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Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into on May
1, 2000, by and between SQLSoft, Inc., a Washington corporation (the "Buyer"),
and Aris Corporation, a Washington corporation (the "Seller"). The Buyer and the
Seller are referred to collectively herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will
purchase certain of the assets (and assume certain of the liabilities) of the
Division (as defined below) in return for cash, the Buyer Note and certain
future payments as set forth herein.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act of 1933.
"Acquired Assets" means all of the right, title, and interest that the
Seller represents it possesses and has the right to transfer in and to the
assets set forth on Schedule A hereto (subject to mutually acceptable
post-Closing modification through Monday, May 15, 2000); provided, however, that
the Acquired Assets shall not include (i) the corporate charter, qualifications
to conduct business as a foreign corporation, arrangements with registered
agents relating to foreign qualifications, taxpayer and other identification
numbers, seals, minute books, stock transfer books, blank stock certificates,
and other documents relating to the organization, maintenance, and existence of
the Seller as a corporation, (ii) any cash and cash equivalents (including
marketable securities and short term investments), or (iii) any of the rights of
the Seller under this Agreement (or under any side agreement between the Seller
on the one hand and the Buyer on the other hand entered into on or after the
date of this Agreement).
"Additional Contributions" means proceeds received by the Buyer in
connection with the sale of securities of the Buyer after the Closing Date but
prior to the Change of Control.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" means, with respect to a company, its parent company or
majority owned subsidiary.
"Assumed Liabilities" means all liabilities and obligations of the
Division (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), relating to (a) the liabilities
and obligations of the Seller under the agreements, contracts, leases, licenses,
and other arrangements referred to in the definition of Acquired Assets, (b) the
liabilities and obligations of the Seller with respect to the outstanding
obligations to deliver courses at the Facilities which have been prepaid by
customers prior to the Closing but not delivered as of the Closing, (c) the
liabilities and obligations of the Seller for classes and portions of classes
initiated at the Facilities but not invoiced to customers as of the Closing,
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(d) liabilities and obligations of the Seller arising after the Closing Date
under contracts with employees, suppliers and maintenance firms, equipment
leases and other agreements entered into prior to the Closing in connection with
the day-to-day operation of the Facilities as set forth on Schedule B hereto
(subject to mutually acceptable post-Closing modification through Monday, May
15, 2000); provided, however, that the Assumed Liabilities shall not include any
liability or obligation of the Seller under this Agreement (or under any side
agreement between the Seller on the one hand and the Buyer on the other hand
entered into on or after the date of this Agreement).
"Bellevue Facility" means the education facility of the Seller located
at 1750 - 112th Ave. NE, Suites A-101 and B-101, Xxxxxxxx, Xxxxxxxxxx 00000.
"Buyer" has the meaning set forth in the preface above.
"Buyer Note" means the Promissory Note in the form attached hereto as
Exhibit 1.1.
"Change of Control" means (i) an acquisition of the Buyer by another
entity by means of a merger, consolidation, or other transaction or series of
related transactions resulting in the exchange of the outstanding shares of the
Buyer's capital stock such that shareholders of the Buyer prior to such
transaction own, directly or indirectly, less than 50% of the voting power of
the surviving entity, or (ii) a sale or transfer of all or substantially all of
the Buyer's assets to any person.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Confidential Information" means any information concerning the
businesses and affairs of the Seller that is not already generally available to
the public.
"Differential Amount" has the meaning set forth in Section 2(g) below.
"Division" means the Seller's training operations conducted out of the
Facilities.
"Employees" means the employees of the Seller set forth on Schedule C.
"Facilities" means the Bellevue Facility and the Portland Facility,
together.
"Knowledge" means actual knowledge of an individual following
reasonable inquiry that would be expected in the exercise of such individual's
responsibilities.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Portland Facility" means education facility of the Seller located at
00000 XX Xxxxxxxxxx Xxxxxxx, Xxxxx X-0, Xxxxxxxxx, Xxxxxx 00000.
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"Purchase Price" has the meaning set forth in Section 2(c) below.
