================================================================================
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXXX 96 VERMOGENSVERWALTUNGS GMBH
AND THE
SHAREHOLDERS OF CSD SOFTWARE GMBH
DATED AS OF
JANUARY 28, 1997
================================================================================
TABLE OF CONTENTS
1. Recitals......................................................................................... 3
2. Sale and Purchase................................................................................ 4
3. Assignment and Individual Sellers' Representations............................................... 7
4. Representations and Warranties................................................................... 8
5. General Provisions Concerning Representations and Warranties..................................... 23
6. Indemnification.................................................................................. 23
7. Representations and Warranties of Acquirer....................................................... 28
8. Complete Performance, Period after Closing....................................................... 30
9. Best Efforts to Obtain Satisfaction of Conditions................................................ 31
10. Fulfilled Conditions to Obligations of the Acquirer.............................................. 31
11. Fulfilled Conditions to Obligations of the Sellers............................................... 33
12. Dispute Resolution............................................................................... 34
13. Confidentiality.................................................................................. 36
14. Non-Competition.................................................................................. 37
15. Miscellaneous.................................................................................... 38
PURCHASE AGREEMENT
--------------------------------------------------------------------------------
Document Register No.
---------------------
On this day, this twenty-eighth day of January, nineteen hundred ninety-seven
- 28 January, 1997 -
appeared before me,
Xx. Xxxxxx Xxxxx
Notary in Munich
in my office at 00000 Xxxxxx, Pacellistrasse 14:
1.1 Hans Till Freiherr von Ruxleben,
geb. am 23.07.1958,
Xxxxxxxxxxxxxxxxxx 0, 00000 Xxxxxxxx,,
nach Angabe im gesetzlichen Guterstand lebend,
- hereinafter: "Mr. von Ruxleben"
(a) acting on his one name
(b) acting on behalf of
Herrn Xxxxxxxx Xxxxx,
geb. am 03.05.1951,
Xxxxxxxxxxxxx 00, 00000 Xxxxxxx,
nach Angabe im gesetzlichen Guterstand verheiratet,
- hereinafter: "Xx. Xxxxx" -;
(c) acting on behalf of
Herrn Prof. Jochen Tschunke,
geb. am 24.02.1945,
Xxxxxxxxxx. 0, 00000 Xxxxxxx,
nach Angabe im Guterstand der Gutertrennung verheiratet,
hereinafter: "Prof. Tschunke" -,
PURCHASE AGREEMENT PAGE 2
on the basis of written powers of attorney the originals of which are
attached to this deed as exhibit 1;
1.2 Liliane Freifrau von Ruxleben, geborene Aussum,
geb. am 15.10.1964,
Xxxxxxxxxxxxxxxxxx 0, 00000 Xxxxxxx,
nach Angabe im gesetzlichen Guterstand verheiratet,
- hereinafter: "Mrs. von Ruxleben" -;
1.3 Xxxx Xxxxx Xxxxxx,
geb am 01.08.1952,
Gautinger Xxxxxxx 00, 00000 Stockdorf,
nach Angabe im Guterstand der Gutertrennung verheiratet,
- hereinafter: "Xx. Xxxxxx" -
acting in his own name and on behalf of his wife
Frau Iska Xxxxxx, geborene Lauffs,
geb. am 10.06.1955,
Xxxxxxxxx Xxxxxxx 00, 00000 Xxxxxxxxx,
- hereinafter: "Xxx. Xxxxxx" -,
on the basis of an written power of attorney the original of which is
attached to this deed as exhibit 2;
1.4 Xxxx Xxxxxx Xxxxxx,
geb. am 28.04.1971,
Xxxxxxxxxx Xxxxxxx 00, 00000 Xxxxxxx,
nach Angabe ledig,
- hereinafter: "Xx. Xxxxxx" -;
Messrs. Freiherr von Ruxleben, Xxxxxx, Moller, Weber, Prof. Tschunke and
Mmes. Xxxxxx and von Ruxleben hereinafter collectively referred to as
"the Sellers".
Mr. von Ruxleben and Xx. Xxxxxx are also acting on behalf of
csd Software GmbH
- hereinafter referred to as "csd" -,
having its registered corporate seat in Munich, HR B 84771, in their
capacity as managing directors of this company.
2.1 Xx. Xxxxxxxxxxx Xxxxxx,
business man,
No 1 The old vicarage, Kingston Road, Teddington,
Middlesex, TW 119HX, Great Britain,
PURCHASE AGREEMENT PAGE 3
not acting in his own name but acting on behalf of
(d) Xxxxx 96 Vermogensverwaltungs GmbH
having its seat in Munich, HR B 115 104, in his capacity as Managing
director of this company.
The notary hereby confirms that a shareholders resolution dated on
24th January 1997 appointing Xx. Xxxxxx as managing director with a
sole power of representation of Xxxxx 96 Vermogensverwaltungs GmbH has
been passed
- hereinafter: "Acquirer" -;
(e) ON Technology Corporation,
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
a Delaware Corporation
on the basis of a written power of attorney
- a copy is attached to this deed as exhibit 3 -;
with the obligation to deliver the original immediately.
Sellers and Acquirer hereinafter collectively referred to as
"the Parties".
The persons appeared before me identified themselves by presenting their
official identity cards.
According to their request I record their statements as follows:
PURCHASE AGREEMENT PAGE 4
1. RECITALS
1.1 Sellers are the sole shareholders of csd Software GmbH (hereinafter
referred to as "csd"), having its registered corporate seat in Germany,
registered in the Commercial Register of the Xxxxx Xxxxx, Xxxxxx, XXX
00000. The nominal share capital of csd amounts to DM 50,000 and is
divided into the following shares, which are held as follows:
Shareholder Nominal Value in DM
----------- -------------------
Xx. Xxxxxx one share of
DM 10,000
Xxx. Xxxxxx one share of
DM 10,000
Mr. von Ruxleben one share of
DM 4,500
Mrs. von Ruxleben one share of
DM 10,000
Xx. Xxxxxx (not married) one share of
DM 5,500
and one share
of DM 4,500
Xx. Xxxxx one share of
DM 500
Prof. Tschunke one share of
(living under marital property DM 5,000
regime of separation of goods)
__________________________________________________________
Aggregate nominal amount
Sellers' Shares DM 50,000
(hereinafter collectively
referred to as the "Shares")
__________________________________________________________
PURCHASE AGREEMENT PAGE 5
2. SALE AND PURCHASE
2.1 Sellers hereby agree to sell and Acquirer hereby agrees to purchase as of
the date hereof (the "Closing Date") all of the Shares including the profit
entitlement for the current business year.
2.2 The purchase price for the sale and transfer of the Shares pursuant to
Subsec. 2.1 shall be the total amount of Twenty-Two Million Four Hundred
Eighty-One Thousand Two Hundred Fifty-Six Deutschemarks (DM22,481,256)
which amount is the sum of the Cash Payment and the Aggregate Share
Consideration (subject to adjustment in accordance with Sec. 2.6)
(hereinafter: the "Purchase Price").
2.3 On the Closing Date, the Acquirer shall deliver, as payment of the Purchase
Price, the following:
(a) to the Sellers the amount of Eight Million One Hundred Seventy-Five
Thousand Deutschemarks (DM 8,175,000) (the "Cash Payment") by wire
transfer free of charges to the respective accounts designated by the
Sellers and in the respective amounts set forth opposite such Sellers'
names on Schedule 2.3.1 attached hereto. Payment of the Cash Payment
--------------
shall be effected only if and when it is fully and unconditionally
credited, free of charges, to the accounts specified on Schedule
--------
2.3.1. The parties agree and acknowledge that a payment of U.S.
-----
$5,000,000 will be accepted as complete fulfillment of the Cash
Payment obligation.
(b) to the Sellers or their attorneys, certificates representing that
number of ON Shares equal to the Stock Payment (as defined below), to
be allocated among the Sellers in the proportions set forth opposite
such Sellers' names on Schedule 2.3.2 attached hereto;
--------------
(c) to Xxxxxxx Xxxxxx & Green, P.C. and Ropes & Xxxx, as escrow agents
(the "Escrow Agents"), (i) certificates representing that number of ON
Shares equal to the Escrowed Shares, to be held in the Escrow Account
(as defined in the Escrow Agreement) and distributed pursuant to Sec.
