ASSET PURCHASE AND SERVICES AGREEMENT
ASSET PURCHASE AND SERVICES AGREEMENT ( Agreement ), dated June 30, 1997, among
BMC Software, Inc., a Delaware corporation ( BMC ), BMC Software (Cayman) LDC, a
Cayman unlimited liability company ( BMC Cayman ) or its assignee (collectively,
the Buyers ), Sento Technical Innovations, Corporation, a Utah corporation (the
Seller ), the principal stockholders of Seller as set forth on the signature
page hereto (the Seller Stockholders ), Australian Software Innovations
(Services) Pty. Ltd. ACN 000-000-000, a limited company organized under the laws
of Australia (the Optionee ) and Eng Xxx ( Xxx ).
WHEREAS, Buyers have agreed to purchase, and Seller has agreed to sell to
Buyers, the Products (as such term is defined below) and related Assets (as such
term is defined below) and Seller and Buyers desire to enter into this Agreement
to set forth the terms and conditions upon which Buyers agree to purchase from
Seller, and Seller agrees to sell to Buyers, such Products and related Assets.
WHEREAS, Seller has an option (the Option ) to purchase the Products and
certain of the Assets pursuant to the terms of an Option Agreement by and among
Seller and Optionee (the Option Agreement ) and will exercise such option prior
to the Closing Date (as such term is defined below).
In consideration of the mutual agreements contained herein, the parties
agree as follows:
ARTICLE I. DEFINITIONS.
The following terms, when set forth with their initial letter capitalized,
shall have the corresponding meanings set forth below:
Affiliate shall have the meaning set forth in Section 6.03.
Assets shall mean the Assignable Distribution Agreements, the Assignable
Licenses, the Products and all books and records, contracts, customer lists and
trial backlogs relating thereto.
Assignable Distribution Agreements shall mean those distribution
agreements that may be assigned to Buyers without third party consent, or for
which such consent has been obtained, and that are not terminated prior to
Closing (as hereinafter defined) pursuant to Section 6.04 hereof.
Assignment shall mean an assignment in the form of Exhibit A.
Assignable Licenses shall mean those Licenses that may be assigned to
Buyers without the licensee s consent or for which such consent has been
obtained.
Assumed Obligations shall have the meaning set forth in Section 2.01(c).
Assumption shall mean an assumption agreement in the form of Exhibit B.
Xxxx of Sale shall mean a xxxx of sale in the form of Exhibit C covering
those Assets not described in the Assignment.
Buyers Accounts Receivable shall mean the accounts receivable of Buyers
for the following third-party fees:
a. except as provided in Section 8.04, license fees for Licenses invoiced
after the Closing Date; and
b. maintenance, enhancement or support fees collected on or after the
Closing Date under the Licenses relating to the Products.
Closing and Closing Date shall have the corresponding definitions set
forth in Section 2.03.
Closing Payment shall have the meaning set forth in Section 2.02.
Confidential Information shall mean any data or information that is
competitively sensitive and not generally known by the public.
Copy or Copies shall include, without limitation, any copy,
translation, prior draft, revision, or other tangible embodiment from which the
work in question or any work derived therefrom, or any portion of any of them,
may be perceived, reproduced, or otherwise communicated, either directly or with
the aid of a machine or device, or any portion thereof in possession of Seller.
Distribution Agreements shall have the meaning set forth in Section
6.04(c).
Damages shall have the meaning set forth in Section 12.02.
Default shall mean, as to any party to this Agreement, a default by such
party in the performance of any of its material obligations hereunder and the
continuation of such default for a period of 15 days after notice if Seller (in
the case of a default by Buyers) or Buyers (in the case of a default by Seller,
Optionee, Xxx or the Seller Stockholders) shall thereafter notify such
defaulting party in writing that a Default has occurred.
Documentation shall have the general meaning customary in the software
industry. It specifically includes, without limitation, all information and
materials relating to the Products. The term particularly includes, by way of
example and not of limitation:
(a) any and all existing listings of the Source Code and/or Object
Code of any program, routine, and subroutine comprising any portion of the
Products, together with all Copies of any of them;
(b) any and all existing descriptions of the designs, formulae,
methods, and algorithms embodied in any portion of the Products, together
with all Copies of any of them; and
(c) all other existing design notes, flow charts, logic diagrams,
coding charts, manuals, specifications, instructions, annotations,
technical and engineering data, laboratory studies, and benchmark test
results used or produced in the development of the Products, together with
all Copies of any of them.
Escrow Account shall mean a joint signature bank account, at Texas
Commerce Bank, National Association, which shall be covered by the terms and
conditions of this Agreement.
Escrow Amount shall mean the $1,400,000 to be paid into the Escrow
Account at Closing, as provided in Section 2.02.
Excluded Obligations shall have the meaning set forth in Section 2.01(c).
Intellectual Property Rights means those intangible legal rights or
interests representing or embodied in (a) any idea, design, concept, technique,
invention, discovery, or improvement, and proprietary information, regardless of
patentability, including but not limited to patent applications, trade secrets,
and know-how; (b) any work of authorship, regardless of copyrightability, but
including copyrights, mask works and any moral rights recognized by law; and (c)
any other similar rights, in each case on a worldwide basis.
Licenses shall mean all licenses of the Products between Seller and
third-party end-user customers.
Object Code shall have the general meaning customary in the software
industry. By way of illustration of this general meaning, the object code of a
computer program comprises a machine-readable sequence of instructions stored in
electronic form, e.g., on a floppy disk or magnetic tape, as a sequence of ones
and zeros.
Pending Transactions shall have the meaning set forth in Section 8.04.
Products shall mean the computer software products owned by Seller or to
be acquired by Seller from Optionee which are known as the SYSMON/Open
Aviator, LOGMON/Control Tower and FLIGHTLOG/ASI-Accounting products and
further described in Schedule 6.01(a) hereto, including, without limitation:
(a) any and all related patents and patent applications, patent rights,
inventions, discoveries and improvements, patent licenses, processes and
formulae, trade secrets, proprietary technical information, trademarks, trade
names, labels and other trade rights, copyrights, design documents and
conceptions, and any and all rights to any of the foregoing, (b) all original
works of authorship comprising the Source Code and Object Code of the Products,
(c) all original works of authorship comprising Documentation concerning the
installation, customization, modification, use and maintenance of such Products
and (d) all Copies in the possession of Seller or Optionee of the works of
authorship and other materials described in (a) through (c) above.
Purchase Price shall mean the aggregate purchase consideration specified
in Section 2.02.
Retained Distribution Agreements shall mean those Distribution Agreements
that are not assigned by Seller to Buyers at the Closing and which Buyers do not
assume pursuant to this Agreement until such Distribution Agreements are
assigned to Buyers or terminated.
Retained Licenses shall mean all Licenses that are not assigned by Seller
to Buyers at the Closing and which Buyers do not assume pursuant to this
Agreement until such Licenses are assigned to Buyers or terminated.
Source Code shall have the general meaning customary in the software
industry. By way of illustration of this general meaning, the source code of a
computer program comprises a series of statements in an English-like
high-level computer language or in a relatively low-level language such as
the assembly language for a particular computer language in question.
Sub-Licenses shall mean all sub-licenses of the Products heretofore
entered between distributors of Seller and third-party end-user customers
described on Schedule 6.04(a).
Tax or Taxes means any income, gross income, gross receipts, profits,
capital stock, franchise, business, withholding, payroll, social security,
workers compensation, unemployment, disability, property, ad valorem, stamp,
excise, occupation, service, sales, use, license, lease, transfer, import,
export, value added, goods and services, alternative minimum, estimated or other
similar tax (including any fee, assessment, or other charge in the nature of or
in lieu of any tax) imposed by any domestic or foreign governmental entity or
political subdivision thereof, and any interest, penalties, additions to tax, or
additional amounts in respect of the foregoing.