"Seller" has the meaning set forth in the preface above.
"Third Party Claim" has the meaning set forth in Section 8(d) below.
2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey, and deliver to the Buyer, all of
the Acquired Assets at the Closing for the consideration specified below in this
Section 2.
(b) Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to assume and become responsible
for all of the Assumed Liabilities at the Closing. The Buyer will not assume or
have any responsibility, however, with respect to any other obligation or
liability of the Seller not included within the definition of Assumed
Liabilities.
(c) Purchase Price. The Buyer agrees to pay to the Seller $2,064,600 in
cash or cash equivalents and plus the proceeds from the sale of 125,000 shares
of the common stock of Aris Corporation (the "Purchase Price"). At Closing, the
Buyer shall deliver (i) $900,000 cash; and (ii) the Buyer Note in the principal
amount of $600,000; in addition, Xxxxxxx X. Xxxxxxx and Xxxx Xxxxx shall sell
125,000 shares of Aris Corporation common stock, in aggregate, at the request of
the Seller from time to time and at any time following the Closing Date, the net
proceeds of which shall be delivered, with accompanying broker confirmation to
the Seller by the Buyer. In addition, the Buyer agrees to pay to the Seller
$564,600, in payments of eighteen thousand eight hundred twenty dollars
($18,820) per month (the "Royalty Payments") for 30 months commencing on the
first day of the seventh (7th) full calendar month following the Closing Date.
The Royalty Payments are to be made in consideration of the Post Acquisition
Transition Support to be provided to Buyer as set forth in Section 6(e). The
Royalty Payments shall be immediately accruable on the books of the Seller and
Buyer.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Van Valkenberg
Xxxxxx Law Group P.L.L.C. in Seattle, Washington, commencing at 10:00 a.m. local
time on May 1, 2000 or such other date as the Parties may mutually determine
(the "Closing Date").
(e) Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 7(a) below; (ii) the Buyer will deliver to the Seller the
various certificates, instruments, and documents referred to in Section 7(b)
below; (iii) the Seller will execute, acknowledge (if appropriate), and deliver
to the Buyer such other instruments of sale, transfer, conveyance, and
assignment as the Buyer and its counsel may reasonably request; (iv) the Buyer
will execute, acknowledge (if appropriate), and deliver to the Seller such other
instruments of assumption as the Seller and its counsel may reasonably request;
and (v) the Buyer will deliver to the Seller the consideration specified in
Section 2(c) above.
(f) Allocation. The Parties agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets for all purposes
(including financial accounting and tax purposes) in accordance with the
allocation schedule attached hereto as Exhibit 2(f).
(g) Purchase Price Adjustment. In the event the Buyer has a Change of
Control prior to the payment in full of the Note, the Buyer shall pay to the
Seller an amount equal to the lesser of (i)
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$585,937.50 or (ii) (Outstanding Balance of the Note/($3,564,600 plus Additional
Contributions)) times the aggregate consideration paid by the purchaser less
outstanding liabilities of the Buyer, transaction costs of the Buyer and
transaction costs of shareholders of Buyer.
3. Representations and Warranties of the Seller. The Seller represents
and warrants to the Buyer that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 3).
(a) Organization of the Seller. The Seller is a corporation duly
organized and validly existing under the laws of the State of Washington.
(b) Authorization of Transaction. The Seller has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Seller, enforceable in accordance with its terms and conditions.
(c) Noncontravention. To the Knowledge of any of the Seller's officers,
neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby (including the assignments and
assumptions referred to in Section 2 above), will violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
the Seller is subject or any provision of the charter or bylaws of the Seller.
To the Knowledge of any of the Seller's officers, the Seller does not need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Section 2 above), except where the
failure to give notice, to file, or to obtain any authorization, consent, or
approval would not have a material adverse effect on the ability of the Parties
to consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. The Seller 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 for which the Buyer could become
liable or obligated.
