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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of July 29, 1999 and effective
as of July 1, 1999 (this "Agreement"), is made by and among SMART SHOP SOFTWARE,
INC., an Idaho corporation ("Seller"), XXXXX XXXXXXX, XXXXXXX XXXXXX, XXXXXXXX
XXXXXXX (the "Shareholders"), USDATA CORPORATION, a Delaware corporation
("USDATA"), and Smart Shop Software, Inc., a Delaware corporation and
wholly-owned subsidiary of United States Data Corporation, which is a
wholly-owned subsidiary of USDATA ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns assets relating to its business as a software
development company (the "Business"); and
WHEREAS, Seller desires to sell and Buyer desires tt purchase,
effective as of 12:01 a.m. July 1, 1999 (the "Effective Time"), substantially
all of the tangible and intangible assets on the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions contained in this Agreement, and intending to be legally bound, and
on the terms and subject to the conditions set forth in this Agreement, the
parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. When used in this Agreement, the following terms
shall have the meanings specified:
"Agreement" shall mean this Asset Purchase Agreement, together with
all schedules and exhibits attached hereto, as the same may be amended from time
to time in accordance with the terms of this Agreement.
"Closing Date" shall mean the date that is the first business day
after satisfaction or waiver of the latest to occur of the conditions set forth
in Articles VII and VIII of this Agreement, unless a different date is agreed to
in writing by the parties.
"Closing Time" shall mean 12:01 a.m. on the Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
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"Effective Time" shall mean 12:01 a.m. on July 1, 1999.
"Employee Benefit Plan" shall mean any plan, fund, program, policy,
arrangement, contract or commitment, whether or not qualified for federal income
tax purposes, whether or not funded, whether formal or informal, and whether for
the benefit of a single individual or more than one individual.
"Financial Statements" shall mean (a) Seller's audited balance
sheets and statements of income, changes in shareholders' equity and cash flow
as of and for the fiscal years ended December 31, 1997 and 1998, and (b)
Seller's unaudited balance sheet and statements of income, changes in
shareholders' equity, and cash flow as of and for the six months ended June 30,
1999.
"GAAP" shall mean those generally accepted accounting principles
which are recognized as such by the American Institute of Certified Public
Accountants acting through its Accounting Principles Board or the Financial
Accounting Standards Board or through other appropriate boards or committees
thereof and which are consistently applied.
"Law" shall mean any federal, state, local or other law or
governmental requirement of any kind, whether legislatively, judicially or
administratively promulgated, and any rules, regulations and orders promulgated
thereunder.
"Material Adverse Effect" shall mean a material and adverse effect
on the financial condition, assets, liabilities, business, property or prospects
of Seller, the Purchased Assets, the Contracts, Buyer and/or USDATA, as
applicable.
"Shareholders" shall mean Xxxxxxx Xxxxxx, Xxxxxxxx Xxxxxxx and
Xxxxx Xxxxxxx, who are the sole shareholders of Seller.
ARTICLE II
PURCHASE AND SALE
2.1 Commitment to Sell and Assign. Upon the terms and subject to the
conditions set forth in this Agreement, Seller shall sell, transfer, assign,
convey and deliver to Buyer all of the assets, properties, interests, business,
goodwill, claims and other rights of Seller (other than the Excluded Assets (as
defined below)) relating to the Business of every kind and nature whatsoever,
tangible or intangible, vested or unvested, contingent or otherwise, real,
personal or mixed, and wherever located, whether or not reflected on the books
and records of Seller and whether or not described in this Agreement or in any
of the schedules hereto, as such existed as of the date hereof, together with
additional assets acquired from the date hereof to the Closing Date, including,
without limitation, all right, title and interest of Seller in and to the
following specified assets, properties and rights (collectively, the "Purchased
Assets"):
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(a) All Intellectual Property (as defined in Section 4.11),
including, but not limited to, that set forth on Schedule 2.1(a) and the use of
the name "Smart Shop Software Inc.," including the goodwill attached to such
name, and the trade names and marks descriptive and associated with such name.
(b) All of Seller's rights to use the Third Party Intellectual
Property (as defined in Section 4.11), including, but not limited to, those set
forth on Schedule 2.1(b).
(c) All cash held by Seller.
(d) All leases, including capitalized leases, for real property
leased or used by Seller in connection with the Business, including those set
forth on Schedule 2.1(d) (the "Real Property Leases").
(e) All fixed assets, furniture, property, equipment, fixtures,
leasehold improvements, tools, machinery, office equipment, plant and other
tangible personal property related to or used in connection with the Business or
located at Seller's place of business, including, without limitation, those set
forth on Schedule 2.1(e) (the "Equipment").
(f) Seller's interest under those certain equipment leases
pertaining to the Business and set forth on Schedule 2.1(f) (the "Equipment
Leases").
(g) Seller's interest in all personal property leases, rental
agreements, sales and purchase orders and acknowledgments, permits, customer
license and maintenance agreements, third party product agreements, third party
supply agreements and any and all other contracts or binding agreements relating
to the Business, including, but not limited to, those set forth on Schedule
2.1(g) (the "Contracts") and all of Seller's interests (including rights to
refund and offset), privileges, claims, causes of action and options relating to
the Contracts or any portion thereof; provided, however, that each of the
Excluded Contracts (as defined below) shall be retained by Seller and shall not
be considered a "Contract" hereunder, but shall constitute an Excluded Asset, as
defined below.
(h) All of Seller's accounts receivable, notes, claims and other
amounts receivable by Seller as a result of Seller's ownership of the Purchased
Assets or arising out of the Business, as of the Closing Time, including, but
not limited to, amounts due from customers and vendors, whether or not arising
in the ordinary course of business (the "Accounts Receivable").
(i) Prepaid expenses or advances to third parties relating to the
Business, including, but not limited to, lease deposits and maintenance
agreements as set forth on Schedule 2.1(i).
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(j) Except as set forth below, all business, accounting and
financial records, property records, contract records, personnel records,
correspondence, files, books and documents of Seller relating to the Business,
including, but not limited to, sales, marketing and advertising data and
materials, customer and mailing lists of any and all types, vendor and customer
invoices, credit reports, billing records, service records, software and related
documentation, artwork, photographs, manuals and teaching aids, engineering,
maintenance and production records (the "Records").
(k) All of Seller's backlog related to the conduct of the business
or operations of the Business, as of the Closing Time, of unfilled firm orders
for products manufactured or sold or services provided by Seller related to the
business or operations of the Business, including, but not limited to, that set
forth on Schedule 2.1(k) (the "Backlog").
(l) All of Seller's licenses and permits required for the operation
of the Business and the operation of the Purchased Assets or used by Seller,
including, but not limited to, those set forth on Schedule 2.1(l) (the "Licenses
and Permits").
Notwithstanding the foregoing, however, the Purchased Assets shall
not include any contract or agreement relating to the Business designated on
Schedule 2.1(m) which USDATA and Buyer are unwilling to assume (the "Excluded
Contracts") and general books of account and books of original entry that
comprise Seller's or the Business' permanent accounting or tax records and books
and records that Seller is required to retain pursuant to any statute, rule or
regulation; provided, however, Buyer shall be entitled to copies of the
foregoing; all of the foregoing (collectively referred to as the "Excluded
Assets"). All Excluded Assets are listed on Schedule 2.1(n).
2.2 Non-Assignable Contracts. In the case of any Real Property Leases,
Contracts or Equipment Leases which by their terms or by virtue of their subject
matter are not assignable without the consent of a third party (collectively,
the "Non-Assignable Contracts," all of which are listed on Schedule 2.2), Seller
will use its best efforts to obtain, prior to the Closing Time, any written
consents necessary to convey to Buyer the benefit thereof. Buyer shall cooperate
with Seller, in such manner as may be reasonably requested and at Seller's
expense, in connection therewith, provided that Buyer shall not be obligated to
agree to pay any consideration or increase the consideration payable under any
such Non-Assignable Contract or to make any other agreement that would affect
adversely in any other way the economics for Buyer under such Non-Assignable
Contract, or would make the obligations intended to be assumed by Buyer
thereunder more burdensome. Seller shall inform Buyer from time to time prior to
the Closing Time of Seller's receipt from any such third party of confirmation
of such third party's refusal to grant its consent to any such assignment.
Nothing in this Agreement shall be construed as an attempt or an agreement to
assign or cause the assignment of any Non-Assignable Contract included in the
Purchased Assets which is in law nonassignable without the consent of the other
party or parties
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thereto, unless such consent shall have been given. Notwithstanding the
foregoing, in the event that any third party to a Non-Assignable Contract has
not consented to an assignment thereof to Buyer for any reason, then Buyer shall
have no liability or obligation to Seller, such third party or any other party
with respect to such Non-Assignable Contract, and if any Non-Assignable Contract
is not assigned to Buyer for any reason and Buyer considers in its sole judgment
that such Non-Assignable Contract is material to the business to be conducted by
Buyer after the Closing Date then, at Buyer's option, Buyer shall have no
obligation to consummate its purchase hereunder. In the event that Buyer
consummates its purchase hereunder and any Non-Assignable Contract has not been
assigned to Buyer for any reason then either (i) Buyer and Seller shall
negotiate in good faith to adjust the Purchase Price (as defined herein) based
on such event and/or (ii) Buyer and Seller shall cooperate in good faith with
the other party in any reasonable arrangement necessary or desirable to provide
Buyer the benefits of such Non-Assignable Contract.
2.3 Commitment to Purchase and Accept. Upon the terms and subject to
the conditions set forth in this Agreement, Buyer shall purchase, accept and
acquire the Purchased Assets, free and clear of all liens, claims and
encumbrances whatsoever (except as set forth in Section 2.5(a)(viii) and Section
4.4), and in full payment for such purchase shall pay, or cause to be paid, to
Seller the purchase price pursuant to Section 2.4.
2.4 Purchase Price. The purchase price for the Purchased Assets (the
"Purchase Price") shall be an amount equal to the sum of: (i) $6,400,000 (the
"Closing Cash Amount"); plus (ii) 500,000 shares of the common stock, par value
$0.01 per share, of USDATA (the "USDATA Stock"). At the Closing (as defined
below), the Note Payable by Seller to the Shareholders shall be modified to be
payable on the date which is three years following the Closing Date. The
Purchase Price shall be payable to Seller as follows:
(a) At the Closing, Buyer or USDATA shall pay to Seller the Closing
Cash Amount by wire transfer. The Closing Cash Amount shall be paid in
immediately available funds.
(b) At the Closing, Buyer and USDATA shall issue an aggregate of
500,000 shares of the USDATA Stock to the Shareholders, all of which shares will
be deposited in escrow pursuant to the terms and conditions of Section 2.4(c).
(c) At the Closing, Buyer and USDATA shall issue to the
Shareholders, and shall deliver to Bank One, N.A., or any other mutually
acceptable escrow agent (the "Escrow Agent"), pursuant to the terms of an escrow
agreement mutually satisfactory to the parties, as collateral for performance of
the matters contained herein, all of the shares of the USDATA Stock payable
under this Agreement (the "Escrow"). Such shares shall be allocated to the
Shareholders as follows: 100,000 to Xxxxx Xxxxxxx; 200,000 to Xxxxxxxx Xxxxxxx;
and 200,000 to Xxxxxxx Xxxxxx.
