Exhibit 10.17
ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement (this "Agreement") is entered into and
effective as of December 23, 1999 (the "Execution Date"), by and between XXX
Xxxxxxxxxxx, a Maryland corporation with a place of business at 0000 X.
Xxxxxxxxx Xxxxxxxxx, Xxxxxx, XX 00000-0000 ("NCR"), and MicroStrategy Inc., a
Delaware corporation with a place of business at 0000 Xxxxxx Xxxxxxxx, Xxxxxx,
Xxxxxxxx ("MSI").
STATEMENT OF PURPOSE
A. NCR desires to sell to MSI, and MSI desires to purchase from NCR, the
Purchased Assets;
B. MSI desires to acquire the Software technology currently owned and being
developed by NCR for further development by MSI to render the Software
technology suitable for sale to NCR and MSI customers, with the purpose of
the acquisition being the transfer of the Software technology, and the
transfer of tangible property (such as Inventory and Physical Assets) being
merely incidental; and
C. Simultaneously with the consummation of the transactions contemplated
hereby, NCR and MSI each desires to enter into the Joint Marketing
Agreement in connection with such sale;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants, agreements and conditions set forth in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, MSI and NCR, intending to be
legally bound, hereby agree as follows:
1. DEFINITIONS
1.1. "Affiliate" means, with respect to any Person, any other Person directly or
indirectly Controlling, Controlled by, or under common Control with such
first Person.
1.2. "Applicable Law" means any applicable constitution, treaty, statute, rule,
regulation, ordinance, order, directive, code, interpretation, judgment,
decree, injunction, writ, determination, award, permit, license,
authorization, directive, requirement or decision of or agreement with or
by Governmental Authorities.
1.3. "Assigned Contracts" means all Customer Agreements, service agreements,
independent contractor agreements and other agreements between NCR and any
third party to the extent pertaining to the Software (other than any such
agreements pertaining to Embedded Software) and which are wither (a)
assignable by NCR to MSI as of the Closing Date or (b) assignable by NCR to
MSI after the Closing Date, all as specifically identified in Schedule 2.3.
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1.4. "Assumed Liabilities" shall mean the obligations arising after the
Closing under the Assigned Contracts.
1.5. "MSI Group" means MSI and its officers, directors, shareholders,
Affiliates and agents.
1.6. "Customer Data" means a copy of NCR's customer lists and other data
relating primarily to customers and potential customers for the Software
and any and all license agreements and maintenance agreements or portions
thereof relating to the Software.
1.7. "Claim" means a written notice asserting a breach of a representation,
warranty or covenant specified in this Agreement, which shall reasonably
set forth, in light of the information then known to the party giving such
notice, a description of and an estimate (if then reasonable to make) of
the amount involved in such breach.
1.8. "Closing" means the closing of the transactions contemplated by this
Agreement.
1.9. "Closing Date" has the meaning set forth in Section 3.
1.10. "Computer Program" means a list of steps or list of statements and/or
instructions which are capable when incorporated in a machine-readable
medium of causing a computer to indicate, perform or achieve particular
functions, tasks or results.
1.11. "Confidential Information" has the meaning set forth in Section 8.1
hereof.
1.12. "Consents" means all of the consents or approvals of Governmental
Authorities and other third parties necessary to sell, transfer and assign
the Purchased Assets and transfer the Assigned Contracts to MSI and to
otherwise consummate the transactions contemplated hereby in compliance
with all Applicable Law.
1.13. "Control" means having the power to direct the affairs of a Person by
reason of either (i) owning or controlling the right to vote a sufficient
number of shares of voting stock or other voting interest of such Person
or (ii) having the right to direct the general management of the affairs
of such Person by contract or otherwise.
1.14. "Customer Agreement" means any and all licenses, leases, distribution and
maintenance agreements whereby NCR has authorized any third party to use
or distribute any of the Software as of the Closing Date; provided,
however, that the term "Customer Agreement" shall not include any
agreement relating to the Embedded Software; all as specifically
identified in Schedule 2.14.
1.15. "Damages" means all claims, liabilities, demands, impositions, causes of
action, losses, investigations, proceedings, damages, penalties, fines,
assessments, deficiencies, interest, expenses and judgments, including
reasonable attorneys' fees and disbursements.
1.16. "Documentation" means all user manuals and technical information
relating to the Software,
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including codes (Object and Source), program notes, drawings and
reproducible copies of each of the foregoing, magnetic tapes and machine
readable codes or other media reasonably necessary to generate the
foregoing; as well as the current status of any known defects in the
Software, types of support calls handled by NCR over the last 6 months,
all requirements stored in any requirements database, test plans, test
suites, programming notes, project plans for future development,
flowcharts, any existing sales and marketing documentation (sales
brochures, sales support material, etc.).
1.17. "Embedded Software" means third party software licensed to NCR that was
to be used by NCR as an embedded part of the Software, and includes
software licensed by Geppetto's Workshop (e.g., Ant Colony), Simba
Technology and BEA (e.g., Top End).
1.18. "Employee Benefit Plan" means any "employee pension benefit plan" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), any "employee welfare benefit plan" (as
defined in Section 3(l) of ERISA) and any other written or oral plan,
agreement or understanding involving direct or indirect compensation,
including insurance coverage, severance benefits, disability benefits,
deferred compensation, bonuses, stock options, stock purchase, phantom
stock, stock appreciation and other forms of incentive compensation or
post-retirement compensation maintained or contributed to by NCR or any of
its Affiliates.
1.19. "Execution Date" means the date of this Agreement.
1.20. "Excluded Assets" means NCR Trademarks, NCR Patents and any Embedded
Software and any assets listed on Schedule 2.20 hereto.
1.21 "Governmental Authority" means any government, any governmental entity,
department, commission, board, agency or instrumentality, and any court,
tribunal or judicial or arbitrational body, whether federal, state or
local.
1.22. "Governmental Order" means any order, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
1.23. "Indemnified Party" means the party who is entitled to indemnification
for, and to be held harmless with respect to, Damages, as provided under
the terms and subject to the conditions of this Agreement.
1.24. "Indemnifying Party" means the party who is obligated to indemnify, and
to hold harmless, the other party hereto with respect to Damages, as
provided under the terms and subject to the conditions of this Agreement.
1.25. "ISV" means independent software vendor.
1.26. "Joint Marketing Agreement" means the Joint Marketing Agreement by and
between NCR and MSI, to be executed as of the Closing Date, in a form
mutually agreed by and between MSI and NCR.
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1.27. "Material Adverse Change" or "Material Adverse Effect" means any change
or effect that is materially adverse to the Purchased Assets, the
business operations related to the Purchased Assets or the transactions
contemplated by this Agreement.
1.28. "NCR Group means NCR and its officers, directors, shareholders,
Affiliates and agents.
1.29. "NCR Trademarks" means any and all trademarks, trade names, service
marks, logos and similar designations of source of origin owned by NCR.
1.30. "Object Code" means the fully compiled or assembled series of Computer
Programs in machine language in either printed form or as stored in
software media.
1.31. "Office Space Lease Agreement" means the Office Space Lease Agreement,
dated December 23, 1999, by and between NCR and MSI.
1.32. "NCR Patents" means any patents, patent applications, and invention
disclosures including all divisions, reissues, continuations,
continuations-in-part, reexaminations, and extensions thereof and
corresponding foreign patents and patent applications corresponding to
such patents owned or controlled by NCR.
1.33. "Permitted Liens" means (i) liens for Taxes not yet due or payable; and
(ii) inchoate materialmen's, mechanics', carriers', warehousemen's,
landlords', workmen's, repairmen's, employees' or other like liens
arising in the ordinary course of business and for which payment is not
yet due or payable.
1.34. "Person" shall mean a natural person, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an
agency or instrumentality thereof.
1.35. "Physical Assets" means all of the furniture, desks, file cabinets,
copiers, personal computers, computer servers, test equipment, printers
and laptops which are used by or necessary to perform the duties of the
Transferred Employees in connection with the Assets and which are set
forth on Schedule 2.36 attached hereto and made a part hereof, provided,
however, that notwithstanding anything contained herein to the contrary,
Physical Assets shall not include any furniture, fixtures, equipment or
other facilities that are shared across the NCR campus (such as by way of
illustration and not of limitation, network and video conferencing
equipment).
1.36. "Purchased Assets" means the Customer Data, the Documentation, the
Software, the Assigned Contracts and the Physical Assets, other than the
Excluded Assets. The Purchased Assets are listed on Schedule 2.34 hereto.
1.37. "Purchase Price" has the meaning set forth in Section 5. 1.
