Exhibit 2
ASSET PURCHASE AGREEMENT
BY AND AMONG
SS&C TECHNOLOGIES, INC.,
AEGON USA REALTY ADVISORS, INC.
AND
QUANTRA CORPORATION
TABLE OF CONTENTS
Page
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Article I - Sale and Delivery of the Assets................................ 1
Section 1.1. Delivery of the Assets................................. 1
Section 1.2. Further Assurances..................................... 3
Section 1.3. Purchase Price......................................... 3
Section 1.4. Assumption of Liabilities; Etc......................... 3
Section 1.5. [Intentionally Deleted]................................ 6
Section 1.6. The Closing............................................ 6
Section 1.7. Escrow................................................. 6
Section 1.8. Apportionment.......................................... 7
Article II - Representations of the Seller................................. 7
Section 2.1. Organization........................................... 7
Section 2.2. Capitalization of the Seller and the Subsidiaries...... 8
Section 2.3. Authorization.......................................... 8
Section 2.4. Ownership of the Assets................................ 9
Section 2.5. Financial Statements................................... 9
Section 2.6. Absence of Undisclosed Liabilities..................... 9
Section 2.7. Litigation............................................. 10
Section 2.8. Insurance.............................................. 10
Section 2.9. Inventory.............................................. 10
Section 2.10. Fixed Assets........................................... 10
Section 2.11. Leases................................................. 10
Section 2.12. Change in Financial Condition and Assets............... 11
Section 2.13. Tax Matters............................................ 11
Section 2.14. Accounts Receivable.................................... 12
Section 2.15. Books and Records...................................... 12
Section 2.16. Contracts and Commitments.............................. 12
Section 2.17. Compliance with Agreements and Laws.................... 14
Section 2.18. Employee Relations..................................... 15
Section 2.19. Absence of Certain Changes or Events................... 15
Section 2.20. Customers.............................................. 16
Section 2.21. Suppliers.............................................. 16
Section 2.22. Bank Accounts.......................................... 16
Section 2.23. Prepayments and Deposits............................... 17
Section 2.24. Intellectual Property.................................. 17
Section 2.25. [Intentionally Deleted]................................ 20
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Section 2.26. Environmental Matters.................................. 20
Section 2.27. Real Estate............................................ 21
Section 2.28. Acquired Assets Complete............................... 21
Section 2.29. Product Warranty....................................... 21
Section 2.30. Regulatory Approvals................................... 22
Section 2.31. Certain Business Relationships With Affiliates......... 22
Section 2.32. Powers of Attorney and Suretyships..................... 22
Section 2.33. Investment Representation.............................. 22
Section 2.34. Broker's Fees.......................................... 22
Article III - Representations of the Buyer................................. 23
Section 3.1. Organization and Authority.............................. 23
Section 3.2. Capitalization.......................................... 23
Section 3.3. Authorization........................................... 23
Section 3.4. Reports and Financial Statements........................ 24
Section 3.5. Broker's Fees........................................... 24
Section 3.6. Regulatory Approvals.................................... 24
Article IV - Access to Information; Public Announcements................... 25
Section 4.1. Access to Management, Properties and Records............ 25
Section 4.2. Public Announcements.................................... 25
Article V - Pre-Closing Covenants of the Seller Entities................... 25
Section 5.1. Conduct of Business..................................... 25
Section 5.2. Absence of Material Changes............................. 25
Section 5.3. Taxes................................................... 27
Section 5.4. Communication with Customers and Suppliers.............. 27
Section 5.5. Compliance with Laws.................................... 27
Section 5.6. Continued Truth of Representations and Warranties
of the Seller Entities.................................. 28
Section 5.7. Continuing Obligation to Inform......................... 28
Section 5.8. Exclusive Dealing....................................... 28
Article VI - Best Efforts to Obtain Satisfaction of Conditions............. 28
Article VII - Conditions to Obligations of the Buyer....................... 28
Section 7.1. Continued Truth of Representations and Warranties
of the Seller Entities.................................. 28
Section 7.2. Corporate Proceedings................................... 29
Section 7.3. Governmental Approvals.................................. 29
Section 7.4. [Intentionally Deleted]................................. 29
Section 7.5. Adverse Proceedings..................................... 29
Section 7.6. Opinion of Counsel...................................... 29
Section 7.7. Board of Directors and Shareholder Approval............. 29
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Section 7.8. The Assets.............................................. 29
Section 7.9. Update.................................................. 29
Section 7.10. [Intentionally Deleted]................................. 29
Section 7.11. [Intentionally Deleted]................................. 29
Section 7.12. Trade Payables.......................................... 29
Section 7.13. [Intentionally Deleted]................................. 29
Section 7.14. Closing Deliveries...................................... 30
Article VIII - Conditions to Obligations of the Seller..................... 31
Section 8.1. Continued Truth of Representations and Warranties
of the Buyer............................................ 31
Section 8.2. Corporate Proceedings................................... 31
Section 8.3. Governmental Approvals.................................. 31
Section 8.4. Consents of Third Parties............................... 31
Section 8.5. Adverse Proceedings..................................... 31
Section 8.6. Opinion of Counsel...................................... 32
Section 8.7. Closing Deliveries...................................... 32
Section 8.8. Offers of Employment.................................... 32
Article IX - Escrow Arrangement and Indemnification........................ 33
Section 9.1. Escrow Arrangement...................................... 33
Section 9.2. Indemnification by the Buyer............................ 33
Section 9.3. Indemnification by the Seller........................... 34
Section 9.4. Claims for Indemnification.............................. 35
Section 9.5. Defense by Indemnifying Party........................... 35
Section 9.6. Payment of Indemnification Obligation................... 36
Section 9.7. Survival................................................ 36
Section 9.8. Limitations............................................. 36
Section 9.9. Pre-Closing Knowledge of Material Breach by the Seller.. 36
Article X - Restricted Stock; Registration Rights.......................... 37
Section 10.1. Restricted Shares...................................... 37
Section 10.2. Share Legend........................................... 37
Section 10.3. Required Registrations................................. 37
Section 10.4. Term of Registration Rights............................ 39
Section 10.5. Registration Procedures................................ 39
Section 10.6. Allocation of Expenses................................. 40
Section 10.7. Indemnification........................................ 40
Section 10.8. Information by Holder.................................. 41
Article XI - Post-Closing Agreements....................................... 42
Section 11.1. Proprietary Information................................ 42
Section 11.2. No Solicitation or Hiring of Former Employees.......... 42
Section 11.3. Non-Competition and Non-Solicitation................... 42
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Section 11.4. Sharing of Data and Cooperation....................... 44
Section 11.5. Use of Name........................................... 44
Section 11.6. Cooperation in Litigation............................. 44
Section 11.7. Accounts Receivable................................... 45
Section 11.8. Product Claims and Returns............................ 46
Section 11.9. Director Election..................................... 47
Section 11.10. Maintenance Arrangement............................... 47
Section 11.11. Business of the Seller................................ 47
Section 11.12. Releases.............................................. 47
Section 11.13. Missing Third Party Consents.......................... 47
Article XII - Termination of Agreement..................................... 48
Section 12.1. Termination by Lapse of Time........................... 48
Section 12.2. Termination by Agreement of the Parties................ 48
Section 12.3. Termination by Reason of Breach........................ 48
Article XIII - Transfer and Sales Tax...................................... 48
Article XIV - Brokers...................................................... 49
Section 14.1. For the Seller......................................... 49
Section 14.2. For the Buyer.......................................... 49
Article XV - Notices....................................................... 49
Article XVI - Successors and Assigns....................................... 50
Article XVII - Entire Agreement; Amendments; Attachments................... 50
Article XVIII - Expenses................................................... 51
Article XIX - Legal Fees................................................... 51
Article XX - Governing Law................................................. 51
Article XXI - Section Headings............................................. 51
Article XXII - Severability................................................ 51
Article XXIII - Counterparts............................................... 52
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[SS&C Technologies, Inc. agrees to furnish supplementally to the Securities and
Exchange Commission copies of any of the following omitted schedules upon
request of the Commission]
Schedules to be provided by the Seller
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1.1(a)(iv)-Assigned Contracts
1.1(a)(x)-Subsidiaries
1.1(b)-Excluded Assets
1.4(a)(vi)-Other Assumed Liabilities
1.4(b)(vii)-Retained Severance Liabilities
1.4(b)(xiv)-Other Retained Liabilities
1.7-Acquisition Liabilities
2.2-Capitalization
2.4(i)-Encumbrances
2.4(ii)-Permitted Encumbrances
2.6-Undisclosed Liabilities
2.7-Litigation
2.8-Insurance
2.9-Inventory
2.10-Fixed Assets
2.11-Leases
2.12-Changes in Financial Condition
2.13-Taxes
2.14-Accounts Receivable
2.16-Contracts
2.17-Permits
2.18-Employee Relations
2.19-Certain Changes or Events
2.20-Customer List
2.21-Suppliers
2.22-Bank Accounts
2.23-Prepayments and Deposits
2.24-Intellectual Property
2.25-Employee Benefits
2.26-Environmental Matters
2.29-Product Warranty
2.30-Regulatory Approvals
2.31-Affiliated Transactions
2.32-Powers of Attorney and Suretyships
2.34-Broker's Fees
7.14-Subleases
11.10-Maintenance Agreements
Schedules to be provided by the Buyer
-------------------------------------
3.3-Third-Party Consents
3.6-Regulatory Approvals
8.8-Offers of Employment
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Exhibits
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A-Escrow Agreement
B-Instrument of Assumption of Liabilities
C-Opinion of Xxxxxxx and Xxxxxx
D-Xxxx of Sale
E-Opinion of Xxxx and Xxxx LLP
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
March 20, 1998 by and among SS&C Technologies, Inc., a Delaware corporation (the
"Buyer"), AEGON USA Realty Advisors, Inc., an Iowa corporation ("AEGON"), and
Quantra Corporation, a Delaware corporation and wholly owned subsidiary of AEGON
(the "Seller" and, together with AEGON, the "Seller Entities"). The Buyer and
the Seller Entities are collectively referred to herein as the "Parties," and
are sometimes individually referred to herein as a "Party."
PRELIMINARY STATEMENT
The Buyer desires to purchase, and the Seller desires to sell,
substantially all of the assets and business of the Seller, for the
consideration set forth below and the assumption of certain of the Seller's
liabilities set forth below, subject to the terms and conditions of this
Agreement.
Now, Therefore, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Parties hereby agree as follows:
ARTICLE I
SALE AND DELIVERY OF THE ASSETS
Section 1.1. Delivery of the Assets. (a) Subject to and upon the terms
and conditions of this Agreement, at the closing of the transactions
contemplated by this Agreement (the "Closing"), the Seller shall sell, transfer,
convey, assign and deliver to the Buyer, and the Buyer shall purchase from the
Seller, the following properties, assets and other claims, rights and interests:
(i) all inventories of raw materials, work in process, finished goods,
office supplies, maintenance supplies, packaging materials, spare parts and
similar items of the Seller (collectively, the "Inventory") which exist on the
Closing Date (as defined below);
(ii) all accounts, accounts receivable, notes and notes receivable
existing on the Closing Date which are payable to the Seller, including any
security held by the Seller for the payment thereof, but excluding any account,
account receivable, note or note receivable payable by any affiliate (as such
term is defined in the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act")) (an "Affiliate") of
the Seller to the Seller (the accounts, accounts receivable, notes and notes
receivable, including any related security therein, to be transferred to the
Buyer pursuant hereto are collectively referred to herein as the "Accounts
Receivable");
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(iii) [Intentionally deleted];
(iv) all rights of the Seller under the contracts, agreements, licenses
and other instruments set forth on Schedule 1.1(a)(iv) attached hereto, to the
extent transferable (collectively, the "Assigned Contracts");
(v) all books, records and accounts, correspondence, production records,
technical, accounting, manufacturing and procedural manuals, customer lists,
employment records, studies, reports or summaries relating to any environmental
conditions or consequences of any operation, present or former, as well as all
studies, reports or summaries relating to any environmental aspect or the
general condition of the Assets (as defined below), and any confidential
information which has been reduced to writing relating to or arising out of the
business of the Seller;
(vi) all rights of the Seller under express or implied warranties from
the suppliers of the Seller;
(vii) all of the computer and other equipment, tools, software, hardware,
maintenance equipment, furniture and construction in progress owned by the
Seller on the Closing Date, whether or not reflected as capital assets in the
accounting records of the Seller (collectively, the "Fixed Assets");
(viii) all of the Seller's right, title and interest in and to all
Intellectual Property (as defined in Subsection 2.24(g)) owned or, where not
owned, used by the Seller in its business and to the extent transferable all
licenses and other agreements to which the Seller is a party (as licensor or
licensee) or by which the Seller is bound relating to the Intellectual Property;
(ix) all copies of and media containing all source code, object code,
flow charts, program descriptions, program listings, libraries, tools,
utilities, databases, data, diagrams, diagnostics, alpha and beta versions and
all related documentation and commentaries, owned, licensed or used by the
Seller in the conduct of its business (the "Software");
(x) all of the outstanding shares of capital stock of the subsidiaries
of the Seller set forth on Schedule 1.1(a)(x) attached hereto; and
(xi) except as specifically provided in Subsection 1.1(b) hereof, all
other assets, properties, claims, rights and interests of the Seller which exist
on the Closing Date, of every kind and nature and description, whether tangible
or intangible, real, personal or mixed.
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(b) Notwithstanding the provisions of paragraph (a) above, the assets to be
transferred to the Buyer under this Agreement shall not include those assets
listed on Schedule 1.1(b) attached hereto (the "Excluded Assets").
(c) The Inventory, Accounts Receivable, Assigned Contracts, Fixed Assets,
Intellectual Property, Software and other properties, assets and business of the
Seller described in paragraph (a) above, other than the Excluded Assets, shall
be referred to collectively as the "Assets."
Section 1.2. Further Assurances. At any time and from time to time after
the Closing, at the request of the Buyer and without further consideration, the
Seller shall promptly execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take such other action, as the
Buyer may reasonably request to more effectively transfer, convey and assign to
the Buyer, and to confirm the Buyer's title to, all of the Assets, to put the
Buyer in actual possession and operating control thereof, to assist the Buyer in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement.