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Subject to the provisions of Section 9.2(c) and the Employment Agreements (as
defined in Section 10.3), the Escrow shall be disbursed to the Shareholders in
the amount of one-sixth of such shares allocated to such Shareholder each six
(6) months following the Closing Date, subject to such Shareholder remaining in
compliance with the Employment Agreements (as defined in Section 10.3) entered
into in connection with this Agreement and subject to the disbursement
conditions contained in the Employment Agreements and the provisions of Section
9.2. Seller and USDATA shall each bear one-half of all fees and costs incurred
by USDATA in connection with the Escrow. If Seller has not reimbursed the Escrow
Agent for its one-half of the reimbursable expenses within 30 days of written
notice to Seller, USDATA may liquidate or sell a sufficient portion of the
assets in the Escrow to reimburse such expenses. The agreements contained in
this Section shall survive any termination of the duties of USDATA hereunder.
2.5 Liabilities.
(a) Buyer shall assume the liabilities of Seller shown on the
unaudited balance sheet of Seller as of June 30, 1999, including but not limited
to the following, but in no event in an aggregate amount of in excess of the
aggregate value of such liabilities shown on such balance sheet, and except for
those items set forth in Section 2.5(b) or incurred by Seller thereafter in the
ordinary course of business consistent with past practice (the "Assumed
Obligations"):
(i) obligations under the Contracts;
(ii) obligations under the terms of any outstanding product
warranty (except those relating to any Excluded Asset);
(iii) liabilities arising on and after the Closing Date (except
as otherwise set forth in this Agreement) under the Contracts, the Real Property
Leases, the Personal Property Leases and other assets included in the Purchased
Assets;
(iv) liabilities for accounts payable and accrued and unpaid
expenses of the Business incurred in the ordinary course of business, including,
with respect to Buyer Employees (as defined below), employment costs relating to
facts and circumstances arising on or after the Closing Date;
(v) insurance claims made on or after the Effective Time
relating to the Purchased Assets or Assumed Obligations;
(vi) liabilities arising from the ownership of the Purchased
Assets on and after the Closing Date;
(vii) liabilities relating to all causes of action and other
claims which a third party may assert in respect of any of the Purchased Assets
(but only to
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the extent such causes of action or claims relate to liabilities assumed
hereunder); and
(viii) the bank debt owing from the Seller to Firstbank
Northwest, as evidenced by that certain Business Loan Agreement and Promissory
Note, both between Seller and Firstbank Northwest and dated as of January 8,
1998.
(b) Seller shall retain and Buyer shall not assume any liabilities
or obligations (other than the Assumed Obligations) of Seller with respect to
the Business, whether known or unknown, fixed or contingent, including without
limitation the following obligations or liabilities (the "Excluded
Obligations"):
(i) obligations and liabilities arising out of or relating to
the Excluded Assets;
(ii) liabilities of Seller for Taxes (as defined in Section
4.19) not shown on the Financial Statements accruing prior to the Effective Time
and Taxes relating to the conduct of the Business prior to the Effective Time;
(iii) liabilities of Seller relating to any Employee (as
defined in Section 4.15) not shown on the Financial Statements or arising under
or pursuant to any Employee Plan or Employee Agreement (as such terms are
defined in Section 4.16), including without limitation all liabilities relating
to the employment by Seller of any employee, agent, contractor or consultant, or
the termination of such employment prior to the Closing Date and all liabilities
and responsibilities for compliance with the requirements of Section 4980B of
the Code (COBRA) through the Closing Date, which includes any terminations of
employment that occur on such date as a result of this transaction;
(iv) other liabilities of the Business not expressly included
in the Assumed Obligations, including without limitation all liabilities of
Seller in connection with the Business arising under or pursuant to
Environmental Laws (as defined in Section 4.20) arising from events occurring
prior to the Closing Date;
(v) all overdrafts; and
(vi) the liabilities set forth on Schedule 2.5(b).
2.6 Power of Attorney. Effective on the Closing Date, Seller hereby
constitutes and appoints Buyer and its successors, legal representatives and
assigns the true and lawful attorneys of Seller, with full power of
substitution, in the name of Seller or Buyer, but on behalf of and for the
benefit of Buyer and its successors, legal representatives and assigns: (a) to
demand and receive from time to time any and all of the Purchased Assets and to
make endorsements and give receipts and releases for and in respect of the same
and any part thereof; (b) to institute, prosecute, compromise and settle any and
all proceedings at law, in equity or otherwise that Buyer and its
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successors, legal representatives or assigns may deem proper in order to
collect, assert or enforce any claim, right or title of any kind in or to the
Purchased Assets; (c) to defend any or all actions, suits or proceedings in
respect of any of the Purchased Assets; and (d) to do all such acts and things
in relation to the matters set forth in the preceding clauses (a) through (c) as
Buyer and its successors, legal representatives or assigns shall deem desirable.
Seller hereby agrees that the appointment hereby made and the powers hereby
granted are coupled with an interest and are and shall be irrevocable by it in
any manner or for any reason. After the Closing Date, Buyer shall have the right
to receive and open all mail, packages and other communications addressed to
Seller and relating to the Purchased Assets, and Seller agrees promptly to
deliver to Buyer any such mail, packages or other communications received
directly or indirectly by Seller. Buyer shall promptly deliver to Seller all
mail, packages and other communications received by it which relate to Seller
but do not relate to the Purchased Assets.
2.7 USDATA Stock. The USDATA Stock shall not be registered under the
Securities Act of 1933, as amended (the "Act"), and as such shall constitute
"restricted securities" within the meaning of Rule 144 under the Act and the
USDATA Stock shall be available for sale in the public market only in compliance
with Rule 144.
The USDATA Stock shall bear a legend substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE "STATE
ACTS"), HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE
ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS
(INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE EXEMPTION AFFORDED
BY RULE 144). UNLESS WAIVED BY USDATA CORPORATION, USDATA CORPORATION
SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE
AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AS
A PRECONDITION TO ANY SUCH TRANSFER.
ARTICLE III
CLOSING
3.1 Closing. The consummation and closing of the transactions
contemplated in this Agreement (the "Closing") shall be held at 9:00 a.m. local
time on the Closing Date at the offices of Jenkens & Xxxxxxxxx, a Professional
Corporation, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx unless the parties
otherwise agree. All transactions occurring at the Closing shall be deemed to
have occurred simultaneously as of the
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Closing Time, and no one transaction shall be complete until all transactions
have been completed.
3.2 Seller's Deliveries at Closing. Seller and the Shareholders, as
applicable, shall at the Closing execute and deliver, or cause to be executed
and delivered, to Buyer and/or USDATA, as appropriate, the following:
(a) a Xxxx of Sale conveying in the aggregate all of the Equipment,
Intellectual Property and Records, and any other personal property included in
the Purchased Assets, in the form attached as Exhibit 3.2(a);
(b) an Assignment and Assumption Agreement, substantially in the
form attached as Exhibit 3.2(b), with respect to the Equipment Leases and
Contracts;
(c) an estoppel and consent certificate (dated not more than 30
days prior to the Closing Date) from each landlord under a Real Property Lease
reasonably acceptable in form to Buyer;
(d) a nondisturbance agreement and an assignment of each Real
Property Lease conveying title to each Real Property Lease in accordance with
this Agreement in a form reasonably acceptable to Buyer;
(e) assignments, each in form satisfactory to Buyer, of all
Intellectual Property from Seller to Buyer and rights to all Third Party
Intellectual Property (together with written consents of the owners thereof to
such assignment and use) (other than the Excluded Contracts);
(f) all consents that are required from parties to the
Non-Assignable Contracts;
(g) true, correct and complete copies of Seller's Certificate of
Incorporation and all amendments thereto, duly certified as of a recent date by
the Secretary of State of Idaho;
(h) a certificate of the Secretary of State of Idaho, dated as of a
recent date, duly certifying as to the existence and good standing of Seller as
a corporation under the laws of Idaho;
(i) a certificate duly executed by an officer of Seller that
certifies (i) the due adoption by the directors and by the Shareholders of
Seller of corporate resolutions attached to such certificate authorizing the
transactions and the execution and delivery of this Agreement and the other
agreements and documents contemplated hereby and the taking of all actions
contemplated hereby and thereby; and (ii) that the copy of the Bylaws (as
defined in Section 4.3) of Seller attached to such certificate is a true and
correct copy of such Bylaws and that such Bylaws have not been amended except as
reflected in such copy;
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(j) a certificate duly executed by an officer of Seller, dated as
of the Closing Date, that certifies that the representations and warranties of
Seller contained in this Agreement are true and correct as of the Closing Date
and that Seller has performed and complied with all covenants and conditions
required by this Agreement to be performed and complied with by any of them at
or prior to Closing;
(k) original copies of all Real Property Leases, Contracts and
Equipment Leases and all amendments, supplements or modifications thereto;
(l) all of Seller's books and records constituting a part of the
Purchased Assets, including, without limitation, the Records;
(m) possession or constructive possession of the Purchased Assets;
(n) such documents necessary to release the Purchased Assets from
all liens, claims and encumbrances not expressly assumed hereunder;
(o) supplements to the Schedules hereto showing any changes thereto
which have occurred between the date of this Agreement and the Closing Date;
(p) the opinion of Seller's counsel substantially in the form of
Exhibit 3.2(p);
(q) such other agreements, documents and/or instruments, including
such specific releases, assignments, bills of sale and other instruments of
conveyance and transfer, in form and substance acceptable to Buyer, USDATA and
their counsel, as may be necessary to transfer, convey and deliver the Purchased
Assets from Seller to Buyer and to vest in Buyer title thereto free and clear of
all liens, claims and encumbrances (except as set forth in Section 2.5(a)(viii)
and Section 4.4);
(r) the Employment Agreements relating to the Shareholders referred
to in Section 10.3(1) through (3), as applicable, and employment agreements with
those individuals set forth on Schedule 3.2(r), in substantially the form of
Exhibit 10.3(4), including in each case the related Exhibit A;
(s) the consent of Firstbank Northwest to assign and transfer the
existing credit obligations of Seller to Buyer on terms that are satisfactory to
Buyer, in its sole discretion and the release of the related personal guarantees
of the Shareholders.
