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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---------- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---------- SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission File Number 0-19690
BARRA, INC.
(Exact name of registrant as specified in its charter)
California 94-2993326
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2100 Milvia Street
Berkeley, California 94704-1113
(Address, including zip code, of principal executive offices)
(510) 548-5442
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the registrant's Common Stock outstanding as of
June 30, 1997 was 8,919,178.
Exhibit Index is located on page 20.
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INDEX
PAGE
PART I FINANCIAL INFORMATION NUMBER
Item 1 Financial Statements: 3
Consolidated Balance Sheets as of June 30, 1997 (unaudited) and
as of March 31, 1997 3
Unaudited Consolidated Statements of Operations for the Three
Months Ended June 30, 1997 and June 30, 1996 4
Unaudited Consolidated Statements of Cash Flows for the Three
Months Ended June 30, 1997 and June 30, 1996 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PAGE
PART II OTHER INFORMATION NUMBER
Item 1 Legal Proceedings 16
Item 4 Submission of Matters to a Vote of Security Holders 16
Item 5 Other Information 17
Item 6 Exhibits and Reports on Form 8-K 17
Signatures 18
Exhibit Index 19
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
BARRA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1997 (UNAUDITED) AND MARCH 31, 1997
- --------------------------------------------------------------------------------
June 30 March 31
1997 1997
-------------------------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $20,041,267 $25,831,118
Accounts receivable:
Trade (Less allowance for doubtful accounts
of $137,247 and $135,732) 15,065,877 15,522,575
Related parties 3,821,319 3,017,164
Short-term investments 6,700,001 5,421,841
Note Receivable 5,550,004 5,419,474
Investment in municipal debt securities -
available for sale 9,168,818 10,323,459
Prepaid expenses 1,140,919 400,187
- --------------------------------------------------------------------------------
Total current assets 61,488,205 65,935,818
- --------------------------------------------------------------------------------
Investments in Unconsolidated Companies 2,249,203 445,644
Furniture and Equipment:
Computer and office equipment 14,900,803 12,421,668
Furniture and fixtures 3,181,566 3,028,968
Leasehold improvements 5,652,392 2,549,737
- --------------------------------------------------------------------------------
Total furniture and equipment 23,734,761 18,000,373
Less accumulated depreciation and
amortization (11,876,801) (9,739,519)
- --------------------------------------------------------------------------------
11,857,960 8,260,854
Deferred Tax Assets 1,772,213 1,038,374
Computer Software
(Less accumulated amortization of $589,598
and $548,263) 1,806,065 536,442
Other Assets 2,051,079 1,219,350
Goodwill
(Less accumulated amortization of $1,922,772
and $1,585,124) 11,753,045 6,764,619
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TOTAL $92,977,770 $84,201,101
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- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $918,352 $2,748,572
Due to related party 1,376,779 707,266
Accrued expenses payable:
Accrued compensation 5,476,973 7,186,875
Accrued corporate income taxes 4,712,286 3,533,677
Other accrued expenses 7,117,729 5,761,211
Shareholder notes payable 122,088 239,611
Unearned revenues 18,008,727 12,427,274
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Total current liabilities 37,732,934 32,604,486
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Other Long-Term Liabilities:
Deferred tax liabilities 844,646 768,352
Shareholder notes payable 473,411 473,411
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Total other long-term liabilities 1,318,057 1,241,763
- --------------------------------------------------------------------------------
Minority Interest in Equity of Subsidiary 1,323,509 1,981,002
Shareholders' Equity:
Preferred stock, no par; 10,000,000 shares
authorized; none issued and outstanding
Common stock, no par; 40,000,000 shares authorized;
8,919,178 shares and 8,417,314 shares issued and
outstanding 23,080,889 12,878,186
Retained earnings 29,705,050 35,967,057
Foreign currency translation adjustment (182,669) (471,393)
- --------------------------------------------------------------------------------
Total shareholders' equity 52,603,270 48,373,850
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TOTAL $92,977,770 $84,201,101
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- --------------------------------------------------------------------------------
See Accompanying Notes to the Consolidated Financial Statements
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BARRA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
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Three Months Ended June 30,
1997 1996
-----------------------------
Operating Revenues:
Subscription and consulting fees $20,741,126 $18,005,739
Electronic brokerage and information 2,958,103 2,134,480
Asset management 3,407,233 2,786,530
-----------------------------
Total operating revenues 27,106,462 22,926,749
-----------------------------
Operating Expenses:
Cost of subscription products 1,707,544 1,890,789
Compensation and benefits 12,958,500 11,705,842
Rent expense 1,131,628 988,614
Other operating expenses 4,760,444 4,245,917
One-time acquisition charges 9,914,000 --
-----------------------------
Total operating expenses 30,472,116 18,831,162
-----------------------------
Interest Income & Other 455,070 641,344
-----------------------------
Income (Loss) before Equity in Net Income and
Loss of Investees, Minority Interest and
Income Taxes (2,910,584) 4,736,931
Equity in Net Income and Loss of Investees 21,688 (6,108)
Minority Interest (589,237) 51,222
-----------------------------
Income (Loss) before Income Taxes (3,478,133) 4,782,045
Income Taxes (2,783,874) (2,013,843)
-----------------------------
Net Income (Loss) ($6,262,007) $2,768,202
-----------------------------
-----------------------------
Net Income (Loss) Per Share: ($0.74) $0.30
-----------------------------
-----------------------------
Weighted Average Common and Common Equivalent
Shares: 8,473,082 9,316,978
-----------------------------
-----------------------------
See Accompanying Notes to the Consolidated Financial Statements
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BARRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
Three Months Ended
June 30,
1997 1996
Cash Flows from Operating Activities:
Net Income (loss) ($6,262,007) $2,768,202
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Equity in net income and loss of investees (21,688) 6,108
Minority interest 589,027 (51,222)
Depreciation and amortization 1,057,389 683,105
Dividends received from investee -- (226,583)
Gains on marketable securities -- (86,000)
One-time acquisition charges 9,914,000 --
Other (162,315) 100,884
Changes in:
Trade accounts receivable 1,423,163 (67,764)
Related parties receivable (236,155) (66,039)
Prepaid expenses (657,183) (435,374)
Other assets (938,547) (17,325)
Accounts payable, due to related party and
accrued expenses (3,972,637) (1,182,082)
Unearned revenues 1,944,597 2,429,646
Net cash provided by operating activities 2,677,644 3,855,556
Cash Flows from Investing Activities:
Capital expenditures (3,233,412) (1,071,750)
Short-term investments - net (1,278,160) (795,866)
Investment in municipal debt securities -
available for sale 1,154,641 (6,600,000)
Acquisition of GAT and Innosearch, net of
cash acquired (1,713,529) --
Investments in unconsolidated companies (1,803,559) (800,000)
Dividends received from investee -- 226,583
Consolidation of Bond Express L.P. - cash acquired -- 146,742
Net cash used in investing activities (6,874,019) (8,894,291)
Cash Flows from Financing Activities:
Payments to minority shareholders (1,812,789) --
Repayments on notes payable and lines of credit (117,523) (454,506)
Proceeds from sale of common stock 336,836 201,240
Common stock repurchased -- (505,560)
Net cash used in financing activities (1,593,476) (758,826)
Net Decrease in Cash and Cash Equivalents (5,789,851) (5,797,561)
Cash and Cash Equivalents at Beginning of Period 25,831,118 22,493,363
Cash and Cash Equivalents at End of Period $20,041,267 $16,695,802
Other Cash Flow Information:
Cash paid during the period for:
Interest expense $16,819 $61,814
Income taxes $1,221,276 $1,397,883
Non-cash investing transactions during the
period for:
Acquistion of GAT and Innosearch - See note 2
Exchange of equity interest in LBIC for debt $7,219,458
Consolidation of Bond Express L.P.:
Note receivable ($2,100,000)
Net assets acquired $1,139,726
Minority Interest $512,877
Goodwill $1,473,151
See Accompanying Notes to the Consolidated Financial Statements
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BARRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
BARRA, Inc. (the "Company" or "BARRA") and its wholly-owned subsidiaries. Also
included in the accompanying consolidated financial statements are the accounts
of 1) Bond Express, L.P., in which the Company determined it had controlling
financial interest beginning June 1, 1996; 2) Symphony Asset Management, LLC, a
50%-owned joint venture; and 3) Global Advanced Technology Corporation ("GAT")
and approximately 62% of Innosearch Corporation ("Innosearch") which the Company
acquired on June 24, 1997 (see Note 2). All significant intercompany
transactions and balances have been eliminated. Certain reclassifications have
been made to prior year financial statements to conform to current year
presentation.
In the opinion of management, the accompanying unaudited consolidated financial
statements include all adjustments (consisting of normal recurring entries)
necessary to present fairly the financial position of BARRA as of June 30, 1997
and the results of its operations and cash flows for the periods presented in
conformity with generally accepted accounting principles. The results of
operations for the interim periods are not necessarily indicative of results of
operations for a full year. The March 31, 1997 consolidated balance sheet is
derived from the audited consolidated financial statements included in BARRA's
Annual Report on Form 10-K for the fiscal year ended March 31, 1997, filed with
the Securities and Exchange Commission on June 24, 1997 (the "Form 10-K"), but
does not include all disclosures required by generally accepted accounting
principles. It is suggested that these consolidated financial statements be read
in conjunction with the audited consolidated financial statements and related
notes included in the Form 10-K and Management's Discussion and Analysis of
Financial Condition and Results of Operations included in this Form 10-Q.
2. BUSINESS COMBINATION
On June 24, 1997 the Company completed the acquisition of GAT and a majority
ownership interest in Innosearch, an affiliate of GAT. GAT is a leading provider
of fixed income analytics and related consulting services. The total purchase
price of approximately $20 million included 469,726 shares of unregistered BARRA
common stock valued at approximately $10 million, liabilities assumed of
approximately $6 million, and cash and transaction costs of
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approximately $4 million. Under terms of the acquisition, an additional $1
million of contingent consideration is payable if certain conditions are met
within specified time frames. The acquisition has been accounted for as a
purchase, and the results of GAT and Innosearch are included in the
accompanying consolidated financial statements from the date of acquisition
only.
The cost of the acquisition has been allocated on the basis of the estimated
fair value of assets acquired and liabilities assumed. This allocation
resulted in capitalized software of approximately $1 million, purchased
in-process technology of approximately $10 million and goodwill of
approximately $5 million. As required under generally accepted accounting
principles, the amount allocated to purchased in-process technology was
immediately expensed. Goodwill from the acquisition will be amortized over 10
years.
The following summary, prepared on a pro-forma basis, combines the unaudited
consolidated results of operations as if GAT and Innosearch had been acquired
as of the beginning of the periods presented, after excluding the impact of
one-time acquisition charges:
THREE MONTHS ENDED JUNE 30
--------------------------
1997 1996
---- ----
Operating revenues $28,934,462 $24,931,994
Net income 3,454,089 2,955,636
Net income per share .35 .30
The pro-forma financial information is presented for informational purposes
only and is not necessarily indicative of the operating results that would
have occurred had GAT and Innosearch been acquired as of the above dates. In
addition, the pro-forma results are not intended to be a projection of future
results and do not reflect the financial impact of combining GAT and BARRA's
operations.
3. NET INCOME (LOSS) PER SHARE
Net income per share is computed using the primary weighted average number of
common shares outstanding during the period after including the effect of
dilution, if any, of the exercise of common stock options using the treasury
stock method. Net loss is computed using only the primary weighted-average
number of common shares outstanding during the period. Fully diluted income
(loss) per share is not significantly different that primary income (loss) per
share.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with the
BARRA, Inc. ("BARRA" or the "Company") unaudited financial statements and
related notes presented in this Form 10-Q. The discussion of results, causes
or trends should not be construed to imply that such results, causes or
trends will necessarily continue in the future. Each statement made in this
discussion and analysis and elsewhere in this report containing any future
verb tense or form of the words "anticipate", "estimate", "expect,"
"believe," "future" or "forward" is a forward-looking statement that may
involve a number of risk factors and uncertainties. Among other factors that
could cause actual results to differ materially are the following: business
conditions and other changes in the Company's industry; competitive factors
such as rival products and price pressures both domestically and
internationally; availability of adequate third-party data on reasonable
terms and at reasonable prices; significant delays or excessive costs
associated with product research, development and/or introduction; the loss
of a large single revenue source; the investment performance and the timing
of performance fee determination dates for the Company's asset management
subsidiary; significant changes in trading volumes on the POSIT trading
system; and fluctuations in U.S. dollar exchange rates for non-U.S.
currencies. Further information and potential risk factors that could affect
the Company's financial results are included in the Company's Form 10-K for
the fiscal year ended March 31, 1997.
A. GENERAL
Certain of the information required by this item has been previously reported
under the heading "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Form 10-K.
As discussed in Note 2 to the financial statements, on June 24, 1997, BARRA
acquired substantially all of the ownership of Global Advanced Technology
Corporation ("GAT") and a majority interest in Innosearch, an affiliate of GAT.
The acquisition was accounted for as a purchase and the unaudited financial
information presented here reflects the results of GAT and Innosearch only since
the date of acquisition. The minority shareholder's interest in Innosearch's
net assets and results of operations has been separately stated as minority
interest in the accompanying unaudited consolidated balance sheet and statement
of operations.
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FOREIGN CURRENCY
BARRA, as an international corporation, generates revenues from clients
throughout the world, maintains sales and representative offices world-wide
and holds certain deposits and accounts in foreign currencies. BARRA's
revenues are generated from both United States and foreign currencies.
BARRA's subscriptions in the United Kingdom and the European Community are
priced in British pounds sterling ("pounds") and European Currency Units
("ECUs"), respectively. Additionally, BARRA's consolidated subsidiary, BARRA
International (Japan), Ltd. ("BARRA Japan"), generates revenues, has expenses
and has assets and liabilities in Japanese yen. All other things being
equal, weakening of the U.S. dollar has a positive impact on profits, and
strengthening of the U.S. dollar has a negative impact. The Company has
considered its exposures to foreign currency fluctuations and to this point
has decided not to engage in hedging or managing exposures to foreign
currency fluctuations through contracts for the purchase, sale or swapping of
currencies.
For the quarter ended June 30, 1997, when compared to the same quarter a year
ago, the U.S. dollar strengthened against the yen and ECU and weakened against
the pound - all of which had the net effect of increasing the dollar value of
net revenues denominated in these non-U.S. currencies by approximately $50,000.
The impact of changes in exchange rates from the same quarter a year ago was not
material to net income for the period.
Because the functional currency of BARRA Japan is the yen, the translation gains
and losses associated with the consolidation of its balance sheets at points in
time are reported as part of shareholders' equity.
Under current operating arrangements in the countries in which BARRA does
business, there are no restrictions upon the flow of funds from BARRA's
foreign subsidiary to the parent company. There are currently no commitments
or requirements for material capital expenditures outside of the United
States.
B. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The dollar and percentage increases or decreases set forth below in this
discussion and analysis of BARRA's consolidated financial condition result
from a comparison of BARRA's balance sheet at June 30, 1997 to the balance
sheet at March 31, 1997. All amounts have been rounded to the nearest $1,000.
FINANCIAL CONDITION
Total assets increased $8,777,000 or 10.4%.
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Total current assets decreased $4,448,000 or 6.7%. This net increase
consisted primarily of decreased cash and equivalents as a result of
investing activities completed during the quarter - see the accompanying
unaudited consolidated statement of cash flows for more information.
Investments in unconsolidated companies increased $1,804,000 representing two
investments: 1) 272.7 shares of Series A Convertible Preferred Stock of Data
Downlink Corporation for $1,500,000 and; 2) an additional 46,368 shares of
Series C Convertible Preferred Stock of QouteCom, Inc. for $304,000.
Furniture and equipment increased $3,193,000, excluding approximately
$2,500,000 in furniture and equipment acquired as part of the acquisition of
GAT and Innosearch. This increase reflects expenditures for leasehold
improvements and new office furniture associated with moving the Company's
headquarters in June 1997. No further significant cash expenditures
associated with the relocation of the Company's headquarters are expected.
Increases in computer software and goodwill of $1,270,000 and $4,988,000,
respectively, are primarily the result of purchase price allocations for the
acquisitions of GAT and Innosearch.
Total current liabilities increased $5,128,000 due to approximately $3.6
million in unearned revenue associated with GAT product subscriptions with
the remaining increase resulting from growth in BARRA product subscriptions.
Minority interest in equity of subsidiary represents minority shareholders'
interests in the net assets of Bond Express L.P., Symphony Asset Management
LLC and Innosearch.
Shareholders' equity in common stock increased $10,203,000 as a result of
issuing 469,726 common shares for the acquisition of GAT and Innosearch, as
well as the issuance of BARRA common stock for exercises of stock options
under the Company's Employee Stock Option Plan and shares purchased under the
Employee Stock Purchase Plan.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents, short-term investments and investment in municipal
debt securities available-for-sale totaled $35,910,000 at June 30, 1997. In
addition, the Company has a commitment from a bank for an unsecured
short-term line of credit of up to $5 million - of which, no amounts have
been, or are presently anticipated to be, drawn down.
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BARRA believes that its cash flow from operations (including prepaid
subscription fees), together with existing cash balances, will be sufficient
to meet its cash requirements for capital expenditures and other cash needs
for ongoing business operations. Other than commitments described in this
discussion and analysis and in the financial statements and notes, the
Company has no present binding understandings or commitments with respect to
any significant expenditures.
PRINCIPAL FINANCIAL COMMITMENTS. The Company's principal financial
commitments consist of obligations under operating leases and contracts for
the use of computer and office facilities.
C. RESULTS OF OPERATIONS
References to the dollar and percentage increases or decreases set forth
below in this discussion and analysis of BARRA's results of operations are
derived from comparisons of BARRA's consolidated statements of operations for
the three months ended June 30, 1997 and June 30, 1996. The impact of
including the results of operations for GAT and Innosearch since the date of
acquisition (June 24, 1997) was not material. All amounts, except per share
amounts, have been rounded to the nearest $1,000.
NET INCOME (LOSS)
NET LOSS for the three month period ended June 30, 1997, including one-time
acquisition charges of $9,914,000 or $1.13 per share, was $6,262,000 or $0.74
per share, compared to net income of $2,768,000 or $0.30 per share for the
same quarter a year ago.
OPERATING REVENUES. Total operating revenues increased $4,180,000 or 18%
over the same quarter a year ago.
SUBSCRIPTION AND CONSULTING FEES consist of annual subscription fees for
BARRA's software products, revenues from other sources related to the
institutional analytics business and consulting services to pension plan
sponsors and investment managers. A summary of the components and related
changes compared to the same quarter a year ago is as follows (amounts in
000's):
- --------------------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30, CHANGE
1997 1996 $ %
- --------------------------------------------------------------------------------
Analytics subscriptions $14,735 $11,437 3,298 29
Other analytics related 1,155 1,304 (149) (11)
Consulting 4,851 5,265 (414) (8)
- --------------------------------------------------------------------------------
TOTAL $20,741 $18,006 2,735 15
- --------------------------------------------------------------------------------
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ANALYTICS SUBSCRIPTIONS are for BARRA's software products and related
updates. The Company generally bills and collects fees on an annual basis,
but recognizes the income 1/12th per month over each year of the subscription
period. The growth in annual subscription fees continues to be generated
from a combination of both obtaining new clients as well as increasing
revenues from existing customers through the introduction of new products and
services. For the three months ended June 30, 1997 compared to the same
quarter a year ago, annual subscription fee revenue for the U.S and non-U.S.
markets increased approximately 33% and 26%, respectively. For both markets,
revenue growth primarily came from equity models and related data reflecting
the continued success of the BARRA Aegis System-TM-. Various new single
country and global versions of this equity analytics system have been
introduced continuously since July 1995. Fixed income product sales also
contributed, primarily to the non-US increase, as a result of sales of the
BARRA COSMOS System-TM- and the recently released COSMOS Optimizer feature,
which was introduced in January 1997. Increases in subscription revenues
continue to come most significantly from net increases in the number of
subscriptions and less significantly from changes in the prices of
subscriptions.
REVENUES FROM OTHER SOURCES RELATED TO THE INSTITUTIONAL ANALYTICS BUSINESS
include timesharing revenues, seminar revenues and other recurring fees. The
decline in the relative and absolute amounts of this component of revenue
continues to be the result of the conversion of clients from timesharing to
in-house computers for running BARRA's products and differences in the timing
of certain seminars.
CONSULTING FEES
Consulting fees consist primarily of services to pension plan sponsors
("Sponsor Services") which are usually recurring retainer-based fee
arrangements, and consulting to money managers ("Strategic Services"), which
are usually non-recurring, project engagements that are completed in phases.
Also included in Strategic Services revenues are fees related to consulting
work done in connection with strategic transactions involving clients.
Accordingly, Strategic Services revenues are susceptible to a large degree of
variability depending on the ability to source new projects and the
unpredictable nature and significance of fees associated with strategic
transactions. The decrease in consulting fees reflects the net effect of
continued growth in these businesses offset by approximately $1.3 million in
one-time fees recorded in the June 30, 1996 quarter associated with a
non-recurring strategic
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transaction fee and one specific BARRA custom product development fee.
ELECTRONIC BROKERAGE AND INFORMATION
Electronic brokerage and information revenues increased $824,000 or 39% compared
to the same quarter a year ago. This component of revenue consists principally
of license fees from Portfolio System for Institutional Trading ("POSIT"), which
increased $560,000 or 28% compared to the same quarter a year ago. BARRA's
revenues from POSIT are derived from commissions generated by the trading volume
in the system. POSIT revenue increases reflect higher trading volumes during
the quarter as well as greater usage of the system by its major participants.
Revenues from Bond Express L.P. accounted for $264,000 of the increase from the
same quarter a year ago and reflects the inclusion of Bond Express' results of
operations for only one month in the June 30, 1996 quarter.
ASSET MANAGEMENT
Asset management revenues increased $620,000 or 22% compared to the same
quarter a year ago. Asset management revenues consist of fees generated from
active management of investor accounts by Symphony and fees earned by
RogersCasey asset management services from management of customized
multi-manager programs.
Symphony's revenues consist primarily of asset management fees which are a
fixed percentage of asset value and performance fees that are based on the
performance over a benchmark for each account. Symphony's total revenues
were $2,999,000 for the current quarter compared to $2,258,000 for the same
quarter a year ago. The increase in total revenues was the result of
increases in base fees due to growth in assets under management. As of June
30, 1997, Symphony had approximately $2.1 billion under direct management. Of
the funds under direct management, approximately $1.0 billion are managed
under agreements that provide for performance fees in addition to a base
management fee.
Performance fees included in total revenues were $378,000 for the current
quarter compared to $781,000 for the same quarter a year ago. Performance
fees are recognized only at the measurement date for determining performance
of an account, which typically is at the end of each year of the contract.
The decrease in performance fee revenues is the result of fewer investor
account anniversaries during the current quarter compared to the same quarter
a year ago. Because of the addition, termination and re-negotiation of
account agreements, the pattern of anniversaries can change from quarter to
quarter. There is also, of course, no assurance that the investment
performance will continue at
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historical levels. It is presently estimated that approximately 10% and 60%
of the performance based funds under management will have performance fee
determination dates in the quarters ended September 30, 1997 and December 31,
1997, respectively.
Symphony's future revenues will depend on the performance of the funds it
manages and the timing of anniversary fee determination dates for performance
based funds.
OPERATING EXPENSES. Total operating expenses, including one-time acquisition
charges of $9,914,000, increased $11,641,000 or 62% compared to the same
quarter a year ago. Excluding one-time acquisition charges, operating
expenses increased $1,727,000 or 9%.
COST OF SUBSCRIPTION PRODUCTS
Cost of subscription products consists of computer access charges, data and
software acquisition expenses, BARRA's computer leasing expenses, and seminar
expenses. This component of expense decreased $183,000 or 10% compared to the
same quarter a year ago primarily due to lower data costs as a result of
approximately $170,000 of non-recurring, project-related data fees included
in the June, 1996 quarter.
COMPENSATION AND BENEFITS
Compensation and benefits increased $1,253,000 or 11% compared to the same
quarter a year ago. The increase from the same quarter a year ago is
primarily the result of wage increases that take effect on July 1 within each
fiscal year and a small increase in the number of employees. Increases in
group insurance and other benefits also contributed to higher costs. The
Company expects compensation costs to increase significantly next quarter
consistent with the annual salary administration process.
OTHER OPERATING EXPENSES
Other operating expenses increased $515,000 or 12% compared to the same
quarter a year ago. Other operating expenses include travel, office,
maintenance, depreciation, amortization, data costs related to
non-subscription services, marketing, advertising, outside legal and
accounting services and other corporate expenses. The increase from the same
quarter a year ago reflects higher data costs at Symphony related to their
increase in revenues and other increases consistent with the general growth
of BARRA's business and the move to a new headquarters facility during the
current quarter.
ONE-TIME ACQUISITION CHARGES
One-time acquisition charges of $9,914,000 represent purchased in-process
research and development in connection
14
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with the acquisitions of GAT and Innosearch on June 24, 1997. The portion of
the purchase price allocated to purchased in-process technology was
determined based on a valuation study completed shortly after the closing of
the acquisition. As required by generally accepted accounting principles,
the portion of the purchase price allocated to purchased technology was
immediately expensed.
INTEREST INCOME AND OTHER
Interest income and other decreased $186,000 or 29% compared to the same
quarter a year ago. The decrease from the same quarter a year ago reflects
reduced interest on notes receivable due to declines in outstanding balances
as well as a higher percentage of investments made in tax exempt securities
and lower average invested balances as compared to the same quarter a year
ago.
MINORITY INTEREST
Minority interest for the current quarter represents the share of profits
from Symphony Asset Management LLC that is due to the minority shareholders.
15
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PART II - OTHER INFORMATION
Each statement made in this Part II containing any future verb tense or any
form of the words "believe", "future", "forward", "estimate", "anticipate" or
"expect" is a forward looking statement that may involve a number of risk
factors and uncertainties. A discussion of those risk factors is located in
the first paragraph of Part I, Item 2.
ITEM 1. LEGAL PROCEEDINGS.
All information required by this item has been previously reported under the
heading "Business-Litigation" in the Form 10-K. There have been no other
material developments in the legal proceedings of BARRA since the date of the
Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of the Shareholders of BARRA was held on Thursday, July 31,
1997.
The meeting was held to consider and vote upon (i) electing directors to
serve for the ensuing year and until their successors are duly elected and
qualified (ii) approving the addition of 700,000 shares of BARRA common stock
for issuance under the BARRA Stock Option Plan; (iii) ratifying the adoption
of the BARRA, Inc. Directors Plan; and (iv) ratifying the selection of
Deloitte & Touche LLP as independent auditors of BARRA for the fiscal year
ended March 31, 1998. The votes cast with respect to each director are
summarized as follows: A. George Battle, for 7,139,447 withheld 299,827;
John F. Casey, for 7,138,947, withheld 300,327; M. Blair Hull, for 7,139,447,
withheld 299,827; Norman J. Laboe, for 7,108,622, withheld 330,652; Ronald J.
Lanstein, for 7,139,947, withheld 300,327; Andrew Rudd, for 7,138,447,
withheld 300,827.
The votes cast to ratify the addition of 700,000 shares of common stock for
issuance under the BARRA, Inc. Stock Option Plan are summarized as follows:
for 4,896,932, against 1,395,661, abstain 4,800, broker non-vote 1,141,881.
The votes cast to ratify the adoption of the BARRA, Inc. Directors Plan are
summarized as follows: for 5,769,031, against 498,411, abstain 32,901,
broker non-vote 1,138,931. The votes cast to ratify the selection of
Deloitte & Touche LLP as independent auditors are summarized as follows:
for 7,426,678, against 1,401, abstain 2,200.
16
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ITEM 5. OTHER INFORMATION.
On June 24, 1997 the Company completed the acquisition of 100% of the issued
and outstanding shares of capital stock of Global Advanced Technology
Corporation ("GAT") and of 62% of the issued and outstanding shares of
capital stock of Innosearch Corporation, an affiliate of GAT. For further
details of these transactions see Note 2 of the Notes to Consolidated
Financial Statements and Item 2 of Part I of this form.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) the following exhibits are required by Item 601 of the Regulation S-K:
Exhibit Sequential
Number Exhibit Description Page Number
- ------- ------------------- -----------
10.1 Amended and Restated Global 21
Advanced Technology Corporation
Stock Purchase Agreement
dated as of June 24, 1997,
between Global Advanced Technology
Corporation ("GAT"), BARRA, Inc.,
and the GAT stockholders
10.2 Stock Purchase Agreement among 75
BARRA, Inc. and the Shareholders
of Innosearch Corporation, dated as
of May 23, 1997, between Innosearch
Corporation ("Innosearch"),
BARRA, Inc., and certain of the
Innosearch shareholders
(b) Reports on Form 8-K: None.
17
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
BARRA has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BARRA, Inc.