Section 1.3. Purchase Price.
(a) The purchase price to be paid by the Buyer for the Assets shall be:
(i) the cash sum of $2,269,800 (the "Cash Portion of the Base Consideration")
and (ii) 546,019 shares (the "Stock Portion of the Base Consideration" or the
"Shares"). The Cash Portion of the Base Consideration and the Stock Portion of
the Base Consideration are collectively referred to herein as the "Base
Consideration." The Base Consideration shall be payable in the manner described
in paragraph (b) of this Subsection 1.3.
(b) At the Closing, the Buyer shall deliver to the Seller: (i) the Cash
Portion of the Base Consideration in cash or by wire transfer of immediately
available funds to an account designated by the Seller, and (ii) a stock
certificate registered in the name of the Seller representing the Stock Portion
of the Base Consideration. Additionally at the Closing, the Buyer, the Seller
and the Escrow Agent (as defined therein) shall execute and deliver the Escrow
Agreement attached hereto as Exhibit A (the "Escrow Agreement"), and the Buyer
shall deliver to the Escrow Agent $1,230,200 (the "Transaction Funds") to be
held in escrow pursuant to Subsection 1.7 below.
Section 1.4. Assumption of Liabilities; Etc. (a) At the Closing, the
Buyer shall execute and deliver an Instrument of Assumption of Liabilities (the
"Instrument of Assumption") substantially in the form attached hereto as Exhibit
B, pursuant to which it shall assume and agree to perform, pay and discharge the
following liabilities, obligations and commitments of the Seller (the "Assumed
Liabilities"):
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(i) all trade accounts payable, accrued liabilities and other
current liabilities reflected on the balance sheet of the Seller as of
January 31, 1998 (the "Balance Sheet"), less
(A) any payments made from January 31, 1998 (the "Balance Sheet
Date") to the Closing Date,
(B) accounts payable which are outstanding for more than 90 days as
of the Balance Sheet Date,
(C) any accrued liabilities and accrued commissions described in
Subsections 1.4(b)(xii) and 1.4(b)(xiii), and
(D) any accounts or notes payable of the Seller to any Affiliate of
the Seller;
(ii) all trade accounts payable and accrued liabilities of the Seller
incurred in the ordinary course of business of the Seller from the Balance
Sheet Date to the Closing Date, other than any liabilities of the Seller to
any Affiliate of the Seller, accounts payable which are outstanding for
more than three months as of the Closing Date and accounts payable that are
contingent or are not fixed in amount as of the Closing Date;
(iii) all obligations of the Seller continuing after the Closing
under the contracts set forth on Schedule 1.1(a)(iv) attached hereto which
become due and payable after the Closing Date;
(iv) all liabilities or claims that the Buyer causes to occur after
the Closing Date or which occur prior to the Closing Date, whether caused
by the Seller or the Buyer, if such occurrence is at the request of or
agreed to by the Buyer, with regard to liabilities or expenses under the
Worker Adjustment and Retraining Notification ("WARN") Act;
(v) all warranty claims made by any customer of the Seller with
respect to products sold or licensed by the Seller prior to the Closing
("Warranty Claims"); and
(vi) all other liabilities and obligations of the Seller specifically
set forth on Schedule 1.4(a)(vi) attached hereto.
(b) The Buyer shall not assume or become responsible for, and the Seller
shall remain liable for, any and all liabilities or obligations (whether known
or unknown, whether absolute or contingent, whether liquidated or unliquidated,
whether due or to become due, and whether claims with respect thereto are
asserted
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before or after the Closing) of the Seller which are not Assumed Liabilities
(collectively, the "Retained Liabilities"); provided, however, that nothing
contained herein shall be deemed to increase any such existing liabilities or
obligations of the Seller or to give any third party any better rights or
remedies with respect thereto. The Retained Liabilities shall include, without
limitation, the following:
(i) all liabilities of the Seller for costs and expenses incurred in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement;
(ii) all liabilities and obligations of the Seller under this
Agreement or the agreements provided for herein;
(iii) all liabilities of the Seller for any Taxes (as defined in
Subsection 2.13(a)), including without limitation in connection with the
transactions contemplated by this Agreement, deferred Taxes or Taxes
measured by income of the Seller earned prior to the Closing, any
liabilities for federal or state income Tax and FICA Taxes of employees of
the Seller which the Seller is legally obligated to withhold prior to the
Closing, any liabilities for employer FICA and unemployment Taxes incurred
prior to the Closing, and any liabilities for sales, use or excise Taxes or
customs and duties incurred prior to the Closing;
(iv) all liabilities and obligations of the Seller under any
agreements, contracts, leases or licenses which are not Assigned Contracts;
(v) all liabilities and obligations of the Seller arising, or
related to the period, prior to the Closing under the Assigned Contracts,
and all liabilities and obligations arising from any breach, act or
omission relating to, or claim pursuant to, any Assigned Contract, which
breach, act or omission occurs prior to the Closing or as a result of the
transactions contemplated hereby;
(vi) all liabilities and obligations of the Seller arising out of
events, conduct or conditions existing or occurring prior to the Closing
that constitute a violation of or non-compliance with (A) any law, rule or
regulation (including without limitation any Environmental Laws (as defined
in Subsection 2.26(a))); (B) any judgment, decree or order of any
governmental, regulatory or administrative authority, agency, department,
bureau, commission, court or arbitrational tribunal (a "Governmental
Entity"); or (C) any Permit (as defined in Subsection 2.17);
(vii) all liabilities and obligations of the Seller to pay employee
or severance benefits with respect to the employees of the Seller set forth
on Schedule 1.4(b)(vii) attached hereto;
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(viii) all liabilities of the Seller for injury to or death of
persons or damage to or destruction of property occurring prior to the
Closing (including without limitation any workers' compensation claim);
(ix) all liabilities of the Seller for medical, dental and
disability (both long-term and short-term benefits), whether insured or
self-insured, owed to employees or former employees of the Seller based
upon (A) exposure to conditions in existence prior to the Closing or (B)
disabilities existing prior to the Closing (including any such disabilities
which may have been aggravated following the Closing);
(x) any litigation, suit, action, investigation, proceeding or
controversy (A) specifically naming the Seller as a party and existing on
the Closing Date or (B) arising out of the Seller's actions prior to the
Closing Date;
(xi) all intercompany liabilities between the Seller and its
Affiliates;
(xii) all accrued liabilities of the Seller for insurance claims
incurred but not reported;
(xiii) all of the Seller's accrued commissions for bonuses; and
(xiv) all liabilities and obligations set forth on Schedule
1.4(b)(xiv) attached hereto.
Section 1.5. [Intentionally Deleted].
Section 1.6. The Closing. The Closing shall take place at the offices of
Xxxxxxx and Xxxxxx, counsel to the Seller Entities, 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000 at 4:00 p.m., local time, on March 20, 1998 or at such
other place, time or date as may be mutually agreed upon in writing by the
parties hereto. The transfer of the Assets by the Seller to the Buyer shall be
deemed to occur at the closing of business on the date of the Closing (the
"Closing Date").
Section 1.7. Escrow. On the Closing Date, the Buyer shall deliver to the
Escrow Agent the Transaction Funds for the purpose of securing: (a) the
indemnification obligations of the Seller under Subsection 9.3 of this Agreement
for which claims for Damages (as defined in Subsection 9.2) are made by the
Buyer against the Seller on or before the first anniversary of the Closing Date
(the "First Anniversary"); (b) the obligations of the Seller with respect to
Accounts Receivable under Subsection 11.7 of this Agreement; (c) the obligation
of the Seller under Subsection 11.8 of this Agreement to reimburse the Buyer for
costs and expenses incurred by the Buyer for product claims and returns, which
claims for reimbursement are made by the Buyer on or before the First
Anniversary; and (d) payment of the acquisition costs and
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expenses set forth on Schedule 1.7 attached hereto (collectively, the
"Acquisition Liabilities"). The Transaction Funds shall be held by the Escrow
Agent under the Escrow Agreement pursuant to the terms thereof. The Transaction
Funds shall be held as a trust fund and shall not be subject to any lien,
attachment, trustee process or any other judicial process of any creditor of any
Party, and shall be held and disbursed solely for the purposes and in accordance
with the terms of the Escrow Agreement.
Section 1.8. Apportionment. Prepaid premiums on insurance if assigned as
herein provided, water and sewer use charges, transfer taxes and recording fees,
if any, incurred in connection with the transfer of the Assets contemplated
hereby shall be apportioned and adjusted as of the Closing Date and the net
amount thereof shall be added to or deducted from, as the case may be, the Cash
Portion of the Base Consideration.
ARTICLE II
REPRESENTATIONS OF THE SELLER
The Seller represents and warrants to the Buyer as follows (it being
understood that all references in this Agreement to the Seller shall be deemed
to include all of the Subsidiaries (as defined in Subsection 2.1), unless the
context otherwise requires):
Section 2.1. Organization. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and has all requisite power and authority (corporate and other)
to own its properties, to carry on its business as now being conducted, to
execute and deliver this Agreement and the agreements contemplated herein and
thereby and to consummate the transactions contemplated hereby and thereby.
Schedule 1.1(a)(x) attached hereto constitutes a true, correct and complete list
of all corporate, partnership, joint venture, limited liability and other
entities in which the Seller holds, directly or indirectly, a 50% or greater
interest (collectively, the "Subsidiaries"). Each of the Subsidiaries is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of the state of its incorporation or organization and
has all requisite power and authority (corporate and other) to own its
properties and to carry on its business as now being conducted. To the
knowledge of the Seller, each of the Seller and its Subsidiaries is duly
qualified to do business and in good standing in all jurisdictions in which its
ownership of property or the character of its business requires such
qualification. Certified copies of the charter and bylaws of the Seller and
certified copies of the charter, bylaws and other governing instruments of the
Subsidiaries, each as amended to date, have been previously delivered to the
Buyer, are complete and correct, and no amendments have been made thereto or
have been authorized since the date thereof. The Seller does not own any
capital stock of or
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other equity interest in any corporation, partnership, joint venture, limited
liability or other entity, other than the Subsidiaries.
Section 2.2. Capitalization of the Seller and the Subsidiaries. AEGON is
the sole beneficial and record owner of all of the outstanding voting securities
of the Seller. The authorized capital stock of the Subsidiaries is as set forth
on Schedule 2.2 attached hereto. All of such shares have been duly and validly
issued, are fully paid and nonassessable and held of record and beneficially by
the Seller. There are no outstanding options, warrants, scrip, rights to
subscribe to, call or commitments of any character whatsoever relating to, or
securities or rights convertible into, shares of any capital stock of the Seller
or the Subsidiaries, or contacts, commitments, understandings or arrangements by
which the Seller or any Subsidiary is or may become bound to issue additional
shares of any capital stock of the Seller or such Subsidiary, as the case may
be.
Section 2.3. Authorization. The execution and delivery by each of the
Seller Entities of this Agreement, and the agreements provided for herein, and
the consummation by each of the Seller Entities of all transactions contemplated
hereby and thereby, have been duly authorized by all requisite corporate action.
This Agreement and all such other agreements and obligations entered into and
undertaken in connection with the transactions contemplated hereby to which each
Seller Entity is a party constitute the valid and legally binding obligations of
the respective Seller Entity, enforceable against the respective Seller Entity
in accordance with their respective terms. The execution, delivery and
performance by the Seller Entities of this Agreement and the agreements provided
for herein to which each Seller Entity is a party, and the consummation by each
Seller Entity of the transactions contemplated hereby and thereby, will not,
with or without the giving of notice or the passage of time or both, (a) violate
the provisions of any law, statute, rule or regulation applicable to such Seller
Entity; (b) violate the provisions of the charter or bylaws of such Seller
Entity; (c) violate any judgment, decree, order, writ, injunction or award of
any court, arbitrator or other Governmental Entity applicable to such Seller
Entity or its properties or assets; (d) require on the part of such Seller
Entity any filing with, or any permit, authorization, consent or approval of,
any Governmental Entity, other than any filing, permit, authorization, consent
or approval which if not obtained or made would not have a material adverse
effect on the assets, business, financial condition, results of operations or
future prospects of the Seller or on the ability of the Parties to consummate
the transactions contemplated by this Agreement; or (e) conflict with or result
in the breach or termination of any term or provision of, or constitute a
default under, or cause any acceleration under, or cause the creation of any
security interest, lien, charge or encumbrance upon the properties or assets of
such Seller Entity pursuant to, any indenture, mortgage, deed of trust or other
instrument or agreement to which such Seller Entity is a party or by which it or
any of its properties is or may be bound.
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Section 2.4. Ownership of the Assets. Schedule 2.4(i) attached hereto
sets forth a true, correct and complete list of all claims, liabilities, liens,
pledges, security interests, charges, encumbrances and equities of any kind
affecting the Assets (collectively, the "Encumbrances"). The Seller is, and at
the Closing will be, the true and lawful owner of the Assets, and will have the
right to sell and transfer to the Buyer good, clear, record and marketable title
to the Assets, free and clear of all Encumbrances of any kind, except as set
forth on Schedule 2.4(ii) attached hereto (the "Permitted Encumbrances"). The
delivery to the Buyer of the instruments of transfer of ownership contemplated
by this Agreement will vest good and marketable title to the Assets in the
Buyer, free and clear of all liens, mortgages, pledges, security interests,
restrictions, prior assignments, encumbrances and claims of any kind or nature
whatsoever, except for the Permitted Encumbrances.
Section 2.5. Financial Statements.
(a) The Seller has previously delivered to the Buyer (i) its audited
balance sheet as of December 31, 1996 and the related statements of operations,
shareholder's equity and cash flows of the Seller for the fiscal year ended
December 31, 1996 (collectively, the "Audited Financial Statements") and (ii)
its unaudited balance sheets as of December 31, 1997 and January 31, 1998 and
the related unaudited statements of operations, shareholder's equity and cash
flows of the Seller for the fiscal year ended December 31, 1997 and the one
month ended January 31, 1998 (the "Unaudited Financial Statements"). The
Audited Financial Statements and the Unaudited Financial Statements (together,
the "Financial Statements") have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods covered thereby.