(e) Title to Tangible Assets. The Seller has good title to, or a valid
leasehold interest in, the material tangible assets included within the
definition of Acquired Assets. Further, Seller has received or obtained all
necessary consents and delivered all necessary notices with respect to the
assignment of the Acquired Assets to the Buyer.
(f) Contracts. The Seller has delivered to the Buyer a correct, current
and complete copy of each contract or other agreement included within the
definition of Acquired Assets.
(g) Investment. The Seller (i) understands that the Buyer Note has not
been, and will not be, registered under the Securities Act, or under any state
securities laws, and is being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering, (ii) is
acquiring the Buyer Note solely for its own account for investment purposes, and
not with a view to the distribution thereof, (iii) is a sophisticated investor
with knowledge and experience in business and financial matters, (iv) has
received certain information concerning the Buyer and has had the opportunity to
obtain additional information as desired in order to evaluate the merits and the
risks inherent in holding the Buyer Note, (v) is able to bear the economic risk
and lack of liquidity inherent in holding the Buyer Note, and (vi) is an
Accredited Investor.
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(h) Disclaimer of other Representations and Warranties. Except as
expressly set forth in this Section 3, the Seller makes no representation or
warranty, express or implied, at law or in equity, in respect of any of its
assets (including, without limitation, the Acquired Assets), liabilities or
operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed. The Buyer hereby acknowledges and
agrees that, except to the extent specifically set forth in this Section 3, the
Buyer is purchasing the Acquired Assets on an "as-is, where-is" basis. Without
limiting the generality of the foregoing, the Seller makes no representation or
warranty regarding any assets other than the Acquired Assets or any liabilities
other than the Assumed Liabilities, and none shall be implied at law or in
equity.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 4).
(a) Organization of the Buyer. The Buyer is a corporation duly
organized and validly existing under the laws of the State of Washington.
(b) Authorization of Transaction. The Buyer has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Buyer, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws. The Buyer does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments and assumptions
referred to in Section 2 above).
(d) Brokers' 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 for which the Seller could become
liable or obligated.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use reasonable effort to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 7 below).
(b) Notices and Consents. Each of the Parties will give any notices to,
make any filings with, and use reasonable effort to obtain any authorizations,
consents, and approvals of governments, governmental agencies and other third
parties in connection with the matters referred to in Section 3(c) and Section
4(c) above.
(c) Operation of Business. With respect to the Division, the Seller
will not cause or permit any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business excluding support and
activities in anticipation of the change in control.
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(d) Full Access. The Seller will permit representatives of the Buyer to
have full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of the Division, to all premises,
properties, personnel, books, records (including tax records), contracts, and
documents of or pertaining to the Division. The Buyer will treat and hold as
such any Confidential Information it receives from any of the Seller in the
course of the reviews contemplated by this Section 5(d), will not use any of the
Confidential Information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, will return to the Seller all
tangible embodiments (and all copies) of the Confidential Information which are
in its possession.
(e) Notice of Developments. The Seller may elect at any time to notify
the Buyer of any development causing a breach of any of its representations and
warranties in Section 3 above. Unless the Buyer has the right to terminate this
Agreement pursuant to Section 9(a)(ii) below by reason of the development and
exercises that right within the period of 10 business days referred to in
Section 9(a)(ii) below, the written notice pursuant to this Section 5(e)(i) will
be deemed to have qualified the representations and warranties contained in
Section 3 above, and to have cured any misrepresentation or breach of warranty
that otherwise might have existed hereunder by reason of the development.
(f) Exclusivity. The Seller will not solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of all or substantially all of the assets of the Division; provided,
however, that the Seller and its directors and officers will remain free to
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing to the extent their fiduciary duties may require.
6. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as the other Party may reasonably
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 8 below).
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Division, the other Party will cooperate with
the contesting or defending Party and its counsel in the contest or defense,
make available its personnel, and provide such testimony and access to its books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 8 below).
(c) Transition. The Seller will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Division from maintaining the same
business relationships with the Buyer after the Closing as it maintained with
the Division prior to the Closing.
