EXHIBIT 4.6
ASSET PURCHASE AND SALE AGREEMENT
---------------------------------
THIS ASSET PURCHASE AND SALE AGREEMENT, dated December , 1998
between SITE TECHNOLOGIES, INC., a California corporation having an address at
000 Xx Xxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxxxxxx 00000 (the "Seller"), and STARBASE
CORPORATION, a Delaware corporation having an address at 0 Xxxxxx Xxxxxx Xxxxx,
Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx 00000(xxx "Purchaser").
RECITALS
The Seller is in the business of designing, developing,
licensing and selling software products and related materials for various Web
site applications. The Seller has decided to sell certain of its assets and
properties. The Seller has agreed to sell such assets and properties to the
Purchaser, and the Purchaser has agreed to buy such assets and properties, all
upon the terms and provisions and subject to the conditions hereinafter set
forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and
agreements hereinafter set forth, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. As used in this Agreement, the
following capitalized terms and non-capitalized words and phrases shall have the
meanings respectively assigned to them below, which meanings shall be applicable
equally to the singular and plural forms of the terms so defined:
"Agreement" shall mean this Asset Purchase and Sale Agreement,
together with all schedules and exhibits hereto, as the same may be
supplemented, modified, amended or restated from time to time in the manner
provided herein.
"Affiliate" of a referenced person shall mean (a) another
person controlling, controlled by or under common control with such referenced
person, (b) any other person beneficially owning or controlling ten percent
(10%) or more of the outstanding voting securities or rights or of the interest
in the capital, distributions or profits of the referenced person or (c) any
officer or director of or partner in the referenced person, or any person
controlled by any such individual. The terms "control", "controlling",
"controlled" and the like shall mean the direct or indirect possession of the
power to direct or cause the direction of the management or policies of a person
or the disposition of its assets or properties, whether through ownership, by
contract, arrangement or understanding, or otherwise.
"Asset" and "Assets" shall have the meanings respectively
assigned to them in Section 2.01 hereof.
"Assumed Obligation" and "Assumed Obligations" shall have the
meanings respectively assigned to them in Section 2.03 hereof.
"Business Day" shall mean any day other than any Saturday,
Sunday or other applicable U.S. federal holiday.
"Closing" shall mean the consummation of the sale and purchase
of the Assets by the Seller and the Purchaser as contemplated by this Agreement.
"Closing Date" shall have the meaning assigned to it in
Section 2.09 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidential Information" shall mean, with respect to the
Assets only, and the information contained therein, any and all Documents and
other information pertaining to the assets, bids, business, code, costs,
creditors, customers and customer identities and contacts, data, Developments
(as hereinafter defined), financial condition or affairs, formulae, know-how,
methods, operations, personnel, prices, procedures, products, proposals,
prospects, reports, services, software, strategies, suppliers, systems,
technologies and other trade secrets of the Seller, whether existing prior
hereto, acquired hereunder or developed or otherwise acquired by the Purchaser
during the Restricted Period or at any other time; provided, however, that
Confidential Information shall exclude any information that (i) is or becomes
publicly available other than through any direct or indirect disclosure by the
Seller or any of its Representatives (ii) was known to Seller or its
Representatives, without confidentiality restriction, at the time of disclosure
as shown by the files of Seller or its Representatives in existence at the time
of disclosure; (iii) is disclosed with the prior written approval of Purchaser;
(iv) was independently developed by Seller or its Representatives without any
use of the Confidential Information and by employees or other agents of (or
independent contractors hired by) Seller or its Representatives who have not bee
exposed to the Confidential Information; (v) becomes known to Seller or its
Representatives, without confidentiality restriction, form a source other than
Purchaser without breach of this Agreement by Seller or its Representatives and
otherwise not in violation of Purchaser's rights; (vi) is disclosed to third
parties by Purchaser without restrictions similar to those contained in this
Agreement; or (vii) is disclosed pursuant to the order or requirement of a
court, administrative agency, or other governmental body, provided, however,
that Seller or its Representatives shall provide prompt written notice thereof
to enable Purchaser to seek a protective order or otherwise prevent such
disclosure.
-2-
"Conveyance Instruments" shall mean the bills of sale,
assignments and other documents required by Section 2.07 hereof.
"Corporate Document" shall mean any of the following: (a) the
Certificate of Incorporation and By-laws of the Seller; (b) any resolution with
continuing effect adopted by the Board of Directors of the Seller; or (c) any
term or provision of any agreement or trust respecting the securities issued by
the Seller or any related rights; in each case whether now or hereafter
existing, and irrespective of whether reduced to writing, and as each has been
and hereafter may be supplemented, modified, amended or restated from time to
time.
"Developments" shall mean, collectively, any and all
developments, enhancements, refinements, upgrades and documentation of Software,
Source Code, ideas, inventions, products, services, know-how, programs,
procedures, strategies, and other trade secrets and works of authorship for use
in or related to the Assets.
"Documents" shall mean, with respect to the Assets only, any
and all documents and other tangible items containing information, including
(without limitation) any and all agreements, books, correspondence, discs,
drawings and pictures, instructions, lists and other collections of information,
manuals, memoranda, notes, programs, software and codes, proposals and
presentations, whether in hard copy or electronic storage.
"Event" shall include (without limitation) any event,
occurrence, circumstance, condition or state of facts.
"Excluded Asset" and "Excluded Assets" shall have the meanings
respectively assigned to them in Section 2.02 hereof.
"Excluded Liability" and "Excluded Liabilities" shall have the
meanings respectively assigned to them in Section 2.04 hereof.
"GAAP" shall mean United States generally accepted accounting
principles applied on a basis consistent with the preparation of the
consolidated financial statements referred to in Section 4.05 hereof.
"hereunder" , "herein", "hereof" and other words and phrases
of like import shall refer to each and every term and provision of this
Agreement.
"Indemnification Limit" shall have the meaning assigned to it
in Section 5.02(a) hereof.
"Interim License and Consulting Agreement" shall mean that
certain agreement between the Seller and the Purchaser, dated as of the date
hereof and attached hereto as Exhibit A.
.
"Liability Threshold" shall have the meaning assigned to it in
Section 5.02(a) hereof.
-3-
"Lien" and "Liens" shall respectively refer to any one or more
of the following with respect to the Assets: (a) any assignment, pledge,
mortgage, hypothecation or security interest (irrespective of whether the Seller
is personally obligated with respect to any obligation thereby secured); (b) any
consignment, finance lease, conditional sale contract or other title retention
agreement; (c) any assignment, pledge or other transfer, restriction or
encumbrance of any right to receive any income or other distributions or
proceeds; (d) any lien for Taxes or other assessments or any mechanics' or other
statutory lien; (e) any restrictive covenant, lease, license, right of use,
possession or first refusal, infringement, community property or other joint
ownership interest, limitation or restriction on use or transfer, exception to
title, or other limitation or restriction on the extent, exercise or enforcement
of any right or interest respecting any asset or property; (f) any covenant or
agreement with any other person to a "Negative Pledge" (i.e., that the Seller
will not do any one or more of the things specified in the preceding clauses);
or (g) any other lien, encumbrance or adverse right or claim of any nature in,
to or against any Asset.
"Loss" shall mean any loss, damage, injury, harm, detriment,
decline in value, liability, claim, demand, action, suit, investigation,
proceeding, settlement, judgment, award, fine, penalty, Tax, fee, charge, cost
or expense (including any reasonable out-of-pocket disbursement, expense or fee
or other reasonable amount paid to any attorney or other professional advisor
and any reasonable costs of investigation).
"Material Adverse Effect" shall mean (i) with respect to
Seller, any material and adverse effect, whether individually or in the
aggregate, upon (a) the Assets, or (b) the ability of the Seller to perform as
and when due of all or any part of its obligations under this Agreement or any
other Purchase Document and (ii) with respect to Purchaser, any change, event or
effect that is or reasonably likely could be materially adverse, whether
individually or in the aggregate, (a) to the current or continuing business,
assets (including intangible assets), financial condition or results of
operations of Purchaser and its subsidiaries taken as a whole, or (b) upon the
ability of Purchaser to perform as and when due of all or any part of its
obligations under this Agreement or any other Purchase Document.
"Material Contract" and "Material Contracts" shall
respectively mean any one or more of each material agreement, contract,
instrument, document, arrangement or other obligation or understanding primarily
with respect to the Assets: (a) to which the Seller is or may be a party; or (b)
by which the Seller or any of the Assets is or may be bound or subject; in each
case, whether now or hereafter existing, and irrespective of whether reduced to
writing, and as each has been supplemented, modified, amended or restated to the
date hereof; provided, however, that Material Contract shall not include any
such item pertaining to any Excluded Asset or Excluded Liability.
"Material Document" shall mean, with respect to the Assets
only, any material instrument, agreement, contract, document, arrangement or
other obligation or understanding relating to the Assets: (a) to which the
Seller is or may be a party; or (b) by which the Seller or any of the Assets is
or may be bound or subject; in each case, whether now or hereafter existing, and
irrespective of whether reduced to writing, and as each has been and hereafter
may be supplemented, modified, amended or restated from time to time.
-4-
"Product Liability" shall mean any liability or other
obligation (whether alleged or otherwise) of the Seller or any agent or
affiliate of the Seller respecting any express or implied representation,
warranty, guaranty, agreement, arrangement or understanding made (or claimed to
have been made), or imposed (or claimed to have been imposed) by operation of
applicable law, in respect of the Assets.
"Prospective Employees" shall mean Xxxx Xxxxxx, Xxx Xxxxxx,
Xxx Xxxxxxxx, Xxxxx Xxxx and Xxxxx Xxxxxxx.
"Purchase Document" and "Purchase Documents" shall
respectively mean any one or more of this Agreement, the Conveyance Instruments,
the various other assignments, instruments and other documents creating or
evidencing the sale, assignment or other transfer or delivery of any Asset or
assumption of any Assumed Obligation, and all other agreements and documents and
all waivers, consents, reports, statements, certificates and schedules executed
by the requisite person(s) pursuant to or in connection with any of the
foregoing.
"Purchase Price shall have the meaning assigned to it in
Section 2.05 hereof.
"Purchaser" shall have the meaning assigned to it in the
Introduction.
"Representative" and "Representatives" of a referenced person
shall respectively mean any one or more of the affiliates of the referenced
person and the respective shareholders, directors, officers, employees,
consultants, agents and other representatives of the referenced person and its
affiliates.