(Registrant)
Date: August 14, 1997 /s/ Andrew Rudd
------------------------------------
Andrew Rudd, Chairman of the Board
of Directors and Chief Executive
Officer
Date: August 14, 1997 /s/ James D. Kirsner
------------------------------------
James D. Kirsner, Chief Financial
Officer
18
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Exhibit Description Page Number
- ------- ------------------- -----------
10.1 Amended and Restated Global 21
Advanced Technology Corporation
Stock Purchase Agreement
dated as of June 24, 1997,
between Global Advanced Technology
Corporation ("GAT"), BARRA, Inc.,
and the GAT stockholders
10.2 Stock Purchase Agreement among 75
BARRA, Inc. and the Shareholders
of Innosearch Corporation, dated as
of May 23, 1997, between Innosearch
Corporation ("Innosearch"),
BARRA, Inc., and certain of the
Innosearch shareholders
19
<PAGE>
EXHIBIT 10.1
21
<PAGE>
AMENDED AND RESTATED
GLOBAL ADVANCED TECHNOLOGY CORPORATION
STOCK PURCHASE AGREEMENT
22
<PAGE>
TABLE OF CONTENTS
1. SALE OF THE GAT SHARES; AUTHORIZATION AND ISSUANCE OF
THE BARRA SHARES................................................... 27
1.1 Sale of the GAT Shares....................................... 27
1.2 Fractional Shares............................................ 28
1.3 Authorization of the BARRA Shares............................ 28
1.4 Treatment of Yamaichi Stock Option........................... 28
2. CLOSING DATE; DELIVERY................................................ 28
2.1 Closing Date................................................. 28
2.2 Delivery..................................................... 29
3. COVENANTS OF THE PARTIES.............................................. 29
3.1 Covenants of BARRA........................................... 29
(a) Reservation and Issuance of BARRA Common Stock........... 29
(b) Government Approvals..................................... 29
(c) Notification of Breach of Representations, Warranties
and Covenants........................................... 29
(d) Extension of Credit...................................... 30
(e) Press Release............................................ 30
(f) Litigation Developments.................................. 30
(g) Employment............................................... 30
(h) Access to Properties, Books and Records.................. 30
(i) Options; Bonuses......................................... 31
3.2 Covenants of GAT, Innosearch and the GAT Stockholders......... 31
(a) Stockholder Lists and Other Information.................. 31
(b) Transactions in BARRA Common Stock....................... 32
(c) Government Approvals..................................... 32
(d) Capital Commitments and Expenditures..................... 32
(e) Notification of Breach of Representations,
Warranties and Covenants................................ 32
(f) Compensation............................................. 32
(g) Conduct of Business in the Ordinary Course............... 33
(h) Press Releases........................................... 34
(i) No Merger or Solicitation................................ 34
(j) GAT 401(k) Plan.......................................... 35
(k) Additional Agreements.................................... 35
(l) Access to Properties, Books and Records.................. 35
(m) Employee Welfare Benefit Plans........................... 36
(n) Litigation Developments.................................. 36
(o) Employment............................................... 36
3.3 Covenants of the Parties...................................... 36
4. REPRESENTATIONS AND WARRANTIES OF GAT, INNOSEARCH AND
THE GAT STOCKHOLDERS............................................... 37
4.1 Corporate Status and Power to Enter Into Agreements.......... 37
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4.2 Execution and Delivery of the Agreement...................... 37
4.3 Subsidiaries and Other Equity Interests...................... 38
4.4 Certificate, Bylaws, Books and Records....................... 38
4.5 Compliance with Laws, Regulations and Decrees................ 39
4.6 Capitalization............................................... 39
4.7 Financial Statements......................................... 40
4.8 Government Regulation........................................ 40
4.9 Code of Ethics............................................... 42
4.10 Tax Returns.................................................. 42
4.11 Material Adverse Change...................................... 43
4.12 No Undisclosed Liabilities................................... 43
4.13 Properties and Leases........................................ 44
4.14 Patents, Copyrights, Trademarks.............................. 45
4.15 Material Contracts........................................... 46
4.16 Employment Contracts and Benefits............................ 46
4.17 Compliance With ERISA........................................ 48
4.18 Collective Bargaining and Employment Agreements.............. 48
4.19 Compensation of Officers and Employees....................... 48
4.20 Legal Actions and Proceedings................................ 49
4.21 Retention of Broker or Consultant............................ 49
4.22 Insurance.................................................... 49
4.23 Transactions with Affiliates................................. 49
4.24 Trading in BARRA Common Stock................................ 50
4.25 No Departing Employees....................................... 50
4.26 No Loss of Customers......................................... 50
4.27 Communications with Stockholders............................. 50
4.28 Accuracy of Representations and Warranties................... 51
4.29 Proposed Business Combination................................ 51
4.30 GAT Balance Sheet............................................ 51
5. REPRESENTATIONS AND WARRANTIES OF BARRA.............................. 51
5.1 Corporate Status and Power to Enter Into Agreements.......... 51
5.2 Certificate, Bylaws, Books and Records....................... 52
5.3 Properties................................................... 52
5.4 BARRA SEC Documents.......................................... 52
5.5 Material Adverse Change...................................... 53
5.6 Execution and Delivery of the Agreement...................... 53
5.7 Accuracy of Representations and Warranties................... 53
5.8 Capitalization............................................... 54
5.9 Duly Authorized Issuances.................................... 54
5.10 Retention of Broker or Consultant............................ 54
5.11 Compliance with Laws, Regulations and Decrees................ 55
6. INVESTMENT REPRESENTATION............................................ 55
7. REGISTRATION RIGHTS.................................................. 56
7.1 Definitions.................................................. 56
(a) "Exchange Act"........................................... 57
24
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(b) "Holder"................................................. 57
(c) "Register", "Registered" and "Registration".............. 57
(d) "Registrable Securities"................................. 57
(e) "Registration Expenses".................................. 57
(f) "Securities Act"......................................... 57
(g) "Selling Expenses"....................................... 58
7.2 BARRA Registration........................................... 58
(a) Notice of Registration................................... 58
7.3 Underwriting................................................. 58
7.4 Expenses of Registration..................................... 59
7.5 Furnish Information.......................................... 59
7.6 Indemnification.............................................. 59
7.7 "Market Stand-off" Agreement................................. 61
8. CONDITIONS TO THE OBLIGATIONS OF BARRA............................... 61
8.1 Representations and Warranties............................... 61
8.2 Compliance and Performance Under Agreement................... 62
8.3 Material Adverse Change...................................... 62
8.4 GAT Stockholders............................................. 62
8.5 Officer's Certificate........................................ 62
8.6 GAT Board of Directors....................................... 62
8.7 No Injunctions or Restraints; Illegality..................... 62
8.8 Government Approvals......................................... 62
8.9 Expenses..................................................... 63
8.10 Closing Documents............................................ 63
8.11 Consents..................................................... 63
8.12 Innosearch Transaction....................................... 63
8.13 Employee Agreements.......................................... 64
8.14 Opinion of Counsel........................................... 64
8.15 Third Party Actions.......................................... 64
8.16 The 3/31/97 Balance Sheets................................... 64
8.17 Option Amendment............................................. 64
9. CONDITIONS TO THE OBLIGATIONS OF GAT AND THE GAT STOCKHOLDERS........ 64
9.1 Representations and Warranties............................... 65
9.2 Compliance and Performance Under Agreement................... 65
9.3 Material Adverse Change...................................... 65
9.4 Officers Certificate......................................... 65
9.5 Opinion of Counsel........................................... 65
9.6 Third Party Actions.......................................... 65
9.7 Closing Documents............................................ 66
9.8 No Injunctions or Restraints; Illegality..................... 66
9.9 Innosearch Transaction....................................... 66
9.10 Government Approvals......................................... 66
10. EXPENSES............................................................ 66
11. SURVIVAL, INDEMNIFICATION AGAINST LOSS.............................. 67
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<PAGE>
11.1 Survival..................................................... 67
11.2 GAT Stockholders' Indemnification............................ 67
11.3 BARRA's Indemnification...................................... 68
11.4 GAT's Indemnification........................................ 69
11.5 Indemnification Procedures................................... 69
11.6 Limitation on Indemnification Claims......................... 70
11.7 Liability Limited to Indemnification......................... 71
12. ESCROW.............................................................. 71
12.1 Escrow for Representations and Warranties.................... 71
12.2 Holder's Agent............................................... 72
13. AMENDMENT; TERMINATION.............................................. 73
13.1 Amendment.................................................... 73
13.2 Termination.................................................. 73
13.3 Notice....................................................... 73
13.4 Termination and Expenses..................................... 73
14. MISCELLANEOUS....................................................... 74
14.1 Notices...................................................... 74
14.2 Binding Agreement............................................ 75
14.3 Consent to Jurisdiction and Forum Selection.................. 75
14.4 Governing Law................................................ 76
14.5 Attorneys' Fees.............................................. 76
14.6 Entire Agreement; Severability............................... 76
14.7 Counterparts................................................. 76
14.8 Waivers...................................................... 76
LIST OF EXHIBITS
EXHIBIT A-----------------------------------------FORM OF EMPLOYMENT AGREEMENT
EXHIBIT B-----------------------------------------FORM OF EMPLOYMENT AGREEMENT
EXHIBIT C---------------------------------------------OPINION OF COUNSEL (GAT)
EXHIBIT D-------------------------------------------OPINION OF COUNSEL (BARRA)
EXHIBIT E-----------------------------------------------------ESCROW AGREEMENT
26
<PAGE>
AMENDED AND RESTATED
GLOBAL ADVANCED TECHNOLOGY CORPORATION
STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT ("Agreement") is made
and entered into as of June__, 1997, by and among BARRA, Inc., a California
corporation ("BARRA"), GLOBAL ADVANCED TECHNOLOGY CORPORATION, a Delaware
corporation ("GAT"), and THOMAS HO and MARK WAINGER, all of the stockholders
of GAT (herein individually a "GAT Stockholder" and collectively the "GAT
Stockholders").
WHEREAS, the GAT Stockholders currently own eight (8) shares of GAT
common stock (individually, a "GAT Share" and in the aggregate, the "GAT
Shares");
WHEREAS, the GAT Shares represent one hundred percent (100%) of the
currently issued and outstanding capital stock of GAT;
WHEREAS, BARRA wishes to purchase, and the GAT Stockholders wish to sell to
BARRA, the GAT Shares in accordance with the terms of this Agreement;
WHEREAS, GAT and the GAT Stockholders own an aggregate of approximately
sixty-two percent (62%) of the issued and outstanding capital stock of
Innosearch, Inc., a New York Corporation ("Innosearch"); and
WHEREAS, BARRA, GAT and the GAT Stockholders desire to amend and restate in
its entirety that certain Stock Purchase Agreement, dated as of May 23, 1997, by
and among BARRA, GAT and the GAT Stockholders (the "GAT Agreement").
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth herein,
THE PARTIES HEREBY AGREE TO AMEND AND RESTATE THE GAT AGREEMENT IN ITS
ENTIRETY AS FOLLOWS:
1. SALE OF THE GAT SHARES; AUTHORIZATION AND ISSUANCE OF THE BARRA SHARES.
1.1 SALE OF THE GAT SHARES. Subject to the terms and conditions
hereof, on the Closing Date, as defined in Section 2.1, the GAT Stockholders
will sell to BARRA and BARRA agrees to purchase from each of the GAT
Stockholders all of the GAT Shares, totaling an aggregate of eight (8) GAT
Shares, for a total consideration in cash ("Cash
27
<PAGE>
Consideration") and fully paid and non assessable shares of common stock of
BARRA (the "BARRA Common" or the "BARRA Shares") allocated to each GAT
Shareholder as set forth in Schedule A attached hereto. The BARRA Common or
BARRA Shares along with the Cash Consideration is sometimes referred to as
the "Purchase Price."
1.2 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of BARRA Common Stock shall be issued to the GAT
Stockholders; rather, the number of BARRA Shares to be issued as the Stock
Consideration shall be rounded up to the nearest whole BARRA share.
1.3 AUTHORIZATION OF THE BARRA SHARES. On or prior to the Closing
Date, BARRA will have taken all necessary corporate action for the purpose of
authorizing the issuance and sale of the BARRA Shares to the GAT Stockholders.
1.4 TREATMENT OF YAMAICHI STOCK OPTION. Pursuant to the Stock Option
Agreement, dated January 19, 1995, by and between GAT and Yamaichi Securities
Co., Ltd. ("Yamaichi" or the "GAT Optionholder"), GAT granted to Yamaichi an
option (the "Yamaichi Option") to acquire two percent (2%) of the issued and
outstanding shares of voting stock of GAT (the "Option Shares") for an
exercise price of the greater of the fair market value of the Option Shares
or $600,000. The Yamaichi Option is exercisable until January 18, 1998.
Pursuant to the terms of the First Amendment to the Stock Option Agreement,
dated as of June ___, 1997, by and between BARRA, GAT and Yamaichi (the
"Option Amendment") following the Closing Date, Stock Consideration and Cash
Consideration shall be substituted under the Yamaichi Option for GAT Shares
based on the Consideration Ratio in Schedule A. Specifically, the Option
Amendment provides that the Yamaichi Option shall be deemed to continue as an
option to purchase the number of shares of BARRA Common Stock and to receive
Cash Consideration equal to the Consideration Ratio multiplied by the number
of Option Shares subject to the Yamaichi Option on the Closing Date, at the
same option exercise price set forth in the Yamaichi Option. In the event
that the Yamaichi Option expires on January 19, 1998 without being exercised
by Yamaichi, the number of shares of BARRA Common Stock and the Cash
Consideration allocated to the Yamaichi Option under the Consideration Ratio
in Schedule A shall be distributed pro rata to the GAT Stockholders.
2. CLOSING DATE; DELIVERY.
2.1 CLOSING DATE. The closing of the purchase and sale of the GAT
Shares hereunder (the "Closing") shall be held at the offices of Graham &
James LLP, One Maritime Plaza, Suite 300, San Francisco, California 94111 on
or before August 20, 1997, or at such other time and place to which the
parties hereto may agree in writing (the "Closing Date").
2.2 DELIVERY. At the Closing, each GAT Stockholder will deliver to
BARRA certificates representing the GAT Shares to be purchased from such GAT
Stockholder against payment of the Purchase Price therefor by (a) delivery to
each GAT Stockholder
28
<PAGE>
of a certificate representing the number of the BARRA Shares to be issued to
such GAT Stockholder and a check representing the Cash Consideration due such
GAT Stockholder and not subject to escrow pursuant to Section 12, each as
calculated pursuant to the Consideration Ratio in Schedule A, (b) reservation
by BARRA of the number of BARRA Shares and the Cash Consideration due to the
GAT Optionholder and not subject to escrow pursuant to Section 12, each as
calculated pursuant to the Consideration Ration in Schedule A, and delivery
of the $1,600,000 of Cash Consideration into escrow in accordance with the
provisions of Section 12.
3. COVENANTS OF THE PARTIES.
3.1 COVENANTS OF BARRA. Unless otherwise expressly indicated below and
unless the Agreement is not earlier terminated pursuant to Section 13, from
the date of this Agreement to the Closing Date, BARRA hereby covenants as
follows:
(a) RESERVATION AND ISSUANCE OF BARRA COMMON STOCK. BARRA shall
reserve and make available for issuance in accordance with the terms of this
Agreement a number of the BARRA Shares equal to the Stock Consideration,
including the maximum number of shares of BARRA Common Stock to which the GAT
Optionholder may be entitled pursuant to Section 1.4 above.
(b) GOVERNMENT APPROVALS. BARRA, with the cooperation of GAT,
shall use reasonable efforts in good faith to take or cause to be taken as
promptly as practicable all such steps as shall be necessary to obtain all
consents and approvals of government agencies as are required by law or
otherwise (the "Government Approvals") and shall do any and all acts
reasonably necessary or appropriate in order to cause the stock purchase to
be consummated on the terms provided in this Agreement as promptly as
practicable.
(c) NOTIFICATION OF BREACH OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. BARRA shall promptly give written notice to GAT upon becoming
aware of the occurrence or impending or threatened occurrence of any event
which would cause or constitute a breach of any of the representations,
warranties or covenants of BARRA contained or referred to in this Agreement
and shall use commercially reasonable efforts to prevent the same or remedy
the same promptly.
(d) EXTENSION OF CREDIT. On or after March 31, 1997, neither
BARRA, any of its affiliates, or any third party, including any bank or
financing company (but excluding either GAT and Innosearch) shall extend
credit or otherwise lend money to GAT and/or Innosearch. In such event, the
Purchase Price shall be decreased by the amount of such extension of credit
or loan.
(e) PRESS RELEASE. BARRA shall not issue any press release or
written statement for general circulation to the public relating to the stock
purchase or this Agreement unless previously provided to GAT for review and
approval (which
29
<PAGE>
approval will not be unreasonably withheld or delayed) and shall cooperate
with GAT in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement or the
purchase, provided that BARRA may, without the consent of GAT and Innosearch,
make any disclosure with regard to this Agreement or the purchase that it
determines is required under any applicable law or regulation, provided that,
if practicable, BARRA shall provide to GAT an opportunity to review and
comment on the content of any such disclosure prior to such disclosure being
publicly distributed.
(f) LITIGATION DEVELOPMENTS. BARRA agrees to promptly advise GAT
and Innosearch with respect to any and all material legal actions or other
material proceedings or investigations against BARRA relating to this
transaction and to promptly advise GAT and Innosearch with respect to any
significant developments arising in connection with said actions, proceedings
or investigations.
(g) EMPLOYMENT. BARRA shall not directly or indirectly, solicit,
induce or recruit any of the officers or employees of GAT and Innosearch to
leave their employment with GAT and Innosearch without obtaining the prior
written consent of GAT and Innosearch.
(h) ACCESS TO PROPERTIES, BOOKS AND RECORDS. Prior to the Closing
Date, BARRA shall give GAT and Innosearch and its counsel and accountants
full access, during normal business hours and upon reasonable requests, to
all of its properties, books, contracts, commitments and records including,
but not limited to, the corporate, financial and operational records,
reports, instructions, procedures, tax returns and filings, tax settlement
letters, material contracts or commitments, regulatory examinations and
correspondence and shall allow GAT and Innosearch to make copies of such
materials (to the extent not legally prohibited) and shall furnish GAT and
Innosearch with all such information concerning its affairs as GAT and
Innosearch may reasonably request. BARRA shall also cause Deloitte & Touch
LLP ("DT") to make available to GAT and Innosearch, its accountants, counsel
and other agents, to the extent reasonably requested in connection with such
review, DT work papers and documentation relating to its work papers and its
audits of the books and records of BARRA. Documents requested pursuant to
this Section 3.1(h) that are protected pursuant to confidentiality agreements
or are subject to attorney-client privilege ("BARRA Confidential Documents")
shall not be subject to this Section 3.1(h). Notwithstanding the foregoing,
BARRA shall disclose to GAT and Innosearch the general subject matter of the
BARRA Confidential Documents requested pursuant to this Section 3.1(h), and
any matter therein which would have a material adverse effect on this
transaction. Client files that are protected pursuant to confidentiality
agreements signed with BARRA, pursuant to fiduciary obligations to maintain
confidentiality under the Advisers Act (as defined in Section 4.8(a)) or are
subject to attorney-client privilege, and that are requested pursuant to this
Section 3.1(h), shall not be subject to this Section 3.1(h) ("BARRA
Confidential Files"). Notwithstanding the foregoing, BARRA shall disclose to
GAT or Innosearch on attached Schedule 3.1(h), the
30
<PAGE>
general subject matter of the BARRA Confidential Files requested pursuant to
this Section 3.1(h), and any matter therein which would have a material
adverse effect on this transaction.
(i) OPTIONS; BONUSES. No later than thirty (30) days after the
Closing Date, BARRA shall grant the bonus as set forth in Schedule 3.1(i);
and at the next regularly scheduled meeting of the Board of Directors of
BARRA, the senior management of BARRA shall recommend to the Board of
Directors that they grant to certain GAT employees (as determined by mutual
agreement between the GAT Stockholders and BARRA), options to purchase an
aggregate of 60,000 shares of BARRA Common stock. Such options shall be
subject to the terms and conditions of the BARRA Stock Option Plan.
3.2 COVENANTS OF GAT, INNOSEARCH AND THE GAT STOCKHOLDERS. Unless
otherwise expressly indicated below and unless this Agreement is earlier
terminated pursuant to Section 13, from the date of this Agreement to the
Closing Date, GAT, on behalf of itself and Innosearch, and the GAT
Stockholders, as applicable, hereby covenant to BARRA as follows.
(Innosearch is identified separately in these covenants for clarification
only and not by way of limitation; each covenant made herein by GAT is made
equally on behalf of Innosearch if the covenant is relevant and applicable.)
(a) STOCKHOLDER LISTS AND OTHER INFORMATION. GAT and Innosearch
shall from time to time make available to BARRA, upon request, a list of
their stockholders and their addresses, a list showing all transfers of the
GAT Common Stock and/or Common Stock of Innosearch and such other information
as BARRA shall reasonably request regarding both the ownership and prior
transfers of the GAT Common Stock and Common Stock of Innosearch.
(b) TRANSACTIONS IN BARRA COMMON STOCK. GAT and each GAT
Stockholder hereby agrees not to, directly or indirectly, buy or sell, or
otherwise effect any trade in, any shares of BARRA Common Stock, or any
security derivative of the BARRA Common Stock, from the date hereof through
and including the Closing Date unless the Agreement is earlier terminated.
Neither GAT nor any GAT Stockholders owns beneficially any shares of BARRA
Common Stock.
(c) GOVERNMENT APPROVALS. GAT and the GAT Stockholders shall
cooperate in good faith and in all reasonable respects with BARRA in its
undertaking pursuant to Section 3.1(c) to obtain the Government Approvals and
GAT and the GAT Stockholders further agree to take such actions in good faith
as may be reasonably requested by BARRA to cause the purchase to be
consummated on the terms provided in this Agreement as promptly as is
practicable.
(d) CAPITAL COMMITMENTS AND EXPENDITURES. After the execution of
this Agreement, no new capital commitments in excess of $25,000 individually
or $50,000 in the aggregate shall be entered into, and no capital
expenditures in excess of $25,000
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<PAGE>
individually or $50,000 in the aggregate shall be made by GAT without the
prior written approval of BARRA other than capitalized research and
development expenses listed in Schedule 3.2(d) of the Disclosure Statement.
Neither GAT nor Innosearch shall enter into any acquisitions or leases of
real property, including both new leases and lease extensions without the
prior written approval of BARRA.
(e) NOTIFICATION OF BREACH OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. GAT and/or the GAT Stockholders shall promptly give written
notice to BARRA upon becoming aware of the occurrence or impending or
threatened occurrence of any event which would cause or constitute a breach
of any of the representations, warranties or covenants of GAT and/or the GAT
Stockholders contained or referred to in this Agreement and shall use
commercially reasonable efforts to prevent the same or remedy the same
promptly.
(f) COMPENSATION. Neither GAT nor Innosearch shall make or
approve any increase in the compensation payable or to become payable by GAT
or Innosearch to any of its directors, officers, employees or agents with
annual salaries in excess of $30,000 at the date hereof and no increases in
compensation shall exceed $25,000 in the aggregate (including but not limited
to compensation through any profit sharing, pension, retirement, severance,
incentive or other employee benefit program or arrangement), nor shall any
bonus payment or any agreement or commitment to make a bonus payment be made
(except with BARRA's prior written approval), nor shall any material
amendment to an existing employee benefit plan or arrangement or any new
employee benefit plan or arrangement be adopted, nor shall any stock option,
warrant or other right to acquire capital stock be granted, or employment
agreement (other than any such employment agreement that may arise by
operation of law upon the hiring of any new employee) or consulting agreement
be entered into by GAT or Innosearch with any such directors, officers,
employees or agents unless BARRA has given its prior written consent. Nothing
herein shall prevent the payment to GAT or Innosearch employees (with
salaries of $30,000 or less at the date hereof) of regular salary increases,
consistent with past practices in connection with regular salary reviews
consistent with past practices, as heretofore disclosed to BARRA, provided
such salary increases shall not exceed $25,000 in the aggregate. Nothing
herein shall prevent the payment by GAT to its employees of the bonuses
listed on Schedule 3.2(f) to the Disclosure Statement. Without the prior
written consent of BARRA, neither GAT nor Innosearch shall hire any new
employee at an annual rate in excess of current customary practice or, in any
event, in excess of $30,000 per year in each individual case, or $50,000 in
the aggregate. GAT has previously delivered to BARRA a comprehensive list of
employees as of the date hereof (the "Employee List"), setting forth in
detail the compensation payable to each and all of GAT's and Innosearch's
directors, officers, employees and agents.
(g) CONDUCT OF BUSINESS IN THE ORDINARY COURSE. GAT and
Innosearch shall conduct their businesses in the ordinary course as
heretofore conducted. For purposes of this Agreement the "Ordinary Course of
Business" shall consist of the marketing and sale of software products and
related data and consulting services and other business
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presently conducted by GAT and Innosearch. Prior to the Closing Date GAT
shall use its best efforts to maintain satisfactory relationships with
licensors, suppliers, distributors and customers, all in accordance with its
Ordinary Course of Business. Prior to the Closing Date, except as listed on
Schedule 3.2(g), GAT shall not, without the prior written consent of BARRA:
(1) amend its Certificate of Incorporation or Bylaws;
(2) authorize for issuance, issue, deliver or sell any
additional GAT Shares of its capital stock of any class, or securities
convertible into GAT Shares of such stock, or issue or grant any rights,
options or other commitments for the issuance of GAT Shares of such stock or
such convertible securities;
(3) split, combine or reclassify any GAT Shares of its
capital stock or declare, set aside or pay any dividend (whether in cash,
stock or property) in respect to its capital stock or redeem or otherwise
acquire any of its capital stock;
(4) dispose of or acquire any material properties or assets
except in the Ordinary Course of Business;
(5) engage in any activities or transactions that are outside
the Ordinary Course of Business;
(6) incur any indebtedness for borrowed money.
(h) PRESS RELEASES. GAT shall not issue any press release or
written statement for general circulation relating to this Agreement or the
purchase unless previously provided to BARRA for review and written approval
(which shall not be unreasonably withheld) and shall cooperate with BARRA in
the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or the purchase. GAT
and Innosearch may, without the consent of BARRA, make any disclosure with
regard to this Agreement or the purchase that is required under any
applicable law or regulation, provided that, GAT and Innosearch shall provide
to BARRA an opportunity to review and comment on the content of any such
disclosure prior to such disclosure being publicly distributed.
(i) NO MERGER OR SOLICITATION.
(i) Without the prior written consent of BARRA, neither GAT,
Innosearch nor the GAT Stockholders shall effect or agree to effect any
Business Combination, acquire or agree to acquire any of the capital stock of
GAT, nor shall GAT or Innosearch acquire or agree to acquire the capital
stock or assets (except in the Ordinary Course of Business) of any other
entity, or commence any proceedings for winding up and dissolution affecting
any of them. As used in this Agreement, "Business Combination" shall mean
any tender or exchange offer, proposal for a merger, consolidation,
acquisition of assets or other takeover proposal involving any
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party hereto (except as explicitly contemplated in this Agreement) or any
offer or proposal to acquire in any manner a five percent (5%) or greater
interest in, or a substantial portion of any party hereto other than
transactions contemplated hereunder.
(ii) Neither GAT, Innosearch, any GAT Stockholder, nor any
officer, director or affiliate of GAT, nor any investment banker, attorney,
accountant or other agent, advisor or representative retained by GAT shall
(A) solicit or encourage, directly or indirectly, any inquiries, discussions
or proposals for, continue, propose or enter into discussions or negotiations
looking toward, or enter into any agreement or understanding providing for,
any Business Combination; or (B) in connection with a potential Business
Combination or otherwise than in the Ordinary Course of Business disclose,
directly or indirectly, any nonpublic information to any corporation,
partnership, person or other entity or group concerning the business and
properties of GAT or Innosearch or afford any such party access to the
properties, books or records of GAT or Innosearch or otherwise assist or
encourage any such party in connection with the foregoing, or (C) furnish or
cause to be furnished any information concerning the business, financial
conditions, operations, properties or prospects of GAT or Innosearch to
another person, having any actual or prospective role with respect to any
such transaction. The foregoing will be subject at all times to the right
and ability of the directors and officers of GAT and Innosearch to satisfy
their fiduciary obligations.
(iii) GAT shall notify BARRA of the details of any indication
of interest of any person, corporation, firm, association or group to acquire
by any means a five percent (5%) or greater interest in, or a substantial
portion of GAT or Innosearch or engage in any Business Combination with GAT
or Innosearch within two business days of any such indication of interest.
(j) GAT 401(k) PLAN. GAT agrees the Global Advanced Technology
Corporation 401(k) Savings Plan (the "GAT 401(k) Plan") may be continued or
merged into the BARRA 401(k) Plan, on or after the Closing Date, as
determined by BARRA in its sole discretion, subject to compliance with
applicable law and the terms of the GAT 401(k) Plan.
(k) ADDITIONAL AGREEMENTS. In case at any time after the Closing
Date any further action is necessary to vest with all rights of GAT pursuant
to this Agreement in all properties, assets, rights, approvals, immunities
and franchises of GAT, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
(l) ACCESS TO PROPERTIES, BOOKS AND RECORDS. Prior to the Closing
Date, GAT and Innosearch shall give BARRA and its counsel and accountants
full access, during normal business hours and upon reasonable request, to all
of its properties, books, contracts, commitments and records including, but
not limited to, the corporate, financial and operational records, papers,
reports, instructions, procedures, tax returns and filings, tax settlement
letters, material contracts or commitments, regulatory
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examinations and correspondence and shall allow BARRA to make copies of such
materials (to the extent not legally prohibited) and shall furnish BARRA with
all such information concerning its affairs as BARRA may reasonably request.
GAT shall also cause Sheehan & Company ("Sheehan") to make available to
BARRA, its accountants, counsel and other agents, to the extent reasonably
requested in connection with such review, Sheehan work papers and
documentation relating to its work papers and its audits and reviews of the
books and records of GAT. Documents requested pursuant to this 3.2(l) that
are protected pursuant to confidentiality agreements or are subject to
attorney-client privilege ("GAT Confidential Documents") shall not be subject
to this Section 3.2. Notwithstanding the foregoing, GAT shall disclose to
BARRA the general subject matter of the GAT Confidential Documents, and any
matter therein which would have a material adverse effect on this transaction
or on the business or financial performance of GAT or Innosearch on Schedule
3.2(l). Client files that are protected pursuant to confidentiality
agreements signed with GAT or Innosearch, pursuant to fiduciary obligations
to maintain confidentiality under the Advisers Act (as defined in Section
4.8(a) or are subject to attorney-client privilege shall not be subject to
this Section 3.2(l) ("GAT Confidential Files"). Notwithstanding the
foregoing, GAT and Innosearch shall disclose to BARRA on attached Schedule
3.2(l) the general subject matter of the GAT Confidential Files and any
matter therein which would have a material adverse effect on this transaction.
(m) EMPLOYEE WELFARE BENEFIT PLANS. GAT agrees that GAT's
employee welfare benefit plans, as that term is used in Section 3(l) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), may be
continued or merged into BARRA's welfare benefit plans, on or after the
Closing Date, as determined by BARRA in its sole discretion, subject to
compliance with applicable law and the terms of the plans. Attached hereto
as Schedule 3.2(m) of the GAT Disclosure Statement is a list of all of GAT's
employee welfare benefit plans.
(n) LITIGATION DEVELOPMENTS. GAT and Innosearch agree to promptly
advise BARRA with respect to any and all material legal actions or other
material proceedings or investigations against GAT or such subsidiaries and
to promptly advise BARRA with respect to any significant developments arising
in connection with said actions, proceedings or investigations.
(o) EMPLOYMENT. Neither GAT, Innosearch, nor the GAT
Stockholders, shall solicit any of the officers or directors of BARRA or its
subsidiaries to leave their employment with BARRA or its subsidiaries,
without obtaining the prior written consent of BARRA.
3.3 COVENANTS OF THE PARTIES. Each party shall use its best efforts to
cause its officers, directors, employees, auditors, agents, and attorneys to
cooperate with the other in the reasonable requests for information by the
other parties hereto. In addition, the parties acknowledge and confirm the
terms of a confidentiality letter dated December 26, 1996 between BARRA and
the Updata Group, Inc., and a confidentiality
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letter dated February 4, 1997 between BARRA and GAT which provisions shall
remain in effect in accordance with their terms. Each party shall in good
faith use its commercially reasonable efforts to cause its officers,
directors, employees, auditors, agents and attorneys to cooperate with the
other in negotiations with Yamaichi in an effort to cause Yamaichi to sign
the Innosearch Agreement and the Option Amendment and to participate in the
sale of its Innosearch shares to BARRA under the terms of the Innosearch
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF GAT, INNOSEARCH AND THE GAT STOCKHOLDERS.
(Innosearch is identified separately in these representations and warranties
for clarification only and not by way of limitation; each representation and
warranty made herein by GAT is made equally by Innosearch if the
representation and warranty is relevant and applicable.)
GAT (on behalf of itself and, to the extent applicable, Innosearch) and each
of the GAT Stockholders jointly and severally represents and warrants to
BARRA that except as disclosed to BARRA in writing on a separate disclosure
statement attached hereto (the "GAT Disclosure Statement") which GAT
Disclosure Statement shall be deemed to be representations and warranties to
the appropriately cross-referenced sections as if made hereunder:
4.1 CORPORATE STATUS AND POWER TO ENTER INTO AGREEMENTS. Each of GAT
and Innosearch (i) is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of organization,
(ii) subject to the approval of this Agreement and the transactions
contemplated hereby by the Board of Directors of GAT, GAT has all necessary
corporate power to enter into this Agreement and the Escrow Agreement to
carry out all of the terms and provisions hereof and thereof to be carried
out by it, (iii) is not subject to any order (formal or informal) or
agreement, of the Securities and Exchange Commission ("SEC") or any other
regulatory authority having jurisdiction over its business or any of its
assets or properties, and (iv) is in full compliance with any agreements,
understandings or orders of the SEC or any other regulatory authority having
jurisdiction over its business or any of its assets or properties. GAT and
Innosearch are each duly qualified to do business as a foreign corporation
under the laws of each jurisdiction in which the conduct of its business
requires such qualification or license, and where failure to be so qualified
would have a material adverse effect on it, and each such jurisdiction is set
forth on Schedule 4.1 of the GAT Disclosure Statement.
