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Exhibit 2.1
STOCK PURCHASE AGREEMENT
AMONG
BSW HOLDINGS, INC., AS BUYER,
ELECTRONIC DATA SYSTEMS CORPORATION, AS SELLER,
AND
UGS PLM SOLUTIONS INC.
DATED AS OF MARCH 12, 2004
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TABLE OF CONTENTS
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1. DEFINITIONS
1.1
Definitions............................................................
1
1.2
References and
Titles..................................................
8
2. PURCHASE AND SALE
2.1
Purchase and Sale of Common
Stock...................................... 8
2.2
Closing................................................................
8
2.3
Working Capital
Adjustment.............................................
9
2.4
Post-Closing
Payment...................................................
10
2.5
Foreign Cash
Adjustment................................................
10
2.6
Access.................................................................
12
3. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY
3.1
Organization, Qualification and
Authority.............................. 12
3.2
Capitalization.........................................................
13
3.3
Authorization; Valid and Binding
Agreement............................. 13
3.4
Noncontravention;
Consents............................................. 14
3.5
Financial Statements, Books and
Records................................ 14
3.6
Recent
Events..........................................................
15
3.7
Tax
Matters............................................................
16
3.8
Properties.............................................................
18
3.9
Intellectual Property;
Software........................................ 18
3.10
Contracts..............................................................
21
3.11
Litigation.............................................................
22
3.12
Employees; Employment
Matters.......................................... 23
3.13
Employee Benefit
Plans................................................. 23
3.14
Licenses, Permits and Approvals; Compliance with
Laws..................
25
3.15
Insurance..............................................................
26
3.16
Environmental
Matters..................................................
26
3.17
Brokers'
Fees..........................................................
27
3.18
Transactions with
Affiliates........................................... 27
3.19
Customers and
Suppliers................................................
27
4. REPRESENTATIONS AND WARRANTIES OF SELLER
4.1
Organization, Qualification and
Authority.............................. 28
4.2
Authorization; Valid and Binding
Agreement............................. 28
4.3
Noncontravention;
Consents............................................. 28
4.4
Consents...............................................................
28
4.5
Title to Purchased
Shares.............................................. 29
4.6
Broker's
Fees..........................................................
29
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5. REPRESENTATIONS AND WARRANTIES OF BUYER
5.1
Organization and
Power................................................. 29
5.2
Authorization; Valid and Binding
Agreement............................. 29
5.3
Noncontravention;
Consents............................................. 29
5.4
Litigation.............................................................
30
5.5
Broker's
Fees..........................................................
30
5.6
Investment
Representation..............................................
30
5.7
Financing..............................................................
30
6. COVENANTS OF SELLER AND THE COMPANY
6.1
Conduct of the
Business................................................
31
6.2
Access to Books and
Records............................................ 32
6.3
Regulatory
Filings.....................................................
32
6.4
Conditions;
Cooperation................................................
32
6.5
Exclusive
Dealing......................................................
33
6.6
Notification...........................................................
33
6.7
Financial Statements and
Reports....................................... 33
6.8
Non-Compete;
Non-Solicitation..........................................
34
6.9
Confidential
Information...............................................
35
6.10
Payments
Received......................................................
36
6.11
Software
Master........................................................
36
6.12
Intercompany
Liabilities...............................................
36
7. COVENANTS OF BUYER
7.1
Notification...........................................................
36
7.2
Regulatory
Filings.....................................................
36
7.3
Conditions.............................................................
37
7.4
Financing..............................................................
37
7.5
Certain Matters Relating to Special Indemnified
Losses................. 38
8. ADDITIONAL COVENANTS AND AGREEMENTS
8.1
Independent
Investigation..............................................
38
8.2
Tax
Matters............................................................
39
8.3
Additional Documents
and Instruments; Execution and Delivery of Certain
Documents at
Closing...................................................
43
8.4
Agreement Regarding Attorney/Client Privilege
Waiver................... 44
8.5
Insurance
Matters......................................................
44
8.6
Employees and Employee
Benefits........................................ 46
8.7
Separate Acquisitions of Foreign
Subsidiaries.......................... 49
8.8
Stand-Alone
Requirements...............................................
49
8.9
Back-to-Back
Agreements................................................
49
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9. CONDITIONS TO CLOSING
9.1
Conditions to Buyer's
Obligations...................................... 50
9.2
Conditions to Seller's
Obligations..................................... 51
10. TERMINATION
10.1
Termination............................................................
52
10.2
Effect of
Termination..................................................
53
11. SURVIVAL OF WARRANTIES AND INDEMNIFICATION
11.1
Survival...............................................................
53
11.2
Indemnification........................................................
54
11.3 Limits on
Indemnification..............................................
54
11.4
Matters Involving Third
Parties........................................ 56
11.5
Exclusive
Remedy.......................................................
57
11.6
Remedies
Cumulative....................................................
57
12. MISCELLANEOUS
12.1 No
Third Party
Beneficiaries...........................................
58
12.2 No
Public
Disclosure...................................................
58
12.3
Entire
Agreement.......................................................
58
12.4
Succession and
Assignment..............................................
58
12.5
Counterparts...........................................................
58
12.6
Notices................................................................
58
12.7
Governing Law; Jurisdiction and
Venue.................................. 60
12.8
Waiver of Trial by
Jury................................................ 60
12.9
Amendments and
Waivers.................................................
61
12.10
Severability...........................................................
61
12.11
Expenses...............................................................
61
12.12
Construction...........................................................
61
12.13 Tax
Disclosure.........................................................
62
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Exhibits:
Exhibit A - Executive Employment Agreement
Exhibit B - Stand-Alone Requirements
Exhibit C-1 - Co-Location License
Exhibit C-2 -- Standard Sublease Agreement
Exhibit D-1 - Debt Financing Commitment Letters
Exhibit D-2 - Equity Financing Commitment Letters
Exhibit E - Royalty Plan
Exhibit F - Working Capital Methodology
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STOCK PURCHASE AGREEMENT
THIS STOCK
PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of March 12, 2004, among (i) BSW Holdings, Inc., a Delaware
corporation
("BUYER"), (ii) Electronic Data Systems Corporation, a Delaware
corporation
("SELLER"), and (iii) UGS PLM Solutions Inc., a Delaware
corporation (together
with its predecessors, the "COMPANY"). Buyer, Seller and the
Company are each
sometimes referred to herein individually as a "PARTY" and
collectively as the
"PARTIES."
RECITALS
A.The
Company is in the business of researching and developing,
marketing,
licensing and maintaining computer-aided design, computer-aided
manufacturing,
computer-aided engineering, product lifecycle management, product
data
management and related software for customers in academia and a
wide range of
industries, including aerospace, automotive, hi-tech, machine tool
and consumer
goods, and providing services related to such software, including
installation,
integration, modification and process engineering services (as
conducted on the
date hereof, the "BUSINESS").
B. Seller
owns 1,000 shares of common stock, par value $.01 of the
Company
(the "COMMON STOCK"), which 1,000 shares of Common Stock constitute
all of the
issued and outstanding capital stock of the Company.
C. Seller
desires to sell, and Buyer desires to purchase, all of the
shares of the Common Stock owned by Seller (the "PURCHASED SHARES")
on the terms
and conditions set forth herein.
D. Before
the execution of this Agreement the Company has entered into an
executive employment agreement attached hereto as Exhibit A (the
"EXECUTIVE
EMPLOYMENT AGREEMENT") with Anthony J. Affuso, President and Chief
Executive
Officer of the Company.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing Recitals and the
representations, warranties and covenants herein contained, the
Parties hereby
agree as follows:
1. DEFINITIONS
1.1
Definitions. The following terms shall have the meanings ascribed
to
them below in this Agreement:
"ADVERSE
CONSEQUENCES" means all damages, dues, penalties, fines, costs,
losses, and expenses.
"AFFILIATE" means, with respect to any particular Person, any
Person
controlling, controlled by or under common control with such
Person, whether by
ownership or control of voting securities, by contract or
otherwise, or any
partner, director, manager or executive officer of such Person.
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"BUSINESS
DAY" means any day other than (a) a Saturday, Sunday or federal
holiday or (b) a day on which commercial banks in the State of
Texas or New York
are authorized or required to be closed.
"BUYER
INDEMNIFIED TAXES" means any and all Taxes (other than Transfer
Taxes allocated to Buyer in Section 8.2(g)) (a) imposed on the
Company or any
Subsidiary of the Company for any Taxable period ending on or prior
to the
Closing Date or the portion of any Straddle Period ending on the
Closing Date
(determined in accordance with the provisions of Section 8.2(c)),
(b) for which
the Company or any Subsidiary of the Company may be liable under
Treasury
Regulation Section 1.1502-6 by reason of its having been a member
of Seller's
affiliated group (or any corresponding provision of state, local or
foreign
law), (c) of any other Person for which the Company or any
Subsidiary of the
Company may be liable as a transferee or successor, by contract or
otherwise for
any Taxable period ending on or prior to the Closing Date or the
portion of any
Straddle Period ending on the Closing Date, (d) resulting from a
breach of any
covenant, representation or warranty of Seller or any of its
Affiliates or (e)
equal to the excess of, if any, foreign Taxes of any Subsidiary
actually paid by
such Subsidiary over foreign Taxes of such Subsidiary that would
have been paid
had the royalties prepaid as described in Section 6.1(c)(iii) not
been prepaid
and instead had been paid when otherwise due and payable (excluding
foreign
Taxes attributable to a 5% royalty free sales range), in each case
not including
Taxes taken into account in determining the Final Working Capital
and without
double counting any Taxes paid by Seller or the Company on or
before the Closing
Date. Notwithstanding the above, Buyer Indemnified Taxes shall not
include (x)
any Taxes of the Company or any Subsidiaries thereof that are
directly
attributable to actions taken by Buyer or its Affiliates (including
the Company
and its Subsidiaries) after the Closing Date or on the Closing Date
after the
Closing that are outside of the Ordinary Course of Business, except
to the
extent contemplated by the Transaction Documents or required by
law; (y) any
Taxes imposed as a result of a breach by Buyer of any covenant
contained in
Section 8.2; or (z) any Taxes of the Company or any Subsidiaries in
respect of
Taxable periods or portions thereof beginning on or after the
Closing Date
attributable to adjustments or eliminations of any net operating
losses,
non-capital losses, net capital losses, capital losses, credits or
tax basis of
the assets or stock of the Company.