"Restricted Period" shall have the meaning set forth in
Section 5.05 hereof.
"Securities" of any person shall mean equity securities and
debt securities, general or limited partnership interests, investment contracts
and any other instrument or interest commonly understood to be a security issued
by that person.
"Seller" shall have the meaning assigned to it in the
Introduction.
"Software" shall mean all computer software contained or used
in the Software Products, including without limitation, all Source Code thereto,
all related and all updated printed material and documentation with respect
thereto.
"Software Products" shall mean SiteMaster, SiteSweeper,
QuickSite, Webtools and SiteMarks.
"Source Code" shall mean computer software code in human
readable, high-level language form which, when compiled or assembled, becomes
the executable object code of a software program, and shall include all
developer comments concerning the relevant code.
-5-
"Tax" shall mean any federal, state, local or foreign tax
(including, without limitation, any income tax, franchise tax, capital gains
tax, gross receipts tax, value-added tax, surtax, excise tax, ad valorem tax,
transfer tax, stamp tax, sales tax, use tax, property tax, inventory tax,
occupancy tax, withholding tax, payroll tax, gift tax, estate tax, inheritance
tax, employment tax, unemployment tax, social security tax, services tax, value
added tax, privilege tax, license tax, profits tax, capital stock tax, severance
tax, minimum tax, environmental tax, occupancy tax or occupation tax), levy,
assessment, tariff, impost, imposition, toll, duty (including without
limitation, any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or for any governmental authority, including, without limitation, any
liability therefor as a transferee (including, without limitation, under Section
6901 of the Code or any comparable applicable law), as a result of Treasury
Regulation ss. 1.1502-6 or any comparable applicable law, or pursuant to any
tax-sharing agreement or any other agreement, arrangement or understanding
relating to the sharing or payment of any such tax, levy, assessment, tariff,
impost, imposition, toll, duty, deficiency or fee.
"Tax Return" shall mean any return, declaration, report,
estimate, claim for refund or credit, or information return or statement, and
any amendment, supplement or modification thereto, together with any supporting
information and schedules, which is filed or required to be filed under
applicable law in connection with the determination, assessment, collection or
administration of any Tax or ERISA, whether on a consolidated, combined, unitary
or separate basis or otherwise.
ARTICLE II
PURCHASE OF ASSETS; PAYMENT
2.01 Assets to be Transferred. Upon the terms and subject to
the conditions set forth in this Agreement, and subject to the satisfaction of
the conditions precedent set forth in Section 2.08 (or the waiver thereof by the
Seller or the Purchaser, as applicable), at the Closing, the Seller shall sell,
assign, transfer, convey and deliver to the Purchaser, and the Purchaser shall
purchase and accept from the Seller, all right, title and interest of the Seller
or any subsidiary of the Seller, as the case may be, in and to all of the
following assets of Seller, together with all books and records of the Seller
pertaining primarily thereto (individually, an "Asset", and collectively, the
"Assets"):
(a) the Software and the Software Products, files
specifications, design documents, user documentation,
change requests and defects lists, each as listed on
Schedule 2.01(a) hereto;
(b) all marketing collateral materials, including, but
not limited to, brochures, data sheets, ad and
editorial reprints, web site content, and materials
for the Software and the Software Products, each as
listed on Schedule 2.01(b) hereto;
-6-
(c) all reseller, consultant, customer and prospect
lists, sales contact management system database,
Software and licenses, customer support system
database and forecasts related to the Software and
the Software Products, each as listed on Schedule
2.01(c) hereto;
(d) Seller's file server relating to Source Code
repository and workstation and all configurations
thereto (including the hardware, Software and
licenses), and all peripheral equipment in primary
use for the development of the Software Products, all
Software Product content for the "xxxxxxxx.xxx" Web
site and all applicable Software, each as listed on
Schedule 2.01(d) hereto;
(e) any and all Material Contracts, as listed in Schedule
3.08(a) hereto;
(f) any and all trade names, trademarks, copyrights,
trade secrets and other intellectual and intangible
properties (whether or not registered) relating to
the Assets described in subsection (a) through (e)
above, including, without limitation, the
"xxxxxxxx.xxx" Web site URL ("xxx.xxxxxxxx.xxx") and
telephone and facsimile numbers for the Seller's
sales and support departments, each as listed on
Schedule 2.01(f) hereto; and
(g) any and all registration, licenses and permits (if
transferrable) related to the Assets described in
subsection (a) through (e) above, Developments,
Confidential Information and other general
intangibles and Documents of the Seller related
thereto, and any and all products and proceeds of and
payments and other distributions, accruing subsequent
to the date of this Agreement with respect to any and
all of the foregoing items as they relate to
registrations, licenses and permits, each as listed
on Schedule 2.01(g) hereto.
2.02 Excluded Assets. There shall be excluded from the Assets
transferred to the Purchaser hereunder all other assets of the Seller and
subsidiaries of the Seller not specifically listed as an Asset in Section 2.01
hereof (individually, an "Excluded Asset", and collectively, the "Excluded
Assets") including, but not limited to:
(a) any and all leases and other interests of the Seller
in real estate, including all immovable fixtures
affixed thereto, and any and all other leases of
equipment or other assets;
(b) the rights of the Seller under this Agreement,
including the right to receive the Purchase Price;
(c) all of the accounts receivable of the Seller for the
Software Products unpaid as of the Closing Date, and
all accounts, notes and trade receivables and other
instruments and chattel paper of the Seller;
-7-
(d) any and all of the Seller's minute books, tax
returns, accountants' work papers, and insurance
policies not expressly included in the Assets; and
(e) the assets and properties of Seller listed on
Schedule 2.02(e) hereto.
2.03 Assumed Obligations. At the Closing, the Purchaser shall
assume only those commitments of the Seller pertaining to the Assets as of the
Closing Date which are listed on Schedule 3.08(a) hereof (the "Assumed
Obligations"), which shall thereafter be performed by the Purchaser when due in
accordance with the terms thereof. Furthermore, Purchaser shall be responsible
for all liabilities arising form the operation of the Assets and the related
business from and after the Closing Date. Seller shall use its commercially
reasonable efforts to obtain the consents, waivers and approvals under any of
the Material Contracts as may be required in connection with this Agreement and
the transactions contemplated hereby (all of such consents and approvals are set
forth in Schedule 2.03) so as to preserve all rights of, and benefits to Seller
thereunder, provided, however, that in no event shall Seller be required to make
any payment to obtain such consent.
2.04 Liabilities Not Assumed by the Purchaser. Except as
otherwise expressly provided herein, the Purchaser has not, and shall not be
deemed or construed to have, in any way assumed or received the Assets subject
to, or in any way become liable or responsible for, any of the liabilities or
other obligations of the Seller or any affiliate of the Seller (each, an
"Excluded Liability", and collectively, the "Excluded Liabilities"), including,
without limitation, the following:
(a) any liability or other obligation respecting the
Seller's lease, ownership, operation or use of any
real estate;
(b) any liability or other obligation respecting any
Product Liability;
(c) any liability or other obligation for (i) any
incomplete, incorrect, expired or missing license,
registration or other permit required under any
Environmental Law or other applicable law, or (ii)
any violation of any applicable law, in each case
respecting any act, omission, condition, circumstance
or other event occurring or existing on, before or
after the Closing Date and relating in any way to (A)
any of the Assets, (B) any of the other assets or
properties of the Seller or any of its affiliates,
(C) the import, procurement, storage, manufacture,
use, shipment, sale or disposal of any product or
substance, or (D) any conduct of the Seller, any
affiliate of the Seller or any of their respective
Representatives;
(d) any liability or other obligation for any action,
suit, investigation or proceeding at law, in equity,
in arbitration or by or before any governmental
authority threatened, pending, decided or settled on,
before or after the Closing Date involving or
affecting the Seller or any Asset, whether or not
disclosed;
-8-
(e) any liability or other obligation of the Seller under
any employment agreement or in respect of any Plan;
(f) any liability or other obligation for any Tax for
which the Seller is or may be liable subject to
Section 7.05(b);
(g) any liability or other obligation to make any
severance or other payment to any employee who
declines any offer of employment from the Purchaser;
(h) any liability or other obligations of the Seller to
shareholders, officers, employees or other
Representatives of the Seller or any affiliate of the
Seller; or
(i) any liability or other obligation of the Seller with
respect to the Excluded Assets.
2.05 Purchase Price and Payment.
(a) The aggregate purchase price for the Assets (the "Purchase
Price") shall be 750,000 newly issued and initially unregistered shares (the
"Shares") of common stock of Purchaser, each having a par value of $0.01 per
share (the "Common Stock"), as adjusted between the date hereof and the Closing
Date in case the Purchaser shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock. If the product (the "Aggregate
Consideration") of (i) 750,000 (as adjusted) and (ii) the average of the daily
closing bid and ask price of the Common Stock on the NASDAQ Small Cap Market for
the five (5) days immediately preceding the two (2) Business Days preceding the
Closing Date (the "Average Share Price") is less than $500,000 (the "Minimum
Threshold") or greater than $1,500,000 (the "Maximum Threshold"), the Purchase
Price shall be adjusted by adding such number of Shares, if the Aggregate
Consideration is less than the Minimum Threshold, or subtracting such number of
Shares, if the Aggregate Consideration is greater than the Maximum Threshold,
equal to (x) the difference between the Minimum Threshold and the Aggregate
Consideration or the difference between the Aggregate Consideration and the
Maximum Threshold, as the case may be, divided by (y) the Average Share Price.
(b) The Purchase Price, as adjusted, shall be paid by the
delivery at the Closing (or as promptly as practical thereafter, but in any
event within five (5) Business Days) of stock certificates issued in the name of
the Seller and evidencing the Shares.
2.06 INTENTIONALLY OMITTED.
2.07 Instruments of Conveyance. In order to effectuate the
transfer of the Assets contemplated by Section 2.01, upon request, the Seller
will execute and deliver, all such bills of sale,
-9-
assignments and other documents or instruments of assignment, transfer or
conveyance as the Purchaser shall reasonably deem necessary or appropriate to
vest in or confirm to the Purchaser good and marketable title to those Assets
owned by the Seller, in each case free and clear of all Liens, each in form and
substance reasonably satisfactory to the Purchaser.