Tax Return or Tax Returns shall mean all tax returns, declarations of
estimated tax and tax reports relating to any Tax, including, without
limitation, income, franchise, sales and use, unemployment compensation, excise,
severance, property, gross receipts, profits, payroll and withholding tax
returns and information returns.
Trade Secret shall mean the whole or any part of any scientific or
technical information, design process, procedure, formulae, data processing
technique, computer program or improvement that is valuable and secret (in the
sense that it is not generally known to competitors of Seller). To the extent
consistent with the foregoing, Trade Secrets include, without limitation, the
specialized information and technology embodied in computer program material,
including Source Code, Object Code, Documentation and other program and system
designs, that provide Seller with an advantage over its competitors with respect
to the Products.
ARTICLE II. TRANSFER OF ASSETS.
2.01. ASSETS TO BE SOLD AND LIABILITIES TO BE ASSUMED.
(a) Subject to the terms and conditions of this Agreement, at the
Closing, Seller will sell, convey, assign, transfer and deliver the
following: (i) all right, title and interest in and to the Products, the
Assignable Distribution Agreements, the Assignable Licenses, the Buyers
Accounts Receivable and all other Assets, subject to the exceptions listed
in sub-paragraph (b) of this Section 2.01, to BMC Cayman, and (ii) all
right, title and interest in and to the distribution rights to the Products
in the United States to BMC.
(b) Such sale, conveyance, assignment, transfer and delivery will be
effected, at the Closing by delivery by Seller to Buyers of the duly
executed Assignment, Xxxx of Sale and such other good and sufficient
instruments of conveyance and transfer as shall be reasonably necessary to
vest in Buyers good, valid and marketable title to the Assets, free and
clear of all claims, liens and encumbrances (whether absolute, accrued,
contingent or otherwise) except for: (i) all rights under the Distribution
Agreements; (ii) all rights under the Licenses; (iii) all rights under the
Sub-Licenses and (iv) the exceptions set forth on Schedule 2.01(b).
(c) At the Closing, Buyers shall assume the liabilities and
obligations arising from the acts and omissions of Buyers under the
Assignable Distribution Agreements and Assignable Licenses after the
Closing (the Assumed Obligations ), by delivery to Seller of the duly
executed Assumption. The Assumed Obligations are the only liabilities and
obligations being assumed by Buyers at the Closing, provided; however,
that: in the event any Retained Distribution Agreements or Retained
Licenses are assigned to Buyers subsequent to the Closing, all obligations
of the Seller under any such Retained Distribution Agreements or Retained
Licenses shall thereafter be considered Assumed Obligations for purposes
of this Section 2.01. Except as specifically set forth in the preceding
sentences, Buyers shall neither assume nor agree to pay, perform or
discharge, and Seller shall solely retain and be responsible for paying and
discharging, all liabilities and obligations occurring or arising under
Licenses and Distribution Agreements prior to the Closing and all other
liabilities and obligations of Seller, whether disclosed, undisclosed,
direct, indirect, absolute, contingent, secured, unsecured, accrued or
otherwise. Except as specifically set forth in this paragraph, Seller
shall solely retain and be responsible for paying, discharging and
performing all liabilities or obligations of any nature of Seller
(absolute, accrued, contingent or otherwise) that arose, existed or accrued
on or prior to the Closing or that arise out of, or result from, any act or
omission or alleged act or omission of Seller or its employees or agents or
subcontractors, on or prior to the Closing. The liabilities and
obligations not being assumed by Buyers are hereinafter collectively called
the Excluded Obligations. Seller shall utilize all reasonable efforts
that may be necessary to prevent any person, firm or governmental authority
from having recourse against any of the Assets or against Buyers as
transferee thereof, with respect to the Excluded Obligations at the
Closing. For the avoidance of doubt, any sales or other transfer tax
arising out of the sale of the Assets to Buyers shall be the sole
responsibility of Seller, and Seller shall indemnify and hold Buyers
harmless from and against any liability arising from or relating to any
claim of non-payment or underpayment of the same.
2.02. CONSIDERATION. Subject to the terms and conditions of this
Agreement, in reliance on Seller s, Seller Stockholders , Optionee s and Xxx s
representations, warranties and agreements contained herein, and in
consideration of the aforesaid sale, conveyance, assignment, transfer and
delivery of the Assets, Buyers will deliver or cause to be delivered to Seller
at the Closing, as payment for the aforesaid sale, conveyance, assignment,
transfer and delivery of the Assets, the following consideration:
payment, by federal funds bank wire transfers or bank checks as
determined by Seller, in its sole discretion, of an amount equal to
$2,450,000 to be paid by BMC for distribution rights to the Products in the
United States and of an amount equal to $4,550,000 to be paid by BMC Cayman
for all remaining Assets (together, the Purchase Price ), which shall be
payable as follows: $5,600,000 (the Closing Payment ) to Seller or as
directed by Seller and $1,400,000 to the Escrow Account.
2.03. CLOSING. The closing of the transactions contemplated by this
Agreement will take place at 10:00 a.m. local time at BMC, 0000 XxxxXxxx
Xxxxxxxxx, Xxxxxxx, Xxxxx, on the 10th day of July, 1997 or such other time as
may be agreed to by Buyers and Seller. The location of the Closing may be
changed to such other place as Buyers and Seller may mutually agree upon in
writing. The date on which the closing actually occurs is hereinafter referred
to as the Closing Date. The closing shall be effective as of the close of
business on the Closing Date (the closing, when so effective, the Closing ).
2.04. DELIVERY BY SELLER. At or prior to the Closing, Seller will
deliver to Buyers the following, in form and substance reasonably satisfactory
to Buyers:
(a) the duly executed Assignment;
(b) the duly executed Xxxx of Sale if any Assets are not covered by
the Assignment;
(c) a true and complete copy of all promotional and sales materials
used in marketing the Products;
(d) physical delivery of the Products, including without limitation,
(a) all Copies of Source Code, including any enhanced or modified versions,
(b) all Documentation, including flow charts, program procedures and
descriptions, procedures for maintenance and modification and testing data
in Seller s possession and (c) all physical Copies of the Products in
Seller s, Optionee s or Xxx s possession; PROVIDED, HOWEVER, that Seller
and Optionee shall retain subsequent to the Closing sufficient copies of
the Source Code, the Object Code and such Documentation as reasonably
necessary to permit Seller and Optionee to perform the obligations under
this Agreement to be performed subsequent to the Closing under Sections
9.05 and 9.06. Seller and Optionee shall immediately return all Source
Code, Object Code and Documentation to Buyers upon satisfaction of the
obligations under Sections 9.05 and 9.06.
(e) lists of all customer prospects and current customers for the
Products, including output of Seller s sales database;
(f) the certified resolutions referred to in Section 4.02 hereof;
(g) the opinion of counsel to Seller, dated the Closing Date,
substantially in the form of Exhibit D hereto;
(h) an amended and updated Schedule 6.04(a);
(i) an accounting showing all of Buyers Accounts Receivable as of the
Closing Date;
(j) a true and complete executed copy of all documentation relating
to the Option Agreement; and
(k) all other documents, instruments and writings reasonably required
to be delivered by Seller at or prior to the Closing pursuant to this
Agreement.
2.05 DELIVERY BY BUYERS. At or prior to the Closing, Buyers will deliver
to Seller or the Escrow Account, the following, in form and substance reasonably
satisfactory to Seller:
(a) the Closing Payment referred to in Section 2.02 hereof;
(b) the Escrow Amount referred to in Section 2.02 hereof;
(c) the duly executed Assumption;
(d) all other documents, instruments and writings reasonably required
to be delivered by Buyers at or prior to the Closing pursuant to this
Agreement.
ARTICLE III. RELATED MATTERS.