3.3 USDATA and Buyer's Deliveries. Buyer and USDATA, as applicable,
shall at the Closing execute and deliver to Seller (or to the Escrow Agent, in
the case of the shares of USDATA Stock) the following:
(a) the Closing Cash Amount;
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(b) the USDATA Stock;
(c) the opinion of Buyer's counsel substantially in the form of
Exhibit 3.3(c);
(d) the Employment Agreements referred to in Section 3.2(r);
(e) certificates duly executed by the Secretary or Assistant
Secretary of both USDATA and Buyer that certify to the extent necessary (i) the
due adoption of the Board of Directors of both of corporate resolutions attached
to such certificate authorizing the transactions and the execution and delivery
of this Agreement and the other agreements and documents contemplated hereby and
the taking of all actions contemplated hereby and thereby; and (ii) that the
copy of the Bylaws of both attached to such certificate is a true and correct
copy of such Bylaws and that such Bylaws have not been amended except as
reflected in such copy;
(f) certificates duly executed by the Secretary or Assistant
Secretary of Buyer and USDATA, dated as of the Closing Date, that certifies that
the representations and warranties of Buyer and USDATA contained in this
Agreement are true and correct as of the Closing Date and that Buyer and USDATA
have performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by it at or prior to Closing; and
(g) cash in the amount of $50,000 to be paid by Seller in
satisfaction of indebtedness owing from Seller to X.X. Xxxxxxx, Xx.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
Seller and the Shareholders hereby jointly and severally represent and
warrant to Buyer and USDATA as follows:
4.1 Organization and Authority of Seller. Seller is a corporation
validly existing and in good standing under the laws of the State of Idaho and
has full power to enter into and perform its obligations under this Agreement
and under all other agreements, documents and/or instruments to be executed
and/or delivered by Seller pursuant to or in connection with this Agreement.
Seller has full power to own, operate and/or hold under lease the Purchased
Assets as, and in the places where, such properties and assets now are owned,
operated or held.
4.2 Authorization; Enforceability. The execution, delivery and
performance by Seller of this Agreement and of all of the agreements, documents
and/or instruments to be executed and/or delivered by Seller pursuant to or in
connection with this Agreement have been duly authorized by all necessary action
of Seller. This Agreement is, and the other agreements, documents and
instruments required hereby will be, when executed and delivered by the parties
hereto, the valid and binding
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obligations of Seller and the Shareholders, enforceable against Seller and the
Shareholders in accordance with their respective terms.
4.3 No Violation or Conflict by Seller. The execution, delivery and
performance of this Agreement by Seller and the Shareholders does not and will
not violate, conflict with or result in the creation or imposition of any lien,
charge or encumbrance under any Law, judgment, order or decree binding on Seller
or the Articles of Incorporation or the Bylaws of Seller, or any contract or
agreement to which Seller is a party or by which Seller or any of the Purchased
Assets are bound.
4.4 Title to Assets. Seller has good and marketable title to all of the
Purchased Assets owned or purported to be owned by Seller pursuant to the
Schedules hereto and a good and valid leasehold interest in all property leased
by Seller and used in connection with the Business, in each case free and clear
of all liens, claims and encumbrances (except as set forth in Section
2.5(a)(viii) and this Section 4.4). Upon delivery of the Purchased Assets at the
Closing, good and valid title to the Purchased Assets, free and clear of all
mortgages, liens, claims, pledges, security interests or other encumbrances
(except as set forth in Section 2.5(a)(viii)), will pass to Buyer.
4.5 Accounts Receivable. The description of the Accounts Receivable
contained in Schedule 4.5 is complete and accurate as of July 1, 1999. Since
July 1, 1999 there have been no material changes to the Accounts Receivable,
other than changes in the ordinary course of business. The Accounts Receivable
constitute, and on the Closing Date the Accounts Receivable will constitute, all
of the Accounts Receivable of the Business related to the Purchased Assets.
There is not and will not be any liability of Seller for any refunds, allowances
or returns in respect of products imported, marketed, sold, distributed or
shipped by or for the account of Seller on or prior to the Closing Date.
4.6 No Litigation. Except as described on Schedule 4.6, there are no
actions at law or in equity, or arbitration proceedings, or claims or
investigations of which Seller has received notice, pending or to Seller's
knowledge threatened, or state of facts existing, which gives Seller any
reasonable basis to anticipate any such action, proceeding, claim or
investigation which could have a Material Adverse Effect. There are no
proceedings, pending or to Seller's knowledge threatened, against Seller and
related to the Business by or before any governmental board, department,
commission, bureau, instrumentality or agency (including, but not limited to,
any federal, state, or local governmental agency or body concerned with
environmental protection or pollution control, civil rights, labor or
discrimination, safety or health, zoning or land use), or state of facts
existing which gives Seller any reasonable basis to anticipate any
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such proceeding; and Seller's ownership and operation of the Business is not in
violation of any order, decree or judgment of any court or arbitration tribunal
or governmental board, department, commission, bureau, instrumentality or
agency.
4.7 Financial Statements. The Financial Statements (a) were prepared in
accordance with the books of account and records of Seller, (b) are true,
correct and complete and present fairly the financial position and results of
operations of the Business as of the dates and for the periods indicated
therein, (c) make full and adequate disclosure of, and provision for, all
obligations and liabilities of the Business as of the dates thereof, and (d)
except as to the unaudited financial statements of Seller for the period from
January 1, 1999 to June 30, 1999, and as of such date, were prepared in
conformity with generally accepted accounting principles applied on a consistent
basis. The unaudited financial statements of Seller for the period from January
1, 1999 to June 30, 1999, and as of such date, have been prepared in accordance
with Seller's past accounting practices.
4.8 Liabilities and Obligations. The Financial Statements reflect all
liabilities of Seller relating to the Business, accrued, contingent or otherwise
(known or unknown and asserted or unasserted), arising out of transactions
effected or events occurring on or prior to the date of such Financial
Statements. All reserves shown in the Financial Statements are appropriate,
reasonable and sufficient to provide for the losses contemplated thereby. Seller
is not liable upon or with respect to, or obligated in any other way to provide
funds in respect of or to guarantee or assume in any manner, any debt,
obligation or dividend of any person, corporation, association, partnership,
joint venture, trust or other entity which relates to or effects the Business.
4.9 Real Property Leases. Seller does not own any real property. The
Real Property Leases listed on Schedule 2.1(d) are the only property of similar
type used by Seller in the Business. Seller's interest in the Real Property
Leases is subject to no liens, claims or encumbrances, except for those set
forth in Schedule 4.9. True and correct copies of the Real Property Leases have
been delivered to Buyer by Seller. Subject to the terms of the respective Real
Property Leases, Seller has a valid and subsisting leasehold estate in and the
right to quiet enjoyment to the property subject thereto for the full term of
the respective Real Property Lease. The Real Property Leases are in full force
and effect and are enforceable in accordance with their respective terms, except
as such enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization or other similar Laws affecting the enforcement of creditors'
rights generally. Seller has not assigned, pledged, mortgaged, hypothecated or
otherwise transferred any Real Property Lease. Seller has not sublet all or any
portion of any property subject to a Real Property Lease. Seller has not
received any written notice of default under any Real Property Lease, and to
Seller's
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knowledge there is no material default by any tenant or landlord under any Real
Property Lease, and no event has occurred or failed to occur which, with the
giving of notice or the passage of time, or both, would constitute a material
default under any Real Property Lease. No portion of any parcel of real property
subject to a Real Property Lease is located in an area designated as a flood
zone by any governmental entity. All facilities and improvements subject to any
Real Property Lease are adequate and suitable for the conduct of the Business
and are in good working order and condition, ordinary wear and tear excepted,
and are supplied with utilities and other services necessary for their operation
in connection with the Business.
4.10 Personal Property; Inventories.
(a) Schedule 2.1(c) sets forth a description of all Equipment owned
by Seller and used in connection with the Business, and separately sets forth
all Equipment (other than Excluded Assets) (i) leased by Seller, (ii) which is
in the possession of Seller and owned by other persons or (iii) owned by Seller
and is in the possession of other persons. All Equipment owned, leased or used
by Seller in connection with the Business is fit for operation in the usual
course of business as currently conducted, ordinary wear and tear excepted, and
all such Equipment is located on premises owned by Seller or covered by valid
leaseholds. Seller has or will on the Closing Date have the right and authority
to transfer all Equipment to Buyer and, upon such transfer, Buyer will have good
and valid title to such Equipment free and clear of all liens (including,
without limitation, liens for taxes), claims and encumbrances (except as set
forth in Section 2.5(a)(viii)). Except as set forth on Schedule 2.1(c), each
lease or agreement pursuant to which Seller leases any Equipment for use in
connection with the Business may be assigned to Buyer without any restriction or
required consent or other approval.
(b) Seller does not own material quantities of any inventories of
materials, spare parts, work-in-process or finished goods (whether located at or
in transit to Seller) used in connection with the Business.
4.11 Intellectual Property Rights.
(a) Seller owns, or is licensed or otherwise possesses legally
sufficient rights to use, all patents, trademarks, trade names, service marks,
copyrights, maskworks and any applications therefor, technology, know-how, video
and audio compression algorithms, computer software programs or applications (in
both source code and object code form) and tangible or intangible proprietary
information or material that are used or proposed to be used in the Business of
Seller as currently conducted. Schedule 2.1(a) lists all current patents, patent
applications, registered and
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material unregistered copyrights, maskworks, trade names and any applications
therefor owned or licensed by Seller (the "Intellectual Property"), and
specifies the jurisdictions in which each such Intellectual Property has been
issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners. Schedule 2.1(b)
includes and specifically identifies all material third-party patents,
trademarks, copyrights (including software) and maskworks (the "Third Party
Intellectual Property"), which are incorporated in, are, or form a part of, any
Seller product, excluding any such intellectual property rights that are
available on a commodity basis (such as "shrink wrap" licenses) and which are
non-exclusive, terminable and available at a standard fee. Schedule 2.1(a) lists
(i) all material licenses, sublicenses and other agreements as to which Seller
is a party and pursuant to which any person is authorized to use any of Seller's
Intellectual Property, or any trade secret material to Seller or any of its
subsidiaries; and (ii) all material licenses, sublicenses and other agreements
as to which Seller is a party and pursuant to which Seller is authorized to use
any Third Party Intellectual Property, or other trade secret of a third party in
or as any product, and includes the identity of all parties thereto, a
description of the nature and subject matter thereof and the term thereof.
(b) Seller is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder, in
violation of any license, sublicense or agreement described in Schedule 2.1(a)
or Schedule 2.1(b). No claims with respect to Seller's Intellectual Property,
any trade secret material to Seller, or Third Party Intellectual Property to the
extent arising out of any use, reproduction or distribution of such Third Party
Intellectual Property by or through Seller, are currently pending or to Seller's
knowledge are threatened by any person, nor does Seller know of any valid
grounds for any bona fide claims (i) to the effect that the manufacture, sale,
licensing or use of any product as now used, sold or licensed or proposed for
use, sale or license by Seller infringes on any copyright, maskwork, patent,
trademark, service xxxx or trade secret; (ii) against the use by Seller of any
trademarks, trade names, trade secrets, copyrights, maskworks, patents,
technology, know-how, video and audio compression algorithms, or computer
software programs and applications used in Seller's business as currently
conducted; (iii) challenging the ownership, validity or effectiveness of any of
the Seller's Intellectual Property or other trade secret material to the Seller;
or (iv) challenging the Seller's license or legally enforceable right to use of
the Third Party Intellectual Property. All material patents, registered
trademarks, maskworks and copyrights held by the Seller are valid and
subsisting. To Seller's knowledge, there is no material unauthorized use,
infringement or misappropriation of any of the Seller's Intellectual Property by
any third party, including any employee or former employee of the Seller or any
of the its subsidiaries. Neither the Seller nor any of its subsidiaries (i) has
been sued or charged in writing as a defendant in any claim,
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suit, action or proceeding which involves a claim or infringement of trade
secrets, any patents, trademarks, service marks, maskworks or copyrights and
which has not been finally terminated prior to the date hereof or been informed
or notified by any third party that the Seller may be engaged in such
infringement or (ii) has knowledge of any infringement liability with respect
to, or infringement by, the Seller or any of its subsidiaries of any trade
secret, patent, trademark, service xxxx, maskwork or copyright of another.