2.08 Conditions Precedent.
(a) Conditions to the Obligations of Seller. The obligations
of Seller to consummate the transactions contemplated by this Agreement are
subject to the fulfillment or waiver by Seller, on or before the Closing, of the
following conditions:
(i) Consents. Purchaser shall have obtained
those consents of third parties listed on
Schedule 2.08(a)(i) hereto.
(ii) Interim License and Consulting Agreement.
The Interim License and Consulting Agreement
shall have remained in full force and effect
up to and including the Closing Date unless
terminated as a result of a breach by
Seller.
(iii) Approval by Shareholders of Seller. The
shareholders of Seller shall have approved
this Agreement and the transactions
contemplated hereby in accordance with the
voting requirements of Seller's Articles of
Incorporation, By-laws and Chapters 12 and
13 of the California Corporations Code.
(iv) Representations and Warranties True. All of
the representations and warranties of
Purchaser contained in this Agreement or in
any certificate, document or instrument
delivered pursuant hereto or in connection
with the transactions contemplated hereby
shall be complete and correct in all
material respects on and as of the date
hereof and on and as of the Closing Date as
if made on and as of such date, except with
respect to those representations and
warranties specifically made as of an
earlier date in which case such
representations and warranties shall be true
and correct in all material respects as of
such earlier date.
(v) Covenants and Agreements Performed.
Purchaser shall have performed or complied
in all material respects with or delivered
in all material respects all covenants,
agreements, conditions or documents required
by this Agreement to be performed, complied
with or delivered by Purchaser prior to or
at the Closing.
(vi) Opinion of Counsel to Purchaser. Purchaser
shall have delivered to Seller the opinion
of Xxxxxx Xxxxxx Flattau & Klimpl, LLP,
counsel
-10-
to Purchaser, dated as of the date hereto,
in the form attached hereto as Exhibit A.
(vii) Other Documents. Purchaser shall have
delivered all such certified resolutions,
certificates, documents and instruments with
respect to Purchaser (including instruments
of assumption) as Seller and its counsel may
reasonably request prior to the Closing to
carry out the intent and purpose of this
Agreement.
(viii) No Actions, Suits or Proceedings. No action,
suit or proceeding shall be pending before
any court, governmental body or other
authority to restrain or prohibit this
Agreement or the consummation of the
transactions contemplated hereby.
(ix) Officers' Certificate. Seller shall have
been furnished with a certificate executed
on behalf of Purchaser by its President or a
Vice President, and a Secretary or an
Assistant Secretary, dated the date hereof,
certifying, in such detail as Seller may
reasonably request, that (a) the conditions
set forth in Section 2 of this Agreement
have been fulfilled at or prior to the date
hereof (including as of the Closing Date
Section 2.08(a)(iv) hereof.
(x) Assumption of Contracts and Other Assumed
Obligations. Purchaser shall have executed
and delivered to Seller such instruments of
assumption as Seller and its counsel may
reasonably request in order to assume the
Assumed Obligations.
(b) Conditions to the Obligations of Purchaser. The
obligations of Purchaser to consummate the transactions contemplated by this
Agreement are subject to the fulfillment or waiver by Purchaser, on or before
the Closing, of the following conditions:
(i) Consents. Seller shall have obtained those
consents of third parties listed on Schedule
2.08 (b)(i) hereto.
(ii) Interim License and Consulting Agreement.
The Interim License and Consulting Agreement
shall have remained in full force and effect
up to and including the Closing Date unless
terminated as result of a material breach by
Purchaser.
(iii) Representations and Warranties True. All of
the representations and warranties of Seller
contained in this Agreement or in any
certificate, document or instrument
delivered pursuant hereto or in connection
with the transactions contemplated hereby
shall be complete and correct in all
material respects on and as of the date
hereof as if made
-11-
on and as of the date hereof, except with
respect to those representations and
warranties specifically made as of an
earlier date, in which case such
representations and warranties shall be
complete and correct in all material
respects as of such earlier date.
(iv) Covenants and Agreements Performed. Seller
shall have performed in all material
respects or complied in all material
respects with or delivered all covenants,
agreements, conditions or documents required
by this Agreement to be performed, complied
with or delivered by Seller prior to or at
the Closing.
(v) Opinion of Counsel to Seller. Seller shall
have delivered to Purchaser the opinion of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, counsel for
Seller, dated the Closing Date, in the form
attached hereto as Exhibit B.
(vi) Other Documents. Seller shall have delivered
all such certified resolutions,
certificates, documents or instruments with
respect to Seller as Purchaser may
reasonably request prior to the Closing to
carry out the intent and purpose of this
Agreement.
(vii) No Actions, Suits or Proceedings. No action,
suit or proceeding shall be pending before
any court, governmental body or other
authority to restrain or prohibit this
Agreement or the consummation of the
transactions contemplated hereby.
(viii) Instrument of Conveyance. Seller shall have
executed and delivered to Purchaser such
instruments of conveyance as Purchaser may
reasonably request to transfer and vest in
Purchaser good and valid title to the
Assets.
(ix) No Changes. During the period from the date
hereof to the Closing Date, there shall not
have been any material adverse change in the
Assets (except due to Purchaser's action or
failure to act) where such change would have
a Material Adverse Effect.
(x) Officers' Certificate. Purchaser shall have
been furnished with a certificate executed
on behalf of Seller by its President or a
Vice President, and Secretary or Assistant
Secretary, dated the Closing Date,
certifying, in such detail as Purchaser may
reasonably request, that the conditions set
forth in Section 2 of this Agreement have
been fulfilled at or prior to the date
hereof, (including as of the Closing Date,
Section 2.08(b)(iii))
-12-
2.09 Closing. Subject to Section 7.02(b), the closing of the
purchase and sale of the Assets shall take place at the offices of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx, within five (5) days after Seller's shareholders approve this
Agreement and the transactions contemplated hereby, or at such other time as the
parties may mutually agree in writing (such time and date being referred to
herein as the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The disclosures contained in the Schedules hereto for any
paragraph shall qualify each other paragraph contained in this Article III as it
relates to the subject matter of each such other paragraph. Any reference in
this Article III to an agreement being "enforceable" shall be deemed to be
qualified to the extent such enforceability is subject to (i) laws of general
application relating to bankruptcy, insolvency, moratorium and the relief of
debtors, and (ii) the availability of specific performance, injunctive relief
and other equitable remedies. To induce the Purchaser to enter into this
Agreement and the other Purchase Documents to which it is a party and to
purchase the Assets, the Seller hereby represents and warrants to the Purchaser,
as the date hereof and as of the Closing Date (except as otherwise expressly
provided below or on the Schedules attached hereto and corresponding to the
Section numbers contained in this Article III), that:
3.01 Organization, Powers, Etc. The Seller: (a) is duly
organized, validly existing and in good standing under the laws of the State of
California, its state of organization; (b) has the power and authority to carry
on its business as now conducted and to own or hold under lease the assets and
properties it purports to own or hold under lease; (c) is duly qualified,
licensed or registered to transact its business and in good standing in every
jurisdiction in which failure to be so qualified, licensed or registered would
have a Material Adverse Effect; (d) has the power and authority to execute and
deliver this Agreement and each of the other Purchase Documents to which it is
or will be a party and to perform all of its obligations hereunder and
thereunder; and (e) currently conducts its business exclusively under the name
set forth in the Introduction at its chief executive office and principal place
of business located in Scotts Valley, California.
3.02 Authorization, Conflicts and Validity. The execution and
delivery by the Seller of this Agreement and each of the other Purchase
Documents to which it is or will be a party and the performance by the Seller of
all of its obligations hereunder and thereunder: (a) have been duly authorized
by all requisite corporate action; (b) will not violate or be in conflict with
any term or provision of (i) any applicable law, (ii) any judgment, order, writ,
injunction, decree or consent of any court or other judicial authority, or (iii)
any Corporate Document; (c) will not violate, be in conflict with, result in a
breach of or constitute a default (with or without the giving of notice or the
passage of time or both) under any term or provision of any Material Document;
and (d) will not result in the creation or imposition of any material Lien of
any nature upon any of the Assets, except in each case (other than (b)(iii))
that would not individually or in the aggregate have a Material Adverse Effect.
This Agreement is, and the other Purchase Documents to which the Seller is or
will be a party when
-13-
executed and delivered will be, legal, valid and binding obligations of the
Seller, enforceable in accordance with their respective terms and provisions.
3.03 Consents, Etc. Except as set forth on Schedule 3.03
hereto, no material consent, approval or authorization of, or registration,
declaration or filing with, or notice to, any governmental authority, creditor
or other person that has not been duly and timely obtained or made (including,
without limitation, the consent of the shareholders of the Seller, but not
including any filings and notices under applicable bulk sales laws, which under
applicable law is the responsibility of the Purchaser) is required as a
condition precedent, concurrent or subsequent to or in connection with the due
and valid execution, delivery and performance by the Seller of this Agreement or
any other Purchase Document to which the Seller is or will be a party or the
legality, validity, binding effect or enforceability of any of their respective
representations, warranties, covenants and other terms and provisions.
3.04 Litigation. Except as set forth on Schedule 3.04 hereto,
there are no actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Seller) pending or to the knowledge of Seller,
threatened at law, in equity, in arbitration or by or before any other
governmental authority involving or affecting: (a) the Seller; (b) any Corporate
Document; (c) any part of the Assets, including, without limitation, any
proprietary Software and its underlying Source Code; (d) any of the Assumed
Obligations; or (e) any of the transactions contemplated in this Agreement and
the other Purchase Documents that, if adversely determined, would have a
Material Adverse Effect. The Seller is not in default with respect to any
judgment, order, writ, injunction, decree or consent of any court or other
judicial authority, which default would have or has had a Material Adverse
Effect.
3.05 Compliance with Applicable Laws. The Seller is in
material compliance with and conforms to all material applicable laws. The
procurement, storage, containment, presence, manufacture, distribution, removal
and disposition of all inventory and substances and the use and operation of all
assets and properties (including, without limitation, machinery, equipment, real
estate and improvements), as now or previously existing, as now or previously
conducted by or for the Seller, or as contemplated, are in full compliance with
and conform to all applicable laws except as would not have a Material Adverse
Effect.