"CODE"
means the Internal Revenue Code of 1986, as amended, and the
rules
and regulations promulgated thereunder.
"CO-LOCATED FACILITIES" means each facility identified as a
co-located
facility on Section 1.1(a) of the Company Disclosure Letter.
"CO-LOCATION LICENSE" means the license agreement, in substantially
the
form attached hereto as Exhibit C-2, for all Co-Located Facilities
for which the
words "License Agreement" appear under the caption "tenure" in
Section 1.1(a) of
the Company Disclosure Letter, with base rent at a rate equal to
the estimated
2004 annual rent set forth with respect to each Co-Located Facility
thereon,
plus associated costs in accordance with past practice, in each
case for
temporary occupancy for a period ending on the earlier of the term
set forth on
Section 1.1(a) of the Company Disclosure Letter after the Closing
Date and the
date on which the licensee relocates affected employees to other
locations, to
be entered into by Seller or its appropriate Affiliate and the
Company or its
appropriate Subsidiary on or before the Closing.
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"COMPANY
DISCLOSURE LETTER" means the disclosure letter delivered to
Buyer
by the Company concurrently with the execution of this
Agreement.
"CONFIDENTIALITY AGREEMENT" means, collectively, (i) the
Confidentiality
Agreement, dated October 23, 2003, between Seller and Warburg
Pincus LLC, (ii)
the Confidentiality Agreement, dated October 23, 2003, between
Seller and Silver
Lake Technology Management L.L.C. and (iii) the Confidentiality
Agreement, dated
October 23, 2003, between Seller and Bain Capital California,
Inc.
"DISCLOSURE LETTERS" means each of the Company Disclosure Letter
and
Seller Disclosure Letter.
"ENCUMBRANCE" means any mortgage, pledge, lien, encumbrance,
charge, or
other security interest, option, right or restriction, other than
(a)
mechanic's, materialmen's, and similar liens for amounts not yet
due and
payable, (b) statutory liens for Taxes not yet due and payable or
for Taxes that
the taxpayer is contesting in good faith, (c) purchase money liens
and liens
securing rental payments under capital lease arrangements that have
been
disclosed pursuant hereto, (d) other liens and encumbrances not
incurred in
connection with the borrowing of money that do not materially and
adversely
affect the occupancy, use or value of the affected assets, (e) in
the case of
the Common Stock or capital stock of Subsidiaries, restrictions
arising under
applicable securities laws, (f) pledges or deposits made in the
Ordinary Course
of Business in connection with workers' compensation, unemployment
insurance and
other types of social security, (g) deposits to secure the
performance of bids,
contracts (other than for borrowed money), leases, statutory
obligations, surety
and appeal bonds, performance bonds and other obligations of a like
nature
incurred in the Ordinary Course of Business, (h) zoning regulations
and
restrictive covenants and easements of record that do not detract
in any
material respect from the value of any real property and do not
materially and
adversely affect, impair or interfere with the use of any property
affected
thereby, (i) public utility easements of record, in customary form,
to serve any
real property, (j) landlords' liens in favor of landlords under the
leases with
respect to any leased real property, (k) mortgages, deeds of trust
and other
security instruments, and ground leases or underlying leases
covering the title,
interest or estate of such landlords with respect to any leased
real property
and to which the leases with respect to the leased real property
are subordinate
and (l) any mortgage, pledge, lien, encumbrance, charge, or other
security
interest, option, right or restriction described in Section 1.1(b)
of the
Company Disclosure Letter; provided, however, that clauses (a)
through (l)
(other than clause (e)) shall not apply to the Purchased Shares or
the capital
stock of the Company's Subsidiaries.
"ENVIRONMENTAL LAWS" means all existing laws, statutes, or
regulations
pertaining to Hazardous Materials and protection of the environment
including,
without limitation, the Comprehensive Environmental Response,
Compensation and
Liability Act of 1980, the Solid Waste Disposal Act, the Federal
Water Pollution
Control Act, the Clean Air Act, and the Toxic Substances Control
Act, each as
amended, and similar foreign laws.
"EXHIBITS"
means the exhibits that are attached to this Agreement and are
incorporated by reference herein.
"FINAL
WORKING CAPITAL ADJUSTMENT AMOUNT" means an amount equal to the
Final
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Working Capital less the Estimated Working Capital, together with
interest on
the absolute value of such difference at a rate equal to the
average LIBOR for
the 30 days prior to the day of payment plus 0.75% per annum for
the period
beginning on the Closing Date and ending on the date of payment of
the Final
Working Capital Adjustment Amount as provided in Section 2.4.
"GAAP"
means United States generally accepted accounting principles as
in
effect from time to time, applied consistently with the principles
used in
preparing the Financial Statements (as defined in Section 3.5
below) for the
Most Recent Fiscal Year End (as defined in Section 3.5 below).
"HAZARDOUS
MATERIAL" means any substance, whether solid, liquid or gaseous
in nature that is or becomes defined as a "HAZARDOUS WASTE," a
"HAZARDOUS
SUBSTANCE," a "POLLUTANT," or a "contaminant" under the
Environmental Laws;
petroleum products and the constituents and fractions thereof; and
asbestos and
polychlorinated biphenyls ("PCB").
"HSR ACT"
means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"INDEBTEDNESS" means (a) indebtedness for borrowed money, (b)
Liabilities
evidenced by bonds, notes, debentures or other similar instruments
or by letters
of credit, including purchase money obligations or other
obligations relating to
the deferred purchase price of property (other than trade payables
incurred in
the Ordinary Course of Business), (c) Liabilities of Persons other
than the
Company and its Subsidiaries secured by an Encumbrance on any asset
of the
Company or any of its Subsidiaries, (d) Liabilities under or in
respect of
letters of credit and bank guarantees (including reimbursement
obligations with
respect thereto), (e) Liabilities under any sale and leaseback
transaction, any
synthetic lease or tax ownership operating lease transaction or any
other
transaction which is the functional equivalent of or takes the
place of
borrowing but which does not constitute a liability on the balance
sheet, (f)
Liabilities under interest rate cap agreements, interest rate swap
agreements,
foreign currency exchange agreements and other hedging or similar
agreements,
(g) to the extent not otherwise included in the foregoing, any
Liabilities in
respect of financing of accounts receivable or inventory, and (h)
Liabilities in
the nature of guarantees of obligations of the type described in
the foregoing
clauses of any other Person.
"INDEMNIFIED PARTY" means, as the context may require, a party
entitled to
indemnification pursuant to Article 11 hereof.
"INDEMNIFYING PARTY" means, as the context may require, a party
required
to indemnify an Indemnified Party pursuant to Article 11
hereof.
"INFRINGE"
means to infringe, violate, or render unenforceable, convert,
misappropriate, or, with respect to marks, dilute.
"INTELLECTUAL PROPERTY RIGHTS" means all United States,
international and
foreign intellectual property rights, including, without
limitation, any or all
of the following rights: (a) all rights in inventions, and
proprietary methods
and processes (in each case, whether patentable or not), as well as
all United
States, international and foreign patents and applications
therefor, and all
reissues, divisions, renewals, extensions, provisionals,
continuations and
continuations-in-part
4
<PAGE>
thereof throughout the world; (b) all confidential information,
trade secrets,
and know how, including but not limited to, confidential software,
source code,
invention disclosures, improvements, customer lists, supplier
lists, business
plans, development projects, technical data, and documentation; (c)
all rights
in expressive works of authorship, whether or not copyright
registration has
been obtained therefor, including without limitation all
copyrights, copyright
registrations and applications therefore and all other rights
corresponding
thereto, including all moral rights of authors, throughout the
world; (d) all
rights in names, marks and brand identifiers used in connection
with the
Business, whether or not registration has been obtained or applied
for, all
trademarks, service marks, trade names, trade dress, domain names,
slogans, and
logos, and registrations and applications therefore throughout the
world, and
all goodwill arising from or associated with the foregoing; (e) all
maskworks
and any registrations and applications therefor throughout the
world; (f) all
items constituting "Software" in Section 3.9(b)(i); and (g) all
rights in the
foregoing clauses (a) through (f) enjoyed under written consents,
releases, or
permissions previously obtained by the Company or by Seller for the
benefit of
the Company which explicitly refer to such rights set forth in any
of the
foregoing (a) through (f).
"KNOWLEDGE
OF THE COMPANY" or any similar phrase means with respect to any
matter that such matter is known to any of the following Persons
after
reasonable investigation: Anthony J. Affuso; Keith S. Krzeminski;
or Charles C.
Grindstaff.
"LEASE"
means a lease or license for office space on the EDS-owned
campus
in Plano, Texas between Seller or its appropriate Affiliate and the
Company, on
terms reasonably agreeable to the Parties.
"LIABILITIES" means any and all debts, liabilities and
obligations,
whether accrued or fixed, absolute or contingent, known or unknown,
matured or
unmatured or determined or determinable, including without
limitation all
obligations in respect of principal, accrued interest, penalties,
fees and
premiums.
"LIBOR"
means, on the applicable date, the rate which appears on page
3750
on the Dow Jones Telerate Service, or such other page as may
replace page 3750
on that service (rounded up to the nearest 1/100 of 1%), for the
purpose of
displaying London interbank offered rates of major banks for
deposits of United
States Dollars.