1.38. "Registration Rights Agreement" means the Registration Rights Agreement,
dated December 23, 1999, by and between NCR and MSI.
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1.39. "Related Agreements" means all agreements, instruments and certificates
contemplated hereby and thereby.
1.40. "Retained Liabilities" shall mean any and all liabilities or obligations
(whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated, whether accrued or unaccrued, whether due or
to become due and whether claims with respect thereto are asserted before
or after the Closing) of NCR which are not Assumed Liabilities. Retained
Liabilities shall include the following: (i) all liabilities and
obligations of NCR relating to the Excluded Assets, (ii) all liabilities
and obligations of NCR to pay salaries, severance, termination pay, pay
in lieu of notice, accrued vacation time, personal time and sick leave
payable, bonuses or other payments or reimbursements to any current or
former employee, including the Transferred Employees, arising on or prior
to December 17, 1999, (iii) all obligations of NCR to any retired,
former or current employee, including the Transferred Employees, under
any Employee Benefit Plan, (iv) all liabilities and obligations of NCR
(including cost of cleanup and remediation) resulting from any violation
of any environmental law by NCR or any predecessor business or company
which arose on or prior to the Closing Date for which NCR is or may be
liable pursuant to any law or regulation, indemnity or otherwise, (v) all
liabilities of NCR arising out of any claim, suit, action, arbitration,
investigation or similar proceeding which relates to the ownership or
operation of the Purchased Assets on or prior to the Closing Date,
including any obligations or liabilities arising our of any matter
disclosed on any Schedule to this Agreement, regardless of whether any
such claim, suit, action, investigation or other similar proceeding was
commenced before, on or after the Closing Date, and any litigation
related thereto or arising out of the subject matter thereof, (vi) all
liabilities of NCR for any Texas resulting from the ownership or
operation of the Purchased Assets on or prior to the Closing Date, (vii)
all obligations under the Assigned Contracts to be performed on or prior
to the Closing Date, and all liabilities for any breach, act or omission
by NCR on or prior to the Closing Date under any Assigned Contract,
(viii) all liabilities and obligations of NCR under any agreements,
contracts, leases or licenses which are not Assigned Contracts and (ix)
all liabilities and obligations arising out of events, conduct or
conditions existing or occurring on or prior to the Closing Date that
constitute or allegedly constitute an infringement, violation or
misappropriation of any patent, patent application, trademark, service
xxxx, trade dress, copyright or any application for registration thereof,
trade secret and confidential business information any other intellectual
property rights of any other Person.
1.41. "Shares" means 283,186 shares of Class A Common Stock, par value per
share, of MSI
1.42. "Software" means the software product currently known as Teracube, more
fully described in Schedule 2.39 hereto, including all copyrights and
copyright registrations on Teracube, all intangible property solely
related to Teracube software including, but not limited to, processes,
know-how, and logic flow, other than NCR Patents and Excluded Assets and
Embedded Software, and all existing variations, enhancements, updates and
improvements thereto, but not including any Embedded Software. The term
"Software" shall include all present and predecessor versions (regardless
of whether or not actually marketed), as well as all work in progress on
the Software.
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2.44. "Source Code" means the Computer Programs in human readable form.
2.45 "Subsidiary" means a corporation, company or other entity (i) more than
fifty percent (50%) of whose outstanding shares or securities
(representing the right to vote for the election of directors or other
managing authority) are, or (ii) which does not have outstanding shares
or securities, as may be the case in a partnership, joint venture, or
unincorporated association, but more than fifty percent (50%) of whose
ownership interest representing the right to make the decisions for such
corporation, company or other entity is, now or hereafter, owned or
controlled, directly or indirectly, by any other Person, but such
corporation, company or other entity shall be deemed to be a Subsidiary
only so long as such ownership or control exists.
2.46. "Taxes" or individually "Tax," means any federal, state, local or foreign
taxes, assessments, interest, penalties', deficiencies, fees and other
governmental charges or impositions (including without limitation, all
income tax, unemployment compensation, social security, payroll, sales
and use, excise, privilege, property, ad valorem, franchise, license,
school and any other tax or similar governmental charge or imposition).
2.47. "Tax Code" means the Internal Revenue Code of 1986, as amended.
2.48. "Third-Party Claim" means, in respect of the obligations of each
Indemnifying Party hereunder, a claim asserted against the Indemnified
Party by a third party.
2.49. "Threshold Amount" has the meaning set forth in Section 12.4.
2.50. "Transferred Employees" has the meaning set forth in Section 9.1 hereof
2.51. "Waiver and Confidentiality Agreement" has the meaning set forth in
Section 6.9.
3. CLOSING; CONDITIONS TO CLOSING; DELIVERIES
3.1. Closing. The Closing shall occur within five (5) business days following
the satisfaction or waiver of the conditions precedent set forth in
Sections 3.2 and 3.3 (the "Closing Date") and shall be held at such place
and at such time as NCR and MSI may mutually agree.
3.2. Conditions to Obligations of NCR to Close. The obligations of NCR to
consummate the Closing shall be subject to the satisfaction, on or before
the Closing Date, of each and every one of the following conditions, all
or any of which may be waived, in whole or in part, by NCR, provided,
however, that in the event that any or all of such conditions are waived,
such waiver shall be for all purposes and not only for purposes of
closing the transactions contemplated hereby, and the conditions so
waived shall not serve as a basis for indemnification under Section 12
hereof.
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3.2.1 Representations and Warranties; Covenants.
3.2.1.1. The representations and warranties of MSI contained in
this Agreement shall be true and correct in all material respects as
of the Closing, with the same force and effect as if made as of the
Closing; and
3.2.1.2. The covenants and agreements contained in this Agreement
to be complied with by MSI at or prior to the Closing shall have
been complied with in all material respects.
3.3.2 No Order. No action or proceeding shall have been instituted against
NCR or any of its Affiliates or any officer or director of NCR or any of
its Affiliates which seeks to, or would render it unlawful as of the
Closing to effect the transactions contemplated hereby in accordance with
the terms hereof or creates or poses a risk of creating a limitation on NCR
to own the MSI Shares, and no such action shall seek damages in a material
amount by reason of the consummation of the transactions contemplated
hereby.
3.2.3. Opinions of Counsel. NCR shall have received from counsel to MSI, an
opinion dated as of the Closing Date in form and substance reasonably
satisfactory to NCR.
3.2.4. Deliveries. MSI shall have made or stand willing and able to make
all the deliveries to NCR set forth in Section 3.5.
3.3. Conditions to Obligations of MSI. The obligations of MSI to consummate the
Closing shall be subject to the satisfaction, on or before the Closing
Date, of each and every one of the following conditions, all or any of
which may be waived, in whole or in part, by MSI, provided, however, that
in the event that any or all of such conditions are waived, such waiver
shall be for all purposes and not only for purposes of closing the
transactions contemplated hereby, and the conditions so waived shall not
serve as a basis for indemnification under Section 12 hereof.
3.3.1. Representations and Warranties; Covenants.
3.3.1.1. The representations and warranties of NCR contained in
this Agreement shall be true and correct in all material respects as
of the Closing, with the same force and effect as if made as of the
Closing; and
3.3.1.2. The covenants and agreements contained in this Agreement to
be complied with by NCR at or prior to the Closing shall have been
complied with in all material respects.
3.3.2. No Order. No action or proceeding shall have been instituted
against MSI or any of its Affiliates or any officer or director of MSI or
any of its Affiliates which seeks to, or would, render it unlawful as of
the Closing to effect the transactions contemplated hereby in accordance
with the terms hereof or would restrain, prohibit or otherwise
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interfere with the effective operation or enjoyment by MSI of all or any
material portion of the Purchased. Assets or Assigned Contracts, or with
the effective transfer of the Transferred Employees as contemplated hereby,
and no such action shall seek damages in a material amount by reason of the
consummation of the transactions contemplated hereby.
3.3.3. Consents and Approvals. Each of the Consents shall have been duly
obtained and delivered to MSI.
3.3.4. Opinions of Counsel. MSI shall have received from Xxx Xxxx, Esq.,
Senior Vice President and General Counsel of NCR, an opinion dated as of
the Closing Date in form and substance reasonably satisfactory to MSI.
3.3.5. Deliveries. NCR shall have made or stand willing and able to make
all the deliveries to MSI set forth in Section 3.4.