Seller has not taken any action to encourage adoption by any uniform standards
board of any technology upon which Seller's Intellectual Property is based or
with respect to any Third Party Intellectual Property which is incorporated in,
are or form a part of any Seller product.
4.12 Entire Business. Seller has the complete and unrestricted power
and the unqualified right to sell, transfer, convey, assign and deliver the
Purchased Assets to Buyer. The sale of the Purchased Assets by Seller to Buyer
pursuant to this Agreement will effectively convey to Buyer the entire Business
(other than the Excluded Assets and the Excluded Contracts). The assets,
properties and rights which will be owned or possessed by Buyer as of the
Closing will constitute all of the tangible and intangible property used by
Seller (whether owned by it or by any of its affiliates) in connection with the
conduct of the Business as heretofore conducted by Seller, except for the
Excluded Assets.
4.13 Contracts.
(a) Schedule 2.1(g) contains a complete and accurate list of all
Contracts to which Seller is a party and which in any way relate to the
operations or properties of the Business or which are or will be binding upon
the Business or the Purchased Assets. Except for the Contracts listed on
Schedule 2.1(g) (true and complete copies of which agreements have been
previously delivered to Buyer or, in the case of oral agreements, descriptions
of which are set forth on Schedule 2.1(g)), there are no other Contracts to
which Seller is party and which relate to the Business or to the Purchased
Assets.
(b) Except as set forth in Schedule 2.1(g), Seller has in all
material respects performed all obligations required to be performed by it under
all Contracts listed on Schedule 2.1(e); neither Seller nor any other party to a
Contract with Seller, is in material default under any such Contract; and no
event exists which with the giving of notice or the passage of time, or both,
would create such a default; and Seller does not know of any basis for any claim
of any such default.
(c) Each of the Contracts listed on Schedule 2.1(g) has been
lawfully entered into and is or will be valid and in full force and effect and
is or will be enforceable in accordance with its terms for the period stated in
such Contract. Except
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as set forth in Schedule 2.1(g) relating to the Excluded Contracts, there are no
currently threatened cancellations of, nor are there any outstanding disputes
under, any Contracts which could have a Material Adverse Effect.
(d) Except as set forth on Schedule 2.2, the consummation of the
transactions contemplated by this Agreement does not require any consent under
any Contract listed on Schedule 2.1(g) which will not have been obtained by the
Closing (and copies of such consents will be given to Buyer on or prior to the
Closing Date), and such consummation will not result in the termination of any
right or privilege under any Contract listed on Schedule 2.1(g). Seller has not
received notice that any party to any Contract listed on Schedule 2.1(g) intends
to cancel such Contract nor has any party given Seller notice of any alleged
breach of any Contract or of its intent to take any legal action in order to
enforce its rights thereunder. All liabilities and obligations of Seller which
are due and payable or which are to be performed on or before the Closing Date
under such Contracts have been, or will be on the Closing Date, duly paid in
full or performed in all material respects except as set forth on Schedule 2.2.
(e) Except as set forth on Schedule 2.1(g), Seller does not have
any Contract with any person (or group of affiliated persons) which accounted
for more than five percent of Seller's gross revenues of the Business in any of
the last two fiscal years.
(f) Except as set forth in Schedule 2.1(g), Seller is not a party
to nor is Seller or the Business bound by, any noncompetition agreement or
arrangement or any other agreement or arrangement restricting or prohibiting the
way in which the business of the Business is operated.
(g) Schedule 2.1(g) contains a list of all noncompetition or
similar agreements or arrangements which restrict any person or persons from
competing with Seller or otherwise are for the benefit of Seller or the
Business.
4.14 Certain Transactions. Except as set forth on Schedule 4.14, since
December 31, 1998, Seller has conducted the Business only in the ordinary course
consistent with past practices and has not, in each case with respect to the
business and operations of the Business, (a) paid, or made any accrual or
arrangement for the payment of, bonuses or special compensation of any kind or
any severance or termination pay to any present or former officer or employee;
(b) made any general wage or salary increases to its employees or increased or
altered any other benefits or insurance provided to or maintained on behalf of
any employee by it or declared or paid any bonus to any employee; (c) sold,
assigned or transferred or agreed to sell, assign
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or transfer any of its assets, properties or rights; (d) granted any rights or
licenses under any Intellectual Property or entered into any licensing or
distributorship arrangements; (e) canceled or agreed to cancel any debts; (f)
waived or agreed to waive any rights; (g) made or permitted any amendment or
termination of any Contracts; (h) effected any change in the accounting methods
and principles used in connection with its books, records and financial
statements; (i) entered into any transaction other than in the ordinary course
of business, except transactions expressly permitted by the terms of this
Agreement; (j) suffered any event or condition of any character; (k) suffered
any default under, or suffered any event which with notice or lapse of time or
both would constitute a default under, any Contract, debt instrument or other
agreement to which Seller is a party or by which it or any of the Purchased
Assets is bound; (l) lost or terminated any employees; or (m) terminated
(excluding a termination in accordance with its terms) or amended, or suffered a
termination or amendment of, any Contract, agreement, lease or license, except,
in all such cases (a) through (m) individually or in the aggregate, where such
events or actions did not since such date have a Material Adverse Effect.
4.15 Employees.
(a) Schedule 4.15 contains a list setting forth, (i) the name and
current annual salary and other compensation payable by Seller to each manager,
employee, officer, independent contractor, agent or consultant of Seller
employed or engaged in connection with the Business (an "Employee"); (ii) the
profit sharing, bonus or other form of additional compensation paid or payable
by Seller to or for the benefit of each such person for the current fiscal year;
and (iii) any and all loans outstanding from Seller to any Employee. There are
no oral or written contracts, agreements or arrangements relating to
compensation or performance awards or obligating Seller to increase the
compensation or benefits presently being paid or hereafter payable to any of its
employees or other persons. There is not due or owing, and there will not be due
and owing at the Closing, to any of Seller's Employees, any sick pay, severance
pay (whether arising out of the termination of an Employee of Seller prior to or
subsequent to the Closing), compensable time or pay, including but not limited
to, salary, commission and bonuses, personal time or pay or vacation time or
vacation pay attributable to service rendered on or prior to the Closing Date,
other than set forth on Schedule 4.15. There is not now, and there will not be
as of the Closing Date, any liability of, or claims against, Seller (including,
without limitation, workers' compensation claims and claims or suits for
contribution to, or indemnification of, third parties, occupational health and
safety, environmental, consumer protection or equal employment matters) for
injury, sickness, disease, discrimination, death or termination of employment of
any Employee or other employment matter (including, without limitation, any
Employee or former Employee or any contractor or subcontractor of Seller or any
agent or distributor of Seller), to the extent attributable to an event
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occurring or a state of facts existing prior to the Closing other than as set
forth on Schedule 4.15; it being understood and agreed that Seller shall remain
liable for, and indemnify and hold harmless Buyer and USDATA against, any and
all claims, liabilities, damages, losses, costs or expenses, of any nature
whatsoever, incurred by Seller, or resulting from or relating to any Employees
(whether hourly or salaried) of Seller, including, but not limited to, those set
forth on Schedule 4.15.
(b) Seller is not a party to any collective bargaining agreements,
written or oral, which cover any Employees of the Business. There have not been,
and there are no, strikes, grievances, disputes or controversies pending or
threatened between Seller and any of its Employees or any union or other
organization claiming to represent such Employees' interests. There is no
request for union representation pending and there is no present union
organizing or election activities in progress or to Seller's knowledge
threatened with respect to any Employees of Seller. There is no unfair labor
practice complaint pending before the National Labor Relations Board or to
Seller's knowledge threatened against or relating to Seller.
(c) The purchase of the Purchased Assets by Buyer hereunder will
not subject Buyer or USDATA to any absolute or contingent, direct or indirect
liability to or claim by Seller's past, present or future Employees (except for
obligations expressly assumed by Buyer hereunder with respect to the Buyer
Employees).
4.16 Employee Benefit Plans.
(a) Seller's employee handbook contains a true and complete list
of each plan, program, policy, practice, contract, agreement or other
arrangement providing for severance, termination pay, stock or stock-related
awards, fringe benefits or other employee benefits of any kind, whether formal
or informal, proposed or final, funded or unfunded and whether or not legally
binding, including, without limitation, each "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") ("Employee Plan") which is now or ever has been maintained,
contributed to, or required to be contributed to, for the benefit of any current
or former Employee, and each management, employment, severance or consulting
agreement or contract between Seller and any Employee, including, without
limitation, summaries of all oral employment or consulting or similar
arrangements between Seller and any person which are not terminable without
liability on thirty (30) days' or less prior notice (each, an "Employee
Agreement"). Seller will provide to Buyer prior to the Closing true and complete
copies of all documents, if any, embodying each Employee Plan and Employee
Agreement, and all material communications, if any, to any Employee relating to
each Employee Plan. Buyer shall have no liability with respect to any Employee
Plan or Employee Agreement.
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(b) Seller does not maintain or contribute to any Employee
Plan which provides, or has any liability to provide, life insurance, medical or
other employee welfare benefits to any Employee upon his retirement or
termination of employment, except as may be required by statute, and Seller has
never promised, represented to, or contracted with (orally or in writing) any
Employee (individually or as a group) that life insurance, medical or other
employee welfare benefits would be provided upon their retirement or termination
of employment, except to the extent required by statute.
(c) Except as set forth on Schedule 4.16, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not (either alone or when taken together with any additional or
subsequent events) constitute an event under any Employee Plan or Employee
Agreement that will or may result in any payment, upon a change in control or
otherwise, whether of severance, accrued vacation, or otherwise, acceleration,
vesting, distribution, increase in benefits or obligations to fund benefits with
respect to any Employee.
(d) Seller (i) is in compliance with all applicable federal
and state laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to Employees, except where the failure to be in compliance would
not, singularly or in the aggregate, have a Material Adverse Effect; (ii) has
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to Employees; (iii) is not liable for any
arrearages of wages or any taxes or any penalty for failure to comply with any
of the foregoing; and (iv) (other than routine payments not yet due which are to
be made in the normal course of business and consistent with past practice and
applicable laws) is not liable for any payment to any trust or other fund or to
any governmental or administrative authority, with respect to unemployment
compensation benefits, Social Security or other benefits for Employees, with the
exception of back pay claims and back taxes which will be discharged by Seller
immediately following Closing.