6 of this Agreement and the terms of the Escrow Agreement attached
hereto as Exhibit I (the "Escrow Agreement") and (ii) certificates
---------
representing that number of ON Shares equal to the Reserved Shares
(as defined below) to be held in the Reserve Account (as defined
below) and distributed pursuant to Sec. 2.6 of this Agreement and the
terms of the Escrow Agreement.
PURCHASE AGREEMENT PAGE 6
2.4 For purposes of this Sec. 2, the following definitions shall apply:
(a) "Aggregate Share Consideration" shall mean Fourteen Million Three
Hundred and Six Thousand Two Hundred Fifty-Six Deutschemarks (DM
14,306,256).
(b) "Escrow Proportion", with respect to each Seller, means a fraction the
numerator of which is that number of ON Shares allocable to such
Seller pursuant to Schedule 2.4.2 and the denominator of which is 263,158.
--------------
(c) "ON Shares" shall mean the common stock, $.01 par value per share, of
ON Technology Corporation, a Delaware corporation.
(d) "ON Share Price" shall mean DM 10.87275 (corresponding to U.S. $6.65)
per share.
(e) "Escrowed Shares" shall mean 263,158 ON Shares.
(f) "Reserved Shares" shall mean 78,514 ON Shares.
(g) "Stock Payment" shall mean that number of ON Shares calculated by
subtracting from the Total Purchase Shares (i) the Escrowed Shares and
(ii) the Reserved Shares.
(h) "Total Purchase Shares" shall mean that number of ON Shares calculated
by dividing (i) Aggregate Share Consideration by (ii) the ON Share
Price.
2.5 The Cash Payment shall be due and payable on the Closing Date. Payment
shall be timely only if it is credited, as specified in Subsec. 2.3.1, to
the client trust account of Ropes & Xxxx for the joint benefit of the
Sellers, such account being identified on Schedule 2.5 attached hereto.
------------
2.6 The Reserve Account shall be established and administered as follows:
(a) Within sixty (60) days after the Closing Date, ON, at its cost and
expense, shall cause the Auditors to prepare and deliver to Sellers an
audited balance sheet of csd as of the Closing Date (the "Final
Closing Date Balance
PURCHASE AGREEMENT PAGE 7
Sheet") prepared in accordance with German GAAP (as defined below)
consistent with the preparation of the Current Financial Statements
(as defined below).
(b) If stockholders' equity as shown on the Final Closing Date Balance
Sheet is less than zero, then:
(a) if the amount of such deficit is greater than DM 853,663, then
(i) Sellers shall, each in the proportion set forth opposite such
Seller's name on Schedule 2.3.2 attached hereto, reconvey to
--------------
Acquirer certificates representing that number of ON Shares
calculated by dividing (x) the amount of such difference by (y)
DM 10.87275 and (ii) the Escrow Agents shall release from the
Reserve Account the Reserved Shares and deliver such shares to
Acquirer; or
(b) if the amount of such deficit is equal to DM 853,663, then the
Escrow Agents shall release from the Reserve Account the Reserved
Shares and deliver such shares to Acquirer; or
(c) if the amount of such deficit is less than DM 853,663, then (i)
the Escrow Agents shall release from the Reserve Account
certificates representing that number of ON Shares calculated by
dividing (x) the amount of such difference by (y) DM 10.87275,
and the Escrow Agents shall deliver to each Seller that Seller's
Escrow Proportion (if any) of such released Reserved Shares and
(ii) the Escrow Agents shall release from the Reserve Account the
remaining Reserved Shares and shall deliver such Reserved Shares
to Acquirer.
For purposes of the above definitions, any fractional shares shall be rounded to
the nearest whole share.
3. ASSIGNMENT AND INDIVIDUAL SELLERS' REPRESENTATIONS
3.1 Subject to and upon the terms and conditions of this Agreement, each
Seller herewith assigns to this accepting Acquirer, with effect as of
the Closing Date, all of his or her respective shares in csd, such
assignment being made subject to the condition precedent
(aufschiebende Bedingung) that the Purchase Price has been fully paid
in accordance with Sec. 2.
PURCHASE AGREEMENT PAGE 8
3.2 Each Seller severally represents and warrants that the following
representations and warranties are true and complete:
3.2.1 Such Seller has good and marketable title to the Shares which
are to be transferred to the Acquirer by such Seller pursuant
hereto. Such Shares are free and clear of any and all
covenants, conditions, restrictions, voting trust arrangements,
liens, charges, encumbrances, options and adverse claims or
rights whatsoever. Such Seller has the full right, power and
authority to enter into this Agreement and to transfer, convey
and sell to the Acquirer the Shares to be sold by such Seller
hereunder and, upon consummation of the purchase contemplated
hereby, the Acquirer will acquire from such Seller good and
marketable title to such Shares, free and clear of all
covenants, conditions, restrictions, voting trust arrangements,
liens, charges, encumbrances, options and adverse claims or
rights whatsoever, exclusive of any liens, charges,
encumbrances and adverse claims or rights that may arise solely
upon the Acquirer's acquisition of such Shares.
3.2.2 Such Seller is not a party to, subject to or bound by any
agreement or any judgment, order, writ, prohibition, injunction
or decree of any court or other governmental body which would
prevent the execution and delivery of this Agreement by such
Seller or the transfer, conveyance and sale of the Shares sold
by such Seller pursuant to the terms hereof.
4. REPRESENTATIONS AND WARRANTIES
The Sellers, jointly and severally, hereby represent and warrant that the
following representations and warranties are true and complete.
4.1 Corporate status
The corporate status of csd is correctly reflected in Sec. 1 and in
Schedule 4.1. The attached excerpts from the commercial register (Schedule
------------ --------
4.1) reflect the status of csd correctly.
---
All shares of csd are fully paid up. No repayments of capital have been
made.
PURCHASE AGREEMENT PAGE 9
csd is a corporation duly organized and validly existing under German law.
csd has no subsidiaries and does not own any securities issued by any other
business organization or governmental authority. csd does not own or have
any direct or indirect interest in or control of any corporation,
partnership, joint venture or entity of any kind.
4.2 Authority to dispose of shares
Each Seller owns the shares sold by such Seller free of any encumbrance or
rights of third parties in its own name and on its own account and has the
full authority to enter into and to perform this Agreement and has, except
as provided in this Agreement, obtained all authorizations to enter into
this Agreement.
4.3 Financial statements and related matters
(a) Attached hereto as Schedule 4.3.1 are (i) the unaudited balance sheet
--------------
of csd as of December 31, 1995 (the "1995 Balance Sheet") and the
related statements of income, shareholders' equity, retained earnings
and changes in financial condition of csd for the fiscal year then
ended, together with the notes thereto (collectively, the "1995
Financial Statements"), and (ii) the draft balance sheet of csd as of
December 31, 1996 (the "Current Balance Sheet") and the related
statements of income, shareholders' equity, retained earnings and
changes in financial condition of csd for the twelve-month period then
ended (collectively, the "Current Financial Statements"). The 1995
Financial Statements and the Current Financial Statements are herein
collectively referred to as the "Financial Statements." The Financial
Statements have been prepared in accordance with accounting principles
generally applicable in Germany ("German GAAP") applied on a
consistent basis throughout the period covered thereby (except that
the 1995 Financial Statements do not contain all footnotes and related
information required by German GAAP) and without change as in the
preceding fiscal year of csd, except as specified otherwise in the
Financial Statements and are accompanied by a certificate of the
Management of csd to the effect that the Financial Statements were
prepared in accordance with German GAAP, subject to the absence of
footnotes and other related information required by German GAAP. The
Financial Statements give within the framework of German GAAP a true
and fair view as required by German GAAP as of their respective dates,
of the financial condition, retained earnings, assets and liabilities
of csd and the results of operations of csd's business for the periods
indicated. The Current
PURCHASE AGREEMENT PAGE 10
Balance Sheet and the accounting principles applied thereto may not be
changed for purposes of this Agreement.