3.06 Payment of Debts and Taxes. Except as set forth on
Schedule 3.06 hereto, and to the extent to which the failure to do so would have
a Material Adverse Effect, the Seller: (a) has duly and timely filed all
required Tax Returns with the appropriate taxing authorities, which Tax Returns
are true, correct and complete in all material respects; (b) has duly and timely
paid or caused to be paid all Taxes for which the Seller is or may be liable as
shown on those Tax Returns; (c) has made full provision for the payment of all
Taxes that have accrued but which were not due and payable on or before the
Closing Date; and (d) has duly and timely withheld or collected and paid over to
the appropriate taxing authorities all Taxes required to have been withheld or
collected and paid over by it. To the extent to which the failure to do so would
have a Material Adverse Effect, no adjustment relating to any such Tax Return
has been proposed formally or informally by any taxing authority or any
representative thereof, and there is no request for information currently
outstanding
-14-
that could affect any Tax for which the Seller is or may be liable or to which
any of the Assets or the Business may be subject. To the Seller's knowledge,
there is no pending audit, examination, investigation, action or other
proceeding relating to the assessment or allocation of any Tax for which any of
the Assets may be subject and to the Seller's knowledge, no such audit,
examination, investigation, action, proceeding, adjustment or request has been
threatened. There is no outstanding waiver or agreement that extends the statute
of limitations for any period with respect to the assessment or collection of
any Tax for which the Seller is or may be liable relating to any of the Assets.
There is no Tax Lien on any of the Assets. The Seller is current in its payment
of debts and performance of obligations with respect to the Assets (other than
Taxes), except to the extent payment or performance is not or would not yet be
required under applicable law and except to the extent failure to so pay or
perform would not have a Material Adverse Effect.
3.07 Title to Assets, Encumbrances, Etc. The Seller or its
subsidiaries owns and has good valid title to all of the Assets, and no part of
the Assets is subject to any Lien of any kind whatsoever except Permitted Liens
(as defined below). There are no claims of third parties that would prevent any
assignee or purchaser of all or any portion of the Assets from receiving any
payments, distributions and proceeds with respect thereto, if any, without any
defense, counterclaim, set-off, right of recoupment, abatement or other claim or
determination whatsoever, except (i) the lien of current taxes not yet due and
payable, (ii) such imperfections of title, liens and easements as do not and
will not materially detract from or interfere with the use of the Assets, or
otherwise materially impair the Assets and (iii) liens securing debt or royalty
payment obligations that are disclosed to Purchaser ("Permitted Liens").
3.08 Material Contracts and Other Agreements.
(a) Schedule 3.08(a) hereto contains a complete and accurate
list of each Material Contract.
(b) The Seller has made available to the Purchaser true,
complete and correct copies (and, on the Closing Date, will deliver to the
Purchaser all originals in its possession) of all current and proposed Material
Contracts, including all supplements, modifications, amendments and restatements
respecting each made to date or proposed. There are no renegotiations of, or
attempts to renegotiate, or outstanding rights to renegotiate, any material
amounts paid or payable to the Seller under current or completed contracts,
agreements, or commitments with any person having the contractual or statutory
right to demand or require such renegotiation. To Seller's knowledge, no such
person has made written demand for such renegotiation.
(c) Except as set forth in Schedule 3.08(c) hereto, each
Material Contract fully reflects all agreements and understandings with the
signer with respect thereto, and is assignable to the Purchaser in accordance
with the terms and provisions hereof and thereof. No condition exists or event
has occurred that, with notice or lapse of time or both, would constitute a
default by Seller or to Seller's knowledge, the other party thereto, under any
of the foregoing.
-15-
3.09 Employees. Schedule 3.09 hereto contains a complete and
accurate current list of each Prospective Employee, specifying for each: (a)
name; (b) job title; (c) existence and date of any employment or other
agreement; (d) current compensation paid or payable and showing any change in
compensation since January 1, 1998; (e) vacation accrued; (f) all benefits and
other entitlements; and (g) ownership interest in the Seller.
3.10 Intellectual Property.
(a) Except as set forth on Schedule 3.10, Seller is the sole
and exclusive owner, with all right, title and interest in and to (free and
clear of any liens or encumbrances), or has a right to use (and is not
contractually obligated to pay any compensation to any third party in respect
thereof), the patents, trademarks, trade names, service marks, copyrights, and
any applications, therefor listed in Schedule 3.10, and net lists, schematics,
technology, know-how, computer Software programs or applications (in both source
code and object code form), and tangible or intangible proprietary information
or material that are, in each case, used with respect to the Assets by the
Seller as currently conducted (the "Site Intellectual Property Rights").
(b) Schedule 3.10 sets forth a complete list of all patents,
registered and material unregistered trademarks, registered copyrights, trade
names and service marks, and any applications therefor, included in the Site
Intellectual Property Rights, and specifies, where applicable, the jurisdictions
in which each such Site Intellectual Property Right has been issued or
registered or in which an application for such issuance and registration has
filed, including the respective registration or application numbers and the
names of all registered owners.
(c) Except as set forth in Schedule 3.10, no claims with
respect to Site Intellectual Property Rights have been asserted or are
threatened by any person, (i) to the effect that the manufacture, sale,
licensing or use of any products relating to the Assets infringes on any
copyright, patent, trade xxxx, service xxxx, trade secret or other proprietary
right of others, (ii) against the use by Site of any trademarks, service marks,
trade names, trade secrets, copyrights, maskworks, patents, technology, know-how
or computer Software programs and applications relating to the Assets, or (iii)
challenging the ownership by Site or the validity or effectiveness of any of
Site Intellectual Property Rights. To Seller's knowledge, except as set forth in
the Schedule 3.10, Seller has not infringed as it relates to the Assets any
copyright, patent, trademark, service xxxx, trade secret or other proprietary
right of any third party. To Seller's knowledge, except as set forth in the
Schedule 3.10, there is no material unauthorized use, infringement or
misappropriation of any of Site Intellectual Property Rights by any third party,
including any employee or former employee of Seller relating to the Assets. No
Site Intellectual Property Right or product of Seller is subject to any
outstanding decree, order, judgment, or stipulation restricting in any manner
the licensing thereof by Seller.
(d) Seller has taken reasonable efforts to ensure that each
employee, consultant or contractor of Seller given access to proprietary and
confidential information of Seller as it relates to the Assets has executed a
proprietary information and confidentiality agreement substantially in Seller's
standard forms and Seller is not aware of any person who has not executed such
an
-16-
agreement. All Software Products included in the Site Intellectual Property
Rights are either commercially available Software subject to shrinkwrap license
or original with Seller and has been either created by employees of Seller on a
work-for-hire basis or by consultants or contractors who have created such
Software themselves and have assigned all rights they may have had in such
Software to Seller.
3.11 Absence of Certain Events. Except as set forth on
Schedule 3.11, from the date hereof to the Closing Date, Seller has not in
connection with the Assets:
(a) mortgaged, pledged or subjected to any Lien any of the
Assets;
(b) other than the transactions contemplated by this Agreement
and the other Purchase Documents, disposed of any Assets, or entered into any
agreement or other arrangement for any such disposition;
(c) other than the transactions contemplated by this Agreement
and the other Purchase Documents, granted any rights or licenses under any of
its Intellectual Properties included in the Assets or entered into any licensing
or distributorship arrangements with respect thereto; or
(d) entered into any agreement or committed to take any action
set forth in subsections (a) through (c) of this Section 3.11.
3.12 Suppliers and Customers. Schedule 3.12 hereto sets forth
a complete and correct list of the ten (10) largest suppliers and/or vendors and
ten (10) largest customers of Seller with respect to the Software Products
(other than customers of distributors).
3.13 Insurance. Schedule 3.13 sets forth a brief description
(showing the policy number, name of carrier, coverage, deductible amounts, term,
expiration date and annual premium) of all policies of fire, casualty, liability
and other forms of insurance owned by or for the benefit of the Seller and
relating to the Assets, and all self-insurance programs maintained for the
Assets. All such policies are in full force and effect, all premiums due thereon
have been paid in full, and are adequate in amount, scope and coverage to
protect the Seller against any Loss (less the deductible set forth on Schedule
3.13 with respect to such policy) in connection with the Assets.
3.14 Brokers. Except as payable to Alliant Partners, Seller
has not paid or become obligated to pay any fee or commission to any broker,
finder, investment banker or other intermediary in connection with this
Agreement or the transactions contemplated hereby.
3.15 No Misrepresentation by the Seller, Disclosure, Etc. No
representation or warranty of the Seller made or contained in this Agreement or
any other Purchase Document, and no report, statement, certificate, schedule or
other document or information furnished or to be furnished by or on behalf of
the Seller in connection with the transactions contemplated by this Agreement
and the other Purchase Documents, contains or will contain a misstatement of a
material fact or omits or will omit to state a material fact required to be
stated therein in order to make it, in
-17-
the light of the circumstances under which made, not misleading. Except as
specifically disclosed in this Agreement or in Seller's public disclosure
documents filed with the Securities and Exchange Commission, there is no fact
known to the Seller with specific application to the Assets or the Assumed
Obligations (other than general economic or industry conditions) that will or,
so far as the Seller can reasonably foresee, would have a Material Adverse
Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
To induce the Seller to enter into this Agreement and the
other Purchase Documents to which it is a party and to sell the Assets, the
Purchaser hereby represents and warrants to the Seller, as of the date hereof
and as of the Closing Date (express as otherwise expressly provided below) that:
4.01 Organization, Powers, Etc. The Purchaser: (a) is duly
organized, validly existing and in good standing under the laws of the State of
Delaware, its state of incorporation; (b) has the power and authority to carry
on its business as now conducted and to own or hold under lease the assets and
properties it purports to own or hold under lease; (c) is duly qualified,
licensed or registered to transact its business and in good standing in every
jurisdiction in which failure to be so qualified, licensed or registered would
have a Material Adverse Effect; (d) has the power and authority to execute and
deliver this Agreement and each of the other Purchase Documents to which it is
or will be a party and to perform all of its obligations hereunder and
thereunder; and (e) conducts its business exclusively under the name and at the
executive office and principal place of business at the address set forth in the
Introduction and has done so since the date of its incorporation.
4.02 Authorization, Conflicts and Validity. The execution and
delivery by the Purchaser of this Agreement and each of the other Purchase
Documents to which it is or will be a party and the performance by the Purchaser
of all of its obligations hereunder and thereunder: (a) have been duly
authorized by all requisite corporate action; and (b) will not violate or be in
conflict with any term or provision of (i) any applicable law, (ii) any
judgment, order, writ, injunction, decree or consent of any court or other
judicial authority, or (iii) any of its charter or by-laws. This Agreement is,
and the other Purchase Documents to which the Purchaser is or will be a party
when executed and delivered will be, legal, valid and binding obligations of the
Purchaser, enforceable in accordance with their respective terms and provisions.