"MATERIAL
ADVERSE CHANGE" means any change, effect, development,
circumstance or condition that, in the aggregate, is materially
adverse to the
assets, liabilities, condition (financial or otherwise), results of
operations
or business of the Company and its Subsidiaries taken as a whole or
on the
ability of the Company or Seller to consummate the transactions
contemplated
hereby; provided, however, that none of the following shall be
deemed in
themselves, either alone or in combination, to constitute a
Material Adverse
Change: (a) any immaterial failure by the Company and/or any of its
Subsidiaries
to meet internal projections or forecasts or published revenue or
earnings
predictions for any period ending (or for which revenues or
earnings are
released) on or after the date of this Agreement; or (b) any
adverse change,
effect, development, circumstance, condition, event, occurrence or
state of
facts attributable to, resulting from, or relating to (i) the
announcement or
pendency of the transactions contemplated by this Agreement, (ii)
conditions
affecting the industry in which the Company and its Subsidiaries
participate,
the United States economy as a whole, the capital markets in
general, or the
markets
5
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in which the Company and its Subsidiaries operate that do not
disproportionately
affect the Company and its Subsidiaries (other than as a result of
the outbreak
or escalation of hostilities involving the United States, the
declaration by the
United States of a national emergency or war, or the occurrence of
any other
calamity or crisis, including an act of terrorism), (iii)
compliance with the
terms of, or the taking of any action required by, this Agreement,
(iv) any
change in accounting requirements or principles or any change in
applicable
laws, rules or regulations or the interpretation thereof, or (v)
actions
required to be taken under applicable laws, rules, regulations,
contracts or
agreements.
"MATERIAL
ADVERSE EFFECT" means any change, effect, development,
circumstance or condition that, individually or in the aggregate,
is materially
adverse to the assets, liabilities, condition (financial or
otherwise), results
of operations or business of the Company and its Subsidiaries taken
as a whole
or on the ability of the Company or Seller to consummate the
transactions
contemplated hereby; provided, however, that none of the following
shall be
deemed in themselves, either alone or in combination, to constitute
a Material
Adverse Effect: (a) any adverse change, effect, development,
circumstance,
condition, event, occurrence or state of facts primarily
attributable to,
resulting from, or relating to (i) the announcement or pendency of
the
transactions contemplated by this Agreement, (ii) compliance with
the terms of,
or the taking of any action required by, this Agreement, or (iii)
any change in
accounting requirements or principles required to be adopted by
GAAP during the
period in which such change occurs.
"ORDINARY
COURSE OF BUSINESS" means the ordinary course of business of
the
Company and its Subsidiaries in all material respects consistent
with past
custom and practice.
"PERSON"
means any individual, trust, corporation, partnership, limited
partnership, joint venture, limited liability company or other
business
association or entity, court, governmental body or governmental
agency.
"SELLER
DISCLOSURE LETTER" means the disclosure letter delivered to
Buyer
by Seller concurrently with the execution of this Agreement.
"SPECIAL
INDEMNIFIED LOSSES" means any Adverse Consequences to any Buyer
Indemnified Person: (a) to the extent arising from (i) the audit
and outstanding
IRS correction submission with respect to Seller's 401(k) plan
listed on Section
3.13(a) of the Company Disclosure Letter, (ii) In re Electronic
Data Systems
Corp. "ERISA" Litigation referred to in Section 3.13(a) of the
Company
Disclosure Letter, or (iii) any defined benefit pension plan
maintained by EDS
or any Affiliate (other than the Company or any of its
Subsidiaries) prior to
Closing except to the extent rights or obligations in respect
thereof are
expressly assumed hereby; (b) relating to the violations of
Export
Administration Regulations referred to in Section 3.11 of the
Company Disclosure
Letter, to the extent such Adverse Consequences exceed (i) the
reserve
specifically allocated thereto on the Year End Balance Sheet minus
(ii) the
legal fees and disbursements paid by the Company for services
performed during
the period after the Most Recent Fiscal Year End pursuant to
Section 7.5; and
(c) relating to the matters that are the subject of Configuration
Data Systems
v. Northrup Grumman Corp. referred to in Section 3.11 of the
Company Disclosure
Letter.
"STRADDLE
PERIOD" means any Taxable period beginning on or before and
ending after
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the Closing Date.
"SUBLEASES" means the subleases or functionally equivalent
agreements, in
substantially the form attached hereto as Exhibit C-2, for each of
the
Co-Located Facilities for which the word "Sublease" appears under
the caption
"Tenure" on Section 1.1(a) of the Company Disclosure Letter, each
to be entered
into by Seller or its appropriate Affiliate and the Company or its
appropriate
Subsidiary on or before the Closing with base rent with respect to
each such
Sublease as set forth in Section 1.1(a) of the Company Disclosure
Letter,
associated costs in accordance with past practice, and sublease
periods
extending to the length of the underlying lease, unless otherwise
indicated
thereon, in each case unless Buyer and Seller mutually agree
otherwise.
"SUBSIDIARY" means any corporation, limited liability company,
limited
partnership, partnership, trust or other entity with respect to
which another
person (a) has the power, directly or indirectly through one or
more
intermediaries, to vote or direct the voting of sufficient
securities or
interests to elect a majority of the directors or management
committee or
similar governing body or (b) directly or indirectly owns at least
50% of the
outstanding capital stock or similar ownership interests.
"TARGET
WORKING CAPITAL" means $5,000,000, which amount was calculated
using the methodology set forth on Exhibit F.
"TAX" or
"TAXES" means any federal, state, local or foreign income,
gross
receipts, sales, licenses, payroll, employment, excise, severance,
stamp,
occupation, premium, windfall profits, environmental (including
taxes under
Section 59A of the Code), customs duties, capital stock, franchise,
profits,
withholding, social security (or similar), unemployment,
disability, real
property, personal property, use, transfer, registration, value
added,
alternative or add-on minimum, estimated, or other tax, charge,
fee, levy,
import or assessment of any kind whatsoever imposed by any federal,
state,
local, or foreign Taxing authority, including any interest,
penalty, or addition
thereto, whether disputed or not.
"TAX
RETURN" means any return, declaration, report, claim for refund,
or
information return or statement relating to Taxes, including any
schedule or
attachment thereto, and including any amendment thereof.
"TRANSACTION DOCUMENTS" means this Agreement and the Transition
Services
Agreements and all other documents, instruments and certificates
contemplated by
this Agreement.
"TRANSITION SERVICES AGREEMENTS" means the Transition Services
Agreement,
in a form mutually agreeable to Buyer and Seller, and the
Subleases, Lease, if
any, and Co-Location Licenses.
"WORKING
CAPITAL" as of a given date means the amount calculated by
subtracting certain of the current liabilities of the Company and
its
consolidated Subsidiaries as of that date from certain of the
current assets of
the Company and its consolidated Subsidiaries as of that date, and
then adding
back cash in U.S. bank accounts, in each case using the methodology
set forth on
Exhibit F and determined in accordance with GAAP, except that the
Company's
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restructuring reserve shall not be reduced from levels included in
the Year End
Balance Sheet except to the extent of actual cash expenditures made
with respect
thereto.
1.2
References and Titles. Any reference to any United States,
state,
local, or other foreign statute or law shall be deemed also to
refer to all
rules and regulations promulgated thereunder, unless the context
requires
otherwise. Each defined term used in this Agreement has a
comparable meaning
when used in its plural or singular form. Each gender-specific term
used herein
has a comparable meaning whether used in a masculine, feminine or
gender-neutral
form. The term "include" and its derivatives shall have the same
construction as
the phrase "include, without limitation," and its derivatives. The
section
headings contained in this Agreement are inserted for convenience
or reference
only and shall not affect in any way the meaning or interpretation
of this
Agreement. Reference in this Agreement to any legal term for any
law, action,
remedy, method of judicial proceeding, legal document, legal
status, court,
official or any other legal concept or thing shall in respect of
any
jurisdiction other than the United States be deemed to include that
legal
concept or thing in that other jurisdiction which most nearly
approximates that
United States legal term (in addition to any other analogous legal
concept or
term specified).
2. PURCHASE AND SALE
2.1
Purchase and Sale of Common Stock. Subject to the terms and
conditions
of this Agreement, at the Closing (as defined in Section 2.2), (a)
Buyer will
purchase, and Seller will sell, transfer and assign to Buyer, the
Purchased
Shares free and clear of all Encumbrances and (b) Buyer shall pay
to Seller or
its designees by wire transfer of immediately available funds to an
account or
accounts designated by Seller at least two Business Days prior to
the Closing
Date an amount equal to Two Billion Fifty Million Dollars
($2,050,000,000.00)
(the "PURCHASE PRICE"); provided, that the Purchase Price shall be
adjusted (i)
on the Closing Date, to reflect a Positive Estimated Working
Capital Amount or a
Negative Estimated Working Capital Amount as provided in Section
2.3, (ii) after
the Closing to reflect a Positive Final Working Capital Amount or a
Negative
Final Working Capital Amount as provided in Section 2.4, and (iii)
after the
Closing to reflect payments in respect of Repatriated Amounts and
Unrepatriated
Amounts as provided in Section 2.5. The Purchase Price shall
represent the total
amount of consideration paid by Buyer for the Purchased Shares and
the separate
acquisitions contemplated by Section 8.7 hereof.
2.2
Closing. (a) Unless this Agreement shall have been terminated and
the
transactions herein contemplated shall have been abandoned pursuant
to Article
10, and subject to the satisfaction or waiver of the conditions set
forth in
Article 9, the closing of the purchase and sale of the Purchased
Shares and the
other transactions contemplated hereby (the "CLOSING") shall take
place at 10:00
a.m., Dallas, Texas time, not later than the fifth Business Day
after
termination or expiration of the applicable waiting period (and any
extension
thereof) under the HSR Act, at the offices of Vinson & Elkins
L.L.P., 3700
Trammell Crow Center, 2001 Ross Ave., Dallas, Texas 75201-2975,
unless another
date, time or place is mutually agreed to in writing by Buyer and
Seller. If any
of the conditions set forth in Article 9 are not satisfied or
waived at the time
the Closing is to occur pursuant to this Section 2.2, Buyer and
Seller may agree
to postpone the Closing to a later date (but not later than the
Business Day
immediately prior to the Termination Date). The date and time on
which the
Closing occurs is the "CLOSING
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DATE."