(b) The Financial Statements fairly present, as of the respective dates
thereof and for the periods referred to therein, the financial condition,
retained earnings, assets and liabilities of the Seller and the results of
operations and cash flows of the Seller's business for the periods indicated;
with respect to the contracts and commitments for the licensing of Software or
the provision of services by the Seller, the Financial Statements contain and
reflect adequate reserves, which are consistent with previous reserves taken,
for all reasonably anticipated material losses and costs and expenses.
Section 2.6. Absence of Undisclosed Liabilities. To the Seller's
knowledge, except as and to the extent (a) reflected and reserved against in the
Balance Sheet, (b) set forth on Schedule 2.6 attached hereto or (c) incurred in
the ordinary course of business after the Balance Sheet Date and not material in
amount, either individually or in the aggregate, the Seller does not have any
liability or obligation, secured or unsecured, whether accrued, absolute,
contingent, unasserted or otherwise, affecting the Assets. For purposes of this
Subsection 2.6, "material" means any amount in excess of $10,000.
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Section 2.7. Litigation. Except as set forth on Schedule 2.7 attached
hereto, the Seller is not a party to, or to the knowledge of the Seller
threatened with, and none of the Assets are subject to, any litigation, suit,
action, investigation, proceeding or controversy before any court,
administrative agency or other Governmental Entity relating to or affecting the
Assets or the business or condition (financial or otherwise) of the Seller. The
Seller is not in violation of or in default with respect to any judgment, order,
writ, injunction, decree or rule of any Governmental Entity or any regulation of
any Governmental Entity.
Section 2.8. Insurance. Schedule 2.8 attached hereto sets forth a true,
correct and complete list of all fire, theft, casualty, general liability,
workers compensation, business interruption, environmental impairment, product
liability, automobile and other insurance policies insuring the Assets or
business of the Seller and of all life insurance policies maintained for any of
its employees, specifying the type of coverage, the amount of coverage, the
premium, the insurer and the expiration date of each such policy (collectively,
the "Insurance Policies") and all claims in excess of $1,000 made under such
Insurance Policies since December 31, 1995. True, correct and complete copies
of all of the Insurance Policies have been previously delivered by the Seller to
the Buyer. The Insurance Policies are in full force and effect and are in
amounts and of a nature which are adequate and customary for the Seller's
business. All premiums due on the Insurance Policies or renewals thereof have
been paid and there is no default under any of the Insurance Policies. Except
as set forth on Schedule 2.8 attached hereto, the Seller has not received any
notice or other communication from any issuer of the Insurance Policies since
December 31, 1995 cancelling or materially amending any of the Insurance
Policies, materially increasing any deductibles or retained amounts thereunder,
or materially increasing the annual or other premiums payable thereunder, and,
to the knowledge of the Seller Entities, no such cancellation, amendment or
increase of deductibles, retainages or premiums is threatened.
Section 2.9. Inventory. Schedule 2.9 attached hereto sets forth a true,
correct and complete list of the Inventory as of March 18, 1998, including a
description and the book value thereof.
Section 2.10. Fixed Assets. Schedule 2.10 attached hereto sets forth a
true, correct and complete list of all Fixed Assets as of December 31, 1997,
including a description and the book value thereof. All of the Fixed Assets are
in good operating condition and repair, normal wear and tear excepted, are
currently used by the Seller in the ordinary course of business and in the
production of products of and provision of services by the Seller, and normal
maintenance has been consistently performed with respect to such Fixed Assets.
Section 2.11. Leases. Schedule 2.11 attached hereto sets forth a true,
correct and complete list as of the date hereof of all leases of real property,
identifying separately
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each ground lease, to which the Seller is a party (the "Leases"). True, correct
and complete copies of the Leases, and all amendments, modifications and
supplemental agreements thereto, have previously been delivered by the Seller to
the Buyer. To the knowledge of the Seller, the Leases are in full force and
effect, are binding and enforceable against each of the parties thereto in
accordance with their respective terms and, except as set forth on Schedule 2.11
attached hereto, have not been modified or amended since the date of delivery to
the Buyer. No party to any Lease has sent written notice to the other claiming
that such party is in default thereunder, which remains uncured. Except as set
forth on Schedule 2.11 attached hereto, there has not occurred any event which
would constitute a breach of or default in the performance of any material
covenant, agreement or condition contained in any Lease, nor has there occurred
any event which with the passage of time or the giving of notice or both would
constitute such a breach or material default. The Seller is not obligated to pay
any leasing or brokerage commission relating to any Lease and, except as set
forth on Schedule 2.11 attached hereto, will not have any enforceable obligation
to pay any leasing or brokerage commission upon the renewal of any Lease. No
material construction, alteration or other leasehold improvement work with
respect to any of the Leases remains to be paid for or to be performed by the
Seller.
Section 2.12. Change in Financial Condition and Assets. Except as set
forth on Schedule 2.12 attached hereto, since the Balance Sheet Date, there has
been no change which materially and adversely affects the business, properties,
assets, condition (financial or otherwise) or prospects of the Seller. The
Seller has no knowledge of any existing or threatened occurrence, event or
development which, as far as can be reasonably foreseen, could have a material
adverse effect on the Seller or its business, properties, assets, condition
(financial or otherwise) or prospects.
Section 2.13. Tax Matters.
(a) The Seller has filed all Tax Returns (as defined below) that it was
required to file and all such Tax Returns were correct and complete in all
material respects. Except as set forth in Schedule 2.13 attached hereto, the
unpaid Taxes of the Seller for Tax periods through the Balance Sheet Date do not
exceed the accruals and reserves for Taxes set forth on the Balance Sheet. The
Seller has no actual or potential liability for any Tax obligation of any
taxpayer (including without limitation any affiliated group of corporations or
other entities that included the Seller during a prior period) other than the
Seller. All Taxes that the Seller is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Entity. For purposes of this Agreement,
"Taxes" means all taxes, charges, fees, levies, custom duties or other similar
assessments or liabilities, including without limitation income, gross receipts,
ad valorem, premium, value-added, excise, severance, stamp, occupation, windfall
profits, custom duties, real property, personal property, sales, use, transfer,
transfer
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gains, withholding, employment, unemployment insurance, social security,
business license, business organization, environmental, payroll and franchise
taxes imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any Tax or any contest or dispute thereof. For purposes of this Agreement,
"Tax Returns" means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection with
Taxes.
(b) The Seller is not a party to any Tax allocation or sharing agreement
with respect to Taxes. The Seller has not waived any statute of limitations
with respect to Taxes or agreed to an extension of time with respect to a Tax
assessment or deficiency.
Section 2.14. Accounts Receivable. Schedule 2.14 attached hereto sets
forth a true, correct and complete list of all Accounts Receivable as of March
18, 1998, including an aging thereof. All Accounts Receivable arose out of the
sales or licenses of inventory, products or services in the ordinary course of
business and are collectible in the face value thereof within 90 days of the
date of invoice, using normal collection procedures, net of the reserve for
doubtful accounts as set forth thereon, which reserve is adequate and was
calculated in accordance with GAAP consistently applied.
Section 2.15. Books and Records. The general ledgers and books of
account of the Seller, all federal, state and local income, franchise, property
and other Tax Returns filed by the Seller Entities with respect to the Assets,
and all other books and records of the Seller are in all material respects
complete and correct and have been maintained in accordance with good business
practice and in accordance with all applicable procedures required by laws and
regulations.
Section 2.16. Contracts and Commitments.
(a) Schedule 2.16 attached hereto contains a true, complete and correct
list and description of the following contracts and agreements, whether written
or oral (collectively, the "Contracts"):
(i) all loan agreements, indentures, mortgages and guaranties to which
the Seller is a party or by which the Seller or any of its property is
bound;
(ii) all pledges, conditional sale or title retention agreements,
security agreements, equipment obligations, personal property leases and
lease
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purchase agreements relating to any of the Assets to which the Seller is a
party or by which the Seller or any of its property is bound;
(iii) all contracts, agreements, commitments, purchase orders or
other understandings or arrangements to which the Seller is a party or by
which the Seller or any of its property is bound which (A) involve payments
or receipts by the Seller of more than $10,000 in the case of any single
contract, agreement, commitment, understanding or arrangement under which
full performance (including payment) has not been rendered by all parties
thereto or (B) which may materially adversely affect the condition
(financial or otherwise) or the properties, assets, business or prospects
of the Seller;
(iv) all collective bargaining agreements, employment and consulting
agreements and employee benefit plans to which the Seller is a party or by
which the Seller or any of its property is bound;
(v) all agency, distributor, sales representative and similar
agreements to which the Seller is a party;
(vi) all contracts, agreements or other understandings or arrangements
between the Seller and any stockholder or Affiliate of the Seller;
(vii) all leases, whether operating, capital or otherwise, under
which the Seller is lessor or lessee;
(viii) all contracts, agreements and other documents or information
relating to past disposal of waste (whether or not hazardous);
(ix) all contracts, agreements, licenses, commitments, purchase orders
or other understandings to which the Seller is a party obligated to or
pursuant to which the Seller (A) is otherwise obligated to perform
maintenance services in connection with the Seller's products for (i) a
period in excess of one year subsequent to the Closing Date or (ii) nominal
or no consideration or (B) has licensed its products for nominal or no
consideration; and
(x) any other material agreement or contract entered into by the
Seller.
(b) Except as set forth on Schedule 2.16 attached hereto:
(i) each Contract is a valid and binding agreement of the Seller,
enforceable against the Seller in accordance with its terms, and the Seller
does not have any knowledge that any Contract is not a valid and binding
agreement of the other parties thereto;
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(ii) the Seller has fulfilled all material obligations required
pursuant to the Contracts to have been performed by the Seller on its part
prior to the date hereof, and the Seller has no reason to believe that the
Seller will not be able to fulfill, when due, all of its obligations under
the Contracts which remain to be performed after the date hereof;
(iii) the Seller is not in breach of or default under any Contract,
and no event has occurred which with the passage of time or giving of
notice or both would constitute such a default, result in a loss of rights
or result in the creation of any lien, charge, security interest or
encumbrance thereunder or pursuant thereto;
(iv) to the knowledge of the Seller, there is no existing breach or
default by any other party to any Contract, and no event has occurred which
with the passage of time or giving of notice or both would constitute a
default by such other party, result in a loss of rights or result in the
creation of any lien, charge, security interest or encumbrance thereunder
or pursuant thereto; and
(v) the Seller is not restricted by any Contract from carrying on its
business anywhere in the world.
Section 2.17. Compliance with Agreements and Laws. The Seller has all
requisite licenses, permits and certificates, including environmental, health
and safety permits, from federal, state and local authorities necessary to
conduct its business and own and operate its assets (collectively, the
"Permits"). Schedule 2.17 attached hereto sets forth a true, correct and
complete list of all such Permits. The Seller is not in violation of any law,
regulation or ordinance (including, without limitation, laws, regulations or
ordinances relating to building, zoning, environmental, disposal of hazardous
substances, land use or similar matters) relating to its properties, the
violation of which could have a material adverse effect on the Seller or its
properties. The business of the Seller does not violate, in any material
respect, any federal, state, local or foreign laws, regulations or orders
(including, but not limited to, any of the foregoing relating to employment
discrimination, occupational safety, environmental protection, hazardous and
solid wastes (as defined in the Resource Conservation and Recovery Act, as
amended), conservation or corrupt practices, the enforcement of which would have
a material adverse effect on the results of operations, condition (financial or
otherwise), assets, properties, business or prospects of the Seller. Except as
set forth on Schedule 2.17 attached hereto, the Seller has not since December
31, 1995 received any notice or communication from any federal, state or local
Governmental Entity or otherwise of any such violation or noncompliance.
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Section 2.18. Employee Relations.
(a) To the knowledge of the Seller, the Seller is in compliance with all
federal, state and local laws respecting employment and employment practices,
terms and conditions of employment, and wages and hours, and is not engaged in
any unfair labor practice, and there are no arrears in the payment of wages or
social security Taxes.
(b) Except as set forth on Schedule 2.18 attached hereto:
(i) none of the employees of the Seller is represented by any labor
union;
(ii) there is no unfair labor practice complaint against the Seller
pending before the National Labor Relations Board or any state or local
agency;
(iii) there is no pending labor strike or other labor trouble
affecting the Seller (including, without limitation, any organizational
drive);
(iv) there is no labor grievance pending against the Seller;
(v) there is no pending representation question respecting the
employees of the Seller; and
(vi) there are no pending arbitration proceedings arising out of or
under any collective bargaining agreement to which the Seller is a party,
or to the knowledge of the Seller, any basis for which a claim may be made
under any collective bargaining agreement to which the Seller is a party.
(c) For purposes of this Subsection 2.18, the term "employee" shall be
construed to include sales agents and other independent contractors who spend a
majority of their working time on the Seller's business.
Section 2.19. Absence of Certain Changes or Events. Except as set forth
on Schedule 2.19 attached hereto, since the Balance Sheet Date, the Seller has
not entered into any transaction which is not in the usual and ordinary course
of business, and, without limiting the generality of the foregoing, the Seller
has not:
(a) incurred any material obligation or liability for borrowed money;
(b) discharged or satisfied any lien or encumbrance or paid any obligation
or liability other than current liabilities reflected in the Balance Sheet;
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(c) mortgaged, pledged or subjected to lien, charge or other encumbrance
any of the Assets;
(d) sold or purchased, assigned or transferred any of its tangible assets
or cancelled any debts or claims, except for inventory sold in the ordinary
course of business;
(e) made any material amendment to or termination of any Contract or done
any act or omitted to do any act which would cause the breach of any Contract;
(f) suffered any losses, whether insured or uninsured, and whether or not
in the control of the Seller, in excess of $10,000 in the aggregate, or waived
any rights of any value;
(g) made any changes in compensation of its officers, directors or
employees;
(h) authorized or issued recall notices for any of its products or
initiated any safety investigations;
(i) received notice of any litigation, warranty claim or products liability
claims; or
(j) made any material change in the terms, status or funding condition of
any employee benefit plan.
Section 2.20. Customers. Schedule 2.20 attached hereto sets forth a
true, correct and complete list of the names and addresses of all customers of
the Seller that accounted for more than 1% of the Seller's total sales in the
fiscal year ended December 31, 1997. None of such customers has notified the
Seller that it intends to discontinue its current relationship with the Seller.