(b) Schedule 4.3.2 attached hereto sets forth a true, correct and
--------------
complete list of the accounts and notes receivable of csd (the
"Accounts Receivable"), including the aging thereof as of a date
not more than five (5) days prior to the date hereof. All
Accounts Receivable arose out of the sales of inventory or
services in the ordinary course of business and 90% of such
Accounts Receivable are collectible in the face value thereof
within 90 days after the date of invoice (except for the Accounts
Receivable due from Siemens Nixdorf Informationsysteme AG, which
is collectible in the face value thereof within 150 days after
the date of invoice), using normal collection procedures, net of
the reserve for doubtful accounts set forth thereon, which
reserve is adequate and was calculated in accordance with German
GAAP consistently applied. All Accounts Receivable are valid,
legal and binding, subject to no set-offs, returns or
counterclaims.
(c) The general ledgers and books of account of csd, all tax returns
filed by csd, and all other books and records of csd are in all
material respects complete and correct and have been maintained
in accordance with good business practice and in accordance with
all applicable procedures required by laws and regulations.
(d) Schedule 4.3.4 attached hereto sets forth all prepayments and
--------------
deposits, which have been received by csd as of the date of the
respective balance
PURCHASE AGREEMENT PAGE 11
sheets, from customers for products to be shipped, or services to
be performed, after the Closing Date.
(e) There are no liabilities of csd as of the date of the respective
balance sheets which are required to be shown in the Financial
Statements by German GAAP and which are not shown in the
Financial Statements.
4.4 Pension liabilities
csd has no pension liabilities.
4.5 Personnel
csd do not employ any employees except those listed in Schedule 4.5
------------
attached hereto.
The employment conditions listed in Schedule 4.5 attached hereto give a
------------
true and fair view of the employment conditions of csd including the
service agreement conditions of the managing directors.
There have been no increases or other changes of such conditions since the
date of the Current Balance Sheet except (i) as a result of the relevant
collective bargaining agreement or usual salary review for people not
covered by a collective bargaining agreement and (ii) as listed in Schedule
--------
4.5 attached hereto.
---
4.6 Material agreements
Schedule 4.6 attached hereto contains a true, complete and correct list and
------------
description of the following contracts and agreements, whether written or
oral (collectively, the "Contracts") which will continue after the Closing
Date: (i) all loan agreements, indentures, mortgages and guaranties to
which csd is a party or by which csd is bound; (ii) all pledges,
conditional sale or title retention agreements, security agreements
(including but not limited to maintenance agreements), equipment
obligations, personal property leases and lease purchase agreements to
which csd is a party or by which csd or its property is bound; (iii) all
contracts, agreements, commitments, purchase orders or other understandings
or arrangements to which csd is a party or by which csd or its property is
bound which either involve payments or receipts
PURCHASE AGREEMENT PAGE 12
by csd of more than U.S. $25,000 in the case of any single contract,
agreement, commitment, understanding or arrangement under which full
performance (including payment) has not been rendered by all parties
thereto, or may materially adversely effect the condition (financial or
otherwise) or the properties, assets, business or prospects of csd; (iv)
all collective bargaining agreements, employment and consulting agreements,
executive compensation plans, bonus plans, deferred compensation
agreements, pension plans, retirement plans, employee stock option or stock
purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, arrangements or commitments to which
csd is a party; (v) all agency, distributor, sales representative,
franchise, partner or similar agreements to which csd is a party; (vi) all
contracts, agreements or other understandings or arrangements between csd
and any of the Sellers or their affiliates; (vii) all material leases or
personal property, whether operating, capital or otherwise, under which csd
is lessor or lessee; (viii) all contracts, agreements and other documents
or information relating to past disposal of waste (whether or not
hazardous); (ix) all leases of real property, identifying separately each
ground lease, to which csd is a party (collectively, the "Real Property
Leases") and (x) any other material agreements or contracts entered into by
csd.
Except as set forth on Schedule 4.6: (i) each such Contract is a valid
------------
and binding agreement of csd, enforceable against csd in accordance with
its terms, and the Sellers do not have any knowledge that any Contract is
not a valid and binding agreement of the other parties thereto; (ii) csd
has fulfilled all obligations required pursuant to the Contracts to have
been performed by csd on its part prior to the date hereof, and the Sellers
have no reason to believe that csd will not be able to fulfill all of its
obligations under the Contracts which remain to be performed within 90 days
after the date such performance is required; (iii) csd is not in breach of
or default under any Contract, and no event has occurred which with the
passage of time or giving of notice or both would constitute such a breach
or default; (iv) to the best knowledge of the Sellers, there is no existing
breach or default by any other party to any Contract; (v) no Contract is
likely to result in a material financial loss to csd; and (vi) none of the
Contracts contain a provision requiring the consent of any other party
thereto, or giving rise to a right to terminate the Contract, in the event
of a change of control of csd. True, correct and complete copies of all
Contracts have previously been delivered to the Acquirer by the Sellers.
True, correct and complete copies of all Real Property Leases and all
amendments, modifications and supplemental agreements thereto, have
previously been delivered by the Sellers or csd to the Acquirer. To the
best knowledge of the Sellers, the Real Property Leases are in full force
and effect, are binding and enforceable against each of the parties thereto
in accordance with their respective terms. The Real Property Leases have
not been modified or amended since the date of delivery to the Acquirer. To
the best knowledge of the Sellers, no party to any Real Property Lease has
sent written notice to the other claiming that such party is in default
thereunder and that such default remains uncured. There has not occurred
PURCHASE AGREEMENT PAGE 13
any event which would constitute a breach of or default in the performance
by csd of any covenant, agreement or condition contained in any Real
Property Lease, nor has there occurred any event which with the passage of
time or the giving of notice or both would constitute such a breach or
default.
4.7 Administrative approvals, licenses
(a) csd has obtained all material administrative approvals and licenses
which are required for the operation of its business as presently
conducted, including, without limitation, all administrative approvals
and licenses that may be required pursuant to applicable Environmental
Laws for the occupation of the real property subject to the Real
Property Leases (as hereinafter defined) and the operation of csd's
business ("Administrative Approvals and Licenses"). Schedule 4.7
------------
attached hereto sets forth a true, correct and complete list of such
Administrative Approvals and Licenses.
(b) The business of csd as presently conducted is materially in compliance
with all applicable legal and administrative provisions including,
without limitation, all applicable laws relating to public health and
safety, worker health and safety and pollution and protection of the
environment ("Environmental Laws").
(c) Except as set forth on Schedule 4.7, csd has not had notice or
------------
communication from any governmental authority since January 1, 1994 of
any violation or noncompliance with such legal or administrative
provisions, and to the best knowledge of the Sellers, there are no
outstanding notices of any such violation or noncompliance which have
not been cured.
4.8 Litigation
Except as shown in Schedule 4.8 attached hereto:
------------
(a) csd is not involved, whether as defendant or as plaintiff, in any
material litigation or material arbitration proceedings, nor, to the
best of Sellers' knowledge, are any claims, actions or proceedings
threatened.
PURCHASE AGREEMENT PAGE 14
(b) csd has not been permanently or temporarily enjoined by any order,
judgment or decree of any governmental authority from engaging in or
continuing any practice in connection with the business, assets or
properties of csd. There is not in existence on the date hereof any
such order, judgment or decree.
4.9 Taxes
csd has:
(a) filed all tax returns and other returns to be filed according to
applicable law when due, and all such returns are complete and correct
in all respects;
(b) paid all taxes and duties due and no tax lien has been filed and no
lien is being asserted with respect to any taxes or duties; and
(c) withheld and passed on to the relevant tax authorities and social
security parties all taxes and social security charges which it is
required to deduct from any payments to employees or others.
4.10 Interim business developments
Except as provided in Schedule 4.10 attached hereto, since the date of the
-------------
Current Balance Sheet:
(a) csd has not entered into any contract or commitment or taken any other
action that is not in the ordinary course of business as conducted in
prior periods;
(b) there has not been any damage, accident or other detrimental event
materially affecting the business of csd or the consummation of the
transactions contemplated hereby;
(c) neither csd nor the Sellers have knowledge of any existing or
threatened damage, accident or other detrimental event materially
affecting the business of csd or the consummation of the transactions
contemplated hereby;
(d) there has been no change in the capital structure of csd;
PURCHASE AGREEMENT PAGE 15
(e) there has been no resolution to pay dividends to the Sellers and no
payment to the Sellers of a dividend or any other distribution (except
arms length interest payment) by csd to the Sellers.
4.10.6 there has been no increase in the compensation of any employee and
no lump sum payments have been made to any employee.