(b) If the conditions set forth in Article 9 (other than the
conditions set forth in Sections 9.1(c) and 9.2(c)) have been met,
and the
conditions set forth in Sections 9.1(c) or 9.2(c) have not been met
with respect
to the stock or assets and liabilities of the Company or any of its
Subsidiaries
in any non-US jurisdiction, or if any other consents required by
law to effect
the change of control of such stock or assets and liabilities have
not been
received (in each case excluding separate foreign acquisitions
contemplated by
Section 8.7 hereof) and (i) the affected assets constitute less
than 5% of the
Company's consolidated assets and (ii) the revenues generated by
such assets
constituted less than 5% of the Company's consolidated revenues in
2003, then
(x) Buyer may notify Seller it wishes the Closing to proceed, in
which case the
Closing shall proceed and Buyer shall indemnify Seller for all
Adverse
Consequences resulting from the failure to have obtained such
consents or (y)
Seller may notify Buyer that it wishes the Closing to proceed, in
which case the
Closing shall proceed and Seller shall indemnify Buyer for all
Adverse
Consequences resulting from the failure to have obtained such
consents. If the
Closing occurs under such circumstances, until the required
consents have been
received, the Company and its Subsidiaries shall cooperate with
Buyer in any
lawful arrangement that is not unduly economically burdensome under
which Buyer
receives the benefits of such stock or assets and is allowed to
perform its
obligations under the related liabilities, to the same extent as if
such stock
or assets were transferred with the purchase of the Purchased
Shares at Closing.
The parties agree to undertake commercially reasonable efforts to
obtain such
consents and satisfy such conditions as soon as practicable
following the
Closing Date.
2.3
Working Capital Adjustment. (a) No later than three Business
Days
before the Closing Date, the Company shall, and Seller shall cause
the Company
to, deliver to Buyer (i) a good faith estimate of the consolidated
balance sheet
for the Company and its Subsidiaries as of 11:59 p.m. on the last
day of the
fiscal month that ended at least five Business Days before the
Closing Date and
prepared in accordance with GAAP consistently applied with the Year
End Balance
Sheet (the "CLOSING BALANCE SHEET"), (ii) a good faith estimate of
Working
Capital based on the Closing Balance Sheet and using the
methodology set forth
on Exhibit F, provided that the Company shall adjust such estimates
as
reasonably agreed by Buyer and Seller to account for expected
changes in Working
Capital between the date of the Closing Balance Sheet and the
Closing Date that
are not properly included or excluded therefrom (the "ESTIMATED
WORKING
CAPITAL"), and (iii) a certificate of the chief executive officer
and the chief
financial officer of the Company certifying that the Estimated
Working Capital
and the Closing Balance Sheet have been estimated and calculated in
accordance
with this Agreement. If the Estimated Working Capital less the
Target Working
Capital is a positive number (a "POSITIVE ESTIMATED WORKING CAPITAL
AMOUNT"),
then the Purchase Price payable by Buyer on the Closing Date shall
be increased
by an amount equal to the Positive Estimated Working Capital
Amount. If the
Estimated Working Capital less the Target Working Capital is a
negative number
(a "NEGATIVE ESTIMATED WORKING CAPITAL AMOUNT"), then the Purchase
Price payable
by Buyer on the Closing Date shall be decreased by an amount equal
to the
absolute value of the Negative Estimated Working Capital
Amount.
(b) No later than 90 days after the Closing Date, the Company
shall,
and Buyer shall cause the Company to, prepare and deliver to Seller
(i) a
consolidated balance sheet for the Company and its Subsidiaries as
of 11:59 p.m.
on the date immediately prior to the
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Closing Date (the "FINAL BALANCE SHEET"), and (ii) a statement of
Working
Capital as of 11:59 p.m. on the date immediately prior to the
Closing Date based
on the Final Balance Sheet and using the methodology set forth on
Exhibit F (the
"WORKING CAPITAL STATEMENT"). The Final Balance Sheet shall be
prepared in
accordance with GAAP consistently applied and shall fairly present
the financial
position of the Company as of 11:59 p.m. on the date immediately
prior to the
Closing Date. If within 30 days following delivery of the Working
Capital
Statement to Seller, Seller has not given Buyer written notice of
its objection
to the Working Capital Statement (such notice must contain a
statement
describing the basis of such objection), then the Working Capital
reflected on
the Working Capital Statement shall be deemed final and conclusive
and shall be
the "FINAL WORKING CAPITAL." If Seller gives such written notice of
objection
within such 30 day period, then the issues in dispute shall be
submitted for
resolution to a "big four" accounting firm to be selected jointly
by Seller and
Buyer within the following 15 days (the "REFEREE"). The Referee
shall determine
the Final Working Capital within 30 days after the dispute is
submitted to it.
If issues in dispute are submitted to the Referee for resolution,
(A) each Party
shall furnish to the Referee such work papers and other documents
and
information relating to the disputed issues as the Referee may
request and are
available to that Party or its Subsidiaries (or its independent
auditors), shall
be afforded the opportunity to present to the Referee any material
relating to
the determination of Final Working Capital and to discuss such
determination
with the Referee, and shall otherwise cooperate with the Referee
and the other
Parties to enable the Referee to make its determination as soon as
practicable,
(B) the determination by the Referee of Final Working Capital, as
set forth in a
written notice delivered to both Parties by the Referee, shall be
binding and
conclusive on the Parties (except in the event of fraud), and (C)
Seller and
Buyer shall each bear one-half of the fees and expenses of the
Referee for such
determination.
2.4
Post-Closing Payment. In the event that the Final Working Capital
less
the Estimated Working Capital is a positive number, then Buyer
shall pay to
Seller an amount equal to the Final Working Capital Adjustment
Amount. In the
event that the Final Working Capital less the Estimated Working
Capital is a
negative number, then Seller shall pay to Buyer an amount equal to
the absolute
value of the Final Working Capital Adjustment Amount. Any required
payment shall
be made by Buyer or Seller, as the case may be, on the third
Business Day
following the determination of Final Working Capital, in
immediately available
funds by wire transfer to such bank account or accounts as the
other Party may
specify.
2.5
Foreign Cash Adjustment.
(a) Closing Cash Schedule. No later than 30 days after the
Closing
Date, the Company shall, and Buyer shall cause the Company to,
prepare and
deliver to Seller (i) a statement of the amount, in local
currencies, of cash
and cash equivalents held in each country other than the United
States by the
Company or any of its Subsidiaries as of 11:59 p.m. on the date
immediately
prior to the Closing Date (the "CLOSING CASH SCHEDULE"). If within
30 days
following delivery of the Closing Cash Schedule to Seller, Seller
has not given
Buyer written notice of its objection to the Closing Cash Schedule
(such notice
must contain a statement describing the basis of such objection),
then the
Closing Cash Schedule shall be deemed final and conclusive and
shall be the
"FINAL CLOSING CASH SCHEDULE." If Seller gives such written notice
of objection
within such 30 day period, then the issues in dispute shall be
submitted for
resolution to a "big four" accounting firm to be selected jointly
by Seller and
Buyer within the
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<PAGE>
following 15 days (the "REFEREE"). The Referee shall determine the
Final Closing
Cash Schedule within 30 days after the dispute is submitted to it.
If issues in
dispute are submitted to the Referee for resolution, (A) each Party
shall
furnish to the Referee such work papers and other documents and
information
relating to the disputed issues as the Referee may request and are
available to
that Party or its Subsidiaries (or its independent auditors), shall
be afforded
the opportunity to present to the Referee any material relating to
the
determination of the Final Closing Cash Schedule and to discuss
such
determination with the Referee, and shall otherwise cooperate with
the Referee
and the other Parties to enable the Referee to make its
determination as soon as
practicable, (B) the determination by the Referee of the Final
Closing Cash
Schedule, as set forth in a written notice delivered to both
Parties by the
Referee, shall be binding and conclusive on the Parties (except in
the event of
fraud), and (C) Seller and Buyer shall each bear one-half of the
fees and
expenses of the Referee for such determination.
(b) Facilitation of Repatriation. Buyer and the Company shall
cooperate with Seller's reasonable requests to facilitate the
repatriation to
the United States of cash and cash equivalents included on the
Final Closing
Cash Schedule during the 180 day period after the Closing Date.
(c) Monthly Repatriation Payments. If the Final Closing Cash
Schedule has been determined prior to any of the first five
calendar month ends
after the Closing Date, then no later than 30 days after such month
end, the
Company shall, and Buyer shall cause the Company to, prepare and
deliver to
Seller a statement (a "MONTHLY REPATRIATION SCHEDULE") of the
amount in U.S.
dollars repatriated to the United States on or prior to such month
end from each
foreign country identified on the Closing Cash Schedule with
respect to the cash
and cash equivalents in local currencies included on the Closing
Cash Schedule,
net of all Adverse Consequences related to such repatriation (the
sum of such
net amounts, the "INTERIM REPATRIATED AMOUNT"), and Buyer shall pay
to Seller an
amount equal to the difference between (i) the Interim Repatriated
Amount as of
such month end and (ii) the aggregate amount previously paid
pursuant to this
Section 2.5(c), in immediately available funds by wire transfer to
such bank
account or accounts as the other Party may specify.