Section 2.21. Suppliers. Schedule 2.21 attached hereto sets forth a
true, correct and complete list of the names and addresses of the ten suppliers
of the Seller that accounted for the largest dollar volume of purchases by the
Company in the fiscal year ended December 31, 1997. None of such suppliers has
notified either of the Seller Entities that it intends to discontinue its
current relationship with the Seller.
Section 2.22. Bank Accounts. Schedule 2.22 attached hereto contains a
true, correct and complete list of all bank, brokerage and investment accounts
and safe deposit boxes in the name of or controlled by the Seller and the names
of persons having access thereto.
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Section 2.23. Prepayments and Deposits. Schedule 2.23 attached hereto
sets forth all prepayments or deposits from customers for products to be
shipped, or services to be performed, after the Closing Date which have been
received by the Seller as of the date hereof.
Section 2.24. Intellectual Property.
(a) The Seller owns or has the right to use all Intellectual Property (as
defined in Subsection 2.24(g)) used in the operation of its business or
necessary for the operation of the business as presently proposed to be
conducted. Each item of Intellectual Property owned by the Seller will be
transferred to the Buyer immediately following the Closing, and each such item
of Intellectual Property available for use by the Seller will be available for
use by the Buyer on identical terms and conditions immediately following the
Closing. The Seller has taken all reasonable measures to protect the
proprietary nature of each item of Intellectual Property, and to maintain in
confidence all trade secrets and confidential information, that it owns or uses.
To the knowledge of the Seller, no other person or entity has any rights to any
of the Intellectual Property owned or used by the Seller (except pursuant to
agreements or licenses specified in Schedule 2.16 and Schedule 2.24(c) attached
hereto), and no other person or entity is infringing, violating or
misappropriating any of the Intellectual Property that the Seller owns or uses.
(b) To the knowledge of the Seller, none of the activities or businesses
conducted by the Seller infringes, violates or constitutes a misappropriation of
(or in the past infringed, violated or constituted a misappropriation of) any
Intellectual Property rights of any other person or entity. The Seller has not
received any complaint, claim or notice alleging any such infringement,
violation or misappropriation, and to the knowledge of the Seller, there is no
basis for any such complaint, claim or notice.
(c) Schedule 2.24(c) attached hereto identifies each (i) trademark,
copyright and patent registration that has been issued to the Seller; (ii)
pending trademark, copyright and patent application which the Seller has made
and (iii) license or other agreement pursuant to which the Seller has granted
any rights to any third party with respect to any of its Intellectual Property.
The Seller has delivered to the Buyer correct and complete copies of all such
patent, trademark and copyright registrations and applications (as amended to
date) and such licenses and agreements (as amended to date) and has specifically
identified and made available to the Buyer correct and complete copies of all
other written documentation evidencing ownership of, and any claims or disputes
relating to, each such item. Except as set forth in Schedule 2.24(c) attached
hereto, with respect to each item of Intellectual Property that the Seller owns:
(i) the Seller possesses all right, title and interest in and to
such item;
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(ii) such item is not subject to any outstanding judgment, order,
decree, stipulation or injunction; and
(iii) the Seller has not agreed to indemnify any person or entity for
or against any infringement, misappropriation or other conflict with
respect to such item.
(d) Schedule 2.24(d) attached hereto identifies each item of Intellectual
Property used in the operation of the business of the Seller at any time during
the period covered by the Financial Statements, or that the Seller plans to use
in the future, that is owned by a party other than the Seller. The Seller has
supplied the Buyer with correct and complete copies of all licenses, sublicenses
or other agreements (as amended to date) pursuant to which the Seller uses such
Intellectual Property, all of which are listed on Schedule 2.16 and Schedule
2.24(d) attached hereto. Except as set forth in Schedule 2.16 and Schedule
2.24(d) attached hereto, with respect to each such item of Intellectual
Property:
(i) the license, sublicense or other agreement covering such item is
legal, valid, binding, enforceable and in full force and effect;
(ii) such license, sublicense or other agreement will continue to be
legal, valid and binding, enforceable and in full force and effect upon and
immediately following the Closing in accordance with the terms thereof as
in effect prior to the Closing;
(iii) neither the Seller nor, to the knowledge of the Seller, any
other party to such license, sublicense or other agreement, is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification or
acceleration thereunder;
(iv) the underlying item of Intellectual Property is not subject to
any outstanding judgment, order, decree, stipulation or injunction;
(v) the Seller has not agreed to indemnify any person or entity for
or against any interference, infringement, misappropriation or other
conflict with respect to such item; and
(vi) no license or other fee is payable upon any transfer or
assignment of such license, sublicense or other agreement.
(e) Schedule 2.24(e) attached hereto accurately identifies and describes in
summary fashion the functions of all Software developed by the Seller (the
"Seller Software") and identifies the nature of the Seller's rights therein.
Schedule 2.24(e)
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attached hereto identifies all computer programs, libraries, databases or other
software not owned by the Seller but embedded in or necessary for the use of the
Seller Software (the "Third Party Software"). Except as set forth on Schedule
2.24(e) attached hereto:
(i) The documentation, manuals, flow charts or other materials which
the Seller is transferring to the Buyer pursuant hereto document in
reasonable detail all of the functions of the Software and are sufficient
and adequate to provide for their use by end users skilled in the use of
such programs.
(ii) Other than as described on Schedule 2.24(e) attached hereto, the
Seller has not disclosed the source code for any of the Seller Software or
other confidential or proprietary information constituting, embodied in or
pertaining to the Seller Software to any person and has taken reasonable
measures to prevent such disclosure, other than disclosure of such source
code to employees or independent contractors of the Seller, in each case
pursuant to valid and binding nondisclosure agreements with such persons or
entities which are in full force and effect. Other than as described on
Schedule 2.24(e) attached hereto, all of the Seller Software has been
created by regular employees of the Seller within the scope of their
employment by the Seller or by independent contractors of the Seller who,
in either case, have executed agreements maintaining the confidentiality of
the Seller Software and expressly assigning, in the case of such regular
employees and such independent contractors, all such regular employees, and
such independent contractors' right, title and interest in the Seller
Software to the Seller.
(iii) Except as disclosed on Schedule 2.24(e) attached hereto, the
Seller has not distributed the Seller Software or Third Party Software
except pursuant to and in compliance with the Contracts. No licensees of
the Seller are permitted to distribute the Seller Software except pursuant
to a valid written sublicense agreement, a form of which has been provided
to the Buyer. Other than as described on Schedule 2.24(e) attached hereto,
no third party may legally use the Seller Software except pursuant to a
written license agreement, a form of which has been provided to the Buyer
or a sublicense agreement, as described above.
(f) The Seller warrants that all of the Seller's software products
described on Schedule 2.24(f) attached hereto are designed to perform, and will
perform correctly at all times prior to, during and after the calendar year
2000, all functions, calculations, sequencing, displays and other processing of
calendar dates and date-related data without error or degradations in
performance, specifically including any error relating to, or the product of,
date data which represent different centuries
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or more. The Seller makes no such representation with respect to any of its
other software products.
(g) For purposes of this Agreement, "Intellectual Property" means all (i)
patents, patent applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, reexamination, utility, model,
certificate of invention and design patents, patent applications, registrations
and applications for registrations; (ii) trademarks, service marks, trade dress,
logos, trade names and corporate names and registrations and applications for
registration thereof; (iii) copyrights and registrations and applications for
registration thereof (including moral rights); (iv) mask works and registrations
and applications for registration thereof; (v) computer software, data and
documentation; (vi) trade secrets and confidential business information, whether
patentable or unpatentable and whether or not reduced to practice, know-how,
manufacturing and production processes and techniques, research and development
information, copyrightable works, financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information; (vii) other proprietary rights relating to any
of the foregoing; and (viii) copies and tangible embodiments thereof.
Section 2.25. [Intentionally Deleted].
Section 2.26. Environmental Matters.
(a) Except as set forth on Schedule 2.26(a) attached hereto, the Seller has
complied with all applicable Environmental Laws (as defined below) as such laws
relate to its business or operations. There is no pending or, to the knowledge
of the Seller Entities, threatened civil or criminal litigation, written notice
of violation, formal administrative proceeding, or investigation, inquiry or
information request by any Governmental Entity, relating to any Environmental
Law involving the Seller. For purposes of this Agreement, "Environmental Law"
means any federal, state or local law, statute, rule or regulation or the common
law relating to the environment or occupational health and safety, including
without limitation any statute, regulation or order pertaining to (i) treatment,
storage, disposal, generation and transportation of industrial, toxic or
hazardous substances or solid or hazardous waste; (ii) air, water and noise
pollution; (iii) groundwater and soil contamination; (iv) the release or
threatened release into the environment of industrial, toxic or hazardous
substances, or solid or hazardous waste, including without limitation emissions,
discharges, injections, spills, escapes or dumping of pollutants, contaminants
or chemicals; (v) the protection of wild life, marine sanctuaries and wetlands,
including without limitation all endangered and threatened species; (vi) storage
tanks, vessels and containers; (vii) underground and other storage tanks or
vessels, abandoned, disposed or discarded barrels, containers and other closed
receptacles; (viii) health and safety of employees and other persons; and (ix)
manufacture, processing, use, distribution, treatment, storage, disposal,
transportation or handling of pollutants,
-20-
contaminants, chemicals or industrial, toxic or hazardous substances or oil or
petroleum products or solid or hazardous waste. As used above, the terms
"release" and "environment" shall have the meaning set forth in the federal
Comprehensive Environmental Compensation, Liability and Response Act of 1980, as
amended ("CERCLA").
(b) Except as set forth on Schedule 2.26(b) attached hereto, there have
been no releases of any Materials of Environmental Concern (as defined below)
into the environment at any parcel of real property or any facility formerly or
currently owned, operated, utilized or controlled by the Seller. With respect
to any such releases of Materials of Environmental Concern, the Seller has given
all required notices to Governmental Entities (copies of which have been
provided to the Buyer). The Seller is not aware of any releases of Materials of
Environmental Concern at parcels of real property or facilities other than those
owned, operated or controlled by the Seller that could reasonably be expected to
have an impact on the real property or facilities owned, operated, utilized or
controlled by the Seller. For purposes of this Agreement, "Materials of
Environmental Concern" means any chemicals, pollutants or contaminants,
hazardous substances (as such term is defined under CERCLA), solid wastes and
hazardous wastes (as such terms are defined under the federal Resources
Conservation and Recovery Act, as amended), toxic materials, oil or petroleum
and petroleum products.
(c) Set forth on Schedule 2.26(c) attached hereto is a list of all
environmental reports, investigations and audits (whether conducted by or on
behalf of the Seller or a third party, and whether done at the initiative of the
Seller or directed by a Governmental Entity or other third party) relating to
premises currently or previously utilized or operated by the Seller. Complete
and accurate copies of each such report, or the results of each such
investigation or audit, have been provided to the Buyer.
(d) Set forth on Schedule 2.26(d) attached hereto is a list of all of the
solid and hazardous waste transporters and treatment, storage and disposal
facilities that have been utilized or operated by the Seller. The Seller is not
aware of any material environmental liability of any such transporter or
facility.
Section 2.27. Real Estate. The Seller owns no real property.
Section 2.28. Acquired Assets Complete. The Assets are, when utilized by
a labor force substantially similar to that employed by the Seller on the date
hereof and when properly funded by the Buyer with working capital, adequate to
conduct the business operations currently conducted by the Seller.
Section 2.29. Product Warranty. The warranties contained in the
Contracts constitute the only express warranties relating to the software
licensed and services
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provided thereunder. Schedule 2.29 attached hereto sets forth the aggregate
expenses incurred by the Seller in fulfilling its obligations under guaranty,
warranty, right of return and indemnity provisions during the fiscal year
covered by the Financial Statements; and the Seller knows of no reason why such
expenses should significantly increase as a percentage of sales in the future.
Section 2.30. Regulatory Approvals. All consents, approvals,
authorizations and other requirements prescribed by any law, rule or regulation
which must be obtained or satisfied by the Seller and which are necessary for
the execution and delivery by the Seller of this Agreement and the documents to
be executed and delivered by the Seller in connection herewith are set forth on
Schedule 2.30 attached hereto and have been, or will be prior to the Closing
Date, obtained and satisfied.
Section 2.31. Certain Business Relationships With Affiliates. Except as
set forth on Schedule 2.31 attached hereto, no Affiliate of the Seller (a) owns
any property or right, tangible or intangible, which is used in the business of
the Seller, (b) has any claim or cause of action against the Seller or (c) owes
any money to the Seller. Schedule 2.31 attached hereto describes any
transactions or relationships between the Seller and any Affiliate thereof which
are reflected in the Financial Statements.
Section 2.32. Powers of Attorney and Suretyships. Except as set forth on
Schedule 2.32 attached hereto, the Seller has no general or special powers of
attorney outstanding (whether as grantor or grantee thereof) and has no
obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-xxxxxx, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity, except as endorser or
maker of checks or letters of credit, respectively, endorsed or made in the
ordinary course of business.
Section 2.33. Investment Representation. The Seller is acquiring the
Shares from the Buyer for its own account for investment and not with a view to,
or for sale in connection with, any distribution thereof, nor with any present
intention of distributing or selling the same; and, except as contemplated by
this Agreement and the agreements contemplated herein, the Seller has no present
or contemplated agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for the disposition thereof. The Seller is an "accredited
investor," as such term is defined in Rule 501 of Regulation D of the Securities
Act.
Section 2.34. Broker's Fees. Except as set forth on Schedule 2.34
attached hereto, neither of the Seller Entities has any liability or obligation
to pay any fees or commissions to any broker, finder or agent with respect to
the transactions contemplated by this Agreement.
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ARTICLE III
REPRESENTATIONS OF THE BUYER
The Buyer represents and warrants to the Seller Entities as follows:
Section 3.1. Organization and Authority. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has requisite power and authority (corporate and other) to own its
properties, to carry on its business as now being conducted, to execute and
deliver this Agreement and the agreements contemplated herein and to consummate
the transactions contemplated hereby and thereby.