3.4. Deliveries by NCR. Prior to or on the Closing Date, NCR shall deliver, or
cause to be delivered, to MSI the following, in form and substance
reasonably satisfactory to MSI and its counsel:
3.4.1. Transfer Documents. Duly executed copies of the following:
3.4.1.1. Xxxx of Sale in the form attached as Schedule 3.4.1.1;
3.4.1.2. Other transfer documents which shall be sufficient to vest
good and marketable title to the Purchased Assets in the name
of MSI or its permitted assignees. NCR agrees to promptly
execute and deliver such further instruments of sale, transfer,
conveyance, assignment and confirmation, as MSI may reasonably
request to transfer, convey and assign to MSI, and to confirm
MSI's title to, all of the Purchased Assets and to effectuate
and consummate the terms of the this Agreement, including but
not limited to any assignment of copyright needed to effectuate
and record the transfer of ownership of the Purchased Assets
with the appropriate government agency.
3.4.2. Purchase Agreement. Duly executed Purchase Agreement.
3.4.3. Joint Marketing Agreement. Duly executed Joint Marketing Agreement.
3.4.4. Lease Agreement. Duly executed Office Space Lease Agreement, in a
form reasonably acceptable to NCR and MSI.
3.4.5. Waiver and Confidentiality Agreements. Duly executed copies of the
Waiver and Confidentiality Agreements contemplated under Section 6.9
hereof.
3.4.6. Secretary's Certificate. Certificate, dated as of the Closing Date,
executed by the Secretary or Assistant Secretary of NCR certifying (i) as
to the Charter of NCR, (ii) as to the Bylaws of NCR, and (iii) as to the
incumbency of the officers of NCR
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duly authorized to execute and deliver this Agreement and the Related
Agreements.
3.4.7. Officer's Certificate. Certificate, dated as of the Closing Date,
executed by the President or Vice President of NCR, certifying that: (i)
the representations and warranties of NCR in this Agreement are true and
complete in all material respects at and as of the Closing Date (except for
representations and warranties that by their terms are made as of a
specified date and except for changes that are contemplated by this
Agreement or occur in the ordinary course of business which do not singly
or in the aggregate have a Material Adverse Effect) and (ii) NCR has
performed all of its obligations and has complied in all material- respects
with all of its covenants set forth in this Agreement to be performed or
complied with on or prior to the Closing Date.
3.4.8. Good Standing Certificate. A certificate as to the good standing
of NCR, issued by the Secretary of State of the State of Maryland, dated no
more than ten (10) days prior to the Closing.
3.4.9. Assignment Agreement. NCR shall provide MSI with an Assignment
Agreement in the form attached hereto as Schedule 3.4.11 pursuant to which
it shall assign all rights under and pursuant to the Assigned Contracts to
MSI and MSI will assume obligations that arise on and after the date of
Closing with respect to those Contracts identified on Schedule 11.5.
3.4.10. Other. Such other evidence of the performance of all covenants
and satisfaction of all conditions required of NCR by this Agreement, at or
prior to the Closing, as MSI or its counsel may reasonably require.
3.5. Deliveries by MSI. Prior to or on the Closing Date, MSI shall deliver,
or cause to be delivered, to NCR the following, in form and substance
reasonably satisfactory to NCR and its counsel:
3.5.1 Xxxx of Sale. Duly executed Xxxx of Sale, substantially in the form
of Schedule
3.5.2. Stock Certificates. Certificates representing the Shares.
3.5.3. Joint Marketing Agreement. Duly executed Joint Marketing Agreement.
3.5.4. Registration Rights Agreement. Duly executed Registration Rights
Agreement.
3.5.5. Secretary's Certificate. Certificate, dated as of the Closing Date,
executed by the Secretary or Assistant Secretary of MSI certifying (i) as to
the Certificate of Incorporation of MSI, (ii) as to the Bylaws of MSI, (iii)
that the resolutions, as attached to such certificate, were duly adopted by
the Board of Directors of MSI, authorizing and approving the execution of
this Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby and that such resolutions
remain in full force and effect and (iv) as to the incumbency of the
officers
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of MSI duly authorized to execute and deliver this Agreement and the
Related Agreements.
3.5.6. Officer's Certificate. Certificate, dated as of the Closing Date,
executed by the President or Vice President of MSI, certifying that (i) the
representations and warranties of MSI in this Agreement are true and
complete in all material respects at and as of the Closing Date (except for
representations and warranties that by their terms are made as of a
specified date and except for changes that are contemplated this Agreement)
and (ii) MSI has performed all of its obligations and has complied in all
material respects with all of its covenants set forth in this Agreement to
be performed or complied with on or prior to the Closing Date.
3.5.7. Good Standing Certificate. A certificate as to the good standing
of MSI, issued by the Secretary of State of the State of Delaware, dated
not more than ten (10) days prior to the Closing.
3.5.8. Other. Such other evidence of the performance of all covenants and
satisfaction of all conditions required of MSI by this Agreement, at or
prior to the Closing, as NCR or its counsel may reasonably require.
3.5.9. MSI agrees to promptly execute and deliver such further instruments
of sale, transfer, conveyance, assignment and confirmation, as NCR may
reasonably request to transfer, convey and assign to MSI, and to confirm
MSI's title to, all of the Purchased Assets and to effectuate and
consummate the terms of this Agreement, including but not limited to any
assignment of copyright needed to effectuate and record the transfer of
ownership of the Purchased Assets with the appropriate government agency.
4. SALE AND PURCHASE OF PURCHASED ASSETS
4.1 Sale and Transfer
4.1.1. Transfer of Purchased Assets. Pursuant to the terms and subject to
the conditions set forth in this Agreement, NCR hereby agrees to sell,
grant, transfer, convey, assign and deliver exclusively to MSI on the
Closing Date, and MSI agrees to purchase and acquire from NCR on the
Closing Date, all right title and interest of NCR in and to the Purchased
Assets, free and clear of any and all liens and encumbrances.
4.1.2. Subject to the provisions of Section 4.1.1., hereof, the Software
will be transferred by NCR to MSI by electronic means directly into the
permanent storage memory of computer hardware owned by MSI. The transfer of
the Software will occur on the Closing Date but shall occur subsequent to
and shall be separate and apart from the transfer of all other Purchased
Assets, including Documentation, and any printed form of the Software in
Object Code and Source Code, to MSI.
4.2. Assigned Contracts. Pursuant to the terms and subject to the conditions set
forth in this Agreement, Effective xxxx Xxxxxxx, XXX shall assign to MSI
all of NCR's rights and
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obligations under the Assigned Contracts, which are assignable by NCR to
MSI as of the Closing Date, and MSI shall accept such assignment and shall
assume all responsibilities and obligations of NCR under such contracts.
Following the Closing Date, and pursuant to the terms and conditions set
forth in this Agreement, NCR shall assign to MSI all of NCR's rights and
obligations under, and MSI shall accept such assignment and shall assume
all responsibilities and obligations of NCR under, the Assigned Contracts
which are assignable by NCR to MSI after the Closing Date. Notwithstanding
the foregoing or anything to the contrary set forth herein, MSI shall not
assume or become responsible for, and NCR shall remain solely liable for,
the Retained Liabilities.
5. CONSIDERATION
5.1. Transfer of Purchased Assets. Pursuant to the terms and subject to the
conditions of this Agreement, in consideration for the sale, transfer,
conveyance, and assignment of the Purchased Assets, MSI agrees to issue to
NCR the Shares, representing $14,000,000 of shares of Class A Common Stock
of MSI, calculated based on the closing price of a Share as quoted on
NASDAQ on September 29, 1999.
5.2. Allocation of Purchase Price. The asset allocation statement (the "Asset
Allocation Statement") containing the allocation of the aggregate
consideration payable pursuant to Section 5.1 among the Purchased Assets is
attached hereto as Schedule 5.2.
5.2.1. The parties hereto agree (i) to use the allocations set forth in
the Asset Allocation Statement above, for accounting, financial reporting
and Tax purposes; (ii) that such allocations shall be in accordance with,
and as provided by, Section 1060 of the Tax Code; and (iii) that any Tax
returns or other Tax information they may file or cause to be filed with
any Governmental Authority or fiscal intermediary shall be prepared and
filed consistently with such allocation. The parties agree that, to the
extent required, they will each properly and timely file Form 8594 in
accordance with Section 1060 of the Tax Code.
5.3. Sales or Use Taxes. All sales, use and other similar Taxes, charges and
fees, if any, arising out of or in connection with the transactions
contemplated by this Agreement (other than any income, capital gains and
other similar Taxes, charges and fees imposed on, or imposed in respect of,
the income or gain of NCR), shall be paid by MSI. Each of the parties shall
cooperate with the other to the extent reasonably required and permitted by
Applicable Law in order to eliminate of minimize any such Tax. Without
limiting the foregoing, to the extent any such Tax is imposed, NCR shall
prepare and file any required Tax returns in connection therewith and MSI
shall pay and promptly discharge when due the entire amount of any such
Tax.