3.01. INFORMATION.
(a) ACCESS PENDING THE CLOSING. Prior to the Closing, Seller will
provide Buyers and their counsel, accountants and other representatives
reasonable access during normal business hours with copies of Seller s
contracts, commitments and records and other business and financial
information that relate to the Products.
(b) ACCESS AFTER THE CLOSING. Subsequent to the Closing, Seller will
permit Buyers and their representatives to have reasonable access to, and
to examine and make copies of, all invoices, records, Licenses, contracts,
commitments, records and other business and financial information that
relate to the Assets.
(c) RECORD RETENTION. For a period of three (3) years after the
Closing, Buyers, Seller and Optionee each agree that prior to the
destruction or disposition of any Licenses, contracts and commitments that
relate directly to the Assets, each party shall provide not less than 30
nor more than 60 days prior written notice to the others of any such
proposed destruction or disposal. If a recipient of such notice desires to
obtain any of such documents, it may do so by notifying the other party in
writing at any time prior to the scheduled date for such destruction or
disposal. Such notice must specify the documents which the requesting
party wishes to obtain. The parties shall then promptly arrange for the
delivery of such documents. All out-of-pocket costs associated with the
delivery of the requested documents shall be paid by the requesting party.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER STOCKHOLDERS.
Seller and Seller Stockholders (solely with respect to Sections 4.02 and
4.03) hereby, jointly and severally, represent, warrant and covenant to Buyers
that:
4.01. ORGANIZATION, ETC. Seller is a corporation duly organized,
validly existing and in good standing under the laws of Utah. Seller has the
full corporate power and authority to conduct its business as currently
conducted and to own, operate or lease the property and assets it purports to
own, operate and hold. Seller has the requisite power and authority to enter
into, execute and deliver this Agreement and related instruments or agreements
to which it is a party and to carry out the transactions contemplated hereby on
its part.
4.02. AUTHORITY. The execution and delivery of this Agreement, the
Assignment, the Xxxx of Sale, and any other conveyances or agreements
contemplated hereby and the effectuation of the transactions contemplated hereby
and by the Option Agreement have been duly authorized by all necessary corporate
action of Seller. Seller will deliver to Buyers at the Closing complete and
correct copies, certified by its secretary, of the resolutions duly and validly
adopted by its Board of Directors, evidencing such authorization (which
resolutions will not have been modified, revoked or rescinded in any respect
prior to, and will be in full force and effect at, the Closing). No other
corporate act or proceeding on the part of Seller or Seller Stockholders is
necessary for the due and valid authorization of this Agreement or the
transactions contemplated hereby and by the Option Agreement. When executed by
Seller and Seller Stockholders, this Agreement will constitute and the Option
Agreement currently constitutes the valid and binding obligation of Seller and
Seller Stockholders enforceable against each in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization and other laws affecting creditors rights and
equitable remedies generally.
4.03. NO VIOLATION. Neither the execution and delivery of this
Agreement nor the effectuation by Seller of the transactions contemplated hereby
or by the Option Agreement (a) will violate any statute or law, or any rule,
regulation, order, writ, injunction or decree of any court or governmental
authority, or (b) will violate or conflict with or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or will result in the termination of, or accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the Assets, under any term or provision of (i) the
incorporation and organizational documents of Seller, or (ii) any contract,
commitment, understanding, arrangement, agreement or restriction of any kind or
character to which Seller is a party or by which Seller or any of its assets or
properties, may be bound or affected, which violation, conflict or default would
cause a material adverse effect on the business, prospects or condition
(financial or otherwise) of Seller. Except for filings, consents, approvals or
authorizations which will have been made or obtained or actions which will have
been taken at or prior to the Closing, no filing with, or consent, approval,
authorization or action by, any governmental authority is required in connection
with the execution and delivery by Seller of this Agreement or the effectuation
by it of the transactions contemplated herein or in the Option Agreement.
4.04. LITIGATION. There are no actions, suits or proceedings by or
against Seller at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, agency, instrumentality or
authority and, to the best of the knowledge of Seller, no judgment, order or
decree of any such court or other governmental agency has been entered against
or served on Seller which would have a material adverse effect on the business
prospects or condition (financial or otherwise) of Seller.
4.05. SUFFICIENCY OF CAPITAL. Seller now has capital sufficient to
carry on its business and transactions and all businesses and transactions in
which it is about to engage, is now, and after giving effect to the transactions
contemplated by this Agreement will be, solvent and able to pay its debts as
they mature, now owns property whose fair saleable value is greater than the
amount required to pay its debts and will not be rendered insolvent by the
transactions contemplated by this Agreement or the Option Agreement.
4.06. COMPLIANCE WITH LAW. Seller has conducted its business in
accordance with all material applicable laws, regulations and other requirements
of all national governmental authorities, and of all states, municipalities and
other political subdivisions and agencies thereof, having jurisdiction over
Seller and which could have a material adverse effect on Buyers s interest in
the Assets. Seller has received no notification of any asserted present or past
failure by Seller to comply with such laws, rules or regulations in connection
with its business and operations or in connection with the Assets.
4.07. TAXES. Seller has filed all Tax Returns for periods ending on or
before Closing and paid all Taxes now due for periods covered by such returns
and in respect of all periods through the date hereof. No material deficiencies
have been proposed or assessed against Seller by federal, state or local tax
authorities that remain unpaid.
4.08. FINANCIAL STATEMENTS. Seller has delivered to Buyers its audited
consolidated financial statements as of and for the period ended March 31, 1997
as set forth in its most recent annual report on Form 10-KSB (the Financial
Statements ). Except as set forth in the Financial Statements, Seller has no
outstanding claims, liabilities or indebtedness, contingent or otherwise, which
in the aggregate are material to the condition (financial or otherwise) of
Seller.
4.09. DISTRIBUTION AGREEMENTS. Except as set forth on Schedule
6.04(c), all Assignable Distribution Agreements may be terminated at will by
Buyers without any payment to the respective distributor.
4.10. STATE SALES TAX. No Tax will be imposed on Buyers by the State
of Utah as a result of the transfer of tangible personal property to Buyers.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF OPTIONEE AND XXX.
Optionee and Xxx, jointly and severally, hereby represent, warrant and
covenant to Buyers that:
5.01 ORGANIZATION, ETC. Optionee is a limited company duly organized,
validly existing and in good standing under the laws of Australia. Optionee has
the full corporate power and authority to conduct its business as currently
conducted and to own, operate or lease the property and assets it purports to
own, operate and hold. Optionee has the requisite power and authority to enter
into, execute and deliver this Agreement and related instruments or agreements
to which it is a party and to carry out the transactions contemplated hereby on
its part.
5.02. AUTHORITY. The execution and delivery of this Agreement and the
effectuation of the transactions contemplated hereby and by the Option Agreement
have been duly authorized by all necessary corporate action of Optionee.
Optionee will deliver to Buyers at the Closing complete and correct copies,
certified by its secretary, of the resolutions duly and validly adopted by its
Board of Directors and stockholders, evidencing such authorization (which
resolutions will not have been modified, revoked or rescinded in any respect
prior to, and will be in full force and effect at, the Closing). No other
corporate act or proceeding on the part of Optionee is necessary for the due and
valid authorization of this Agreement or the transactions contemplated hereby
and by the Option Agreement. Each of this Agreement and the Option Agreement
constitute the valid and binding obligation of Optionee and Xxx enforceable
against each in accordance with their terms except as may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization and other laws
affecting creditors rights and equitable remedies generally.