Section 3.2. Capitalization. The authorized capital stock of the Buyer
consists of (a) 25,000,000 shares of Buyer Common Stock, of which 13,900,744
shares are issued and outstanding and no shares are held in the treasury of the
Buyer, and (b) 1,000,000 shares of Preferred Stock, $.01 par value per share, of
which no shares are issued or outstanding. All of the issued and outstanding
shares of Buyer Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. All of the Shares will be,
when issued in accordance with this Agreement, duly authorized, validly issued,
fully paid, nonassessable and free of all preemptive rights.
Section 3.3. Authorization. The execution and delivery of this Agreement
and the agreements provided for herein by the Buyer, and the consummation by the
Buyer of all transactions contemplated hereby and thereby, have been duly
authorized by all requisite corporate action on the part of the Buyer. This
Agreement and all such other agreements and written obligations entered into and
undertaken in connection with the transactions contemplated hereby to which the
Buyer is a party constitute the valid and legally binding obligations of the
Buyer, enforceable against it in accordance with their respective terms. The
execution, delivery and performance of this Agreement and the agreements
provided for herein, and the consummation by the Buyer of the transactions
contemplated hereby and thereby, will not, with or without the giving of notice
or the passage of time or both, (a) violate the provisions of any law, statute,
rule or regulation applicable to the Buyer; (b) violate the provisions of the
charter or bylaws of the Buyer; (c) violate any judgment, decree, order, writ,
injunction or award of any court, arbitrator or other Governmental Entity
applicable to the Buyer or its properties or assets; (d) require on the part of
the Buyer any filing with, or any permit, authorization, consent or approval of,
any Governmental Entity; or (e) conflict with or result in the breach or
termination of any term or provision of, or constitute a default under, or cause
any acceleration under, or cause the creation of any security interest, lien,
charge or encumbrance upon the properties or assets of the Buyer pursuant to,
any indenture, mortgage, deed of trust or other agreement or instrument to which
it or its properties is a party or by which the Buyer is or may be bound.
Schedule 3.3 attached hereto sets forth a true, correct
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and complete list of all consents and approvals of third parties that are
required in connection with the consummation by the Buyer of the transactions
contemplated by this Agreement.
Section 3.4. Reports and Financial Statements. The Buyer has previously
furnished to the Seller complete and accurate copies, as amended or
supplemented, of its (a) Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as filed with the Securities and Exchange Commission (the
"Commission"), and (b) all other reports filed by the Buyer under Section 13 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with the
Commission since December 31, 1996 (such reports are collectively referred to
herein as the "Buyer Reports"). The Buyer Reports constitute all of the
documents required to be filed by the Buyer under Section 13 of the Exchange Act
with the Commission since December 31, 1996. As of their respective dates, the
Buyer Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited financial statements and unaudited interim
financial statements of the Buyer included in the Buyer Reports (i) comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto, (ii)
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby (except as may be indicated therein or in
the notes thereto, and in the case of quarterly financial statements, as
permitted by Form 10-Q under the Exchange Act), (iii) fairly present the
consolidated financial condition, results of operations and cash flows of the
Buyer as of the respective dates thereof and for the periods referred to therein
and (iv) are consistent with the books and records of the Buyer.
Section 3.5. Broker's Fees. The Buyer has no liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
Section 3.6. Regulatory Approvals. All consents, approvals,
authorizations and other requirements prescribed by any law, rule or regulation
which must be obtained or satisfied by the Buyer and which are necessary for the
execution and delivery by the Buyer of this Agreement and the documents to be
executed and delivered by the Buyer in connection herewith are set forth on
Schedule 3.6 attached hereto and have been, or will be prior to the Closing
Date, obtained and satisfied.
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ARTICLE IV
ACCESS TO INFORMATION; PUBLIC ANNOUNCEMENTS
Section 4.1. Access to Management, Properties and Records.
(a) From the date of this Agreement until the Closing Date, the Seller
shall afford the officers, attorneys, accountants and other authorized
representatives of the Buyer free and full access upon reasonable notice and
during normal business hours to all management personnel, offices, properties,
books and records of the Seller, so that the Buyer may have full opportunity to
make such investigation as it shall desire to make of the management, business,
properties and affairs of the Seller, and the Buyer shall be permitted to make
abstracts from, or copies of, all such books and records. The Seller shall
furnish to the Buyer such financial and operating data and other information as
to the Assets and the business of the Seller as the Buyer shall reasonably
request.
(b) The Seller shall authorize the release to the Buyer of all files
pertaining to the Seller, the Assets or the business or operations of the Seller
held by any federal, state, county or local Governmental Entities.
Section 4.2. Public Announcements. The Parties agree that prior to the
Closing Date, except as otherwise required by law, any and all public
announcements or other public communications concerning this Agreement and the
purchase of the Assets by the Buyer shall be subject to the approval of the
Parties, which approval shall not be unreasonably withheld.
ARTICLE V
PRE-CLOSING COVENANTS OF THE SELLER
From and after the date hereof and until the Closing Date:
Section 5.1. Conduct of Business. The Seller shall carry on its business
diligently and substantially in the same manner as heretofore and shall not make
or institute any unusual or new methods of manufacture, purchase, sale, shipment
or delivery, lease, license management, accounting or operation, and shall not
ship or deliver any quantity of products in excess of normal shipment or
delivery levels, except as agreed to in writing by the Buyer. All of the
property of the Seller shall be used, operated, repaired and maintained in a
normal business manner consistent with past practice.
Section 5.2. Absence of Material Changes. Without the prior written
consent of the Buyer, the Seller shall not:
(a) take any action to amend its charter or bylaws;
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(b) issue any stock, bonds or other corporate securities or grant any
option or issue any warrant to purchase or subscribe to any of such securities
or issue any securities convertible into such securities;
(c) incur any obligation or liability (absolute or contingent), except
current liabilities incurred and obligations under contracts entered into in the
ordinary course of business;
(d) declare or make any payment or distribution with respect to its stock
or purchase or redeem any shares of its capital stock;
(e) mortgage, pledge or subject to any security interest, lien, charge or
any other encumbrance any of the Assets;
(f) sell, assign or transfer any of the Assets, except for inventory or
products sold or licensed in the ordinary course of business, at a normal profit
margin, and for not less than replacement cost;
(g) cancel any debts or claims, except in the ordinary course of business;
(h) merge or consolidate with or into any corporation or other entity;
(i) make, accrue or become liable for any bonus, profit sharing or
incentive payment, except for accruals under existing plans, if any, or increase
the rate of compensation payable or to become payable by it to any of its
officers, directors or employees, other than increases in the ordinary course of
business consistent with past practice;
(j) make any election or give any consent under the Code or the Tax
statutes of any state or other jurisdiction or make any termination, revocation
or cancellation of any such election or any consent or compromise or settle any
claim for past or present Tax due;
(k) waive any rights of material value;
(l) modify, amend, alter or terminate any of its executory contracts of a
material value or which are material in amount;
(m) take or permit any act or omission constituting a breach or default
under any contract, indenture or agreement by which it or its properties are
bound;
(n) fail to (i) preserve the possession and control of its assets and
business; (ii) keep in service its present officers and key employees; (iii)
preserve the goodwill of its customers, suppliers, agents, brokers and others
having business relations
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with it and (iv) keep and preserve its business existing on the date hereof
until after the Closing Date;
(o) fail to operate its business and maintain its books, accounts and
records in the customary manner and in the ordinary or regular course of
business and maintain in good repair its business premises, fixtures, machinery,
furniture and equipment;
(p) enter into any leases, contracts, agreements or understandings other
than those entered into in the ordinary course of business calling for payments
which in the aggregate do not exceed $10,000 for each such lease, contract,
agreement or understanding;
(q) engage any employee for a salary in excess of $25,000 per annum;
(r) materially alter the terms, status or funding condition of any Employee
Benefit Plan; or
(s) commit or agree to do any of the foregoing in the future.
Section 5.3. Taxes. The Seller will, on a timely basis, file all Tax
Returns for and pay any and all Taxes which shall become due or shall have
accrued (a) on account of the operation of the business of the Seller or the
ownership of the Assets on or prior to the Closing Date or (b) on account of the
sale of the Assets (including a pro-rata portion of all personal property and
excise Taxes payable with respect to the Assets by the Seller).
Section 5.4. Communication with Customers and Suppliers.
(a) Unless instructed otherwise by the Buyer in writing, the Seller will
accept customer orders in the ordinary course of business and consistent with
past practice for all products offered by the Seller but expected to be shipped
by the Buyer after the Closing Date.
(b) The Seller and the Buyer will cooperate in communication with suppliers
and customers to accomplish the transfer of the Assets to the Buyer on the
Closing Date.
Section 5.5. Compliance with Laws. The Seller will comply with all laws
and regulations which are applicable to it, its ownership of the Assets or to
the conduct of its business and will perform and comply with all contracts,
commitments and obligations by which it is bound.
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Section 5.6. Continued Truth of Representations and Warranties of the
Seller Entities. The Seller will not take any actions which would result in any
of the representations or warranties set forth in Section 2 hereof being untrue.
Section 5.7. Continuing Obligation to Inform. From time to time prior to
the Closing, the Seller will deliver or cause to be delivered to the Buyer
supplemental information concerning events subsequent to the date hereof which
would render any statement, representation or warranty in this Agreement or any
information contained in any Schedule inaccurate or incomplete in any material
respect at any time after the date hereof until the Closing Date.
Section 5.8. Exclusive Dealing. The Seller Entities, individually or
together, will not, directly or indirectly, through any officer, director, agent
or otherwise, (a) solicit, initiate or encourage submission of proposals or
offers from any person relating to any acquisition or purchase of all or a
material portion of the Assets, or any equity interest in, the Seller or any
equity investment, merger, consolidation or business combination with the
Seller; or (b) participate in any discussions or negotiations regarding, or
furnish to any other person, any non-public information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person to do or seek any of the
foregoing. The Seller Entities shall promptly notify the Buyer if any such
proposal or offer, or any inquiry or contact with any person with respect
thereto, is made.
ARTICLE VI
BEST EFFORTS TO OBTAIN SATISFACTION OF CONDITIONS
The Seller and the Buyer covenant and agree to use their best efforts to
obtain the satisfaction of the conditions specified in this Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Buyer:
Section 7.1. Continued Truth of Representations and Warranties of the
Seller; Compliance with Covenants and Obligations. The representations and
warranties of the Seller shall be true on and as of the Closing Date as though
such representations and warranties were made on and as of such date, except for
representations and warranties made as of a specific date, which shall be true
as of such date. The Seller shall have performed and complied with all terms,
conditions, covenants, obligations, agreements and restrictions required by this
Agreement to be performed or complied with by each of them, respectively, prior
to or at the Closing Date.
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Section 7.2. Corporate Proceedings. All corporate and other proceedings
required to be taken on the part of each of the Seller to authorize or carry out
this Agreement and to convey, assign, transfer and deliver the Assets shall have
been taken.
Section 7.3. Governmental Approvals. All Governmental Entities, the
consent, authorization or approval of which is necessary under any applicable
law, rule, order or regulation for the consummation by the Seller of the
transactions contemplated by this Agreement and the operation of the Seller's
business by the Buyer shall have consented to, authorized, permitted or approved
such transactions.
Section 7.4. [Intentionally Deleted].
Section 7.5. Adverse Proceedings. No action or proceeding by or before
any court or other Governmental Entity shall have been instituted or threatened
by any Governmental Entity or person whatsoever which shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or which
might affect the right of the Buyer to own or use the Assets after the Closing.
Section 7.6. Opinion of Counsel. The Buyer shall have received an
opinion of Xxxxxxx and Xxxxxx, counsel to the Seller, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit C.
Section 7.7. Board of Directors and Shareholder Approval. The Board of
Directors and AEGON, the sole shareholder of the Seller, shall have duly
authorized the transactions contemplated by this Agreement.
Section 7.8. The Assets. Except for the Permitted Encumbrances, at the
Closing the Buyer shall receive good, clear, record and marketable title to the
Assets, free and clear of all liens, liabilities, security interests and
encumbrances of any nature whatsoever.
Section 7.9. Update. The Seller shall have provided the Buyer with a
true, correct and complete list and amount, as of March 18, 1998, of the trade
accounts payable, accrued liabilities and other current liabilities.
Section 7.10. [Intentionally Deleted].
Section 7.11. [Intentionally Deleted].
Section 7.12. [Intentionally Deleted].
Section 7.13. [Intentionally Deleted].
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Section 7.14. Closing Deliveries. The Buyer shall have received at or
prior to the Closing each of the following documents:
(a) a Xxxx of Sale executed by the Seller in substantially the form
attached hereto as Exhibit D;
(b) such instruments of conveyance, assignment and transfer, in form and
substance satisfactory to the Buyer, as shall be appropriate to convey, transfer
and assign to, and to vest in, the Buyer, good, clear, record and marketable
title to the Assets;
(c) all technical data, formulations, product literature and other
documentation relating to the Seller's business in the possession of the Seller,
all in form and substance satisfactory to the Buyer;
(d) such contracts, files and other data and documents pertaining to the
Assets or the Seller's business in the possession of the Seller as the Buyer may
reasonably request;
(e) copies of the general ledgers and books of account of the Seller;
(f) such certificates of the Seller's officers and such other documents
evidencing satisfaction of the conditions specified in Section 7 as the Buyer
shall reasonably request;
(g) a certificate of the Secretary of State of the State of Delaware as to
the legal existence and corporate good standing of the Seller in Delaware;
(h) a certificate of the Secretary of State of the State of Illinois as to
the foreign qualification and good standing of the Seller in Illinois;
(i) certificate of the Secretary of the Seller attesting to the incumbency
of the Seller's officers, the authenticity of the resolutions authorizing the
transactions contemplated by this Agreement, and the authenticity and continuing
validity of the charter and bylaws delivered pursuant to Subsection 2.1;
(j) subleases for the properties situated at 0000 Xxxx Xxxx Xxxxx, Xxxxxx,
Xxxxxxx (the "Georgia Sublease") and 000 Xxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxx
(the "Illinois Sublease"), each executed by the Seller;
(k) the schedules listed in Subsection 7.9;
(l) the Escrow Agreement executed by the Seller and the Escrow Agent;
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(m) the cross receipt executed by the Seller; and
(n) such other documents, instruments or certificates as the Buyer may
reasonably request, including without limitation a certain side letter dated the
date hereof with respect to post-closing arrangements (the "Side Letter")
between the Seller and the Buyer.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE SELLER
The obligations of the Seller under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing at the sole discretion of the Seller:
Section 8.1. Continued Truth of Representations and Warranties of the
Buyer; Compliance with Covenants and Obligations. The representations and
warranties of the Buyer in this Agreement shall be true on and as of the Closing
Date as though such representations and warranties were made on and as of such
date, except for representations and warranties made as of a specific date,
which shall be true as of such date. The Buyer shall have performed and
complied with all terms, conditions, obligations, agreements and restrictions
required by this Agreement to be performed or complied with by it prior to or at
the Closing Date.