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6. ADDITIONAL OBLIGATIONS; COVENANTS
6.1. Consents
6.1.1. Obtaining Consents. NCR will use all commercially reasonably efforts
to obtain any Consent required to assign all agreements and complete all
other transfers and transactions contemplated by this Agreement at NCR's
sole expense.
6.1.2. Alternative Arrangement. In the event and to the extent that NCR is
unable to obtain any such Consent, or if any attempted assignment or
novation would be ineffective or would restrain, prohibit or otherwise
interfere with the effective operation or enjoyment by MSI of all or any
material portion of the Purchased Assets or with the effective transfer of
the Transferred Employees as contemplated hereby, NCR will: (i) reasonably
cooperate with MSI, to the extent permitted by law, in a reasonable
arrangement under which MSI would, to the fullest extent possible, obtain
the benefits and assume the obligations with respect relating to such
Asset, in accordance with this Agreement, and (ii) use reasonable efforts
to enforce at the request of MSI or allow MSI or its designees to enforce
(and, solely for such purpose, NCR hereby constitutes and appoints MSI or
its designees as its true and lawful attorney-in-fact with respect to such
matters), any rights of NCR under any such Purchased Asset. To the extent
that MSI is providing the benefits of any such Purchased Asset, MSI shall
perform the obligations relating to such Purchased Asset in accordance with
this Agreement. Nothing contained herein or in any Related Agreements
shall be construed to have assigned any such non-assignable contract or
agreement.
6.1.3. Teracube Products. NCR will not, except for the sale of NCR as a
business, for a period of three years after the Closing transfer to any
third party other than any Subsidiary of NCR any product having the name
Teracube.
6.1.4. Existing Teracube Customers, ISVS, and Business Partners. In
addition to carrying out NCR's obligations under the Assigned Contracts as
provided under Section 4, MSI will, to the extent commercially reasonable,
continue to support all current and older versions of the Software product
family in a manner consistent with MSI's standard policies, including end-
of-life policies and practices. To the best of NCR's knowledge, Schedule
6.4 sets forth a substantially complete list of all NCR Software customers,
ISVS, channel partners and business partners.
6.4. Further Assurances. NCR agrees that, at any time after the Closing Date,
upon the request of MSI, it will do, execute, acknowledge and deliver, or
will cause to be done, executed, acknowledged and delivered, all such
further acknowledgments, deeds, assignments, bills of sale, transfers,
conveyances, instruments, consents and assurances as may reasonably be
required for the better assigning, transferring, granting, conveying,
assuring and confirming to MSI, its successors and assigns, the transfers
contemplated by this Agreement.
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6.5. Conduct of Business of NCR Pending the Closing. NCR agrees that, during the
period from the Execution Date to the Closing:
6.5.1. Operation. NCR shall (a) cause the business operations related to
the Purchased Assets to be conducted in the ordinary course consistent with
past practice, (b) use commercially reasonably efforts to preserve intact
the relevant business, properties and organization with respect thereto in
all material respects, (c) maintain the Physical Assets in good operating
condition and repair (ordinary wear and tear excepted), (d) use
commercially reasonable efforts to preserve for the benefit of MSI the
goodwill of customers, vendors and others having business relations with it
related to the Purchased Assets; and
6.5.2. Disposition of Assets. NCR shall: (a) not sell or dispose of any
of the Purchased Assets, (b) use commercially reasonable efforts to prevent
the occurrence of any event or condition which may have a Material Adverse
Effect or would restrain, prohibit or otherwise interfere with the
effective operation or enjoyment by MSI of all or any material portion of
the Purchased Assets or with the effective transfer of the Transferred
Employees as contemplated hereby, (c) not modify, amend or terminate any of
the Assigned Contracts and (d) not enter into any agreement, in writing or
otherwise, that would result in a breach either of the foregoing covenants.
6.6. Updated Schedules. NCR shall promptly disclose in writing to MSI any
information contained in its representations and warranties or any of the
Schedules hereto which, because of an event occurring after the date of
this Agreement, is incomplete or is no longer correct as of all times after
the Execution Date and until the Closing Date. Any such disclosure shall be
in the form of an updated Schedule, marked to reflect the new or amended
information.
6.7 Notice of Certain Matters. NCR shall give prompt written notice to MSI, and
MSI shall give prompt written notice to NCR, of any failure of NCR or MSI,
as the case may be, to comply with or satisfy any covenant condition or
agreement to be complied with or satisfied by it hereunder. No such
disclosure shall be deemed to avoid or cure such breach.
6.8. Waiver and Confidentiality Agreements. NCR shall use its reasonable efforts
to deliver to MSI on or before the Closing Date a copy of a Waiver and
Confidentiality Agreement, in a form reasonably acceptable to the parties
(the "Waiver and Confidentiality Agreement"), executed by each of the NCR
employees, agents or consultants listed in Schedule 6.9 hereto.
6.9. Access to Records. Each party agrees to allow representatives of the other
party after the Closing, upon reasonable written notice, access to any
books and records relating to the Purchased Assets or the Transferred
Employees for the purpose of filing and supporting Tax returns and Tax
audits of such other party or defending any Claim relating thereto or any
Third Party Claim the business relating to Purchased Assets after the
Closing Date and to the extent necessary for the purpose of for conducting
and
13
complying with applicable securities, employment and other laws and
regulations. Each party shall preserve such books and records as necessary
to support tax returns of the other party relating to the Purchased Assets
or the Transferred Employees and to notify the other party prior
destruction of any such records relating to periods prior to the Closing if
the destruction thereof is scheduled to occur within five (5) years after
the Closing Date, and the other party shall be permitted, upon reasonable
written notice, to take possession of such records at its sole expense.
Nothing herein shall be deemed to constitute a waiver of any attorney
client, work-product or joint-defense privilege.
7. LICENSE UNDER NCR PATENTS AND EMBEDDED SOFTWARE
.NCR hereby grants to MSI, its Parents and Subsidiaries, a non-exclusive,
worldwide, perpetual, irrevocable, paid-up, royalty-free license, under NCR
patents to make, use, modify, and sell or otherwise distribute the Software, or
any future versions or modifications thereof to the extent such future versions
or modifications embody NCR Patents used in the Software.
8. CONFIDENTLALITY
8.1. Confidential Information. In the course of the performance of this
Agreement, NCR and MSI each recognizes that it will obtain, or has prior to
the Execution Date obtained, access to the confidential, proprietary,
technical, business and operational information of the other, (excluding
the issued NCR Patents) (the "Confidential Information"). Confidential
Information includes all terms of the transactions contemplated by this
Agreement.
8.2. Non-Confidential Information. Information shall not constitute Confidential
Information if:
8.21. Previously Possessed. It is demonstrated to have been in the
possession of the receiving party or available to the receiving party prior
to the disclosure, without any breach of a duty of confidentiality owed by
any party to the disclosing party
8.2.2. Subsequently Obtained The receiving party rightfully obtains the
Confidential
Information without breach of this Agreement, or any Applicable Laws, from
a third party having no duty of confidentiality to the disclosing party;
8.2.3. Developed It is independently developed by the receiving party
without use of the Confidential Information; or
8.2.4. Authorized The disclosing party authorizes in writing the
disclosure of the Confidential Information.
8.3. MSI Confidential Information. As of the Closing Date, all information
disclosed by NCR which becomes or is intended to become the property of MSI
by virtue of the transactions contemplated herein constitutes Confidential
Information of MSI as if MSI were the disclosing party therefor.
14
8.4. Standard of Care. All Confidential Information shall remain the exclusive
property of the disclosing party, and the receiving party may not disclose
any Confidential Information of the disclosing party for any reason without
the prior written consent of the disclosing party or make any use of such
Confidential Information other than as expressly permitted by or necessary
to perform its obligations under this Agreement or the Related Agreements.
The receiving party shall use the same care and discretion, but no less
than reasonable care and discretion, to avoid disclosure, publication, or
dissemination of Confidential Information it has received, as the receiving
party employs for similar information of its own which it does not desire
to publish, disclose or disseminate, except to those employees, directors,
agents and/or permitted subcontractors of the receiving party who have a
need to know in order to exercise the rights granted or retained pursuant
to this Agreement and who have agreed in writing to be bound by the
confidentiality terms of the Agreement. The receiving party shall be
responsible and liable for breaches of confidentiality obligations by its
employees, directors, agents and/or permitted subcontractors.
8.5. Required Disclosure. Notwithstanding any other provision of this Section 8,
if the receiving party is required to disclose any Confidential Information
pursuant to legal, accounting or regulatory requirements, the receiving
party shall provide to the disclosing party written notice of such required
disclosure sufficiently in advance thereof to enable the disclosing party
to take reasonable actions to avoid. the requirement of disclosure.