5.03. NO VIOLATION. Neither the execution and delivery of this
Agreement nor the effectuation by Optionee and Xxx of the transactions contem-
plated hereby or by the Option Agreement (a) will violate any statute or law, or
any rule, regulation, order, writ, injunction or decree of any court or
governmental authority, or (b) will violate or conflict with or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or will result in the termination of, or accelerate
the performance required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the Assets, under any term or
provision of (i) the incorporation and organizational documents of Optionee, or
(ii) any contract, commitment, understanding, arrangement, agreement or
restriction of any kind or character to which Optionee is a party or by which
Optionee or any of its assets or properties, may be bound or affected, which
violation, conflict or default would cause a material adverse effect on the
business, prospects or condition (financial or otherwise) of the Optionee.
Except for filings, consents, approvals or authorizations which will have been
made or obtained or actions which will have been taken at or prior to the
Closing, no filing with, or consent, approval, authorization or action by, any
governmental authority is required in connection with the execution and delivery
by Optionee of this Agreement or the effectuation by it of the transactions
contemplated herein or in the Option Agreement.
5.04 TITLE. As of the date hereof, Optionee has good, valid and
marketable title to all of the Assets and all interests therein, and none of the
Assets nor any interest therein is, except as set forth in Schedule 6.01(b), or
at the Closing will be, subject to any mortgage, pledge, lien, security
interest, sale agreement, encumbrance, claim or charge, license (other than the
exceptions described in Section 2.01 (b) hereof), lease or other obligation of
any kind, whether accrued, absolute, contingent or otherwise.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SELLER, SELLER STOCKHOLDERS,
OPTIONEE AND XXX.
Seller, Seller Stockholders, Optionee and Xxx hereby, jointly and
severally, represent, warrant and covenant to Buyers that:~
_
6.01. ASSETS; SOFTWARE PRODUCTS.
(a) Schedule 6.01(a) describes in full all software and software
products, both generally available and under development (in all stages of
development), that are included in Seller s or Optionee s software business
relating to any of the Products.
(b) At the Closing, Seller will have, good, valid and marketable
title to all of the Assets and all interests therein, and none of the
Assets nor any interest therein is, except as set forth in Schedule
6.01(b), or at the Closing will be, subject to any mortgage, pledge, lien,
security interest, sale agreement, encumbrance, claim or charge, license
(other than the exceptions described in Section 2.01 (b) hereof), lease or
other obligation of any kind, whether accrued, absolute, contingent or
otherwise. At the Closing, Seller will have, complete and unrestricted
power and the unqualified right to sell to Buyers and to assign, transfer
and deliver to Buyers, and upon consummation of the transactions
contemplated by this Agreement, Buyers will acquire, good, valid and
marketable title to the Assets, free and clear of all mortgages, pledges,
liens, security interests, conditional sales agreements, encumbrances or
charges of any kind (other than the exceptions described in Section 2.01(b)
hereof).
(c) Schedule 6.01(c) sets forth the form and placement of the
proprietary legends and copyright notices displayed in or on the Products.
In no instance has the eligibility of the Products for protection under
applicable copyright laws been forfeited to the public domain by omission
of any required notice or any other action.
(d) The Source Code for the Products has at all times been maintained
in strict confidence and the only individuals or entities who have access
to such Source Code are set forth on Schedule 6.01(d) or Schedule 6.01(e).
Except as set forth on Schedule 6.01(d) or Schedule 6.01(e), all of such
individuals or entities are parties to written nondisclosure agreements.
(e) Schedule 6.01(e) sets forth all individuals and entities,
including employees, agents, consultants and contractors who have
contributed to or participated in the conception and development of the
Products. Except as set forth on Schedule 6.01(e), all of such individuals
are parties to written nondisclosure agreements reasonably protecting the
Confidential Information and Trade Secrets included in the Products.
Except as set forth on Schedule 6.01(e), all of Seller s and Optionee s
employees listed on Schedule 6.01(e) have executed instruments of
assignment in favor of Seller or Optionee as assignee of all tangible and
intangible property thereby arising.
(f) Except as set forth on Schedules 6.01(d) and (e), Seller has not
provided any Copies of the Products or of Documentation to any third
parties other than pursuant to the Distribution Agreements or Licenses and
other than evaluation Copies provided to potential customers, and, except
as set forth on Schedule 6.01(d), all such evaluation Copies have been
provided in Object Code only.
(g) Neither Seller nor Optionee has taken any action to cause any of
the Products or Trade Secrets related to the Products to enter the public
domain and Optionee has not failed to take any actions, the failure of
which would have caused, or has directly caused, the Products or any Trade
Secrets to enter the public domain. Seller has not entered into or
executed any previous agreement of sale, license, lease or similar
transactions, other than the Distribution Agreements or Licenses, pursuant
to which a party other than Seller has acquired or may acquire rights to
the Products that conflict with the provisions of this Agreement.
(h) Schedule 6.01(h) contains a complete list of software libraries,
compilers and other third-party software used in the development of the
Products and all license agreements for the use of such software by Seller
and, if such software is not licensed, the basis of the use of such
software by Seller. All use of each such software program by Seller has
been in full compliance with the respective license agreement or right of
use listed on Schedule 6.01(h).
6.02. DOCUMENTATION OF SOURCE CODE. All of the Source Code includes
all commentary or explanation that may be reasonably necessary to render such
materials understandable and usable by a trained computer programmer skilled in
client/server Unix operating systems monitoring. The Documentation also includes
any programs (including compilers), workbenches, tools and higher level (or
proprietary ) language used for the development, maintenance, and the
implementation of the software programs.
6.03. PATENTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 6.03 delivered
in connection herewith contains an accurate and complete description of all
patents, trademarks, trade names, assumed names, copyrights, technology, and
processes, and all applications therefore, currently owned or held by Seller,
Optionee or their Affiliates that relate to the Products. For the purposes of
this Agreement, the term Affiliate shall mean any individual or entity
controlling, controlled by or under common control with the subject referenced.
The Products, the use thereof by Seller and the use, license, sale or lease of
the Products, or of any part thereof, or of any Copy, or of any part thereof, do
not and will not infringe on, or contribute to the infringement of, any
copyright, trade secret, patent right or trademark of any third party in either
the United States or any foreign country. No person or entity has asserted a
claim that the use, license, sale or lease of the Products, or any part thereof,
infringes or contributes to the infringement of any patent claim, copyright or
trade secret right of any third party in either the United States or any foreign
country, and Seller is not aware of any basis for any such claim. The
Assignment will assign all such patents, trademarks, trade names, assumed names,
copyrights, Trade Secrets and similar rights, and all applications with respect
to any thereof, will be duly executed and, if required to be filed, will be in
form suitable for filing.
6.04. LICENSES, TRIALS, CONTRACTS AND COMMITMENTS.
(a) Schedule 6.04(a) sets forth a complete and accurate list of each
License of the Products entered into by Seller or Optionee and their
respective Distributors as of the date hereof. Schedule 6.04(a) details
which License is not an Assignable License and which licenses are license
agreements between Seller and the licensee and which are sub-licenses
between a Distributor and an end-user licensee. Except as set forth on
Schedule 6.04(a), Seller has provided accurate and complete copies of such
Licenses to Buyers.
(b) Seller and Optionee are currently conducting Trials with respect
to the Pending Transactions (as hereinafter defined) with respect to the
Products, all of which are being conducted or have been delivered in
connection with Seller s or Optionee s standard published pricing and their
discount structure, as applicable.
(c) Schedule 6.04(c) sets forth all agency, marketing or distribution
agreements that obligate Seller or Optionee to provide or support the
Products or that grant any right to sell, relicense, market or distribute
the Products (the Distribution Agreements ).
(d) Seller is not in material default, nor is there any basis for any
valid claim of material default, under any License and, in particular,
Seller has not taken any action that would cause, or failed to take any
action, the failure of which would cause, the Source Code of the Products
to be released from escrow. Schedule 6.04(d) summarizes material pending
customer complaints known to Seller relating to the Products as of the
Closing Date.
6.05. NO MISLEADING STATEMENTS. This Agreement and the information and
schedules referred to herein, when taken together, do not include any untrue
statement of material fact and do not omit to state any material fact necessary
to make the statements contained herein and therein not misleading.