(d) Repatriation Schedule. No later than 210 days after the
Closing
Date, the Company shall, and Buyer shall cause the Company to,
prepare and
deliver to Seller a statement (the "REPATRIATION SCHEDULE") of (i)
the amount in
U.S. dollars repatriated to the United States from each foreign
country
identified on the Closing Cash Schedule on or prior to the 180th
day after the
Closing Date with respect to the cash and cash equivalents in local
currencies
included on the Closing Cash Schedule, net of all Adverse
Consequences related
to such repatriation (the sum of such net amounts, the "REPATRIATED
AMOUNT") and
(ii) the amount in U.S. dollars not repatriated to the United
States from each
foreign country identified on the Closing Cash Schedule on or prior
to the 180th
day after the Closing Date with respect to the cash and cash
equivalents in
local currencies included on the Closing Cash Schedule (the sum of
such amounts,
the "UNREPATRIATED AMOUNT"). If within 30 days following delivery
of the
Repatriation Schedule to Seller, Seller has not given Buyer written
notice of
its objection to the Repatriation Schedule (such notice must
contain a statement
describing the basis of such objection), then the Repatriation
Schedule, the
Repatriated Amount and the Unrepatriated Amount shall be deemed
final and
conclusive and shall be the "FINAL REPATRIATION SCHEDULE," the
"FINAL
REPATRIATED AMOUNT" and the "FINAL UNREPATRIATED AMOUNT,"
respectively. If
Seller gives such written
11
<PAGE>
notice of objection within such 30 day period, then the issues in
dispute shall
be submitted for resolution to a "big four" accounting firm to be
selected
jointly by Seller and Buyer within the following 15 days (the
"REFEREE"). The
Referee shall determine the Final Repatriation Schedule, Final
Repatriated
Amount and Final Unrepatriated Amount within 30 days after the
dispute is
submitted to it. If issues is dispute are submitted to the referee
for
resolution, (A) each Party shall furnish to the Referee such work
papers and
other documents and information relating to the disputed issues as
the Referee
may request and are available to that Party or its Subsidiaries (or
its
independent auditors), shall be afforded the opportunity to present
to the
Referee any material relating to the determination of the Final
Repatriation
Schedule, Final Repatriated Amount and Final Unrepatriated Amount
and to discuss
such determination with the Referee, and shall otherwise cooperate
with the
Referee and the other Parties to enable the Referee to make its
determination as
soon as practicable, (B) the determination by the Referee of the
Final
Repatriation Schedule, Final Repatriated Amount and Final
Unrepatriated Amount,
as set forth in a written notice delivered to both Parties by the
Referee, shall
be binding and conclusive on the Parties (except in the event of
fraud), and (C)
Seller and Buyer shall each bear one-half of the fees and expenses
of the
Referee for such determination.
(e) Final Payment. On the third Business Day following the
determination of the Final Repatriated Amount and Final
Unrepatriated Amount,
Buyer shall pay to Seller an amount equal to (i) the difference
between (A) the
sum of (1) the Final Repatriated Amount plus (2) the lesser of (x)
$2,500,000 or
(y) 20% of the Final Unrepatriated Amount and (B) the amounts
previously paid
pursuant to Section 2.5(c), in immediately available funds by wire
transfer to
such bank account or accounts as the other Party may specify.
2.6 Access.
Buyer will make available (or cause to be made available) to
Seller and its auditors and advisors all records and work papers
used in
preparing the Working Capital Statement, the Closing Cash Schedule
or the
Repatriation Schedule in connection with its reviews thereof in
accordance with
Section 2.4 or Section 2.5.
3. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY
Seller and
the Company hereby jointly and severally represent and warrant
to Buyer, as of the date of this Agreement and as of the Closing
Date, that:
3.1
Organization, Qualification and Authority.
(a) The Company. The Company is a corporation duly formed,
validly
existing and in good standing under the laws of the State of
Delaware. The
Company has all requisite corporate power and authority to carry on
the business
in which it is presently engaged and to own and use the properties
presently
owned and used by it. True and correct copies of the Company's
certificate of
incorporation and bylaws, as amended to date, have been made
available to Buyer.
The Company is qualified to conduct business and is in good
standing or is
active, as the case may be, under the laws of each jurisdiction
wherein the
nature of its business or its ownership of property requires it to
be so
qualified, except where the failure to be so qualified could not,
individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
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<PAGE>
(b) Subsidiaries. Except as set forth in Section 3.1(b) of the
Company Disclosure Letter, neither the Company nor any of its
Subsidiaries owns
or holds the right to acquire any stock, membership interest,
partnership
interest, joint venture interest or other equity ownership interest
in any other
Person. Each Subsidiary of the Company is either wholly owned by
the Company or
a Subsidiary of the Company as indicated in Section 3.1(b) of the
Company
Disclosure Letter, except as set forth in Section 3.1(b) of the
Company
Disclosure Letter. Except as set forth in Section 3.1(b) of the
Company
Disclosure Letter, each of the Subsidiaries identified in Section
3.1(b) of the
Company Disclosure Letter is qualified to conduct business and is
in good
standing or is active, as the case may be, under the laws of each
jurisdiction
wherein the nature of its business or its ownership of property
requires it to
be so qualified, except where the failure to be so qualified could
not,
individually or in the aggregate, reasonably be expected to have a
Material
Adverse Effect. Each of the Company's Subsidiaries has all
requisite corporate
or other organizational power and authority to carry on the
business in which it
is presently engaged and to own and use the properties presently
owned and used
by it. Each of the outstanding shares of capital stock of each of
the
Subsidiaries is duly authorized, validly issued, fully paid and,
except for the
Subsidiaries organized outside of the United States and identified
on Section
3.1(b) of the Company Disclosure Letter, nonassessable, and the
Company is the
beneficial owner of all of the capital stock or similar ownership
interests in
the Company's Subsidiaries and holds such stock or interests free
and clear of
all Encumbrances.
3.2
Capitalization. Section 3.2 of the Company Disclosure Letter
sets
forth (a) the authorized capital stock of the Company, (b) the
number of issued
and outstanding shares of each class of the authorized capital
stock of the
Company, all of which are owned of record by Seller, and (c) all of
the current
directors and other executive officers of the Company. All of the
issued and
outstanding shares of Common Stock have been duly authorized and
are validly
issued, fully paid, and nonassessable. Except as set forth on
Section 3.2 of the
Company Disclosure Letter, there are no currently outstanding or
authorized
options, warrants, rights, contracts, rights of first refusal or
first offer,
calls, preemptive rights, puts, rights to subscribe, conversion
rights, voting
trusts, registration rights or other agreements or commitments
providing for the
issuance, disposition, or acquisition of any of the Company's
Common Stock or
securities convertible into or exchangeable for its Common Stock,
or for the
issuance, disposition, or acquisition of any of the capital stock
or similar
outstanding ownership interests of the Company's Subsidiaries or
securities
convertible into or exchangeable for any of the capital stock or
similar
outstanding ownership interests of the Company's Subsidiaries.
There are no
outstanding or authorized equity appreciation, phantom equity, or
similar rights
with respect to the Company or any of its Subsidiaries. As of the
Closing, the
Purchased Shares will represent all of the then issued and
outstanding capital
stock of the Company.
3.3
Authorization; Valid and Binding Agreement. The execution,
delivery
and performance by the Company of the Transaction Documents to be
executed by
the Company and the consummation of the transactions contemplated
thereby have
been duly and validly authorized by all requisite corporate action
of the
Company, and no other proceedings on its part are necessary to
authorize the
execution, delivery or performance of the Transaction Documents to
be executed
by the Company. The Transaction Documents to be executed by the
Company have
been duly executed and delivered by the Company and, assuming the
due
authorization, execution and delivery by the other Parties thereto,
constitute
legal, valid and binding obligations of the Company, enforceable in
accordance
with their respective terms, except as enforceability
13
<PAGE>
may be limited by bankruptcy laws, other similar laws affecting
creditors'
rights and general principles of equity affecting the availability
of specific
performance and other equitable remedies.
3.4
Noncontravention; Consents.
(a) Noncontravention. Except as set forth on Section 3.4(a) of
the
Company Disclosure Letter, and except where the failure of any of
the following
to be true could not, individually or in the aggregate, reasonably
be expected
to have a Material Adverse Effect, the execution and the delivery
of the
Transaction Documents by the Company and Seller and the
consummation by them of
the transactions contemplated thereby will not (i) violate or
conflict in any
way with any statute, regulation, law, rule, ordinance or common
law doctrine
applicable to the Company or its Subsidiaries, (ii) violate or
conflict in any
way with any judgment, order, decree, stipulation, injunction,
charge or other
restriction of any government, governmental agency or court to
which the Company
or any of its Subsidiaries is subject or any provision of the
Company's or any
of its Subsidiaries' certificate of incorporation, bylaws or
similar
organizational documents, (iii) result in a breach of, constitute a
default
under (with or without notice or lapse of time, or both), result in
the
acceleration of, create in any party the right to accelerate,
terminate, modify
or cancel, or require any notice, consent or approval under, (a)
any Contract
(as defined in Section 3.10(a)), or (b) other lease, sublease,
license,
sublicense, franchise, permit, indenture, agreement for borrowed
money or other
agreement or instrument to which the Company or any of its
Subsidiaries is a
party or by which it is bound, or (iv) result in the loss of any
benefit to the
Company or any Subsidiary or in the creation of any Encumbrance on
the Purchased
Shares or on any assets or properties of the Company or any
Subsidiary pursuant
to any note, bond, mortgage, indenture, contract, agreement, lease
license,
permit, franchise or other instrument to which Seller, the Company,
or any
Subsidiary is a party or by which any of such assets or properties
is bound or
affected.