4.2 EXECUTION AND DELIVERY OF THE AGREEMENT.
(a) The execution and delivery of this Agreement has been duly
authorized by the Board of Directors of GAT and, this Agreement will be duly
and validly authorized by all necessary corporate action on the part of GAT.
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(b) This Agreement has been, and as of the Closing Date the Escrow
Agreement will have been, duly executed and delivered by GAT and (assuming
due execution and delivery by and enforceability against BARRA) constitute
legal and binding obligations of GAT, enforceable in accordance with their
terms, except as enforcement may be limited by applicable bankruptcy laws or
other similar laws effecting creditors' rights generally, and except that the
availability of equitable remedies may be limited.
(c) The execution and delivery by GAT of this Agreement and the
consummation of the transactions described herein (A) do not violate any
provision of the Certificate of Incorporation or Bylaws of GAT or Innosearch,
any provision of federal or state law or any governmental rule or regulation
(assuming (1) receipt of the Government Approvals, (2) receipt of the
requisite GAT Board approval, (3) receipt of appropriate permits or approvals
under applicable federal and state securities laws, and (4) accuracy of the
representations of BARRA set forth herein), and (B) do not require any
consent of any person under, conflict with or result in a breach of, or
accelerate the performance required by any of the terms of any material debt
instrument, lease, license, covenant, agreement or understanding to which GAT
or Innosearch is a party or by which it is bound or any order, ruling,
decree, judgment, arbitration award or stipulation to which GAT or Innosearch
is subject, or constitute a material default thereunder or result in the
creation of any lien, claim, security interest, encumbrance, charge,
restriction or similar right of any third party upon any of the properties or
assets of GAT or Innosearch.
(d) Each GAT Stockholder has now, and will have at the Closing
Date, all requisite legal and (if applicable) corporate, trust or partnership
power to enter into this Agreement, to receive the BARRA Shares in exchange
for GAT Shares hereunder and to perform its obligations under the terms of
this Agreement.
(e) This Agreement when executed and delivered by each GAT
Stockholder will constitute a valid and legally binding obligation of such
GAT Stockholder, enforceable in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy laws or other similar
laws affecting creditors' rights generally, and except that the availability
of equitable remedies may be limited.
4.3 SUBSIDIARIES AND OTHER EQUITY INTERESTS. Except for a 26% equity
interest in Innosearch, GAT does not own, directly or indirectly, any
interest in any other corporation, partnership, association, joint venture or
other business entity.
4.4 CERTIFICATE, BYLAWS, BOOKS AND RECORDS. The copies of the
Certificate of Incorporation and Bylaws of GAT and Innosearch to be delivered
to BARRA prior to the date hereof are complete and accurate copies thereof as
in effect on the date hereof. The minute books of GAT and Innosearch made
available to BARRA contain an accurate record of all resolutions of the Board
of Directors (and committees thereof) and Stockholders of GAT and Innosearch.
The Certificate of Incorporation and Bylaws of
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GAT and Innosearch and all amendments thereto have been duly approved by all
requisite corporate action and by the appropriate regulatory authority to the
extent required by law and each Certificate of Incorporation has been duly
filed with all appropriate governmental agencies.
4.5 COMPLIANCE WITH LAWS, REGULATIONS AND DECREES. GAT and Innosearch
each (i) has the corporate power to own or lease its properties and to
conduct its business as currently conducted, (ii) has complied with, and is
not in default of any laws, regulations, ordinances, orders or decrees
applicable to the conduct of its business and the ownership of its
properties, other than where such noncompliance or default is not likely to
result in a material limitation on the conduct of its business or is not
likely to otherwise have a material adverse effect on GAT or Innosearch taken
as a whole, (iii) has not failed to file with the proper federal, state,
local or other authorities any material report or other document required to
be so filed, (iv) has all material approvals, authorizations, consents,
licenses, clearances and orders of, and has currently effective all
registrations with, all governmental and regulatory authorities which are
necessary to the business and operations of GAT and Innosearch as now being
conducted, and (v) has received no notification, formally or informally, from
any agency or department of any federal, state or local government or any
regulatory agency or the staff thereof (A) asserting that GAT or Innosearch
is not in material compliance with any of the statutes, regulations or
ordinances which such government or regulatory authority enforces, or (B)
threatening to revoke any licenses, franchise, permit or governmental
authorization of GAT or Innosearch.
4.6 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of GAT
consists of one thousand five hundred (1,500) shares of GAT Common Stock,
without par value, of which eight (8) shares are duly authorized, validly
issued, fully paid, nonassessable and currently outstanding. Said stock has
been issued in compliance with all applicable registration or qualification
provisions of state and federal securities laws. On January 19, 1995, GAT
granted the Yamaichi Option, as described in Section 1.4 hereof. The Yamaichi
Option was issued in compliance with all applicable registration or
qualification provisions of state and federal securities laws. Other than as
set forth in this subsection, there are no outstanding (i) options, agreements,
calls or commitments of any character which would obligate GAT to issue, sell,
pledge, assign or otherwise encumber or dispose of, or to purchase, redeem or
otherwise acquire, any GAT Common Stock or any other equity security of GAT, or
(ii) warrants or options relating to, rights to acquire, or debt or equity
securities convertible into, GAT Shares of GAT Common Stock or any other equity
security of GAT.
(b) The authorized capital stock of Innosearch consists of ten
thousand (10,000) shares of Innosearch Common Stock, ten cents ($.10) par value
per share, of which eight hundred seventy (870) shares are duly authorized,
validly existing, fully paid, and nonassessable and currently outstanding. Such
stock has been issued in
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compliance with all applicable registration or qualification provisions of
state and federal securities laws. No other securities of Innosearch are
outstanding. Attached hereto on Schedule 4.6 of the GAT Disclosure Statement
is a list as of the date of this Agreement of (i) all stockholders of GAT,
and (ii) all holders of options or other GAT securities, and (iii) all
stockholders of Innosearch and their respective number of shares owned and
percentage of ownership in GAT and Innosearch.
4.7 FINANCIAL STATEMENTS.
(a) GAT has delivered to BARRA true and correct copies of
consolidated statements of income, changes in stockholders' equity and
statements of cash flows for the fiscal years ended March 31, 1996, 1995 and
1994, and consolidated balance sheets at March 31, 1996, 1995 and 1994. Such
consolidated financial statements have been audited by Sheehan & Company as
independent public accountants for GAT during the relevant periods, and
include or shall include an opinion of such accounting firm to the effect
that such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP") and present fairly, in all material respects,
the consolidated financial position, results of operations and cash flows of
GAT at the dates indicated and for the periods then ending. The opinion of
such accounting firm does not and shall not contain any qualifications. Such
consolidated financial statements for the fiscal years ended March 31, 1994,
1995 and 1996 have been reviewed by Sheehan & Company and have been prepared
in accordance with GAAP and present fairly, in all material respects, the
consolidated financial position, results of operation and cash flows of GAT
at the dates indicated and for the periods then ending.
(b) GAT has delivered to BARRA true and correct copies of
unaudited consolidated statements of income, for the one-month periods from
April 30, 1996 through December 31, 1996 and unaudited consolidated balance
sheet at December 31, 1996. From the date hereof through the Closing Date,
GAT will continue to prepare unaudited consolidated financial statements on a
monthly basis and will deliver the same to BARRA no later than 30 days after
the end of each month. All such unaudited monthly consolidated financial
statements have been prepared in accordance with GAAP and present fairly, in
all material respects, the consolidated financial position, results of
operation and cash flows of GAT at the dates indicated and for the periods
then ending subject to normal year-end adjustments, and the absence of
certain notes thereto none of which will be material.
(c) GAT has delivered or shall deliver to BARRA true and complete
copies of GAT's communications which were sent jointly to both stockholders
and optionholders during the last three years.
4.8 GOVERNMENT REGULATION.
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(a) GAT is and has been since April 18, 1991, duly registered as
an investment adviser under the Investment Advisers Act of 1940 (the
"Advisers Act"). Innosearch has not been registered as an investment adviser
under the Advisers Act, is not required to so register, and has obtained a
No-Action Letter from the Securities and Exchange Commission, dated August
13,1985, concerning it's failure to so register, a copy of which is attached
hereto as Schedule 4.8 (a)A. GAT is registered as an investment adviser in
the states referenced in item 7, Part I of each respective current Form ADV
and is in compliance with all state laws requiring registration, licensing or
qualification as an investment adviser. Each such registration is in full
force and effect. GAT has delivered to BARRA a true and complete copy of its
Forms ADV and the Form ADV for Innosearch, as amended to date, filed by GAT
and Innosearch with the SEC since January 1, 1993; copies of all state
registration forms, likewise as amended to date have been made available to
BARRA; and copies of all current reports required to be kept by GAT and
Innosearch pursuant to the Advisers Act and rules promulgated thereunder, and
required pursuant to applicable state statutes have been made available to
BARRA. The information contained in such forms and reports was true and
complete at the time of filing in all material respects. GAT and Innosearch
have filed all amendments required to be filed to its Form ADV and state
registration forms under federal and state law. Each of GAT and Innosearch
have filed all reports required to be filed by it under the Exchange Act
(including Sections 13(d), (f) and (g) thereof) and rules promulgated
thereunder and all applicable state laws and regulations. All filings
required to be made by GAT and Innosearch as described in this Section 4.8
are hereafter referred to as the "GAT SEC Documents." Attached hereto as
Schedule 4.8(a)B of the GAT Disclosure Statement is a schedule which
identifies the examination and/or certification qualifications of each
adviser representative of GAT and Innosearch. The GAT SEC Documents comply
in all material respects with the applicable requirements of the 1940 Acts,
and none of the GAT SEC Documents contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading except to the extent
corrected by a subsequently filed GAT SEC Document. To the extent financial
statements are required in the GAT SEC Documents, such financial statements
of GAT and/or Innosearch included in the GAT SEC Documents comply as to form
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by the rules
and regulations of the SEC) and fairly present the financial positions of GAT
and Innosearch as at the dates thereof and the consolidated results of their
operations and changes in financial position for the periods then ended
(subject in the case of unaudited statements, to normal recurring audit
adjustments).
(b) Neither GAT nor Innosearch is an "investment company" within
the meaning of the Investment Company Act of 1940 (the "Company Act"), which
is required to be registered under the Company Act in order to engage in the
transactions
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described in Section 7 of that Act. Neither GAT nor Innosearch is a "broker"
or "dealer" within the meaning of the Exchange Act. Copies of all inspection
reports or similar documents furnished to GAT and/or Innosearch by the SEC or
state regulatory authorities since January 1, 1993, are listed on Schedule
4.8(b) of the GAT Disclosure Statement and copies thereof have been provided
to BARRA. GAT is not required to disclose any information to clients under
Rule 206(4)-4 promulgated under the Advisers Act.
(c) Except with respect to the entities listed on Schedule
4.8(c)(A) of the GAT Disclosure Statement attached hereto (each a "Fund" and
collectively the "Funds"), neither GAT nor Innosearch acts as investment
adviser or subadviser to any "investment company," as defined in the Company
Act, which is registered under such Act. Each of GAT and Innosearch has a
written investment advisory agreement with each Fund pursuant to which GAT or
Innosearch serves as investment adviser to each Fund and has delivered to
BARRA true and complete copies of such agreements; attached hereto as
Schedule 4.8(c)(B) of the GAT Disclosure Statement is a list of all such
agreements. Each such agreement is in full force and effect, neither GAT nor
Innosearch is in default thereunder and to the best knowledge of GAT, no Fund
that is a party thereto is in default thereunder.
(d) Neither GAT nor Innosearch nor any other "interested person"
of GAT as such term is defined in the Advisers Act, receives or is entitled
to receive any compensation directly or indirectly (a) from any person in
connection with the purchase or sale of securities or other property to, from
or on behalf of any of the Funds, other than bona fide ordinary compensation
as principal underwriter for the Funds or (b) from the Funds or its
Stockholders for other than bona fide investment advisory services, or other
services.
4.9 CODE OF ETHICS. GAT has adopted a formal code of ethics as part of
its employee manual, a true, complete and accurate copy of which has been
provided to BARRA. The policies of GAT with respect to avoiding conflicts of
interest are as set forth in its Form ADV, as amended, which have been
delivered to BARRA. There have been no material instances of non-compliance
with such policies since their adoption, except as listed on the GAT
Disclosure Statement.
4.10 TAX RETURNS. Each of GAT and Innosearch have timely filed all
federal, state, county, local and foreign tax returns required to be filed by
it, including without limitation, estimated tax, use tax, excise tax, real
property and personal property tax reports and returns, employer's
withholding tax returns, other withholding tax returns and Federal
Unemployment Tax Returns, and all other reports or other information required
or requested to be filed by it, and each such return, report or other
information was, when filed, complete and accurate in all material respects.
Each of GAT and Innosearch have paid all taxes, fees and other governmental
charges, including any interest and penalties thereon, when they have become
due and payable, except those that are being contested in good faith, which
contested matters are identified and
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described on Schedule 4.10 of the GAT Disclosure Statement attached hereto.
Neither GAT nor Innosearch has given any currently effective waivers
extending the statutory period of limitation applicable to any tax return
required to be filed by it for any period. There are no claims pending
against GAT or Innosearch for any alleged deficiency in the payment of any
taxes, and no pending or threatened audits, investigations or claims for
unpaid taxes or relating to any liability in respect of any taxes. GAT has
delivered to BARRA all of its and Innosearch's tax returns with respect to
taxes payable to the United States of America and the State of New York for
fiscal years ended March 31, 1996, 1995, 1994, 1993 and 1992.
4.11 MATERIAL ADVERSE CHANGE. Since December 31, 1996, there has been
(i) no adverse change which is material to the business, assets, licenses,
permits, franchises, results of operations or financial condition of GAT
(whether or not in the ordinary course of business), (ii) no change in any of
the assets, licenses, permits or franchises of GAT or Innosearch or that has
had or to GAT's knowledge can reasonably be expected to have a material
adverse effect on any of the items listed in clause 4.8 above, (iii) no
damage, destruction or other casualty loss (whether or not covered by
insurance) that has had or can reasonably be expected to have a material
adverse effect on any of the items listed in clause 4.8 above, (iv) no
amendment, modification, or termination of any existing, or entering into of
any new, contract, agreement, plan lease, license, permit or franchise that
is material to the business, financial condition, assets, liabilities or
operations of GAT or Innosearch taken as a whole, except in the Ordinary
Course of Business; (v) no disposition by GAT or Innosearch of one or more
assets that, individually or in the aggregate, are material to GAT or
Innosearch except sales of assets in the Ordinary Course of Business.
4.12 NO UNDISCLOSED LIABILITIES. Except for items for which reserves
have been established in the audited consolidated balance sheets of GAT as of
March 31, 1996, and listed on Schedule 4(l) of the GAT Disclosure Statement
attached hereto, since such date neither GAT nor Innosearch has incurred or
discharged, and is not legally obligated with respect to, any indebtedness,
liability (including, without limitation, a liability arising out of an
indemnification, guarantee, hold harmless or similar arrangement) or
obligation (accrued or contingent, whether due or to become due, and whether
or not subordinated to the claims of its general creditors), other than as a
result of operations in the Ordinary Course of Business. Neither GAT nor
Innosearch is in default under any outstanding debt obligation. No agreement
pursuant to which any assets have been or will be sold by GAT or Innosearch
entitles the buyer of such assets, unless there is material breach of a
representation or covenant by GAT or Innosearch, to cause GAT or Innosearch
to repurchase such asset or to pursue any other form of recourse against GAT
or Innosearch. Neither GAT nor Innosearch has made nor shall make any
representations or covenants in any such agreement that contained or shall
contain any untrue statement of a material fact or omitted or shall omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which such representations
and/or covenants were made or shall
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be made, not misleading. No cash, stock or other dividend or any other
distribution with respect to the stock of GAT or Innosearch has been
declared, set aside or paid, nor have any GAT Shares of the stock of GAT or
Innosearch been purchased, redeemed or otherwise acquired, directly or
indirectly, by GAT or Innosearch since March 31, 1996.
4.13 PROPERTIES AND LEASES.
(a) Each of GAT and Innosearch has good and marketable title, free
and clear of all liens and encumbrances and the right of possession, subject
to existing leaseholds, to all real properties and good title to all other
tangible property and assets (collectively, the "Real and Tangible
Property"). All Real and Tangible Property is reflected in the GAT
consolidated balance sheet as of March 31, 1996 (except property held as
lessee under leases entered into since March 31, 1996 and as set forth on
Schedule 4.13(a) of the GAT Disclosure Statement attached hereto and except
personal property sold or otherwise disposed of since March 31, 1996 in the
Ordinary Course of Business). All tangible properties of GAT and Innosearch
conform in all material respects with all applicable ordinances, regulations
and zoning laws. All material tangible properties of GAT and Innosearch are
in a good state of maintenance and repair and are adequate for the current
business of GAT and Innosearch. No properties of GAT or Innosearch, and no
properties in which they hold a collateral or contingent interest or purchase
option, are the subject of any pending or threatened investigation, claim or
proceeding relating to the use, storage or disposal on such property of or
contamination of such property by any toxic or hazardous waste material or
substance. Neither GAT nor Innosearch owns, possesses or has a collateral or
contingent interest or purchase option in any properties or other assets
which contain or have located within or thereon any hazardous or toxic waste
material or substance unless the location of such hazardous or toxic waste
material or other substance or its use thereon conforms in all material
respects with all federal, state and local laws, rules, regulations or other
provisions regulating the discharge of materials into the environment. As to
any asset not owned or leased by GAT and/or Innosearch, neither GAT nor
Innosearch has controlled, directed or participated in the operation or
management of any such assets or any facilities or enterprise conducted
thereon, such that it has become an owner or operator of such asset under
applicable environmental laws.
(b) All properties held by GAT and/or Innosearch under leases are
held under valid, binding and enforceable leases, assuming such leases have
been duly authorized by all necessary corporate action on the part of the
other parties to such leases, with such exceptions as are not material and do
not interfere with the conduct of the business of GAT or Innosearch, and GAT
and Innosearch each enjoys quiet and peaceful possession of such leased
property. A list of each property held by GAT and/or Innosearch under lease
is attached hereto as Schedule 4.13(a) of the GAT Disclosure Statement.
Neither GAT nor Innosearch is in default in any material respect under any
material lease, agreement or obligation regarding its properties to which it
is a party or by which it is bound.
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(c) None of GAT's and/or Innosearch's rights and obligations under
the leases referred to in Section 4.13(b) above require the consent of any
other party to the transaction contemplated by this Agreement. Where such
consent is required, GAT shall use all commercially reasonable efforts to
obtain, prior to the Closing Date, the consent of all parties to any such
transactions.
4.14 PATENTS, COPYRIGHTS, TRADEMARKS. Each of GAT and Innosearch has
exclusive right, title and interest in and to, or adequate licenses, rights,
purchase options, assignments and/or releases with respect to the foregoing,
all of the intangible property, including all patents, trademarks, service
marks, trade names, copyrights, trade secrets and other proprietary rights
(collectively, "Proprietary Rights"), necessary for its business as now
conducted and as currently proposed to be conducted, and neither GAT nor
Innosearch has received any notice or claim of, nor does it have any
knowledge of, any infringement or misappropriation by GAT or Innosearch of
the asserted rights of others. All assignments and agreements relating to
Proprietary Rights to which GAT and/or Innosearch is a party constitute
legal, valid and binding obligations of the respective parties thereto and
are enforceable in accordance with their respective terms, assuming such
assignments and agreements have been duly authorized by all necessary
corporate action on the part of the other parties to such assignments and
agreements, and except as limited by bankruptcy and other laws of general
application affecting the rights and remedies of creditors generally and
except insofar as the availability of equitable remedies may be limited.
Neither GAT nor Innosearch is aware of any material infringement or
misappropriation by others of any of its Proprietary Rights. Each of GAT and
Innosearch and have taken all steps necessary to establish and maintain its
ownership of or interest in the Proprietary Rights. Attached hereto as
Schedule 4.14 of the GAT Disclosure Statement is a true and correct list for
each of GAT and Innosearch of all material: (i) Proprietary Rights
(excluding trade secrets); (ii) registrations and applications for GAT's
and/or Innosearch's copyrights and trademarks; (iii) the trademarks under
which, and the countries in which, GAT and/or Innosearch sells or intends to
sell products; (iv) all availability searches conducted for GAT's or
Innosearch's trademarks; and (v) all Office Actions issued by the U.S. Patent
and Trademark Office and any equivalent office outside the U.S. relating to
GAT's or Innosearch's trademarks. The material products and processes in
which GAT and/or Innosearch claim trade secret protection have been
independently disclosed in writing to BARRA as of the date hereof. GAT has
independently developed its Decision and Precision products and all of the
other GAT Proprietary Rights listed on Schedule 4.14 and none of such
products or Proprietary Rights infringes any rights of any third party
(including, without limitation, Innosearch or the GAT Optionholder). GAT has
exclusive right, title and interest in and to its Decision and Precision
products, and may develop, market, license and otherwise use its Decision and
Precision products without payment of any royalties or fees to any third
parties (including, without limitation, Innosearch or the GAT Optionholder).
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4.15 MATERIAL CONTRACTS. Except as set forth on Schedule 4.15 of the
GAT Disclosure Statement attached hereto, neither GAT nor Innosearch is a
party to or bound by any contract or other agreement made in the Ordinary
Course of Business which involves aggregate future payments by or to it of
$50,000 or more, and which is made for a fixed period expiring more than one
year from the date hereof, and neither GAT nor Innosearch is a party to or
bound by any agreement not made in the Ordinary Course of Business which is
to be performed at or after the date hereof. Each of the contracts and
agreements disclosed to BARRA pursuant to this Section 4.15 is a legal and
binding obligation of GAT or an Innosearch (subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
applicability), and no material breach or default by GAT or Innosearch, to
the best of GAT's knowledge, exists with respect thereto. No power of
attorney or similar authorization given directly or indirectly by GAT or
Innosearch is currently outstanding.
4.16 EMPLOYMENT CONTRACTS AND BENEFITS.
(a) Attached hereto as Schedule 4.16 of the GAT Disclosure
Statement is an accurate list setting forth all bonus, incentive
compensation, profit-sharing, pension, retirement, stock purchase, stock
option, deferred compensation, severance, hospitalization, medical, dental,
vision, group insurance, death benefits, disability and other fringe benefit
plans, trust agreements, arrangements and commitments of GAT (including but
not limited to such plans, agreements, arrangements and commitments
applicable to former employees or retired employees, or for which such
persons are eligible), if any. Copies of all such plans, agreements,
arrangements and commitments that are documented and in effect on the date
hereof and any and all contracts of employment in effect on the date hereof
have been delivered to BARRA.
(b) With respect to each employee benefit plan (as defined in
Section 3(3) of ERISA) which is listed on Schedule 4.16 of the GAT Disclosure
Statement and which is subject to the reporting, disclosure and record
retention requirements set forth in the IRC and Part I of Subtitle B of Title
I of ERISA and the regulations thereunder, each of such requirements has been
fully met in all material respects and on a timely basis.
(c) With respect to each employee benefit plan (as defined in
Section 3(3) of ERISA) which is listed on Schedule 4.16 of the GAT Disclosure
Statement and which is subject to Part 4 of Subtitle B of Title I of ERISA,
none of the following now exists or has existed within the six-year period
ending on the date hereof:
(i) Any act or omission constituting a material violation of
Section 402 of ERISA;
(ii) Any act or omission constituting a violation of Section
403 of ERISA;
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(iii) Any act or omission by GAT or any of its subsidiaries,
or by any director, officer or employee thereof, constituting a violation of
Sections 404 and 405 of ERISA;
(iv) To the best of GAT's knowledge, any act or omission by
any other person constituting a violation of Sections 404 or 405 of ERISA;
(v) Any act or omission which constitutes a material
violation of Sections 406 or 407 of ERISA and is not exempted by Section 408
of ERISA or which constitutes a violation of Section 4975(c) of the IRC and
is not exempted by Section 4975(d) of the IRC; or
(vi) Any act or omission constituting a violation of Sections
503, 510 or 511 of ERISA.
(d) All contributions, premiums or other payments due from GAT
and/or Innosearch as of December 31, 1996 to (or under) any plan listed on
Schedule 4.16 of the GAT Disclosure Statement have been fully paid or
adequately provided for on the unaudited financial statements of GAT for the
period ended December 31, 1996. All accruals thereon (including, where
appropriate, proportional accruals for partial periods) have been made in
accordance with GAAP consistently applied on a reasonable basis.
(e) Each plan listed on Schedule 4.16 of the GAT Disclosure
Statement complies in all material respects with all applicable requirements
of (A) the Age Discrimination in Employment Act of 1967, as amended, and the
regulations thereunder and (B) Title VII of the Civil Rights Act of 1964, as
amended, and the regulations thereunder.
(f) Each plan listed on Schedule 4.16 of the GAT Disclosure
Statement complies in all material respects with all applicable requirements
of the health care continuation coverage provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, and the regulations thereunder.
(g) Attached hereto as Schedule 4.16 of the GAT Disclosure
Statement is a list of the names of each director, officer and employee of
each of GAT and Innosearch.
4.17 COMPLIANCE WITH ERISA. GAT has not either maintained or
contributed to an employee pension benefit plan, as defined in Section 3(2)
of ERISA, including multi-employer plans, other than the 401(k) Plan, a true
and accurate copy of which has been provided to BARRA. A summary of the GAT
401(k) Plan is attached hereto as Schedule 4.17 of the GAT Disclosure
Statement. With respect to the 401(k) Plan and its related trust (the
"Trust"), as of the Closing Date, (i) the 401(k) Plan will in all material
respects be (and currently is) in compliance with all the applicable
requirements of Section 401(a) of the IRC, and the Trust will be exempt from
income tax under
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Section 501(a) of the Internal Revenue Code ("IRC"); (ii) the 401(k) Plan
represents the adoption of a standardized prototype plan that received a
favorable opinion letter ("Opinion Letter") from the Internal Revenue Service
("IRS") as to its form dated August 17, 1990; (iii) GAT relies on such
Opinion Letter as authorized under IRS Revenue Procedure 89-9 as support for
the fact that the 401(k) Plan is qualified under section 401(a) of the IRC;
(iv) no contributions have exceeded the limitations set forth in Section 415
of the IRC; (v) all required filings with the IRS, Department of Labor and
any other governmental agencies with respect to the 401(k) Plan and the Trust
for all periods ending at or prior to the Closing Date will have been made on
a timely basis by GAT and the plan administrator; (vi) there shall have been
no material violation of Parts 1 and 4 of Subtitle B of Title I of ERISA or
of Section 4975 of the IRC; and (vii) there shall have been no action, claim
or demand of any kind known to GAT brought or threatened by any potential
claimant or representative of such claimant under the 401(k) Plan or Trust
where GAT may be either (A) liable directly on such action, claim or demand,
or (B) obligated to indemnify any person, group of persons or entity with
respect to such action, claim or demand, unless such action, claim or demand
is covered by adequate reserves reflected in GAT's March 31, 1996 financial
statements or an insurer of GAT has agreed to defend against and pay the
amount of any resulting liability without reservation.
4.18 COLLECTIVE BARGAINING AND EMPLOYMENT AGREEMENTS. GAT does not have
any union or collective bargaining or written employment agreements,
contracts or other agreements with any labor organization or with any member
of management, or any management or consultation agreement not terminable at
will by GAT without liability and no such contract or agreement is under
discussion by management with any group of employees, any member of
management or any other person. Each of GAT's employees is terminable at will
by GAT without liability. There are no material controversies pending
between GAT and any current or former employees, and to the best of GAT's
knowledge, there are no efforts presently being made by any labor union
seeking to organize any of such employees.
4.19 COMPENSATION OF OFFICERS AND EMPLOYEES. Except as set forth on the
Employee List, which has been delivered to BARRA pursuant to Section 3.2(f),
(i) no officer or employee of GAT is receiving aggregate direct remuneration
at a rate exceeding $30,000 per annum, and (ii) except as provided in this
Agreement, the consummation of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional or
further acts or events) result in any additional payment (whether of
severance pay or otherwise) becoming due from GAT or BARRA to any employee of
GAT.
4.20 LEGAL ACTIONS AND PROCEEDINGS. Neither GAT nor Innosearch is a
party to, or threatened with, any legal action or other proceeding or
investigation before any court, any arbitrator of any kind or any government
agency, and to the best of GAT's knowledge, neither GAT nor Innosearch is
subject to any potential adverse claim, the outcome of which could involve
the payment or receipt by GAT or Innosearch of any
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amount in excess of $25,000, or $50,000 for all claims in the aggregate.
There is no labor dispute, strike, slow-down or stoppage pending or, to the
best of the knowledge of GAT, threatened against GAT or Innosearch.
4.21 RETENTION OF BROKER OR CONSULTANT. No broker, agent, finder,
consultant or other party (other than legal, compliance, loan auditors,
accounting advisors, Sheehan and the Updata Group, Inc.) has been retained by
GAT or Innosearch or is entitled to be paid based upon any agreements,
arrangements or understandings made by GAT or Innosearch in connection with
any of the transactions contemplated by this Agreement.
4.22 INSURANCE. GAT is, and has been continuously since January 1,
1993, insured with reputable insurers against all risks normally insured
against by companies similarly situated, and all of the insurance policies
and bonds maintained by GAT are in full force and effect, neither GAT nor
Innosearch is in default thereunder and all material claims thereunder have
been filed in due and timely fashion. In the judgment of the management of
GAT, such insurance coverage is adequate for GAT and Innosearch. Since
December 31, 1996, there has not been any damage to, destruction of, or loss
of any assets of GAT or Innosearch not covered by insurance.
4.23 TRANSACTIONS WITH AFFILIATES. Since December 31, 1996, neither GAT
nor Innosearch has extended credit, committed to extend credit, or
transferred any asset to or assumed or guaranteed any liability of each other
or of the employees, stockholders or directors of GAT or Innosearch, or any
spouse or child of any of them, or to any of their "affiliates" or
"associates" as such terms are defined in Rule 405 under Regulation C of the
Securities Act, except for (i) expenses in the Ordinary Course of Business
not to exceed $5,000 in each individual instance and $10,000 in the aggregate
and (ii) extensions of credit made by GAT and/or Innosearch to each other, as
set forth in Schedule 4.23. All intercompany extensions of credit and other
loans between GAT and Innosearch and their affiliates and associates have
been made with all required consents and approvals. Since December 31, 1996,
neither GAT nor Innosearch has entered into any other transactions with the
employees or directors of GAT or Innosearch or any spouse or child of any of
them, or any of their affiliates or associates.
4.24 TRADING IN BARRA COMMON STOCK. GAT, the GAT Stockholders and
Innosearch severally but not jointly represent that they have not, during the
period constituting twenty (20) trading days prior to the date hereof, either
directly or indirectly, bought or sold, or otherwise effected any trade in
any shares of BARRA Common Stock, or any security derivative of BARRA Common
Stock.