4.17 Licenses and Permits. Seller has all licenses or permits required
for the operation of the Business and the operation and use of the Purchased
Assets as presently operated or used by it. All licenses and permits held by
Seller and material to the Business are valid and in full force and effect and
no proceedings which could result in the termination or impairment of any such
license or permit are pending or to Seller's knowledge threatened. Schedule
2.1(l) sets forth a description of all such licenses or permits. Seller is not
in violation of, nor has Seller received any notice of any violation of, nor
does any state of facts exist which could lead to a penalty or termination of,
any license or permit which might reasonably be expected to have a Material
Adverse Effect.
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4.18 Insurance. Attached hereto as Schedule 4.18 is a true, correct and
complete schedule which describes all insurance policies currently maintained by
Seller in connection with the operation of the Business and the Purchased Assets
transferred hereunder. All of said insurance policies which are now in effect
shall continue to remain in full force and effect through the Closing Date in
accordance with their respective terms.
4.19 Taxes. Except as set forth in Schedule 4.19, Seller has timely and
properly filed all federal, state, local and foreign tax returns and reports and
forms which it is or has been required to file, either on its own behalf or on
behalf of its employees or other persons or entities, including but not limited
to income, profits, franchise, sales, use, occupation, property, excise, ad
valorem and payroll (including employee taxes withheld) taxes ("Taxes"), all
such returns, reports and forms being true and complete in all material
respects, and has paid all taxes, including penalties and interest, if any,
which have become due pursuant to such returns or reports or forms or pursuant
to assessments received by Seller. No tax deficiencies have been determined nor
proposed tax assessments charged against Seller and there exists no basis for
any such deficiencies. No Internal Revenue Service or other governmental taxing
authority audit of Seller is pending or to Seller's knowledge threatened, and
the results of any completed audits are properly reflected in the Financial
Statements. Seller has not granted any extension to any taxing authority of the
limitation period during which any tax liability may be asserted.
4.20 Environmental Matters. Seller is currently in compliance with and
has not violated environmental laws applicable to the Business and/or the
Purchased Assets has obtained all permits, licenses and other authorizations
needed to operate the Purchased Assets in compliance with environmental laws and
is unaware of any present requirements of any applicable environmental law which
is due to be imposed upon it which will increase its cost of complying with
environmental laws. All past on-site generation, treatment, storage and disposal
of waste, if any (including hazardous waste), at the Business by Seller (or its
predecessors at the Business), have been done in compliance with the currently
applicable environmental laws, and all off-site treatment, storage and disposal
of waste (including hazardous waste), if any, generated by Seller have been done
in compliance with the currently applicable environmental laws. The term (a)
"environmental laws" includes but is not limited to any federal, state or local
law, statute, charter or ordinance, and any rule, regulation, binding
interpretation, binding policy, permit, order, court order or consent decree
issued pursuant to any of the foregoing, which pertains to, governs or otherwise
regulates any of the following activities, including, without limitation, (i)
the emission,
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discharge, release or spilling of any substance into the air, surface water,
groundwater, soil or substrata; and (ii) the manufacturing, processing, sale,
generation, treatment, storage, disposal, labeling or other management of any
waste, hazardous substance or hazardous waste, and (b) "waste," "hazardous
substance," and "hazardous waste" include any substance defined as such by any
applicable environmental laws.
4.21 Creditors. On or after the Closing Date, neither Buyer nor USDATA
shall be subject to any claim of a creditor of Seller, or to any obligation to
pay, discharge or satisfy in any manner Seller's liabilities or other
obligations as a result of the sale and transfer of the Purchased Assets to
Buyer under this Agreement, other than liabilities assumed by Buyer pursuant to
Section 2.5.
4.22 Compliance with Laws. Seller has complied in all material respects
with all laws, statutes, rules, regulations, orders and standards of any
federal, state and local agencies and authorities applicable to the Business and
the Purchased Assets (including, but not limited to, those concerned with civil
rights, labor and discrimination, safety and health, zoning and land use and the
environment).
4.23 Third Party Options. There are no existing contracts, options,
commitments or rights with, to or in any third party to acquire the Purchased
Assets or any interest therein or the Business (other than the Excluded Assets
or Excluded Contracts).
4.24 Transactions with Certain Persons. Except as provided in this
Agreement, at and as a result of the Closing, neither Buyer nor USDATA shall
have any obligation or liability to any current or former member, manager or
employee of Seller or any member of such person's immediate family or any entity
in which such person has a direct or indirect ownership interest (other than
ownership of less than five percent of the issued and outstanding stock of a
corporation whose stock is publicly traded) (each, a "Related Party"),
including, without limitation, any contract (a) providing for the furnishing of
services by, (b) providing for the rental of real or personal property from, or
(c) otherwise requiring payment to any such Related Party.
4.25 Accuracy of Information Furnished. All information furnished to
Buyer and USDATA by Seller or the Shareholders herein or in any exhibit or
schedule hereto is true, correct and complete. Such information states all facts
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements are made, true, correct
and complete.
4.26 Product Warranties. There is no agreement or obligation to which
Seller is a party, or any claim against or liability of Seller, on account of
product warranties or
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with respect to the manufacture, sale or rental of defective products, and there
is no basis for any such claim on account of defective products heretofore
manufactured, sold or rented which is not fully covered by insurance. Neither
Buyer nor USDATA shall have any liability with respect to any claim against or
liability of Seller on account of product warranties or with respect to the
manufacture, sale or rental of defective products except as expressly set forth
on Schedule 4.26 setting forth the specific amount of the claims or liability as
to each such matter, and except as assumed by Buyer pursuant to Section 2.5.
4.27 Questionable Payments. Neither Seller, nor any of Seller's current
or former officers, directors, Shareholders, employees, agents, or
representatives, have in connection with the business or operations of the
Business (a) used any corporate funds for any contributions, gifts,
entertainment or other expenses relating to political activity, or used any
limited liability company funds to reimburse any person for any such payment in
contravention of any laws, (b) used any corporate funds for any direct or
indirect payments to any foreign or domestic government officials or employees,
(c) violated any provision of the Foreign Corrupt Practices Act of 1977, (d)
established or maintained any unrecorded fund of corporate monies or other
assets, (e) made any false or fictitious entries on the books and records of
Seller, (f) made any bribe, rebate, payoff, influence payment, kickback or other
payment of any nature, (g) made any favor or gift which is not deductible for
federal income tax purposes, or (h) violated the Arab boycott laws.
4.28 Burdensome Obligations. To Seller's knowledge, (a) Seller is not a
party to or bound by any Contract which is so unusual or burdensome as in the
foreseeable future could reasonably be expected to have a Material Adverse
Effect and (b) Seller is not in violation of any law, ordinance, statute, code,
rule, regulation, order or decree of the United States, any state, any county,
any city, or any other political subdivision in which Seller operates (the
"Legal Requirements") pertaining to occupational safety.
4.29 USDATA Stock. The Shareholders acquiring the USDATA Stock and the
Buyer Employees (as defined in Section 10.1) are acquiring the Options solely
for the purpose of investment and not with a view to, or for offer or sale in
connection with, any distribution thereof, except as contemplated by this
Agreement. The Shareholders acknowledge that neither the USDATA Stock nor the
Options have been registered under the Act or under the securities or "blue sky"
laws of any state. The Shareholders acknowledge receipt of those items listed in
Section 5.4.
4.30 Books of Accounts. The books of account of Seller have been kept
accurately in the ordinary course of its business, the transactions entered
therein represent bona fide transactions and the revenues, expenses, assets and
liabilities of Seller have been properly recorded in such books.
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4.31 Consents. Except as set forth in Schedule 4.31, no authorization,
consent, approval, permit or license of, or filing with, any governmental or
public body or authority, any lender or lessor or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement or the agreements contemplated hereby
on the part of Seller.
4.32 Year 2000. No technology owned, developed or licensed by Seller
that has been actively used or marketed by Seller within the past two (2) years
and, except as set forth in Schedule 4.32 with respect to third party
technology, no technology used by Seller in connection with the Business
(including, but not limited to, information systems and technology, commercial
and noncommercial hardware and software, firmware, mechanical or electrical
products, embedded systems, or any other electro-mechanical or processor-based
system, whether as part of a desktop system, office system, building system or
otherwise) (collectively, the "Technology"), will experience any malfunctions,
premature cancellation or expiration of contractual rights or deletion of data,
or any other problems in connection with (i) the year 2000 (and all subsequent
years) as distinguished from 1900 years, (ii) the date February 29, 2000, and
all subsequent leap years, and (iii) the date September 9, 1999.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND USDATA
Buyer and USDATA jointly and severally represent and warrant to Seller
and the Shareholders as follows:
5.1 Organization. Each of Buyer and USDATA is a corporation duly and
validly existing and in good standing under the laws of its state of
incorporation and has full corporate power to enter into and perform its
respective obligations under this Agreement and under any other agreements,
documents and/or instruments to be executed and/or delivered by each pursuant to
or in connection with this Agreement.
5.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement and of all of the agreements, documents and/or
instruments to be executed and/or delivered by each of Buyer and USDATA pursuant
to or in connection with this Agreement have been duly authorized by all
necessary corporate action of each. This Agreement is, and the other agreements,
documents and instruments required hereby will be, when executed and delivered
by the parties hereto, enforceable against each of Buyer and USDATA in
accordance with their respective terms.
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5.3 No Violation or Conflict. The execution, delivery, and performance
of this Agreement by each of Buyer and USDATA does not and will not violate or
conflict with any Law, judgment, order, or decree binding on each of Buyer or
USDATA, or the Certificate of Incorporation or Bylaws of either or any contract
or agreement to which either is a party or by which either is bound.
5.4 Financial Condition. USDATA has delivered to Seller and the
Shareholders copies of USDATA's most recent reports to the SEC on Forms 10-K and
10-Q, all of USDATA's annual reports, definitive proxy materials and all reports
on Form 8-K since the filing of the Form 10-K with respect to fiscal year ended
December 31, 1998. None of such reports contains an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made.
ARTICLE VI
CERTAIN MATTERS PENDING CLOSING
Seller and the Shareholders covenant to Buyer and USDATA, and Buyer and
USDATA covenant to Seller, that from and after the Effective Time and until the
Closing Date, without the other party's prior written consent:
6.1 Carry on in Regular Course. Seller shall carry on the business of
the Business in a reasonable and prudent manner and only in the regular course
and substantially in the same manner as heretofore carried on and use its good
faith and reasonable efforts to preserve the Business's properties and existing
business organization and retain good relationships with employees, customers,
suppliers and others with whom it maintains a business relationship. Seller
shall conduct its business in compliance with all applicable laws. Seller shall
not engage in any extraordinary transactions without USDATA's prior written
consent, including (a) not disposing of any assets of Seller, except in the
ordinary course of business and (b) not causing assets of Seller to be
distributed to any of its members. Nothing in this Agreement shall diminish
Seller's sole title to the Business or shall be construed to limit Seller's
discretion to operate the Business in the ordinary course, or shall give Buyer
any ownership rights in or rights to the Purchased Assets before the Closing
Date.