4.03 Shares. Each of the Shares is duly authorized, validly
issued, fully paid, non-assessable, will not be subject to any preemptive or
other statutory right of stockholders, will be issued in compliance with
applicable U.S. Federal and state securities laws and will be free of any liens
or encumbrances other than any liens or encumbrances created by or imposed upon
the holders hereof.
4.04 Litigation. There are no actions, suits, investigations
or proceedings (whether or not purportedly on behalf of the Purchaser) pending
or, to the knowledge of Purchaser, threatened
-18-
or contemplated at law, in equity, in arbitration or by or before any other
governmental authority involving of affecting the Purchaser that, if adversely
determined, would have a Material Adverse Effect, nor, to the knowledge of
Purchaser, is there any basis for the institution of any such action, suit,
investigation or proceeding. The Purchaser is not in default with respect to any
judgment, order, writ, injunction, decree or consent of any court or other
judicial authority, which default would have a Material Adverse Effect.
4.05 SEC Filings. The Purchaser has filed with the Securities
and Exchange Commission all reports, schedules, forms, statements and other
documents required by the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, to be filed by the Purchaser since January 1,
1995 (collectively, and in each case including all exhibits and schedules
thereto and documents incorporated by reference therein, the "Purchaser SEC
Documents"). As of their respective dates, except to the extent revised or
superseded by a subsequent filing with the Securities and Exchange Commission on
or before the date of this Agreement, the Purchaser SEC Documents filed by the
Purchaser complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of the
Purchaser SEC Documents (including any and all financial statements included
therein) filed by the Purchaser as of such dates contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of the Purchaser and its consolidated Subsidiaries included
in the Purchaser SEC Documents, including any amendments thereto, are complete,
accurate and fairly present the Purchaser's financial condition as of the date
thereof and the results of its operations for the periods covered thereby comply
as to form in all material respects with applicable accounting requirements
(including GAAP consistently applied during such periods) and the published
rules and regulations of the Securities and Exchange Commission with respect
thereto. The Purchaser has filed with the Securities and Exchange Commission as
exhibits to the Purchaser SEC Documents all agreements, contracts and other
documents or instruments required to be so filed, and such exhibits are true and
complete copies of such agreements, contracts and other documents or
instruments, as the case may be.
4.06 Tax Returns and Audits. Purchaser and each of its
subsidiaries have timely filed all Tax Returns required to be filed by Purchaser
and each of its subsidiaries with any Tax authority since January 1, 1995,
except such Tax Returns which are not material to Purchaser, and have paid all
Taxes shown to be due on such Tax Returns on a timely basis. There is no Tax
deficiency outstanding, proposed in writing (or otherwise to Purchaser's
knowledge proposed) or assessed against Purchaser or any of its subsidiaries,
nor has Purchaser or any of its subsidiaries executed any unexpired waiver of
any statute of limitations on or extending the period for the assessment or
collection of any Tax. No audit or other examination of any Tax Return of
Purchaser or any of its subsidiaries by any Tax authority is presently in
progress, nor has Purchaser or any of its subsidiaries been notified in writing
(or otherwise to Purchaser's knowledge notified) of any request for such an
audit or other examination. No adjustment relating to any Tax Returns filed by
Purchaser or any of its subsidiaries has been proposed in writing by any Tax
authority to Purchaser or any of its subsidiaries. Neither Purchaser nor any of
its subsidiaries has any liability for unpaid Taxes which has not been accrued
for or reserved in accordance with GAAP on Purchaser's financial
-19-
statements (or in any Purchaser SEC Report filed prior to the date hereof, or
for liabilities accruing following the date hereof, in any Purchaser SEC Report
filed prior to the date of the Closing), whether asserted or unasserted,
contingent or otherwise, which is material to Purchaser, other than any
liability for unpaid Taxes that may have accrued since January 1, 1995 in
connection with the operation of the business of Purchaser and its subsidiaries
in the ordinary course. Neither Purchaser nor any of its subsidiaries is party
to, or has any obligation under, or will have any obligation as a result of the
transactions contemplated hereby under, any tax-sharing, tax indemnity or tax
allocation agreement or arrangement. Neither Purchaser nor any of its
subsidiaries is a party to (A) any foreign Tax holidays, (B) any intercompany
transfer pricing agreements, or other arrangement that have been established by
Purchaser or any of its subsidiaries with any Tax authority and (C) any
expatriate programs or policies affecting Purchaser or any of its subsidiaries.
4.07 Consents, Etc. No consent, approval or authorization of,
or registration, declaration or filing with, or notice to, any governmental
authority, creditor or other person that has not been duly and timely obtained
or made (including, without limitation, any filings and notices under applicable
laws, including bulk sales laws) is required as a condition precedent,
concurrent or subsequent to or in connection with the due and valid execution,
delivery and performance by the Purchaser, of this Agreement or any other
Purchase Document to which the Purchaser is or will be a party or the legality,
validity, binding effect or enforceability of any of their respective
representations, warranties, covenants and other terms and provisions.
4.08 Absence of Change. Since June 30, 1998, except as
disclosed in Purchaser's SEC Documents prior to the date hereof, there has not
occurred a Material Adverse Effect on Purchaser.
ARTICLE V
INDEMNIFICATION AND CERTAIN OTHER CONTINUING OBLIGATIONS
5.01 Indemnification by the Seller.
(a) During the one (1) year period following the Closing Date,
the Purchaser and each of its affiliates, and their respective accountants,
attorneys and other Representatives (individually, a "Purchaser's Indemnified
Person", and collectively, the "Purchaser's Indemnified Persons") are each
hereby indemnified, and shall be reimbursed and held harmless on demand, by the
Seller, upon demand in accordance with this Article V (with indemnity made first
from the Escrow Fund), and (at the request of the Purchaser) defended at the
reasonable expense of the Seller, with one counsel reasonably selected by the
Purchaser, from and against any and all Losses (excluding, however, the
disbursements, expenses and fees of their respective attorneys) imposed upon,
incurred by or asserted against any of the Purchaser's Indemnified Persons
resulting from, arising out of or directly or indirectly related to: (i) any
Excluded Liability; (ii) any inaccuracy in or omission from any representation,
warranty or other information contained in this Agreement or any other Purchase
Document or contained in any certificate, report, statement, schedule or other
document or information furnished in connection therewith; (iii) any default
(whether in whole or in part) in the due or timely observance, performance or
satisfaction of any covenant or other term or provision of
-20-
this Agreement or any other Purchase Document by the Seller and (iv) any third
party copyright, trademark or patent infringement action with respect to the
Software Products and Software related to periods or actions prior to the
Closing Date.
(b) Indemnification by the Purchaser. During the one (1) year
period following the Closing Date, the Seller and each of its affiliates, and
their respective accountants, attorneys and other Representatives (individually,
a "Seller's Indemnified Person", and collectively, the "Seller's Indemnified
Persons") are each hereby indemnified, and shall be reimbursed and held harmless
on demand, by the Purchaser, upon demand, and (at the request of the Seller)
defended at the reasonable expense of the Purchaser, with one counsel reasonably
selected by the Seller, from and against any and all claims, liabilities,
expenses (excluding, however, the disbursements, expenses and fees of their
respective attorneys) and other Losses that may be imposed upon, incurred by or
asserted against any of the Seller's Indemnified Persons resulting from, arising
out of or directly or indirectly related to: (i) any inaccuracy in or omission
from any representation, warranty or other information contained in this
Agreement or any other Purchase Document or contained in any certificate,
report, statement, schedule or other document or information furnished in
connection therewith; (ii) any default (whether in whole or in part) in the due
or timely observance, performance or satisfaction of any covenant or other term
or provision of this Agreement or any other Purchase Document by the Purchaser;
and (iii) any Assumed Liability.
5.02 Limitations on Amount.
(a) The Seller shall have no liability for indemnification
with respect to any Loss based upon Section 5.01 hereof until the aggregate of
all Losses exceeds $100,000 (the "Liability Threshold"). Then if the Liability
Threshold is exceeded, the Seller shall be responsible for all Losses from the
first dollar of Loss, without regard to the Liability Threshold. Notwithstanding
anything to the contrary in this Agreement, the Seller shall have no liability
for indemnification to the extent that the aggregate amount of all Losses with
respect to such matters exceeds an amount equal to fifty percent (50%) of the
product of (i) the Purchase Price, as adjusted pursuant to Section 2.05(a)
hereof, and (ii) the Average Share Price (as defined in Section 2.05(a), (the
"Indemnification Limit"). At Seller's sole discretion, any and all claims for
Losses by Purchaser's Indemnified Persons shall be satisfied by (i) the delivery
of that number of Indemnification Shares (as defined in Section 5.03(a)) equal
to (a) the amount of Loss divided by (b) the Average Share Price, (ii) a cash
payment equal to the amount of Loss, or (iii) a combination of (i) and (ii)
above.
(b) Notwithstanding anything to the contrary set forth in
Section 5.02(a) hereof, the limitations set forth in Section 5.02(a) shall not
apply to any claim by the Purchaser or other Purchaser's Indemnified Person with
respect to a claim for indemnification with respect to (i) the representations
or warranties set forth in Section 3.02; or (ii) any claim for indemnification
based upon fraud.
-21-
5.03 Indemnification Holdback.
(a) 250,000 Shares (prior to any adjustment pursuant to
Section 2.05(a)) shall be placed in an escrow account (the "Escrow Fund") with
Greater Bay Trust Company (the "Escrow Agent") following the Closing to be
available for indemnification claims pursuant to Section 5.01, if any (the
"Indemnification Shares") for a period not to exceed three hundred sixty (360)
days following the Closing (the "Escrow Period"), except as otherwise provided
below. One hundred eighty (180) days after the Closing, 125,000 Shares (less the
number of any Shares paid or claimed to be payable in connection with any claim
pursuant to Section 5.01) shall be released from escrow, and three hundred sixty
(360) days after the Closing, the remaining Shares shall be released from
escrow. Notwithstanding the foregoing, to the extent insufficient shares remain
in escrow, Seller shall meet its responsibilities pursuant to Sections 5.01 and
5.02 to indemnify the Purchaser's Indemnified Person's with timely cash payments
in any amount or amounts up to and including the Indemnification Limit.