4.25 NO DEPARTING EMPLOYEES. Since December 31, 1996, no employee
listed on Schedule 4.25 on the GAT Disclosure Statement attached hereto has
left the employ of GAT or has given notice to GAT of his or her intention to
leave the employ of GAT nor does GAT have any knowledge that any current
employee who is listed on Schedule 4.25 intends, or more than 10% of all
employees of GAT intend, to leave the employ of GAT, due to the transactions
contemplated by this Agreement or otherwise.
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All employees who since March 31, 1996 were, or as of the Closing Date are,
key to the operations of GAT are listed on Schedule 4.25.
4.26 NO LOSS OF CUSTOMERS. Attached hereto as Schedule 4.26 is a
current list of (i) customers and subscribers of GAT, including products and
services subscribed for each customer and subscriber ("GAT Customers"), (ii)
a list of GAT Customers which, since December 31, 1996, have ceased to be
customers or subscribers of GAT, (iii) a list of GAT Customers which, since
December 31, 1996, have given notice that they will cease to be customers or
subscribers of GAT and (iv) a current list of GAT Customers which GAT has
reason to know may cease to be customers or subscribers of GAT. Since
December 31, 1996 to the date of this Agreement, to the best knowledge of
GAT, neither GAT nor Innosearch has lost any GAT Customers which in the
aggregate accounted, or would have accounted for, five percent (5%) or more
of the gross revenues of GAT for the fiscal year ended March 31, 1997. Since
the date of this Agreement, to the best knowledge of GAT, neither GAT nor
Innosearch has lost any GAT Customers which in the aggregate accounted for,
or would have accounted for, three percent (3%) or more of the gross revenues
of GAT for the fiscal year ended March, 31, 1997.
4.27 COMMUNICATIONS WITH STOCKHOLDERS. Except as disclosed to BARRA on
Schedule 4.27 of the GAT Disclosure Statement, GAT has not made any written
communications addressed solely and jointly to all GAT Stockholders the last
three years.
4.28 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty by GAT, Innosearch or any of the GAT Stockholders, and no statement
by GAT, Innosearch or any of the GAT Stockholders in any certificates,
agreements, schedules or other documents furnished in connection with the
transactions contemplated by this Agreement, contain or will contain any
untrue statement of a material fact or omit or will omit to state any
material fact necessary to make such representation, warranty or statement
not misleading to BARRA; provided however, that information as of a later
date shall be deemed to modify information as of an earlier date.
4.29 PROPOSED BUSINESS COMBINATION. Except with respect to the
transactions contemplated by this Agreement: (i) GAT has not had any
inquiries, discussions, or negotiations, nor has it received any proposals,
letters of intent, term sheets or agreements with any third party, in
connection with any proposed or potential Business Combination, as that term
is defined in Section 3.2(i); (ii) since February 4, 1997, GAT has not
entered into any letter of intent, term sheet or agreement with any third
party or made any public announcement in connection with a proposed,
potential or actual Business Combination; and (iii) to the best of GAT's
knowledge, neither the execution of this Agreement, nor the consummation of
the transactions contemplated hereby, will result in any suit, action,
investigation, claim or proceeding being commenced against BARRA, GAT or
Innosearch, or their respective officers, directors, employees, agents or
subsidiaries, or successors in interest.
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4.30 GAT BALANCE SHEET. GAT shall provide to BARRA a balance sheet and
income statement of GAT and a balance sheet and income statement of
Innosearch dated as of March 31, 1997 (the "3/31/97 Balance Sheets"). The
3/31/97 Balance Sheets shall have been prepared in accordance with GAAP and
present fairly, in all material respects, the consolidated financial position
of GAT and Innosearch at the date indicated, subject to normal year-end
adjustments, and the absence of certain notes thereto, none of which
adjustments or notes will be material.
5. REPRESENTATIONS AND WARRANTIES OF BARRA.
BARRA represents and warrants to GAT that:
5.1 CORPORATE STATUS AND POWER TO ENTER INTO AGREEMENTS. BARRA is a
corporation duly organized, validly existing and in good standing under the
laws of California and, subject to the approval of this Agreement and the
transactions contemplated hereby by the Board of Directors of BARRA, has all
necessary corporate power to enter into this Agreement and the Escrow
Agreement and to carry out all of the terms and provisions hereof and thereof
to be carried out by it.
5.2 CERTIFICATE, BYLAWS, BOOKS AND RECORDS. The copies of the Articles
of Incorporation and Bylaws of BARRA delivered to GAT prior to the date
hereof are complete and accurate copies thereof as in effect on the date
hereof. The Articles of Incorporation and Bylaws of BARRA and all amendments
thereto have been duly approved by all requisite corporate action and said
Articles of Incorporation and all amendments thereto have been duly filed
with the California Secretary of State.
5.3 PROPERTIES. BARRA and each of its subsidiaries each has the
corporate power to own or lease its properties and to conduct its business as
currently conducted.
5.4 BARRA SEC DOCUMENTS. All documents (other than preliminary
material) that BARRA has filed with the SEC since March 31, 1996 and that
BARRA shall file with the SEC after the date hereof ( collectively the
"BARRA SEC documents") pursuant to the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Investment
Advisers Act of 1940, as amended, and the Investment Company Act of 1940
(collectively, the "1940 Acts"), as amended, complied in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act and the 1940 Acts, and none of the BARRA SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading except to the extent corrected by a subsequently filed BARRA SEC
Document. The financial statements of BARRA included in the BARRA SEC
Documents comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with GAAP (except
as may be indicated in
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the notes thereto or, in the case of unaudited statements, as permitted by
the rules and regulations of the SEC) and fairly present the consolidated
financial position of BARRA and its consolidated subsidiaries as at the dates
thereof and the consolidated results of their operation and changes in
financial position for the periods then ended (subject in the case of
unaudited statements, to normal recurring audit adjustments). Except as
disclosed in the BARRA SEC Documents filed prior to the execution of this
Agreement, or except as contemplated by this Agreement or on account of the
transactions contemplated hereby, since the date of the most recent BARRA SEC
Document, there has not been any material adverse change in the results of
operations, financial condition, assets or business of BARRA and its
subsidiaries taken as a whole.
5.5 MATERIAL ADVERSE CHANGE. Other than a change in financial
condition which will result from the consummation of the transactions
contemplated by this Agreement, there has been no material adverse change in
the financial condition, results of operation or assets of BARRA from the
financial condition, results of operation or assets indicated in the
financial statements of BARRA at December 31, 1996, which financial
statements have been heretofore provided to GAT.
5.6 EXECUTION AND DELIVERY OF THE AGREEMENT.
(a) The execution and delivery of this Agreement has been duly and
validly authorized by the Board of Directors of BARRA and this Agreement will
be duly and validly authorized by all necessary corporate action on the part
of BARRA.
(b) This Agreement has been, and as of the Closing Date the Escrow
Agreement will have been, duly executed and delivered by BARRA and (assuming
due execution and delivery by and enforceability against GAT) constitute
legal and binding obligations of BARRA, enforceable in accordance with their
terms, except as enforcement may be limited by applicable bankruptcy laws and
other similar laws affecting creditors' rights generally, and except that the
availability of equitable remedies may be limited.
(c) The execution and delivery by BARRA of this Agreement and the
consummation of the transactions described herein (i) do not and will not
violate any provision of the Articles of Incorporation or Bylaws of BARRA,
any provision of federal or state law or any governmental rule or regulation
(assuming (A) receipt of the Government Approvals, (B) receipt of appropriate
permits or approvals under applicable state securities laws, and (C) accuracy
of the representations and warranties of GAT, Innosearch and the GAT
Stockholders set forth herein and each of the Innosearch Stockholders as set
forth in the Innosearch Agreement), and (ii) do not require any consent of
any person under, conflict with or result in a breach of, or accelerate the
performance required by any of the terms of, any material debt instrument,
lease, license, covenant, agreement or understanding to which BARRA is a
party or by which it is bound or any order, ruling, decree, judgment,
arbitration award or stipulation to which BARRA is subject, or constitute a
material default thereunder or
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result in the creation of any lien, claim, security interest, encumbrance,
charge, restriction or similar right of any third party of any kind
whatsoever upon any of the properties or assets of BARRA.
5.7 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty by BARRA and no statement by BARRA in any certificate, agreement,
schedule or other document furnished in connection with the transactions
contemplated by this Agreement contains or will contain any untrue statement
of material fact or omits or will omit to state any material fact necessary
to make such representation, warranty or statement not misleading to GAT;
PROVIDED, HOWEVER, that information as of a later date shall be deemed to
modify information as of an earlier date.
5.8 CAPITALIZATION. As of March 31, 1997, the authorized capital stock
of BARRA consisted of (i) 40,000,000 shares of common stock, no par value, of
which 8,417,314 shares were issued and outstanding and (ii) 10,000,000 shares
of preferred stock, no par value of which none were issued and outstanding.
As of March 31, 1997, there were 2,200,000 shares of BARRA Common, no par
value, authorized for issuance upon exercise of stock options granted or to
be granted pursuant to the BARRA Stock Option Plan, and options to purchase
1,691,540 shares were outstanding. As of March 31, 1997, there were 30,257
shares of BARRA Common authorized for issuance upon exercise of stock options
granted or to be granted pursuant to the Rogers, Casey & Associates 1992
Stock Option Plan, and options to purchase 25,415 shares were outstanding.
As of March 31, 1997, there were 750,000 shares of Common, no par value
authorized for issuance pursuant to the BARRA, Inc. 1996 Employee Stock
Purchase Plan and 738,478 shares remained available for issuance under that
plan. Pending approval of the shareholders of BARRA at the July 31, 1997
annual meeting, the Board of Directors of BARRA has approved the
authorization of an additional 700,000 shares of BARRA Common for issuance
under the BARRA Stock Option Plan and has also approved the creation of a
Stock Option Plan for the non-employee members of the Board of Directors of
BARRA which will have 100,000 shares of BARRA Common authorized for issuance
upon exercise of stock options granted or to be granted pursuant to the terms
of that plan. Neither of these authorizations will be effective until they
are approved by the Shareholders of BARRA. Other than as set forth in this
subsection or in the BARRA SEC Documents and other than options to purchase
BARRA Common granted since March 31, 1997 under the BARRA Stock Option Plan,
there are no outstanding (i) options, agreements, calls or commitments of any
character which would obligate BARRA to issue, sell, pledge, assign or
otherwise encumber or dispose of, or to purchase, redeem or otherwise
acquire, any BARRA Common Stock or any other equity security of BARRA, or
(ii) warrants or options relating to, rights to acquire, or debt or equity
securities convertible into, shares of BARRA Common Stock or any other equity
security of BARRA.
5.9 DULY AUTHORIZED ISSUANCES. All BARRA Shares will, when issued and
delivered pursuant to and in accordance with the terms of this Agreement, be
duly authorized, validly issued, fully paid and nonassessable.
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5.10 RETENTION OF BROKER OR CONSULTANT. Except for Hambrecht & Quist
LLC, no broker, agent, finder, consultant or other party (other than legal,
compliance, loan auditors and accounting advisors) has been retained by BARRA
or is entitled to be paid based upon any agreements, arrangements or
understandings made by BARRA in connection with any of the transactions
contemplated by this Agreement.
5.11 COMPLIANCE WITH LAWS, REGULATIONS AND DECREES. BARRA (i) has the
corporate power to own or lease all its properties and to conduct its
business as currently conducted, (ii) has complied with, and is not in
default of any laws, regulations, ordinances, orders or decrees applicable to
the conduct of its business and the ownership of its properties, other than
where such noncompliance or default is not likely to result in a material
limitation on the conduct of its business or is not likely to otherwise have
a material adverse effect on BARRA and its subsidiaries taken as a whole,
(iii) has not failed to file with the proper federal, state, local or other
authorities any material report or other document required to be so filed,
(iv) has all material approvals, authorizations, consents, licenses,
clearances and orders of, and has currently effective all registrations with
all governmental and regulatory authorities which are necessary to the
business and operations of BARRA now being conducted, and (v) has received no
notification, formally or informally, from any agency or department of any
federal, state or local government or any regulatory agency or the staff
thereof (A) asserting that BARRA is not in material compliance with any of
the statutes, regulations or ordinances which such government or regulatory
authority enforces, or (B) threatening to revoke any material license,
franchise, permit or governmental authorization of BARRA.
6. INVESTMENT REPRESENTATION.
(a) The BARRA Shares received by the GAT Stockholders and the GAT
Optionholder (collectively, the "GAT Securityholders") pursuant to the terms
of this Agreement (the "Securities") will be acquired for the GAT
Securityholders' own account, not as a nominee or agent, and not with a view
to the distribution of any part thereof.
(b) Each GAT Securityholder has investigated BARRA's business,
management and financial condition, has read the BARRA SEC Documents and has
had access to all information requested pursuant to Section 3.1(h) and to
such other information about BARRA as such GAT Stockholder has deemed
necessary or desirable to reach an informed and knowledgeable decision to
acquire the Securities.
(c) Each GAT Securityholder understands that the Securities have
not been registered under the Securities Act by reason of reliance upon
certain exemptions therefrom, and that the reliance of BARRA on such
exemptions is predicated upon, among other things, the bona fide nature of
each GAT Stockholder's investment intent as expressed herein.
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(d) Each GAT Securityholder is experienced in evaluating and
investing in securities and has made investments in securities other than
those of GAT. Each GAT Stockholder is knowledgeable in business and
financial matters and is capable of evaluating the merits and risks of an
investment in BARRA. Each GAT Stockholder acknowledges that it has the
ability to bear the economic risk of its investment pursuant to this
Agreement.
(e) Each GAT Securityholder understands that the Securities being
purchased hereunder are restricted securities within the meaning of Rule 144
under the Securities Act; that the Securities are not registered and must be
held indefinitely unless they are subsequently registered or an exemption
from such registration is available.
(f) Each certificate representing the Securities when delivered to
the GAT Securityholders at the Closing or upon exercise of the Yamaichi
Option shall be endorsed with the following or substantially similar legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND MAY
NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED (I) IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THESE SECURITIES UNDER THE 1933 ACT, AND AN
EFFECTIVE REGISTRATION OR QUALIFICATION OF THESE SECURITIES FOR
SALE UNDER ANY APPLICABLE STATE SECURITIES LAW; (II) IN THE
ABSENCE OF AN OPINION OF COUNSEL SATISFACTORY TO BARRA, INC. THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED; OR (III)
UNLESS SOLD PURSUANT TO RULE 144 OR OTHER APPLICABLE PROVISIONS OF
THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAW.
Each GAT Securityholder agrees not to attempt any transfer of any such
securities without first complying with the substance of said legend, and agrees
that satisfaction of the issuer may, if BARRA so requests, depend in part upon
an opinion of counsel reasonably acceptable in form and substance to the issuer,
or equivalent evidence. Each of the undersigned GAT Securityholders
acknowledges, without limitation, that the foregoing agreement and
representation shall apply to BARRA Shares delivered to such person as a result
of the Closing.
7. REGISTRATION RIGHTS.
7.1 DEFINITIONS. As used in this Section 7, the following terms shall
have the following respective meanings:
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(a) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
SEC thereunder, all as the same may be in effect at that time;
(b) "HOLDER" means any person who holds outstanding Registrable
Securities which have not been sold to the public, but only if such person is
a GAT Stockholder as of the Closing Date.
(c) "REGISTER", "REGISTERED" and "REGISTRATION" mean a
registration effected through the preparation and filing of a registration
statement or similar document in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement or
document;
(d) "REGISTRABLE SECURITIES" means (i) any and all shares of BARRA
Common Stock issued upon sale of the GAT Shares pursuant to this Agreement;
and (ii) any and all shares of BARRA Common Stock issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange
for or in replacement of, such BARRA Common Stock; PROVIDED, HOWEVER, that
(a) shares of BARRA Common Stock which are Registrable Securities shall cease
to be Registrable Securities upon the consummation of any sale of such BARRA
shares pursuant to a registration statement or Rule 144 under the Securities
Act; and (b) shares of BARRA Common Stock which are eligible to be sold by
the holder thereof under Rule 144(k) under the Securities Act without
numerical or dollar-value limitation shall cease to be Registrable Securities
(BARRA shares received by the GAT Securityholders pursuant to this Agreement
with numerical or dollar-value limitations shall cease to be Registrable
Securities at such times and in such dollar amounts as such BARRA shares
qualify for sale under Rule 144(e)).
(e) "REGISTRATION EXPENSES" means all expenses incurred by BARRA
in effecting any registration pursuant to this Agreement, including, without
limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for BARRA, blue sky
fees and expenses, and the expense of any special audits incident to or
required by any such registration.
(f) "SECURITIES ACT" means the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
SEC thereunder, all as the same may be in effect at that time;
(g) "SELLING EXPENSES" means all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered
by the Holders.
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7.2 BARRA REGISTRATION.
(a) NOTICE OF REGISTRATION. If, at any time or from time to time
BARRA shall determine to register any of its securities for its own account
in connection with an offering of its securities to the general public for
cash on a form which would permit the registration of Registrable Securities,
BARRA will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, the Registrable Securities specified in a
written request or requests (subject to Section 7.3 below), made within
twenty (20) days after mailing or personal delivery of such written notice
from BARRA by any Holders.
7.3 UNDERWRITING. If the registration of which BARRA gives notice is
for a registered public offering involving an underwriting, BARRA shall so
advise the Holders as a part of the written notice given pursuant to Section
7.2(a)(i). In such event, the right of any Holder to registration pursuant
to this Section 7 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with
BARRA) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by BARRA.
Notwithstanding any other provision of this Section 7, if the underwriter
determines that marketing factors require a limitation of the number of BARRA
shares to be underwritten, the underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting,
or may exclude Registrable Securities entirely from such registration and
underwriting. In such event BARRA shall so advise all Holders whose
securities would otherwise be registered and underwritten pursuant hereto,
and the number of BARRA shares of Registrable Securities that may be included
in the registration and underwriting shall be allocated among all Holders in
proportion, as nearly as practicable, to the respective amounts of
Registrable Securities entitled to inclusion in such registration held by
such Holders at the time of filing the registration statement. If any Holder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to BARRA and the underwriter provided on or
before ten (10) days prior to the filing of the registration statement. Any
securities excluded or withdrawn from such underwriting shall be withdrawn
from such registration and shall not be transferred in a public distribution
prior to 180 days after the Closing Date of the registration statement
relating thereto.
7.4 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with registrations, filings, qualifications or compliance pursuant
to this Section 7 shall be borne by BARRA, and unless otherwise stated, all
Selling Expenses relating to
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securities registered by the Holders shall be borne by the holders of such
securities pro rata on the basis of the number of BARRA shares of such
holders so registered.
7.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of BARRA to take any action pursuant to this Section 7 that the
selling Holders shall furnish to BARRA such information regarding themselves,
the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
7.6 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 7:
(a) To the extent permitted by law, BARRA will indemnify and hold
harmless each Holder, against any losses, claims, damages or liabilities
(joint or several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of
or are based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (ii) the 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 BARRA of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act, other applicable law or any state securities law in
each case to the extent (and only to the extent) that such violation occurs
in reliance upon and in conformity with statements and materials contained in
the registration statement filed with the SEC relating to such registration
including any preliminary prospectus or final prospectus contained therein;
and BARRA will reimburse each such Holder, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; PROVIDED, HOWEVER, that the
indemnity agreement contained in this Section 7.6(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of BARRA (which
consent shall not be unreasonably withheld), nor shall BARRA be liable in any
such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such person are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify and hold harmless BARRA, each of its directors and officers, each
legal counsel and independent accountant of BARRA, each person, if any, who
controls BARRA within the meaning of the Securities Act, each underwriter
(within the meaning of the Securities Act) of
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BARRA's securities covered by such a registration statement, and any other
Holder selling securities in such registration statement against any losses,
claims, damages, or liabilities (joint or several) to which BARRA, its
directors, officers or controlling persons, any such legal counsel or
independent accountant of BARRA, or any such underwriter, or other Holder may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration, and each such
Holder will reimburse any legal or other expenses reasonably incurred by
BARRA, its officers, directors, or controlling persons or any such
underwriter or other Holder in connection with investigating or defending any
such loss, claim damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 7.6(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 7.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 7.6,
notify the indemnifying party in writing of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
shall have the right to retain its own counsel, with the fees and expenses to
be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure of any indemnified party to notify an indemnifying
party within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of liability to the indemnified party under this Section
7.6 only to the extent that such failure to give notice shall materially
prejudice the indemnifying party in the defense of any such claim or any such
litigation, but the omission so to notify the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 7.6.
7.7 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that it
will not, to the extent requested by BARRA and an underwriter of BARRA Common
Stock (or other securities) of BARRA sell or otherwise transfer or dispose of
any Registrable Securities, except BARRA Common Stock included in such
registration, during the one hundred eighty (180) day period following the
Closing Date of any registration
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statements of BARRA filed under the Securities Act. In order to enforce the
foregoing covenant, BARRA may impose stop-transfer instructions with respect
to the Registrable Securities of each Holder (and the GAT Shares or
securities of every other person subject to the foregoing restriction) until
the end of such 180-day period.
8. CONDITIONS TO THE OBLIGATIONS OF BARRA.
The obligations of BARRA under this Agreement are, at its option, subject
to fulfillment at or prior to the Closing Date of each of the following
conditions; PROVIDED, HOWEVER, that any one or more of such conditions may be
waived in writing by BARRA at any time at or prior to the Closing Date; AND
PROVIDED FURTHER, that each certificate, document, opinion or other writing,
including the GAT Disclosure Statement, required to be delivered by the parties
at the Closing, shall be provided at least five (5) days prior to the scheduled
Closing:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of GAT and the GAT Stockholders in Sections 4 and 6 hereof shall be true and
correct in all material respects on the date hereof and as of the Closing
Date, with the same effect as though such representations and warranties had
been made on and as of such date except as to any representation or warranty
which specifically relates to a specified date, and the representations and
warranties shall not contain any material inaccuracies or omissions the
circumstances as to which either individually or in the aggregate have, or
reasonably could be expected to have, a material adverse effect on GAT or
Innosearch.
8.2 COMPLIANCE AND PERFORMANCE UNDER AGREEMENT. GAT, and each GAT
Stockholder shall have performed and complied in all material respects with
all terms of this Agreement required to be performed or complied with by it
at or prior to the Closing Date, including, without limitation, each of the
covenants set forth in Section 3.2
8.3 MATERIAL ADVERSE CHANGE. Except as disclosed to BARRA in writing
prior to the date hereof, no materially adverse change shall have occurred
since December 31, 1996, in the business, financial condition or results of
operations of GAT and Innosearch taken as a whole, and neither GAT nor
Innosearch shall be a party to or threatened with, any legal action or other
proceeding before any court, any arbitrator of any kind or any government
agency if, in the reasonable judgment of BARRA, such legal action or
proceeding could materially adversely affect GAT and Innosearch, taken as a
whole, or the business, financial condition, results of operations or
prospects of GAT and all of GAT's subsidiaries taken as a whole.
8.4 GAT STOCKHOLDERS. All GAT Stockholders shall be parties to this
Agreement and, at the Closing, BARRA shall acquire 100% of the outstanding
capital stock of GAT.
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8.5 OFFICER'S CERTIFICATE. BARRA shall have received a certificate,
dated the Closing Date, signed on behalf of GAT by its Treasurer and by its
Chief Executive Officer, to the effect that the conditions in this Section
8.1, 8.2, 8.3, 8.4, 8.6, 8.7, 8.8, 8.9, 8.11, 8.13, 8.14, 8.15, (to be best
of GAT's knowledge) and 8.16 have been satisfied.
8.6 GAT BOARD OF DIRECTORS. Immediately upon closing, all of the
members of the Board of Directors of GAT shall submit a letter of
resignation, effective as of the Closing Date.
8.7 NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the stock purchase shall be in
effect.
8.8 GOVERNMENT APPROVALS. All Government Approvals shall be in effect,
and all conditions or requirements prescribed by law or by any such
Government Approval shall have been satisfied; PROVIDED, HOWEVER, that no
Government Approval shall be deemed to have been received if it shall require
the divestiture or cessation of any of the present businesses or operations
conducted by either of the parties hereto or shall impose any other condition
or requirement, which divestiture, cessation, condition or requirement BARRA,
in its reasonable judgment shall deem to be materially burdensome (in which
case BARRA shall promptly notify GAT). For purposes of this Agreement no
condition shall be deemed to be "materially burdensome" if such condition
would not (a) require the taking of any action materially inconsistent with
the manner in which BARRA or GAT has conducted its business previously, (b)
have a material adverse effect upon the business, financial condition or
results of operations of BARRA or GAT, or (c) preclude satisfaction of any of
the material conditions to consummation of the transactions contemplated by
this Agreement.
8.9 EXPENSES. On or before the date hereof, all attorneys,
accountants, consultants, investment bankers and other advisors and agents
for GAT and Innosearch shall have submitted to GAT (with a copy to BARRA)
estimates of and all invoices for their fees and expenses (including, but not
limited to, legal, accounting and financial advisory expenses) for all
services rendered in any respect in connection with the transactions
contemplated hereby, (collectively, the "GAT Expenses"). Based on such GAT
Expenses, GAT and Innosearch shall have prepared and submitted to BARRA on
the date hereof a summary of such fees and expenses as of the date hereof
(the "Expense Summary"). At least five (5) business days prior to the
Closing Date, such advisors shall have submitted their final bills for such
fees and expenses to GAT for services rendered, with a copy to be delivered
to BARRA, and based on such summary, GAT shall have prepared and submitted to
BARRA a final Expense Summary dated as of the Closing Date.
8.10 CLOSING DOCUMENTS. BARRA shall have received such certificates and
other closing documents as counsel for BARRA shall reasonably request.
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8.11 CONSENTS. GAT shall have received, or BARRA shall have satisfied
itself that GAT will receive, all consents of other parties to and required
by all material mortgages, notes, leases, franchises, agreements, licenses
and permits applicable to GAT and Innosearch, including, without limitation,
any consents required pursuant to the Advisers Act or Company Act and for any
mortgages, notes, leases, franchises, agreements, licenses and permits listed
on the Schedules 4.2(c)(B) and 4.15 of the GAT Disclosure Statement for GAT
or Innosearch, in each case in form and substance reasonably satisfactory to
BARRA, and no such consent or license or permit shall have been withdrawn or
suspended.
8.12 INNOSEARCH TRANSACTION. BARRA and the shareholders of Innosearch
(except Yamaichi) shall have entered into a Stock Purchase Agreement
substantially similar to this Agreement (the "Innosearch Agreement"), except
that the Purchase Price, BARRA Common Stock granted and the Cash
Consideration shall be as set forth in the Innosearch Agreement.
8.13 EMPLOYEE AGREEMENTS. Each employee of GAT shall have executed an
agreement regarding confidentiality and proprietary information, and an
agreement that their employment is terminable at will, the form of which will
be established by the mutual agreement of the parties and attached hereto as
EXHIBIT A at the Closing. Each of Thomas Ho and Mark Wainger shall have
entered into employment and non-competition agreements with BARRA in the form
that will be established by the mutual agreement of the parties and attached
hereto as EXHIBIT B at the closing.
8.14 OPINION OF COUNSEL. GAT shall have delivered to BARRA an opinion
of counsel in the form that will be established by the mutual agreement of
the parties and attached hereto as EXHIBIT C at the Closing.
8.15 THIRD PARTY ACTIONS. No suit, action, investigation, claim or
proceeding has commenced or to the best knowledge of GAT is to be commenced
by any party based in whole or in part on an argument or assertion that
BARRA, due to this Agreement, the negotiations leading up to this Agreement,
or related agreements or activities, interfered or is interfering with any
contractual relations of GAT or Innosearch or any party with whom GAT or
Innosearch is, or has been, or may be engaged in business discussions.
8.16 THE 3/31/97 BALANCE SHEETS. GAT shall have delivered to BARRA the
3/31/97 Balance Sheets, required to be delivered to BARRA pursuant to Section
4.30.
8.17 OPTION AMENDMENT. BARRA, GAT and Yamaichi shall have executed and
delivered the Option Amendment.
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9. CONDITIONS TO THE OBLIGATIONS OF GAT AND THE GAT STOCKHOLDERS.
The obligations of GAT and the GAT Stockholders under this Agreement are
subject to the fulfillment at or prior to the Closing Date of each of the
following conditions; PROVIDED, HOWEVER, that any one or more of such
conditions may be waived in writing by GAT or by a majority in interest of
the GAT Stockholders at any time prior to the Closing Date; AND PROVIDED
FURTHER, that each certificate, document, opinion or other writing required
to be delivered by the parties at the Closing shall be provided at least five
(5) days prior to the Closing:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of BARRA in Section 5 hereof shall be true and correct in all material
respects on the date hereof and as of the Closing Date, with the same effect
as though such representations and warranties had been made on and as of such
date except as to any representation or warranty which specifically relates
to a specified date and does not contain any inaccuracies or omissions the
circumstances as to which either individually or in the aggregate have, or
reasonably could be expected to have, a material adverse effect on BARRA.
9.2 COMPLIANCE AND PERFORMANCE UNDER AGREEMENT. BARRA and its
subsidiaries shall have performed and complied in all material respects with
all of the terms of this Agreement required to be performed or complied with
by them at or prior to the Closing Date.
9.3 MATERIAL ADVERSE CHANGE. No materially adverse change shall have
occurred since December 31, 1996, in the business, financial condition,
results of operations or properties of BARRA and its subsidiaries taken as a
whole, and BARRA shall not be engaged in, or a party to or so far as BARRA is
aware, threatened with, and to BARRA's knowledge there is no reasonable basis
for, any legal action or other proceeding before any court, any arbitrator of
any kind or any government agency which, in the reasonable judgment of GAT,
could materially adversely affect BARRA or its business, financial
conditions, results of operations or assets taken as a whole.
9.4 OFFICERS CERTIFICATE. GAT shall have received a certificate, dated
the Closing Date, signed on behalf of BARRA by its President or Chief
Executive Officer and Chief Financial Officer or Treasurer, certifying to the
fulfillment of the conditions stated in Sections 9.1, 9.2, 9.3, 9.5 9.6 (to
the best of BARRA's knowledge), 9.8, and 9.10.
9.5 OPINION OF COUNSEL. BARRA shall have delivered to GAT an opinion
of its counsel in a form that will be established by the mutual agreement of
the parties and attached hereto as EXHIBIT D at the closing.
9.6 THIRD PARTY ACTIONS. No suit, action, investigation, claim or
proceeding has commenced or to the best knowledge of BARRA is to be commenced
by any party based in whole or in part on an argument or assertion that GAT
and/or Innosearch, due
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to this Agreement, the negotiations leading up to this Agreement, or related
agreements or activities, interfered or is interfering with any contractual
relations of BARRA or any party with whom BARRA is, or has been, or may be
engaged in business discussions.
9.7 CLOSING DOCUMENTS. GAT shall have received such certificates and
other closing documents including the employment and non-competition
agreements executed on behalf of BARRA provided in Section 8.13 as counsel
for GAT shall reasonably request.
9.8 NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the stock purchase shall be in
effect.
9.9 INNOSEARCH TRANSACTION. BARRA, Innosearch and the shareholders of
Innosearch (except Yamaichi) shall have entered into the Innosearch Agreement.