Section 8.2. Corporate Proceedings. All corporate and other proceedings
required to be taken on the part of the Buyer to authorize or carry out this
Agreement shall have been taken.
Section 8.3. Governmental Approvals. All Governmental Entities, the
consent, authorization or approval of which is necessary under any applicable
law, rule, order or regulation for the consummation by the Buyer of the
transactions contemplated by this Agreement shall have consented to, authorized,
permitted or approved such transactions.
Section 8.4. Consents of Third Parties. The Buyer shall have received
all requisite consents and approvals of all third parties whose consent or
approval is required in order for the Buyer to consummate the transactions
contemplated by this Agreement.
Section 8.5. Adverse Proceedings. No action or proceeding by or before
any court or other Governmental Entity shall have been instituted or threatened
by any Governmental Entity or person whatsoever which shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or which
might affect the right of the Seller to transfer the Assets.
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Section 8.6. Opinion of Counsel. The Seller shall have received an
opinion of Xxxx and Xxxx LLP, counsel to the Buyer, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit E.
Section 8.7. Closing Deliveries. The Seller shall have received at or
prior to the Closing each of the following documents:
(a) such certificates of the Buyer's officers and such other documents
evidencing satisfaction of the conditions specified in this Section 8 as the
Seller shall reasonably request;
(b) a certificate of the Secretary of State of the State of Delaware as to
the legal existence and corporate good standing of the Buyer in Delaware;
(c) a certificate of the Secretary of the Buyer attesting to the incumbency
of the Buyer's officers, the authenticity of the resolutions authorizing the
transactions contemplated by this Agreement, and the authenticity and continuing
validity of the Buyer's charter and bylaws;
(d) the Instrument of Assumption executed by the Buyer;
(e) payment of the Base Consideration;
(f) the Escrow Agreement executed by the Buyer and the Escrow Agent;
(g) the Georgia Sublease and the Illinois Sublease, each executed by the
Buyer;
(h) the cross receipt executed by the Buyer; and
(i) such other documents, instruments or certificates as the Seller may
reasonably request, including without limitation the Side Letter.
Section 8.8. Offers of Employment. The Buyer, in its sole discretion,
will decide which employees it will make offers of employment to, and will make
such decisions in compliance with all applicable laws. The Buyer agrees to
offer to employ a sufficient number of the Seller's employees at sufficient
wages and benefits and under terms and conditions sufficient to avoid the
imposition of any liability on the Seller under the WARN Act.
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ARTICLE IX
ESCROW ARRANGEMENT AND INDEMNIFICATION
Section 9.1. Escrow Arrangement. The Parties agree and acknowledge that
the Buyer is delivering the Transaction Funds to the Escrow Agent on the Closing
Date to secure: (a) the indemnification obligations of the Seller under
Subsection 9.3 of this Agreement for which claims for Damages (as defined below)
are made by the Buyer against the Seller on or before the First Anniversary; (b)
the obligations of the Seller with respect to Accounts Receivable under
Subsection 11.7 of this Agreement; (c) the obligation of the Seller under
Subsection 11.8 of this Agreement to reimburse the Buyer for costs and expenses
incurred by the Buyer for product claims and returns, which claims for
reimbursement are made by the Buyer on or before the First Anniversary; and (d)
payment of the Acquisition Liabilities. Subject to the provisions of Subsection
9.9 hereof, none of the claims or obligations set forth in this Subsection 9.1
shall be affected by any examination made for or on behalf of the Buyer or the
Seller, as the case may be, or the knowledge of any of the officers, directors,
stockholders, employees or agents of the Buyer or the Seller, as the case may
be. Any claims or obligations secured by the Transaction Funds shall be made in
accordance with the provisions of the Escrow Agreement.
Section 9.2. Indemnification by the Buyer. The Buyer hereby agrees to
indemnify and holds harmless the Seller against any and all debts, obligations
and other liabilities (whether absolute, accrued, contingent, fixed or
otherwise, or whether known or unknown, or due or to become due or otherwise),
monetary damages, fines, fees, penalties, interest obligations, deficiencies,
losses and expenses (including without limitation amounts paid in settlement,
interest, court costs, costs of investigators, fees and expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation) ("Damages") incurred by the Seller:
(a) resulting from any breach by the Buyer of any representation or
warranty in this Agreement;
(b) resulting from any breach of any covenant, agreement or obligation of
the Buyer contained in this Agreement or any other agreement, instrument or
document contemplated by this Agreement;
(c) resulting from any misrepresentation contained in any statement,
certificate or schedule furnished by the Buyer pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement;
(d) resulting from, relating to or constituting any obligations,
liabilities or commitments of the Seller included within the Assumed
Liabilities;
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(e) resulting from any warranty claim or product liability claim relating
to (i) services provided or products sold or licensed by the Buyer after the
Closing Date or (ii) the Buyer's operation of the Seller's business or
operations after the Closing Date; and
(f) relating to liabilities or expenses under the WARN Act.
Section 9.3. Indemnification by the Seller. The Seller agrees to
indemnify and hold harmless the Buyer from any and all Damages reasonably
incurred by the Buyer in connection with each and all of the following:
(a) Any breach by the Seller of any representation or warranty in this
Agreement;
(b) Any breach of any covenant, agreement or obligation of the Seller
contained in this Agreement or any other agreement, instrument or document
contemplated by this Agreement;
(c) Any misrepresentation contained in any statement, certificate or
schedule furnished by the Seller pursuant to this Agreement or in connection
with the transactions contemplated by this Agreement;
(d) Any claims against, or liabilities or obligations of, the Seller
relating to the Retained Liabilities;
(e) The failure of the Buyer to obtain the protections afforded by
compliance with the notification and other requirements of the bulk sales laws
in force in the jurisdictions in which such laws may be applicable to either the
Seller or the transactions contemplated by this Agreement;
(f) Any violation by the Seller of, or any failure by the Seller to comply
with, any law, ruling, order, decree, regulation or zoning, environmental or
permit requirement applicable to the Seller, the Assets or its business, whether
or not any such violation or failure to comply has been disclosed to the Buyer,
including any costs incurred by the Buyer (i) to bring the Assets into
compliance with Environmental Laws as a consequence of noncompliance with such
laws on the Closing Date or (ii) in connection with the transfer of the Assets;
(g) Any warranty claim or product liability claim relating to (i) products
manufactured or sold by the Seller prior to the Closing Date or (ii) the
Seller's business or operation prior to the Closing Date;
(h) Any Tax liabilities or obligations of the Seller or any of its
Subsidiaries;
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(i) Any liability resulting from, relating to or constituting any
litigation, suit, action, investigation, proceeding or controversy arising out
of the Seller's actions prior to the Closing Date; and
(j) Any liability resulting from, relating to or constituting any
obligations of the Seller under the Assigned Contracts which became due and
payable on or prior to the Closing Date.
Section 9.4. Claims for Indemnification. Whenever any claim shall arise
for indemnification pursuant to Subsections 9.2 or 9.3 of this Agreement, the
Party seeking indemnification (for purposes of this Section 9, the "Indemnified
Party") shall promptly notify the Party from whom indemnification is sought (for
purposes of this Section 9, the "Indemnifying Party") of the claim and, when
known, the facts constituting the basis for such claim. In the event of any
such claim for indemnification hereunder resulting from or in connection with
any claim or legal proceedings by a third party, the notice to the Indemnifying
Party shall specify, if known, the amount or an estimate of the amount of the
liability arising therefrom. The Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld, unless suit shall have
been instituted against it and the Indemnifying Party shall not have taken
control of such suit after notification thereof as provided in Subsection 9.5 of
this Agreement. Any claims for indemnification by the Buyer made on or before
the First Anniversary shall also be made in accordance with the procedures set
forth in the Escrow Agreement.
Section 9.5. Defense by Indemnifying Party. In connection with any claim
giving rise to indemnity hereunder resulting from or arising out of any claim or
legal proceeding by a person who is not a party to this Agreement, the
Indemnifying Party at its sole cost and expense may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
it acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim. The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim or litigation
resulting therefrom within one month after the date such claim is made, (a) the
Indemnified Party may defend against such claim or litigation, in such manner as
it may deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the Indemnifying Party, on such
terms as the Indemnified Party may deem appropriate, and (b) the Indemnifying
Party shall be entitled to participate in (but not control) the defense of such
action, with its counsel and at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified Party defended
such third-party claim or the amount or nature of any such settlement, the
Indemnifying Party shall have
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the burden to prove by a preponderance of the evidence that the Indemnified
Party did not defend or settle such third-party claim in a reasonably prudent
manner.
Section 9.6. Payment of Indemnification Obligation. The Seller hereby
agrees that any claim for indemnification by the Buyer under this Agreement
shall not be limited to the Transaction Funds. All indemnification by the Buyer
or the Seller hereunder (to the extent not satisfied in the manner specified in
the preceding sentence) shall be effected by payment of cash or delivery of a
cashier's or certified check in the amount of the indemnification liability.
Section 9.7. Survival. The representations and warranties of the Parties
set forth in this Agreement shall survive the Closing and the consummation of
the transactions contemplated hereby and continue until two years after the
Closing Date (and thereafter the Parties shall not make a claim against each
other with respect thereto) and, subject to the provisions of Subsection 9.9
hereof, shall not be affected by any examination made for or on behalf of such
Party or the knowledge of any of the officers, directors, stockholders,
employees or agents of such Party. Notwithstanding the foregoing, the
representations contained in Subsections 2.13 and 2.26 shall survive the Closing
and the consummation of the transactions contemplated thereby and continue until
the expiration of the applicable statute of limitations relating to the subject
matter of such representations, and the representations contained in Section 2.3
relating to the Seller's authority to engage in the transactions contemplated
hereby shall survive without limit. If a notice is given in accordance with the
provisions of Section 9 or the Escrow Agreement before expiration of such
periods, then (notwithstanding the expiration of such time period) the
representation or warranty applicable to such claim shall survive until, but
only for purposes of, the resolution of such claim.
Section 9.8. Limitations. Notwithstanding anything to the contrary
herein, (a) the Seller shall not be liable under this Section 9 for any claims
for Damages made after the First Anniversary unless and until the aggregate
Damages to the Buyer exceed $100,000 (at which point the Seller shall become
liable for the aggregate Damages, and not just amounts in excess of $100,000)
and (b) the Buyer shall not be liable under this Section 9 unless and until the
aggregate Damages to the Seller exceed $100,000 (at which point the Buyer shall
become liable for the aggregate Damages, and not just amounts in excess of
$100,000). Except with respect to claims based on fraud, the rights of each
Party under this Section 9 shall be the exclusive remedy of such Party with
respect to claims resulting from or relating to any misrepresentation, breach of
warranty or failure to perform any covenant or agreement of the other Party
contained in this Agreement.
Section 9.9. Pre-Closing Knowledge of Material Breach. Notwithstanding
anything to the contrary contained herein, neither the Seller nor the Buyer may
make a claim against the other for Damages with respect to any matter actually
known by the
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Buyer or the Seller, as the case may be, prior to the Closing to conflict with
the accuracy of any representations or warranties of the Buyer or the Seller, as
the case may be, if the Damages with respect to such inaccuracy exceeds
$500,000.
ARTICLE X
RESTRICTED STOCK; REGISTRATION RIGHTS
Section 10.1. Restricted Shares. The Seller acknowledges that the Shares
are not registered under the Securities Act, or applicable state securities
laws, and any resale inconsistent with the Securities Act may create liability
on its part and/or the part of the Buyer, and agrees not to assign, sell,
contract to sell, pledge, make any short sale, transfer or otherwise dispose of
any Shares prior to the First Anniversary. Notwithstanding the foregoing, at any
time after the First Anniversary, the Seller may transfer the Shares to one or
more Affiliates of the Seller if such Affiliates agree to be bound by the terms
of Section 10 of this Agreement.
Section 10.2. Share Legend. The Seller agrees that each certificate
representing any of the Shares will bear a legend substantially as follows:
"These shares have not been registered under the Securities Act of
1933, as amended. They may not be offered or transferred by sale,
assignment, pledge or otherwise unless (i) a registration statement
for the shares under the Securities Act of 1933, as amended, is in
effect or (ii) the corporation has received an opinion of counsel,
which opinion is satisfactory to the corporation, to the effect that
such registration is not required under the Securities Act of 1933, as
amended."
Section 10.3. Required Registrations.
(a) At any time on or after the first anniversary of the Closing Date, the
Seller may request, in writing, that the Buyer effect a registration on Form S-3
(or any successor form) of up to one-half of the Registrable Shares (as defined
in Subsection 10.3(e) below). Thereupon, the Buyer shall use its best efforts
to effect the registration on Form S-3 (or any successor form) of all such
Registrable Shares which the Buyer has been requested to so register.
(b) At any time on or after the second anniversary of the Closing Date, the
Seller may request, in writing, that the Buyer effect a registration on Form S-3
(or any successor form) of the remaining Registrable Shares. Thereupon, the
Buyer shall use its best efforts to effect the registration on Form S-3 (or any
successor form) of all such Registrable Shares which the Buyer has been
requested to so register.
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(c) If practicable, upon a request by the Seller to register up to one-half
of the Registrable Shares pursuant to Subsection 10.3(a) above, the Buyer may,
at its option, choose to register on Form S-3 (or any successor form) all of the
Registrable Shares subject to required registrations pursuant to Subsections
10.3(a) and 10.3(b) above. In such event, the Seller agrees to execute a "lock-
up" agreement containing usual and customary provisions and providing that no
more than one-half of the Registrable Shares will be sold by the Seller under
the Form S-3 prior to the second anniversary of the Closing Date.