4.11 Insurance
(a) Schedule 4.11 attached hereto sets forth a true, correct and complete
-------------
list of all fire, theft, casualty, general liability, business
interruption, environmental impairment, product liability, automobile
and other insurance policies maintained by csd and of all life
insurance policies maintained on the lives of any of its employees,
specifying the type of coverage, the amount of coverage, the insurer
and the expiration date of each such policy (collectively, the
"Insurance Policies"). True, correct and complete copies of all
Insurance Policies have been previously delivered to the Acquirer by
the Sellers or csd. The Insurance Policies are in full force and
effect and are, to the best of Seller's knowledge, in amounts and of a
nature which are adequate and customary for csd's business. All
premiums due on the Insurance Policies or renewals thereof have been
paid, and there are no defaults (including with respect to the payment
of premiums or the giving of notices) by csd under the Insurance
Policies nor any default by any other party to the Insurance Policies
that is known by the Sellers, and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or default
or permit termination, modification or acceleration, under any
Insurance Policy. csd has not received any notice from the insurer
denying coverage or reserving rights with respect to a particular
claim currently pending or any Insurance Policy in general. Since
January 1, 1993, csd has not incurred any loss, damage, expense or
liability that has had or would reasonably be expected to have a
material adverse effect on csd's condition, property, assets or
business, taken as a whole and that was or would be covered by any
Insurance Policy for which csd has not properly asserted a claim under
any Insurance Policy. There are no outstanding recommendations by any
issuer of an Insurance Policy or by any board of insurer underwriters
or other similar body exercising similar functions or by any
governmental authority exercising similar functions which requires or
recommends any changes in the conduct of the business
of, or any repairs or other work to be done on or with respect to any
of the properties or assets of, csd.
4.12 Intangible Property
PURCHASE AGREEMENT PAGE 16
(a) Schedule 4.12.1 attached hereto sets forth a true, correct and
---------------
complete list and, where appropriate, a description of all
material items of intangible property (other than Programs, which
are specifically referenced in Sec. 4.12.3 below) owned by csd
(the "Owned Intangible Property") or used in the business of, csd
but not owned by them (the "Licensed Intangible Property", and,
together with the Owned Intangible Property, the "Intangible
Property"), including, without limitation, all patents,
copyrights, trademarks and material trade secrets. Except as
otherwise disclosed in Schedule 4.12.1: (i) except for the
---------------
provisions of the German Statute of Employees' Inventions, as far
as applicable, csd is the sole and exclusive owner of all right,
title and interest in and to the Owned Intangible Property and
all designs, permits, labels and packages used on or in
connection therewith, free and clear of all liens, security
interests, charges, encumbrances, equities and other adverse
claims; (ii) csd has, to the best of Sellers' knowledge, the
right and authority to use the Intangible Property in connection
with the conduct of its business in the manner presently
conducted or conducted by csd at any time within five years prior
to the date hereof, and to the best knowledge of the Sellers,
such use does not conflict with, infringe upon or violate any
rights of any other person, corporation or entity; (iii) neither
csd nor any of the Sellers has received notice of a pleading or
threatened claim, interference action or other judicial or
adversarial proceeding against csd alleging that csd's
operations, activities, products, services or publications
infringe any patent, trademark, trade name, copyright, trade
secret or other property right of a third party, or that it is
illegally or otherwise using the trade secrets, formulae or
property rights of others; and (iv) there are no outstanding
disputes or other disagreements with respect to any licenses or
similar agreements or arrangements described in Schedule 4.12.1
---------------
or with respect to infringement by a third party of any of the
Intangible Property. Each item of Intangible Property owned or
used by csd immediately prior to the Closing Date will be owned
or available for use by the Acquirer on identical terms and
conditions immediately subsequent to the Closing Date.
(b) All employees and other persons currently employed or retained by
csd who have participated in the development of the Intangible
Property or the Programs or who have had access to the source
code of any Intangible Property or Program have executed and
delivered to csd the form of Non-Disclosure Agreement attached
hereto as Schedule 4.12.2.
---------------
PURCHASE AGREEMENT PAGE 17
(c) Schedule 4.12.3 attached hereto accurately identifies all
---------------
computer programs, currently owned, licensed from third parties
or currently under development by csd, excluding "off the shelf",
mass marketed software programs licensed by the Company from
commercial vendors (collectively, the "Programs"). Except as
disclosed in Schedule 4.12.3, all present and prior versions of
---------------
the Programs constitute original works-for-hire compiled or
prepared by employees of or consultants to csd. All such
versions of the Programs are proprietary to csd; all right, title
and interest in and with respect to such versions are vested
solely in csd (other than Urheberpersoenlischkeitsrechte which
cannot be waived or assigned), and no royalties or other payments
are payable with respect to the Programs or any portion thereof
except under agreements listed on Schedule 4.6 hereto; and csd
------------
has all documentation reasonably necessary to enforce their
proprietary rights in such Programs. To the best of Sellers'
knowledge, none of the Programs contain any so-called "virus"
which restricts or impairs the proper operation of the Program or
any computer software or hardware (including any peripheral) on
which or with which any Program operates or is intended to
operate, or which, other than as decided by the user, propagates
itself. csd has taken all reasonable steps to protect the source
code of the Programs as proprietary trade secrets. csd has
disclosed its proprietary trade secrets only to consultants,
legal and accounting advisors, investors, distributors, customers
and employees of csd and only after such persons (excluding
advisors who are otherwise bound by law to do so) have executed
agreements not to disclose such proprietary trade secrets
sufficient to maintain the proprietary nature of such trade
secrets under law. Except for deviations stated in the Release
Notes to the programs, the Programs perform in accordance with
csd's user manuals therefor in all material respects.
4.13 Absence of Undisclosed Liabilities
Except as and to the extent (i) reflected and reserved against in the
Current Balance Sheet, (ii) set forth on Schedule 4.13 attached hereto, or
-------------
(iii) incurred in the ordinary course of business after the date of the
Current Balance Sheet and not material in amount (either individually or in
the aggregate), the Company has no liability or obligation, secured or
unsecured, whether accrued, absolute, contingent, unasserted or otherwise,
which is material to the condition (financial or otherwise) of the assets,
properties, business or prospects of csd taken as a whole. For purposes of
this Subsection, "material" means any amount in excess of U.S. $15,000.
PURCHASE AGREEMENT PAGE 18
4.14 Real Property
The Company does not own any real property.
4.15 Inventory
The Current Balance Sheet reflects, net of applicable reserves, the
inventory of csd as of the date thereof. The inventory consists of items
of a quality and quantity which are usable and saleable without non-
ordinary course discount in the business conducted by csd. The value of
all items of obsolete materials and of materials of below standard quality
have been written down to realizable market value and the values at which
such inventory is carried reflect the normal inventory valuation policy of
csd as consistently applied with csd's past practice and in accordance with
German GAAP. csd's Current Balance Sheet fairly presents the value of
csd's inventory as of the date thereof and, other than transactions in the
ordinary course of business, there has been no change in csd's inventory
that would have a material adverse effect on csd's business, taken as a
whole, since the date of the Current Balance Sheet. For purposes of this
Section, "material" means any amount in excess of U.S. $15,000.
4.16 Warranty and product liability claims
(a) Each Program and other product manufactured, sold, leased, licensed or
delivered by csd (collectively, "Product") has been manufactured,
sold, leased, licensed or delivered in material conformity with all
applicable contractual commitments and all express and implied
warranties, and csd has no liability (and there is no basis for any
present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand against csd giving rise to any such
liability) for replacement or repair thereof or other damage in
connection therewith, subject only to the reserve for product warranty
claims set forth on the Current Balance Sheet. No Product is subject
to any guaranty, warranty or other indemnity materially different from
the standard terms and conditions set forth in the model form of
license agreement attached as Schedule 4.16.1 hereto. Schedule 4.16.1
--------------- ---------------
hereto includes copies of the current standard terms and conditions of
the license agreements used by csd (containing applicable guaranty,
warranty and indemnity provisions).
(b) There are no claims for returns or trial use arrangements which could
result in the return of Products by reason of any alleged
overshipment, defective equipment, the expiration of trial use
arrangements or otherwise. There
PURCHASE AGREEMENT PAGE 19
are no Products in the hands of customers under any understanding that
such Product would be returnable other than pursuant to the standard
return policy set forth in the model written license attached as
Schedule 4.16.2 hereto. Neither the execution and delivery of this
---------------
Agreement nor the consummation of the transactions contemplated hereby
will result in any cancellations or withdrawals of accepted or
unfilled orders for the sale, license, lease or other transfer of any
Product.