6.2 Employee Compensation. Seller shall not increase the rate of pay
for any employee of the Business except pursuant to a regularly scheduled time
schedule for increases and no bonus, profit sharing, retirement, insurance,
death, fringe benefit or other extraordinary or indirect compensation shall
accrue, be set aside or be paid to,
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for or on behalf of any officers or employees of the Business other than as
required by presently existing pension, profit sharing, bonus and similar
benefit plans as presently constituted, and no agreement or plan other than
those now in effect shall be adopted or committed for, except in amounts
approved in writing by USDATA. Seller shall not increase, terminate, amend or
otherwise modify any plan for the benefit of any employee without USDATA's prior
written consent.
6.3 Hiring Employees. Prior to and at the Closing, Seller will
cooperate with all reasonable requests made by Buyer for the purpose of allowing
Buyer to hire those employees of Seller, as contemplated by Article X, such
employment to be effective as of the Closing Date.
6.4 Access. Upon reasonable notice, Buyer, USDATA and their authorized
agents, officers and representatives shall have complete access to the
facilities, properties, books, records, contracts, information and documents of
Seller as they relate to the Business to conduct such examinations and
investigations of Seller as they deem necessary. Seller and its directors,
officers, shareholders, employees, accountants and other agents and
representatives shall cooperate fully with Buyer, USDATA and their authorized
agents, officers and representatives in connection with Buyer's and USDATA's due
diligence investigation of Seller and Seller's assets, contracts, liabilities,
operations and other aspects of its Business.
6.5 Cooperation. As soon as practical after the date hereof, if they
have not previously done so, Buyer, USDATA and Seller shall promptly and
properly prepare and file all filings required by all Laws relating to the
transactions contemplated hereby, and shall cooperate in all respects in
connection with the giving of any notices to any governmental authority or
securing the permission, approval, determination, consent or waiver of any
governmental authority required by Law in connection with the consummation of
this Agreement.
6.6 Confidentiality. Each party recognizes that it will receive
confidential information regarding the other party during the course of the
negotiations contemplated by this Agreement. Accordingly, each of and USDATA and
Buyer, on the one hand, and Seller, on the other hand, agree to use its best
efforts to prevent the unauthorized disclosure of any confidential information
concerning the other party that has been disclosed previously or is disclosed
during the course of the negotiations and investigations contemplated by this
Agreement. The obligations of this paragraph do not apply to information that:
(a) is or becomes part of the public domain (other than through breach of this
Agreement or any other agreement between the parties relating to
confidentiality), (b) is received by the receiving party from a third party
without breach of a nondisclosure obligation of the third party, or (c) is
independently developed.
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6.7 Publicity. All notices, releases, statements and communications to
employees, suppliers, distributors and customers and any person other than their
respective officers, directors, stockholders, representatives or agents of
Seller and Buyer and to the general public and the press relating to the
transactions contemplated by this Agreement shall be made only at such times and
in such manner as may be mutually agreed upon in writing by Seller and Buyer;
provided, however, that any party shall be entitled to make a public
announcement or statement or other public disclosure relating to the
transactions contemplated hereby if, in the opinion of its legal counsel, such
announcement or statement or other public disclosure is required to comply with
any Law (including, without limitation, federal securities laws) or any subpoena
or other process; provided, further, however, that such party gives prior
written notice of its intention to make such disclosure, the content of such
disclosure and the provision of Law, subpoena or process requiring such
disclosure and further, provided, USDATA shall be permitted to file this
Agreement and to describe the transactions contemplated hereby in a Current
Report on Form 8-K or a Quarterly Report on Form 10-Q filed under the Securities
Exchange Act of 1934, as amended.
6.8 Material Adverse Effect. Prior to the Closing, Seller shall
promptly inform Buyer and USDATA in writing of the occurrence of any event or
set of facts or circumstances of which it has or obtains knowledge that have
resulted in, or with the passage of time could be expected to result in, a
Material Adverse Effect or any event that renders the representations and
warranties made in Article 4 to be inaccurate, or any failure of Seller to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by any of them under this Agreement. Any such disclosure shall not
be deemed a waiver by Buyer or USDATA of any representation, warranty, covenant
or agreement of Seller contained in this Agreement.
6.9 Approvals of Governmental Authorities and Third Parties. As soon as
practicable after the execution of this Agreement, but in any event prior to the
Closing Date, Seller, USDATA and Buyer will secure all necessary approvals and
consents of all governmental authorities and other third parties required on the
part of Seller, USDATA and Buyer for the consummation of the transactions
contemplated by this Agreement.
6.10 Contracts. Prior to Closing, except with Buyer's prior written
consent, (a) other than in the ordinary course of the business and operations of
the Business and in a manner consistent with past business practices of the
Business, Seller will not assume or enter into any contract, lease, license,
obligation, indebtedness, commitment, purchase or sale relating to the business
or operations of the Business involving more than $10,000 each, and (b) except
as expressly contemplated hereby,
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Seller will not modify, amend or waive any provisions of any Contract in a
manner that would adversely affect Buyer's ownership or operation of the
Purchased Assets or the Business after the Closing Date, or terminate any
Contract listed on Schedule 2.1(g).
6.11 Capital Assets. Prior to Closing, except with Buyer's prior
written consent, Seller will not acquire or dispose of any capital asset (other
than Excluded Assets) relating to or used or to be used in the business or
operations of the Business having an initial cost of $10,000 or more.
6.12 Mortgages; Liens. Prior to Closing, except with Buyer's prior
written consent, Seller will not enter into or assume any mortgage, pledge,
conditional sale or other title retention agreement, or permit any lien,
encumbrance or claim of any kind to attach to any of its assets, whether now
owned or hereafter acquired, relating to or used or to be used in the business
or operations of the Business.
6.13 No Solicitation. From the date hereof through the later of (a) the
date specified in Section 12.1(d); or (b) the Closing Date, or the earlier
termination of this Agreement, Seller shall not and Seller will cause each of
its officers, directors and shareholders and its legal and financial advisors
and affiliates not to, directly or indirectly, make, solicit, encourage,
initiate or enter into any agreement or agreement in principle, or announce any
intention to do any of the foregoing, with respect to any offer or proposal to
acquire all or part of the business or properties of the Business or the
Purchased Assets (excluding the Excluded Assets) (whether through direct
purchase, merger, consolidation, or other business combination, an "Alternative
Transaction"). Seller shall not, and Seller will cause each of its officers,
directors and shareholders and its legal and financial advisors and affiliates
not to, directly or indirectly, participate in any negotiations or discussions
regarding, or furnish any information (including, but not limited to,
confidential or financial information) with respect to, or otherwise cooperate
in any way in connection with, or assist or participate in, facilitate or
encourage or respond to, any effort or attempt to effect or seek to effect an
Alternative Transaction with or involving any corporation, partnership, person
or other entity or group other than Buyer and USDATA, their employees,
directors, representatives and agents concerning the sale of Seller or any
merger, combination sales of assets, or similar transactions which would involve
the assets and Business of Seller. Seller shall promptly communicate to Buyer
and USDATA the terms of any proposal it may receive in respect of an Alternative
Transaction and the identity of such other party and the nature of such
proposal, offer or invitation.
6.14 Information for Tax Returns. Seller shall cooperate with Buyer and
USDATA after the Closing Date by providing Buyer and USDATA, without any
additional consideration but at the expense of Buyer and USDATA, promptly upon
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request, such records and other information regarding the Purchased Assets
and/or the Business as may reasonably be requested from time to time by Buyer
and USDATA in connection with the preparation or audit of its federal, state and
local income and other tax returns, and audits, disputes, refund claims or
litigation relating thereto. In such connection, Seller will afford Buyer's and
USDATA's independent tax advisors, and such other persons as may be mutually
agreed upon, access to Seller's books and records or relating to the Purchased
Assets; provided, however, that Buyer and USDATA shall cause its independent tax
advisors and such other persons to hold in strict confidence all such
information (except as required to be disclosed in connection with such tax
returns and audits, disputes, refund claims and litigation relating thereto).
6.15 Supplements to Disclosure Schedules. From time to time prior to
the Closing Date, Seller shall promptly provide to Buyer and USDATA proposed
supplements or amendments to the schedules to this Agreement with respect to any
matter arising or changing which, if existing or occurring as of the date of
this Agreement, would have been required to be set forth or described in such
schedules; provided, however, any such proposed supplements or amendments to the
schedules to this Agreement shall not become part of this Agreement unless and
until Buyer and USDATA shall execute an instrument evidencing their agreement
thereto, and such proposals shall not be deemed a waiver by Buyer or USDATA of
any representation or warranty of Seller contained in this Agreement other than
as agreed upon in such instrument.
6.16 Payments by Seller. Seller shall have the right to pay the items
listed on Schedule 2.5(b) prior to Closing. To the extent Seller possesses
insufficient cash as of the Closing to make such payments, Seller shall pay such
amounts upon Closing, and Buyer and/or USDATA shall pay the amount of such
insufficiency to Seller in the form of a note payable with a maturity of thirty
(30) days from the date of Closing, payable in full at maturity without
interest.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND USDATA
Each and every obligation of Buyer and USDATA to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing of
the following express conditions precedent:
7.1 Compliance with Agreement. Seller and the Shareholders shall have
performed and complied in all material respects with all of its obligations,
covenants and agreements under this Agreement which are to be performed or
complied with by it prior to the Closing.
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7.2 No Litigation.
(a) No third-party investigation, suit, action, or other proceeding
that questions the validity or legality of the transactions contemplated hereby
or that seeks restraint, prohibition, damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby shall
be pending before any court or governmental agency or threatened.
(b) There shall not be in effect any order, decree or injunction
(whether preliminary, final or appealable) of a federal or state court of
competent jurisdiction which (i) prohibits consummation of this Agreement or the
transactions contemplated hereby, (ii) requires Buyer or USDATA to hold separate
or dispose of any of the Purchased Assets or (iii) could have a Material Adverse
Effect or materially impairs the ability of Buyer or USDATA to perform their
obligations hereunder.
7.3 Representations and Warranties. The representations and warranties
made by Seller and the Shareholders in this Agreement shall be true and correct
in all material respects at and as of the date of this Agreement and as of the
Closing Date with the same force and effect as though said representations and
warranties had been made on the Closing Date.
7.4 Material Adverse Effect. Between the date hereof and the Closing
Date, no event shall have occurred or set of facts or circumstances arisen which
has resulted in, or with the passage of time could be expected to result in, a
Material Adverse Effect.
7.5 Deliveries at Closing. Seller and the Shareholders shall have
delivered to Buyer and/or USDATA, as appropriate, the documents and items
specified in Section 3.2.