(b) Consents. Except as set forth on Section 3.4(b) of the
Company
Disclosure Letter, except where the failure of any of the following
to be true
could not, individually or in the aggregate, reasonably be expected
to have a
Material Adverse Effect and except for the applicable requirements
of the HSR
Act or any similar competition or foreign investment laws in any
foreign
jurisdiction ("COMPETITION LAWS"), the Company and its Subsidiaries
are not
required to submit any notice, report or other filing with any
governmental
authority in connection with the execution, delivery or performance
by them of
this Agreement or the consummation of the transactions contemplated
hereby, and
no consent, approval or authorization of any governmental or
regulatory
authority or any other party or Person is required to be obtained
by them in
connection with the execution, delivery and performance of this
Agreement or the
consummation of the transactions contemplated hereby.
3.5
Financial Statements, Books and Records.
(a) The Company has provided Buyer with the following financial
statements, with respect to each such period which has been
completed
(collectively the "FINANCIAL STATEMENTS"): (i) audited consolidated
balance
sheets as of December 31, 2002, and December 31, 2003 (the "YEAR
END BALANCE
SHEET"), and related audited consolidated statements of income and
cash flows of
the Company and its Subsidiaries for the fiscal years ended
December
14
<PAGE>
31, 2001, December 31, 2002, and December 31, 2003 (the "MOST
RECENT FISCAL YEAR
END"); and (ii) monthly unaudited financial statements of the
Company and its
Subsidiaries in the form customarily prepared by management for
internal use for
each complete month beginning January 1, 2004 (the "MONTHLY
STATEMENTS"). The
Financial Statements (other than the Monthly Statements), including
the notes
thereto, have been prepared in accordance with GAAP and fairly
present in all
material respects the financial condition and results of operations
of the
Company and its Subsidiaries (taken as a whole) as of the times and
for the
periods referred to therein. The Monthly Statements have been
prepared in
accordance with the methods customarily employed by the Company for
the
preparation of monthly financial statements. The Company received
certain
allocated charges and credits during the fiscal year ended December
31, 2003, as
reflected in note 10 to the Financial Statements for such period
and the summary
detail of which is described in Section 3.5 of the Company
Disclosure Letter.
Such charges and credits, while believed by Seller to be
reasonable, do not
necessarily reflect the amounts which would have resulted from
arm's length
transactions.
(b) As of the date of this Agreement, there are no Liabilities
of
the Company or any of its Subsidiaries that are reasonably expected
to have a
Material Adverse Effect other than Liabilities: (i) reflected or
reserved
against on the Year End Balance Sheet (or the notes thereto); (ii)
incurred
since the Latest Balance Sheet Date solely in the Ordinary Course
of Business;
(iii) incurred under the Transaction Documents; (iv) that are
disclosed in this
Article 3 or the Company Disclosure Letter or (v) with respect to
Taxes.
3.6 Recent
Events. Except as set forth on Section 3.6 of the Company
Disclosure Letter, since the Most Recent Fiscal Year End through
the date of
this Agreement, the Company and its Subsidiaries have been operated
solely in
the Ordinary Course of Business and have not experienced or
suffered any
Material Adverse Effect. Without limiting the generality of the
foregoing,
except as set forth in Section 3.6 of the Company Disclosure
Letter, since the
Most Recent Fiscal Year End, none of the Company or any of its
Subsidiaries, or
(on behalf of the Company or any of its Subsidiaries) Seller or any
of its
Subsidiaries, has:
(a) borrowed any amount or incurred or become subject to any
material liabilities, other than (i) liabilities incurred in the
Ordinary Course
of Business and borrowings from Seller necessary to meet working
capital
requirements in the Ordinary Course of Business, (ii) liabilities
under the
Transaction Documents, (iii) liabilities for fees and expenses
incurred in
connection with the transactions contemplated in the Transaction
Documents or
the alternative sale of a minority interest in the Company or
initial public
offering of the Company's common stock, and (iv) liabilities that
are not
material to the financial condition or operating results of the
Company and its
consolidated Subsidiaries, taken as a whole;
(b) sold, leased, licensed, transferred, assigned, abandoned or
permitted to lapse any material assets, rights or properties,
tangible or
intangible, in whole or in part, other than in the Ordinary Course
of Business;
(c) amended its certificate of incorporation, bylaws, or
similar
organizational documents or the terms of any of its capital stock
or similar
ownership interests, or issued, sold or transferred any of its
capital stock or
other equity securities, securities convertible into its capital
stock or other
equity securities or warrants, options or other rights to acquire
its capital
15
<PAGE>
stock or other equity securities, or any bonds or debt securities,
or paid any
dividend;
(d) experienced any material damage, destruction, or loss
(whether
or not covered by insurance) to any material assets (other than
ordinary wear
and tear); or
(e) made or committed to make any capital expenditures
(including
capital leases but excluding operating leases and capitalized
internal software
costs) for a single project in excess of $1,000,000 or entered into
any other
material transaction outside the Ordinary Course of Business;
(f) agreed to complete or completed any acquisition (by merger,
consolidation, or acquisition of stock or assets) of any Person or
division
thereof for a purchase price in excess of $1,000,000;
(g) increased the compensation payable or paid, whether
conditionally or otherwise, to any director, officer, employee,
consultant or
agent other than in the Ordinary Course of Business or pursuant to
the Executive
Employment Agreement, amended the Executive Employment Agreement,
or entered
into or amended arrangements requiring severance, change of control
or other
payments in connection with the transactions contemplated
hereby;
(h) permitted the creation of any Encumbrances on any properties
or
assets (whether tangible or intangible) other than (i) Encumbrances
that will be
released at or prior to the Closing and (ii) Encumbrances on assets
having a
value not exceeding $500,000 in the aggregate;
(i) after the date of this Agreement, modified, amended,
assigned,
terminated (other than by expiration) or relinquished any Contract,
other than
in the Ordinary Course of Business; or
(j) entered any agreement to take any actions specified in this
Section 3.6.
3.7 Tax Matters.
(a) Tax Returns. Except as set forth on Section 3.7(a) of the
Company Disclosure Letter, the Company, its Subsidiaries and each
affiliated,
consolidated, combined or unitary group of which the Company or any
of its
Subsidiaries is or was a member have timely filed all material Tax
Returns that
were required to be filed on or prior to the date hereof. All such
Tax Returns
were correct and complete in all material respects for the periods
covered
thereby, and all material Taxes that have become due, whether or
not shown to be
due on such Tax Returns, have been paid prior to their due dates.
Except for
Taxes that are being contested in good faith, the Company and its
Subsidiaries
withheld and paid when due (or set aside in accounts for such
purpose) all
material Taxes required to have been withheld and paid in
connection with
amounts paid or owing to any employee, creditor, independent
contractor, foreign
payee or other third party.
(b) Tax Liens. There are no liens for Taxes (other than for
current
Taxes not yet due and payable and for Taxes that are being
contested in good
faith) on any assets of the
16
<PAGE>
Company or any of its Subsidiaries.
(c) Audits. Except as set forth on Section 3.7(c) of the
Company
Disclosure Letter, no audits or other administrative proceedings or
any court
proceedings are currently pending or have been threatened in
writing with regard
to any Taxes or Tax Return of the Company or any Subsidiary.
(d) Tax Sharing Agreements. Except as set forth in Section 3.7(d)
of
the Company Disclosure Letter, none of the Company and its
Subsidiaries is a
party to any Tax allocation or sharing agreement.
(e) Consolidated Return Liability. Except as set forth on
Section
3.7(e) of the Company Disclosure Letter, none of the Company and
its
Subsidiaries on or after January 1, 1996 (i) has been a member of
an "affiliated
group," as defined in Section 1504(a) of the Code, filing a
consolidated federal
income Tax Return (other than a group the common parent of which is
Seller, the
Company, or any Subsidiary of the Company) or (ii) has any
liability for the
Taxes of any Person (other than the Company and its Subsidiaries
and the members
of the affiliated group the common parent of which is Seller) under
Treasury
Regulation Section 1.1502-6 (or any corresponding provision of
state, local or
foreign law), as transferee or successor, by contract or
otherwise.
(f) Adjustments. None of the Company and its Subsidiaries is or
has
been required to make any adjustment pursuant to Section 481(a) of
the Code (or
any predecessor provision) or any similar provision of state, local
or foreign
Tax law by reason of any change in any accounting methods, or will
be required
to make such an adjustment as a result of the transactions
contemplated herein,
and there is no application pending with any taxing authority
requesting
permission for any changes in any of its accounting methods for Tax
purposes. To
the Knowledge of the Company, no taxing authority has in writing
proposed any
such adjustment or change in accounting method.
(g) Post-Closing Inclusions. Except as set forth on Section
3.7(g)
of the Company Disclosure Letter, none of the Company and its
Subsidiaries will
be required to include any amount in taxable income or exclude any
item of
deduction or loss from taxable income, or will be subject to any
Tax, for any
taxable period (or portion thereof) ending after the Closing Date
as a result of
(i) any closing agreement with any taxing authority (other than a
closing
agreement relating to a Seller Consolidated Return) executed on or
prior to the
Closing Date, or (ii) an installment sale or open transaction
disposition made
on or prior to the Closing Date.
(h) Parachute Payments. None of the Company nor any of its
Subsidiaries is a party to any agreement, contract, arrangement or
plan that, as
a result of the transactions contemplated by this Agreement, will
result in the
payment of any "excess parachute payment" within the meaning of
Section 280G of
the Code (or any corresponding provision of state, local or foreign
tax law).
(i) Subpart F Income. During the period beginning January 1,
2004
and ending on the Closing Date, none of the Subsidiaries will
generate any
material subpart F income
17
<PAGE>
(as defined in section 952(a) of the Code) outside the Ordinary
Course of
Business.
3.8
Properties.
(a) Except for the property addressed in Section 3.9, each of
the
Company and its Subsidiaries has indefeasible title to, or valid
leasehold
interests in, all of its properties and assets, free and clear of
all
Encumbrances. Sections 3.8(a)(i) of the Company Disclosure Letter
sets forth a
list of all owned real property of the Company and its
Subsidiaries, and Section
3.8(a)(ii) of the Company Disclosure Letter sets forth a list of
all leased real
property of the Company and its Subsidiaries. Each of the Company
and its
Subsidiaries is not in default of any material obligations of any
material real
property leases to which it is a party, and all such material
leases are in full
force and effect. Seller and its Affiliates are not in default of
any material
obligations of any real property leases to which any of them is a
party and with
respect to which the Company or one of its Subsidiaries will be a
party to a
Sublease in accordance with this Agreement that is material to the
Business, and
all such leases are in full force and effect.