(d) Covenants Not to Compete; Non-Solicitation.
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(i) For a period of two years from and after the Closing Date,
the Seller will not, within the states of Oregon, Washington, Idaho,
Hawaii or Alaska, engage, directly or indirectly, in the business of
"instructor led classroom training"; provided, however, that no owner
of less than 5% of the outstanding stock of any publicly traded
corporation shall be deemed to be engaged solely by reason thereof in
any of its businesses. For a period of two years from and after the
Closing Date, the Seller will not solicit, recommend or induce
employees or clients of the Buyer to terminate their relationship with
the Buyer, and the Seller shall not employ any former employee of the
Buyer during the three months following the termination of such
employee's employment by the Buyer. Notwithstanding the above, the
Seller and the Buyer acknowledge that the Seller, through its
subsidiary, Netcisive, Inc. ("Netcisive"), may conduct interactive
education training and content delivery of information technology
subject matter as well as other content and subject matter through
technology developed for delivery by the world wide web, Internet,
extranet and similar delivery means. The Parties acknowledge that the
business of Netcisive is fluid and under development as of the date of
this Agreement, and the business of Netcisive may evolve to compete for
customers of the Buyer, provided, that neither Netcisive nor its
Affiliates shall provide instructor led classroom training.
(ii) For a period of two years from and after the Closing Date,
the Buyer will not, anywhere in the world, engage, directly or
indirectly, in the business of (i) "consulting packaged applications"
or "custom developed consulting (including interactive e-commerce
applications)," or (ii) delivering consulting services valued at more
than $50,000 per year per customer, to any existing or historic
customer of the Seller (other than Microsoft Corporation); provided,
however, that no owner of less than 5% of the outstanding stock of any
publicly traded corporation shall be deemed to engage solely by reason
thereof in any of its businesses. For a period of two years from and
after the Closing Date, the Buyer will not solicit, recommend or induce
employees or clients of the Seller to terminate their relationship with
the Seller, and the Buyer shall not employ any former employee of the
Seller during the three months following the termination of such
employee's employment by the Seller without prior consent of Seller.
However, nothing contained in this Agreement shall prevent the Buyer
from employing any of the Employees.
(iii) Notwithstanding other provisions in this Agreement to the
contrary, the Parties shall have the right to enforce the provisions of
this Section 6(d) by injunction, specific performance or other
equitable relief, without bond, and without prejudice to any other
rights and remedies that the Parties may have for a breach of this
Section 6(d).
(iv) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 6(d) is invalid or
unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
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(e) Post Acquisition Transition Support: The following terms and
conditions shall apply to services provided to the Hidden Valley,
Bellevue facility and staff and shall not apply to the Portland
(Beaverton) facility and staff. Similar terms and conditions are
provided to the Portland (Beaverton) facility and staff via a
Facilities and Services Agreement dated May 1, 2000 by and between
Buyer and Seller.
(i) ACETS support:
(a) The Seller shall provide support of ACETS for benefit
of the Division for 6 months following the Closing Date. The
existing database shall be located at Aris Corporate
Headquarters and a separate instance of the database shall be
located at the Bellevue Facility. The Seller shall provide
support to correct critical bug, backup and recovery, and
system administration, but the Seller will not be required to
provide functionality enhancements. There will be no interface
to the Buyer's accounting system during this 6-month support
period.
(b) At the end of the 6-month period set forth in (a)
above, the Seller will provide a snapshot of data, but will
otherwise provide no further system interface or software.
(c) The Seller shall provide the Buyer specific data for
all existing EDU classes and EDU projects for regions 1, 2, 88
and both EDU and CONS projects for regions 12, 88 and 99.
(ii) The Buyer will pay all costs associated with WAN connection
between the Bellevue Facility and the Seller's corporate location for
as long as a connection is required. The Seller will pay the cost of
the WAN between the Seller's corporate location and the Portland
Facility until such time as the Seller's consulting group terminates
occupancy in the jointly occupied Portland Facility, after which time
the cost of the WAN shall be the obligation of the Buyer.