6.06. NO BROKERAGE FEES. None of Seller, Seller Stockholders, Optionee
or Xxx or any of their respective Affiliates has retained any financial advisor,
broker, agent or finder or paid or agreed to pay any financial advisor, broker,
agent or finder on account of this Agreement or any transaction contemplated
hereby.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF BUYERS.
Buyers hereby jointly and severally, represent, warrant and covenant to
Seller, the Seller Stockholders, Optionee and Xxx that:
7.01. ORGANIZATION. BMC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. BMC
Cayman is a Cayman unlimited liability company duly organized, validly existing
and in good standing under the laws of the Cayman Islands. Each of the Buyers
has the requisite corporate power and authority to carry on its business as
presently conducted and the requisite power and authority, to enter into,
execute and deliver this Agreement, the Assumption and related instruments or
agreements to which it is a party and to carry out the transactions contemplated
hereby and thereby.
7.02. AUTHORITY. The execution and delivery of this Agreement, the
Assumption and any agreements contemplated hereby and the effectuation by Buyers
of the transactions contemplated hereby and thereby have been duly authorized by
the respective Boards of Directors of the Buyers. No other corporate act or
proceeding on the part of Buyers or their stockholders is necessary to authorize
this Agreement, or the transactions contemplated hereby. When executed by the
Buyers, this Agreement will constitute the valid and binding obligation of each
of the Buyers, enforceable against each in accordance with its terms except as
may be limited by applicable bankruptcy, insolvency, moratorium, reorganization
and other laws affecting creditors rights and equitable remedies generally.
7.03. NO VIOLATION. Neither the execution and delivery of this
Agreement nor the Assumption nor the effectuation by Buyers of the transactions
contemplated hereby (a) will violate any statute or law, or any rule,
regulation, order, writ, injunction or decree of any court or governmental
authority, or (b) will violate or conflict with or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or will result in the termination of, or accelerate the performance
required by, any term or provision of (i) the incorporation and organizational
documents of BMC or BMC Cayman or (ii) any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which either
of the Buyers is a party or by which either of the Buyers or any of their assets
or properties may be bound or affected. Except for filings, consents, approvals
or authorizations which will have been made or obtained or actions which will
have been taken at or prior to the Closing, no filing with, or consent,
approval, authorization or action by, any governmental authority is required in
connection with the execution and delivery by Buyers of this Agreement or the
effectuation by them of the transactions contemplated herein.
ARTICLE VIII. OTHER OBLIGATIONS OF THE PARTIES.
8.01. CONDUCT OF BUSINESS OF SELLER AND OPTIONEE PENDING THE CLOSING.
Seller and Optionee agree that from the date hereof until the earlier of the
Closing or termination of this Agreement as herein provided, except as otherwise
specifically permitted by this Agreement or unless otherwise consented to by
Buyers in writing, which consent Buyers will not withhold unreasonably:
(a) Seller and Optionee shall not enter into any licenses or other
contracts respecting the Products except in the ordinary course of business
in accordance with their respective standard published pricing and discount
structure.
(b) Seller and Optionee shall not take any action that would, or fail
to take any action the failure of which would, cause directly or indirectly
any of the Products or Trade Secrets to enter the public domain or that
could otherwise adversely affect the Products or Trade Secrets.
(c) Seller and Optionee shall not in any way dispose of or encumber
the Assets or any right relating thereto.
(d) Except as contemplated by this Agreement, neither Seller nor
Optionee will, directly or indirectly (through a representative or
otherwise), solicit, or furnish information to, any prospective buyers,
commence negotiations with any other party or enter into any agreement with
any other party concerning the sale of the Assets or of Seller or Optionee
or of any part of Seller or Optionee (other than assets not included in the
Assets).
(e) Seller and Optionee will use their best efforts to preserve their
exclusive rights to use their trademarks, trade names, service marks and
similar rights and to preserve as secret all of their Trade Secrets
respecting the Products.
8.02. CONSENTS. Seller and Optionee will use their reasonable efforts
to obtain, prior to the Closing, the consent of each licensee under each License
(other than Assignable Licenses) to the assignment of such Licenses to Buyers at
the Closing. All such consents will be in writing and executed counterparts
thereof will be delivered to Buyers at the Closing.
8.03 CONDUCT OF DUE DILIGENCE BY BUYERS. Buyers shall use all diligent
efforts to conduct and conclude a due diligence investigation of the Assets by
no later than ten (10) business days after the date of this Agreement. Seller
and Optionee will cooperate with such review and will provide Buyers and their
agents reasonable access to the Products immediately following the date of this
Agreement.
8.04 SALES DURING TRANSITION PERIOD. Buyers and Seller agree that Seller
may close the sales of the Products during the first 90 days after the Closing
Date to the sales prospects listed on Schedule 8.04 at the prices and in the
quantities consistent with those indicated on Schedule 8.04 (the Pending
Transactions ) using Seller s standard form of license and terms, including
discount premiums. Buyers and Seller agree that during the 90 day period
following the Closing Date, Seller will receive a commission on sales of the
Products to those sales prospects listed on Schedule 8.04 based on the following
payment scale: (i) for sales made during the first 30 days after the Closing
Date, Seller shall receive a 90% commission; (ii) for sales made during the
second 30 days after the Closing Date, Seller shall receive a 80% commission;
and (iii) for sales made during the third 30 days after the Closing Date, Seller
shall receive a 70% commission. In addition, Buyers and Seller agree that
during the 90 day period beginning 90 days after the Closing Date, Seller shall
receive a 60% commission on revenues received by Buyers from sales of Products
utilized in conjunction with the DEC PolyCenter Capacity Planning Product.
ARTICLE IX. COVENANTS OF SELLER, OPTIONEE AND XXX.
9.01. NONCOMPETITION. Each of Seller, Optionee and Xxx and their
respective Affiliates covenant and agree that, for a period of three years from
and after the Closing Date, it shall not (i) compete with Buyers, directly or
indirectly, whether individually or as owner, stockholder, member, director,
agent, consultant, employee, independent contractor or otherwise, of any
corporation, partnership, proprietorship or other business organization or
association, in the development or marketing of any computer software program
that performs or is intended to perform functions substantially similar to any
of those performed by the Products at Closing or (ii) offer employment to, or
induce or attempt to induce any director, officer, employee, agent, or customer,
supplier or lessor of BMC or its subsidiaries to terminate such position or
relationship with BMC or its subsidiaries. Notwithstanding anything to the
contrary contained herein, Seller and Xxx and their respective Affiliates shall
not be prohibited from (x) making minority, passive investments in companies
whose securities are publicly traded and that compete with Buyers or any of
their assigns or (y) marketing computer software programs that perform or are
intended to perform functions substantially similar to existing Enlighten and
COS/MANAGER software products currently distributed by Seller. Seller and Xxx
acknowledge that this covenant not to compete is ancillary to the sale of
certain assets of Seller s and Xxx s businesses from which Seller and Xxx will
receive good and valuable financial consideration, is reasonably necessary to
protect the Assets being acquired by Buyers and does not impose an undue or
unreasonable hardship upon Seller, Optionee or Xxx. If, however, any portion of
this covenant is found by a court of competent jurisdiction to be unreasonable,
Seller, Optionee and Xxx agree that the covenant shall be reformed by the court
whereby it is reasonable and, as reformed, shall be enforced by the court
prospectively.
Notwithstanding the foregoing, it is hereby agreed that any performance by
Seller, Optionee or Xxx of their obligations required under this Agreement,
including without limitation, all obligations under the Retained Distribution
Agreements or Retained Licenses or under Section 9.05 hereof shall not be
considered a default of this Section 9.01. The parties agree that $750,000 of
the consideration payable to BMC is allocable to this noncompetition covenant.