(b) The assets (including intangible assets), rights and
properties
of the Company and its Subsidiaries include all of the assets,
rights or
properties of any kind that are material to or necessary for the
Business as it
is now conducted and is currently intended to be conducted.
3.9
Intellectual Property; Software.
(a) Intellectual Property.
(i) Status. Set forth on Section 3.9(a) of the Company
Disclosure Letter is a true and complete list of all patents,
patent
applications, registered trademarks and service marks, unregistered
trademarks
and service marks, trademark and service mark applications, trade
names, domain
names and copyright registrations currently owned by the Company
and its
Subsidiaries (together with all other Intellectual Property Rights
owned by the
Company or its Subsidiaries, the "OWNED INTELLECTUAL PROPERTY").
Set forth on
Section 3.9(a) of the Company Disclosure Letter is a true and
complete list of
all material royalty-bearing licenses to the Company and its
Subsidiaries
relating to Intellectual Property Rights currently used in the
Business of the
Company and its Subsidiaries (all items so listed or required to be
so listed,
the "LICENSED INTELLECTUAL PROPERTY"). The Owned Intellectual
Property is
subsisting and valid. Except as set forth in Section 3.9(a) of the
Company
Disclosure Letter, no action, suit, proceeding, complaint, claim or
demand is
pending or, to the Knowledge of the Company, threatened, which
challenges the
validity, enforceability or ownership of the Owned Intellectual
Property. Except
as set forth in Section 3.9(a)(i) of the Company Disclosure Letter
and to the
Knowledge of the Company, (i) no party to any license, sublicense,
agreement or
permission covering the Licensed Intellectual Property is in breach
or default
and (ii) all such agreements or permissions are legal, valid,
binding,
enforceable against all parties thereto, except as enforcement may
be limited by
bankruptcy, insolvency, or other similar laws affecting the rights
and remedies
of creditors generally and the general principles of equity. Except
as set forth
in Section 3.9(a)(i) of the Company Disclosure Letter, no action,
suit,
proceeding, complaint, claim or demand is pending or, to the
Knowledge of the
Company, threatened, which challenges the validity, enforceability
or legality
of any agreement granting the Company the right to exploit the
18
<PAGE>
Licensed Intellectual Property.
(ii) Ownership/Right to Use. The Company or one of its
Subsidiaries owns, or has the license or right to use (without
additional
license fees or royalties other than in Contracts identified in
Section 3.10(a)
of the Company Disclosure Letter) in the United States and in any
foreign
country in which the Company and its Subsidiaries conduct business,
all
Intellectual Property Rights currently used to conduct the Business
as currently
conducted, except for such licenses the lack of which could not,
individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.
Except as set forth in Section 3.9(a)(ii) of the Company Disclosure
Letter, all
Intellectual Property Rights owned by the Company or its
Subsidiaries, or used
by the Company or its Subsidiaries in the Business immediately
prior to the
Closing, will be owned or available for use by the Company or its
Subsidiaries
on identical terms immediately subsequent to the Closing free and
clear of any
Encumbrances.
(iii) No Infringement. To the Knowledge of the Company, the
Business as currently conducted by the Company or any of its
Subsidiaries does
not Infringe any Intellectual Property Rights of any other Person,
and except as
disclosed in Section 3.9(a)(iii) of the Company Disclosure Letter
the Company
has not received within the last twelve (12) months prior to the
date of this
Agreement (or earlier, if the allegations in such notices remain
unresolved) any
written notices of any infringement or violation by the Company or
any of its
Subsidiaries (including invitations for a license) with respect to
the
Intellectual Property Rights of any Person. To the Knowledge of the
Company and
except as disclosed in Section 3.9(a)(iii) of the Company
Disclosure Letter, no
Person is Infringing the Intellectual Property Rights owned or
exclusively
licensed to the Company or any of its Subsidiaries.
(iv) Assignment. The Company and its Subsidiaries have a
standard practice of obtaining, and to the Knowledge of the
Company, have
obtained from each employee and independent contractor a written
agreement under
which each such person or entity is obligated to disclose,
transfer, and fully
assign, to the Company, without receipt by such person of any
additional value
therefor (other than such person's contract, employment, normal
salary, and
benefits) any inventions, developments, and discoveries, and/or
Intellectual
Property Rights, which during the period of employment or
engagement with or by
the Company and its Subsidiaries, he or she, makes or conceives of,
either
solely or jointly with others, that relate to any subject matter
with which his
or her work for the Company or its Subsidiaries may be concerned,
or relate to
or are connected with the present or anticipated business,
products, services,
or projects of the Company or its Subsidiaries, or involve the use
of the
Company's or its Subsidiaries, time, materials, or facilities.
(v) Confidential Information. The Company and its Subsidiaries
have a standard written practice of obtaining, and to the Knowledge
of the
Company, have obtained legally binding written confidentiality
agreements
containing reasonable protective terms from all employees,
independent
contractors, and third persons, with whom the Company and its
Subsidiaries have
shared material, confidential, and/or proprietary information: (i)
of the
Company or its Subsidiaries; or (ii) received from others which the
Company or
its Subsidiaries are obligated to treat as confidential, which
agreements
require such employees and third parties to keep such information
confidential.
The Company has not taken any action to jeopardize its trade
secrets embodied in
any of its material software products.
19
<PAGE>
(b) Software.
(i) "OWNED SOFTWARE" means all computer programs and/or
software programs (including, but not limited to, all source code,
object code,
firmware, programming tools and/or documentation and related
materials),
including without limitation, computer programs used by the Company
in the
planning, development, testing and/or acceptance phase, owned or
purported to be
owned by the Company or any of its Subsidiaries. "LICENSED
SOFTWARE" means all
material computer programs and/or software programs (including, but
not limited
to, all source code, object code, firmware, programming tools
and/or
documentation and related materials) licensed to and used by the
Company or any
of its Subsidiaries by any third party (other than any
off-the-shelf computer
programs licensed to the Company or any of its Subsidiaries under a
shrink wrap
license) (the Licensed Software and the Owned Software, the
"SOFTWARE").
(ii) Except as set forth on Section 3.9(b)(ii) of the Company
Disclosure Letter and except for Licensed Software incorporated
into the
Business's products free and clear of any obligation on the part of
the Company
other than for payments (which are up to date), confidentiality and
other
covenants contained in the applicable license agreements regarding
the Licensed
Software, the Company, directly or through its Subsidiaries, owns
all right,
title and interest, and has the right to sell, license, transfer,
assign,
convey, use, and otherwise exploit all of the Owned Software, free
and clear of
all Encumbrances. The Company, directly or through its
Subsidiaries, is in
actual possession of or has necessary control over: (i) the source
code and
object code and all related materials for each computer program
included in the
Owned Software; and (ii) the object code and, to the extent
required for the use
of the Software as currently used in the Business or as currently
offered to the
Business's customers or potential customers, the source code, for
each computer
program included in the Licensed Software. Except where the failure
to do so
could not, individually or in the aggregate, reasonably be expected
to have a
Material Adverse Effect, the Company, directly or through its
Subsidiaries, is
in possession of or has necessary control over all documentation
(including,
without limitation, all related engineering specifications, program
flow charts,
installation and user manuals) and know-how required for the use
and revision of
the Software as currently used, or that is being designed and/or
developed, in
the Business or as currently offered to the Business's customers or
potential
customers. Except for computer programs described in Section
3.9(b)(ii) of the
Company Disclosure Letter, the Software constitutes all the
computer programs
necessary to conduct the Business as currently conducted by the
Company and its
Subsidiaries. Except as set forth in Section 3.9(b)(ii) of the
Company
Disclosure Letter, other than pursuant to agreements entered into
in the
Ordinary Course of Business, no person other than the Company and
its
Subsidiaries has any material ownership right or interest in or
with respect to
the Owned Software or any rights to sell, license, transfer, use or
otherwise
exploit the Owned Software.
(iii) Since the Company and its Subsidiaries have owned the
Owned Software, the Company and its Subsidiaries have disclosed
source code to
the Owned Software only pursuant to written confidentiality terms
that
reasonably protect the Company's rights in such Owned Software. To
the Knowledge
of the Company, except as disclosed in accordance with such
confidentiality
agreements or valid source code escrow agreements or except as set
forth in
Section 3.9(b)(iii) of the Company Disclosure Letter, no Person
(other than
Company
20
<PAGE>
and its Subsidiaries) is in possession of any source code for any
computer
program included in the Owned Software or has any rights to the
same.
(iv) Except as set forth on Section 3.9(b)(iv) of the Company
Disclosure Letter, neither the Company or any Subsidiary is
obligated to support
or maintain any of the Owned Software except pursuant to agreements
terminable
by the Company (other than for cause) on a periodic basis and that
provide for
periodic payments to the Company for such services.
(v) To the Knowledge of the Company, the Owned Software and
all software products of the Company and its Subsidiaries function
in accordance
with their documentation in all material respects, and to the
Knowledge of the
Company, do not Infringe on the Intellectual Property Rights of any
Person.
Neither the Company nor any Subsidiary is or is alleged to be in
material breach
of any license to the Owned Software.
(vi) None of the Owned Software or any software products of
the Company or its Subsidiaries, except as disclosed in the
documentation for
such Owned Software or software products or in any license
agreements therefor,
contain any time bomb, virus, worm, trojan horse, back door, drop
dead device,
or any other code that would interfere with the normal operation of
the same,
would allow circumvention of security controls for the same, or
that is intended
to cause damage to hardware, software or data.