(iii) The Seller will provide the Buyer the server (Halidon I)
containing the ASPECT data as of the Closing Date. After the Closing
Date, the Seller will not support ASPECT. Though not supported, the
Buyer shall have user rights to ASPECT for six months following the
Closing Date.
(iv) The Seller will host Exchange mail service for 3 months
following Closing Date and shall forward mail for 1 year following the
Closing Date, both at no additional cost to the Buyer.
At the request of Buyer, the Seller will use reasonable efforts to
forward mail for one additional year at no cost to the Buyer.
(v) The Seller will support the Education website for 6 months
following the Closing Date and provide content support including
interactivity with ACETS and upload of new content, but will not
support any system enhancements. At the end of the six-month period,
the Seller will provide the Buyer a snapshot of website content.
(vi) The Seller shall not support MAS90 for benefit of the Buyer,
except that the Seller shall cooperate in the preparation of relevant
reports, closing balances, etc. in support of an orderly transition of
customer names, vendor names, etc. as may be reasonably requested by
the Buyer.
(vii) The Seller shall provide content for the Education
subdirectory as of the Closing Date, but shall provide no further
support of ARISPHERE.
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(viii) The Seller will transfer the US West accounts required by
the Buyer to the Buyer to be held in its name to preserve the
connection numbers. The same shall apply to all MCI numbers if
transferable; if not transferable, the Buyer shall pay the toll fees of
the 1-800 and 1-888 numbers. The Seller will forward for 3 months
following the Closing Date the Renton Direct inward dial numbers, but
will terminate all numbers not required by the Buyer as of the Closing
Date.
(ix) Sublease of Leased Premises. The Buyer shall assume, as
sublessor, the leases the Hidden Valley (Bellevue) Facility. The
sublease shall be under the terms of the sublease agreements, copies of
which are attached hereto as Exhibit D. The sublease is subject to the
submission of request for consent and the consent of the landlord.
Seller shall make reasonable attempt to induce ASA Properties, Inc. to
consent to the sublease of real property in accordance with the
sublease agreement. Buyer shall comply with reasonable request of the
landlord for information which shall be requested in connection with
the request for consent. In the event that the landlord shall fail to
consent to sublease, Buyer shall enter into a new lease with the
landlord for the same or similar space or shall relocate to other real
estate within the time period as provided in the respective underlying
master lease. Failure of the landlord to consent to the sublease shall
not be cause to terminate this Agreement or cause it to become null or
void. Seller shall defend buyer's right to occupy Facilities and use
all reasonable means including legal remedies including suit, counter
suit and appeal if necessary at the Seller's expense.
(x) The Seller shall pay $563.04 per month for its pro-rata share
of all rents for its occupancy of the Bellevue Facility's broadcast
studio until the Bellevue Facility lease is terminated or the broadcast
studio is removed at the Seller's expense prior to the termination of
such lease.
(xi) The Buyer shall provide to the Seller, for the cost of
courseware, training for the Seller's employees on a space available
basis during the term of the Note. The decision to hold or not hold a
class shall be solely that of the Buyer and a request to train the
Seller's employees shall not be cause to hold a class which may
otherwise have been cancelled or not scheduled.
(f) Post Acquisition Equitable Payments: The Buyer shall invoice the
Seller monthly for any unfulfilled obligations of the Seller to provide
education services carried on the books of the Seller as of the Closing Date as
unfulfilled obligations in recorded as negative accounts receivable.
(g) Financial Reporting: The Buyer shall deliver to the Seller, for the
life of the Note, for the Sellers own internal use (and shall not disclose to
third parties):
(i) as soon as practicable, but in any event within ninety (90)
days after the end of each fiscal year of the Buyer, an income statement for
such fiscal year, a balance sheet of the Buyer and statement of shareholder's
equity as of the end of such year, and a statement of cash flows for such year,
such year-end financial reports to be in reasonable detail, prepared in
accordance with generally accepted accounting principles;
(ii) as soon as practicable, but in any event within forty-five
(45) days after the end of each of the first three (3) quarters of each fiscal
year of the Buyer, an unaudited income statement, statement of cash flows for
such fiscal quarter and an unaudited balance sheet as of the end of such fiscal
quarter.