9.02. CONFIDENTIALITY. Subsequent to the Closing, Seller, Optionee and
Xxx agree to keep secret and not, without the prior written consent of Buyers,
use or disclose to any third party any Confidential Information or Trade Secrets
relating to the Products.
9.03. ADDITIONAL DOCUMENTS RELATING TO PROPRIETARY RIGHTS AND TITLE.
Seller, Optionee and Xxx shall execute, without additional consideration from
Buyers, any and all additional and proper copyright, patent and trade secret
documents reasonably requested by Buyers, including, without limitation,
copyright registration applications, patent applications, recordation documents
and/or conveyance documents reasonably necessary for the purposes of protecting
Buyers s rights in and to the Products or perfecting Buyers s right, title and
interest to the Assets.
9.04 RETAINED DISTRIBUTION AGREEMENTS AND RETAINED LICENSES. Seller shall
observe all provisions of, and perform all of its obligations under, the
Retained Distribution Agreements and Retained Licenses, including, but not
limited to, the performance of its product maintenance obligations, in a manner
reasonably satisfactory to the respective distributor and licensee. Seller
shall request the consent of the distributor and/or licensee under any Retained
Distribution Agreement or Retained License to the transfer or assignment thereof
to Buyers. If such consent is not obtained or if an attempted assignment
thereof would be ineffective or would affect the rights of Seller thereunder
such that Buyers would not in fact receive all such rights, Seller and Buyers
shall enter into any arrangements reasonably necessary to provide (a) for
Buyers, the benefits thereunder, including, but not limited to, the economic
benefits accruing post-Closing to the licensor under the Retained Distribution
Agreements or Retained Licenses and the enforcement of the benefit of Buyers or
any and all rights of the licensor against the distributor/licensee thereto
arising out of breach or cancellation by such other party or otherwise, and (b)
for Seller, the performance of all of the obligations of the licensor
thereunder.
9.05 POST-CLOSING MAINTENANCE. Seller, Optionee and Xxx shall provide
maintenance and support services for the Products in accordance with the
maintenance and support services plan set forth in Schedule 9.05 for a period of
six months following the Closing Date; provided, however, that Buyers may, upon
giving written notice to Seller, reduce such six-month period to any shorter
period selected by Buyers . Buyers shall make appropriate arrangements to
provide timely access to the Source Code of the Products as necessary to
performance by Seller, Optionee and Xxx of their obligations under this
Agreement. Seller, Optionee and Xxx covenant that the services they will
provide pursuant to this Section 9.05 will conform in all material respects to
the descriptions and specifications therefor set forth in Schedule 9.05.
Seller, Optionee and Xxx covenant that they will perform the services required
under this Section 9.05 in a professional manner with due diligence and good
faith. Buyers will pay to Seller, in consideration of Seller, Optionee and Xxx s
performance of these services, 100% of any maintenance fees received by Buyers
during the period in which Seller, Optionee and Xxx are providing these
services. Buyers will invoice, xxxx and collect fees in connection with all
maintenance services after the Closing Date.
9.06 INTEGRATION OF PRODUCTS. Seller or Optionee shall provide three of
the leading developers of the Products, the names of whom are set forth on
Schedule 9.06, to Buyers in Houston for a period of six months following the
Closing Date to work full-time on the integration of the Products with BMC s
PATROL systems management software product as set forth on Schedule 9.06.
Buyers shall have the option of extending such services for an additional six
months at the cost of $50,000 per month with the understanding that if Buyers
elect to extend such services for the additional six months, Buyers shall pay a
completion bonus of $15,000 per individual to each of the three developers
listed on Schedule 9.06. Seller and Optionee covenant that the services they
will provide pursuant to this Section 9.06 will conform in all respects to the
descriptions and specifications therefor set forth in Schedule 9.06. Seller and
Optionee covenant that they will perform the services required under this
Section 9.06 in a professional manner with due diligence and good faith. In the
event any of the persons listed on Schedule 9.06 becomes an employee of BMC
within the period ending six months after the completion of the integration
services, BMC shall pay Seller $25,000 per individual so employed.
9.07 BUYERS ACCOUNTS RECEIVABLE. On and after the Closing Date, Seller
shall remit to Buyers, every three months following the Closing Date, all
payments of Buyers Accounts Receivable received by Seller. Buyers shall notify
all of its customers (other than those under the Retained Distribution
Agreements and Retained Licenses) immediately after the Closing all payments of
maintenance and other amounts shall thereafter be made to Buyers rather than
Seller.
9.08 EXERCISE OF OPTION. Seller shall exercise the Option pursuant to the
Option Agreement and complete the purchase of the Assets prior to July 9, 1997.
9.09 U.K. DISTRIBUTION AGREEMENT. Seller and Optionee shall enter into an
arrangement with Software Innovations Ltd. providing for the termination of the
exclusive distribution or licensing rights of Software Innovations Ltd. with
respect to the Products, including any and all rights under the Marketing Rights
Agreement between Optionee and Software Innovations Ltd. dated December 7, 1989
and the renewal thereof dated September 9, 1994.
ARTICLE X. CONDITIONS TO BUYERS OBLIGATIONS.
Except as may be waived by Buyers, the obligations of Buyers are subject to
the fulfillment, prior to or at the Closing, of each of the following
conditions:
10.01. DUE DILIGENCE. Buyers shall have completed the due diligence
investigation contemplated by Section 8.03 to their reasonable satisfaction.
10.02. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Seller, Seller Stockholders, Optionee and Xxx in this
Agreement, and the statements contained in the Exhibits and Schedules annexed
hereto or in any instrument, list, certificate or writing delivered by Seller,
Optionee and Xxx pursuant to this Agreement, shall have been true in all
material respects when made and at and as of the Closing Date as though such
representations and warranties were made at and as of such date, except for any
changes permitted by the terms of this Agreement or consented to by Buyers in
writing.
10.03 NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement
there shall not have occurred any material adverse change in the condition
(financial or otherwise), business, properties, or assets of Seller, or in the
Assets.
10.04. PERFORMANCE. Each of Seller, Optionee and Xxx shall have
performed and complied with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by them, prior to or at
the Closing.
10.05. CONSENTS; LEGALITY. All approvals of applications to public
authorities (federal, state or local, domestic or foreign), other than consents
to assignment of any License under which a governmental agency is licensee, and
all necessary corporate and shareholder action of Seller, if any, the granting
or performing of which are necessary, in the reasonable opinion of Buyers, for
the consummation of the transactions contemplated hereby shall have been
obtained and no such approval or action shall contain any condition which
materially adversely affects or will materially adversely affect the Assets or
the operations, business or prospects related to the Assets.
10.06. LITIGATION
(a) There shall be no order, decree or injunction of a court of
competent jurisdiction, including without limitation the entry of a
preliminary or permanent injunction, that (i) prevents or delays the
performance by Buyers, Seller, Optionee or Xxx of their respective
obligations hereunder or (ii) would impose any material limitation on the
ability of Buyers effectively to exercise full rights of ownership of the
Assets and the goodwill associated therewith.
(b) No action, suit or proceeding before any court or any
governmental or regulatory authority shall be pending against Buyers,
Seller or Xxx challenging the validity or legality of the transactions
contemplated by this Agreement or the Option Agreement.
10.07. OPTION CLOSING. Seller shall have exercised the option to
purchase from Optionee the Assets and the purchase and sale of the Assets by
Seller shall have been completed.
ARTICLE XI. CONDITIONS TO SELLER S, SELLER STOCKHOLDER S, OPTIONEE S AND
XXX S OBLIGATIONS.
Except as may be waived by Seller, the obligations of Seller, Seller
Stockholders, Optionee and Xxx under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
11.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Buyers in this Agreement shall be true in all material
respects when made and at and as of the Closing Date as though such represen-
tations and warranties were made at and as of such date, except for any changes
permitted by the terms of this Agreement or consented to by Seller in writing.