Furthermore, existence of the Escrow Fund shall be extended in an amount equal
to that portion of the Escrow Fund which, in the reasonable judgement of
Purchaser, subject to the objection of Seller and the subsequent arbitration of
the matter in the manner provided in Section 5.03(d) hereof, is necessary to
satisfy any unsatisfied claims specified in any Officer's Certificate (as
defined below) theretofore delivered to the Escrow Agent prior to the end of the
Escrow Period (which amount shall remain in the Escrow Fund until such claims
have been resolved). As soon as all such claims have been resolved, the Escrow
Agent shall deliver to Seller the remaining portion of the Escrow Fund not
required to satisfy such claims.
(b) The Escrow Agent shall hold and safeguard the Escrow Fund
during the Escrow Period, shall treat such fund as a trust fund in accordance
with the terms of this Agreement and not as the property of Purchaser and shall
hold and dispose of the Escrow Fund only in accordance with the terms hereof.
(c) Upon receipt by the Escrow Agent at any time on or before
the last day of the Escrow Period of a certificate signed by any officer of
Purchaser (an "Officer's Certificate"): (A) stating that Purchaser has incurred
and paid or properly accrued Losses, or reasonably anticipates that it may have
to pay or accrue Losses, and (B) specifying in reasonable detail the individual
items of Losses included in the amount so stated, the date each such item was
incurred and paid or properly accrued, or the basis for such anticipated
liability, and the nature of the misrepresentation, breach of warranty or claim
to which such item is related, the Escrow Agent shall, subject to the provisions
of Sections 5.01 and 5.02 hereof and this Section 5.03, deliver to Purchaser out
of the Escrow Fund, as promptly as practicable, such amounts held in the Escrow
Fund equal to such Losses. Purchaser shall submit an Officer's Certificate only
in good faith.
(d) At the time of delivery of any Officer's Certificate to
the Escrow Agent, a duplicate copy of such certificate shall be delivered to
Seller, and for a period of thirty (30) days after such delivery the Escrow
Agent shall make no delivery to Purchaser of any Escrow Amount specified in such
Officer's Certificate unless the Escrow Agent shall have received written
authorization from the Seller to make such delivery. After the expiration of
such thirty (30) day period, the Escrow Agent shall make delivery of an amount
from the Escrow Fund in accordance with such Officer's
-22-
Certificate and Section 5.03(c) hereof, provided, that, no such payment or
delivery may be made if Seller shall object in a written statement to the claim
made in the Officer's Certificate, and such statement shall have been delivered
to the Escrow Agent prior to the expiration of such thirty (30) day period.
Seller shall only submit an objection in good faith.
(e) (i) In case Seller shall so object in writing to any claim
or claims made in any Officer's Certificate, Seller and Purchaser shall attempt
in good faith to agree upon the rights of the respective parties with respect to
each of such claims. If Seller and Purchaser should so agree, a memorandum
setting forth such agreement shall be prepared and signed by both parties and
shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to
rely on any such memorandum signed by Purchaser and Seller and distribute
amounts from the Escrow Fund in accordance with the terms thereof.
(ii) If no such agreement can be reached after good
faith negotiation, either Purchaser or Seller may demand arbitration of the
matter unless the amount of the damage or loss is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in either such
event the matter shall be settled by arbitration conducted by one arbitrator.
Purchaser and Seller shall each select one arbitrator, and the two arbitrators
so selected shall select a third arbitrator (who shall be affiliated with a Big
Six accounting firm or a successor thereto) (the "Arbitrator"). The Arbitrator
shall, within ten (10) business days after the last day of any hearings on any
motion, issue a definitive ruling on such motion. The Arbitrator shall also,
within twenty (20) business days from the last day of any hearings regarding the
issuance of any awards, issue a definitive ruling on the issuance of any such
award in such arbitration. The Arbitrator shall also establish procedures
designed to reduce the cost and time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the Arbitrator, to discover
relevant information from the opposing parties about the subject matter of the
dispute. The Arbitrator shall also rule upon motions to compel or limit
discovery and shall have the authority to impose sanctions, including attorneys
fees and costs, to the extent as a court of competent law or equity, should the
Arbitrator determine that discovery was sought without substantial justification
or that discovery was refused or objected to without substantial justification.
The decision of the Arbitrator as to the validity and amount of any claim in
such Officer's Certificate shall be binding and conclusive upon the parties to
this Agreement, and notwithstanding anything in Section 5.03(f) hereof, the
Escrow Agent shall be entitled to act in accordance with such decision and make
or withhold payments out of the Escrow Fund in accordance therewith. Such
decision shall be written and shall be supported by written findings of fact and
conclusions which shall set forth the award, judgment, decree or order awarded
by the Arbitrator.
(iii) In no event may punitive or exemplary damages
be awarded in any arbitration, and arbitration between the parties shall be
final and binding. Judgment upon any award rendered by the Arbitrator may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Santa Xxxxx County, California under the Commercial Rules then in effect of the
American Arbitration Association. Each party to any arbitration pursuant to this
Section 5.03(e) shall pay its own expenses; the fees of each arbitrator and the
administrative fee of the American Arbitration Association shall be borne
equally by Purchaser, on the one hand, and Seller, on the other.
-23-
(f) For any third party claim which Purchaser believes may
result in a demand against the Escrow Fund, Purchaser shall promptly notify
Seller of such claim, and Seller shall be entitled, at Seller's expense, to
participate in any defense of such claim, and to the extent Seller wishes, to
assume the defense of such claim with counsel satisfactory to Purchaser and,
after notice from Seller to Purchaser of Seller's election to assume the defense
of such claim, the Seller will not, as long as it diligently conducts such
defense, be liable to Purchaser for any fees or other counsel or any other
expenses with respect to the defense of such claim.
(g) The Escrow Agent's duties shall be as follows:
(i) The Escrow Agent shall be obligated only for
the performance of such duties as are
specifically set forth herein, and as set
forth in any additional written escrow
instructions which the Escrow Agent may
receive after the date of this Agreement
which are signed by an officer of Purchaser
and Seller, and may rely and shall be
protected in relying or refraining from
acting on any instrument reasonably believed
to be genuine and to have been signed or
presented by the proper party or parties.
The Escrow Agent shall not be liable for any
act done or omitted hereunder as Escrow
Agent while acting in good faith and in the
exercise of reasonable judgment, and any act
done or omitted pursuant to the written
advice of counsel shall be conclusive
evidence of such good faith.
(ii) The Escrow Agent is hereby expressly
authorized to disregard any and all warnings
given by any of the parties hereto or by any
other person, excepting only orders or
process or courts of law, and is hereby
expressly authorized to comply with and obey
orders, judgments or decrees of any court.
In case the Escrow Agent obeys or complies
with any such order, judgment or decree of
any court, the Escrow Agent shall not be
liable to any of the parties hereto or to
any other person by reason of such
compliance, notwithstanding any such order,
judgment or decree being subsequently
reversed, modified, annulled, set aside,
vacated or found to have been entered
without jurisdiction.
(iii) The Escrow Agent shall not be liable in any
respect on account of the identity,
authority or rights of the parties executing
or delivering or purporting to execute or
deliver this Agreement or any documents or
papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the
expiration of any rights under any statue of
limitations with respect to this Agreement
or any documents deposited with the Escrow
Agent.
-24-
(v) The Escrow Agent may resign at any time upon
giving at least thirty (30) days written
notice to Purchaser and Seller; provided,
however, that no such resignation shall
become effective until the appointment of a
successor escrow agent which shall be
accompanied as follows: Purchaser and Seller
shall use their best efforts to mutually
agree upon a successor escrow agent within
thirty (30) days after receiving such
notice. If the parties fail to agree upon a
successor escrow agent within such time,
Purchaser shall have the right to appoint a
successor escrow agent (which, in such case,
shall be a financial institution with assets
of at least $1 billion). The successor
escrow agent selected in the preceding
manner shall execute and deliver an
instrument accepting such appointment and it
shall thereupon be deemed the Escrow Agent
hereunder and it shall without further acts
be vested with all the estates, properties,
rights, powers, and duties of the
predecessor Escrow Agent as if originally
named as Escrow Agent. Thereafter, the
predecessor Escrow Agent shall be discharged
for any further duties and liabilities under
this Agreement.
(vi) During the Escrow Period, the Escrow Agent
shall invest any cash portion of the Escrow
Fund solely in direct obligations of the
United States government, the principal and
interest of which are fully guaranteed by
the United States government, any daily or
weekly withdrawal money market fund
investing solely in such obligations or
interest-bearing or time deposits fully
insured by the Federal Deposit Insurance
Corporation, and short-term bankers'
acceptances in any bank which is rated in
one of the two highest ratings categories by
Xxxxx'x Investor Service, Inc. or Standard &
Poor's Corporation (collectively, the
"Permitted Investments"), or any combination
of the foregoing. For purposes of this
Agreement, any and all interest earned on
the Escrow Fund during the Escrow Period as
a result of any Permitted Investment shall
be reported by Seller for tax purposes and
distributed to Seller upon termination of
the Escrow Fund.
(vii) All fees of the Escrow Agent for performance
of its duties hereunder shall be paid by
Purchaser. It is understood that the fees
and usual charges agreed upon for services
of the Escrow Agent shall be considered
compensation for ordinary services.
5.04 "No Shop" and Liquidated Damages Covenant. In recognition
of the time and expense expended by Purchaser with respect to the purchase of
the Assets, the Seller hereby covenants and agrees that prior to the Closing
Date or the termination of this Agreement, it will not offer, or accept any
offer for, any of the Assets to or from any third party. The Seller further
covenants and agrees, that if any termination of this Agreement pursuant to
Section 7.02(c) shall be
-25-
followed by a sale of substantially all the Assets within one hundred eighty
(180) days following any such termination, Seller shall pay to Purchaser the
amount of $140,000, as liquidated damages.
5.05 Lock-Up and First Refusal of Shares.
(a) None of the Shares may be sold for a period of one hundred
eighty (180) days after the Closing. One-half of the Shares, which are not
subject to the indemnification holdback pursuant to Section 5.02, may be sold
after the First Lock-Up Period and the remaining Shares may be sold after the
Second Lock-Up Period.
