JOINT VENTURE INTEREST PURCHASE AGREEMENT
THIS JOINT VENTURE INTEREST PURCHASE AGREEMENT (the
"Agreement") is made and entered into as of the 31st day of
October, 1996 (the "Effective Date"), by and between PRUTECH
RESEARCH AND DEVELOPMENT PARTNERSHIP, a California limited
partnership whose sole general partner is R&D Funding Corp., a
Delaware corporation ("Seller"), and AMERICAN SOFTWARE, INC.,
a Georgia corporation ("Buyer").
BACKGROUND INFORMATION
A. Pursuant to the Joint Venture Agreement of Prutech-
American (as amended by that certain First Amendment to Joint
Venture Agreement of Prutech-American, dated December 28, 1984,
the "Joint Venture Agreement"), made and entered into as of the
29th day of December, 1983, between Buyer and Seller, Buyer and
Seller formed Prutech-American to manufacture and market certain
existing mainframe software products (as more particularly
described in the Joint Venture Agreement) and to conduct
research into and to design, develop, produce, and, market
certain new computer software (as more particularly described
in the Joint Venture Agreement).
B. Immediately following the formation of the Joint
Venture, Buyer and Seller caused the Joint Venture to enter into
the following agreements to effectuate its purposes, as
described above (all such agreements are hereinafter
collectively referred to as the "Ancillary Agreements"):
(i) Base Technology Agreement, dated as of December
29, 1983, by and between Buyer and the Joint Venture,
as amended by that certain First Amendment to Base
Technology Agreement, dated December 28, 1984;
(ii) Contract for Research and Development, dated as
of December 29, 1983, by and between American
Software Research and Development Corp. and the Joint
Venture, as amended by that certain First Amendment
to Contract for Research and Development, dated
December 28, 1984, and as guaranteed by that certain
Guaranty from Buyer in favor of the Joint Venture,
dated as of December 29, 1983; and
(iii) Agreement for License or Sale of
Technology, dated as of December 29, 1983, by and
between Buyer and the Joint Venture, as amended by
that certain First Amendment to Agreement for License
or Sale of Technology, dated December 28, 1984.
C. Seller proposes to sell and assign to Buyer, and Buyer
proposes to purchase from Seller, on the terms and subject to
the conditions set forth in this Agreement, Seller's entire
right, title, and interest in the Joint Venture ("Seller's
Interest"), including (i) Seller's entire economic and ownership
interest in the Joint Venture, including any and all rights to
distributions of money and/or property, whether accrued or
unaccrued, and regardless of whether currently owed or owing to
Seller, and (ii) to the extent such rights may exist, any right,
title, and interest of Seller in any real or personal property
of the Joint Venture, including without limitation, Intellectual
Property Rights (as hereinafter defined) of the Joint Venture.
D. In connection with Seller's sale and assignment of
Seller's Interest, Seller and Buyer agree to dissolve the Joint
Venture as of the Effective Date and commence the winding up of
its affairs pursuant to Section 9.01(c) of the Joint Venture
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual benefits contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Sale and Purchase. On November 6, 1996 (the "Closing
Date"), but effective as of the Effective Date, Seller agrees
to sell, assign, and transfer to Buyer, and Buyer agrees to
purchase from Seller, Seller's Interest upon the terms and
subject to the conditions hereinafter set forth. On the Closing
Date, Seller shall execute and deliver to Buyer the Xxxx of Sale
and Assignment of Joint Venture Interest (the "Xxxx of Sale and
Assignment"), in the form of Exhibit "A", attached hereto and
incorporated herein by reference, pursuant to which Seller shall
assign and deliver Seller's Interest to Buyer. The parties
expressly acknowledge and agree that the terms set forth in this
Agreement deviate from the purchase option terms in favor of
Buyer set forth in Section 8 of the Joint Venture Agreement, and
the parties expressly waive any rights or obligations arising
out of such Section of the Joint Venture Agreement.
2. Purchase Price. The purchase price for Seller's
Interest is the sum of Five Hundred Fifty Thousand and No/100
Dollars ($550,000.00) to be paid by Buyer to Seller on the
Closing Date, in cash or by wire transfer of immediately
available funds pursuant to wire instructions from Seller
attached hereto as Exhibit "B".