11.02. PERFORMANCE. Buyers shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to so be
performed or complied with by them prior to or at the Closing.
11.03. LITIGATION.
(a) There shall be no order, decree or injunction of a court of
competent jurisdiction, including without limitation the entry of a
preliminary or permanent injunction, which prevents or delays the
performance by Buyers, Seller Stockholders, Seller, Optionee or Xxx of
their respective obligations hereunder.
(b) No action, suit or proceeding before any court or any
governmental or regulatory authority shall be pending against Buyers,
Seller Stockholders, Seller, Optionee or Xxx challenging the validity or
legality of the transactions contemplated by this Agreement or the Option
Agreement.
ARTICLE XII. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS.
12.01. SURVIVAL OF REPRESENTATIONS.
(a) The representations, warranties, covenants and agreements of the
parties contained in Articles IV, V, VI and IX and in this Article XII of
this Agreement or in any writing delivered pursuant to such sections shall
not terminate at, but rather shall survive, the Closing and shall terminate
on the third anniversary of the Closing Date.
(b) All such representations, warranties, covenants and agreements
shall survive as to any claim or demand made prior to their termination
date until such claim or demand is fully paid or otherwise resolved by the
parties hereto in writing or by a court of competent jurisdiction.
(c) The representations, warranties, covenants and agreements of the
parties contained in Article VII of this Agreement shall terminate at and
shall not survive the Closing Date.
12.02. INDEMNIFICATION. Subject to Section 12.04, each of Seller, the
Seller Stockholders, Optionee and Xxx (each, an Indemnifying Party ) shall,
severally and jointly (except with respect to the representations, warranties
and covenants contained in Articles IV and V hereof, severally and NOT jointly),
indemnify and hold harmless Buyers and their directors and officers, and each
other person, if any, who controls Buyers within the meaning of the Securities
Act ( Controlling Persons ) in respect of any and all claims, losses, damages,
liabilities, demands, assessments, judgments, costs and expenses (including,
without limitation, settlement costs and any legal or other expenses for
investigating, bringing or defending any actions or threatened actions)
(collectively, Damages ) reasonably incurred by Buyers, any of their directors,
officers or Controlling Persons in connection with each and all of the
following:
(i) any misrepresentation or breach of any warranty made by the
Indemnifying Parties in this Agreement or in any schedule, exhibit,
certificate or other instrument contemplated by this Agreement; and
(ii) the breach of any covenant, agreement or obligation of the
Indemnifying Parties contained in this Agreement or any other instrument
contemplated in this Agreement.
In addition, each of Seller and Optionee, severally and not jointly, shall
indemnify, defend and hold harmless Buyers from and against all Damages
resulting from the following:
(i) its liabilities or obligations (whether absolute, accrued,
contingent or otherwise) that are not Assumed Obligations as defined in
Section 2.01(c);
(ii) any taxes relating to its operations prior to the Closing Date;
and
(iii) the noncompliance by it with the provisions of any
applicable bulk sales, fraudulent conveyance or other similar law for the
protection of its creditors.
12.03 CLAIMS FOR INDEMNIFICATION.
(a) Whenever any claim shall arise for indemnification under this
Article XII, the party asserting the claim for indemnification (the
Indemnified Party ) shall promptly describe such claim in a written notice
( Notice of Claim ) to the party from which indemnification is sought (the
Indemnifying Party ) and, when known, specify the facts constituting the
basis for such claim and the amount or an estimate of the amount of such
claim. Each Notice of Claim shall (A) be signed by a proper representative
of the Indemnified Party, (B) contain a description of the claim,
(C) specify the amount of such claim, and (D) state that, in the opinion of
the signer thereof, such Notice of Claim is valid under the terms of this
Article XII and is being given by the Indemnified Party in good faith.
(i) Without limiting the foregoing, the Indemnified Party shall
give the Indemnifying Party prompt notice of any claim for
indemnification hereunder resulting from, or in connection with, any
claim or legal proceeding by a person who is not a party to this
Agreement ( Third Party Claim ) and, with respect to any Third Party
Claim, the Indemnifying Party shall at its election, undertake and
control the defense thereof by representatives reasonably satisfactory
to the Indemnified Party and the Indemnifying Party. However, the
Indemnified Party shall have the right to participate in any such
defense of a Third Party Claim with advisory counsel of its own
choosing at its own expense. In the event the Indemnifying Party,
within a reasonable time after notice of any Third Party Claim, fails
to defend, the Indemnified Party shall have the right diligently to
undertake the defense, compromise or settlement of such Third Party
Claim on behalf of, and for the account of, the Indemnifying Party, at
the expense and risk of the Indemnifying Party to the extent of its
liability set forth in Article XII. The Indemnified Party, without
the Indemnifying Party s written consent, shall not settle or
compromise any such Third Party Claim or consent to entry of any
judgment; the Indemnifying Party s consent shall be conditioned, among
other matters, on the giving by the claimant or the plaintiff to the
Indemnified Party, an unconditional release from all liability in
respect of such Third Party Claim. Notwithstanding any provision
herein to the contrary, failure of the Indemnified Party to give any
notice of any Third Party Claim required by this Article XII shall not
constitute a waiver of the Indemnified Party s right to
indemnification or a defense to any claim by the Indemnified Party
hereunder unless the Indemnifying Party is materially adversely
affected by such failure.
(ii) the Indemnifying Party, without the Indemnified Party s
written consent, shall not settle or compromise any Third Party Claim
against the Indemnifying Party or consent to the entry of any judgment
that does not include as an unconditional term thereof, the giving by
the claimant or the plaintiff to the Indemnifying Party an
unconditional release from all liability with respect to such Third
Party Claim.
12.04 EXTENT AND MANNER OF INDEMNIFICATION. Seller shall have no
indemnification obligation under this Agreement with respect to any Damages that
exceed in the aggregate the total consideration received by Seller pursuant to
this Agreement. Seller Stockholders, Optionee and Xxx, collectively, shall have
no indemnification obligation under this Agreement with respect to any Damages
that exceed in the aggregate $3.5 million, such obligation to be allocated among
the Seller Stockholders, Optionee and Xxx as set forth on SCHEDULE 12.04. All
indemnification hereunder shall be effected first by the release of funds from
Escrow Account and, for claims in excess of the Escrow Amount, by payment of
cash or delivery of a certified cashier s check in the amount of the
indemnification liability. Buyers agree to use commercially reasonable efforts
to pursue each of Seller, Optionee and Xxx for satisfaction of any
indemnification claims hereunder before approaching the Seller Stockholders.
12.05 EXCLUSIVE REMEDY. Subsequent to Closing, the provisions of this
Article XII shall provide the exclusive monetary, but not injunctive, remedy of
Buyers for any breach of this Agreement.
12.06 ESCROW.
(a) Buyers and Seller agree that the Escrow Amount shall be placed in
escrow with Buyers at Texas Commerce Bank, National Association, for a
period beginning on the Closing and ending on the 24-month anniversary of
the Closing, to be disbursed solely upon the joint signatures of the Buyers
and Seller, all as set forth below, provided that one-half of the Escrow
Amount shall be disbursed to Seller automatically on the 12-month
anniversary of the Closing. Disbursements from the Escrow Amount shall be
made for the payment of amounts, if any, needed to satisfy the
indemnification rights of the Buyers pursuant to Article XII hereof.
(b) The Escrow Amount or the appropriate portion thereof shall be
disbursed to Buyers during the period ending on the 24-month anniversary of
the Closing at any time or from time to time, upon the Buyers, giving
Seller a Notice of Claim unless Seller delivers a Notice of Objection (as
hereafter defined) in accordance with the procedures described in this
Section 12.06. Such Notice of Claim must be for a specified amount.