(c) Schedule 4.16.3 attached hereto contains a true, correct and complete
---------------
list of all material warranty and product liability claims made
against csd from January 1, 1994 through the date hereof, the current
status of all such claims and the costs of all actions taken in
satisfaction of such claims. All information relative to such claims
and those arising thereafter shall be available to the Acquirer from
and after the date hereof.
4.17 Customers
Schedule 4.17 attached hereto sets forth a true, correct and complete list
-------------
of the names and addresses of all customers of csd which accounted for more
than 5% of csd's total sales in the twelve months ended December 31, 1996.
4.18 Suppliers
Schedule 4.18 attached hereto sets forth a true, correct and complete list
-------------
of the names and addresses of the ten suppliers of csd which accounted for
the largest dollar volume of purchases by the Company in the twelve
months ended December 31, 1996. None of the suppliers has notified csd in
writing that it intends to discontinue its relationship with csd.
4.19 Indebtedness to and from Officers and Directors
csd is not indebted, directly or indirectly, to any person who is an
officer, director or shareholder of csd or any affiliate of any such person
in any amount whatsoever other than for salaries for services rendered or
reimbursable business expenses, all of which have been reflected on the
Current Financial Statements, and no such officer, director, shareholder or
affiliate is indebted to csd, except for advances made to employees of csd
in the ordinary course of business to meet reimbursable business expenses
anticipated to be incurred by such obligor.
PURCHASE AGREEMENT PAGE 20
4.20 Third-Party Consents
Schedule 4.20 attached hereto sets forth all material third-party consents
-------------
needed by the Sellers and csd to consummate the transaction contemplated
hereby.
4.21 Brokers' Fees
Except for fees payable to The Updata Group by the Acquirer, neither csd
nor any of Sellers has any liability or obligation to pay any fees or
commissions to any brokers, finder or agent with respect to the
transactions contemplated herein.
4.22 Section 419 of German Civil Code
The shares sold by each Seller do not constitute all or essentially all of
the assets of such seller in the sense of Section 419 of the German Civil
Code.
4.23 Tax Status of Shares
Since January 28, 1987 or the date of the incorporation of csd, whichever
is later, the shares sold hereunder were held by individuals who were
resident in Germany and subject to unlimited German taxation.
5. GENERAL PROVISIONS CONCERNING REPRESENTATIONS AND WARRANTIES
5.1 To the extent that representations and warranties refer to the best of
Seller's knowledge, the knowledge of a manager (Geschaftsfuhrer) of csd
shall be deemed to constitute knowledge of the Sellers. "Knowledge" shall
mean knowledge after reasonable investigation of the applicable matter.
6. INDEMNIFICATION
6.1 The Sellers, jointly and severally, hereby indemnify and hold harmless the
Acquirer and csd from and against all material claims, damages, losses,
liabilities, costs and expenses (including, without limitation, settlement
costs and any legal,
PURCHASE AGREEMENT PAGE 21
accounting or other expenses for investigating or defending any actions or
threatened actions) (collectively, the "Losses") in connection with any
breach or non-performance by the Sellers of any representation, warranty,
covenant or condition contained in this Agreement and any certificates,
exhibits, schedules or documents delivered hereunder. The indemnity under
this Subsec. 6.1 extends only to the net amount of any Loss sustained by
the Acquirer after deducting therefrom any amount which the Acquirer or any
of its subsidiaries recovers as proceeds of insurance in respect of such
Loss, net of any cost of collection, deductible, retroactive premium
adjustment, reimbursement obligation, or other cost directly related to the
insurance claim for such Loss and net of any tax payable in respect of such
recovery; provided that the Acquirer is not required under this Section to
make a claim under or seek recovery from any insurance policy or policies
it may maintain.
6.2 The Acquirer hereby indemnifies and holds harmless the Sellers and the
Company from and against all material Losses in connection with any breach
or non-performance by the Acquirer of any representation, warranty,
covenant or condition contained in this Agreement and any certificates,
exhibits, schedules or documents delivered hereunder.
6.3 Whenever any claim shall arise for indemnification under this Sec. 6, the
Acquirer, the Sellers or csd, as the case may be (the party seeking such
indemnification being the "Indemnified Party"), shall promptly notify the
other party or parties hereto (such party or parties, the "Indemnifying
Party") in writing (the "Indemnification Notice") of the claim, which
writing shall include the facts constituting the basis for such claim, the
specific section of this Agreement upon which the claim is based and an
estimate, if possible, of the amount of damages suffered by the Indemnified
Party. In the event of any such claim for indemnification hereunder
resulting from or in connection with any claim or legal proceedings by a
third party (a "Third Party Claim"), the Indemnification Notice shall
specify, if known, the amount or an estimate of the amount of the liability
arising therefrom and shall attach all correspondence and demands from such
third party. In the event that any claim for indemnification involves a
matter other than a Third Party Claim, the Indemnifying Party shall have
thirty (30) days from receipt of the Indemnification Notice to object to
such claim by delivery of a written notice of such objection to the
Indemnified Party specifying in reasonable detail the basis for such
objection. If an objection is timely interposed by the Indemnifying Party
and the dispute is not resolved within twenty (20) business days from the
date (such period is hereinafter referred to as the "Negotiation Period")
the Indemnified Party receives such objection, such dispute shall be
resolved by arbitration in accordance with the provisions of Sec. 12
hereof. The Indemnified Party shall not settle or compromise any Third-
Party Claim by a third party for which it is entitled to indemnification
hereunder without the prior written consent, which shall not be
unreasonably withheld or delayed, of the Indemnifying Party; provided,
--------
however, that if suit shall have been instituted against the Indemnified
-------
Party and the
PURCHASE AGREEMENT PAGE 22
Indemnifying Party shall not have assumed the defense of such suit within
ten (10) days after notification thereof, the Indemnified Party shall have
the right to settle or compromise such claim upon giving notice to the
Indemnifying Party, so long as such settlement includes a release of the
Indemnifying Party from the Third Party Claim.
(a) In connection with any claim which may give rise to indemnity
hereunder resulting from or arising out of any Third Party Claim, the
Indemnifying Party, at the sole cost and expense of the Indemnifying
Party, may, upon written notice given to the Indemnified Party, assume
the defense of any such claim or legal proceeding if the Indemnifying
Party acknowledges to the Indemnified Party in writing the obligation
of the Indemnifying Party to indemnify the Indemnified Party with
respect to all elements of such claim, subject to the limitations
contained in this Sec. 6. If the Indemnifying Party assumes the
defense of any such claim or legal proceeding, the Indemnifying Party
shall select counsel reasonably acceptable to the Indemnified Party to
conduct the defense of such claims or legal proceedings and, at the
sole cost and expense of the Indemnifying Party, shall take all steps
necessary in the defense or settlement thereof. The Indemnifying
Party shall not consent to a settlement of, or the entry of any
judgment arising from, any such claim or legal proceeding without the
prior written consent of the Indemnified Party (which consent shall
not be unreasonably withheld or delayed). The Indemnified Party shall
be entitled to participate in (but not control) the defense of any
such action, with its own counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim or
litigation resulting therefrom within ten (10) days after the date
such claim is made: (i) the Indemnified Party may defend against such
claim or litigation in such manner as it may deem appropriate,
including, but not limited to, settling such claim or litigation,
after giving notice of the same to the Indemnifying Party, on such
terms as the Indemnified Party may deem appropriate, and (ii) the
Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with its counsel and at its own
expense. If the Indemnifying Party thereafter seeks to question the
manner in which the Indemnified Party defended such third party claim
or the amount or nature of any such settlement, the Indemnifying Party
shall have the burden to prove by a preponderance of the evidence that
the Indemnified Party did not defend or settle such Third Party Claim
in a reasonably prudent manner.
(b) The Indemnifying Party and the Indemnified Party shall cooperate with
each other in all reasonable respects in connection with the defense
of any Third- Party Claim, including making available records relating
to such claim and furnishing employees of the Indemnified Party as may
be reasonably necessary for the preparation
PURCHASE AGREEMENT PAGE 23
of the defense of any such Third Party Claim or for testimony as
witnesses in any proceeding relating to a Third Party Claim.