3. Representations and Warranties by Seller. As an
inducement to Buyer to enter into this Agreement, Seller
represents and warrants to Buyer as follows:
3.1 Organization. Seller is a limited partnership duly
organized, validly existing, and in good standing under the laws
of the State of California and has the requisite partnership
power to consummate the transactions contemplated herein.
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3.2 Authorization. Seller has full partnership power
and authority to execute and deliver this Agreement, to perform
its obligations hereunder, and to consummate the transactions
contemplated hereby, and the execution, delivery, and
performance of this Agreement by Seller has been duly authorized
by all necessary partnership action. This Agreement has been
duly executed and delivered by Seller and, assuming the due
authorization, execution, and delivery by Buyer, constitutes the
legal, valid, and binding obligation of Seller, enforceable
against Seller in accordance with its terms.
3.3 Seller's Interest. At the closing of the transactions
contemplated by this Agreement, Seller will transfer to Buyer
good, valid, and marketable title to Seller's Interest, free and
clear of all liens, charges, claims, encumbrances, and
restrictions.
3.4 No Conflict. Neither the execution, delivery, and
performance of this Agreement nor the consummation by Seller of
the transactions contemplated hereby (i) conflicts with,
violates, causes a default under, or, to Seller's knowledge,
requires consent, authorization, or approval under (A) any law,
regulation, order, writ, injunction, decree, determination, or
award by any court, governmental department, board, or agency,
(B) the Partnership Agreement or Certificate of Partnership of
Seller, or (C) any contract, agreement, instrument, mortgage,
note, lease, or other arrangement to which Seller is a party or
by which Seller, Seller's Interest, or any of Seller's property
may be bound; or (ii) results in the creation of any lien,
charge, claim, encumbrance, or restriction upon Seller's
Interest or any of the assets of Seller.
3.5 Litigation. There is no action, suit, or proceeding
pending or, to the knowledge of Seller, investigation pending
or action, suit, proceeding, or investigation threatened,
against or affecting Seller which would affect the ability of
Seller to transfer Seller's Interest to Buyer.
3.6 Intellectual Property Rights.
(a) It is the intent of the parties that Seller's
Interest shall expressly include, to the extent such rights
may exist by law or agreement, all right, title, and interest of
Seller in any real or personal property of the
Joint Venture, including, without limitation, all
Intellectual Property Rights (as hereinafter
defined) owned or used by Buyer or the Joint Venture
with respect to the business of the Joint
Venture, including, without limitation, those
Intellectual Property Rights arising out of or
relating to the Ancillary Agreements, and, effective
as of the Effective Date, Seller claims no rights of
ownership, license, or use over such Intellectual
Property Rights, and Seller makes no representations or
warranties regarding the Intellectual Property
Rights. For purposes hereof, "Intellectual
Property Rights" means (i) inventions, whether or not
patentable, whether or not reduced to practice, and
whether or not yet made the subject of a pending patent
application, (ii) ideas and conceptions or potentially
patentable subject matter, (iii) national and
multinational statutory invention registrations, patents, patent
registrations, and patent
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applications, and all rights therein, (iv)
trademarks, service marks, trade dress, logos, and
trade names, whether or not registered, including all
common law rights thereto, (v) copyrights (registered
or otherwise) and registrations and
applications for registration thereof and
all rights therein, (vi) computer software
(including, without limitation, "Research
Products", "Existing Products", and
"Derivatives", as such terms are defined in the
Joint Venture Agreement and the Ancillary Agreements),
including source codes, operating systems and
specifications, data, data bases, files,
documentation, and other materials related thereto,
(vii) trade secrets and confidential, technical,
and business information, (viii) whether or not
confidential, all technology (including,
without limitations, all "Technology" as defined in
the Joint Venture Agreement), including,
without limitation, know-how and show-how,
manufacturing and production processes and
techniques, research and development information,
drawings, specifications, designs, plans, proposals,
technical data, copyrightable works,
financial, marketing, and business data, pricing and
cost information, business and marketing plans, and
customer and supplier lists and information, (ix)
copies and tangible embodiments of all of the
foregoing, regardless of form or medium, and (x) all
revenues derived by Buyer, Seller or the Joint Venture
from any sale, license, or lease of all of the
foregoing, including without limitation "Sales
and Licensing Income", as such term is defined in the
Ancillary Agreements.