(b) Purchaser will have a right of first refusal with respect
to any proposed sale of the Shares for a period of five hundred forty (540) days
after the Closing (the "Rights Period"). In the event Seller proposes to sell
any of the Shares during the Rights Period, Seller shall give Purchaser written
notice of its intention, with copies to each of Xxx Xxxxxx and Xxxx Xxxxxx or
their replacements (each, a "Principal"), describing the price and general terms
upon which Seller proposes to sell the same. Purchaser shall have forty eight
(48) hours after telephonic confirmation of the receipt of such notice is given
to Seller by either of the Principals to agree to purchase such Shares for the
price and upon the terms specified in the notice by giving written notice to the
Seller and stating therein the quantity of Shares to be purchased by Purchaser.
5.06 The Seller's Noncompetition Covenant. In order to prevent
the value of the Assets, properties, and Confidential Information being acquired
under this Agreement from being diminished by the activities of the Seller, in
recognition of the competitive and confidential nature of such information and
business, in order to further induce the Purchaser to make that acquisition, and
in consideration of the Purchase Price, the Seller hereby covenants and agrees
that, for a period of three (3) years after the Closing (the "Restricted
Period"), neither of the Seller, nor any of its subsidiaries will directly or
indirectly, under any circumstance other than through, or at the direction and
for the benefit of, the Purchaser, offer employment to any of the Prospective
Employees.
5.07 The Seller's Confidentiality Covenant.
(a) In order to prevent the value of the Assets and
Confidential Information being acquired under this Agreement from being
diminished by the activities of the Seller or any of its Representatives, in
recognition of the competitive and confidential nature of such information, in
order to further induce the Purchaser to make that acquisition, and in
consideration of a portion of the Purchase Price, the Seller hereby covenants
and agrees that, the Seller, will hold all Confidential Information in strict
confidence for the use and benefit of the Purchaser, and the Seller will not, or
permit or cause any of their respective Representatives to, directly or
indirectly, under any circumstance during the 18-month period following the
Closing Date: (a) disclose, publish or otherwise reveal, impart or deliver in
any way any Confidential Information to any other person other than (i) to
authorized Representatives of the Purchaser, (ii) to such other persons as the
Purchaser may direct in writing; and (iii) to such third persons as reasonably
necessary for such third persons to conduct due diligence on Seller's business
and operations relating to any proposed merger with Seller, any sale of all or
substantially all of Seller's assets, or any purchase of such third person's
assets
-26-
by Seller; (b) fail to use reasonable precautions to assure that all
Confidential Information is properly protected and kept from all unauthorized
persons; (c) act or fail to act so as to otherwise impair the confidential or
proprietary nature of any Confidential Information; (d) with respect to the
Assets, use any customer list or information, price or cost information, product
presentation or strategy, know-how or other Confidential Information other than
at the direction and for the benefit of the Purchaser; or (e) offer or agree to,
or cause or assist in the inception or continuation of, any such disclosure,
impairment or use.
(b) In the event of a breach or threatened breach by the
Seller of any of the provisions of this Section 5.07, the Purchaser shall be
entitled to an injunction to be issued by any court or tribunal of competent
jurisdiction to restrain the Seller from committing or continuing any such
violation. In any proceeding for an injunction, the Seller agrees that its
ability to answer in damages shall not be a bar or be interposed as a defense to
the granting of a temporary or permanent injunction against Seller. The Seller
acknowledges that the Purchaser will not have an adequate remedy at law in the
event of any breach by him as aforesaid and that the Purchaser may suffer
irreparable damage and injury in the event of such a breach by Seller. Nothing
contained herein shall be construed as prohibiting the Purchaser from pursuing
any other remedy or remedies available to the Purchaser in respect of such
breach or threatened breach. In addition, if any term or provision of this
Section 5 shall be held invalid or unenforceable because of its duration,
geographic scope, or for any other reason, the Purchaser and the Seller agree
that the court making such determination shall have the power to modify such
provision, whether by limiting the geographic scope, reducing the duration, or
otherwise, to the minimum extent necessary to make such term or provision valid
and enforceable, and such term or provision shall be enforceable in such
modified form.
5.08 Delivery of Protected Documents. With respect to the
Assets, at the Closing, the Seller shall deliver to the Purchaser (or destroy,
if and to the extent reasonably requested by the Purchaser) any and all
Documents (a) copyrighted by the Seller, or (b) constituting or containing any
Confidential Information (collectively, "Protected Documents"). In any event,
the Seller shall not at any time after the Closing Date use or reproduce any of
the Protected Documents or distribute, give or otherwise make available any of
the Protected Documents to any person other than the Purchaser or its
Representatives.
5.09 Sublease. Seller shall arrange to provide office space to
house three Software developers on mutually satisfactory terms.
5.10 Proxy Materials. Seller shall permit Purchaser to review
and approve, in its reasonable discretion, proxy materials relating to the
approval of this Agreement and the transactions contemplated hereby but not with
respect to any other transaction or subject matter contained therein, to be
submitted to the shareholders of the Seller, prior to the filing of any such
materials with the Securities and Exchange Commission.
5.11 Registration Rights. Purchaser will use its reasonable
efforts to register the Shares with the Securities and Exchange Commission
within six (6) months of the date hereof by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules
-27-
and regulations thereunder, with such registration statement declared or ordered
effective by the Securities and Exchange Commission. All Registration Expenses
(as defined below) incurred in connection with any registration, qualification
or compliance pursuant to this Section 5.11 shall be borne by Purchaser.
"Registration Expenses" shall mean all expenses incurred in effecting any
registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for Purchaser and Seller, blue skys fees and
expenses, expenses of any regular or special audits incident to or required by
any such registration and compensation of regular employees of Purchaser.
5.12 Access to the Seller's Retained Books and Records. From
and after the Closing Date, at all reasonable times and as often as the
Purchaser reasonably may request, the Seller shall, and shall cause each of its
affiliates to, permit the Purchaser (and its accountants, attorneys and other
Representatives), to have complete and unrestricted access to all personnel and
all books, records and other factual information retained by the Seller relating
to the Assets as the Purchaser may reasonably require, and to make copies and
excerpts from them and to discuss with them the Seller's officers, directors,
employees, accountants and agents, in connection with (a) the preparation,
filing, audit or any contest of or with respect to any federal, state, local or
foreign income or other tax returns of the Purchaser or any affiliate of the
Purchaser, or with respect to any dispute, refund, claim or litigation relating
to those returns and the Taxes due pursuant to those returns, (b) the
initiation, prosecution or defense of any other litigation by the Purchaser or
any affiliate of the Purchaser, (c) compliance by the Purchaser or any of its
affiliates with any legal or regulatory obligation of those entities, (d) any
Asset or (e) the release or defense of any Excluded Liability or any Lien. The
Seller shall maintain all retained books, records and information for at least
six (6) years following the Closing, except that the Seller from time to time at
its own cost and expense may deliver all or portions thereof to the Purchaser.
5.13 Allocation of Purchase Price. Seller and Purchaser agree
that the Purchase Price shall be allocated among the Assets no later than five
(5) days prior to the Closing (the "Allocation"). For all purposes (including,
without limitation, Section 1060 of the Code), the Seller and the Purchaser
agree to report the allocation of the Purchase Price in accordance with such
Allocation and agree to act in accordance therewith in the preparation and
filing of all relevant Tax Returns.
5.14 Publicity. Seller and Purchaser agree that no publicity,
release or announcement concerning the transactions contemplated hereby shall be
issued without the advance approval, which approval shall not be unreasonably
withheld, of the form and substance thereof by other party hereto, except any
release or announcement required by law or legal process, including the rules of
the Securities and Exchange Commission or any stock exchange, and will inform
the other party in advance of such required publicity release and/or
announcement if reasonably possible.
5.15 Other Transactions. Notwithstanding anything to the
contrary in this Agreement, nothing in this Agreement or the transaction
contemplated hereby shall prohibit or otherwise impair any transaction
constituting a change of control of Seller to any third party
-28-
(including providing Confidential Information to third persons as part of a due
diligence inquiry related thereto).
-29-
ARTICLE VI
OTHER REMEDIES, ETC.
6.01 Equitable Relief, Attorneys Fees, Etc. The Seller
acknowledges and agrees that, in addition to any and all other rights, powers,
privileges and remedies that the Purchaser may have under this Agreement or
applicable law, the Purchaser shall be entitled to injunctive relief, specific
performance or such other equitable relief as it may request to exercise or
otherwise enforce any of the terms and provisions of this Agreement or any other
Purchase Document and to enjoin or otherwise restrain any act prohibited by this
Agreement or any other Purchase Document, and the Seller will not raise and
hereby waives any objection or defense that there is an adequate remedy
available at law.
6.02 Enforcement, Etc. The Purchaser, in its sole discretion,
may proceed to exercise or enforce any right, power, privilege, remedy or
interest that it or they may have under this Agreement, any other Purchase
Document or applicable law: (a) at law, in equity or in any other forum
available under applicable law; (b) without notice except as otherwise expressly
provided herein; (c) without pursuing, exhausting or otherwise exercising or
enforcing any other right, power, privilege, remedy or interest that it may have
against or in respect of the Seller or any other person or thing; and (d)
without regard to any act or omission of the Purchaser or any other person. The
Purchaser may institute one or more proceedings (which may be separate
proceedings) with respect to this Agreement or any other Purchase Document in
such order and at such times as the Purchaser may elect in its sole and absolute
discretion.
6.03 Governing Law; Consent to Jurisdiction and Venue; Waiver
of Personal Service; Waiver of Jury Trial; Etc. THIS AGREEMENT AND EACH OF THE
OTHER PURCHASE DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE APPLICABLE LAWS PERTAINING IN THE STATE OF CALIFORNIA, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF LAW. The Purchaser, the Seller
hereby consents and agrees that the state and federal courts located in Santa
Xxxxx County, California shall have personal jurisdiction and proper venue with
respect to any action or proceeding brought by one party against another
relating to this Agreement. In any such action or proceeding brought in Santa
Xxxxx County, California, neither the Purchaser or the Seller will raise, and
each hereby expressly waives, any objection or defense to any such jurisdiction
or venue as an inconvenient forum. IN ANY ACTION, SUIT OR PROCEEDING IN ANY
JURISDICTION BROUGHT AGAINST THE SELLER BY THE PURCHASER, OR VICE VERSA, THE
SELLER AND THE PURCHASER EACH WAIVE TRIAL BY JURY.