(vii) The Owned Software is Year 2000 Compliant and does not
use windowing or any other Year 2000 remediation technique that is
subject to
expiration within 10 years of the date of this Agreement. For
purposes of this
Agreement, "YEAR 2000 COMPLIANT" means that neither performance
nor
functionality will be adversely affected by dates prior to, during
or after the
year 2000 and that the year 2000 will be recognized as a leap
year.
(viii) No Federal, state, local or other governmental entity
nor any university, college, or academic institution has rights in
Owned
Software other than pursuant to a valid, nonexclusive license
granted by the
Company.
3.10
Contracts.
(a) Material Contracts. Section 3.10(a) of the Company
Disclosure
Letter lists, as of the date of this Agreement, each of the
contracts,
agreements, leases, subleases, licenses, sublicenses, plans,
arrangements,
commitments and other documents and instruments of the following
types (each as
required to be so listed, a "CONTRACT"):
(x) to which the Company or any of its Subsidiaries is a party:
(i) any material written arrangement or agreement with any of
the Persons identified in Section 3.19(a) of the Company Disclosure
Letter;
(ii) any material written arrangement concerning a
partnership, limited liability company, joint venture or business
alliance;
(iii) any material written arrangement or agreement with any
of the
21
<PAGE>
Persons identified in Section 3.19(b) of the Company Disclosure
Letter;
(iv) any contract for the employment of any officer of the
Company or its Subsidiaries on a full-time or consulting basis, and
any
arrangement requiring severance, change of control or other
payments in
connection with the transactions contemplated hereby;
(v) any written agreement or commitment with respect to the
lending or investing of funds by the Company to or in other
Persons;
(vi) any written material agreement or commitment with Seller
or any officer, director, or Affiliate of the Company or a
Subsidiary that will
not terminate automatically upon the Closing;
(vii) any agreement for the acquisition or disposition of a
business or business line (by way of stock purchase, asset
purchase, merger,
consolidation or other business combination) for a purchase price
of $25 million
or more entered into on or after January 1, 1999 under which the
Company or any
of its Subsidiaries is, or may become, obligated to pay any amount
in respect of
indemnification obligations, purchase price adjustment or
otherwise;
(viii) any contracts or agreements containing covenants
restricting the Company or any of its Subsidiaries from engaging in
any line of
business or competing with any Person; and
(ix) any credit agreement, loan agreement, guarantee, note or
other evidence of Indebtedness or agreement providing for
Indebtedness; and
(y) which relates to the Business and to which both (i) Seller or
any Seller
Subsidiary is a party, and (ii) any of General Motors, its
Subsidiaries, or the
U.S. federal government is a party.
(b) No Breach. The Company has made available to Buyer a correct
and
complete copy of each arrangement (including all amendments
thereto) listed or
required to be listed in Section 3.10(a) of the Company Disclosure
Letter. With
respect to each arrangement so listed or required to be listed: (i)
the written
arrangement is legal, valid, binding and enforceable against the
Company or a
Subsidiary (as the case may be) and, to the Company's Knowledge,
legal, valid,
binding and enforceable against each other party thereto, in each
case except as
enforcement may be limited by bankruptcy, insolvency, or other
similar laws
affecting the rights and remedies of creditors generally and the
general
principles of equity; and (ii) neither the Company nor a Subsidiary
(as the case
may be) nor any other party is in breach or default, except for
such breaches,
defaults, terminations, modifications or accelerations that have
been cured or
waived or that could not, individually or in the aggregate,
reasonably be
expected to have a Material Adverse Effect.
3.11
Litigation. Except as set forth on Section 3.11 of the Company
Disclosure Letter, there are no actions, suits, proceedings,
claims,
arbitrations or investigations (collectively, "ACTIONS") pending
or, to the
Company's Knowledge, threatened against or involving the Company or
any
Subsidiary, or any of the assets, rights or properties of the
Company or any
Subsidiary, at law or in equity, or before or by any federal,
state, municipal
or other governmental department, commission, board, bureau,
agency, court or
instrumentality, domestic
22
<PAGE>
or foreign, or any arbitral or other forum, that (a) could,
individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect, (b)
could reasonably be expected to prevent, enjoin, alter or
materially delay the
consummation of the transactions contemplated hereby or (c) could
reasonably be
expected to result in any change in the current equity ownership of
the Company
or any Subsidiary, nor, to the Company's Knowledge, is there any
basis for any
of the foregoing. Neither the Company nor any Subsidiary, nor any
of the assets
or properties of the Company or any Subsidiary, is subject to any
outstanding
judgment, order or decree, stipulation, charge, injunction or other
restriction
of any court or any of the other foregoing bodies.
3.12
Employees; Employment Matters.
(a) Collective Bargaining Agreements. Except as set forth on
Section
3.10(a) of the Company Disclosure Letter, neither the Company nor
any Subsidiary
is a party to or bound by any collective bargaining agreement.
(b) Compliance with Laws. To the Company's Knowledge, the
Company
and its Subsidiaries have materially complied with all applicable
laws relating
to labor or labor relations and employment standards, including any
provisions
thereof relating to wages, hours, overtime pay, immigration
control, employee
safety, termination pay, vacation pay, fringe benefits, employee
benefits,
collective bargaining and the payment and/or accrual of the same
and all
insurance and all other costs and expenses applicable thereto,
except where such
noncompliance could not, individually or in the aggregate,
reasonably be
expected to have a Material Adverse Effect, and, to the Company's
Knowledge,
neither the Company nor any Subsidiary is liable for any arrearage,
or any costs
or penalties for failure to comply with any of the foregoing.
(c) Employment Claims. As of the date of this Agreement, except
as
set forth on Section 3.12(c) of the Company Disclosure Letter, no
charge or
complaint of employment discrimination or other similar charge or
complaint
against the Company or any Subsidiary has been filed with any
local, state or
federal agency, or any court, during the last twelve (12) months,
or is pending
before any such agency or court or, to the Knowledge of the
Company, is
threatened.
3.13
Employee Benefit Plans.
(a) ERISA. Set forth on Section 3.13(a) of the Company
Disclosure
Letter is a complete and accurate list of all "pension plans" (as
defined in
Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended
("ERISA")) (the "U.S. PENSION PLANS"), "welfare plans" (as defined
in Section
3(1) of ERISA) (the "U.S. WELFARE PLANS"), and, without limitation,
all stock
purchase, stock option, restricted stock or other equity-based
plans, deferred
compensation plans or arrangements, severance, employment,
change-in-control,
collective bargaining, bonus, incentive, employee loan, and all
other employee
fringe benefit plans, arrangements, and general employee benefit
plans under
which (i) any current or former U.S. employee, director or
consultant of the
Company or its Subsidiaries has any present or future right to
benefits and
which are contributed to, sponsored by, or maintained by the
Company or its
Subsidiaries or (ii) the Company or any of its Subsidiaries has any
present or
future liability.
23
<PAGE>
The U.S. Pension Plans, the U.S. Welfare Plans, and the other
foregoing plans,
agreements, programs, policies, and arrangements are collectively
referred to as
the "U.S. PLANS." Each of the U.S. Pension Plans that is intended
to be
qualified under section 401(a) of the Code has received a
favorable
determination letter from the Internal Revenue Service or has
submitted a
request for such a letter within the applicable remedial amendment
period. To
the Knowledge of the Company and except as set forth on Section
3.13(a) of the
Company Disclosure Letter, nothing has occurred, whether by action
or failure to
act that could reasonably be expected to cause a loss of such
qualification. The
U.S. Plans comply in form and operation in all material respects
with the
requirements of the Code and ERISA.
(b) Foreign Benefit Plans. To the Knowledge of the Company, all
pensions, welfare, employment and severance arrangements that are
maintained by
Seller, the Company or its Subsidiaries outside of the United
States primarily
for the benefit of current or former employees of the Company or
any of its
Subsidiaries working outside the United States (the "FOREIGN
BENEFIT PLANS")
have been established, maintained, and administered in material
compliance with
their terms and all applicable statutes, laws, ordinances, rules,
orders,
decrees, judgments, writs and regulations of any controlling
governmental
authority or instrumentality.
(c) Required Contributions. With respect to all U.S. Plans, all
required contributions have been made or accrued in accordance with
GAAP.
(d) Disclosure. The Company has made available to Buyer true
and
complete copies of (i) all U.S. Pension Plans and U.S. Welfare
Plans, (ii) the
most recent determination letter received from the Internal Revenue
Service
regarding the U.S. Pension Plans (where applicable), (iii) the most
recent Form
5500 for the U.S. Pension Plans and U.S. Welfare Plans (where
required by
applicable law to be filed with the IRS), and (iv) the most recent
actuarial
report for any U.S. Pension Plan that is a "defined benefit plan"
as defined in
Section 3.35 of ERISA.
(e) Multi-Employer Plans. No U.S. Plan is a "multi-employer
plan"
(as defined in Section 4001(a)(3) of ERISA), and neither the
Company nor any
Subsidiary nor any member of their "Controlled Group" (defined as
any
organization which is a member of a controlled group of
organizations within the
meaning of Sections 414(b), (c), (m) or (o) of the Code), sponsors
or
contributes to, or has any liability or obligation with respect of,
any
multi-employer plan.
(f) Benefit Claims. Except as disclosed on Section 3.13(f) of
the
Company Disclosure Letter, with respect to any U.S. Pension or U.S.
Welfare Plan
or Foreign Benefit Plan, (i) no actions (other than routine claims
for benefits
in the Ordinary Course of Business) are pending or, to the
Knowledge of the
Company, threatened, (ii) no facts or circumstances exist that
could give rise
to any such actions, and (iii) no written or oral communication has
been
received from the PBGC in respect of any U.S. Plans subject to
Title IV of ERISA
concerning the funded status of any such plan or the transactions
contemplated
by this Agreem