(b) Seller shall, and shall use reasonable efforts
to cause its personnel and agents to, hold in strict
confidence, not disclose to any person without the prior
written consent of Buyer, and not use in any manner
whatsoever, any confidential information remaining in its
possession concerning the Joint Venture and its
Intellectual Property Rights (except those Intellectual
Property Rights identified in subsection (a)(x) above,
which items may be reported by Seller to its equity
participants and as otherwise required by regulatory
authorities and governmental agencies). Seller shall
promptly destroy all materials remaining in its possession
containing any such confidential information, including
all copies, extracts, adaptations, and transcriptions
thereof. The foregoing notwithstanding, Seller may
disclose confidential information (a) where necessary to
any regulatory authorities or governmental agencies
pursuant to legal process or (b) if required by court
order or decree. For purposes of this Agreement,
information shall not be deemed confidential (a) to the
extent that such information is available from public
sources; (b) if such information is received from a third
party not under an obligation to keep such information
confidential; or (c) if the recipient can conclusively
demonstrate that such information was independently
developed by the recipient.
3.7 Tax Matters. All federal, state, and local returns,
declarations, reports, or statements filed by Seller, or caused
to be filed by Seller, in the name of or on behalf of the Joint
Venture have been timely filed. In acting as tax matters
partner for the Joint Venture, pursuant to Section 4.05 of the
Joint Venture Agreement, Seller has not negligently prepared,
distributed,
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or filed any tax returns or tax information reports
either on behalf of the Joint Venture, Buyer, Seller, or
Seller's partners and limited partners. The last filing for
federal and state income taxes was for the year ending December
31, 1995. To the knowledge of Seller, there are no federal,
state, or local tax liens upon any property of the Joint
Venture.
4. Representations and Warranties by Buyer. As an inducement
to Seller to enter into this Agreement, Buyer represents and
warrants to Seller as follows:
4.1 Organization. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Georgia and has the requisite corporate power to
consummate the transactions contemplated herein.
4.2 Authorization. Buyer has full corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder, and to consummate the transactions
contemplated hereby, and the execution, delivery, and
performance of this Agreement by Buyer has been duly authorized
by all necessary corporate actions. This Agreement has been
duly executed and delivered by Buyer and, assuming the due
authorization, execution, and delivery by Seller, constitutes
the legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with its terms.
4.3 No Conflict. Neither the execution, delivery, and
performance of this Agreement nor the consummation by Buyer of
the transactions contemplated hereby conflicts with, violates,
or causes a default under, or, to Buyer's knowledge, requires
consent, authorization, or approval under (i) any law,
regulation, order, writ, injunction, decree, determination, or
award by any court, governmental department, board, or agency,
(ii) the Articles of Incorporation or By-Laws of Buyer, or (iii)
any contract, agreement, instrument, mortgage, note, lease, or
other arrangement to which Buyer is a party or by which Buyer
or any of Buyer's property may be bound.
5. Indemnification.
5.1 Indemnification by Seller. Upon consummation of the
closing of the transactions contemplated in this Agreement,
Seller shall indemnify, defend, and hold harmless Buyer and its
successors and assigns and the shareholders, directors,
officers, employees, and agents of each (collectively, the
"Buyer Group"), at, and at any time after, the Effective Date,
from and against any and all demands, claims, actions, or causes
of action, assessments, losses, damages, liabilities, costs, and
expenses, including reasonable fees and expenses of counsel,
other reasonable expenses of investigation, handling, and
litigation, and settlement amounts, together with interest and
penalties (collectively, a "Loss" or "Losses"), imposed upon,
or incurred by the Buyer Group by reason of, resulting from or
arising in connection with any breach of any representation or
warranty of Seller expressly contained in this Agreement or the
Xxxx of Sale and Assignment, excluding those liabilities arising
out of Buyer's indemnification obligation under Section 5.2
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below or otherwise owing to Buyer's fraud, bad faith, willful
misconduct, or gross negligence.