ARTICLE VII
MISCELLANEOUS
7.01 Notice. Except as otherwise expressly provided, any
notice, request, demand or other communication permitted or required to be given
under this Agreement or any other
-30-
Purchase Document shall be in writing, shall be sent by one of the following
means to the addressee at the address set forth above or at such other address
as shall be designated hereunder by notice to the other parties and persons
receiving copies, effective upon actual receipt (with a copy thereof, in the
case of the Purchaser, to Xxxxxx X. Xxxxxxxx, Esq., Xxxxxx Xxxxxx Flattau &
Klimpl, LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and, in the
case of the Seller, to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx,
Xxxx Xxxx, Xxxxxxxxxx 00000, Attn: Xxxxxxx X. Xxxxx and Xxxx Xxxxxx), and shall
be deemed conclusively to have been given: (i) on the first Business Day
following the day timely deposited with Federal Express (or other equivalent
national overnight courier) or United States Express Mail, specifying overnight
delivery, with the cost of delivery prepaid or for the account of the sender;
(ii) on the fifth Business Day following the day duly sent by certified or
registered United States mail, postage prepaid and return receipt requested; or
(iii) when otherwise actually received by the addressee on a Business Day,
whether in writing or by facsimile transmission (or on the next Business Day if
received after the close of normal business hours or on any non-Business Day).
7.02 Termination. Except as provided in Section 7.03 below,
this Agreement may be terminated at any time prior to the Closing:
(a) by mutual consent of Purchaser and Seller;
(b) by Purchaser or Seller if the Closing has not
occurred by June 30, 1999; or
(c) by Purchaser or Seller if the Seller shareholder
approval required as a condition to the Closing shall
not have been approved at such Seller shareholder
meeting or any postponement thereof.
Where action is taken to terminate this Agreement pursuant to
this Section 7.02, it shall be sufficient for such action to be authorized by
the Board of Directors (as applicable) of the party taking such action.
Notwithstanding anything in this Section 7.02, neither Purchaser nor Seller may
terminate this Agreement if such party is in material breach of its obligations
hereunder and such breach caused, directly or indirectly, the Closing not to
occur.
7.03 Effect of Termination. In the event of termination of
this Agreement as provided in Section 7.02, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
Purchaser or Seller, or their respective officers, directors or stockholders,
provided that each party shall remain liable for any breaches of this Agreement
prior to its termination; and provided further that, the provisions of Sections
5.04, 5.12 and this Article VII of this Agreement shall remain in full force and
effect and survive any termination of this Agreement.
7.04 Further Assurances. (a) The Seller agrees to do such
further acts and things and to execute and deliver such statements, assignments,
agreements, instruments and other documents as the Purchaser from time to time
reasonably may request (a) in order to evidence or confirm the transfer of any
Asset, or (ii) the release of any Excluded Liability or any Lien, or (b) in
connection with the administration, enforcement or adjudication of this
Agreement and the other
-31-
Purchase Documents, in order to effectuate the purpose and the terms and
provisions of this Agreement and the other Purchase Documents, each in such form
and substance as may be acceptable to the Purchaser.
(a) The Purchaser agrees to do such further acts and things
and to execute and deliver such statements, assignments, agreements, instruments
and other documents as Seller from time to time reasonably may request (a) in
order to evidence or confirm (i) the transfer of any Asset, or (ii) the release
of any Excluded Liability or any Lien, or (b) in connection with the
administration, enforcement or adjudication of this Agreement and the other
Purchase Documents, in order to effectuate the purpose and the terms and
provisions of this Agreement and the other Purchase Documents, each in such form
and substance as may be acceptable to the Seller.
7.05 Expenses.
(a) Each party shall bear its own expenses in connection with
the negotiations and execution of this Agreement and the transactions
contemplated hereby.
(b) All sales, use and other transfer Taxes and all filing,
recording and registration fees payable in connection with the transactions
contemplated hereby shall be paid equally by Purchaser and Seller and evidence
of any such payment by the Seller shall be promptly delivered to the Purchaser.
The Parties agree to cooperate with each other to minimize taxes payable as a
result of the transactions contemplated by this Agreement.
7.06 Interpretation, Headings, Severability, Etc. The parties
acknowledge and agree that the terms and provisions of this Agreement and the
other Purchase Documents have been negotiated, shall be construed fairly as to
all parties hereto, and shall not be construed in favor of or against any party,
including, without limitation, by reason of such party having caused this
Agreement or any of the Purchase Documents to be drafted. The section headings
contained in this Agreement and the other Purchase Documents are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement or any other Purchase Document. In the event that any term or
provision of this Agreement or any other Purchase Document shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by a governmental authority having jurisdiction and
venue, that determination shall not impair or otherwise affect the validity,
legality or enforceability (a) by or before that authority of the remaining
terms and provisions of this Agreement and the other Purchase Documents, which
shall be enforced as if the unenforceable term or provision were deleted or
reduced pursuant to the next sentence, as applicable, or (b) by or before any
other authority of any of the terms and provisions of this Agreement and the
other Purchase Documents. If any term or provision of this Agreement or any
other Purchase Document is held to be unenforceable because of the scope or
duration of any such provision, the parties agree that any court making such
determination shall have the power, and is hereby requested, to reduce the scope
or duration of such term or provision to the maximum permissible under
applicable law so that said term or provision shall be enforceable in such
reduced form.
-32-
7.07 Successors and Assigns; Assignment; Intended
Beneficiaries. Whenever in this Agreement or any other Purchase Document
reference is made to any person, such reference shall be deemed to include the
successors, assigns, heirs and legal representatives of such person, and,
without limiting the generality of the foregoing, all representations,
warranties, covenants and other agreements made by or on behalf of the Seller in
this Agreement and the other Purchase Documents shall inure to the benefit of
the successors and assigns of the Purchaser; provided, however, that nothing
herein shall be deemed to authorize or permit the Seller to assign any of the
Seller's rights or obligations under this Agreement to any other person (other
than an affiliate of the Seller), and the Seller covenants and agree that the
Seller shall not make any such assignment. The representations, warranties and
other terms and provisions of this Agreement and the other Purchase Documents
are for the exclusive benefit of the parties hereto and, except as otherwise
expressly provided herein, no other person, including creditors of any party
hereto, shall have any right or claim against any party by reason of any of
those terms and provisions or be entitled to enforce any of those terms and
provisions against any party.
7.08 Survival of Representations, Etc. Notwithstanding any
right of Purchaser fully to investigate the affairs of Seller and
notwithstanding any knowledge of the facts determined or determinable by
Purchaser pursuant to such investigation or right of investigation, each party
hereto has the right to rely fully upon representations, warranties, covenants
and agreements of the other party contained in this Agreement and Purchase
Documents as modified by the Disclosure Schedules. All such representations,
warranties, covenants and agreements of Seller and Purchaser made in this
Agreement and the Purchase Documents or in any certificate delivered pursuant
hereto shall survive the execution and delivery hereof and for one (1) year
following the Closing.
7.09 No Waiver by Action, Etc. Any waiver or consent
respecting any representation, warranty, covenant or other term or provision of
this Agreement or any other Purchase Document shall be effective only in the
specific instance and for the specific purpose for which given and shall not be
deemed, regardless of frequency given, to be a further or continuing waiver or
consent. The failure or delay of a party at any time or times to require
performance of, or to exercise its rights with respect to, any representation,
warranty, covenant or other term or provision of this Agreement or other
Purchase Document in no manner (except as otherwise expressly provided herein)
shall affect its right at a later time to enforce any such provision. No notice
to or demand on either party hereto in any case shall entitle such party to any
other or further notice or demand in the same, similar or other circumstances.
The acceptance by the Purchaser of (a) any partial or late payment shall not
constitute a satisfaction or waiver of the full amount then due or the resulting
default, or (b) any payment during the continuance of any default shall not
constitute a waiver or cure thereof; and the Purchaser may accept or reject any
such payment without affecting any of its rights, powers, privileges, remedies
and other interests under this Agreement, the other Purchase Documents and
applicable law. All rights, powers, privileges, remedies and other interests of
the Purchaser hereunder are cumulative and not alternatives, and they are in
addition to and shall not limit (except as otherwise expressly provided herein)
any other right, power, privilege, remedy or other interest of the Purchaser
under this Agreement, any other Purchase Document or applicable law.
-33-
7.10 Counterparts; Amendments; Entire Agreement. This
Agreement shall be effective as of the date first written above when executed by
the Seller and delivered to the Purchaser; and unless otherwise provided each
other Purchase Document shall be effective as of the date first written therein
when executed by the Seller or other party and delivered to the Purchaser. This
Agreement may have been executed in two or more counterpart copies of the entire
document or of signature pages to the document, each of which may be executed by
one or more of the parties hereto or thereto, but all of which, when taken
together, shall constitute a single agreement binding upon all of the parties
hereto or thereto, as applicable. Each and every modification and amendment of
this Agreement or any other Purchase Document shall be in writing and signed by
all of the parties hereto or thereto, as applicable, and each and every waiver
of, or consent to any departure from, any representation, warranty, covenant or
other term or provision of this Agreement or any other Purchase Document shall
be in writing and signed by each affected party hereto or thereto, as
applicable. This Agreement and the other Purchase Documents contain the entire
agreement of the parties and supersede all prior and other representations,
agreements and understandings, oral or otherwise, between the parties with
respect to the matters contained herein or therein.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement on the date first written above.
SITE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Ait
----------------------------------------
Xxxxxxx X. Ait, Chief Executive Officer
STARBASE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx, Vice Chairman
GREATER BAY TRUST COMPANY (WITH RESPECT TO
SECTIONS 5.01, 5.02 AND 5.03 ONLY)
By: ----------------------------------------
-34-
LIST OF SCHEDULES
TO THE ASSET PURCHASE AND SALE AGREEMENT
----------------------------------------
Schedule 2.01 Assets
Schedule 2.02(e) Excluded Assets
Schedule 2.03 Assumed Obligations
Schedule 2.08(a)(1) Purchaser's Consents
Schedule 2.08(b)(1) Seller's Consents
Schedule 3.03 Consents, etc.
Schedule 3.04 Litigation
Schedule 3.06 Tax Returns
Schedule 3.08(a) Material Contracts
Schedule 3.08(c) Certain Conditions and Obligations
Schedule 3.09 Employees
Schedule 3.10 Intellectual Properties
Schedule 3.11 Absence of Certain Events
Schedule 3.12 Suppliers and Customers
Schedule 3.13 Insurance