(d) In connection with the registration of Registrable Shares pursuant to
this Section 10, the Buyer may by written notice require that the Seller
immediately cease offers and sales of shares pursuant to any Registration
Statement (as defined in Subsection 10.3(f) below) (a "Black Out Requirement")
at any time that (i) the Buyer becomes engaged in a business activity or
negotiation which is not disclosed in the Registration Statement (or the
prospectus included therein) which the Buyer reasonably believes must be
disclosed therein under applicable law and which the Buyer desires to keep
confidential for business purposes, the disclosure of which at such time the
Buyer reasonably believes could have an adverse effect on the Buyer or its
business or prospects or on the successful completion of such business activity
or negotiation or on the market price of the Buyer's stock; (ii) the Buyer
reasonably believes that a particular disclosure so determined to be required to
be disclosed therein would be premature or would adversely affect the Buyer or
its business or prospects or the market price of the Buyer's stock or (iii) the
Registration Statement can no longer be used under the existing rules and
regulations promulgated under the Securities Act; provided, however, that (x)
the Buyer shall not impose more than three Black Out Requirements per annum, (y)
no single Black Out Requirement shall last more than 45 days and (z) the total
number of days subject to Black Out Requirements shall not exceed an aggregate
of 90 days per annum. The Buyer shall not be required to disclose to the Seller
the reasons for requiring a suspension of offers and sales hereunder, and the
Seller shall not disclose to any third party the existence of any such
suspension.
(e) For purposes of this Agreement, "Registrable Shares" means (i) the
Shares and (ii) any other shares of Buyer Common Stock issued in respect of such
Shares (because of stock splits, stock dividends, reclassifications,
recapitalizations or similar events); provided, however, that shares of Buyer
Common Stock which are Registrable Shares shall cease to be Registrable Shares
(x) upon any sale pursuant to a registration statement under the Securities Act,
Section 4(1) of the Securities Act or Rule 144 under the Securities Act; (y) at
such time as all of the Registrable Shares then held by the Seller may be sold
without restriction as to volume under Rule 144 or (z) at such time as all such
Registrable Shares may be sold by the Seller under Rule 144(k).
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(f) For purposes of this Agreement, "Registration Statement" means either
of the registration statements on Form S-3 (or any successor form) referred to
in Subsections 10.3(a) and 10.3(b) above.
Section 10.4. Term of Registration Rights. Notwithstanding anything
contained within this Section 10, the rights created in the Seller by this
Section 10 to register Registrable Shares under the Securities Act shall
terminate on the third anniversary of the Closing Date.
Section 10.5. Registration Procedures. If and whenever the Buyer is
required by the provisions of this Section 10 to use its best efforts to effect
the registration of any of the Registrable Shares under the Securities Act, the
Buyer shall:
(a) within 30 days after the Seller's request made pursuant to Subsections
10.3(a) or 10.3(b), file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective;
(b) prepare and file with the Commission any amendments and supplements to
the Registration Statement and the prospectus included in the Registration
Statement as may be necessary to keep the Registration Statement effective until
the earlier of the sale of all Registrable Shares covered thereby or six months
after the effective date thereof;
(c) furnish to the Seller such reasonable numbers of copies of the
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as the Seller may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares owned by the Seller; and
(d) use its best efforts to register or qualify the Registrable Shares
covered by the Registration Statement under the securities or Blue Sky laws of
such states as the Seller shall reasonably request, and do any and all other
acts and things that may be necessary or desirable to enable the Seller to
consummate the public sale or other disposition in such states of the
Registrable Shares owned by the Seller; provided, however, that the Buyer shall
not be required in connection with this Subsection 10.5(d) to qualify as a
foreign corporation or execute a general consent to service of process in any
jurisdiction.
If the Buyer has delivered preliminary or final prospectuses to the Seller
and after having done so the prospectus is amended to comply with the
requirements of the Securities Act, the Buyer shall promptly notify the Seller
and, if requested, the Seller shall immediately cease making offers of
Registrable Shares and return all prospectuses to the Buyer. The Buyer shall
promptly provide the Seller with revised
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prospectuses and, following receipt of the revised prospectuses, the Seller
shall be free to resume making offers of the Registrable Shares.
Section 10.6. Allocation of Expenses. The Buyer shall pay all
Registration Expenses (as defined below) of all registrations under this Section
10. For purposes of this Subsection 10.6, the term "Registration Expenses"
shall mean all expenses incurred by the Buyer in complying with Section 10 of
this Agreement, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses, fees and expenses of counsel for the
Buyer, state Blue Sky fees and expenses, and the expense of any special audits
incident to or required by any such registration, but excluding underwriting
discounts, selling commissions and the fees and expenses of the Seller's own
counsel.
Section 10.7. Indemnification.
(a) In the event of any registration of any of the Registrable Shares under
the Securities Act pursuant to this Section 10, the Buyer shall indemnify and
hold harmless the seller of such Registrable Shares, and each other person, if
any, who controls the seller within the meaning of the Securities Act or the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which the Seller or controlling person may become subject under the
Securities Act, the Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Buyer shall reimburse the seller and each such
controlling person for any legal or any other expenses reasonably incurred by
the seller or controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Buyer shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or omission made in such Registration Statement, preliminary prospectus or final
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Buyer, in writing, by or on behalf
of the seller or controlling person specifically for use in the preparation
thereof.
(b) In the event of any registration of any of the Registrable Shares under
the Securities Act pursuant to this Section 10, the seller of such Registrable
Shares shall indemnify and hold harmless the Buyer, each of its directors and
officers and each person, if any, who controls the Buyer within the meaning of
the Securities Act
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or the Exchange Act, against any losses, claims, damages or liabilities, joint
or several, to which the Buyer, such directors and officers or controlling
person may become subject under the Securities Act, Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement under which such Registrable Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, if the
statement or omission was made in reliance upon and in conformity with
information relating to the seller furnished in writing to the Buyer by or on
behalf of the seller of such Registrable Shares specifically for use in
connection with the preparation of such Registration Statement, prospectus,
amendment or supplement; provided, however, that the obligations of the seller
hereunder shall be limited to an amount equal to the proceeds to the seller of
Registrable Shares sold in connection with such registration.
(c) Each party entitled to indemnification under this Subsection 10.7 (for
purposes of this Subsection 10.7, the "Indemnified Party") shall give notice to
the party required to provide indemnification (for purposes of this Subsection
10.7, the "Indemnifying Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom; provided, that counsel for the Indemnifying Party, who
shall conduct the defense of such claim or litigation, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld); and,
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Subsection 10.7(c). The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
shall pay such expense if representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential differing interests between the Indemnified Party and any other
party represented by such counsel in such proceeding. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation, and no Indemnified Party shall
consent to entry of any judgment or settle such claim or litigation without the
prior written consent of the Indemnifying Party.
Section 10.8. Information by Holder. The Seller shall furnish to the
Buyer such information regarding the Seller and the distribution proposed by the
Seller as the
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Buyer may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Section
10.
ARTICLE XI
POST-CLOSING AGREEMENTS
Each of the Parties agrees that from and after the Closing Date:
Section 11.1. Proprietary Information.
(a) Each Seller Entity shall hold in confidence, and use its best efforts
to have all of its officers, directors and personnel hold in confidence, all
knowledge and information of a secret or confidential nature with respect to the
business of the Seller and shall not disclose, publish or make use of the same
without the consent of the Buyer, except to the extent that such information
shall have become public knowledge other than by breach of this Agreement by the
Seller.
(b) Each of the Seller Entities agrees that the remedy at law for any
breach of this Subsection 11.1 would be inadequate and that the Buyer shall be
entitled to injunctive relief in addition to any other remedy it may have upon
breach of any provision of this Subsection 11.1.
Section 11.2. No Solicitation or Hiring of Former Employees. Except as
provided by law, for a period of three years after the Closing Date, no Seller
Entity shall solicit any person who was an employee of the Seller on the Closing
Date to terminate his employment with the Buyer or to become an employee of a
Seller Entity or hire any person who was such an employee on the date hereof or
on the Closing Date.
Section 11.3. Non-Competition and Non-Solicitation.
(a) In consideration of the Base Consideration, each of the Seller Entities
agrees that during the three-year period beginning on the Closing Date (the
"Non-Competition Period"), it will not in any capacity, either separately,
jointly, or in association with others, directly or indirectly, as an agent,
owner, partner, joint venturer, distributor, dealer, representative,
stockholder, investor, lender or otherwise, engage or have a financial interest
in any business located anywhere in the Restricted Area (as defined below) which
competes with the Buyer or with any Affiliates thereof (excepting only the
ownership of not more than 1% of the outstanding securities of any class listed
on an exchange or regularly traded in the over-the-counter market). "Restricted
Area" means the entire world. An entity shall be deemed to compete with the
Buyer or an Affiliate as of a particular time if the entity then sells or
markets any product or service which is competitive with, and may be purchased
in replacement or substitution of, any product or service which was being
designed, sold, marketed or developed by the Seller prior to the Closing
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Date, and which is then being designed, sold, marketed or developed by the Buyer
or an Affiliate. A product or service shall be deemed to be under development by
the Seller, the Buyer or an Affiliate of the Buyer, as the case may be, as of a
particular date only if the Seller, the Buyer or such Affiliate, as the case may
be, has devoted significant resources to the development thereof and intends to
market such product or service within the next 365 days of such date.
(b) Each of the Seller Entities further agrees that during the Non-
Competition Period it will not in any capacity, either separately, jointly or in
association with others, directly or indirectly, solicit, divert or take away,
attempt to take away or otherwise contact any of the clients, customers,
accounts, distributors, dealers or representatives of the Buyer as shown by the
records of the Buyer, that were clients, customers, distributors, accounts,
dealers or representatives of the Seller at any time during the three years
immediately preceding the Closing Date if such solicitation or contact is for
the specific purpose of selling products or services that compete with any
products or services that the Buyer had available for sale to its clients,
customers, accounts, distributors, dealers or representatives or prospects
during the Non-Competition Period. Each of the Seller Entities further agrees
that during the Non-Competition Period it will not in any capacity, either
separately, jointly or in association with others, directly or indirectly,
recruit, solicit or hire any employee or consultant of the Buyer or induce or
attempt to induce any employee or consultant of the Buyer to terminate his or
her employment or consultancy with, or otherwise cease his or her relationship
with, the Buyer.
(c) The Parties agree that the duration and geographic scope of the non-
competition and non-solicitation provisions set forth in this Subsection 11.3
are reasonable. In the event that any court determines that the duration or the
geographic scope, or both, are unreasonable and that such provisions are to that
extent unenforceable, the Parties agree that the provisions shall remain in full
force and effect for the greatest time period and in the greatest area that
would not render them unenforceable. The Parties intend that these non-
competition and non-solicitation provisions shall be deemed to be a series of
separate covenants, one for each and every county of each and every state of the
United States of America and each and every political subdivision of each and
every country outside the United States of America where this provision is
intended to be effective. Each of the Seller Entities agrees that damages are
an inadequate remedy for any breach of these provisions and that the Buyer
shall, whether or not it is pursuing any potential remedies at law, be entitled
to equitable relief in the form of preliminary and permanent injunctions without
bond or other security upon any actual or threatened breach of these non-
competition and non-solicitation provisions.
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Section 11.4. Sharing of Data and Cooperation.
(a) The Seller Entities and their representatives shall have the right for
a period of six years following the Closing Date to have reasonable access to
such books, records and accounts, including financial and Tax information,
correspondence, production records, employment records and other similar
information as are transferred to the Buyer pursuant to the terms of this
Agreement, and to make copies and extracts therefrom, and to have access to the
services of Buyer and its employees, and to use the Buyer's offices and
equipment, as reasonably necessary for the limited purposes of (i) concluding
their involvement in the business of the Seller prior to the Closing Date; (ii)
complying with their obligations under applicable securities, Tax,
environmental, employment or other laws and regulations; (iii) in connection
with any actual, threatened or anticipated litigation against the Seller
Entities; and (iv) for any other reasonably necessary purpose. The Buyer shall
have the right for a period of three years following the Closing Date to have
reasonable access to those books, records and accounts, including financial and
Tax information, correspondence, production records, employment records and
other records of the Seller which are retained by the Seller pursuant to the
terms of this Agreement to the extent that any of the foregoing relates to the
business of the Seller transferred to the Buyer hereunder or is otherwise needed
by the Buyer in order to comply with its obligations under applicable
securities, Tax, environmental, employment or other laws and regulations.
Notwithstanding anything to the contrary contained in this Section, if the
parties are in an adversarial relationship, in litigation or in arbitration, the
furnishing of information, documents or records in accordance with this
Subsection 11.4(a) shall be subject to applicable rules relating to discovery.
(b) The Seller and the Buyer agree that from and after the Closing Date
they shall cooperate fully with each other to facilitate the transfer of the
Assets from the Seller to the Buyer and the operation thereof by the Buyer.
Section 11.5. Use of Name. The Seller Entities agree not to use the name
"Quantra Corporation" or any derivation thereof after the Closing Date in
connection with any business. As soon as practicable after the Closing Date,
but no later than the fifth business day after the Closing Date, the Seller
shall (a) file an amendment to its charter, prepared in accordance with the
relevant provisions of Delaware law, changing it corporation name to QC Holding
Inc., and (b) amend its certificates of authority to change its corporate name
to QC Holding Inc. in all foreign jurisdictions in which the Seller is qualified
to do business. Other than to comply with the provisions of the preceding
sentence, the Seller Entities agree not to use the name Quantra Corporation or
any derivations thereof after the Closing Date.
Section 11.6. Cooperation in Litigation. Each Party will fully cooperate
with the other in the defense or prosecution of any litigation or proceeding
already instituted or which may be instituted hereafter against or by such Party
relating to or arising
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out of the conduct of the business of the Seller prior to or after the Closing
Date (other than litigation arising out the transactions contemplated by this
Agreement). The Party requesting such cooperation shall pay the out-of-pocket
expenses (including legal fees and disbursements) of the Party providing such
cooperation and of its officers, directors, employees and agents reasonably
incurred in connection with providing such cooperation, but shall not be
responsible to reimburse the Party providing such cooperation for such Party's
time spent in such cooperation or the salaries or costs of fringe benefits or
similar expenses paid by the Party providing such cooperation to its officers,
directors, employees and agents while assisting in the defense or prosecution of
any such litigation or proceeding.