5.2 Indemnification by Buyer. Upon consummation of the
closing of the transactions
contemplated in this Agreement, Buyer shall indemnify, defend,
and hold harmless Seller and its successors and assigns and the
partners, directors, officers, employees and agents of each
(collectively, the "Seller Group"), at, and at any time after,
the Effective Date, from and against any and all Losses imposed
upon or incurred by the Seller Group by reason of, resulting
from or arising in connection with (i) any breach of any
representation or warranty of Buyer expressly contained in this
Agreement, (ii) all responsibilities and liabilities of the
Joint Venture, whether accrued or unaccrued, and regardless of
when arising, excluding those liabilities arising out of
Seller's indemnification obligation under Section 5.1 above or
otherwise owing to Seller's fraud, bad faith, willful
misconduct, or gross negligence, and (iii) Buyer's negligent
preparation, distribution, or filing of any tax return to be
prepared, distributed or filed by Buyer pursuant to Section 6
below.
5.3 Mutual Release. Upon consummation of the closing of
the transactions contemplated in this Agreement, each of Seller
and Buyer hereby agrees to the complete discharge, settlement,
and release of all claims, rights, causes of actions, suits,
matters and issues, whether known or unknown, accrued or
unaccrued, that either party may have, could have had, or in the
future might acquire in any court or proceeding (including, but
not limited to, any claims arising under federal or state law
relating to breach of contract, whether relating to the payment
of funds or otherwise), whether individual, class, derivative,
representative, legal, equitable, or any type or in any other
capacity against the other party hereto or any of its respective
associates, affiliates, subsidiaries, present or former
officers, directors, employees, attorneys, financial advisors
or other advisors or agents, heirs, executors, personal
representatives, estates, administrators, and successors and
assigns (collectively, the "Released Persons") which have
arisen, could have arisen, arise now or hereafter arise of, or
relate in any way to the rights or obligations of either party
under one or more of the Joint Venture Agreement, the Ancillary
Agreements and any other agreements or documents executed or
delivered by either party in connection therewith (collectively,
the "Settled Claims"); provided, however, that the Settled
Claims shall not include the rights of either party to enforce
the terms of this Agreement. Each party is hereby forever
barred and enjoined from commencing or prosecuting any action
asserting any claims, either directly, representatively,
derivatively or in any other capacity, against the other party
or any other Released Persons, which have been or could have
been asserted, or which arise out of or relate in any way to,
the Settled Claims.
6. Dissolution of the Joint Venture. By execution hereof,
Buyer and Seller (i) elect to immediately dissolve the Joint
Venture pursuant to Section 9.01(c) of the Joint Venture
Agreement, and (ii) acknowledge and consent to the termination,
as of the Effective Date, of the Ancillary Agreements. Seller
hereby authorizes Buyer to take any and all actions which Buyer
deems necessary or appropriate to wind up the affairs of, and
otherwise liquidate, the Joint
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Venture as of the Effective Date.
Buyer's and Seller's respective distributive shares of the Joint
Venture's income, gain, loss, and deduction for calendar year
1996 shall be determined on the basis of an interim closing of
all books of the Joint Venture as of the close of business on
the Effective Date, and shall not be based upon a proration of
such items for the entire taxable year. Buyer and Seller shall
cooperate in the filing of all required federal, state, and
local income tax returns and related returns and reports in a
manner consistent with this paragraph. The foregoing
notwithstanding, and notwithstanding anything to the contrary
contained in the Joint Venture Agreement, Seller acknowledges
and agrees that upon execution and delivery of this Agreement,
Seller shall retain no interest in, and shall not be entitled
to receive any distributions of money and/or property, whether
accrued or unaccrued prior to the Effective Date. Seller
acknowledges that Buyer's sole responsibility in connection with
the liquidation of the Joint Venture shall be to provide Seller
with a Form K-1 (and any other records required by law), and,
upon request, a copy of the return for the taxable year ended
October 31, 1996, which return shall be prepared in accordance
with historical tax reporting practices for the Joint Venture
indicating net income and the items thereof through the
Effective Date.