9.10 GOVERNMENT APPROVALS. All Government Approvals shall be in effect,
and all conditions or requirements prescribed by law or by any such
Government Approval shall have been satisfied; PROVIDED, HOWEVER, that no
Government Approval shall be deemed to have been received if it shall require
the divestiture or cessation of any of the present businesses or operations
conducted by either of the parties hereto or shall impose any other condition
or requirement, which divestiture, cessation, condition or requirement GAT,
in its reasonable judgment shall deem to be materially burdensome (in which
case GAT shall promptly notify BARRA). For purposes of this Agreement no
condition shall be deemed to be "materially burdensome" if such condition
would not (a) require the taking of any action materially inconsistent with
the manner in which BARRA or GAT has conducted its business previously, (b)
have a material adverse effect upon the business, financial condition or
results of operations of BARRA or GAT, or (c) preclude satisfaction of any of
the material conditions to consummation of the transactions contemplated by
this Agreement.
10. EXPENSES.
BARRA and GAT agree to pay, without right of reimbursement from the
other party and whether or not the transactions contemplated by this
Agreement shall be consummated, the costs incurred by each such party
incident to the preparation and negotiation of this Agreement, performance of
its obligations under this Agreement and the consummation of the transactions
contemplated hereby and thereby, including the fees and disbursements of
attorneys, accountants, consultants, investment bankers and other advisors
employed by such party in connection therewith; PROVIDED, HOWEVER, that in
the event the transactions contemplated by this Agreement are consummated,
BARRA shall pay the GAT Expenses (as defined in Section 8.9) plus any filing
fees and costs of BARRA, GAT and/or Innosearch incurred in seeking or
obtaining Government Approvals (the "Government Filing Fees") up to an amount
equal to five hundred
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thousand dollars ($500,000). In the event the GAT Expenses and the
Government Filing Fees as of the Closing Date are in an amount exceeding five
hundred thousand dollars ($500,000) in the aggregate, there shall be an
adjustment to the Purchase Price in accordance with the provisions of
Schedule A.
11. SURVIVAL, INDEMNIFICATION AGAINST LOSS.
11.1 SURVIVAL. The representations, warranties, and agreements made
herein, including but not limited to the indemnification provisions of
Sections 11.2, 11.3 and 11.4, shall survive any investigation made by any
party hereto. The representations and warranties made herein shall survive
the Closing of the transactions contemplated hereby until the first
anniversary of the Closing. The representations, warranties,
indemnifications and agreements made pursuant to Sections 4.29, Section 11.2,
11.3 and 11.4 shall survive (i) if a Closing shall occur, until the first
anniversary of the Closing; PROVIDED, HOWEVER, that the indemnification
provided in Section 11.2(a)(iii) shall survive until the payment of any tax
liability or the resolution of any tax dispute and the indemnifications
provided in Sections 11.2(a)(ii), (iv) and (v) shall survive until such
matters are completely resolved; or (ii) if this Agreement is terminated,
until one year after the termination of this Agreement. The confidentiality
covenants of BARRA contained in Section 3.3 shall expire on the Closing Date.
11.2 GAT STOCKHOLDERS' INDEMNIFICATION.
(a) All of the GAT Stockholders shall jointly and severally defend
and indemnify BARRA against, and jointly and severally agree to indemnify and
hold BARRA harmless from, any and all losses, claims, damages, penalties,
liabilities, fines, injuries, costs and expenses (including reasonable
attorneys', accountants' and other professionals' fees, administrative
expenses, prejudgment interest and court costs), incurred or suffered by
BARRA relating to or arising out of or in connection with any or all of the
following: (i) any breach or non-fulfillment of or any inaccuracy in any
representation, warranty or covenant made by GAT and the GAT Stockholders in
this Agreement or the Innosearch Stockholders in the Innosearch Agreement or
failure by GAT and the GAT Stockholders and the Innosearch Stockholders to
perform any obligation or covenant to be performed by it pursuant to this
Agreement, the Innosearch Agreement or any document delivered by GAT at the
Closing; (ii) the failure by GAT or Innosearch to register as an investment
adviser in any jurisdiction in which BARRA, upon the reasonable advice of
counsel, deems a registration to be necessary; (iii) any federal, state,
local or foreign tax liability not reflected or accounted for on the GAT or
Innosearch financial statements provided to BARRA and dated as of December
31, 1996; (iv) any claims or demands by any party relating in any way to the
ownership or use of the Proprietary Rights of GAT and/or Innosearch or the
infringement by GAT and/or Innosearch of the Proprietary Rights of any party,
including, but not limited to, any claims or demands by any GAT Stockholder,
or any stockholder of Innosearch; and (v) any breach of or inaccuracy in the
representations and warranties of GAT, Innosearch or the GAT Stockholders
contained in Sections 4.10
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and 4.14. Notwithstanding the foregoing, neither GAT nor Innosearch shall
have any liability under Section 11.2(a)(ii): (A) to the extent that such
registration is necessary because of a change since the Closing Date in the
applicable law, rules or regulations requiring such registration, (B) to the
extent such registration is necessary because of a change since the Closing
Date in the business or activities of GAT or Innosearch, or (C) with respect
to any administrative or filing fees (but not penalties) for registrations by
GAT or Innosearch as an investment adviser in any jurisdiction after the
Closing Date.
(b) Claims for indemnity made by BARRA pursuant to the provisions
of Section 11.2(a) must total $50,000 in the aggregate before BARRA can seek
reimbursement for such claims from the GAT Stockholders (once the $50,000
threshold is met, BARRA can seek reimbursement for all indemnity claims,
including those up to the $50,000 threshold, but only to the extent such
claims are limited by Section 11.6).
11.3 BARRA'S INDEMNIFICATION.
(a) BARRA shall defend and indemnify the GAT Stockholders against
and agrees to indemnify and hold each of them harmless from any and all
losses, claims, damages, penalties, liabilities, fines, injuries, costs and
expenses (including reasonable attorneys', accountants' and other
professionals' fees, administrative expenses, prejudgment interest and court
costs), incurred or suffered by any of them relating to or arising out of or
in connection with any breach or non-fulfillment of or any inaccuracy in any
representation, warranty or covenant made by BARRA or failure by BARRA to
perform any obligation or covenant to be performed by it pursuant to this
Agreement or any document delivered by BARRA at the Closing.
(b) Claims for indemnity made by the GAT Stockholders pursuant to
the provisions of Section 11.3(a) must total $50,000 in the aggregate before
the GAT Stockholders can seek reimbursement for such claims from BARRA (once
the $50,000 threshold is met, the GAT Stockholders can seek reimbursement
for all additional indemnity claims, including those up to the $50,000
threshold, but only to the extent such claims are limited by Section 11.6).
11.4 GAT'S INDEMNIFICATION.
(a) GAT shall defend and indemnify BARRA against and agrees to
indemnify and hold BARRA harmless from any and all losses, claims, damages,
penalties, liabilities, fines, injuries, costs and expenses (including
reasonable attorneys', accountants' and other professionals' fees,
administrative expenses, prejudgment interest and court costs), incurred or
suffered by BARRA relating to or arising out of or in connection with any
breach or non-fulfillment of or any inaccuracy in any representation,
warranty or covenant made by GAT, the GAT Stockholders, Innosearch or the
Innosearch Stockholders or failure by GAT, the GAT Stockholders, Innosearch
or the Innosearch Stockholders to perform any obligation or covenant to be
performed by
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it or them pursuant to this Agreement or any document delivered by GAT or any
GAT Stockholder at the Closing;
(b) Claims for indemnity made by BARRA pursuant to the provisions
of Section 11.4(a) must total $50,000 in the aggregate before BARRA can seek
reimbursement for such claims from GAT (once the $50,000 threshold is met,
BARRA can seek reimbursement for all indemnity claims, including those up to
the $50,000 threshold, but only to the extent such claims are limited by
Section 11.6).
11.5 INDEMNIFICATION PROCEDURES.
(a) Promptly upon obtaining knowledge of any claim, event,
statement of facts or demand which has given rise to, or could reasonably
give rise to, a claim for indemnification hereunder, any party seeking
indemnification under this Article 11 (an "Indemnified Party") shall give
written notice of such claim or demand ("Notice of Claim") to the party from
which indemnification is sought (an "Indemnifying Party"), setting forth the
amount of the claim. The Indemnified Party shall furnish to the Indemnifying
Party in reasonable detail, such information as it may have with respect to
such indemnification claim (including copies of any summons, complaint or
other pleading which may have been served on it and any written claim,
demand, invoice, billing or other document evidencing or asserting the same).
No failure or delay by the Indemnified Party in the performance of the
foregoing shall reduce or otherwise affect the obligation of the Indemnifying
Party to indemnify and hold the Indemnified Party harmless, except to the
extent that such failure or delay shall have adversely affected the
Indemnifying Party's ability to defend against, settle or satisfy any
liability, damage, loss, claim or demand for which the Indemnified Party is
entitled to indemnification hereunder.
(b) Promptly after receipt of notice of any claim by a third party
which might give rise to indemnification hereunder, the Indemnified Party
shall notify the Indemnifying Party in writing specifying in reasonable
detail the nature and amount of the claim. The Indemnifying Party shall be
entitled to assume and have the sole control of the defense and settlement of
such action or claim; PROVIDED, HOWEVER, that:
(i) the Indemnified Party shall be entitled to participate in
the defense of such claim and, in connection therewith, to employ counsel at
its own expense;
(ii) without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld, the Indemnifying
Party shall not consent to the entry of any judgment or enter into any
settlement that requires any action by the Indemnified Party other than the
payment of money.
(c) In the event the Indemnifying Party elects to assume control
of the defense of any such action in accordance with the foregoing
provisions, (i) the
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Indemnifying Party shall not be liable to the Indemnified Party for any legal
fees, costs and expenses incurred by the Indemnified Party in connection with
the defense thereof after the date on which the Indemnifying Party notifies
the Indemnified Party of such election and (ii) the Indemnified Party shall
fully cooperate with the Indemnifying Party in such defense. If the
Indemnifying Party does not assume control of the defense of such claim in
accordance with the foregoing provisions, the Indemnified Party shall have
the right to defend such claim, in which case the Indemnifying Party shall
pay all reasonable costs and expenses of such defense. The Indemnified Party
shall conduct such defense in good faith and shall have the right to settle
the matter with the prior written consent of the Indemnifying Party which
consent shall not be unreasonably withheld.
(d) Except for third-party claims being defended in good faith,
the Indemnifying Party shall satisfy its obligations hereunder within thirty
(30) days after the Date of the Notice of Claim, provided, however, that,
with respect to third-party claims or otherwise, if BARRA is the Indemnified
Party, the Holder's Agent, as the representative of the Indemnifying Party,
may choose, pursuant to Section 11, to relinquish cash from the Escrow Fund
in satisfaction or partial satisfaction of the indemnity obligations
hereunder.
(e) The term "Date of the Notice of Claim" as used in this Article
11 shall mean either: (i) the third business day after the date of the
postmark on the registered or certified mail containing the Notice of Claim;
or (ii) if the Notice of Claim is personally delivered, the date of such
personal delivery.
11.6 LIMITATION ON INDEMNIFICATION CLAIMS.
(a) Claims for indemnity made by BARRA pursuant to the provisions
of Sections 11.2(a)(i) (but excluding any Misconduct Claims as defined in
Section 12.1) and 11.4 (but excluding any Misconduct Claims) shall be limited
to $1,600,000 (10% of the Purchase Price). Misconduct Claims or claims for
indemnity made by BARRA pursuant to the provisions of Sections 11.2(ii)-(v)
shall not be so limited.
(b) Claims for indemnity made by the GAT Stockholders pursuant to
the provisions of Section 11.3 or otherwise pursuant to this Agreement (but
excluding all Misconduct Claims) shall be limited to $1,600,000 (10% of the
Purchase Price). Misconduct claims made by the GAT Stockholders shall not be
so limited.
11.7 LIABILITY LIMITED TO INDEMNIFICATION.
(a) The consideration paid by BARRA to the GAT Stockholders to
acquire 100% of the GAT Shares has been established by the parties hereto
based on the allocation of risk and rights of recovery hereunder.
(b) The GAT Stockholders have had an opportunity to do due
diligence of BARRA and accordingly have agreed to limit their right to
recourse as set
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forth in this Section 11. Each of the GAT Stockholders and the affiliates of
each shall have no claim or cause of action, whether in contract, tort, under
statute or otherwise, for monetary damages arising out of, or relating to,
this Agreement, the representations and warranties herein or any of the
transactions contemplated hereby apart from the right to indemnification
pursuant to Section 11 hereof.
(c) BARRA has had an opportunity to do due diligence of GAT and
accordingly has agreed to limit its right to recourse as set forth in this
Section 11. BARRA, and the affiliates of BARRA shall have no claim or cause
of action, whether in contract, tort, under statute or otherwise, for
monetary damages arising out of, or relating to, this Agreement, the
representations and warranties herein or any of the transactions contemplated
hereby apart from the right to indemnification pursuant to Section 11 hereof.
(d) GAT and the GAT Stockholders' obligation to indemnify BARRA
under this Section 11 includes the obligation to indemnify BARRA, and all of
its officers, directors, affiliates and subsidiaries.
12. ESCROW.
12.1 ESCROW FOR REPRESENTATIONS AND WARRANTIES. As security for the
representations and warranties contained herein, BARRA shall on the Closing
Date place in escrow (the "Escrow") with an escrow agent reasonably
satisfactory to BARRA and GAT, under the terms of the Escrow Agreement in the
form to be established by the mutual agreement of the parties and attached
hereto as EXHIBIT E at the Closing (the "Escrow Agreement"), One Million Six
Hundred Thousand Dollars ($1,600,000) of the Cash Consideration (the "Escrow
Fund"). Pursuant to the terms of the Escrow Agreement, the Escrow shall
terminate, and the Escrow Fund shall be released pro rata to the GAT
Stockholders, unless otherwise relinquished to BARRA pursuant to the
provisions of Section 11.5, on the business day following the one year
anniversary of the Closing. All claims for indemnification pursuant to
Section 11.2(a)(i) hereof, but excluding all losses, claims, damages,
penalties, liabilities, fines, injuries, costs and expenses (including
reasonable attorney's fees, administrative expenses prejudgment interest and
court costs), resulting from fraud or willful misconduct (the "Misconduct
Claims"), shall be brought and recovered by BARRA solely by the return to
BARRA of cash from the Escrow Fund as satisfaction or partial satisfaction of
such indemnity obligations. All claims for indemnification pursuant to
Sections 11.2(a)(ii)-(v) hereof and all claims for indemnification that are
Misconduct Claims shall be brought and recovered by BARRA against the GAT
Stockholders, on a joint and several basis; provided, however, that the
Holder's Agent may choose to return to BARRA cash from the Escrow Fund as
satisfaction or partial satisfaction of such indemnity obligations, but such
indemnity obligations shall not be limited by the return to BARRA of the
Escrow Fund; provided, further, that the Holder's Agent shall first satisfy
all claims for indemnification pursuant to Section 11.2(a)(i). BARRA, the GAT
Stockholders and the Holder's Agent acknowledge and agree that any
distribution of cash from the Escrow
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Fund to satisfy a claim for indemnification pursuant to Section 11.2(a)(i)
hereof shall be done so as to reduce each GAT Stockholder's and the GAT
Optionholder's interest in the Escrow Fund in a pro rata manner based on the
GAT Stockholder's and the GAT Optionholder's respective ownership interests
in the Escrow Fund.
12.2 HOLDER'S AGENT. Thomas Ho is hereby irrevocably appointed
attorney-in-fact and authorized and empowered to act, for and on behalf of
any or all of the GAT Stockholders (with full power of substitution in the
premises) in connection with the indemnity provisions of Section 11 as they
relate to the GAT Stockholders generally, the Escrow Agreement, the notice
provisions of this Agreement and such other matters as are reasonably
necessary for the consummation of the transactions contemplated hereby
including, without limitation, to act as the representative of the GAT
Stockholders, to review and authorize all setoffs, claims and other payments
authorized or directed by the Escrow Agreement and dispute or question the
accuracy thereof, to compromise on their behalf with BARRA any claims
asserted thereunder and to authorize payments to be made with respect thereto
and to take such further actions as are authorized in this Agreement (the
above named representative, as well as any subsequent representative of the
GAT Stockholders appointed by him or after his death or incapacity elected by
vote of holders of a majority of GAT Common Stock outstanding immediately
prior to the Closing Date being referred to herein as the "Holder's Agent").
The Holder's Agent shall not be liable to any GAT Stockholder or BARRA and
their respective affiliates or any other person with respect to any action
taken or omitted to be taken by the Holder's Agent under or in connection
with this Agreement or the Escrow Agreement unless such action or omission
results from or arises out of fraud, gross negligence, willful misconduct or
bad faith on the part of the Holder's Agent. BARRA and its affiliates
(including, after the Closing, GAT) shall be entitled to rely on such
appointment and treat such Holder's Agent as the duly appointed
attorney-in-fact of each GAT Stockholder.
13. AMENDMENT; TERMINATION.
13.1 AMENDMENT. This Agreement may be amended by the mutual consent of
the boards of directors of BARRA and GAT, and the GAT Stockholders at any
time prior to the Closing Date with respect to any of its terms.
13.2 TERMINATION. This Agreement may be terminated as follows:
(a) By the mutual consent of the boards of directors of BARRA and
GAT at any time prior to the Closing.
(b) By the Board of Directors of BARRA on or after ninety (90)
days from the date of this Agreement, but in no event after the Closing, if
(i) any of the conditions in Section 8 to which the obligations of BARRA are
subject have not been fulfilled, or (ii) such conditions have been fulfilled
by GAT or waived by BARRA, but the GAT Stockholders shall have failed to
deliver 100% of the GAT Shares for BARRA.
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(c) By the Board of Directors of GAT on or after ninety (90) days
from the date of this Agreement, but in no event after the Closing, if (A)
any of the conditions contained in Section 9 to which the obligations of GAT
and the GAT Stockholders are subject have not been fulfilled, or (B) such
conditions have been fulfilled by BARRA or waived by GAT, but BARRA shall
have failed to purchase 100% of the GAT Shares.
13.3 NOTICE. The power of termination hereunder may be exercised by
BARRA or GAT, as the case may be, only by giving written notice to the other
party in accordance with the provisions of Section 14.1.
13.4 TERMINATION AND EXPENSES. Termination of this Agreement shall not
terminate or affect the obligations of the parties to each pay their own
expenses as provided in Section 10, to maintain the confidentiality of the
other party's information pursuant to Section 3.3, or the provisions of this
Section 13.4, or of Sections 14.1, 14.3, 14.4, 14.5 or 14.6 or the second
sentence of Section 14.2 below and shall not affect any agreement after such
termination. The obligations of BARRA under Sections 3.1(g) and 11.3, the
obligations of GAT under Sections 3.2(o) and 11.4, and the obligations of the
GAT Stockholders under Section 11.2, shall survive for one (1) year following
any termination of this Agreement. GAT, the GAT Stockholders and BARRA agree
that any other termination of this Agreement shall not in any manner release
or be construed as so releasing the nonterminating party or parties from any
liability or damage to the other party or parties arising out of, in
connection with or otherwise relating to, directly or indirectly, such
parties' failure in performance of any of its covenants or agreements
hereunder, including without limitation, any obligations arising under
Section 11.
14. MISCELLANEOUS.
14.1 NOTICES. Any notice or other communication required or permitted
under this Agreement shall be effective only if it is in writing and
delivered personally, or by overnight express (DHL, UPS or Federal Express)
or by facsimile or sent by first class United States mail, postage prepaid,
registered or certified mail, addressed as follows:
To BARRA: To GAT:
(if before June 30, 1997) Wall Street Plaza
1995 University Avenue 88 Pine Street
Suite 150 New York, NY 10005
Berkeley, California 94704 Tel. (212) 785-9630
Tel. (510) 548-5442 Fax (212) 425-9095
Fax (510) 548-5374 Attention: Thomas Ho
Attention: Chief Executive Officer
and General Counsel
(if on or after June 30, 1997
BARRA, Inc.
2100 Milvia Street
Berkeley, CA 94704
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With a copy to: With a copy to:
David M. Niebauer, Esq. Thomas T. Chan, Esq.
Graham & James LLP Chan Law Group PLC
One Maritime Plaza, Suite 300 911 Wilshire Boulevard,
San Francisco, California 94111-3492 Suite 2288
Tel: (415) 954-0200 Los Angeles, California
Fax: (415) 391-2493 90017-3451
Tel: (213) 624-6560
Fax: (213) 622-1154
or to such other address as either party may designate by notice to the
other, and shall be deemed to have been given upon receipt.
14.2 BINDING AGREEMENT. This Agreement is binding upon and is for the
benefit of BARRA, GAT, the GAT Securityholders, and their respective
successors and permitted assigns. This Agreement is not made for the benefit
of any person, firm, corporation or association not a party hereto, and no
other person, firm, corporation or association shall acquire or have any
right under or by virtue of this Agreement. No party may assign this
Agreement or any of its rights, privileges, duties or obligations hereunder
without the prior written consent of the other parties to this Agreement.
14.3 CONSENT TO JURISDICTION AND FORUM SELECTION. The parties hereto
agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated exclusively in the State and Federal
courts located in the County of San Francisco, State of California. The
aforementioned choice of venue is intended by the parties to be mandatory and
not permissive in nature, thereby precluding the possibility of litigation
between the parties with respect to or arising out of this Agreement in any
jurisdiction other than that specified in this paragraph. Each party hereby
waives any right it may have to assert the doctrine of forum non conveniens
or similar doctrine or to object to venue with respect to any proceeding
brought in accordance with this paragraph, and stipulates that the State and
Federal courts located in the County of San Francisco, State of California
shall have in personam jurisdiction and venue over each of them for the
purpose of litigating any dispute, controversy, or proceeding arising out of
or related to this Agreement. Each party hereby authorizes and accepts
service of process sufficient for personal jurisdiction in any action against
it as contemplated by this paragraph by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices
as set forth in this Agreement. Any final judgment rendered against a party
in any action or proceeding
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shall be conclusive as to the subject of such final judgment and may be
enforced in other jurisdictions in any manner provided by law.
14.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of California, without
giving effect such state's choice-of-law principles.
14.5 ATTORNEYS' FEES. In any action at law or suit in equity in
relation to this Agreement, the prevailing party in such action or suit shall
be entitled to receive a reasonable sum for its attorneys' fees and all other
reasonable costs and expenses incurred in such action or suit.
14.6 ENTIRE AGREEMENT; SEVERABILITY. This Agreement and the
Confidentiality Agreement by and between GAT and BARRA, dated December 26,
1996 and the documents, certificates, agreements, letters, schedules and
exhibits attached or required to be delivered pursuant hereto set forth the
entire agreement and understanding of the parties in respect of the
transactions contemplated hereby, and supersede all prior agreements,
arrangements and understandings relating to the subject matter hereof. Each
provision of this Agreement shall be interpreted in a manner to be effective
and valid under applicable law, but if any provision hereof shall be
prohibited or ruled invalid under applicable law, the validity, legality and
enforceability of the remaining provisions shall not, except as otherwise
required by law, be affected or impaired as a result of such prohibition or
ruling.
14.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.8 WAIVERS. Prior to or on the Closing Date, each of BARRA, GAT and
the GAT Stockholders shall have the right to waive any default in the
performance of any term of this Agreement by BARRA, GAT, and the GAT
Stockholders, to waive or extend the time for the compliance or fulfillment
by the other of any and all of the other's obligations under this Agreement
and to waive any or all of the conditions precedent to its obligations under
this Agreement. No failure to exercise and no delay in exercising any right,
remedy or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy or power hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy or power provided herein or by law or in equity. The waiver by any
party of the time for performance of any act or condition hereunder does not
constitute a waiver of the act or condition itself.
[THE REMAINDER OF THIS PAGE SHALL INTENTIONALLY REMAIN BLANK.]
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IN WITNESS WHEREOF, BARRA, GAT and the GAT Stockholders have each caused
this Agreement to be signed, and each of the GAT Stockholders has caused the
Power of Attorney - Escrow Provisions to be signed, effective as of the date
written above.
BARRA, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
GLOBAL ADVANCED TECHNOLOGY CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
- ----------------------------------
Thomas Ho
- ----------------------------------
Mark Wainger
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POWER OF ATTORNEY - ESCROW PROVISIONS
KNOW ALL MEN BY THESE PRESENTS:
That each person whose signature appears below constitutes and appoints
Thomas Ho as his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to act for and on behalf of him in connection with
the indemnity provisions of Section 11 as they relate to the GAT Stockholders
generally, the Escrow Agreement, the notice provisions of this Agreement and
such other matters as are reasonably necessary for the consummation of the
transactions contemplated in this Agreement including, without limitation, to
act as his representative, to review and authorize all setoffs, claims and
other payments authorized or directed by the Escrow Agreement and dispute or
question the accuracy thereof, to compromise on the behalf of all GAT
Stockholders with BARRA any claims asserted thereunder and to authorize
payments to be made with respect thereto and to take such further actions as
are authorized in this Agreement.
This Agreement has been signed by the following persons, effective as of
the date written above.
The GAT Stockholders:
- ----------------------------------
Thomas Ho
- ----------------------------------
Mark Wainger
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EXHIBIT 10.2
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STOCK PURCHASE AGREEMENT
AMONG
BARRA, INC.,
AND
THE SHAREHOLDERS OF
INNOSEARCH CORPORATION
May 23, 1997
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TABLE OF CONTENTS
1. SALE OF THE INNOSEARCH SHARES; AUTHORIZATION AND
ISSUANCE OF THE BARRA SHARES....................................... 86
1.1 Sale of the Innosearch Shares................................ 86
1.2 Authorization of the BARRA Shares............................ 87
2. CLOSING DATE; DELIVERY............................................. 87
2.1 Closing Date................................................. 87
2.2 Delivery..................................................... 87
3. COVENANTS OF THE PARTIES........................................... 87
3.1 Covenants of BARRA........................................... 87
(a) Reservation and Issuance of BARRA Common................. 87
(b) Government Approvals..................................... 87
(c) Notification of Breach of Representations,
Warranties and Covenants............................... 88
(d) Press Release............................................ 88
(e) Litigation Developments.................................. 88
(f) Employment............................................... 88
(g) Access to Properties, Books and Records.................. 88
3.2 Covenants of the Innosearch Shareholders..................... 89
(a) Stockholder Lists and Other Information.................. 89
(b) Transactions in BARRA Common............................. 89
(c) Government Approvals..................................... 90
(d) Capital Commitments and Expenditures..................... 90
(e) Notification of Breach of Representations, Warranties and
Covenants.............................................. 90
(f) Compensation............................................. 90
(g) Conduct of Business in the Ordinary Course............... 91
(h) Press Releases........................................... 91
(i) No Merger or Solicitation................................ 92
(j) Access to Properties, Books and Records.................. 93
(k) Employee Welfare Benefit Plans........................... 93
(l) Litigation Developments.................................. 93
(m) Employment............................................... 94
3.3 Covenants of the Parties..................................... 94
4. REPRESENTATIONS AND WARRANTIES OF THE INNOSEARCH SHAREHOLDERS...... 94
4.1 Corporate Status and Power to Enter Into Agreements.......... 94
4.2 Execution and Delivery of the Agreement...................... 95
4.3 Subsidiaries and Other Equity Interests...................... 95
4.4 Certificate, Bylaws, Books and Records....................... 95
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4.5 Compliance with Laws, Regulations and Decrees................ 95
4.6 Capitalization............................................... 96
4.7 Financial Statements......................................... 96
4.8 Government Regulation........................................ 97
4.9 Code of Ethics............................................... 98
4.10 Tax Returns................................................. 99
4.11 Material Adverse Change..................................... 99
4.12 No Undisclosed Liabilities.................................. 99
4.13 Properties and Leases....................................... 100
4.14 Patents, Copyrights, Trademarks............................. 101
4.15 Material Contracts.......................................... 102
4.16 Employment Contracts and Benefits........................... 102
4.17 Compliance With ERISA....................................... 104
4.18 Collective Bargaining and Employment Agreements............. 104
4.19 Compensation of Officers and Employees...................... 104
4.20 Legal Actions and Proceedings............................... 104
4.21 Retention of Broker or Consultant........................... 105
4.22 Insurance................................................... 105
4.23 Transactions with Affiliates................................ 105
4.24 Trading in BARRA Common..................................... 105
4.25 No Departing Employees...................................... 106
4.26 No Loss of Customers........................................ 106
4.27 Communications with Shareholders............................ 106
4.28 Accuracy of Representations and Warranties.................. 106
4.29 Proposed Business Combination............................... 107
4.30 Innosearch Balance Sheet.................................... 107
5. REPRESENTATIONS AND WARRANTIES OF BARRA............................ 107
5.1 Corporate Status and Power to Enter Into Agreements.......... 107
5.2 Certificate, Bylaws, Books and Records....................... 107
5.3 Properties................................................... 108
5.4 BARRA SEC Documents.......................................... 108
5.5 Material Adverse Change...................................... 108
5.6 Execution and Delivery of the Agreement...................... 109
5.7 Accuracy of Representations and Warranties................... 109
5.8 Capitalization............................................... 20
5.9 Duly Authorized Issuances.................................... 110
5.10 Retention of Broker or Consultant........................... 110
5.11 Compliance with Laws, Regulations and Decrees............... 110
6. INVESTMENT REPRESENTATION.......................................... 111
7. REGISTRATION RIGHTS................................................ 112
7.1 Definitions.................................................. 112
(a) "Exchange Act"........................................... 112
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(b) "Holder"................................................. 113
(c) "Register", "Registered" and "Registration".............. 113
(f) "Securities Act"......................................... 113
(g) "Selling Expenses"....................................... 113
7.2 BARRA Registration........................................... 114
(a) Notice of Registration................................... 114
7.3 Underwriting................................................. 114
7.4 Expenses of Registration..................................... 115
7.5 Furnish Information.......................................... 115
7.6 Indemnification.............................................. 115
7.7 "Market Stand-off" Agreement................................. 117
8. CONDITIONS TO THE OBLIGATIONS OF BARRA............................. 117
8.1 Representations and Warranties............................... 117
8.2 Compliance and Performance Under Agreement................... 117
8.3 Material Adverse Change...................................... 118
8.4 Shareholders' Certificate.................................... 118
8.5 No Injunctions or Restraints; Illegality..................... 118
8.6 Innosearch Board of Directors................................ 118
8.7 Government Approvals......................................... 118
8.8 Expenses..................................................... 119
8.9 Closing Documents............................................ 119
8.10 Consents.................................................... 119
8.11 GAT Transaction............................................. 119
8.12 Opinion of Counsel.......................................... 119
8.13 Third Party Actions......................................... 120
9. CONDITIONS TO THE OBLIGATIONS OF THE INNOSEARCH SHAREHOLDERS....... 120
9.1 Representations and Warranties............................... 120
9.2 Compliance and Performance Under Agreement................... 120
9.3 Material Adverse Change...................................... 120
9.4 Officers Certificate......................................... 121
9.5 Opinion of Counsel........................................... 121
9.6 Third Party Actions.......................................... 121
9.7 Closing Documents............................................ 121
9.8 No Injunctions or Restraints; Illegality..................... 121
9.9 GAT Transaction.............................................. 121
9.10 Government Approvals........................................ 121
10. EXPENSES........................................................... 122
11. SURVIVAL, INDEMNIFICATION AGAINST LOSS............................. 122
11.1 Survival.................................................... 122
11.2 Innosearch Shareholders' Indemnification.................... 122
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11.3 BARRA's Indemnification..................................... 123
11.4 Indemnification Procedures.................................. 123
11.5 Limitation on Indemnification Claims........................ 125
11.6 Liability Limited to Indemnification........................ 125
12. AMENDMENT; TERMINATION............................................. 125
12.1 Amendment................................................... 125
12.2 Termination................................................. 126
12.3 Notice...................................................... 126
12.4 Termination and Expenses.................................... 126
13. MISCELLANEOUS...................................................... 126
13.1 Notices..................................................... 126
13.2 Binding Agreement........................................... 128
13.3 Consent to Jurisdiction and Forum Selection................. 128
13.4 Governing Law............................................... 128
13.5 Attorneys' Fees............................................. 128
13.6 Entire Agreement; Severability.............................. 128
13.7 Counterparts................................................ 129
13.8 Waivers..................................................... 129
LIST OF EXHIBITS
EXHIBIT A------------------------------------- OPINION OF COUNSEL (INNOSEARCH)
EXHIBIT B------------------------------------------ OPINION OF COUNSEL (BARRA)
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INNOSEARCH
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of May 23,
1997 ("Agreement") by and among BARRA, INC., a California corporation
("BARRA"), Thomas Ho, Mabel Chan, Yun-Xian Ho, Mark Wainger, Yamaichi
Securities Company, Ltd. ("Yamaichi), the stockholders of Innosearch
Corporation, a New York corporation ("Innosearch") (herein individually an
"Innosearch Shareholder" and collectively, the "Innosearch Shareholders").