Notwithstanding the foregoing, and subject to the prior consent of the
other party (such consent not to be unreasonably withheld or delayed),
either Party shall have the right to disclose the existence and material
terms of this Agreement to the extent such party reasonably determines is
necessary to comply with stock exchange, securities and other similar
disclosure requirements. The receiving party shall cooperate with all
reasonable requests of the disclosing party in connection therewith.
8.6 Enforcement of Confidentiality Obligations. From and after the Closing
Date, NCR shall, to the extent necessary, enforce for the benefit of MSI
and at MSI's expense and shall otherwise reasonably cooperate with MSI in
the enforcement at MSI's expense of all confidentiality, nondisclosure,
assignment of inventions, and non-competition agreements between NCR and
any Person relating to the Purchased Assets.
8.7 Survival of Covenant. Notwithstanding anything contained herein to the
contrary, the obligations of the parties under this Section 8 shall survive
for a period of five (5) years from the Closing Date.
9. EMPLOYEES; LEASE OF SPACE
9.1. Offer ofEmpl6yment. Between 30 and 33 NCR employees identified on Schedule
9.1 will receive written offers of employment with MSI, to be delivered by
MSI not less than ten (10) business days prior to the Closing Date. All
such offers shall be contingent upon the Closing and shall be subject to
acceptance or rejection by such employees prior to Closing. Those employees
who have accepted such offers from MSI shall be referred to herein as
"Transferred Employees." As of December 17, 1999, each of the Transferred
15
Employees ceased their employment with NCR and became employees of MSI. Any
offer of employment will be subject to MSI's standard terms of employment,
including but not limited to MSI's technical Bootcamp course ("Bootcamp").
MSI shall not terminate employment of a Transferred Employee who passes
Bootcamp for a period of six (6) months from date of hire of such
Transferred Employee, except for cause under MSI's employment policies and
practices. If MSI terminates such Transferred Employee's employment within
six (6) months, other than for cause (after meeting MSI's terms for
employment), MSI will pay such employee severance through the end of the
six (6) month period. At the end of this six-month period, the Transferred
Employees that remain employed by MSI will become "at will" employees of
MSI. NCR shall assume sole responsibility for, and agrees to defend,
indemnify and hold harmless MSI from and against all liabilities, including
any Retained Liabilities, and claims relating to or arising from the
employment of the Transferred Employees prior to December 17, 1999.
9.2 Compensation Benefits Package.
9.21. Comparable Compensation. Subject to the terms of this Section 9.2,
MSI shall offer the Transferred Employees Compensation Packages that are
reasonably comparable to those being provided by NCR to the Transferred
Employees immediately prior to the December 17, 1999. The term
"Compensation Package" shall mean base salary plus potential bonus (if
applicable), plus stock options (valued using the Black Scholes option
valuation method).. MSI shall offer to each Transferred Employee a base
salary that is substantially similar to that earned by such employee at NCR
on the Closing Date for a position with MSI which is the same or
substantially equivalent to the employee's position at NCR immediately
prior to the Closing. MSI will offer each Transferred Employee stock
options and bonuses consistent with those received by other similarly
situated MSI employees. Prior to the Execution Date, MSI has provided to
NCR written confidential information regarding the proposed Compensation
Packages for each Transferred Employee for the purpose of enabling NCR to
evaluate independently whether MSI's proposed benefits package is
comparable to that received by each such employee at NCR. Xxxx Xxxxxxx, XXX
shall be deemed to have conclusively determined that MSI's proposed
Compensation Package is reasonably comparable to that received by each such
employee at NCR. MSI agrees that it will not relocate more than two
Transferred Employees so that NCR's RIF policy would be triggered for no
more than two such employees. Attached as Schedule 9.3.1 is a true and
correct copy of NCR's RIF policy.
9.3.2. Benefits Coverage. To the extent permitted by law or contract, MSI's
benefit plans and programs offered to the Transferred Employees shall
reflect credit for service with NCR. No preexisting conditions,
limitations, waiting periods, or proof of insurability will be imposed by
MSI or its benefits plans with respect to initial benefits eligibility of
the Transferred Employees. To the extent legally permitted, NCR will
distribute the amount in each Transferred Employee's savings account in
NCR's 401 (k) plan, and MSI will allow each Transferred Employee to
rollover the amount to MSI's 401 (k) plan. NCR acknowledges and agrees that
nothing in this Section 9 shall require MSI to undertake any modification
of MSI's existing compensation and benefits practices or
16
to take any action that would tend, in MSI's good faith judgment, to expose
MSI to any material liability under any law, regulation, court order,
ordinance or contract of any kind.
9.3.3. Accrued Benefits. At or before the Closing, NCR shall pay out to
all Transferred Employees all accrued vacation, sabbatical or other similar
accrued liability owed by NCR to the Transferred Employees as of December
17, 1999.
9.4. Transferred Employees' Location; Office Space. MSI shall use commercially
reasonable efforts to provide office space for the Transferred Employees
which is located within a reasonable proximity of the current NCR Rancho
Xxxxxxxx, California, location. NCR and MSI agree that the following areas
in California shall be deemed to be within a reasonable proximity to the
current NCR Rancho Xxxxxxx location: Rancho Xxxxxxx, Poway, and Cannel
Mountain Ranch, and the commercial reasonableness of MSI's efforts shall be
evaluated based upon, among other things, facility availability and costs.
At MSI's election, upon written notice to NCR delivered a reasonable time
prior to the Closing, NCR shall lease to MSI certain office space at NCR's
Rancho Xxxxxxxx, California, facility pursuant to an Office Space Lease
Agreement in substantially the form as Schedule 9.4 hereto.
9.5. Non-Solicitation.
9.5.1. NCR Covenant. NCR agrees, for itself and its Affiliates, not to
actively directly solicit or re-hire, for a period of twelve (12) months
from December 17, 1999, any of the Transferred Employees.
9.5.2. MSI Covenant. MSI agrees, for itself and its Affiliates, not to
actively directly solicit for employment or hire, for a period of
twelve (12) months from the December 17, 1999, any employee of NCR who
was in the potential pool of Transferred Employees but refused an
offer of employment from MSI.
9.5.3. Special Projects. In addition, MSI will commit that it will devote
at least fifteen percent (15%) of the Transferred Employees for at
least six (6) months to work on the following projects:
9.5.3.1 Implement and track the evolution of relevant Microsoft
standards and interfaces in the OLAP environment, including OLE DB for
OLAP (ODBO) and MDX.
9.5.3.2 Utilize these standards to implement the integration of
multiple vendors' OLAP clients with MSI's OLAP Server products. NCR
requirements for these clients are Cognos, Business Objects, and
Microsoft Excel at a minimum.
9.5.3.3 Implement and track the evolution of relevant Meta Data
standards, specifically, those defined by the Meta Data Coalition, and
those defined by the Object Management Group.
17
9.5.3.4. Maximize the integration of their OLAP offering with the
Teradata OLAP Extensions embedded in the Teradata database.
9.5.3.5 Use all commercially reasonable efforts to meet the
performance scalability goals set forth in the product requirements
and product plan for the Purchased Assets.
Nothing in this section shall guarantee the results of the effort committed to
in this Section. The parties intent is merely to devote reasonable time and
effort towards meeting these goals.
10. REPRESENTATIONS AND WARRANTIES OF NCR
NCR hereby represents and warrants to MSI as of the date hereof and as of
the Closing Date as follows:
10.1 Organization and Standing; Certificate and Bylaws. NCR is a
corporation duly organized and existing under, and by virtue of, the laws
of the state of Maryland and is in good corporate and tax standing under
such laws.
10.2 Corporate Power. NCR has all requisite corporate power to execute
and deliver this Agreement and the Related Agreements and to carry out and
perform its obligations under the terms hereof and thereof.
10.3. Authorization. All corporate action on the part of NCR, its directors
and its stockholders necessary for the authorization, execution, delivery
and performance of this Agreement and the Related Agreements has been
taken. This Agreement and the Related Agreements, has been duly and
validly executed and delivered by NCR, and constitutes valid and binding
obligations of NCR enforceable in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws from time to time in
effect affecting the enforcement of creditors' rights generally and except
as enforcement of remedies may be limited by general equitable principles.
10.4. Compliance with Other Instruments, No Consents, Etc. The execution and
delivery of the Definitive Agreement will not, and the consummation of the
transactions contemplated in those agreements will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) of, (i) the provisions of any material law, rule or
regulation applicable to NCR the violation of which would have a Material
Adverse Effect on the Purchased Assets. Except as set forth in Schedule
10.4, no Consent is required to be obtained on the part of NCR to permit
the consummation of the transactions contemplated by this Agreement.