7.6 Financial Commitment. USDATA and Buyer shall have received a
financing commitment to fund the transactions contemplated by this Agreement,
and such financing commitment has terms and conditions as are acceptable to
Buyer and USDATA in their sole discretion.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF SELLER AND THE SHAREHOLDERS
Each and every obligation of Seller and the Shareholders to be
performed on the Closing Date shall be subject to the satisfaction prior to or
at the Closing of the following express conditions precedent:
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8.1 Compliance with Agreement. Buyer and USDATA shall have performed
and complied in all material respects with all of their obligations, covenants
and agreements under this Agreement which are to be performed or complied with
by either of them prior to or on the Closing Date.
8.2 No Litigation.
(a) No third-party investigation, suit, action, or other proceeding
that questions the validity or legality of the transactions contemplated hereby
or that seeks restraint, prohibition, damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby shall
be pending before any court or governmental agency or threatened.
(b) There shall not be in effect any order, decree or injunction
(whether preliminary, final or appealable) of a federal or state court of
competent jurisdiction which prohibits consummation of this Agreement or the
transactions contemplated hereby.
8.3 Representations and Warranties. The representations and warranties
made by Buyer and USDATA in this Agreement shall be true and correct in all
material respects at and as of the date of this Agreement and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on the Closing Date.
8.4 Deliveries at Closing. Buyer and/or USDATA shall have joined in and
shall have delivered to Seller and the Shareholders, as applicable, the
documents and items specified in Section 3.3.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival of Representations and Warranties. The representations and
warranties contained herein, other than the representations and warranties
contained in Section 4.19, shall survive the Closing for a period of two (2)
years. The representations and warranties contained in Section 4.19 shall
survive the Closing until the expiration of the applicable statute of
limitations period specified pursuant to applicable Law. If written notice of a
claim has been given prior to the expiration of the applicable representations
and warranties by a party in whose favor such representations and warranties
have been made to the party that made such representations and warranties, the
relevant representations and warranties shall survive as to such claim until the
claim has been finally resolved.
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9.2 Indemnification by Seller and the Shareholders.
(a) Seller and the Shareholders shall indemnify and hold harmless
Buyer and USDATA and each director, officer, employee, agent and affiliate of
Buyer and USDATA (each, a "Buyer Indemnified Party"), from and against, and
agree promptly to defend each Buyer Indemnified Party from and reimburse each
Buyer Indemnified Party for, any and all actions, suits, proceedings (including
any investigations or inquiries), losses, damages, costs, expenses, liabilities,
obligations and claims of any kind or nature whatsoever which may be incurred by
or asserted against or involve a Buyer Indemnified Party, whether or not
disclosed, including, without limitation, reasonable attorneys' fees and other
legal costs and expenses ("Buyer's Losses"), arising out of or in any way
relating to:
(i) any breach by Seller or the Shareholders of any
representation or warranty set forth in this Agreement or in any document
delivered hereunder;
(ii) any Excluded Obligations; or
(iii) any failure by Seller or the Shareholders to carry out,
perform, satisfy and discharge any covenants, agreements, undertakings,
liabilities or obligations to be performed by any of them pursuant to the terms
of this Agreement or any of the documents delivered by them pursuant to this
Agreement.
Notwithstanding any other provision of this Section 9.2, Seller
and the Shareholders shall not have any liability to USDATA or Buyer for a
breach of any representation, warranty or covenant (other than with respect to
Excluded Obligations and the matters contained in Sections 4.16 and 4.19) unless
and until the aggregate Buyer's Losses incurred by Seller for all breaches of
such provisions total more than $100,000 (the "Seller's Floor"), and in the
event that the Buyer's Losses exceed the Seller's Floor, Seller shall be liable
to Buyer and USDATA for the entirety of the amount of the Buyer's Losses.
(b) In the event a claim against a Buyer Indemnified Party arises
to which the indemnity of Section 9.2(a) of this Agreement is applicable, notice
shall be given promptly by the Buyer Indemnified Party to Seller and the
Shareholders and Seller and the Shareholders shall have the right to control all
settlements (unless the Buyer Indemnified Party agrees to assume the cost of
settlement) and to select lead counsel to defend any and all such claims at the
sole cost and expense of Seller and
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the Shareholders. The Buyer Indemnified Party may select counsel to participate
in any such defense at the sole cost and expense of the Buyer Indemnified Party.
In connection with any such claim, action or proceeding, the parties shall
cooperate with each other and provide each with access to relevant books and
records in their possession, as well as necessary employees or other agents.
(c) Except with respect to indemnification obligations of
Seller and Shareholders relating to Taxes, the obligations of Seller and the
Shareholders to indemnify Buyer and/or USDATA pursuant to the terms of this
Agreement shall be recoverable solely from the Escrow or any other amounts or
shares of USDATA Stock due to Seller hereunder if still in the possession of
Buyer or USDATA. Indemnification obligations of Seller and Shareholders relating
to Taxes shall be payable first from the Escrow and then by Seller and the
Shareholders. The number of shares subject to any such withholding or set off
shall be calculated using the then current market price of the USDATA Stock at
the time of such set off.
9.3 Indemnification by Buyer and USDATA.
(a) Buyer and USDATA hereby jointly and severally agree to
indemnify and hold harmless Seller, the Shareholders and each officer, director,
employee, agent and affiliate of Seller (each, a "Seller Indemnified Party")
from and against, and agrees promptly to defend each Seller Indemnified Party
from and reimburse each Seller Indemnified Party for any and all actions, suits,
proceedings (including any investigation or inquiries), losses, damages, costs,
expenses, liabilities, obligations, and claims of any kind or nature whatsoever,
which may be incurred by or asserted against or involve a Seller Indemnified
Party, including, without limitation, reasonable attorneys' fees and other legal
costs and expenses ("Seller's Losses") arising out of or in any way relating to:
(i) any breach by Buyer or USDATA of Buyer's and USDATA's
representations or warranties set forth in this Agreement; or
(ii) any failure by Buyer or USDATA to carry out, perform,
satisfy and discharge any covenants, agreements, undertakings, liabilities or
obligations to be performed by them pursuant to the terms of this Agreement or
any of the documents delivered by Buyer or USDATA pursuant to this Agreement.
(b) In the event a claim against a Seller Indemnified Party arises
to which the indemnity of Section 9.3(a) of this Agreement is applicable, notice
shall be given promptly by Seller to Buyer and USDATA, and Buyer and USDATA
shall have the right to control all settlements (unless the Seller Indemnified
Party agrees to assume
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the cost of settlement) and to select lead counsel to defend any and all such
claims at the sole cost and expense of Buyer and USDATA. The Seller Indemnified
Party may select counsel to participate in any such defense at the sole cost and
expense of the Seller Indemnified Party. In connection with any such claim,
action or proceeding, the parties shall cooperate with each other and provide
each other with access to relevant books and records in their possession.
9.4 Mediation and Arbitration. It is the intention of the parties to
bring all disputes between them to an early, efficient and final resolution.
Therefore, the parties agree that all disputes, claims and controversies between
the parties, whether individual, joint in class in nature, or otherwise, shall
be resolved as provided herein under the rules and auspices of the American
Arbitration Association ("AAA").
(a) Any dispute between the parties as it relates to the terms of
this Agreement or the behavior or practice of the parties as their rights or
privileges may be affected in the future, shall be submitted to formal mediation
using a mediator either appointed by the AAA or a mediator who conducts his
practice under the rules followed by the AAA or any other mediator to which the
parties may agree. Mediation must commence not later than two weeks after one
party notifies the agreed-upon mediator or the AAA, in writing, of its request
for mediation. Mediation shall be deemed to be in the nature of settlement
negotiations and shall be subject to the AAA Mediation procedures. Any
applicable statute of limitation shall be tolled until such time as the mediator
or both parties have concluded that the dispute cannot reasonably be resolved
through mediation.
(b) Any dispute not otherwise satisfactorily resolved shall be
submitted to binding arbitration through the AAA in Texas, Idaho or Washington.
Arbitration must commence not later than sixty (60) days after either party
submits a written demand for arbitration to the AAA, otherwise such demanding
party shall be entitled to an order compelling arbitration as provided by law.
(i) Statutes of limitations, estoppel, waiver, laches and
similar doctrines which would otherwise be applicable in any action brought by a
party hereto shall be applicable in arbitration proceeding hereunder, and the
parties agree that the commencement of binding arbitration proceedings hereunder
shall be deemed the commencement of an action for purposes of such doctrines,
whether raised in court or arbitration. Arbitration is commenced on the date a
notice of demand for binding arbitration is received by the AAA.
(ii) Arbitration shall be conducted by a single arbitrator
appointed by the AAA. Arbitration proceedings shall be conducted in accordance
with
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the AAA Arbitration Procedures unless otherwise agreed between the parties. The
arbitrator shall have the power to award monetary and/or non-monetary relief but
shall not have the power to award punitive damages.
(iii) The decision by the arbitrator shall be final and binding
upon the parties and/or their heirs, successors and assigns. Judgment upon the
award rendered may be entered in any court for confirmation of the award and the
entry of a judgment or for any other relief with respect to the award as
provided by law.
(iv) Notwithstanding the foregoing, any party to this Agreement
may bring any action involving injunctive or extraordinary relief in any court
of competent jurisdiction, and the requirement of arbitration shall not prohibit
a party from seeking injunctive relief from a court of competent jurisdiction
immediately following an alleged breach of this Agreement by the other party.
(c) During mediation and arbitration proceedings, the parties shall
continue performance of this Agreement unless doing so would unnecessarily
increase damages. The parties agree to adhere to all warranties and covenants
contained in this Agreement until such time as the arbitration process has been
completed and the arbitrator has determined each party's post-arbitration
obligations and responsibilities as they relate to such warranties and
covenants.
(d) The fees and costs of mediation shall be divided equally
between the parties. The fees and costs of arbitration, including without
limitation, arbitration fees, reasonable attorneys and accountants fees, witness
expenses and other related expenses actually incurred, shall be awarded by the
arbitrator to the prevailing party in such arbitration proceeding.
ARTICLE X
PERSONNEL
10.1 Buyer Employees. Buyer shall make offers of employment to Seller's
employees of the Business listed on Schedule 10.1 immediately following the
Closing (the "Buyer Employees"). Immediately prior to Closing, Seller shall
terminate the employment of all of the Buyer Employees as of the Closing Date
and Seller shall pay all obligations with respect to such Buyer Employees and
fulfill all obligations and applicable employee benefit plans (including
severance, wages, commissions, accrued vacation and other benefits) in respect
of periods prior to the Closing.