WHEREAS, the Innosearch Shareholders currently own 870 shares of
common stock of Innosearch (individually, an "Innosearch Share" and in the
aggregate, the "Innosearch Shares");
WHEREAS BARRA, Global Advanced Technology Corporation, a Delaware
corporation, ("GAT") and the stockholders of GAT have entered into a stock
purchase agreement dated May 23, 1997, whereby BARRA shall acquire 100% of
the outstanding capital stock of GAT;
WHEREAS, BARRA wishes to purchase, and the Innosearch Shareholders
wish to sell to BARRA, the Innosearch Shares in accordance with the terms
of this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants set forth herein,
THE PARTIES HEREBY AGREE AS FOLLOWS:
15. SALE OF THE INNOSEARCH SHARES; AUTHORIZATION AND ISSUANCE OF THE BARRA
SHARES.
15.1 SALE OF THE INNOSEARCH SHARES. Subject to the terms and conditions
hereof, on the Closing Date, as defined in Section 2.1, the Innosearch
Shareholders will sell to BARRA and BARRA agrees to purchase from each of the
Innosearch Shareholders all of the Innosearch Shares, totaling an aggregate
of 870 Innosearch Shares, for a total consideration in cash ("Cash
Consideration") and fully paid and nonassessable shares of common stock of
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BARRA (the "BARRA Common" or the "BARRA Shares") allocated to each Innosearch
Shareholder as set forth on Schedule A attached hereto. The BARRA Common or
BARRA Shares along with the Cash Consideration, as set forth above, is
sometimes referred to as the "Purchase Price".
15.2 AUTHORIZATION OF THE BARRA SHARES. On or prior to the Closing
Date, BARRA will have taken all necessary corporate action for the purpose of
authorizing the issuance and sale of the BARRA Common to the Innosearch
Shareholders.
16. CLOSING DATE; DELIVERY.
16.1 CLOSING DATE. The closing of the purchase and sale of the
Innosearch Shares hereunder (the "Closing") shall be held at the offices of
Graham & James LLP, One Maritime Plaza, Suite 300, San Francisco, California
94111 on or before August 20, 1997 or at such other time and place to which
the parties hereto may agree in writing (the "Closing Date").
16.2 DELIVERY. At the Closing, each Innosearch Shareholder will deliver
to BARRA certificates representing the Innosearch Shares to be purchased from
such Innosearch Shareholder against payment of the Purchase Price therefore
by delivery to (a) each Innosearch Shareholder (other than GAT) of a check
representing the Cash Consideration allocated to such Innosearch Shareholder
on Schedule A, and (b) the retention by BARRA of the Cash Consideration and
BARRA Common allocated to GAT on Schedule A.
17. COVENANTS OF THE PARTIES.
17.1 COVENANTS OF BARRA. Unless otherwise expressly indicated below and
unless the Agreement is not earlier terminated pursuant to Section 12, from
the date of this Agreement to the Closing Date, BARRA hereby covenants as
follows:
(a) RESERVATION AND ISSUANCE OF BARRA COMMON. BARRA shall reserve
and make available for issuance in accordance with the terms of this
Agreement a number of the BARRA Shares equal to the Stock Consideration.
(b) GOVERNMENT APPROVALS. BARRA, with the cooperation of
Innosearch, shall use reasonable efforts in good faith to take or cause to be
taken as promptly as practicable all such steps as shall be necessary to
obtain all consents and approvals of government agencies as are required by
law or otherwise (the "Government Approvals") and shall do any and all acts
reasonably necessary or appropriate in order to cause the stock purchase to
be consummated on the terms provided in this Agreement as promptly as
practicable.
(c) NOTIFICATION OF BREACH OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. BARRA shall promptly give written notice to the Innosearch
Shareholders upon becoming
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aware of the occurrence or impending or threatened occurrence of any event
which would cause or constitute a breach of any of the representations,
warranties or covenants of BARRA contained or referred to in this Agreement
and shall use commercially reasonable efforts to prevent the same or remedy
the same promptly.
(d) PRESS RELEASE. BARRA shall not issue any press release or
written statement for general circulation to the public relating to the stock
purchase or this Agreement unless previously provided to Innosearch for
review and approval (which approval will not be unreasonably withheld or
delayed) and shall cooperate with Innosearch in the development and
distribution of all news releases and other public information disclosures
with respect to this Agreement or the purchase, provided that BARRA may,
without the consent of Innosearch, make any disclosure with regard to this
Agreement or the purchase that it determines is required under any applicable
law or regulation, provided that, if practicable, BARRA shall provide to
Innosearch an opportunity to review and comment on the content of any such
disclosure prior to such disclosure being publicly distributed.
(e) LITIGATION DEVELOPMENTS. BARRA agrees to promptly advise the
Innosearch Shareholders with respect to any and all material legal actions or
other material proceedings or investigations against BARRA relating to this
transaction and to promptly advise the Innosearch Shareholders with respect
to any significant developments arising in connection with said actions,
proceedings or investigations.
(f) EMPLOYMENT. BARRA shall not directly or indirectly, solicit,
induce or recruit any of the officers or employees of Innosearch to leave
their employment with Innosearch without obtaining the prior written consent
of Innosearch.
(g) ACCESS TO PROPERTIES, BOOKS AND RECORDS. Prior to the Closing
Date, BARRA shall give the Innosearch Shareholders and their counsel and
accountants full access, during normal business hours and upon reasonable
requests, to all of its properties, books, contracts, commitments and records
including, but not limited to, the corporate, financial and operational
records, reports, instructions, procedures, tax returns and filings, tax
settlement letters, material contracts or commitments, regulatory
examinations and correspondence and shall allow the Innosearch Shareholders
to make copies of such materials (to the extent not legally prohibited) and
shall furnish the Innosearch Shareholders with all such information
concerning its affairs as the Innosearch Shareholders may reasonably request.
BARRA shall also cause Deloitte & Touch LLP ("DT") to make available to the
Innosearch Shareholders, their accountants, counsel and other agents, to the
extent reasonably requested in connection with such review, DT work papers
and documentation relating to its work papers and its audits of the books and
records of BARRA. Documents requested pursuant to this Section 3.1(g) that
are protected pursuant to confidentiality agreements or are subject to
attorney-client privilege ("BARRA Confidential Documents") shall not be
subject to this Section 3.1(g). Notwithstanding the
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foregoing, BARRA shall disclose to the Innosearch Shareholders the general
subject matter of the BARRA Confidential Documents requested pursuant to this
Section 3.1(g), and any matter therein which would have a material adverse
effect on this transaction. Client files that are protected pursuant to
confidentiality agreements signed with BARRA, pursuant to fiduciary
obligations to maintain confidentiality under the Advisers Act (as defined in
Section 4.8(a) or are subject to attorney-client privilege, and that are
requested pursuant to this Section 3.1(g), shall not be subject to this
Section 3.1(g) ("BARRA Confidential Files"). Notwithstanding the foregoing,
BARRA shall disclose to the Innosearch Shareholders on attached Schedule
3.1(g), the general subject matter of the BARRA Confidential Files requested
pursuant to this Section 3.1(g), and any matter therein which would have a
material adverse effect on this transaction.
17.2 COVENANTS OF THE INNOSEARCH SHAREHOLDERS. Unless otherwise
expressly indicated below and unless this Agreement is earlier terminated
pursuant to Section 12, from the date of this Agreement to the Closing Date,
the Innosearch Shareholders, as applicable, hereby covenant to BARRA as
follows:
(a) STOCKHOLDER LISTS AND OTHER INFORMATION. Innosearch shall
from time to time make available to BARRA, upon request, a list of their
stockholders and their addresses, a list showing all transfers of the
Innosearch Common Stock and/or Common Stock of Innosearch and such other
information as BARRA shall reasonably request regarding both the ownership
and prior transfers of the Innosearch Common Stock and Common Stock of
Innosearch.
(b) TRANSACTIONS IN BARRA COMMON. Innosearch and each Innosearch
Shareholder hereby agrees not to, directly or indirectly, buy or sell, or
otherwise effect any trade in, any shares of BARRA Common, or any security
derivative of the BARRA Common, from the date hereof through and including
the Closing Date unless the Agreement is earlier terminated. Neither
Innosearch nor any Innosearch Shareholder (other than Yamaichi) owns
beneficially any shares of BARRA Common.
(c) GOVERNMENT APPROVALS. Innosearch and the Innosearch
Shareholders shall cooperate in good faith and in all reasonable respects
with BARRA in its undertaking pursuant to Section 3.1(c) to obtain the
Government Approvals and Innosearch and the Innosearch Shareholders further
agree to take such actions in good faith as may be reasonably requested by
BARRA to cause the purchase to be consummated on the terms provided in this
Agreement as promptly as is practicable.
(d) CAPITAL COMMITMENTS AND EXPENDITURES. After the execution of
this Agreement, no new capital commitments in excess of $25,000 individually
or $50,000 in the aggregate shall be entered into, and no capital
expenditures in excess of $25,000 individually or $50,000 in the aggregate
shall be made by Innosearch without the prior written approval of BARRA.
Innosearch shall not enter into any acquisitions or leases of
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real property, including both new leases and lease extensions without the
prior written approval of BARRA.
(e) NOTIFICATION OF BREACH OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. Innosearch and/or the Innosearch Shareholders shall promptly give
written notice to BARRA upon becoming aware of the occurrence or impending or
threatened occurrence of any event which would cause or constitute a breach
of any of the representations, warranties or covenants of Innosearch and/or
the Innosearch Shareholders contained or referred to in this Agreement and
shall use commercially reasonable efforts to prevent the same or remedy the
same promptly.
(f) COMPENSATION. Innosearch shall not make or approve any
increase in the compensation payable or to become payable by Innosearch to
any of its directors, officers, employees or agents with annual salaries in
excess of $30,000 at the date hereof and no increases in compensation shall
exceed $25,000 in the aggregate (including but not limited to compensation
through any profit sharing, pension, retirement, severance, incentive or
other employee benefit program or arrangement), nor shall any bonus payment
or any agreement or commitment to make a bonus payment be made (except with
BARRA's prior written approval), nor shall any material amendment to an
existing employee benefit plan or arrangement or any new employee benefit
plan or arrangement be adopted, nor shall any stock option, warrant or other
right to acquire capital stock be granted, or employment agreement (other
than any such employment agreement that may arise by operation of law upon
the hiring of any new employee) or consulting agreement be entered into by
Innosearch with any such directors, officers, employees or agents unless
BARRA has given its prior written consent. Without the prior written consent
of BARRA, Innosearch shall not hire any new employees. Innosearch has
previously delivered to BARRA a comprehensive list of employees as of the
date hereof (the "Employee List"), setting forth in detail the compensation
payable to each and all of Innosearch's directors, officers, employees and
agents.
(g) CONDUCT OF BUSINESS IN THE ORDINARY COURSE. Innosearch shall
conduct their businesses in the ordinary course as heretofore conducted. For
purposes of this Agreement the "Ordinary Course of Business" shall consist of
the marketing and sale of software products and related data and consulting
services and other business presently conducted by Innosearch. Prior to the
Closing Date Innosearch shall use its best efforts to maintain satisfactory
relationships with licensors, suppliers, distributors and customers, all in
accordance with its Ordinary Course of Business. Prior to the Closing Date,
except as listed on Schedule 3.2(h), Innosearch shall not, without the prior
written consent of BARRA:
(1) amend its Certificate of Incorporation or Bylaws;
(2) authorize for issuance, issue, deliver or sell any
additional Innosearch Shares of its capital stock of any class, or securities
convertible into Innosearch
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Shares of such stock, or issue or grant any rights, options or other
commitments for the issuance of Innosearch Shares of such stock or such
convertible securities;
(3) split, combine or reclassify any Innosearch Shares of its
capital stock or declare, set aside or pay any dividend (whether in cash,
stock or property) in respect to its capital stock or redeem or otherwise
acquire any of its capital stock;
(4) dispose of or acquire any material properties or assets
except in the Ordinary Course of Business;
(5) engage in any activities or transactions that are outside
the Ordinary Course of Business;
(6) incur any indebtedness for borrowed money.
(h) PRESS RELEASES. Neither Innosearch nor the Innosearch
Shareholders shall not issue any press release or written statement for
general circulation relating to this Agreement or the purchase unless
previously provided to BARRA for review and written approval (which shall not
be unreasonably withheld) and shall cooperate with BARRA in the development
and distribution of all news releases and other public information
disclosures with respect to this Agreement or the purchase. Neither
Innosearch nor the Innosearch Shareholders may, without the consent of BARRA,
make any disclosure with regard to this Agreement or the purchase that is
required under any applicable law or regulation, provided that, both
Innosearch and the Innosearch Shareholders shall provide to BARRA an
opportunity to review and comment on the content of any such disclosure prior
to such disclosure being publicly distributed.
(i) NO MERGER OR SOLICITATION.
(i) Without the prior written consent of BARRA, neither
Innosearch nor the Innosearch Shareholders shall effect or agree to effect
any Business Combination, acquire or agree to acquire any of the capital
stock of Innosearch, nor shall Innosearch acquire or agree to acquire the
capital stock or assets (except in the Ordinary Course of Business) of any
other entity, or commence any proceedings for winding up and dissolution
affecting any of them. As used in this Agreement, "Business Combination"
shall mean any tender or exchange offer, proposal for a merger,
consolidation, acquisition of assets or other takeover proposal involving any
party hereto (except as explicitly contemplated in this Agreement) or any
offer or proposal to acquire in any manner a five percent (5%) or greater
interest in, or a substantial portion of any party hereto other than
transactions contemplated hereunder.
(ii) Neither Innosearch, any Innosearch Shareholder, nor any
officer, director or affiliate of Innosearch, nor any investment banker,
attorney, accountant or other agent, advisor or representative retained by
Innosearch or the Innosearch
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Shareholders shall (A) solicit or encourage, directly or indirectly, any
inquiries, discussions or proposals for, continue, propose or enter into
discussions or negotiations looking toward, or enter into any agreement or
understanding providing for, any Business Combination; or (B) in connection
with a potential Business Combination or otherwise than in the Ordinary
Course of Business disclose, directly or indirectly, any nonpublic
information to any corporation, partnership, person or other entity or group
concerning the business and properties of Innosearch or afford any such party
access to the properties, books or records of Innosearch or otherwise assist
or encourage any such party in connection with the foregoing, or (C) furnish
or cause to be furnished any information concerning the business, financial
conditions, operations, properties or prospects of Innosearch to another
person, having any actual or prospective role with respect to any such
transaction. The foregoing will be subject at all times to the right and
ability of the directors and officers of Innosearch to satisfy their
fiduciary obligations.
(iii) Innosearch shall notify BARRA of the details of any
indication of interest of any person, corporation, firm, association or group
to acquire by any means a five percent (5%) or greater interest in, or a
substantial portion of Innosearch or engage in any Business Combination with
Innosearch within two business days of any such indication of interest.
(j) ACCESS TO PROPERTIES, BOOKS AND RECORDS. Prior to the Closing
Date, Innosearch shall give BARRA and its counsel and accountants full
access, during normal business hours and upon reasonable request, to all of
its properties, books, contracts, commitments and records including, but not
limited to, the corporate, financial and operational records, papers,
reports, instructions, procedures, tax returns and filings, tax settlement
letters, material contracts or commitments, regulatory examinations and
correspondence and shall allow BARRA to make copies of such materials (to the
extent not legally prohibited) and shall furnish BARRA with all such
information concerning its affairs as BARRA may reasonably request.
Innosearch shall also cause Sheehan & Company ("Sheehan") to make available
to BARRA, its accountants, counsel and other agents, to the extent reasonably
requested in connection with such review, Sheehan work papers and
documentation relating to its work papers and its audits and reviews of the
books and records of Innosearch. Documents requested pursuant to this 3.2(j)
that are protected pursuant to confidentiality agreements or are subject to
attorney-client privilege ("Innosearch Confidential Documents") shall not be
subject to this Section 3.2. Notwithstanding the foregoing, Innosearch shall
disclose to BARRA the general subject matter of the Innosearch Confidential
Documents, and any matter therein which would have a material adverse effect
on this transaction or on the business or financial performance of Innosearch
on Schedule 3.2(j). Client files that are protected pursuant to
confidentiality agreements signed with Innosearch, pursuant to fiduciary
obligations to maintain confidentiality under the Advisers Act (as defined in
Section 4.8(a) or are subject to attorney-client privilege shall not be
subject to this Section 3.2(j) ("Innosearch Confidential Files").
Notwithstanding the foregoing, the Innosearch Shareholders shall
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disclose to BARRA on attached Schedule 3.2(j) the general subject matter of
the Innosearch Confidential Files and any matter therein which would have a
material adverse effect on this transaction.
(k) EMPLOYEE WELFARE BENEFIT PLANS. Innosearch agrees that
Innosearch's employee welfare benefit plans, as that term is used in Section
3(k) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), may be continued or merged into BARRA's welfare benefit plans, on
or after the Closing Date, as determined by BARRA in its sole discretion,
subject to compliance with applicable law and the terms of the plans.
Attached hereto as Schedule 3.2(k) of the Innosearch Disclosure Statement is
a list of all of Innosearch's employee welfare benefit plans.
(l) LITIGATION DEVELOPMENTS. Innosearch agrees to promptly advise
BARRA with respect to any and all material legal actions or other material
proceedings or investigations against Innosearch or such subsidiaries and to
promptly advise BARRA with respect to any significant developments arising in
connection with said actions, proceedings or investigations.
(m) EMPLOYMENT. Neither Innosearch nor the Innosearch
Shareholders, shall solicit any of the officers or directors of BARRA or its
subsidiaries to leave their employment with BARRA or its subsidiaries,
without obtaining the prior written consent of BARRA.
17.3 COVENANTS OF THE PARTIES. Each party shall use its best efforts to
cause its officers, directors, employees, auditors, agents, and attorneys to
cooperate with the other in the reasonable requests for information by the
other parties hereto. In addition, the parties acknowledge and confirm the
terms of a confidentiality letter dated December 26, 1996 between BARRA and
the Updata Group, Inc., and a confidentiality letter dated February 4, 1997
between BARRA and GAT which provisions shall remain in effect in accordance
with their terms.
18. REPRESENTATIONS AND WARRANTIES OF THE INNOSEARCH SHAREHOLDERS.
Each of the Innosearch Shareholders jointly and severally represents and
warrants to BARRA that except as disclosed to BARRA in writing on a separate
disclosure statement attached hereto (the "Innosearch Disclosure Statement")
which Innosearch Disclosure Statement shall be deemed to be representations
and warranties to the appropriately cross-referenced sections as if made
hereunder:
18.1 CORPORATE STATUS AND POWER TO ENTER INTO AGREEMENTS. Innosearch
(i) is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of organization, (ii) is not
subject to any order (formal or informal) or agreement, of the Securities and
Exchange Commission ("SEC") or any other regulatory authority having
jurisdiction over its business or any of its assets or properties, and (iii)
is
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in full compliance with any agreements, understandings or orders of the SEC
or any other regulatory authority having jurisdiction over its business or
any of its assets or properties. Innosearch is duly qualified to do business
as a foreign corporation under the laws of each jurisdiction in which the
conduct of its business requires such qualification or license, and where
failure to be so qualified would have a material adverse effect on it, and
each such jurisdiction is set forth on Schedule 4.1 of the Innosearch
Disclosure Statement.
18.2 EXECUTION AND DELIVERY OF THE AGREEMENT.
(a) The execution and delivery by the Innosearch Shareholders of
this Agreement and the consummation of the transactions described herein (A)
do not violate any provision of the Certificate of Incorporation or Bylaws of
Innosearch, any provision of federal or state law or any governmental rule or
regulation (assuming (1) receipt of the Government Approvals, (2) receipt of
appropriate permits or approvals under applicable federal and state
securities laws, and (3) accuracy of the representations of BARRA set forth
herein), and do not require any consent of any person under, conflict with or
result in a breach of, or accelerate the performance required by any of the
terms of any material debt instrument, lease, license, covenant, agreement or
understanding to which Innosearch is a party or by which it is bound or any
order, ruling, decree, judgment, arbitration award or stipulation to which
Innosearch is subject, or constitute a material default thereunder or result
in the creation of any lien, claim, security interest, encumbrance, charge,
restriction or similar right of any third party upon any of the properties or
assets of Innosearch.
(b) Each Innosearch Shareholder has now, and will have at the
Closing Date, all requisite legal and (if applicable) corporate, trust or
partnership power to enter into this Agreement, to receive the BARRA Shares
and/or cash in exchange for Innosearch Shares hereunder and to perform its
obligations under the terms of this Agreement.
(c) This Agreement when executed and delivered by each Innosearch
Shareholder will constitute a valid and legally binding obligation of such
Innosearch Shareholder, enforceable in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy laws or other similar
laws affecting creditors' rights generally, and except that the availability
of equitable remedies may be limited.
18.3 SUBSIDIARIES AND OTHER EQUITY INTERESTS. Innosearch does not own,
directly or indirectly, any interest in any other corporation, partnership,
association, joint venture or other business entity.
18.4 CERTIFICATE, BYLAWS, BOOKS AND RECORDS. The copies of the
Certificate of Incorporation and Bylaws of Innosearch to be delivered to
BARRA prior to the date hereof are complete and accurate copies thereof as in
effect on the date hereof. The minute books of Innosearch made available to
BARRA contain an accurate record of all resolutions of the Board of Directors
(and committees thereof) and Stockholders of Innosearch. The Certificate of
Incorporation and Bylaws of Innosearch and all amendments thereto have
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been duly approved by all requisite corporate action and by the appropriate
regulatory authority to the extent required by law and each Certificate of
Incorporation has been duly filed with all appropriate governmental agencies.
18.5 COMPLIANCE WITH LAWS, REGULATIONS AND DECREES. Innosearch (i) has
the corporate power to own or lease its properties and to conduct its
business as currently conducted, (ii) has complied with, and is not in
default of any laws, regulations, ordinances, orders or decrees applicable to
the conduct of its business and the ownership of its properties, other than
where such noncompliance or default is not likely to result in a material
limitation on the conduct of its business or is not likely to otherwise have
a material adverse effect on Innosearch (iii) has not failed to file with the
proper federal, state, local or other authorities any material report or
other document required to be so filed, (iv) has all material approvals,
authorizations, consents, licenses, clearances and orders of, and has
currently effective all registrations with, all governmental and regulatory
authorities which are necessary to the business and operations of Innosearch
as now being conducted, and (v) has received no notification, formally or
informally, from any agency or department of any federal, state or local
government or any regulatory agency or the staff thereof (A) asserting that
Innosearch is not in material compliance with any of the statutes,
regulations or ordinances which such government or regulatory authority
enforces, or (B) threatening to revoke any licenses, franchise, permit or
governmental authorization of Innosearch.
18.6 CAPITALIZATION. The authorized capital stock of Innosearch
consists of ten thousand (10,000) shares of Innosearch Common Stock, ten
cents ($.10) par value per share, of which eight hundred seventy (870) shares
are duly authorized, validly existing, fully paid and nonassessable and
currently outstanding. Such stock has been issued in compliance with all
applicable registration or qualification provisions of state and federal
securities laws. No other securities of Innosearch are outstanding. There
are no outstanding (i) options, agreements, calls or commitments of any
character which would obligate Innosearch to issue, sell, pledge, assign or
otherwise encumber or dispose of, or to purchase, redeem or otherwise
acquire, any Innosearch Common Stock or any other equity security of
Innosearch, or (ii) warrants or options relating to, rights to acquire, or
debt or equity securities convertible into, shares of Innosearch Common Stock
or any other equity security of Innosearch. Attached hereto on Schedule 4.6
of the Innosearch Disclosure Statement is a list as of the date of this
Agreement of all stockholders of Innosearch and their respective number of
shares and percentage of ownership in Innosearch.
18.7 FINANCIAL STATEMENTS.
(a) Innosearch has delivered to BARRA true and correct copies of
consolidated statements of income, changes in stockholders' equity and
statements of cash flows for the fiscal years ended March 31, 1996, 1995 and
1994, and consolidated balance sheets at March 31, 1996, 1995 and 1994. Such
consolidated financial statements have been
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audited by Sheehan & Company as independent public accountants for Innosearch
during the relevant periods, and include or shall include an opinion of such
accounting firm to the effect that such financial statements have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis during the periods involved ("GAAP") and present
fairly, in all material respects, the consolidated financial position,
results of operations and cash flows of Innosearch at the dates indicated and
for the periods then ending. The opinion of such accounting firm does not
and shall not contain any qualifications. Such consolidated financial
statements for the fiscal years ended March 31, 1994, 1995 and 1996 have been
reviewed by Sheehan & Company and have been prepared in accordance with GAAP
and present fairly, in all material respects, the consolidated financial
position, results of operation and cash flows of Innosearch at the dates
indicated and for the periods then ending.
(b) Innosearch has delivered to BARRA true and correct copies of
unaudited consolidated statements of income, for the one-month periods from
April 30, 1996 through December 31, 1996 and unaudited consolidated balance
sheet at December 31, 1996. From the date hereof through the Closing Date,
Innosearch will continue to prepare unaudited consolidated financial
statements on a monthly basis and will deliver the same to BARRA no later
than 30 days after the end of each month. All such unaudited monthly
consolidated financial statements have been prepared in accordance with GAAP
and present fairly, in all material respects, the consolidated financial
position, results of operation and cash flows of Innosearch at the dates
indicated and for the periods then ending subject to normal year-end
adjustments, and the absence of certain notes thereto none of which will be
material.
(c) Innosearch has delivered or shall deliver to BARRA true and
complete copies of Innosearch's communications which were sent jointly to
shareholders during the last three years.
18.8 GOVERNMENT REGULATION.
(a) Innosearch is not registered as an investment adviser under
the Investment Advisers Act of 1940 (the "Advisers Act"), is not required to
so register, and has obtained a No-Action Letter from the Securities and
Exchange Commission, dated August 13, 1985, concerning its failure to so
register, a copy of which is attached hereto as Schedule 4.8(a)A. Innosearch
has not registered as an investment adviser in any states and is in
compliance with all state laws requiring registration, licensing or
qualification as an investment adviser through available exemptions thereto.
Innosearch has filed all reports required to be filed by it under the
Exchange Act (including Sections 13(d), (f) and (g) thereof) and rules
promulgated thereunder and all applicable state laws and regulations. All
filings required to be made by Innosearch as described in this Section 4.8
are hereafter referred to as the "Innosearch SEC Documents." Attached hereto
as Schedule 4.8(a)B of the Innosearch Disclosure Statement is a schedule
which identifies the examination and/or
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certification qualifications of each adviser representative of Innosearch.
The Innosearch SEC Documents comply in all material respects with the
applicable requirements of the 1940 Acts, and none of the Innosearch SEC
Documents contains any untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which they
were made, not misleading except to the extent corrected by a subsequently
filed Innosearch SEC Document. To the extent financial statements are
required in the Innosearch SEC Documents, such financial statements of
Innosearch included in the Innosearch SEC Documents comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by the rules
and regulations of the SEC) and fairly present the financial positions of
Innosearch as at the dates thereof and the consolidated results of their
operations and changes in financial position for the periods then ended
(subject in the case of unaudited statements, to normal recurring audit
adjustments).
(b) Innosearch is not an "investment company" within the meaning
of the Investment Company Act of 1940 (the "Company Act"), which is required
to be registered under the Company Act in order to engage in the transactions
described in Section 7 of that Act. Innosearch is not a "broker" or "dealer"
within the meaning of the Exchange Act. Copies of all inspection reports or
similar documents furnished to Innosearch by the SEC or state regulatory
authorities since January 1, 1993, are listed on Schedule 4.8(b) of the
Innosearch Disclosure Statement and copies thereof have been provided to
BARRA. Innosearch is not required to disclose any information to clients
under Rule 206(4)-4 promulgated under the Advisers Act.
(c) Except with respect to the entities listed on Schedule
4.8(c)(A) of the Innosearch Disclosure Statement attached hereto (each a
"Fund" and collectively the "Funds"), Innosearch does not act as investment
adviser or subadviser to any "investment company," as defined in the Company
Act, which is registered under such Act. Innosearch has a written investment
advisory agreement with each Fund pursuant to which Innosearch serves as
investment adviser to each Fund and has delivered to BARRA true and complete
copies of such agreements; attached hereto as Schedule 4.8(c)(B) of the
Innosearch Disclosure Statement is a list of all such agreements. Each such
agreement is in full force and effect, Innosearch is not in default
thereunder and to the best knowledge of Innosearch, no Fund that is a party
thereto is in default thereunder.
(d) Neither Innosearch nor any other "interested person" of
Innosearch as such term is defined in the Advisers Act, receives or is
entitled to receive any compensation directly or indirectly (a) from any
person in connection with the purchase or sale of securities or other
property to, from or on behalf of any of the Funds, other than bona fide
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ordinary compensation as principal underwriter for the Funds or (b) from the
Funds or its Stockholders for other than bona fide investment advisory
services, or other services.
18.9 CODE OF ETHICS. Innosearch has adopted a formal code of ethics, a
true, complete and accurate copy of which has been provided to BARRA. The
policies of Innosearch with respect to avoiding conflicts of interest are as
set forth in it's Form ADV, as amended, which have been delivered to BARRA.
There have been no material instances of non-compliance with such policies
since their adoption, except as listed on the Innosearch Disclosure Statement.
18.10 TAX RETURNS. Innosearch has timely filed all federal, state,
county, local and foreign tax returns required to be filed by it, including
without limitation, estimated tax, use tax, excise tax, real property and
personal property tax reports and returns, employer's withholding tax
returns, other withholding tax returns and Federal Unemployment Tax Returns,
and all other reports or other information required or requested to be filed
by it, and each such return, report or other information was, when filed,
complete and accurate in all material respects. Innosearch has paid all
taxes, fees and other governmental charges, including any interest and
penalties thereon, when they have become due and payable, except those that
are being contested in good faith, which contested matters are identified and
described on Schedule 4.10 of the Innosearch Disclosure Statement attached
hereto. Innosearch has not given any currently effective waivers extending
the statutory period of limitation applicable to any tax return required to
be filed by it for any period. There are no claims pending against
Innosearch for any alleged deficiency in the payment of any taxes, and no
pending or threatened audits, investigations or claims for unpaid taxes or
relating to any liability in respect of any taxes. Innosearch has delivered
to BARRA all of its and Innosearch's tax returns with respect to taxes
payable to the United States of America and the State of New York for fiscal
years ended March 31, 1996, 1995, 1994, 1993 and 1992.