10.5. Litigation, Etc. NCR has not received notice of, nor has any
knowledge of any basis for, any claim, interference action or other
judicial or adversarial proceeding against NCR to the extent that any of
the operations, activities, products, services or publications of NCR in
connection with the Purchased Assets infringes or will infringe any
patent, trademark, trade name, copyright, trade secret or other property
right of a third party, or that NCR is illegally or otherwise wrongfully
using the trade secrets, formulae or property rights of others.
18
10.6. Ownership of purchased Assets. NCR owns all of the Purchased Assets
free and clear of all liens, security interests and other encumbrances,
except for Permitted Liens. Upon execution and delivery by NCR to MSI of
the Assignment and Assumption Agreement, MSI will become the true and
lawful owner of, and will receive good and marketable title to, the
Purchased Assets free and clear of all liens, security interests and other
encumbrances, expect for Permitted Liens. Schedule 10.6 sets forth,
without material exception, a true, correct and complete list and, where
appropriate, a description of, all material licenses and maintenance
agreements, or similar arrangements comprising the Purchased Assets to
which NCR is a party as licensee, with respect to the Purchased Assets and
such agreements are in full force and effect, and, to the knowledge of NCR
constitute the enforceable obligation of the parties thereto.
10.7. Policies Regarding Prohibited Discrimination. NCR has adopted a
written policy which prohibits discrimination on the basis of race, color,
religion, sex, national origin, age, physical and mental disability, and
any other protected category under applicable state or local law. NCR's
written policy also specifically prohibits sexual or other illegal
workplace harassment, including, but not limited to, the use of NCR's
computers and electronic mail for anything other than business purposes.
The policy includes a written procedure for handling and investigating
employee complaints of discrimination, including illegal harassment, and
is distributed to all employees. The policy states that incidents of
sexual or other illegal workplace harassment or discrimination may be
reported without fear of retaliation.
10.8. Supervisory and Employee Training Regarding Employment Practices.
NCR conducts training at least annually for employees and supervisors on
illegal harassment, including sexual and racial harassment, and equal
employment opportunity practices designed to educate employees and
supervisors on compliance with equal opportunity laws, NCR's complaint
procedures and policies. Human Resources personnel are further trained on
investigation and proper handling of complaints under NCR's policies. None
of the Transferred Employees is a member of any union.
10.9. Other Personnel Policies and Procedures. NCR requires all applicants
for employment to complete a standard application form. The application
form contains contract disclaimers and statements that the employment
relationship is at-will and terminable at any time by either the employee
or NCR with or without cause. Furthermore, NCR limits information that it
provides in references for former employees to dates of employment and
title(s).
10.10.Government Contractor. NCR acknowledges that it is a covered government
contractor or subcontractor under Executive Order 11246, the
Rehabilitation Act of 1973, and the Vietnam Era Veterans' Readjustment
Assistance Act of 1974, and warrants that NCR has adopted and implemented
affirmative action programs in full compliance with 41 C.F.R. Part 60, and
that no findings of non-compliance have been made with respect to or by
the Teracube software engineers currently employed by NCR by the Office of
Federal Contract Compliance Programs.
19
10.11. Fees. Except as otherwise disclosed in Schedule 10.8.3, NCR has no
royalties, honoraria, fees or other payments due and payable to any third
party in connection with the Purchased Assets, including to any Person by
reason of ownership, use, licensure, sale or disposition of any of the
same, the nonpayment of which has resulted or will result in a Material
Adverse Effect.
10.12. Public Disclosure. Except as otherwise disclosed in Schedule 10.12, NCR
has received no notice that any, and to the best of NCR's knowledge, no
trade secret, know-how, confidential information or other proprietary
right, including without limitation all Source Code for any version of
the Software, has been invalidated or committed to the public domain, nor
have the same been disclosed or authorized to be disclosed to a third
party other than pursuant to written agreements containing appropriate
non-disclosure or confidentiality provisions.
10.12.1 Claims. Except as otherwise disclosed in Schedule 10.12.1, none
of the former or present employees, officers, directors or independent
contractors of NCR holds any contractual right, title or interest,
directly or indirectly, in whole or in part, in the Software, or has
asserted any claim with regard to the Software.
10.12.2. Infringement. (a) Except as otherwise disclosed in Schedule
10.12.2, NCR has received no notice that any (and, to its best knowledge,
none) of the Purchased Assets or the other assets to be transferred by
NCR to MSI in accordance with this Agreement, or the use thereof, (i)
encroaches or infringes upon any intellectual property rights (including
without limitation any copyrights, patents, trade secrets or trademarks)
of any third party, or (ii) contravenes any applicable material law or
ordinance or any other administrative regulation or violates any
restrictive covenant or any provision of material law.
(b) Except as otherwise disclosed in Schedule 10.12.2 and subject to
the Permitted Liens and Outstanding License Agreements, there are no
agreements or arrangements between NCR and any third party which have any
effect upon NCR's title to or other rights respecting the Purchased
Assets, including the right to transfer the same as contemplated by this
Agreement and the Related Agreements.
10.13. Physical Assets. NCR is selling the Physical Assets on an "as is" and
"where is" basis and makes no representations and warranties with respect
thereto, except as expressly set forth herein.
10.14. Securities Laws. NCR is acquiring the Shares for investment purposes only
and not with a view to distribution. NCR acknowledges that the Shares are
"restricted securities" within the meaning of Rule 144 and may not be
sold or otherwise transferred unless they are registered under the
Securities Act of 1933, as amended, and state securities or "blue sky"
laws or an exemption from such registration is available. NCR represents
that it is an "accredited investor" within the meaning of Regulation D
under the Securities Act.
20
10.15. Material Obligations. NCR has fulfilled all material obligations required
pursuant to the Assigned Contracts and NCR is not in breach of or in
default under any Assigned Contract which would give the other party
thereto the right to terminate such Assigned Contract. To the best
knowledge of NCR, there is no existing breach or default by any other
party to Assigned Contract.
10.16. Use of Purchased Assets. NCR has taken all steps commercially reasonable
to protect its right, title, and interest in and to and the continued use
of, the Purchased Assets. Except that NCR has not registered its
copyrights in any of the Purchased Assets. NCR is not a party to any
distribution, sales or marketing agreements, oral or written, with any
third party regarding the Purchased Assets which entitles any persons (1)
to act as a distributor or sales or marketing agent on behalf of MSI for
the Purchased Assets or (2) to a fee from MSI with respect to any
license, sales or maintenance agreement entered into by MSI subsequent to
the date of this Agreement.
10.17. NCR has disclosed to MSI all material information in its possession
relating to the Purchased Assets.
10.18. Source Code Access. Except as set forth in Schedule 10.19, NCR is not a
party to any agreement, written or oral, requiring it to provide access
to the source code for the Software to any person and no third party has
any right to such source code and the execution and delivery of this
Agreement will not cause any third party to have any right, or access, to
such source code. There are no copies of the source code of the Software
other than those being delivered to MSI under this Agreement.
10.19 Material Adverse Conditions. No event has occurred after the effective
date of the LOI which may have a Material Adverse Effect on any material
portion of the Purchased Assets or with the effective Transfer of the
Transferred Employees as contemplated by this Agreement, which has not
been disclosed to MSI.
10.20. NO OTHER REPRESENTATIONS OR WARR,4NTIES. AS TO PERFORMANCE, NCR IS
SELLING THE PURCHASED ASSETS "AS IS" AND MAKES NO REPRESENTATIONS AND
WARRANTIES WITH RESPECT THERETO. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER NCR NOR ANY OTHER PERSON
ACTING FOR NCR MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED
WITH RESPECT TO THE PURCHASED ASSETS, AND NCR AND MSI HEREBY DISCLAIM ANY
SUCH REPRESENTATION OR WARRANTY, WHETHER BY NCR OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES OR ANY OTHER PERSON, WITH
RESPECT TO THE EXECUTION, DELIVERY OR PERFORMANCE BY NCR OF THIS
AGREEMENT OR THE AGREEMENTS SPECIFIED HEREIN OR WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
21
11. REPRESENTATIONS AND WARRANTIES OF MSI
MSI hereby represents and warrants to NCR as of the date hereof and the
Closing Date as follows:
11.1 Organization and Standing, Certificate and Bylaws. MSI is a corporation
duly organized and existing under, and by virtue of, the laws of the state
of Delaware and is in good standing under such laws.