6.4 The Sellers agree that upon a final determination of an indemnification
claim made by the Acquirer, whereby such final determination is by reason
of (i) a failure of the Indemnifying Party to timely object to an
Indemnification Notice, (ii) the mutual agreement of the Indemnifying Party
and the Indemnified Party, or (iii) a final arbitration award pursuant to
Sec. 12 hereof, then the amount of the Losses stated in such claim or
otherwise agreed to or awarded, as the case may be, shall be paid solely,
except as provided below, from the Escrow Account as provided in the Escrow
Agreement and the Acquirer shall not have any recourse against any
Stockholder's assets or properties, except for recovery from the Escrow
Account. Each of the Sellers acknowledges that certain of the Sellers have
no interest in the Escrowed Shares ("Non-Escrow Sellers") and that such
Non-Escrow Sellers are therefore not liable for any indemnification claim
satisfied solely by Escrowed Shares. Each of the Sellers hereby agrees
that any claim arising by reason of the foregoing circumstances shall be
limited solely to a claim of contribution against the Non-Escrow Sellers.
Notwithstanding the foregoing, to the extent that any amounts are to be
paid for Losses arising out of a breach of the representations or
warranties set forth in Secs. 4.2, 4.9 and 4.12 (with respect to third-
party claims thereunder only) and Subsec. 4.7.2 herein and the value of the
Escrowed Shares in the Escrow Account is insufficient to pay such claim(s)
in full (when valued in accordance with Sec. 4 of the Escrow Agreement),
then, in addition to the payment to the Acquirer from the Escrow Account,
the Indemnifying Party shall pay the amount of such deficiency to the
Acquirer in cash or by cashier's check. All indemnification payments to an
Indemnified Party hereunder if the Indemnified Party is other than the
Acquirer shall be effected by payment of cash or delivery of a cashier's
check to the Indemnified Party in the amount of the indemnification
liability. In the event an indemnification claim with respect to Section
4.3.2 is actually paid and thereafter but prior to July 29, 1998, the
Account Receivable which gave rise to such claim is paid, the Acquirer will
remit such payment to Ropes & Xxxx as agent for the Sellers.
6.5 Notwithstanding anything to the contrary in this Sec. 6 or elsewhere in
this Agreement, (i) the Acquirer's exclusive remedy under or in connection
with this Agreement shall be indemnification in accordance with this Sec. 6
and (ii) the maximum liability of the Sellers to the Acquirer for all
Losses, other than Losses arising out of a breach of the representations or
warranties set forth in Secs. 4.2, 4.9 and 4.12 (with respect to
third-party claims thereunder only) and Subsec. 4.7.2, shall be equal to
the value of the Escrowed Shares (when valued in accordance with Sec. 4 of
the Escrow Agreement) and all such Losses must be satisfied from the Escrow
Account. To the extent that Losses relate to claims for fraud or breach of
the representations or warranties set forth in Secs. 4.2, 4.9 and 4.12
(with respect to
PURCHASE AGREEMENT PAGE 24
third-party claims thereunder only) and Subsec. 4.7.2, the maximum
liability of the Sellers and the Company to the Acquirer for all such
claims shall be equal to seventy-five percent (75%) of the Purchase Price,
and all such claims must be satisfied first from the Escrow Account and
then, to the extent that the value of the Escrowed Shares is insufficient,
by payment pursuant to Sec. 6.4.
6.6 The Indemnified Party shall not be entitled to receive, and the
Indemnifying Party shall not be obligated to pay, any amounts under this
Sec. 6 unless and until the aggregate amount of all Losses by an
Indemnified Party under this Sec. 6 exceeds U.S. $100,000 (the "Basket");
provided that the Basket shall not apply to Losses arising by a breach of
Section 4.2. The parties hereto agree that once the aggregate amount of
Losses by any Indemnified Party exceeds the Basket, the Indemnified Party
shall be entitled to indemnity for the amount of all claims made by the
Indemnified Party only to the extent they exceed the Basket.
6.7 Unless otherwise provided herein, all of the representations and warranties
contained in this Agreement shall survive until July 28, 1998 (the
"Survival Date"), except for claims, if any, (a) asserted in writing prior
to such Survival Date and identified as a claim for indemnification
pursuant to this Sec. 6, or (b) which are based upon fraud, or which are
based upon a breach of the representations or warranties set forth in Secs.
4.2, 4.9 and 4.12 (with respect to third-party claims thereunder only) and
Subsec. 4.7.2 which shall survive until the statute of limitations applied
in each case to the subject matter of the applicable representation of
warranty (i.e. for taxes, the statute of limitation on taxes).
6.8 The consideration paid by the Acquirer to the Sellers to acquire the Shares
and the other terms of this Agreement have been established by the parties
hereto based on the allocation of risk and rights of recovery hereunder.
The Acquirer has had an opportunity to do due diligence and, accordingly,
has agreed to limit its right to recourse as set forth in this Sec. 6. The
Acquirer, the Sellers, csd and the affiliates of each shall have no claim
or cause of action, whether in contract, tort, under statute or otherwise,
for damages arising out of, or relating to, this Agreement, or any
certificates, exhibits, schedules or documents delivered hereunder, or any
of the transactions contemplated including, without limitation, claims for
damages, proportionate reduction of the purchase price (Minderung) or
rescission (Rucktritt, Wandlung, Ruckgangigmachung des Vertrages) and any
and all claims of Acquirer which might otherwise be available under German
law on the grounds of representations or warranties implied by fact or law
for violation of obligations in negotiations (culpa in contrahendo) or on
any other basis apart from the right to indemnification pursuant to this
Sec. 6.
PURCHASE AGREEMENT PAGE 25
7. REPRESENTATIONS AND WARRANTIES OF ACQUIRER
Acquirer represents and warranties to Sellers that the following
representations and warranties are correct:
7.1 Corporate Status
The Acquirer is a corporation duly organized and validly existing under the
laws of Germany, with full corporate authority to enter into this Agreement
to complete the transactions and to fulfill the obligations contemplated
herein. All corporate action required to authorize this Agreement for the
Acquirer has been duly taken.
7.2 Validity of the Agreement
This agreement is legally valid and binding on the Acquirer.
7.3 Governmental Consents
For the execution and performance of this Agreement, the Acquirer does not,
unless expressly as set forth on Schedule 7.3 attached hereto, require any
------------
governmental or administrative consent or permission.
7.4 Third-Party Consents
Schedule 7.4 attached hereto sets forth all material third-party consents
------------
needed by the Acquirer to consummate the transactions contemplated herein.
7.5 SEC Filings by the Acquirer's U.S. Parent
ON Technology Corporation, a Delaware corporation ("ON USA") has, in
accordance with the Securities Act of 1933, as amended, the Securities and
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission (the "SEC") promulgated thereunder,
prepared and filed with the SEC such information, documents and reports as
the SEC may require or prescribe under Sec. 13 of the Securities and
Exchange Act of 1934, as amended. Neither this Agreement and the exhibits
and schedules hereto, taken as a whole, nor any of the information,
documents
PURCHASE AGREEMENT PAGE 26
or reports filed by ON with the SEC, contains or will contain any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein in the context in
which they were made no misleading. Neither the Acquirer nor ON knows of
any information or fact which has or would have a material adverse effect
on the financial condition, business or prospects of ON which has not been
disclosed to Sellers in writing; provided that no representation or
warranty is made as to future financial performance or the impact of the
transactions contemplated by this Agreement on the business of ON.
7.6 Except for fees payable to The Updata Group, the Acquirer does not have any
liability or obligation to pay any fees or commissions to any brokers,
finder or agent with respect to the transactions contemplated herein.
8. COMPLETE PERFORMANCE, PERIOD AFTER CLOSING
8.1 Sellers undertake to execute any documents which may after the Closing
Date, or if later, the day on which all conditions with regard to the valid
assignment of the Shares as referred to in Sec. 3 are met, still be
necessary in order to vest in the Acquirer full title to the Shares and to
assist the Acquirer in exercising all rights with respect thereto and to
carry out the purpose and intent of this Agreement.
8.2 The Acquirer shall see to it that csd will grant to Sellers also in the
future the right to inspect, and take copies of, books and records of csd,
to the extent that Sellers request such access and right to make copies for
tax reasons, for reasons of defense of claims or for any other legitimate
reason connected with this Agreement or with Sellers' present ownership of
csd.