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7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) the Seller shall have delivered to the Buyer a certificate
to the effect that each of the conditions specified above in this
Section 7(a) is satisfied in all respects;
(v) the Buyer shall have received sufficient financing to fund
the Purchase Price;
(vi) the Buyer shall have entered into employment agreements or
employment offer letters with each of the Employees; and
(vii) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) the Buyer shall have delivered to the Seller a certificate
to the effect that each of the conditions specified above in this
Section 7(b) is satisfied in all respects;
(v) the Parties shall have entered into side agreements in form
and substance reasonably satisfactory to the Parties, and the same
shall be in full force and effect; and
11
(vi) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Seller.
The Seller may waive any condition specified in this Section 7(b) if it
executes a writing so stating at or prior to the Closing.
8. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties. The representations and
warranties of the Buyer and the Seller contained in this Agreement shall survive
the Closing (unless the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty or covenant at the time of Closing) and
continue in full force and effect forever thereafter (subject to any applicable
statutes of limitations).
(b) Indemnification Provisions for Benefit of the Buyer.
(i) In the event the Seller breaches any of its representations,
warranties, and covenants contained in this Agreement, and, if there is
an applicable survival period pursuant to Section 8(a) above, provided
that the Buyer makes a written claim for indemnification against the
Seller pursuant to Section 10(g) below within such survival period,
then the Seller agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer shall suffer through and
after the date of the claim for indemnification (but excluding any
Adverse Consequences the Buyer shall suffer after the end of any
applicable survival period) caused proximately by the breach.
(ii) The Seller agrees to indemnify the Buyer from and against
the entirety of any Adverse Consequences the Buyer shall suffer caused
proximately by any liability of the Seller which is not an Assumed
Liability (including any liability of the Seller that becomes a
liability of the Buyer under any bulk transfer law of any jurisdiction,
under any common law doctrine of de facto merger or successor
liability, or otherwise by operation of law).
(iii) The Seller agrees to indemnify the Buyer from certain costs
related to termination of the Facilities, Administration and Services
Agreement dated May 1, 2000 as described therein.
(iv) Buyer shall have the right to offset any amounts due from
seller pursuant to Section 8(b) against amounts due and owing pursuant
to the Buyer Note.
(v) The Seller agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences arising from any action or claim
brought by the Employees or former employees of the Seller relating to
employment or termination of such employees by Seller.
(c) Indemnification Provisions for Benefit of the Seller.
(i) In the event the Buyer breaches any of its representations,
warranties, and covenants contained in this Agreement, and, if there is
an applicable survival period pursuant to Section 8(a) above, provided
that the Seller makes a written claim for indemnification against the
Buyer pursuant to Section 10(g) below within such survival period, then
the Buyer agrees to indemnify the Seller from and against the entirety
of any Adverse Consequences the Seller shall suffer through and after
the date of the claim for indemnification (but excluding any Adverse
12
Consequences the Seller shall suffer after the end of any applicable
survival period) caused proximately by the breach.
(ii) The Buyer agrees to indemnify the Seller from and against
the entirety of any Adverse Consequences the Seller shall suffer caused
proximately by any liability of the Seller which is an Assumed
Liability.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against the other Party (the
"Indemnifying Party") under this Section 8, then the Indemnified Party
shall promptly (and in any event within five business days after
receiving notice of the Third Party Claim) notify the Indemnifying
Party thereof in writing.
(ii) The Indemnifying Party will have the right at any time to
assume and thereafter conduct the defense of the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party;
provided, however, that the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably) unless the judgment or proposed
settlement involves only the payment of money damages and does not
impose an injunction or other equitable relief upon the Indemnified
Party.