10.2 Terms of Employment. Buyer's employment of Buyer Employees shall
be
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on terms and conditions as Buyer and Buyer Employees shall find mutually
acceptable (and may include the requirement by the Buyer Employees to complete
applications and customary nondisclosure or noncompetition agreements), and all
Buyer Employees shall be eligible to participate in the employee benefit plans
of Buyer (or USDATA as applicable) to the extent similarly situated employees of
Buyer are eligible to participate in such plans. To the extent permitted by
applicable Law, the Buyer Employees shall be given credit for previous
employment with the Seller for purposes of determining eligibility (but not
compensation levels) under such plans. Notwithstanding the foregoing, Buyer and
USDATA shall have no obligation to provide to Buyer Employees any term,
condition or benefit of employment that is the same as or similar to those
provided by Seller to Buyer Employees prior to the Closing, including, but not
limited, to those relating to commissions, bonus, profit sharing or other
additional compensation, sick pay, severance pay, personal time or pay or
pensions. Seller shall indemnify, defend and hold harmless Buyer and USDATA from
and against any liability or obligation to Buyer Employees or any other
employees of Seller, other than the obligations specifically undertaken by Buyer
as set forth above. No provision of this Agreement shall create any third party
beneficiary rights in any Buyer Employees or any beneficiary or dependent
thereof with respect to the compensation, terms and conditions of employment and
benefits that may be provided to any Buyer Employee.
10.3 Employment Agreements. On the Closing Date, the Shareholders, the
key employees set forth on Schedule 3.2(r) and Buyer and/or USDATA shall enter
into employment agreements in the forms of Exhibit 10.3(1) through (4), as
applicable (the "Employment Agreements").
10.4 Options. As soon as practical following the Closing, and subject
to the execution of appropriate option agreements, USDATA shall make available
to the Buyer Employees stock options (the "Options") to purchase up to an
aggregate of 75,000 shares of USDATA Stock. The Options shall be allocated among
employees as set forth on Schedule 3.2(r). The Options will have customary terms
and conditions as other option holders under USDATA's 1994 Amended and Restated
Equity Compensation Plan (the "Stock Option Plan"). The Options, and the shares
of USDATA Stock issuable upon exercise of the Option, shall not be registered
under the Act unless otherwise set forth in the Stock Option Plan.
10.5 WARN. Seller shall comply in all respects with the notice and
other requirements of the Worker Adjustment Retraining and Notification Act, 19
U.S.C. `2101 et seq., and similar applicable state statutes. Neither Buyer nor
USDATA shall not have any liability with respect to any employee of Seller
arising out of such statutes.
10.6 Payroll Tax. Buyer, USDATA and Seller agree to follow the Standard
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Procedure specified in Rev. Proc. 84-77, 1984-2 C.B. 753, whereby, among other
things, each will be responsible for the reporting duties with respect to its
own payments of wages and compensation to employees in connection with the
operation of the Purchased Assets. In addition, Seller agrees to provide to
Buyer all information reasonably requested by Buyer necessary for Buyer and
Buyer Employees to receive credit for payroll tax items already paid by Seller
or Buyer Employees for any periods prior to the Closing Date.
ARTICLE XI
ADDITIONAL COVENANTS
11.1 Taxes and Fees. Seller shall pay all applicable sales, transfer,
documentary, use and filing fees and taxes that may become due or payable as a
result of the sale, conveyance, assignment, transfer or delivery of any of the
Purchased Assets.
11.2 Brokers. Except as set forth on Schedule 11.2, Seller, the
Shareholders, USDATA and Buyer represent to each other that the transactions
contemplated by this Agreement have been negotiated directly between them and
their respective counsels, without intervention of any person as a result of any
action by them in such a manner as to give rise to a valid claim against any of
them for a brokerage commission, finder's fee, counseling or advisory fee, or
like payment and each agrees to indemnify the opposite party against any such
liability arising from or through it. The fees of Dominion & Company, Inc. shall
be paid by Seller. Subject to such shares remaining in Escrow, Seller may
transfer the ownership of shares of USDATA Stock to Dominion & Company, Inc. or
its affiliates if, prior and as a condition to such transfer, USDATA receives
documents acceptable to it, in its sole discretion, regarding the compliance of
such transfer with all securities laws (including investor representation
letters), regarding the transferee's written agreement to be bound by the terms
of the Escrow and regarding any other matters USDATA deems appropriate. In any
event, all shares shall be held in the Escrow and shall be subject to the terms
and conditions of this Agreement and the Employment Agreements referred to in
Section 10.3 on a pro rata basis with each of the Shareholders. In the event any
Shareholder receives a disbursement of such USDATA Stock or if such USDATA Stock
is forfeited pursuant to the terms of the Employment Agreements or set off
against pursuant to terms of this Agreement, such shares of USDATA Stock
allocable to such holder shall be disbursed, forfeited or set off against in the
proportion that the USDATA Stock disbursed, forfeited or set off against under
the Employment Agreements or this Agreement bears to the shares held by the
Shareholders.
11.3 Books and Records; Personnel. Buyer and Seller shall make
available to
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each other for reasonable periods of time Buyer's or Seller's personnel to
assist Seller or Buyer in locating and obtaining records and files maintained by
Buyer or Seller and any of Buyer's or Seller's personnel whose assistance or
participation is reasonably required by Seller or Buyer, in anticipation of,
preparation for, or the conduct of any existing or future litigation, tax
returns or other matters, in which Seller or Buyer is involved.
ARTICLE XII
TERMINATION
12.1 Termination. Time is of the essence of this Agreement. This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned as follows:
(a) at any time prior to the Closing by mutual written agreement
of Seller, Buyer and USDATA; or
(b) by Buyer and USDATA if there has been a material breach of the
representations and warranties of Seller contained herein or if Seller shall
have failed to comply in any material respect with any of its covenants or
agreements contained in this Agreement; or
(c) by Seller if there has been a material breach of the
representations and warranties of Buyer and USDATA contained herein or if Buyer
or USDATA shall have failed to comply in any material respects with any of their
covenants or agreements contained in this Agreement; or
(d) by Seller or by Buyer on or after August 6, 1999 if by that
date the Closing has not taken place (provided, however, no party shall be
entitled to terminate this Agreement pursuant to this clause (d) if such party
is in breach of this Agreement at such time); or
(e) by any party if any court of competent jurisdiction in the
United States or other governmental body of the United States shall have issued
an order, decree or ruling restraining, enjoining or otherwise prohibiting the
purchase and sale of the Purchased Assets contemplated by this Agreement.
12.2 Rights on Termination; Waiver. If this Agreement is terminated
pursuant to Section 12.1, all further obligations of the parties under or
pursuant to this Agreement shall terminate without further liability of either
party to the other, except for the obligations under Section 13.2; provided,
however, that termination pursuant to clauses (b) or (c) of Section 12.1 shall
not relieve any defaulting or breaching party
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from liability to the other party. Upon any termination of this Agreement, each
party will return all documents, work papers and other material (including all
copies) of the other party relating to the transactions contemplated by this
Agreement.
ARTICLE XIII
MISCELLANEOUS
13.1 Entire Agreement; Amendment. This Agreement and the documents
referred to herein and to be delivered pursuant hereto constitute the entire
agreement between the parties pertaining to the subject matter hereof, and
supersede all prior and contemporaneous agreements, understandings,
negotiations, and discussions of the parties, whether oral or written, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein. This Agreement may only be amended or modified by an instrument in
writing executed by Seller, the Shareholders, Buyer and USDATA. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision of this Agreement, whether or not similar, nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
13.2 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties shall pay the fees and expenses
of their respective counsel, accountants and other experts incident to the
negotiation and preparation of this Agreement, the filing of any reports or
notifications required of that party by Law and the consummation of the
transactions contemplated by this Agreement.
13.3 Governing Law. This Agreement shall be construed and interpreted
according the laws of the State of Texas, without regard to the conflicts of
laws provisions thereof.
13.4 Assignment. Neither party may assign any of its rights or delegate
any of its duties under this Agreement; provided, however, that Buyer may
transfer all of its rights and obligations hereunder to another wholly-owned
direct or indirect subsidiary of USDATA.
13.5 Notices. All communications, notices and disclosures required or
permitted by this Agreement shall be in writing and shall be deemed to have been
given at the earlier of the time when actually delivered to an officer of the
party to which notice is to be given or when sent by facsimile transmission,
overnight courier service or by certified or registered first-class mail,
postage prepaid, return receipt requested, addressed as follows, unless and
until any party notifies the others in accordance with this Section 13.5 of a
change of address:
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If to Buyer or USDATA:
USDATA Corporation
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
With copies to:
Safeguard Scientifics, Inc.
800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
and:
Jenkens & Xxxxxxxxx
a Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
If to Seller:
Smart Shop Software, Inc.
000 X. Xxxxxxxxxx Xxxx, Xxxxx 0
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
With a copy to:
Xxxxxxx & Xxxxx, PC
0000 Xxxxx Xxx. XX
Xxxxx Xxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxx or Xxxxxxx X. XxXxxxxx
Facsimile: (000) 000-0000
13.6 Counterparts; Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute one and the same Agreement. The Table of Contents and
Article and Section headings in this Agreement are inserted for convenience of
reference only and shall not constitute a part of this Agreement.
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13.7 Interpretation. Unless the context requires otherwise, all words
used in this Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and include the singular,
and all words in any gender shall extend to and include all genders.
13.8 Severability. If any provision, clause, or part of this Agreement,
or the application thereof under certain circumstances, is held invalid, the
remainder of this Agreement, or the application of such provision, clause, or
part under other circumstances, shall not be affected thereby.
13.9 No Reliance. Neither Buyer, USDATA nor Seller assume any liability
to any person not a party to this Agreement because of any reliance on the
representations, warranties, and agreements of Buyer, USDATA or Seller contained
herein.
13.10 Specific Performance. Seller acknowledges that a refusal by
Seller to consummate the transactions contemplated hereby, or a breach by Seller
of the provisions of this Agreement, will cause irrevocable harm to Buyer and
USDATA, for which there may be no adequate remedy at law and for which the
ascertainment of damages would be difficult. Therefore, Buyer and USDATA shall
be entitled, in addition to, and without having to prove the inadequacy of,
other remedies at law, to specific performance of this Agreement, as well as
injunctive relief (without being required to post bond or other security).
13.11 Further Assurances. Upon and subject to the conditions contained
herein, each of the parties hereto agrees, both before and after the Closing,
(a) to use all reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement,
(b) to execute any documents, instruments or conveyances of every kind which may
be reasonably necessary or advisable to carry out any of the transactions
contemplated hereby, and (c) to cooperate with each other in connection with the
foregoing, including using their reasonable efforts (i) to obtain all consents
from other parties required to permit consummation of the transactions
contemplated hereby; provided, however, that neither USDATA nor Buyer shall be
required to make any payments, commence litigation or agree to any modification
of the terms thereof in order to obtain such consents, (ii) to obtain all
necessary consents as are required to be obtained under any Law to permit
consummation of the transactions contemplated hereby, (iii) to defend all
litigation challenging this Agreement or other consummation of the transaction
contemplated hereby, (iv) to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (v) to effect all necessary registrations and
filings and (vi) to fulfill all conditions to this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
SMART SHOP SOFTWARE, INC. (Idaho)
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
USDATA CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SMART SHOP SOFTWARE, INC. (Delaware)
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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SHAREHOLDERS:
-------------------------------------
Xxxxx Xxxxxxx
-------------------------------------
Xxxxxxx Xxxxxx
-------------------------------------
Xxxxxxxx Xxxxxxx
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