7. Miscellaneous
7.1 Survival. Each representation and warranty contained
herein or made pursuant hereto shall be deemed to be material
and to have been relied upon, and shall survive (a) the
execution and delivery of the Agreement for a period of six (6)
years from the Closing Date, and (b) any investigation at any
time made by or on behalf of any party hereto.
7.2 Entire Agreement Amendment. This Agreement, and the
documents executed and delivered pursuant hereto, constitute the
entire agreement between the parties with respect to the subject
matter hereof, and may be amended only by a writing signed on
behalf of each party.
7.3 Notices. Any notices or consents required or
permitted by this Agreement shall be in writing and shall be
deemed delivered if delivered in person or if sent by certified
mail, postage prepaid, return receipt requested, as follows,
unless such address is changed by written notice hereunder:
(a) If to Seller:
PruTech Research and Development Partnership
c/o R&D Funding Corp.
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
ATTN: Xxxxxxx X. Xxxxxx
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(b) If to Buyer:
American Software, Inc.
000 Xxxx Xxxxx Xxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
ATTN: President
7.4 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties, nor is this Agreement
intended to confer upon any other person except
the parties any rights or remedies hereunder.
7.5 Governing Law. This Agreement shall be construed as to
both validity and performance and enforced in accordance with and
governed by the laws of the State of California.
7.6 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and
the same instrument.
7.7 Captions. The section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
7.8 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking
action as may be necessary or appropriate to achieve the purposes
of this Agreement, including, without limitation, all actions
necessary or appropriate, in the discretion of Buyer, to dissolve
and liquidate the Joint Venture pursuant to Section 6 above.
7.9 Expenses, Etc. Except as otherwise provided in this
Agreement, whether or not the transactions contemplated by this
Agreement are consummated, Seller and Buyer shall pay their
own expenses and the fees and expenses of their counsel, financial
advisors, accountants and other experts.
7.10 No Waiver Remedies. No failure on the part of any party
hereto to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right hereunder preclude
any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
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7.11 Severability. Each provision of this Agreement is intended
to be severable, and if any term or provision of this Agreement
is determined to be illegal or invalid for any
reason whatsoever, such illegality or invalidity shall
not affect the validity or legality of the
remainder of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
BUYER:
AMERICAN SOFTWARE, INC. a Georgia
corporation
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Its: Controller
--------------------------------
SELLER:
PRUTECH RESEARCH AND
DEVELOPMENT PARTNERSHIP,
a California limited partnership
By: R&D Funding Corp., a Delaware
corporation
Its: General Partner
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Its: President
--------------------------------
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EXHIBIT "A"
XXXX OF SALE OF ASSIGNMENT OF JOINT VENTURE INTEREST
KNOW ALL MEN BY THESE PRESENTS THAT Prutech Research and
Development Partnership ("Seller"), a California limited
partnership whose sole general partner is R&D Funding Corp.,
a Delaware corporation, hereby warrants to American
Software, Inc. ("Buyer"), a Georgia corporation, that
Seller is a joint venturer in Prutech-American (the "Joint Venture").
THAT FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is
hereby acknowledged, Seller does hereby sell, assign, transfer,
convey, grant, bargain, set over, release, deliver, and confirm
unto Buyer, its successors and assigns, Seller's entire
right, title, and interest in the Joint Venture, including,
to the extent such rights may exist, any right, title, and
interest in any real or personal property of the Joint Venture, including
without limitation, Intellectual Property Rights (as defined in
the Joint Venture Interest Purchase Agreement (the "Agreement"),
dated as of even date herewith, between Seller and
Buyer) of the Joint Venture ("Seller's Interest"), free
and clear of all liens, charges, claims, encumbrances, and
restrictions, and Buyer hereby accepts Seller's Interest from Seller, TO
HAVE AND TO HOLD the same unto Buyer, forever.
IN WITNESS WHEREOF, Seller has caused this Assignment to be
duly executed as of the 31st day of October, 1996.
PRUTECH RESEARCH AND
DEVELOPMENT PARTNERSHIP, a
California limited partnership
By: R&D Funding Corp., a Delaware
corporation
Its: General Partner
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Its: President
-------------------------