18.11 MATERIAL ADVERSE CHANGE. Since December 31, 1996, there has been
(i) no adverse change which is material to the business, assets, licenses,
permits, franchises, results of operations or financial condition of
Innosearch (whether or not in the ordinary course of business), (ii) no
change in any of the assets, licenses, permits or franchises of Innosearch or
that has had or to the Innosearch Shareholder's knowledge can reasonably be
expected to have a material adverse effect on any of the items listed in
Section 4.8 above, (iii) no damage, destruction or other casualty loss
(whether or not covered by insurance) that has had or can reasonably be
expected to have a material adverse effect on any of the items listed in
Section 4.8 above, (iv) no amendment, modification, or termination of any
existing, or entering into of any new, contract, agreement, plan lease,
license, permit or franchise that is material to the business, financial
condition, assets, liabilities or operations of Innosearch, except in the
Ordinary Course of Business; (v) no disposition by Innosearch of one or more
assets that, individually or in the aggregate, are material to Innosearch
except sales of assets in the Ordinary Course of Business.
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18.12 NO UNDISCLOSED LIABILITIES. Except for items for which reserves
have been established in the audited consolidated balance sheets of
Innosearch as of March 31, 1996, and listed on Schedule 4.12 of the
Innosearch Disclosure Statement attached hereto, since such date Innosearch
has not incurred or discharged, and is not legally obligated with respect to,
any indebtedness, liability (including, without limitation, a liability
arising out of an indemnification, guarantee, hold harmless or similar
arrangement) or obligation (accrued or contingent, whether due or to become
due, and whether or not subordinated to the claims of its general creditors),
other than as a result of operations in the Ordinary Course of Business.
Innosearch is not in default under any outstanding debt obligation. No
agreement pursuant to which any assets have been or will be sold by
Innosearch entitles the buyer of such assets, unless there is material breach
of a representation or covenant by Innosearch, to cause Innosearch to
repurchase such asset or to pursue any other form of recourse against
Innosearch. Innosearch has not made nor shall make any representations or
covenants in any such agreement that contained or shall contain any untrue
statement of a material fact or omitted or shall omit to state a material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which such representations and/or covenants were made
or shall be made, not misleading. No cash, stock or other dividend or any
other distribution with respect to the stock of Innosearch has been declared,
set aside or paid, nor have any Innosearch Shares of the stock of Innosearch
been purchased, redeemed or otherwise acquired, directly or indirectly, by
Innosearch since March 31, 1996.
18.13 PROPERTIES AND LEASES.
(a) Innosearch has good and marketable title, free and clear of
all liens and encumbrances and the right of possession, subject to existing
leaseholds, to all real properties and good title to all other tangible
property and assets, reflected in the Innosearch consolidated balance sheet
as of March 31, 1996 (except property held as lessee under leases entered
into since March 31, 1996 and as set forth on Schedule 4.13(a) of the
Innosearch Disclosure Statement attached hereto and except personal property
sold or otherwise disposed of since March 31, 1996 in the Ordinary Course of
Business). All tangible properties of Innosearch conform in all material
respects with all applicable ordinances, regulations and zoning laws. All
material tangible properties of Innosearch are in a good state of maintenance
and repair and are adequate for the current business of Innosearch. No
properties of Innosearch, and no properties in which they hold a collateral
or contingent interest or purchase option, are the subject of any pending or
threatened investigation, claim or proceeding relating to the use, storage or
disposal on such property of or contamination of such property by any toxic
or hazardous waste material or substance. Innosearch does not own, possess
or have a collateral or contingent interest or purchase option in any
properties or other assets which contain or have located within or thereon
any hazardous or toxic waste material or substance unless the location of
such hazardous or toxic waste material or other substance or its use thereon
conforms in all material respects with all federal, state and local laws,
rules, regulations or other provisions
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regulating the discharge of materials into the environment. As to any asset
not owned or leased by Innosearch, Innosearch has not controlled, directed or
participated in the operation or management of any such assets or any
facilities or enterprise conducted thereon, such that it has become an owner
or operator of such asset under applicable environmental laws.
(b) All properties held by Innosearch under leases are held under
valid, binding and enforceable leases, assuming such leases have been duly
authorized by all necessary corporate action on the part of the other parties
to such leases, with such exceptions as are not material and do not interfere
with the conduct of the business of Innosearch, and Innosearch enjoys quiet
and peaceful possession of such leased property. A list of each property
held by Innosearch under lease is attached hereto as Schedule 4.13(b) of the
Innosearch Disclosure Statement. Innosearch is not in default in any material
respect under any material lease, agreement or obligation regarding its
properties to which it is a party or by which it is bound.
(c) None of Innosearch's and/or Innosearch's rights and
obligations under the leases referred to in Section 4.13(b) above require the
consent of any other party to the transaction contemplated by this Agreement.
Where such consent is required, Innosearch shall use all commercially
reasonable efforts to obtain, prior to the Closing Date, the consent of all
parties to any such transactions.
18.14 PATENTS, COPYRIGHTS, TRADEMARKS. Each of GAT and Innosearch has
exclusive right, title and interest in and to, or adequate licenses, rights,
purchase options, assignments and/or releases with respect to the foregoing,
all of the intangible property, including all patents, trademarks, service
marks, trade names, copyrights, trade secrets and other proprietary rights
(collectively, "Proprietary Rights"), necessary for its business as now
conducted and as currently proposed to be conducted, and neither GAT nor
Innosearch has not received any notice or claim of, nor does it have any
knowledge of, any infringement or misappropriation by GAT or Innosearch of
the asserted rights of others. All assignments and agreements relating to
Proprietary Rights to which GAT and/or Innosearch is a party constitute
legal, valid and binding obligations of the respective parties thereto and
are enforceable in accordance with their respective terms, assuming such
assignments and agreements have been duly authorized by all necessary
corporate action on the part of the other parties to such assignments and
agreements, and except as limited by bankruptcy and other laws of general
application affecting the rights and remedies of creditors generally and
except insofar as the availability of equitable remedies may be limited.
Neither GAT nor Innosearch is aware of any material infringement or
misappropriation by others of any of its Proprietary Rights. Each of GAT and
Innosearch and have taken all steps necessary to establish and maintain its
ownership of or interest in the Proprietary Rights. Attached hereto as
Schedule 4.14 of the Innosearch Disclosure Statement is a true and correct
list for each of GAT and Innosearch of all material: (i) Proprietary Rights
(excluding trade secrets); (ii) registrations and applications for GAT's
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and/or Innosearch's copyrights and trademarks; (iii) the trademarks under
which, and the countries in which, GAT and/or Innosearch sells or intends to
sell products; (iv) all availability searches conducted for GAT's or
Innosearch's trademarks; and (v) all Office Actions issued by the U.S. Patent
and Trademark Office and any equivalent office outside the U.S. relating to
Innosearch's or GAT's trademarks. The material products and processes in
which GAT and/or Innosearch claims trade secret protection have been
independently disclosed in writing to BARRA as of the date hereof.
Innosearch acknowledges and agrees that GAT has independently developed its
Decision and Precision products and all of the other GAT Proprietary Rights
listed on Schedule 4.14 and none of such products or Proprietary Rights
infringes any rights of any third party (including, without limitation,
Innosearch or Yamaichi). Innosearch further acknowledges and agrees that GAT
has exclusive right, title and interest in and to the Decision and Precision
products, and may develop, market, license and otherwise use such Decision
and Precision products without payment of any royalties or fees to any third
parties (including, without limitation, Innosearch or Yamaichi).
18.15 MATERIAL CONTRACTS. Except as set forth on Schedule 4.15 of the
Innosearch Disclosure Statement attached hereto, Innosearch is not a party to
or bound by any contract or other agreement made in the Ordinary Course of
Business which involves aggregate future payments by or to it of $5,000 or
more, and which is made for a fixed period expiring more than one year from
the date hereof, and Innosearch is not a party to or bound by any agreement
not made in the Ordinary Course of Business which is to be performed at or
after the date hereof. Each of the contracts and agreements disclosed to
BARRA pursuant to this Section 4.15 is a legal and binding obligation of
Innosearch (subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to enforceability, to
equitable principles of general applicability), and no material breach or
default by Innosearch, to the best of Innosearch's knowledge, exists with
respect thereto. No power of attorney or similar authorization given
directly or indirectly by Innosearch is currently outstanding.
18.16 EMPLOYMENT CONTRACTS AND BENEFITS.
(a) Attached hereto as Schedule 4.16 of the Innosearch Disclosure
Statement is an accurate list setting forth all bonus, incentive
compensation, profit-sharing, pension, retirement, stock purchase, stock
option, deferred compensation, severance, hospitalization, medical, dental,
vision, group insurance, death benefits, disability and other fringe benefit
plans, trust agreements, arrangements and commitments of Innosearch
(including but not limited to such plans, agreements, arrangements and
commitments applicable to former employees or retired employees, or for which
such persons are eligible), if any. Copies of all such plans, agreements,
arrangements and commitments that are documented and in effect on the date
hereof and any and all contracts of employment in effect on the date hereof
have been delivered to BARRA.
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(b) With respect to each employee benefit plan (as defined in
Section 3(3) of ERISA) which is listed on Schedule 4.16 of the Innosearch
Disclosure Statement and which is subject to the reporting, disclosure and
record retention requirements set forth in the IRC and Part I of Subtitle B
of Title I of ERISA and the regulations thereunder, each of such requirements
has been fully met in all material respects and on a timely basis.
(c) With respect to each employee benefit plan (as defined in
Section 3(3) of ERISA) which is listed on Schedule 4.16 of the Innosearch
Disclosure Statement and which is subject to Part 4 of Subtitle B of Title I
of ERISA, none of the following now exists or has existed within the six-year
period ending on the date hereof:
(i) Any act or omission constituting a material violation of
Section 402 of ERISA;
(ii) Any act or omission constituting a violation of Section
403 of ERISA;
(iii) Any act or omission by Innosearch or any of its
subsidiaries, or by any director, officer or employee thereof, constituting a
violation of Sections 404 and 405 of ERISA;
(iv) To the best of Innosearch's knowledge, any act or
omission by any other person constituting a violation of Sections 404 or 405
of ERISA;
(v) Any act or omission which constitutes a material
violation of Sections 406 or 407 of ERISA and is not exempted by Section 408
of ERISA or which constitutes a violation of Section 4975(c) of the IRC and
is not exempted by Section 4975(d) of the IRC; or
(vi) Any act or omission constituting a violation of Sections
503, 510 or 511 of ERISA.
(d) All contributions, premiums or other payments due from
Innosearch as of December 31, 1996 to (or under) any plan listed on Schedule
4.16 of the Innosearch Disclosure Statement have been fully paid or
adequately provided for on the unaudited financial statements of Innosearch
for the period ended December 31, 1996. All accruals thereon (including,
where appropriate, proportional accruals for partial periods) have been made
in accordance with GAAP consistently applied on a reasonable basis.
(e) Each plan listed on Schedule 4.16 of the Innosearch Disclosure
Statement complies in all material respects with all applicable requirements
of (A) the Age Discrimination in Employment Act of 1967, as amended, and the
regulations thereunder and (B) Title VII of the Civil Rights Act of 1964, as
amended, and the regulations thereunder.
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(f) Each plan listed on Schedule 416 of the Innosearch Disclosure
Statement complies in all material respects with all applicable requirements
of the health care continuation coverage provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, and the regulations thereunder.
(g) Attached hereto as Schedule 4.16 of the Innosearch Disclosure
Statement is a list of the names of each director, officer and employee of
Innosearch.
18.17 COMPLIANCE WITH ERISA. Innosearch has neither maintained nor
contributed to an employee pension benefit plan, as defined in Section 3(2)
of ERISA, including multi-employer plans.
18.18 COLLECTIVE BARGAINING AND EMPLOYMENT AGREEMENTS. Innosearch does
not have any union or collective bargaining or written employment agreements,
contracts or other agreements with any labor organization or with any member
of management, or any management or consultation agreement not terminable at
will by Innosearch without liability and no such contract or agreement is
under discussion by management with, any group of employees, any member of
management or any other person. Each of Innosearch's employees is terminable
at will by Innosearch without liability. There are no material controversies
pending between Innosearch and any current or former employees, and to the
best of Innosearch's knowledge, there are no efforts presently being made by
any labor union seeking to organize any of such employees.
18.19 COMPENSATION OF OFFICERS AND EMPLOYEES. Except as set forth on
the Employee List, which has been delivered to BARRA pursuant to Section
3.2(f), (i) no officer or employee of Innosearch is receiving aggregate
direct remuneration at a rate exceeding $3,000 per annum, and (ii) except as
provided in this Agreement, the consummation of the transactions contemplated
by this Agreement will not (either alone or upon the occurrence of any
additional or further acts or events) result in any additional payment
(whether of severance pay or otherwise) becoming due from Innosearch, or
BARRA to any employee of Innosearch.
18.20 LEGAL ACTIONS AND PROCEEDINGS. Innosearch is not a party to, or
threatened with, any legal action or other proceeding or investigation before
any court, any arbitrator of any kind or any government agency, and to the
best of the Innosearch Shareholders' knowledge, Innosearch is not subject to
any potential adverse claim, the outcome of which could involve the payment
or receipt by Innosearch of any amount in excess of $25,000, or $50,000 for
all claims in the aggregate. There is no labor dispute, strike, slow-down or
stoppage pending or, to the best of the knowledge of Innosearch, threatened
against Innosearch.
18.21 RETENTION OF BROKER OR CONSULTANT. No broker, agent, finder,
consultant or other party (other than legal, compliance, loan auditors,
accounting advisors, Sheehan and the Updata Group, Inc.) has been retained by
Innosearch or is entitled to be paid based upon
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any agreements, arrangements or understandings made by Innosearch in
connection with any of the transactions contemplated by this Agreement.
18.22 INSURANCE. Innosearch is, and has been continuously since January
1, 1993, insured with reputable insurers against all risks normally insured
against by companies similarly situated, and all of the insurance policies
and bonds maintained by Innosearch are in full force and effect, Innosearch
is not in default thereunder and all material claims thereunder have been
filed in due and timely fashion. In the judgment of the management of
Innosearch, such insurance coverage is adequate for Innosearch. Since
December 31, 1996, there has not been any damage to, destruction of, or loss
of any assets of Innosearch not covered by insurance.
18.23 TRANSACTIONS WITH AFFILIATES. Since December 31, 1996, Innosearch
has not extended credit, committed to extend credit, or transferred any asset
to or assumed or guaranteed any liability of each other or of the employees,
stockholders or directors of Innosearch, or any spouse or child of any of
them, or to any of their "affiliates" or "associates" as such terms are
defined in Rule 405 under Regulation C of the Securities Act, except for (i)
expenses in the Ordinary Course of Business not to exceed $2,000 in each
individual instance and $5,000 in the aggregate and (ii) extensions of credit
made by Innosearch and/or GAT to each other, as set forth in Schedule 4.23.
All intercompany extensions of credit and other loans between GAT and
Innosearch and their affiliates and associates have been made with all
requisite consents and approvals. Since December 31, 1996, Innosearch has
not entered into any other transactions with the employees or directors of
Innosearch or any spouse or child of any of them, or any of their affiliates
or associates.
18.24 TRADING IN BARRA COMMON. The Innosearch Shareholders represent
that they have not, either individually, jointly or collectively, during the
period constituting twenty (20) trading days prior to the date hereof, either
directly or indirectly, bought or sold, or otherwise effected any trade in
any shares of BARRA Common, or any security derivative of BARRA Common.
18.25 NO DEPARTING EMPLOYEES. Since December 31, 1996, no employee
listed on Schedule 4.25 on the Innosearch Disclosure Statement attached
hereto has left the employ of Innosearch or has given notice to Innosearch of
his or her intention to leave the employ of Innosearch nor does Innosearch
have any knowledge that any current employee who is listed on Schedule 4.25
intends, or more than 10% of all employees of Innosearch intend, to leave the
employ of Innosearch, due to the transactions contemplated by this Agreement
or otherwise. All employees who since March 31, 1996 were, or as of the
Closing Date are, significant to the operations of Innosearch are listed on
Schedule 4.25.
18.26 NO LOSS OF CUSTOMERS. Attached hereto as Schedule 4.26 is a
current list of (i) customers and subscribers of Innosearch, including
products and services subscribed for each customer and subscriber
("Innosearch Customers"), (ii) a list of Innosearch Customers
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which, since December 31, 1996, have ceased to be customers or subscribers of
Innosearch, (iii) a list of Innosearch Customers which, since December 31,
1996, have given notice that they will cease to be customers or subscribers
of Innosearch and (iv) a current list of Innosearch Customers which
Innosearch has reason to know may cease to be customers or subscribers of
Innosearch. Since December 31, 1996 to the date of this Agreement, to the
best knowledge of the Innosearch Shareholders, Innosearch has not lost any
Innosearch customers which in the aggregate accounted, or would have
accounted, for five percent (5%) or more of the gross revenues of Innosearch
for the fiscal year ended March 31, 1997. Since the date of signing of this
Agreement, to the best knowledge of the Innosearch Shareholders, Innosearch
has not lost any Innosearch Customers which in the aggregate accounted for,
or would have accounted for, three percent (3%) or more of the gross revenues
of Innosearch for the fiscal year ended March 31, 1997.
18.27 COMMUNICATIONS WITH SHAREHOLDERS. Except as disclosed to BARRA on
Schedule 4.27 of the Innosearch Disclosure Statement, Innosearch has not made
any written communications addressed solely and jointly to all Innosearch
Shareholders the last three years.
18.28 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty by Innosearch or any of the Innosearch Shareholders, and no
statement by Innosearch or any of the Innosearch Shareholders in any
certificates, agreements, schedules or other documents furnished in
connection with the transactions contemplated by this Agreement, contain or
will contain any untrue statement of a material fact or omit or will omit to
state any material fact necessary to make such representation, warranty or
statement not misleading to BARRA; provided however, that information as of a
later date shall be deemed to modify information as of an earlier date.
18.29 PROPOSED BUSINESS COMBINATION. Except with respect to the
transactions contemplated by this Agreement: (i) Innosearch has not had any
inquiries, discussions, or negotiations, nor has it received any proposals,
letters of intent, term sheets or agreements with any third party, in
connection with any proposed or potential Business Combination, as that term
is defined in Section 3.2(i); (ii) Since February 4, 1997, Innosearch has not
entered into any letter of intent, term sheet or agreement with any third
party or made any public announcement in connection with a proposed,
potential or actual Business Combination; and (iii) to the best of the
Innosearch Shareholder's knowledge, neither the execution of this Agreement,
nor the consummation of the transactions contemplated hereby, will result in
any suit, action, investigation, claim or proceeding being commenced against
BARRA, Innosearch, or the Surviving Corporation or their respective officers,
directors, employees, agents or subsidiaries, or successors in interest.
18.30 INNOSEARCH BALANCE SHEET. The Innosearch Shareholders shall
provide to BARRA a balance of sheet of Innosearch dated as March 31, 1997
(the "3/31/97 Balance Sheet"). The 3/31/97 Balance Sheet shall have been
prepared in accordance with GAAP
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and present fairly, in all material respects, the consolidated financial
position of Innosearch at the date indicated, subject to normal year-end
adjustments, and the absence of certain notes thereto, none of which notes or
adjustments will be material.
19. REPRESENTATIONS AND WARRANTIES OF BARRA.
BARRA represents and warrants to the Innosearch Shareholders that:
19.1 CORPORATE STATUS AND POWER TO ENTER INTO AGREEMENTS. BARRA is a
corporation duly organized, validly existing and in good standing under the
laws of California and, subject to the approval of this Agreement and the
transactions contemplated hereby, has all necessary corporate power to enter
into this Agreement and the Escrow Agreement and to carry out all of the
terms and provisions hereof and thereof to be carried out by it.
19.2 CERTIFICATE, BYLAWS, BOOKS AND RECORDS. The copies of the Articles
of Incorporation and Bylaws of BARRA delivered to the Innosearch Shareholders
prior to the date hereof are complete and accurate copies thereof as in
effect on the date hereof. The Articles of Incorporation and Bylaws of BARRA
and all amendments thereto have been duly approved by all requisite corporate
action and said Articles of Incorporation and all amendments thereto have
been duly filed with the California Secretary of State.
19.3 PROPERTIES. BARRA and each of its subsidiaries each has the
corporate power to own or lease its properties and to conduct its business as
currently conducted.
19.4 BARRA SEC DOCUMENTS. All documents (other than preliminary
material) that BARRA has filed with the SEC since March 31, 1996 and that
BARRA shall file with the SEC after the date hereof (collectively, the "BARRA
SEC documents") pursuant to the applicable requirements of the Securities Act
of 1933, as amended (the "Securities Act"), the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Investment Advisers Act of 1940,
as amended, and the Investment Company Act of 1940 (collectively, the "1940
Acts"), as amended, complied in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and the 1940 Acts, and
none of the BARRA SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading except to the extent
corrected by a subsequently filed BARRA SEC Document. The financial
statements of BARRA included in the BARRA SEC Documents comply as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by the rules
and regulations of the SEC) and fairly present the consolidated financial
position of BARRA and its consolidated subsidiaries as at the dates thereof
and the consolidated results of their operation and changes in financial
position for the periods then ended (subject in the case of unaudited
statements, to normal recurring
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audit adjustments). Except as disclosed in the BARRA SEC Documents filed
prior to the execution of this Agreement, or except as contemplated by this
Agreement or on account of the transactions contemplated hereby, since the
date of the most recent BARRA SEC Document, there has not been any material
adverse change in the results of operations, financial condition, assets or
business of BARRA and its subsidiaries taken as a whole.
19.5 MATERIAL ADVERSE CHANGE. Other than a change in financial
condition which will result from the consummation of the transactions
contemplated by this Agreement, there has been no material adverse change in
the financial condition, results of operation or assets of BARRA from the
financial condition, results of operation or assets indicated in the
financial statements of BARRA at December 31, 1996, which financial
statements have been heretofore provided to the Innosearch Shareholders.
19.6 EXECUTION AND DELIVERY OF THE AGREEMENT.
(a) The execution and delivery of this Agreement has been duly and
validly authorized by the Board of Directors of BARRA and this Agreement will
be duly and validly authorized by all necessary corporate action on the part
of BARRA.
(b) This Agreement has been duly executed and delivered by BARRA
and (assuming due execution and delivery by and enforceability against the
Innosearch Shareholders) constitute legal and binding obligations of BARRA,
enforceable in accordance with their terms, except as enforcement may be
limited by applicable bankruptcy laws and other similar laws affecting
creditors' rights generally, and except that the availability of equitable
remedies may be limited.
(c) The execution and delivery by BARRA of this Agreement and the
consummation of the transactions described herein (i) do not and will not
violate any provision of the Articles of Incorporation or Bylaws of BARRA,
any provision of federal or state law or any governmental rule or regulation
(assuming (A) receipt of the Government Approvals, (B) receipt of appropriate
permits or approvals under applicable state securities laws, and (C) accuracy
of the representations and warranties of the Innosearch Shareholders as set
forth herein), and (ii) do not require any consent of any person under,
conflict with or result in a breach of, or accelerate the performance
required by any of the terms of, any material debt instrument, lease,
license, covenant, agreement or understanding to which BARRA is a party or by
which it is bound or any order, ruling, decree, judgment, arbitration award
or stipulation to which BARRA is subject, or constitute a material default
thereunder or result in the creation of any lien, claim, security interest,
encumbrance, charge, restriction or similar right of any third party of any
kind whatsoever upon any of the properties or assets of BARRA.
19.7 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty by BARRA and no statement by BARRA in any certificate, agreement,
schedule or other document furnished in connection with the transactions
contemplated by this Agreement
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contains or will contain any untrue statement of material fact or omit or
will omit to state any material fact necessary to make such representation,
warranty or statement not misleading to the Innosearch Shareholders;
PROVIDED, HOWEVER, that information as of a later date shall be deemed to
modify information as of an earlier date.
19.8 CAPITALIZATION. As of March 31, 1997, the authorized capital stock
of BARRA consisted of (i) 40,000,000 shares of common stock, no par value, of
which 8,417,314 shares were issued and outstanding and (ii) 10,000,000 shares
of preferred stock, no par value of which none were issued and outstanding.
As of March 31, 1997, there were 2,200,000 shares of BARRA Common, no par
value, authorized for issuance upon exercise of stock options granted or to
be granted pursuant to the BARRA Stock Option Plan, and options to purchase
1,691,540 shares were outstanding. As of March 31, 1997, there were 30,257
shares of BARRA Common authorized for issuance upon exercise of stock options
granted or to be granted pursuant to the Rogers, Casey & Associates 1992
Stock Option Plan, and options to purchase 25,415 shares were outstanding.
As of March 31, 1997, there were 750,000 shares of Common, no par value
authorized for issuance pursuant to the BARRA, Inc. 1996 Employee Stock
Purchase Plan and 738,478 shares remained available for issuance under that
plan. Pending approval of the shareholders of BARRA at the July 31, 1997
annual meeting, the Board of Directors of BARRA has approved the
authorization of an additional 700,000 shares of BARRA Common for issuance
under the BARRA Stock Option Plan and has also approved the creation of a
Stock Option Plan for the non-employee members of the Board of Directors of
BARRA which will have 100,000 shares of BARRA Common authorized for issuance
upon exercise of stock options granted or to be granted pursuant to the terms
of that plan. Neither of these authorizations will be effective until they
are approved by the Shareholders of BARRA. Other than as set forth in this
subsection or in the BARRA SEC Documents and other than options to purchase
BARRA Common granted since March 31, 1997 under the BARRA Stock Option Plan,
there are no outstanding (i) options, agreements, calls or commitments of any
character which would obligate BARRA to issue, sell, pledge, assign or
otherwise encumber or dispose of, or to purchase, redeem or otherwise
acquire, any BARRA Common Stock or any other equity security of BARRA, or
(ii) warrants or options relating to, rights to acquire, or debt or equity
securities convertible into, shares of BARRA Common Stock or any other equity
security of BARRA.
19.9 Duly Authorized Issuances. All BARRA Shares will, when issued and
delivered pursuant to and in accordance with the terms of this Agreement, be
duly authorized, validly issued, fully paid and nonassessable.
19.10 RETENTION OF BROKER OR CONSULTANT. Except for Hambrecht & Quist
LLC, no broker, agent, finder, consultant or other party (other than legal,
compliance, loan auditors and accounting advisors) has been retained by BARRA
or is entitled to be paid based upon any agreements, arrangements or
understandings made by BARRA in connection with any of the transactions
contemplated by this Agreement.
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19.11 COMPLIANCE WITH LAWS, REGULATIONS AND DECREES. BARRA (i) has the
corporate power to own or lease all its properties and to conduct its
business as currently conducted, (ii) has complied with, and is not in
default of any laws, regulations, ordinances, orders or decrees applicable to
the conduct of its business and the ownership of its properties, other than
where such noncompliance or default is not likely to result in a material
limitation on the conduct of its business or is not likely to otherwise have
a material adverse effect on BARRA and its subsidiaries taken as a whole,
(iii) has not failed to file with the proper federal, state, local or other
authorities any material report or other document required to be so filed,
(iv) has all material approvals, authorizations, consents, licenses,
clearances and orders of, and has currently effective all registrations with
all governmental and regulatory authorities which are necessary to the
business and operations of BARRA now being conducted, and (v) has received no
notification, formally or informally, from any agency or department of any
federal, state or local government or any regulatory agency or the staff
thereof (A) asserting that BARRA is not in material compliance with any of
the statutes, regulations or ordinances which such government or regulatory
authority enforces, or (B) threatening to revoke any material license,
franchise, permit or governmental authorization of BARRA.
20. INVESTMENT REPRESENTATION.
(a) The BARRA Shares received by the Innosearch Shareholders
pursuant to the terms of this Agreement (the "Securities") will be acquired
for the Innosearch Shareholders' own account, not as a nominee or agent, and
not with a view to the distribution of any part thereof.
(b) Each Innosearch Shareholder has investigated BARRA's business,
management and financial condition, has read the BARRA SEC Documents and has
had access to all information requested pursuant to Section 3.1(g) and to
such other information about BARRA as such Innosearch Shareholder has deemed
necessary or desirable to reach an informed and knowledgeable decision to
acquire the Securities.
(c) Each Innosearch Shareholder understands that the Securities
have not been registered under the Securities Act by reason of reliance upon
certain exemptions therefrom, and that the reliance of BARRA on such
exemptions is predicated upon, among other things, the bona fide nature of
each Innosearch Shareholder's investment intent as expressed herein.
(d) Each Innosearch Shareholder is experienced in evaluating and
investing in securities and has made investments in securities other than
those of Innosearch. Each Innosearch Shareholder is knowledgeable in
business and financial matters and is capable of evaluating the merits and
risks of an investment in BARRA. Each Innosearch Shareholder acknowledges
that it has the ability to bear the economic risk of its investment pursuant
to this Agreement.
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(e) Each Innosearch Shareholder understands that the Securities
being purchased hereunder are restricted securities within the meaning of
Rule 144 under the Securities Act; that the Securities are not registered and
must be held indefinitely unless they are subsequently registered or an
exemption from such registration is available.
(f) Each certificate representing the Securities when delivered to
the Innosearch Shareholders at the Closing or upon exercise of the Yamaichi
Option shall be endorsed with the following or substantially similar legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND MAY
NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED (I) IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THESE SECURITIES UNDER THE 1933 ACT, AND AN
EFFECTIVE REGISTRATION OR QUALIFICATION OF THESE SECURITIES FOR
SALE UNDER ANY APPLICABLE STATE SECURITIES LAW; (II) IN THE
ABSENCE OF AN OPINION OF COUNSEL SATISFACTORY TO BARRA, INC. THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED; OR (III)
UNLESS SOLD PURSUANT TO RULE 144 OR OTHER APPLICABLE PROVISIONS OF
THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAW.
Each Innosearch Shareholder agrees not to attempt any transfer of any
such securities without first complying with the substance of said legend,
and agrees that satisfaction of the issuer may, if BARRA so requests, depend
in part upon an opinion of counsel reasonably acceptable in form and
substance to the issuer, or equivalent evidence. Each of the undersigned
Innosearch Shareholders acknowledges, without limitation, that the foregoing
agreement and representation shall apply to BARRA Shares delivered to such
person as a result of the Closing.
21. REGISTRATION RIGHTS.
21.1 DEFINITIONS. As used in this Section 7, the following terms shall
have the following respective meanings:
(a) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
SEC thereunder, all as the same may be in effect at that time;
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(b) "HOLDER" means any person who holds outstanding Registrable
Securities which have not been sold to the public, but only if such person is
a Innosearch Shareholder as of the Closing Date.