Section 11.7. Accounts Receivable.
(a) For a period of 90 days after the Closing Date (the "Collection
Period"), the Buyer shall use its reasonable efforts to collect the Accounts
Receivable. The Buyer may, but shall not be obligated to, use a collection
agency or commence legal actions in connection with such collection efforts.
Following the expiration of the Collection Period, but no later than the First
Anniversary, the Buyer shall give notice to the Seller designating those
Accounts Receivable which have not been collected as of the end of the
Collection Period and which the Buyer wishes to assign to the Seller. The
aggregate face amount of the unpaid Accounts Receivable which the Buyer wishes
to assign to the Seller shall be considered "Damages" for purposes of this
Agreement, and the Buyer can make a claim for such Damages in accordance with
the provisions of the Escrow Agreement.
(b) Upon assignment of any unpaid Account Receivable to the Seller pursuant
to the provisions of this Subsection 11.7 and the Escrow Agreement, (i) the
Buyer shall promptly deliver to the Seller any tangible evidence of such Account
Receivable then in the possession of the Buyer or under its control, and (ii)
the Seller shall be entitled to such customary and reasonable actions as it
deems necessary or desirable in order to collect such unpaid Account Receivable;
provided, that the Seller shall consult with the Buyer prior to taking any
collection action which might reasonably be expected to jeopardize the Buyer's
relationship with such customer. The Buyer will, from time to time after such
assignment, execute and deliver to the Seller such instruments and other
documents as the Seller may reasonably request to assist the Seller in its
collection efforts.
(c) In the event that any payment received by the Buyer during the
Collection Period is remitted by a customer which is indebted under both
Accounts Receivable and an account receivable arising out of the sale or license
of inventory, products or services in the ordinary course of business after the
Closing Date (a "New Receivable"), such payments shall first be applied to the
Accounts Receivable due from such customer and the balance remaining after
payment in full of all Accounts Receivable due from such customer shall be
applied to the New Receivable; provided,
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however, that (i) with respect to any Account Receivable being contested or
disputed by the payor thereof, no portion of the amount in dispute shall be
deemed to have been collected by the Buyer in respect of the Account Receivable
due from such customer (unless otherwise directed by the customer) until all
amounts owed by such customer to the Buyer for New Receivables have been paid or
such dispute has been resolved, whichever occurs first (it being understood that
undisputed amounts of Accounts Receivable shall be applied in accordance with
the priorities set forth above in this Subsection 11.7) and (ii) the foregoing
priorities shall not apply to sums received by the Buyer which are specifically
identified by the customer as being tendered in payment of a New Receivable.
(d) The Buyer shall cooperate, at the Seller's expense, with the Seller in
collecting any Accounts Receivable which are assigned to the Seller pursuant to
this Subsection 11.7; provided, however, that the foregoing shall not require
the Buyer to be a party to any action brought by the Seller to collect such
Accounts Receivable.
(e) The Seller agrees that it will forward promptly to the Buyer any
monies, checks or instruments received by the Seller after the Closing Date with
respect to the Accounts Receivable, except with respect to those Accounts
Receivable which are assigned to the Seller pursuant to this Subsection 11.7.
(f) Any sums received by the Buyer in respect of Accounts Receivable (and
so identified by the relevant account debtor) after their assignment to the
Seller pursuant to Subsection 11.7(a) hereof shall be promptly transmitted by
the Buyer to the Seller. In addition, if receipt by the Buyer of unidentified
sums of money from an account debtor who owes any Account Receivable assigned to
the Seller pursuant to Subsection 11.7(a) hereof results in such account debtor
having an aggregate credit balance with the Buyer, the Buyer shall promptly
transmit to the Seller an amount of money equal to the lesser of (a) such
aggregate credit balance or (b) the remaining unpaid balance of all Accounts
Receivable which have been assigned to the Seller and are payable by such
account debtor to the Seller.
Section 11.8. Product Claims and Returns. The Buyer shall be responsible
for customer claims relating to services rendered by the Seller prior to the
Closing Date, and customer claims relating to, or returns of, products of the
Seller which (a) were sold or licensed and shipped by the Seller prior to the
Closing Date, (b) were in the finished goods inventory of the Seller as of the
Closing Date or (c) were work in process and more than fifty percent (50%)
completed by the Closing Date. If a customer makes a claim or seeks a return
and, in the judgment of the Buyer, the claim or return is proper, the Buyer
shall replace or repair, as the case may be, the services rendered or product
purchased at the Buyer's then generally prevailing prices and labor rates. The
costs of such repairs or returns shall be considered "Damages" for purposes of
this Agreement. Prior to the First Anniversary, the Buyer can make a claim
against the Transaction Funds in accordance with the provisions of
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the Escrow Agreement to recover any amounts incurred hereunder, and thereafter
may not make any claim against the Transaction Funds or the Seller with respect
thereto.
Section 11.9. Director Election. Promptly following the Closing Date but
no later than the date of the 1998 Annual Meeting of Stockholders of the Buyer,
the Buyer agrees to elect Xxxxx X. Xxxxxxxxxxx to the Board of Directors of the
Buyer.
Section 11.10. Maintenance Arrangement. The Buyer agrees to provide
maintenance services in accordance with the maintenance agreements for which the
Seller has recorded deferred revenue on the books and records of the Seller as
of March 18, 1998, and the Seller agrees to make payments to the Buyer in
accordance with Schedule 11.10 attached hereto.
Section 11.11. Business of the Seller.
(a) Each of the Seller Entities agrees that, prior to the First
Anniversary, the Seller shall not, and AEGON shall not cause the Seller to,
directly or indirectly, issue any dividend or other distribution of cash, stock,
assets or property of any kind to AEGON or any of its Affiliates.
(b) Prior to the First Anniversary, AEGON agrees, and shall cause its
Affiliates to agree, not to (i) request or permit the redemption or conversion
of any of the outstanding securities of the Seller owned by AEGON or any of its
Affiliates; or (ii) take any action to cause the liquidation, dissolution or
winding up of the Seller.
Section 11.12. Releases. The Seller shall use its reasonable efforts to
obtain and have a filed release on Form UCC-3 of the security interest under
each of the financing statements filed with the Office of the Secretary of State
of the State of Illinois on Form UCC-1 bearing file numbers 3227460, 3227461 and
3227462.
Section 11.13. Missing Third Party Consents. The parties hereto agree
that certain consents of third parties ("Required Consents") which are necessary
to assign certain of the Assigned Contracts to the Buyer have not been obtained
prior to Closing. The parties hereto acknowledge and agree that with regard to
Required Consents which have not been obtained prior to Closing, the Seller
agrees to use its reasonable efforts after Closing, if requested by the Buyer,
to assist the Buyer in obtaining any such Required Consents and during the
period after the Closing to the date, if ever, that any Required Consent is
obtained, the Seller shall use its reasonable efforts to allow the Buyer, to the
extent permitted to by applicable law, and to the extent reasonably within the
contractual or other ability or control of the Seller, but only to the extent
same does not constitute an assignment necessitating a Required Consent, to
enjoy the economic and other benefits of the subject matter of such Assigned
Contracts, and to the extent not prohibited under such Assigned Contracts,
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the Buyer agrees to perform, on the Seller's behalf when due, the Seller's
corresponding obligations under such Assigned Contracts, but only to the extent
same does not constitute an assignment necessitating a Required Consent, as a
subcontractor, licensee or agent or in such other capacity which does not
constitute an assignment or breach of any of the provisions of any of such
Assigned Contracts.
ARTICLE XII
TERMINATION OF AGREEMENT
Section 12.1. Termination by Lapse of Time. This Agreement shall
terminate at 5:00 p.m., Eastern time, on March 31, 1998, if the transactions
contemplated hereby have not been consummated, unless such date is extended by
the written consent of all of the parties hereto.
Section 12.2. Termination by Agreement of the Parties. This Agreement
may be terminated by the mutual written agreement of the parties hereto. In the
event of such termination by agreement, the Buyer shall have no further
obligation or liability to the Seller under this Agreement, and the Seller shall
have no further obligation or liability to the Buyer under this Agreement.
Section 12.3. Termination by Reason of Breach. This Agreement may be
terminated by the Seller, if at any time prior to the Closing there shall occur
a breach of any of the representations, warranties or covenants of the Buyer or
the failure by the Buyer to perform any condition or obligation hereunder, and
may be terminated by the Buyer, if at any time prior to the Closing there shall
occur a breach of any of the representations, warranties or covenants of the
Seller or the failure of the Seller to perform any condition or obligation
hereunder.
ARTICLE XIII
TRANSFER AND SALES TAX
Notwithstanding any provisions of law imposing the burden of such Taxes on
the Seller or the Buyer, as the case may be, the Seller shall be responsible for
and shall pay (a) all sales, use and transfer Taxes and (b) all governmental
charges, if any, upon the sale or transfer of any of the Assets hereunder. If
the Seller shall fail to pay such amounts on a timely basis, the Buyer may pay
such amounts to the appropriate Governmental Entity or Entities and the Seller
shall promptly reimburse the Buyer for any amounts so paid by the Buyer.
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ARTICLE XIV
BROKERS
Section 14.1. For the Seller. The Seller agrees to indemnify and hold
harmless the Buyer against any claims or liabilities asserted against it by any
person acting or claiming to act as a broker or finder on behalf of the Seller.
Section 14.2. For the Buyer. The Buyer agrees to indemnify and hold
harmless the Seller against any claims or liabilities asserted against it by any
person acting or claiming to act as a broker or finder on behalf of the Buyer.
ARTICLE XV
NOTICES
Any notice, request, demand, claim, or other communication hereunder shall
be in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly delivered four business days after it is sent by
United States certified mail, return receipt requested, postage prepaid, or one
business day after it is sent via a reputable overnight courier service, in each
case to the intended recipient as set forth below:
To the Seller: Copy to:
Quantra Corporation Xxxxxxx and Xxxxxx
c/o AEGON USA Realty Advisors, Inc. 000 Xxxx Xxxxxx Xxxxxx
0000 Xxxxxxxx Xxxx XX Xxxxxxx, Xxxxxxxx 00000
Xxxxx Xxxxxx, Xxxx 00000 Attention: Xxxxxxx X. Xxxxxxx, Esq.
Attention: Xx. Xxxxx X. Xxxxxxxxxxx, Facsimile: (000) 000-0000
President
To AEGON: Copy to:
AEGON Xxxxxxx and Xxxxxx
USA Realty Advisors, Inc. 000 Xxxx Xxxxxx Xxxxxx
0000 Xxxxxxxx Xxxx XX Xxxxxxx, Xxxxxxxx 00000
Xxxxx Xxxxxx, Xxxx 00000 Attention: Xxxxxxx X. Xxxxxxx, Esq.
Attention: Xx. Xxxxx X. Xxxxxxxxxxx, Facsimile: (000) 000-0000
President
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To the Buyer: Copy to:
SS&C Technologies, Inc. Xxxx and Xxxx XXX
Xxxxxxxxx Xxxxx 00 Xxxxx Xxxxxx
000 Xxxxxxxxxx Xxxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
Xxxxxxxxxx, Xxxxxxxxxxx 00000 Attention: Xxxx X. Xxxxxxx, Esq.
Attention: Xxxxxxx X. Xxxxx, Facsimile: (000) 000-0000
Chief Executive Officer
Any Party may give any notice, request, demand, claim or other communication
hereunder by personal delivery or telecopy, but no such notice, request, demand,
claim or other communication shall be deemed to have been duly given unless and
until it actually is received by the Party or individual for whom it is
intended. Any notice sent by telecopy shall be followed by a confirmation copy
sent by reputable overnight business courier service. Any Party may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Parties notice in the manner
herein set forth.
ARTICLE XVI
SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns, except that the Buyer and
the Seller may not assign their respective obligations hereunder without the
prior written consent of the other Party or Parties, as the case may be;
provided, however, that the Buyer may assign this Agreement, and its rights and
obligations hereunder, to a subsidiary or Affiliate. Any assignment in
contravention of this provision shall be void. No assignment shall release the
Buyer from any obligation or liability under this Agreement.
ARTICLE XVII
ENTIRE AGREEMENT; AMENDMENTS; ATTACHMENTS
(a) This Agreement, all Schedules and Exhibits hereto and all agreements
and instruments to be delivered by the Parties pursuant hereto represent the
entire understanding and agreement among the Parties with respect to the subject
matter hereof and supersede all prior oral and written and all contemporaneous
oral negotiations, commitments and understandings between such Parties. The
Buyer and the Seller, by the consent of their respective Boards of Directors, or
officers authorized by such Boards, may amend or modify this Agreement, in such
manner as may be agreed upon, by a written instrument executed by the Buyer and
the Seller.
(b) If the provisions of any Schedule or Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provision of this
Agreement
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shall prevail. The Exhibits and Schedules attached hereto or to be attached
hereafter are hereby incorporated as integral parts of this Agreement.
ARTICLE XVIII
EXPENSES
Each of the Parties shall pay its own expenses, including without
limitation, legal, accounting and other professional fees, in connection with
this Agreement and the transactions contemplated hereby.
ARTICLE XIX
LEGAL FEES
In the event that legal proceedings are commenced by the Buyer against the
Seller, or by a Seller against the Buyer, in connection with this Agreement or
the transactions contemplated hereby, the Party or Parties which do not prevail
in such proceedings shall pay the reasonable attorneys' fees and other costs and
expenses, including investigation costs, incurred by the prevailing Party or
Parties in such proceedings.
ARTICLE XX
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without reference to its conflicts of laws rules.
ARTICLE XXI
SECTION HEADINGS
The section headings are for the convenience of the parties and in no way
alter, modify, amend, limit, or restrict the contractual obligations of the
parties.
ARTICLE XXII
SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.
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ARTICLE XXIII
COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which shall be one and the same
document.
In Witness Whereof, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
SS&C Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Title: Chief Executive Officer
----------------------------------
Quantra Corporation
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Title: Vice President
----------------------------------
AEGON USA Realty Advisors, Inc.
By: /s/ Xxxxx Xxxxxxxxxxx
-------------------------------------
Title: President
----------------------------------
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