(i) Seller may give the Buyers written notice ( Notice of Objection )
(A) attaching a copy of such Notice of Claim, (B) stating that, in the good
faith opinion of the Seller, the claim described in such Notice of Claim is
invalid (either in whole or in specified part) under the terms of Article
XII hereof, (C) giving the reasons for the alleged invalidity, and (D)
stating that, based on such alleged invalidity, the Seller objects to the
payment of any portion of the Escrow Amount to the requesting party on
account thereof. In the event that a Notice of Objection alleges that a
Notice of Claim is only partially invalid, the Seller, within 30 days of
the receipt of such Notice of Claim, may agree to pay over to the Buyers
that portion of the amounts specified in such Notice of Claim as to which
no objection is made. The Seller is not required to agree to make any
payments to Buyers in respect of a Notice of Claim that has been objected
to in a Notice of Objection given to Buyers as aforesaid except (X) as
provided in the immediately preceding sentence, or (Y) in accordance with
an order of any arbitration panel initiated by any of the parties hereto
pursuant to paragraph ii below.
(ii) Buyers and Seller agree to submit to final and binding
arbitration any and all disputes Seller has specified in a Notice of
Objection or Buyers have specified in a Notice of Claim to which the Seller
has not responded within 30 days of receipt of such Notice of Claim. Any
such dispute subject to arbitration in accordance with the American
Arbitration Association rules.
(c) The Escrow Account shall be terminated on the 24-month
anniversary of the Closing Date; PROVIDED, HOWEVER, that the Escrow Account
may continue beyond such 24-month anniversary, if Buyers have asserted
indemnification claims, and any such claims remain unsatisfied (but only to
the extent necessary to satisfy such unsatisfied claims). Upon termination
of the Escrow Account, all remaining amounts therein that constitute the
Escrow Amount and that have not been paid or are not properly payable to
third parties, or to Buyers pursuant hereto, shall be disbursed to Seller
along with all interest that has accrued on the Escrow Amount during the
period ending 24 months after the Closing.
ARTICLE XIII. TERMINATION OF AGREEMENT.
13.01. TERMINATION. This Agreement may be terminated prior to the
Closing, or, if an earlier date is expressly provided below, on or prior to such
earlier date:
(a) by the mutual written consent of the Buyers and Seller; or
(b) by the Seller or Buyers, upon written notice from the terminating
party to the other party, if the terminating party s conditions to Closing
shall not have occurred on or before the 10th day of July, 1997;
13.02. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Buyers or Seller as provided in Section 13.01 hereof,
this Agreement shall forthwith become void and there shall not be any liability
or obligation with respect to the terminated provisions of this Agreement on the
part of the Buyers or Seller, except and to the extent such termination results
from the willful breach by a party of any of its representations, warranties or
agreements hereunder.
ARTICLE XIV. MISCELLANEOUS.
14.01. NOTICES. All notices, claims, certificates, requests, demands
and other communications hereunder will be in writing or sent by facsimile
transmission and will be deemed to have been duly given upon receipt, addressed
as follows:
If to Buyers, to: BMC Software, Inc.
0000 XxxxXxxx Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: X. Xxxxxxxx Xxxxx, Vice President
If to Seller, to: Sento Technical Innovations, Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxx, Xxxx 00000
Attn: Xxxxxx X. Bench, President
If to Optionee Eng Xxx
or Xxx to: Managing Director
Australian Software Innovations (Services) Pty. Ltd.
Xxxxx 0, 00 Xxxxxx Xxxxxx
Xxxxxx XXX 0000
Xxxxxxxxx
14.02. GOVERNING LAW. This Agreement is entered into under, and shall
be governed for all purposes by, the internal laws of the State of Texas as if
made and entered into between two residents of that state. The sole
jurisdiction and venue for actions related to the subject matter hereof shall be
the state and U.S. federal courts located in the State or county in which the
defendant has its principal place of business or, if an individual, his or her
residence.
14.03. COUNTERPARTS. This Agreement may be executed simultaneously in
several counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
14.04. ENTIRE AGREEMENT. This Agreement and the documents referred to
herein contain the entire agreement between the parties hereto with respect to
the transactions contemplated hereby, and no modification hereof shall be
effective unless in writing and signed by the party against which it is sought
to be enforced.
14.05. FURTHER ACTION. Each of the parties hereto shall use such
party s best efforts to take such actions as may be necessary or reasonably
requested by the other parties hereto to carry out and consummate the
transactions contemplated by this Agreement.
14.06. EXPENSES. Each of the parties hereto shall bear such party s own
expenses in connection with this Agreement and the transactions contemplated
hereby.
14.07. CAPTIONS. The captions appearing herein are for the convenience
of the parties only and shall not be construed to affect the meaning of the
provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of Seller and Buyers as of the date first above
written.
BMC SOFTWARE, INC. SENTO TECHNICAL INNOVATIONS, CORPORATION
By: ___________________________ By: ______________________________
Name: X. Xxxxxxxx Xxxxx Name:Xxxxxx X. Bench
Title: Vice President, General Counsel Title:President
BMC SOFTWARE (CAYMAN) LDC SELLER STOCKHOLDERS
By:____________________________ ____________________________________
Name: Xxxx X. Xxxxxxx
Title:
_____________________________________
Xxxxxxx X. Xxxxx
_____________________________________
Xxxxxxx X. Xxxxxxx
______________________________________
Xxxxx X. Xxxxxxxxxxx
_____________________________________
Xxxxxx X. Bench
AUSTRALIAN SOFTWARE INNOVATIONS (SERVICES)
PTY. LTD. ACN 000-000-000
By:__________________________________
Name: Eng Xxx
Title: Managing Director
ENG XXX
_________________________________
Eng Xxx
ASSIGNMENT
KNOW ALL MEN BY THESE PRESENTS that Sento Technical Innovations,
Corporation, a Utah corporation (the Seller ), for good and valuable
consideration to Seller in hand paid (receipt of which is hereby acknowledged),
pursuant to an Asset Purchase and Services Agreement, dated as of June 30,
1997, (the Agreement ), among BMC Software, Inc., a Delaware corporation, BMC
Software (Cayman) LDC, a Cayman unlimited liability company (collectively, the
Buyers ), the Seller, the Seller Stockholders (as defined therein), Australian
Software Innovations (Services) Pty. Ltd. ACN 000-000-000, a limited company
organized under the laws of Australia, and Eng Xxx does hereby by these
presents, sell, convey, assign, transfer and deliver unto Buyers, their
successors and assigns, the following:
The entire right, title, and interest, including without limitation the
right to xxx and recover damages for past infringements of copyrights and the
like, for the United States and all foreign countries, in and to those certain
Products (as defined in the Agreement) except as described in this Assignment
and Section 2.01(b) of the Agreement.
The entire right, title, and interest, in and to those certain Assignable
Licenses (as defined in the Agreement) and Assignable Distribution Agreements
(as defined in the Agreement).
Seller warrants and covenants that no assignment, grant, mortgage, license,
or other agreement currently affecting the rights and property herein conveyed,
other than the exceptions described in Section 2.01(b) of the Agreement has been
(except as set forth in Schedule 4.03 annexed to the Agreement) made to others
by the Seller nor will Seller do so after the date hereof, and that the full
right to convey the same as herein expressed is possessed thereby.
Seller covenants that it will from time to time at its expense make,
assign, execute and deliver, or cause to be made, executed and delivered, such
instruments, acts, consents and assurances as Buyers may reasonably request to
more effectively assign, transfer to and vest in Buyers all of Seller s right,
title and interest to the aforesaid property or assets being assigned,
transferred and delivered hereunder and to put Buyers in possession of any such
property or assets being assigned, transferred and delivered hereunder.
To be binding on the successors and assigns of the Seller and to extend to
the successors, assigns, and nominees of the Buyers.
Sento Technical Innovations Corp.