(c) "REGISTER", "REGISTERED" and "REGISTRATION" mean a
registration effected through the preparation and filing of a registration
statement or similar document in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement or
document;
(d) "REGISTRABLE SECURITIES" means (i) any and all shares of BARRA
Common issued upon conversion of the Innosearch Shares pursuant to this
Agreement; and (ii) any and all shares of BARRA Common issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which
is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, such BARRA Common; PROVIDED, HOWEVER, that
(a) shares of BARRA Common which are Registrable Securities shall cease to be
Registrable Securities upon the consummation of any sale of such Innosearch
Shares pursuant to a registration statement or Rule 144 under the Securities
Act; and (b) shares of BARRA Common which are eligible to be sold by the
holder thereof under Rule 144(k) under the Securities Act without numerical
or dollar-value limitation shall cease to be Registrable Securities
(Innosearch Shares with numerical or dollar-value limitations shall cease to
be Registrable Securities at such times and in such dollar amounts as such
Innosearch Shares qualify for sale under Rule 144(e)).
(e) "REGISTRATION EXPENSES" means all expenses incurred by BARRA
in effecting any registration pursuant to this Agreement, including, without
limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for BARRA, blue sky
fees and expenses, and the expense of any special audits incident to or
required by any such registration.
(f) "SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the SEC
thereunder, all as the same may be in effect at that time;
(g) "SELLING EXPENSES" means all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered
by the Holders.
21.2 BARRA REGISTRATION.
(a) NOTICE OF REGISTRATION. If, at any time or from time to time
BARRA shall determine to register any of its securities for its own account
in connection with an offering of its securities to the general public for
cash on a form which would permit the registration of Registrable Securities,
BARRA will:
(i) promptly give to each Holder written notice thereof; and
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(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, the Registrable Securities specified in a
written request or requests (subject to Section 7.3 below), made within
twenty (20) days after mailing or personal delivery of such written notice
from BARRA by any Holders.
21.3 UNDERWRITING. If the registration of which BARRA gives notice is
for a registered public offering involving an underwriting, BARRA shall so
advise the Holders as a part of the written notice given pursuant to Section
7.2(a)(i). In such event, the right of any Holder to registration pursuant
to this Section 7 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with
BARRA) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by BARRA.
Notwithstanding any other provision of this Section 7, if the underwriter
determines that marketing factors require a limitation of the number of
Innosearch Shares to be underwritten, the underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting,
or may exclude Registrable Securities entirely from such registration and
underwriting. In such event BARRA shall so advise all Holders whose
securities would otherwise be registered and underwritten pursuant hereto,
and the number of Innosearch Shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities entitled to inclusion in such registration held by
such Holders at the time of filing the registration statement. If any Holder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to BARRA and the underwriter provided on or
before ten (10) days prior to the filing of the registration statement. Any
securities excluded or withdrawn from such underwriting shall be withdrawn
from such registration and shall not be transferred in a public distribution
prior to 180 days after the Closing Date of the registration statement
relating thereto.
21.4 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with registrations, filings, qualifications or compliance pursuant
to this Section 7 shall be borne by BARRA, and unless otherwise stated, all
Selling Expenses relating to securities registered by the Holders shall be
borne by the holders of such securities pro rata on the basis of the number
of Innosearch Shares so registered.
21.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of BARRA to take any action pursuant to this Section 7 that the
selling Holders shall furnish to BARRA such information regarding themselves,
the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
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21.6 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 7:
(a) To the extent permitted by law, BARRA will indemnify and hold
harmless each Holder, against any losses, claims, damages or liabilities
(joint or several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of
or are based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (ii) the 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 BARRA of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act, other applicable law or any state securities law in
each case to the extent (and only to the extent) that such violation occurs
in reliance upon and in conformity with statements and materials contained in
the registration statement filed with the Commission relating to such
registration including any preliminary prospectus or final prospectus
contained therein; and BARRA will reimburse each such Holder, for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 7.6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected
without the consent of BARRA (which consent shall not be unreasonably
withheld), nor shall BARRA be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such person are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify and hold harmless BARRA, each of its directors and officers, each
legal counsel and independent accountant of BARRA, each person, if any, who
controls BARRA within the meaning of the Securities Act, each underwriter
(within the meaning of the Securities Act) of BARRA's securities covered by
such a registration statement, and any other Holder selling securities in
such registration statement against any losses, claims, damages, or
liabilities (joint or several) to which BARRA, its directors, officers or
controlling persons, any such legal counsel or independent accountant of
BARRA, or any such underwriter, or other Holder may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation
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occurs in reliance upon and in conformity with written information furnished
by such Holder expressly for use in connection with such registration, and
each such Holder will reimburse any legal or other expenses reasonably
incurred by BARRA, its officers, directors, or controlling persons or any
such underwriter or, other Holder in connection with investigating or
defending any such loss, claim damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 7.6(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 7.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 7.6,
notify the indemnifying party in writing of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
shall have the right to retain its own counsel, with the fees and expenses to
be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure of any indemnified party to notify an indemnifying
party within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of liability to the indemnified party under this Section
7.6 only to the extent that such failure to give notice shall materially
prejudice the indemnifying party in the defense of any such claim or any such
litigation, but the omission so to notify the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 7.6.
21.7 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that it
will not, to the extent requested by BARRA and an underwriter of BARRA Common
(or other securities) of BARRA sell or otherwise transfer or dispose of any
Registrable Securities, except BARRA Common included in such registration,
during the one hundred eighty (180) day period following the Closing Date of
any registration statements of BARRA filed under the Securities Act.
In order to enforce the foregoing covenant, BARRA may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the Innosearch Shares or securities of every other person subject
to the foregoing restriction) until the end of such 180-day period.
22. CONDITIONS TO THE OBLIGATIONS OF BARRA.
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The obligations of BARRA under this Agreement are, at its option,
subject to fulfillment at or prior to the Closing Date of each of the
following conditions; PROVIDED, HOWEVER, that any one or more of such
conditions may be waived in writing by BARRA at any time at or prior to the
Closing Date; AND PROVIDED FURTHER, that each certificate, document, opinion
or other writing, including the Innosearch Disclosure Statement, required to
be delivered by the parties at the Closing, shall be provided at least five
(5) days prior to the scheduled Closing:
22.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Innosearch Shareholders in Sections 4 and 6 hereof shall be true and
correct in all material respects on the date hereof and as of the Closing
Date, with the same effect as though such representations and warranties had
been made on and as of such date except as to any representation or warranty
which specifically relates to a specified date, and the representations and
warranties shall not contain any material inaccuracies or omissions the
circumstances as to which either individually or in the aggregate have, or
reasonably could be expected to have, a material adverse effect on Innosearch.
22.2 COMPLIANCE AND PERFORMANCE UNDER AGREEMENT. Each Innosearch
Shareholder shall have performed and complied in all material respects with
all terms of this Agreement required to be performed or complied with by it
at or prior to the Closing Date, including, without limitation, each of the
covenants set forth in Section 3.2
22.3 MATERIAL ADVERSE CHANGE. Except as disclosed to BARRA in writing
prior to the date hereof, no materially adverse change shall have occurred
since December 31, 1996, in the business, financial condition or results of
operations of Innosearch and Innosearch shall not be a party to or threatened
with, any legal action or other proceeding before any court, any arbitrator
of any kind or any government agency if, in the reasonable judgment of BARRA,
such legal action or proceeding could materially adversely affect Innosearch,
or the business, financial condition, results of operations or prospects of
Innosearch.
22.4 SHAREHOLDERS' CERTIFICATE. BARRA shall have received a
certificate, dated the Closing Date, signed by the Innosearch Shareholders,
to the effect that the conditions in this Section 8.1, 8.2, 8.3, (to the best
of the Innosearch Shareholders' knowledge), 8.7, 8.8, 8.9, 8.10 and 8.12 have
been satisfied.
22.5 NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the purchase shall be in effect.
22.6 INNOSEARCH BOARD OF DIRECTORS. Immediately upon closing, all
members of the Board of Directors of Innosearch representing Innosearch
Shareholders who have executed this Agreement shall submit a letter of
resignation, effective as of the Closing Date.
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22.7 Government Approvals. All Government Approvals shall be in effect,
and all conditions or requirements prescribed by law or by any such
Government Approval shall have been satisfied; PROVIDED, HOWEVER, that no
Government Approval shall be deemed to have been received if it shall require
the divestiture or cessation of any of the present businesses or operations
conducted by either of the parties hereto or shall impose any other condition
or requirement, which divestiture, cessation, condition or requirement BARRA,
in its reasonable judgment shall deem to be materially burdensome (in which
case BARRA shall promptly notify Innosearch). For purposes of this Agreement
no condition shall be deemed to be "materially burdensome" if such condition
would not (a) require the taking of any action materially inconsistent with
the manner in which BARRA or Innosearch has conducted its business
previously, (b) have a material adverse effect upon the business, financial
condition or results of operations of BARRA or Innosearch, or (c) preclude
satisfaction of any of the material conditions to consummation of the
transactions contemplated by this Agreement.
22.8 EXPENSES. On or before the date hereof, all attorneys,
accountants, consultants, investment bankers and other advisors and agents
for Innosearch shall have submitted to GAT (with a copy to BARRA) estimates
of and all invoices for their fees and expenses (including, but not limited
to, legal, accounting and financial advisory expenses) for all services
rendered in any respect in connection with the transactions contemplated
hereby, (collectively, the "Innosearch Expenses"). Based on such Innosearch
Expenses, Innosearch shall have prepared and submitted to BARRA on the date
hereof a summary of such fees and expenses as of the date hereof (the
"Expense Summary"). At least five (5) business days prior to the Closing
Date, such advisors shall have submitted their final bills for such fees and
expenses to GAT for services rendered, with a copy to be delivered to BARRA,
and based on such summary, Innosearch shall have prepared and submitted to
BARRA a final Expense Summary dated as of the Closing Date.
22.9 CLOSING DOCUMENTS. BARRA shall have received such certificates and
other closing documents as counsel for BARRA shall reasonably request.
22.10 CONSENTS. Innosearch shall have received, or BARRA shall have
satisfied itself that Innosearch will receive, all consents of other parties
to and required by all material mortgages, notes, leases, franchises,
agreements, licenses and permits applicable to Innosearch, including, without
limitation, any consents required pursuant to the Advisers Act or Company Act
and for any mortgages, notes, leases, franchises, agreements, licenses and
permits listed on the Schedules 4.2(a) and 4.15 of the Innosearch Disclosure
Statement for Innosearch, in each case in form and substance reasonably
satisfactory to BARRA, and no such consent or license or permit shall have
been withdrawn or suspended.
22.11 GAT TRANSACTION. BARRA, GAT and the stockholders of GAT shall
have entered into a Stock Purchase Agreement substantially similar to this
Agreement (the "GAT
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Agreement"), except that the purchase consideration will be as set forth in
the GAT Agreement.
22.12 OPINION OF COUNSEL. Innosearch shall have delivered to BARRA an
opinion of counsel in the form that will be established by the mutual
agreement of the parties and attached hereto as EXHIBIT A at the Closing.
22.13 THIRD PARTY ACTIONS. No suit, action, investigation, claim or
proceeding commenced or to the best knowledge of Innosearch is to be
commenced by any party based in whole or in part on an argument or assertion
that BARRA, due to this Agreement, the negotiations leading up to this
Agreement, the purchase, or related agreements or activities, interfered or
is interfering with any contractual relations of Innosearch or any party with
whom Innosearch is, or has been, or may be engaged in business discussions.
23. CONDITIONS TO THE OBLIGATIONS OF THE INNOSEARCH SHAREHOLDERS.
The obligations of Innosearch Shareholders under this Agreement are
subject to the fulfillment at or prior to the Closing Date of each of the
following conditions; PROVIDED, HOWEVER, that any one or more of such
conditions may be waived in writing by a majority in interest of the
Innosearch Shareholders at any time prior to the Closing Date; AND PROVIDED
FURTHER, that each certificate, document, opinion or other writing required
to be delivered by the parties at the Closing shall be provided at least five
(5) days prior to the Closing:
23.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of BARRA in Section 5 hereof shall be true and correct in all material
respects on the date hereof and as of the Closing Date, with the same effect
as though such representations and warranties had been made on and as of such
date except as to any representation or warranty which specifically relates
to a specified date and does not contain any inaccuracies or omissions the
circumstances as to which either individually or in the aggregate have, or
reasonably could be expected to have, a material adverse effect on BARRA.
23.2 COMPLIANCE AND PERFORMANCE UNDER AGREEMENT. BARRA and its
subsidiaries shall have performed and complied in all material respects with
all of the terms of this Agreement required to be performed or complied with
by them at or prior to the Closing Date.
23.3 MATERIAL ADVERSE CHANGE. No materially adverse change shall have
occurred since December 31, 1996, in the business, financial condition,
results of operations or properties of BARRA and its subsidiaries taken as a
whole, and BARRA shall not be engaged in, or a party to or so far as BARRA is
aware, threatened with, and to BARRA's knowledge there is no reasonable basis
for, any legal action or other proceeding before any court, any arbitrator of
any kind or any government agency which, in the reasonable judgment of the
Innosearch Shareholders, could materially adversely affect BARRA or its
business, financial conditions results of operations or assets taken as a
whole.
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23.4 OFFICERS CERTIFICATE. Innosearch shall have received a
certificate, dated the Closing Date, signed on behalf of BARRA by its
President or Chief Executive Officer and Chief Financial Officer or
Treasurer, certifying to the fulfillment of the conditions stated in Sections
9.1, 9.2, 9.3, 9.6 (to the best of BARRA's knowledge), 9.5, 9.8, and 9.11.
23.5 OPINION OF COUNSEL. BARRA shall have delivered to the Innosearch
Shareholders an opinion of its counsel in a form that will be established by
the mutual agreement of the parties and attached hereto as EXHIBIT B at the
Closing.
23.6 THIRD PARTY ACTIONS. No suit, action, investigation, claim or
proceeding commenced or to the best knowledge of BARRA is to be commenced by
any party based in whole or in part on an argument or assertion that the
Innosearch Shareholders, due to this Agreement, the negotiations leading up
to this Agreement, or related agreements or activities, interfered or is
interfering with any contractual relations of BARRA or any party with whom
BARRA is, or has been, or may be engaged in business discussions.
23.7 CLOSING DOCUMENTS. The Innosearch Shareholders shall have received
such certificates and other closing documents as counsel for Innosearch shall
reasonably request.
23.8 NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the purchase shall be in effect.
23.9 GAT TRANSACTION. BARRA, GAT and the stockholders of GAT shall have
entered into the GAT Agreement.
23.10 GOVERNMENT APPROVALS. All Government Approvals shall be in
effect, and all conditions or requirements prescribed by law or by any such
Government Approval shall have been satisfied; PROVIDED, HOWEVER, that no
Government Approval shall be deemed to have been received if it shall require
the divestiture or cessation of any of the present businesses or operations
conducted by any of the parties hereto or shall impose any other condition or
requirement, which divestiture, cessation, condition or requirement
Innosearch, in its reasonable judgment shall deem to be materially burdensome
(in which case the Innosearch Shareholders shall promptly notify BARRA). For
purposes of this Agreement no condition shall be deemed to be "materially
burdensome" if such condition would not (a) require the taking of any action
materially inconsistent with the manner in which BARRA or Innosearch has
conducted its business previously, (b) have a material adverse effect upon
the business, financial condition or results of operations of BARRA or
Innosearch, or (c) preclude satisfaction of any of the material conditions to
consummation of the transactions contemplated by this Agreement.
24. EXPENSES.
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BARRA and the Innosearch Shareholders agree to pay, without right of
reimbursement from the other party and whether or not the transactions
contemplated by this Agreement shall be consummated, the costs incurred by
each such party incident to the preparation and negotiation of this
Agreement, performance of its obligations under this Agreement and the
consummation of the transactions contemplated hereby and thereby, including
the fees and disbursements of attorneys, accountants, consultants, investment
bankers and other advisors employed by such party in connection therewith.
25. SURVIVAL, INDEMNIFICATION AGAINST LOSS.
25.1 SURVIVAL. The representations, warranties, and agreements made
herein, including but not limited to the indemnification provisions of
Sections 11.2 and 11.3 shall survive any investigation made by any party
hereto. The representations and warranties made herein shall survive the
Closing of the transactions contemplated hereby for a period of one year from
the Closing Date. The representations, warranties, indemnifications and
agreements made pursuant to Section 4.29, Section 11.2 and Section 11.3 shall
survive (i) if a Closing shall occur, for a period of one year from the
Closing Date; or (ii) if this Agreement is terminated, until one year after
the termination of this Agreement. The confidentiality covenants of BARRA
contained in Section 3.3 shall expire on the Closing Date.
25.2 INNOSEARCH SHAREHOLDERS' INDEMNIFICATION.
(a) All of the Innosearch Shareholders shall jointly and severally
defend and indemnify BARRA against, and jointly and severally agree to
indemnify and hold BARRA harmless from, any and all losses, claims, damages,
penalties, liabilities, fines, injuries, costs and expenses (including
reasonable attorneys', accountants' and other professionals' fees,
administrative expenses, prejudgment interest and court costs), incurred or
suffered by BARRA relating to or arising out of or in connection with any
breach or non-fulfillment of or any inaccuracy in any representation,
warranty or covenant made by the Innosearch Shareholders or failure by the
Innosearch Shareholders to perform any obligation or covenant to be performed
by them pursuant to this Agreement or any document delivered by the
Innosearch Shareholders at the Closing.
(b) Claims for indemnity made by BARRA pursuant to the provisions
of Section 11.2(a) must total $10,000 in the aggregate before BARRA can seek
reimbursement for such claims from the Innosearch Shareholders (once the
$10,000 threshold is met, BARRA can seek reimbursement for all indemnity
claims, including those up to the $10,000 threshold but only to the extent
that such claims are limited by Section 11.5).
25.3 BARRA'S INDEMNIFICATION.
(a) BARRA shall defend and indemnify the Innosearch Shareholders
against and agrees to indemnify and hold each of them harmless from any and
all losses,
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claims, damages, penalties, liabilities, fines, injuries, costs and expenses
(including reasonable attorneys', accountants' and other professionals' fees,
administrative expenses, prejudgment interest and court costs), incurred or
suffered by any of them relating to or arising out of or in connection with
any breach or non-fulfillment of or any inaccuracy in any representation,
warranty or covenant made by BARRA or failure by BARRA to perform any
obligation or covenant to be performed by it pursuant to this Agreement or
any document delivered by BARRA at the Closing.
(b) Claims for indemnity made by the Innosearch Shareholders
pursuant to the provisions of Section 11.3(a) must total $10,000 in the
aggregate before the Innosearch Shareholders can seek reimbursement for such
claims from BARRA (once the $10,000 threshold is met, the Innosearch
Stockholders can seek reimbursement for all additional indemnity claims,
including those up to the $10,000 threshold (but only to the extent that such
claims are limited by Section 11.5).
25.4 INDEMNIFICATION PROCEDURES.
(a) Promptly upon obtaining knowledge of any claim, event,
statement of facts or demand which has given rise to, or could reasonably
give rise to, a claim for indemnification hereunder, any party seeking
indemnification under this Article 11 (an "Indemnified Party") shall give
written notice of such claim or demand ("Notice of Claim") to the party from
which indemnification is sought (an "Indemnifying Party"), setting forth the
amount of the claim. The Indemnified Party shall furnish to the Indemnifying
Party in reasonable detail, such information as it may have with respect to
such indemnification claim (including copies of any summons, complaint or
other pleading which may have been served on it and any written claim,
demand, invoice, billing or other document evidencing or asserting the same).
No failure or delay by the Indemnified Party in the performance of the
foregoing shall reduce or otherwise affect the obligation of the Indemnifying
Party to indemnify and hold the Indemnified Party harmless, except to the
extent that such failure or delay shall have adversely affected the
Indemnifying Party's ability to defend against, settle or satisfy any
liability, damage, loss, claim or demand for which the Indemnified Party is
entitled to indemnification hereunder.
(b) Promptly after receipt of notice of any claim by a third party
which might give rise to indemnification hereunder, the Indemnified Party
shall notify the Indemnifying Party in writing specifying in reasonable
detail the nature and amount of the claim. The Indemnifying Party shall be
entitled to assume and have the sole control of the defense and settlement of
such action or claim; PROVIDED, HOWEVER, that:
(i) the Indemnified Party shall be entitled to participate in
the defense of such claim and, in connection therewith, to employ counsel at
its own expense;
(ii) without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld, the Indemnifying
Party shall not
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consent to the entry of any judgment or enter into any settlement that
requires any action by the Indemnified Party other than the payment of money.
(c) In the event the Indemnifying Party elects to assume control
of the defense of any such action in accordance with the foregoing
provisions, (i) the Indemnifying Party shall not be liable to the Indemnified
Party for any legal fees, costs and expenses incurred by the Indemnified
Party in connection with the defense thereof after the date on which the
Indemnifying Party notifies the Indemnified Party of such election and (ii)
the Indemnified Party shall fully cooperate with the Indemnifying Party in
such defense. If the Indemnifying Party does not assume control of the
defense of such claim in accordance with the foregoing provisions, the
Indemnified Party shall have the right to defend such claim, in which case
the Indemnifying Party shall pay all reasonable costs and expenses of such
defense. The Indemnified Party shall conduct such defense in good faith and
shall have the right to settle the matter with the prior written consent of
the Indemnifying Party which consent shall not be unreasonably withheld.
(d) Except for third-party claims being defended in good faith,
the Indemnifying Party shall satisfy its obligations hereunder within thirty
(30) days after the Date of the Notice of Claim.
(e) The term "Date of the Notice of Claim" as used in this Article
10 shall mean either: (i) the third business day after the date of the
postmark on the registered or certified mail containing the Notice of Claim;
or (ii) if the Notice of Claim is personally delivered, the date of such
personal delivery.
25.5 LIMITATION ON INDEMNIFICATION CLAIMS.
(a) Claims for indemnity made by Innosearch pursuant to the
provisions of Section 11.3 (but excluding claims resulting from fraud and
willful misconduct (the "Misconduct Claims") shall be limited to One Hundred
Thousand Dollars ($100,000.)).
(b) Claims for indemnity made by BARRA pursuant to the provisions
of Section 11.2 (but excluding Misconduct Claims) shall be limited to One
Hundred Thousand Dollars ($100,000).
25.6 LIABILITY LIMITED TO INDEMNIFICATION.
(a) The consideration paid by BARRA to the Innosearch Shareholders
to acquire the Innosearch Shares has been established by the parties hereto
based on the allocation of risk and rights of recovery hereunder.
(b) The Innosearch Shareholders have had an opportunity to do due
diligence of BARRA and accordingly have agreed to limit their right to
recourse as set forth in this Section 11. Each of the Innosearch
Shareholders and the affiliates of each shall
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have no claim or cause of action, whether in contract, tort, under statute or
otherwise, for monetary damages arising out of, or relating to, this
Agreement, the representations and warranties herein or any of the
transactions contemplated hereby apart from the right to indemnification
pursuant to Section 11 hereof.
(c) BARRA has had an opportunity to do due diligence of Innosearch
but has not received copies of all of GAT's or Innosearch's correspondence
with Yamaichi relating to any aspect of this Agreement and accordingly has
agreed to limit its right to recourse as set forth in this Section 11. BARRA,
and the affiliates of BARRA shall have no claim or cause of action, whether
in contract, tort, under statute or otherwise, for monetary damages arising
out of, or relating to, this Agreement, the representations and warranties
herein or any of the transactions contemplated hereby apart from the right to
indemnification pursuant to Section 11 hereof.
(d) The Innosearch Shareholders' obligation to indemnify BARRA
under this Section 11 includes the obligation to indemnify BARRA, and all of
its officers, directors, affiliates and subsidiaries.
26. AMENDMENT; TERMINATION.
26.1 AMENDMENT. This Agreement may be amended by the mutual consent of
the board of directors of BARRA and a majority in interest of the Innosearch
Shareholders at any time prior to the Closing Date with respect to any of its
terms.
26.2 TERMINATION. This Agreement may be terminated as follows:
(a) By the mutual consent of the board of directors of BARRA and a
majority in interest of the Innosearch Shareholders at any time prior to the
Closing.
(b) By the Board of Directors of BARRA on or after ninety (90)
days from the date of this Agreement, but in no event later than the Closing
Date, if any of the conditions in Section 9 to which the obligations of BARRA
are subject have not been fulfilled.
(c) By a majority in interest of the Innosearch Shareholders on or
after ninety (90) days from the date of this Agreement but in no event later
than the Closing Date, if any of the conditions contained in Section 8 to
which the obligations of the Innosearch Shareholders are subject have not
been fulfilled.
26.3 NOTICE. The power of termination hereunder may be exercised by
BARRA or the Innosearch Shareholders, as the case may be, only by giving
written notice to the other party in accordance with the provisions of
Section 13.1.
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26.4 TERMINATION AND EXPENSES. Termination of this Agreement shall not
terminate or affect the obligations of the parties to each pay their own
expenses as provided in Section 10, to maintain the confidentiality of the
other party's information pursuant to Section 3.3, or the provisions of this
Section 12.4, or of Sections 13.1, 13.3, 13.4, 13.5 or 13.6 or the second
sentence of Section 13.2 below and shall not affect any agreement after such
termination. The obligations of BARRA under Sections 3.1(f) and 11.3, and
the obligations of the Innosearch Shareholders under Section 3.2(m) and
Section 11.2, shall survive for one (1) year following any termination of
this Agreement. The Innosearch Shareholders and BARRA agree that any other
termination of this Agreement shall not in any manner release or be construed
as so releasing the nonterminating party or parties from any liability or
damage to the other party or parties arising out of, in connection with or
otherwise relating to, directly or indirectly, such parties' failure in
performance of any of its covenants or agreements hereunder, including
without limitation, any obligations arising under Section 11 of this
Agreement.
27. MISCELLANEOUS.
27.1 NOTICES. Any notice or other communication required or permitted
under this Agreement shall be effective only if it is in writing and
delivered personally, or by overnight express (DHL, UPS or Federal Express)
or by facsimile or sent by first class United States mail, postage prepaid,
registered or certified mail, addressed as follows:
To BARRA: To the Innosearch Shareholders
1995 University Avenue c/o Innosearch:
Suite 150 Wall Street Plaza
Berkeley, California 94704 88 Pine Street
Tel: (510) 548-5442 New York, NY 10005
Fax: (510) 548-5374 Tel:
Attention: Chief Executive Officer Fax:
and General Counsel Attn: Thomas Ho
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<PAGE>
With a copy to: With a copy to:
David M. Niebauer, Esq. Thomas T. Chan, Esq.
Graham & James LLP Chan Law Group PLC
One Maritime Plaza, Suite 300 911 Wilshire Boulevard, Suite
San Francisco, California 94111-3492 2288
Los Angeles, California 90017-3451
Tel: Tel:
Fax: Fax:
or to such other address as either party may designate by notice to the
other, and shall be deemed to have been given upon receipt.
27.2 BINDING AGREEMENT. This Agreement is binding upon and is for the
benefit of BARRA, the Innosearch Shareholders, and their respective
successors and permitted assigns. This Agreement is not made for the benefit
of any person, firm, corporation or association not a party hereto, and no
other person, firm, corporation or association shall acquire or have any
right under or by virtue of this Agreement. No party may assign this
Agreement or any of its rights, privileges, duties or obligations hereunder
without the prior written consent of the other parties to this Agreement.
27.3 CONSENT TO JURISDICTION AND FORUM SELECTION. The parties hereto
agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated exclusively in the State and Federal
courts located in the County of San Francisco, State of California. The
aforementioned choice of venue is intended by the parties to be mandatory and
not permissive in nature, thereby precluding the possibility of litigation
between the parties with respect to or arising out of this Agreement in any
jurisdiction other than that specified in this paragraph. Each party hereby
waives any right it may have to assert the doctrine of forum non conveniens
or similar doctrine or to object to venue with respect to any proceeding
brought in accordance with this paragraph, and stipulates that the State and
Federal courts located in the County of San Francisco, State of California
shall have in personam jurisdiction and venue over each of them for the
purpose of litigating any dispute, controversy, or proceeding arising out of
or related to this Agreement. Each party hereby authorizes and accepts
service of process sufficient for personal jurisdiction in any action against
it as contemplated by this paragraph by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices
as set forth in this Agreement. Any final judgment rendered against a
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<PAGE>
party in any action or proceeding shall be conclusive as to the subject of
such final judgment and may be enforced in other jurisdictions in any manner
provided by law.
27.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of California, without
giving effect such state's choice-of-law principles.
27.5 ATTORNEYS' FEES. In any action at law or suit in equity in
relation to this Agreement, the prevailing party in such action or suit shall
be entitled to receive a reasonable sum for its attorneys' fees and all other
reasonable costs and expenses incurred in such action or suit.
27.6 ENTIRE AGREEMENT; SEVERABILITY. This Agreement and the
Confidentiality Agreement by and between GAT and BARRA, dated December 26,
1996 and the documents, certificates, agreements, letters, schedules and
exhibits attached or required to be delivered pursuant hereto set forth the
entire agreement and understanding of the parties in respect of the
transactions contemplated hereby, and supersede all prior agreements,
arrangements and understandings relating to the subject matter hereof. Each
provision of this Agreement shall be interpreted in a manner to be effective
and valid under applicable law, but if any provision hereof shall be
prohibited or ruled invalid under applicable law, the validity, legality and
enforceability of the remaining provisions shall not, except as otherwise
required by law, be affected or impaired as a result of such prohibition or
ruling.
27.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
27.8 WAIVERS. Prior to or on the Closing Date, each of BARRA and the
Innosearch Shareholders shall have the right to waive any default in the
performance of any term of this Agreement by BARRA and the Innosearch
Shareholders, to waive or extend the time for the compliance or fulfillment
by the other of any and all of the other's obligations under this Agreement
and to waive any or all of the conditions precedent to its obligations under
this Agreement. No failure to exercise and no delay in exercising any right,
remedy or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy or power hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy or power provided herein or by law or in equity. The waiver by any
party of the time for performance of any act or condition hereunder does not
constitute a waiver of the act or condition itself.
IN WITNESS WHEREOF, BARRA and each of the Innosearch Shareholders have
each caused this Agreement to be signed, effective as of the date written
above.
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<PAGE>
BARRA, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Global Advanced Technology Corporation.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
- ---------------------------------
Thomas Ho
- ---------------------------------
Mabel Chan
- ---------------------------------
Yun-Xian Ho
- ---------------------------------
Mark Wainger
YAMAICHI SECURITIES COMPANY, LTD.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
121
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BARRA, INC
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTH PERIOD
ENDING JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 20041267
<SECURITIES> 15868819
<RECEIVABLES> 15065877
<ALLOWANCES> 137247
<INVENTORY> 0
<CURRENT-ASSETS> 61488205
<PP&E> 23734761
<DEPRECIATION> 11876801
<TOTAL-ASSETS> 92977770
<CURRENT-LIABILITIES> 37732934
<BONDS> 0
0
0
<COMMON> 23080889
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 52603270
<SALES> 27106462
<TOTAL-REVENUES> 27106462
<CGS> 0
<TOTAL-COSTS> 20558116
<OTHER-EXPENSES> 9914000<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3478133)
<INCOME-TAX> 2783874
<INCOME-CONTINUING> (6262007)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6262007)
<EPS-PRIMARY> (.74)
<EPS-DILUTED> 0
<FN>
<F1>ONE-TIME ACQUISITION CHARGES OF $9,914,000 REPRESENT PURCHASED IN-PROCESS
RESEARCH AND DEVELOPMENT IN CONNECTION WITH THE ACQUISITIONS OF GAT AND
INNOSEARCH ON JUNE 24, 1997. EXCLUDING ONE-TIME ACQUISITION CHARGES, NET
INCOME PER SHARE WOULD HAVE BEEN $.39.
</FN>
</TABLE>