8.3 It is the Acquirer's intention to grant options to purchase ON Shares to
substantially all csd employees consistent with ON's current stock
incentive policies for employees in corporate positions at ON.
8.4 The Acquirer acknowledges that Messrs. von Ruxleben, Xxxxxx and Xxxxxx are
guarantors of a line of credit of DM 2,000,000 made to csd by Bayerische
Hypotheken und Wechselbank Munchen ("Hypobank"). The Acquirer agrees to
use all reasonable efforts to obtain, as soon as practicable, the release
of all of such guaranties and further agrees to indemnify and hold harmless
each of Messrs. von Ruxleben, Xxxxxx and Xxxxxx from and against any and
all claims and liabilities arising by reason of such guaranties.
PURCHASE AGREEMENT PAGE 27
9. BEST EFFORTS TO OBTAIN SATISFACTION OF CONDITIONS
The Sellers, csd and the Acquirer covenant and agree to use their best
efforts to obtain the satisfaction of the conditions specified in this
Agreement.
10. FULFILLED CONDITIONS TO OBLIGATIONS OF THE ACQUIRER
The obligations of the Acquirer under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent,
each of which is hereby acknowledged to have been satisfied or waived.
10.1 Corporate Proceedings.
All corporate and other proceedings required to be taken on the part of csd
to authorize or carry out this Agreement and the transactions contemplated
hereby have been taken.
10.2 Governmental Approvals.
All governmental agencies, department, bureaus, commissions and similar
bodies, the consent, authorization or approval of which is necessary under
any applicable law, rule, order or regulation for the consummation by the
Sellers, csd or the Acquirer of the transactions contemplated by this
Agreement and the operation of the business of csd by the Acquirer have
consented to, authorized, permitted or approved such transactions.
10.3 Consent of Third Parties.
The Sellers and csd have received all requisite consents and approvals of
all lenders, lessors and other third parties whose consent or approval is
required in order for the Sellers and csd to consummate the transactions
contemplated by this Agreement, including without limitation, those set
forth on Schedule 4.20 attached hereto.
-------------
10.4 Adverse Proceedings.
PURCHASE AGREEMENT PAGE 28
No action or proceeding by or before any court or other governmental body
have been instituted or, to the best knowledge of the Sellers, threatened
by any governmental body or person whatsoever which shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or
which might affect the right of the Acquirer to own the Shares or to own or
operate the business of csd after the Closing.
10.5 Employment Agreements.
csd has executed an employment agreement with each of Xx. Xxxxxx, Mr. von
Ruxleben and Xx. Xxxxxx, copies of which are attached as Exhibits K-1, K-2
-----------------
and K-3, respectively (collectively, the "Employment Agreements").
-------
10.6 Registration Rights Agreement.
ON has executed a registration rights agreement with the Sellers, a copy of
which is attached as Exhibit L (the "Registration Rights Agreement").
---------
10.7 Material Adverse Effect.
There has been no material adverse change in the business, operations,
customers, conditions (financial or otherwise) or prospects of csd since
the date of the Current Balance Sheet.
PURCHASE AGREEMENT PAGE 29
10.8 Closing Deliveries.
The Acquirer has received at or prior to the Closing such documents,
instruments or certificates as the Acquirer may reasonably request
including, without limitation:
(i) an approval by csd of the transfer of the Shares; and
(ii) a fully executed Escrow Agreement.
11. FULFILLED CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent,
each of which is hereby acknowledged to have been satisfied or waived.
11.1 Corporate Proceedings.
All corporate and other proceedings required to be taken on the part of the
Acquirer to authorize or carry out this Agreement and the transactions
contemplated hereby have been taken.
11.2 Governmental Approvals.
All governmental agencies, departments, bureaus, commissions and similar
bodies, the consent, authorization or approval of which is necessary under
any applicable law, rule, order or regulation for the consummation by the
Acquirer of the transactions contemplated by this Agreement have consented
to, authorized, permitted or approved such transactions including, without
limitation, the approvals set forth in Schedule 7.3 hereof.
------------
11.3 Consents of Third Parties.
The Acquirer has received all requisite consents and approvals of all
lenders, lessors and other third parties whose consent or approval is
required in order for the Acquirer to consummate the transactions
contemplated by this Agreement including, without limitation, the consents
set forth on Schedule 7.4 hereof.
------------
PURCHASE AGREEMENT PAGE 30
11.4 Employment Agreements.
csd has executed the Employment Agreements with each of Xx. Xxxxxx, Mr. von
Ruxleben and Xx. Xxxxxx.
11.5 Registration Rights Agreement.
ON has executed the Registration Rights Agreement with the Sellers.
11.6 Closing Deliveries.
The Sellers have received at or prior to the Closing such documents,
instruments or certificates as the Sellers may reasonably request
including, without limitation, a fully executed Escrow Agreement.
12. DISPUTE RESOLUTION
12.1 General
In the event that any dispute should arise between the parties hereto with
respect to any matter covered by this Agreement, the parties hereto shall
resolve such dispute solely by agreement or arbitration in accordance with
the procedures set forth in this Sec. 12.
12.2 Consent of the Parties
In the event of any dispute between the parties with respect to any matter
covered by this Agreement, the parties shall first use their best efforts
to resolve such dispute among themselves. If the parties are unable to
resolve the dispute within 30 calendar days after the commencement of
efforts to resolve the dispute, the dispute will be submitted to
arbitration in accordance with this Sec. 12.
PURCHASE AGREEMENT PAGE 31
12.3 Arbitration
(i) Either the Acquirer or the Sellers (acting upon the consent of the
Seller holding a majority of the Shares who shall have the authority
to bind all the Sellers) may submit any matter referred to in Sec.
12.1 hereof to arbitration by notifying the other parties hereto, in
writing, of such dispute. Within 10 days after receipt of such
notice, the Acquirer and the Seller shall designate in writing one
arbitrator to resolve the dispute; provided, that if the parties
hereto cannot agree on an arbitrator within such 10-day period, the
arbitrator shall be selected by the President of the IHK for Munich
and Upper Bavaria. The arbitrator so designated shall not be an
employee, consultant, officer, director or stockholder of any party
hereto or any Affiliate of any party to this Agreement.
(ii) Within 15 days after the designation of the arbitrator, the
arbitrator, the Acquirer and the Sellers shall meet, at which time the
Acquirer and the Sellers shall be required to set forth in writing all
disputed issues and a proposed ruling on each such issue.
(iii) The arbitrator shall set a date for a hearing, which shall be no
later than 30 days after the submission of written proposals pursuant
to paragraph (b) above, to discuss each of the issues identified by
the Acquirer and the Sellers. Each such party shall have the right to
be represented by counsel. The arbitration shall be governed by the
rules of the International Chamber of Commerce; provided, that the
arbitrator shall have sole discretion with regard to the admissibility
of evidence. The hearings shall be conducted in English.
(iv) The arbitrator shall use his best efforts to rule on each disputed
issue within 30 days after the completion of the hearings described in
paragraph (c) above. The determination of the arbitrator as to the
resolution of any dispute shall be binding and conclusive upon all
parties hereto. All rulings of the arbitrator shall be in writing and
shall be delivered to the parties hereto.
(v) The arbitrator may, in his or her discretion, award attorneys' fees
and expenses in connection with the arbitration determination, but may
not award punitive damages.
(vi) Any arbitration pursuant to this Sec. 12 shall be conducted in Munich,
Germany. Any arbitration award may be entered in and enforced by any
court having jurisdiction thereover and the parties hereby consent and
PURCHASE AGREEMENT PAGE 32
commit themselves to the jurisdiction of the courts of Germany for
purposes of the enforcement of any arbitration award.
13. CONFIDENTIALITY
13.1 All information not previously disclosed to the public or generally known
to the persons engaged in the respective businesses of Acquirer or csd
which shall have been furnished by Acquirer, csd or Sellers to any other
party in connection with the transactions contemplated hereby shall not be
disclosed to any other person other than their respective employees,
directors, attorneys, accountants or financial advisors or other than as
contemplated herein.