11.2 Corporate Power. MSI has all requisite corporate power to execute and
deliver this Agreement and the Related Agreements and to carry out and
perform its obligations under the terms of this Agreement and such other
agreements.
11.3. Authorization. All corporate action on the part of MSI, its directors and
its stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the Related Agreements has been taken.
This Agreement and the Related Agreements, when executed and delivered by
MSI, will constitute valid and binding obligations of MSI enforceable in
accordance with their respective terms.
11.4. Compliance with Other Instruments, No Conflicts, Etc. The execution,
delivery and performance of, and compliance with, this Agreement and the
Related Agreements will not conflict with, or result in any violation of,
or default (with or without notice or lapse of time or both) of (i) the
provisions of any material law, rule or regulation applicable to MSI; or
(ii) the provisions of the Certificate of Incorporation or Bylaws of MSI.
Except as set forth in Schedule 11.4, no Consent is required to be
obtained on the part of MSI to permit the consummation of the transactions
contemplated by this Agreement.
11.5 Litigation, Etc. Except as otherwise disclosed in Schedule 11.5, there are
no actions, suits, proceedings, oppositions, challenges or investigations
pending against MSI or its officers or properties before any Governmental
Authority (or, to the best of MSI's knowledge, is there any threat
thereof), and MSI is not a party to or subject to the provisions of any
Governmental Order that, in any such case, questions or has the potential
to harm the validity of this Agreement and/or any of the Related
Agreements or any action taken or to be taken in connection or herewith or
therewith. There is no action, suit, proceeding or investigation by MSI
currently pending or that MSI currently intends to initiate that questions
or has the potential to harm the validity of this Agreement and/or any of
the Related Agreements or any action taken or to be taken in connection or
herewith or therewith.
11.6. Shares. The Shares have been duly authorized by all necessary corporate
action, and when issued to NCR pursuant to this Agreement will be validly
issued, fully paid and nonassessable and free of preemptive rights. MSI
has engaged in no general solicitation or general advertising with respect
to the sale of the Shares to NCR.
11.7 NO OTHER REPRESENTATIONS OR WARRANTIES. THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT,
22
IN THE EXHIBITS AND SCHEDULES HERETO, THE AGREEMENTS SPECIFIED HEREIN AND
IN THE CERTEFICATES REQUIRED TO BE DELIVERED PURSUANT TO OR IN CONNECTION
HEREWITH, NEITHER MSI NOR ANY OTHER PERSON ACTING FOR MSI MAKES ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND NCR AND MSI HEREBY
DISCLAIM ANY SUCH REPRESENTATION OR WARRANTY, WHETHER BY MSI OR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES OR ANY OTHER
PERSON, WITH RESPECT TO THE EXECUTION, DELIVERY OR PERFORMANCE BY MSI OF
THIS AGREEMENT OR THE AGREEMENTS SPECIFIED HEREIN OR WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12. INDEMNIFICATION
12.1. Survival of Representations and Warranties. The representations and
warranties set forth in this Agreement or any Related Agreement shall
survive for a period of three (3) years following the Closing Date and any
covenant or obligation under this Agreement or any Related Agreement to be
performed after the Closing shall survive the Closing and continue until
the expiration of the applicable statute of limitations. Notwithstanding
the foregoing to the contrary, if a Claim is timely made, it may continue
to be asserted beyond the termination date of the representation, warranty
or covenant to which such Claim relates.
12.2. Indemnification.
12.2.1 Indemnification by NCR. NCR hereby agrees to indemnity, defend and
hold harmless each member of the MSI Group from and against all Damages
asserted against, imposed upon or incurred by any member of the MSI Group,
directly or indirectly, by reason of or resulting from (i) any breach or
inaccuracy of any representation, warranty or covenant of NCR set forth in
this Agreement (ii) the conduct and operation of NCR's business on or
before the Closing Date; (iii) any claim relating to the Retained
Liabilities; (iv) the sale, license, use or operation of the Purchased
Assets on or before the Closing Date; (v) the employment of the
Transferred Employees on or before the Closing Date; (vi) the Assumed
Contracts on or before the Closing Date; and (vii) except as otherwise
provided in Section 5.3, liabilities of NCR for any Taxes, including
without limitation arising as a result of the transactions contemplated by
this Agreement or the conduct or operation of NCR's business on or prior
to the Closing Date.
I2.2.2. Indemnification by MSI MSI hereby agrees to indemnify, defend and
hold harmless each member of the NCR Group from and against all Damages
asserted against, imposed upon or incurred by any member of the NCR Group,
directly or indirectly, by reason of or resulting from (i) any breach or
inaccuracy of any representation, warranty or covenant contained in this
Agreement; (ii) the Assumed Contracts from and after the Closing Date to
the extent assigned on the Closing Date and from and after the effective
date of any such Assumed Contract if assigned to MSI after the Closing
Date (but only if
23
MSI has received written notice of such post-Closing Date assignments);
(iii) the sale, license, use or operation of the Purchased Assets from
and after the Closing Date; and (iv) the employment or termination of
employment of the Transferred Employees which arise from and after the
Closing Date.
12.3. Third-Party Claims. The obligations and liabilities of each party to this
Agreement under Section 12.2 related to Third-Party Claims shall be
subject to the following terms and conditions.
12.3.1. Participation by Indemnifying and Indemnified Party. Upon receipt
of written notice of any Third-Party Claim asserted against, imposed upon
or incurred by an Indemnified Party, the Indemnified Party shall notify
the Indemnifying Party thereof in writing. The Indemnifying Party shall
be entitled, at its own expense, to participate in and, upon notice to
the Indemnified Party, to undertake the defense thereof in good faith by
counsel of the Indemnifying Party's own choosing, which counsel shall be
reasonably satisfactory to the Indemnified Party, provided that (i) the
Indemnified Party shall at all times have the option, at its own expense,
to participate fully therein (without controlling such action) and (ii)
if in the Indemnified Party's reasonable judgment (as evidenced and
supported by an opinion of its legal counsel who will not be the same
counsel who will represent the Indemnified Party in the underlying case)
a conflict of interest exists between such Indemnified Party and the
Indemnifying Party in respect of such Third-Party Claim, such Indemnified
Party shall be entitled to select counsel of its own choosing, reasonably
satisfactory to the Indemnifying Party, and the Indemnifying Party shall
be obligated to pay the reasonable fees and expenses of such counsel.
12.3.2 Failure by Indemnifying Party to Defend. If within thirty (30)
days after written notice to the Indemnified Party of the Indemnifying
Party's intention to undertake the defense of any Third-Party Claim the
Indemnifying Party shall fail to defend the Indemnified Party against
such Third-Party Claim, the Indemnified Party will have the right (but
not the obligation) to undertake the defense, compromise or settlement of
such Third-Party Claim on behalf of, and for the account and at the risk
of, the Indemnifying Party.
12.3.3. Right of Indemnified Party to Defend and Settle. Anything in this
Section 12.3 to the contrary notwithstanding, if a Third-Party Claim is
asserted against an Indemnified Party and there is a reasonable
probability in the Indemnified Party's reasonable good faith judgment
that a Third-Party Claim may materially and adversely effect the
Indemnified Party, other than as a result of the imposition of money
damages or other money payments, (i) the Indemnified Party shall have the
right, at its sole option, to take over the defense of such Third-Party
Claim (in which case the Indemnifying Party and the Indemnified Party
shall share equally the cost and expense of such defense) or to codefend
such Third-Party Claim (in which case the Indemnified Party shall bear
the cost and expense of the additional counsel) and no compromise or
settlement of such Third-Party Claim shall be permitted without the
consent of both the Indemnified Party and the Indemnifying Party and (ii)
the Indemnifying Party and the Indemnified Party shall not,
24
without the prior written consent of the other party, settle or compromise
any Third-Party Claim or consent to the entry of any judgment relating to
any such Third-Party Claim, unless such settlement, compromise or judgment
includes as an unconditional release of the Indemnified Party from all
liabilities in respect of such Third-Party Claim.
12.4. Limitation on Indemnification Obligations.
12.4.1 Limitation. Notwithstanding anything contained in this Section 12
to the
contrary, no party shall assert a Claim against the other party for
indemnification hereunder unless and until the amount of all Damages
determined to have been incurred or suffered at the time by the
Indemnified Party exceeds, in the aggregate, $50,000, (the "Threshold
Amount") and then only for the excess of such amount. The parties hereto
further acknowledge and agree that the total indemnification obligations
of each party hereto under this Agreement shall not exceed, in the
aggregate for such party, $14,000,000 (fourteen million). The foregoing
limitations shall not apply to Claims made by a party with respect to
fraud on the part of the other party or a breach by the other party of any
representation or warranty in this Agreement or any Related Agreement, of
which such breaching party had knowledge on or prior to the Closing or to
a breach by MSI of its obligations under Section 11.6..