(iii) Unless and until the Indemnifying Party assumes the defense
of the Third Party Claim as provided in Section 8(d)(ii) above,
however, the Indemnified Party may defend against the Third Party Claim
in any manner it reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party
(not to be withheld unreasonably).
(e) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for tax benefits and insurance coverage in determining
Adverse Consequences for purposes of this Section 8. All indemnification
payments under this Section 8 shall be deemed adjustments to the Purchase Price.
(f) Exclusive Remedy. Except as set forth in Section 6(d)(iii), above,
the Buyer and the Seller acknowledge and agree that the foregoing
indemnification provisions in this Section 8 shall be the exclusive remedy of
the Buyer and the Seller with respect to the Division and the transactions
contemplated by this Agreement.
9. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event (A)
the Seller has within the then previous 10 business days
13
given the Buyer any notice pursuant to Section 5(e)(i) above and (B)
the development that is the subject of the notice has had a material
adverse effect upon the business prospects of the Division when taken
as a whole;
(iii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing if the Closing
shall not have occurred on or before May 1, 2000, by reason of the
failure of any condition precedent under Section 7(a) hereof (unless
the failure results primarily from the Buyer itself breaching any
representation, warranty, or covenant contained in this Agreement); and
(iv) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing if the Closing
shall not have occurred on or before May 1, 2000 by reason of the
failure of any condition precedent under Section 7(b) hereof (unless
the failure results primarily from the Seller itself breaching any
representation, warranty, or covenant contained in this Agreement).
(g) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to the other Party
(except for any liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in Section 5(d) above shall survive
termination.
10. Miscellaneous.
(a) Press Releases and Public Announcements. The Buyer shall not issue
any press release or make any public announcement containing a quote by an
officer or director of the Seller without the prior written approval of the
Seller.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
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If to the Seller: Chief Legal Counsel
Aris Corporation
0000 000xx Xxxxxx XX
Xxxxxxxx, Xxxxxxxxxx 00000
With copy to:
Xxxxxxx X. Xxxxxx
Van Valkenberg Xxxxxx Law Group P.L.L.C.
0000 0xx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
If to the Buyer: Xxxxxxx X. Xxxxxxx
00000 00xx Xxxxxx XX
Xxxxxxx, Xxxxxxxxxx 00000
and
Xxxx Xxxxx
00000 XX 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With copy to:
Xxxx Xxxxxxxxx
Xxxxxx Xxxxxxxx, P.S.
000 - 0xx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), 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 intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
(h) Governing Law; Arbitration. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Washington
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Washington or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Washington. Either party to this Agreement can initiate arbitration pursuant to
this Agreement by serving notice on the other party of an intent to arbitrate.
The notice shall specify with particularity the claims or issues that are to be
arbitrated. Within ten days of receipt of the notice, the parties shall obtain a
list of available arbitrators from the local office of the Judicial Arbitration
and Mediation Service ("JAMS") and select a mutually acceptable arbitrator. If
the parties are unable to agree on an arbitrator within ten days, any party may
petition the Presiding Judge of the Superior Court for King County to select a
single arbitrator from the JAMS list. The parties shall have the discovery
rights available under Washington's Civil Rules, subject to the limitation that
each side shall be limited to no more than five interrogatories and five
depositions unless, upon a showing of good cause, the party can convince the
arbitrator that more interrogatories or depositions should be permitted. All
discovery
15
must be concluded within 60 days of the selection of an arbitrator. The
arbitration hearing must be concluded within 30 days of the close of discovery
and it will be conducted in accordance with Washington Rules of Evidence. The
arbitrator's final decision shall be rendered within ten days of the final
hearing day. Judgment upon the arbitrator's final award may be entered in any
court having jurisdiction thereof.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
BUYER
SQLSOFT, INC,
a Washington corporation
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxx, President
SELLER ARIS CORPORATION,
a Washington corporation
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx,
Vice President and Chief Financial
Officer