13.2 Except as otherwise required by law, the parties agree that any and all
general public pronouncements or other general public communications
concerning this Agreement and the purchase and sale of the Shares by the
Acquirer, and the timing, manner and content of such disclosures, shall be
subject to the mutual agreement of Xx. Xxxxxx, Mr. von Ruxleben and the
Acquirer; provided, however, that the Acquirer's U.S. Parent, may, without
-------- -------
the agreement of Xx. Xxxxxx or Mr. von Ruxleben, make any such disclosures
that it is required to make as a result of its status as a reporting
company under the Securities Exchange Act of 1934, as amended, or as a
listed company on the Nasdaq National Market, Inc.
14. NON-COMPETITION
14.1 In consideration of the Purchase Price and the other benefits afforded by
this Agreement, each of Xx. Xxxxxx, Xxx. Xxxxxx, Mr. von Ruxleben, Mrs. von
Ruxleben and Xx. Xxxxxx (each, a "Covered Seller") hereby agrees that until
the third anniversary of the date hereof (the "Prohibition Period"), the
Covered Seller will not, without the Acquirer's or csd's prior written
approval, directly or indirectly:
(a) recruit, solicit or knowingly induce, or attempt to induce, any
employee or consultant of csd to terminate his employment or
consulting relationship with, or otherwise cease his relationship
with, csd;
(b) solicit, divert or take away, or attempt to do so, the business or
patronage of any of the clients, customers or accounts, or prospective
clients, customers or accounts, of csd (defined, for purposes hereof,
as any individual or entity whose business is solicited by csd,
proposed to be solicited by csd, or who approaches csd, with respect
to possibly becoming a client, customer, or account); or
PURCHASE AGREEMENT PAGE 33
(c) directly or indirectly engage (with or without compensation) as an
individual proprietor, partner, stockholder, officer, employee,
director, joint venturer, investor, lender, or in any other capacity
whatsoever (other than as the holder of not more than one percent (1%)
of the total outstanding stock of a publicly-held company), in any
business activity within Europe or the United States that involves or
relates to the network application management market, or any other
area of business in which csd is involved.
14.2 Each Covered Seller shall keep csd informed during the Restriction Period
of the nature and extent of all his earnings from all employers, including
bonuses, gratuities and annual payments, whether or not granted under a
legal claim, other variable receipts, etc., and including any payments made
after the expiry of the restriction period, but that were earned during the
same.
14.3 Each Covered Seller shall be liable to pay csd liquidated damages of DM
30,000 for any isolated breach of the restrictions set forth in this Sec.
or, if such a breach is continuing, such amount at the beginning of each
month that the breach has continued.
14.4 If any restriction set forth in this Sec. 14 is found by any court of
competent jurisdiction to be unenforceable because it covers too long a
period of time, too great a range of activities, or too broad a geographic
area, it shall be narrowed to cover the maximum period of time, range of
activities or geographic areas that may be enforceable.
14.5 Each Covered Seller acknowledges that the restrictions contained in this
Sec. 14 are necessary for the protection of the business and goodwill of
csd and are considered by csd to be reasonable for this purpose. Each
Covered Seller agrees that any breach of this Sec. 14 will cause csd
substantial and irrevocable damage and, therefore, in the event of any such
breach, in addition to such other remedies which may be available, csd will
have the right to seek specific performance and injunctive relief.
15. MISCELLANEOUS
15.1 The notary's fees accruing from this Agreement, as well as the fees and
expenses charged by an governmental authorities (including antitrust
bodies) in connection with this Agreement shall be borne by Acquirer.
Apart therefrom each party shall bear its own cost and the fees and costs
of its own advisors, including without limitation, consultants, investment
brokers and other financial advisers, counsel and accountants.
PURCHASE AGREEMENT PAGE 34
15.2 All parties mutually consent to the sale and the transfer of all shares in
csd to the Acquirer, even if the assigning Seller is lacking title to the
sold shares.
15.3 This Agreement constitutes the complete and entire agreement between the
Sellers on the one hand and the Acquirer on the other hand, regarding the
transactions contemplated herein, and supersedes all previous agreements,
whether written or oral. Changes and amendments to, and interpretations of,
this Agreement as well as notices and declarations to be given or other
communications to be made pursuant to this Agreement shall be valid only if
made in writing unless a notarial deed is legally required. This shall
also apply to any changes to this Subsec. 15.3.
15.4 If a provision of this Agreement is or becomes invalid or unenforceable the
validity and enforceability of the other provisions hereof shall not be
affected thereby. The invalid or unenforceable provision shall be replaced
by a legally valid and enforceable arrangement which corresponds as closely
as possible to the intentions of the parties.
15.5 The Schedules (but not the Exhibits) to this Agreement form an integral
part hereof. Statements in one provision of, or Schedule to, this
Agreement shall be deemed to have been made also for the purposes of all
other provisions of and Schedules to this Agreement.
15.6 Every notice under or in connection with this Agreement shall be given in
writing and must be delivered personally or sent by registered mail, return
receipt requested or by telecopier to the recipient at the following
addresses (or to such address as may be notified by like notice):
If to Sellers: to the respective addresses
of each of the Sellers set
forth on Schedule 15.6
-------------
with a copy to: Xx. Xxx X. Xxxxxxxxxx
Dissman & Partners
Xxxxxxxx-Xxxxxxxxx-Xxx. 00X
X-00000 Xxxxxxx
Xxxxxxx
with a copy to: Xxxxx Xxxxx, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
PURCHASE AGREEMENT PAGE 35
If to Acquirer: c/o ON Technology Corporation
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx
with a copy to: Xxxxx Xxxxx, Esq.
Xxxxxxx Xxxxxx & Green, P.C.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
15.7 Any assignment of rights and obligations under this Agreement requires
consent of all Parties.
15.8 This Agreement shall be governed by the laws of the Federal Republic of
Germany.
15.9 The place of jurisdiction shall be Munich.
15.10 Certified copies of this deed shall be sent to
- all parties of this Agreement
- csd as notification according to sec. 16 GmbHG
- the tax authority in charge
- Dissmann & Partner, Xxxxxxxx-Xxxxxxxxx-Xxx. 00X, 00000 Xxxxxxx,
- Xxxxxxxxx & Xxxxxx, Prinzregentenpl. 10,81675, Munchen,
- Ropes & Xxxx, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000,
- Xxxxxxx Xxxxxx & Green, P.C., 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000.
15.11 ON Technology Corporation hereby consents to the Acquirer entering into
this Agreement and hereby guarantees full and timely payment and
performance of the obligations of the Acquirer set forth in Sections 6.2
and 6.3 of this Agreement and consents to Section 12 of this Agreement.
Nach Uberzeugung des beurkundenden Notars und nach Bestatigung aller
unterzeichneten Urkundsbeteiligten sind diese der englischen Sprache hinreichend
kundig. Die Zuziehung eines Dolmetschers ist deshalb nicht erforderlich.
Read by the Notary, with all Exhibits, (the Exhibits K1-K3 are attached only for
the purpose of proof) and Schedules (regarding Schedule 4.3.1 Anlage I und II
only), approved by the persons appearing and signed by them and the Notary as
follows:
XXXXX 96 VERMOGENSVERWALTUNGS GMBH
PURCHASE AGREEMENT PAGE 36
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
__________________________________________
Xxxxxxxxxxx X. Xxxxxxx, Managing Director
/s/ Xxxxx Xxxxxx
_____________________________________________
Xxxxx Xxxxxx
/s/Iska Xxxxxx
_____________________________________________
Iska Xxxxxx
/s/ Hans-Till Freiherr von Ruxleben
_____________________________________________
Hans-Till Freiherr von Ruxleben
/s/ Liliane Freifrau von Ruxleben
_____________________________________________
Liliane Freifrau von Ruxleben
/s/ Xxxxxx Xxxxxx
_____________________________________________
Xxxxxx Xxxxxx
/s/ Xxxxxxxx Xxxxx
_____________________________________________
Xxxxxxxx Xxxxx
/s/ Jochen Tschunke
_____________________________________________
Prof. Jochen Tschunke
ON Technology Corporation hereby consents to the Acquirer entering into
this Agreement and hereby guarantees full and timely payment and performance of
the obligations of the Acquirer set forth in Sections 6.2 and 6.3 of this
Agreement.
ON Technology Corporation
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
________________________________________
Xxxxxxxxxxx X. Xxxxxxx, Attorney in Fact