12.5. Consequential Damages. No party hereto shall have any liability under any
provision of this Agreement for, and in no event shall any party's
Threshold Amount be applied to, any consequential, special or indirect
Damages, including lost profits.
13. [Intentionally Omitted]
14. MISCELLANEOUS
14.1. Xxxxxx Xxxxx Releases. Except as set forth in the Joint Marketing
Agreement [, each of the parties agrees that until six (6) months
following the Closing, no press release or other disclosures by company
representatives shall be made without the prior written consent of the
other party, such consent not to be unreasonably withheld or delayed.
Approval shall be deemed to have been given if there is a written response
to a proposed release or disclosure is not delivered to the requesting
party within two (2) business days after delivery of a request for such
approval.
14.2. Notices. All notices, requests, demands and other communications which are
required or may be given pursuant to the terms of this Agreement shall be
in the English language, in written or electronic form and shall be deemed
delivered (i) on the date of delivery when delivered by hand, (ii) on the
date of transmission when sent by facsimile transmission during normal
business hours with written confirmation of receipt, (iii) one day after
dispatch when sent by overnight courier maintaining records of receipt, or
(iv) three days after dispatch when sent by certified mail, postage
prepaid, return-receipt requested; provided that, in an any such case,
such communication is addressed as follows:
25
If to NCR:
XXX Xxxxxxxxxxx
0000 X. Xxxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Attention: Chief Financial Officer
Telephone: 000-000-0000 Facsimile: 000-000-0000
with a copy to:
Xxx Xxxx, Esq.
Senior Vice President and General Counsel
XXX Xxxxxxxxxxx
0000 X. Xxxxxxxxx
Xxxxxxxxx
Xxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to MSI:
MicroStrategy Incorporated
0000 Xxxxxx Xxxxxxxx Xxxxx Towers CrescentTowers Crescent
Vienna, VA 22182
Attention: General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
14.3. Relationship of the Parties. It is understood and agreed that each of the
parties hereto is an independent contractor, and that neither party is,
or shall be considered to be, by virtue of this Agreement, an agent or
representative of the other party for any purpose.
14.4. Assignment. Neither party may assign this Agreement without the prior
written consent of the other party. Notwithstanding the foregoing to the
contrary, either party may assign any of its rights or obligations
hereunder to any one or more of its Subsidiaries. Each party acknowledges
that it shall continue to be obligated if and to the extent that a
permitted assignee under this paragraph 14.4 fails to perform the
obligations that such party has assigned. Any attempted assignment in
violation of this Section 14.4 without consent shall be null and void.
Where required, no party shall unreasonably withhold or delay consent.
14.5. Binding Effect. This Agreement shall be binding on all parties hereto,
and shall be binding upon and inure to the benefit of each party and its
respective permitted successors and assigns.
14.6. Waiver, Modification; Amendment. No term or provision hereof will be
considered waived by either party, and no breach excused by either party,
unless such waiver or consent is in writing signed on behalf of the party
against whom the waiver is asserted. No consent by either party to, or
waiver of, a breach by either party, whether express or implied, will
constitute a consent to, waiver of, or excuse of any other different, or
subsequent, breach by either party. This Agreement, including the
Schedules and Exhibits attached hereto may not be modified or amended
except by an instrument in writing duly signed by or on behalf of the
parties hereto.
14.7 Force Majeure. Each of the parties hereto shall exert diligence in
performing its obligations under this Agreement, but neither shall be
liable in any manner whatsoever for failure to perform or delay in
performing such obligations, if and to the extent and for so long as such
failure or delay in performance or breach is due to natural disasters,
strikes or labor disputes, natural forces, or other acts of God or cause
reasonably beyond the control of such party. Any party desiring to invoke
this Section 14.7 shall notify the other in writing of such desire and
shall use reasonably efforts and due diligence to resume performance of
its obligations.
26
14.8. United Nations. The parties expressly exclude, if applicable, the
application of the United Nations Convention on Contracts for the
International Sale of Goods.
14.9. Severability. If any part of this Agreement is found invalid or
unenforceable, that part will be amended to achieve as nearly as possible
the same economic and practical effect as the original provision and the
remainder of this Agreement will remain in full force and effect.
14.10. No Interpretation Against Drafter. The terms and provisions of this
Agreement shall not be construed against the drafter or drafters hereof.
All parties hereto agree that the language of this Agreement shall be
construed as a whole according to its fair meaning and not strictly for
or against any of the parties hereto.
14.11. Governing Law; Arbitration. This Agreement shall be governed and enforced
in accordance with the substantive laws of the State of New York, without
regard to any such laws or regulations that may direct the application of
the law of any other jurisdiction. Any controversy, claim or dispute
between the parties arising out of or relating to this Agreement or any
Related Agreement or any breach hereof or thereof shall be referred to
final and binding resolution by the MSI and NCR senior executives who
have authority to reach agreement on any matters in dispute upon written
request by either party specifying in reasonable detail the nature of the
dispute. In the event that such MSI and NCR senior executives are unable
to resolve the dispute within thirty (30) days after the initial request
for dispute resolution, the dispute shall be settled by final and binding
arbitration before a sole arbitrator in New York, New York pursuant to
the then-current Commercial Rules of the American Arbitration Association
and the federal substantive and procedural law of arbitration. Judgment
upon any award rendered by the arbitrator may be entered in any court
having jurisdiction thereof The arbitrator will not have the power to
award punitive or exemplary damages or any damages excluded by, or in
excess of, any damage limitations expressed in this Agreement. Each party
will bear its own attorneys fees and costs related to the arbitration.
Unless otherwise determined by the arbitrator, the costs and expenses of
the arbitration shall be borne equally by the parties.
14.l2 Entire Agreement This Agreement, together with the Schedules and Exhibits
attached hereto and the letter agreement dated December 20, 1999,
constitutes the entire agreement between the parties relating to this
subject matter and supersedes all prior or simultaneous representations,
discussions, negotiations, and agreements with respect thereto, whether
written or oral. Without limiting the foregoing, this Agreement expressly
supersedes the Memorandum of Understanding between MSI and NCR executed
on October 1, 1999.
14.13. Counterparts. This Agreement may be executed simultaneously in any number
of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
27
14.14. Terms Generally. Whenever the context requires, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and. "including" shall be deemed to be followed by
the phrase "without limitation". All references to "party" and "parties"
shall be deemed references to the parties to this Agreement unless the
context shall otherwise require. The terms "this Agreement", "hereof,
"hereunder", and similar expressions refer to this Agreement and not to
any particular Section or other portion hereof and include any agreement
supplemental hereto. All references to Sections, paragraphs, Schedules
and Exhibits shall be deemed references to Sections of, paragraphs of,
and Schedules and Exhibits to, this Agreement unless the context shall
otherwise require. The term "or" is used in its inclusive sense
("and/or").
14.15. Expenses. Except as otherwise expressly provided herein, all costs and
expenses, including fees and disbursements of counsel, financial advisors
and accountants, incurred in connection with this Agreement such costs
and the transactions contemplated hereby shall be paid by the party
incurring expenses, whether or not the Closing shall have occurred.
10.19 Remedies Cumulative, Specific Performance. All remedies, afforded to the
parties under this Agreement or any Related Agreement, Applicable Law or
otherwise, shall be cumulative and not alternative. Each of the parties
agrees that in the event of any breach or threatened breach by a party of
any provision of this Agreement or any Related Agreement, the other party
shall be entitled, in addition to any other rights or remedies it may
have, to a decree or order of specific performance or mandamus to enforce
the observance and performance of such provision and an injunction
restraining such breach or threatened breach.
10.20 Brokers and Finders. Each of NCR and MSI represents that no agent,
broker, investment banker, financial advisor or other firm person is or
will be entitled to any broker's or finder's fee or any other commission
or similar fee in connection with any of the transactions contemplated by
this Agreement and each party agrees to indemnify the other party and
hold the other party harmless from and against any and all claims,
liabilities or obligations with respect to any other fee, commissions or
expenses asserted by any person on the basis of any act or statement
alleged to have been made by such first party.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives, effective as of the date first above
written.
MicroStrategy Incorporated XXX Xxxxxxxxxxx
By: /s/ Xxxxx Xxxxxx By: /s/ M. Xxxxxx Xxxxxxx
--------------------- ----------------------
Date: Date: December 23, 1999
Xxxxx Xxxxxx M. Xxxxxx Xxxxxxx
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Print Name Print Name
COO Assistant Secretary
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Title Title
