EXECUTION COPY
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT, dated December 18, 1998
between SITE TECHNOLOGIES, INC., a California corporation having an address
at 000 Xx Xxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxxxxxx 00000 (the "SELLER"), and
STARBASE CORPORATION, a Delaware corporation having an address at 0 Xxxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx 00000(xxx "PURCHASER").
RECITALS
The Seller is in the business of designing, developing,
licensing and selling software products and related materials for various Web
site applications. The Seller has decided to sell certain of its assets and
properties. The Seller has agreed to sell such assets and properties to the
Purchaser, and the Purchaser has agreed to buy such assets and properties,
all upon the terms and provisions and subject to the conditions hereinafter
set forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and
agreements hereinafter set forth, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 CERTAIN DEFINED TERMS. As used in this Agreement, the
following capitalized terms and non-capitalized words and phrases shall have
the meanings respectively assigned to them below, which meanings shall be
applicable equally to the singular and plural forms of the terms so defined:
"AGREEMENT" shall mean this Asset Purchase and Sale Agreement,
together with all schedules and exhibits hereto, as the same may be
supplemented, modified, amended or restated from time to time in the manner
provided herein.
"AFFILIATE" of a referenced person shall mean (a) another
person controlling, controlled by or under common control with such
referenced person, (b) any other person beneficially owning or controlling
ten percent (10%) or more of the outstanding voting securities or rights or
of the interest in the capital, distributions or profits of the referenced
person or (c) any officer or director of or partner in the referenced person,
or any person controlled by any such individual. The terms "CONTROL",
"CONTROLLING", "CONTROLLED" and the like shall mean the direct or indirect
possession of the power to direct or cause the direction of the management or
policies of a
individual. The terms "CONTROL", "CONTROLLING", "CONTROLLED" and the like
shall mean the direct or indirect possession of the power to direct or cause
the direction of the management or policies of a person or the disposition of
its assets or properties, whether through ownership, by contract, arrangement
or understanding, or otherwise.
"ASSET" and "ASSETS" shall have the meanings respectively
assigned to them in SECTION 2.01 hereof.
"ASSUMED OBLIGATION" and "ASSUMED OBLIGATIONS" shall have the
meanings respectively assigned to them in SECTION 2.03 hereof.
"BUSINESS DAY" shall mean any day other than any Saturday,
Sunday or other applicable U.S. federal holiday.
"CLOSING" shall mean the consummation of the sale and purchase
of the Assets by the Seller and the Purchaser as contemplated by this
Agreement.
"CLOSING DATE" shall have the meaning assigned to it in SECTION
2.09 hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" shall mean, with respect to the
Assets only, and the information contained therein, any and all Documents and
other information pertaining to the assets, bids, business, code, costs,
creditors, customers and customer identities and contacts, data, Developments
(as hereinafter defined), financial condition or affairs, formulae, know-how,
methods, operations, personnel, prices, procedures, products, proposals,
prospects, reports, services, software, strategies, suppliers, systems,
technologies and other trade secrets of the Seller, whether existing prior
hereto, acquired hereunder or developed or otherwise acquired by the
Purchaser during the Restricted Period or at any other time; PROVIDED,
HOWEVER, THAT Confidential Information shall exclude any information that (i)
is or becomes publicly available other than through any direct or indirect
disclosure by the Seller or any of its Representatives (ii) was known to
Seller or its Representatives, without confidentiality restriction, at the
time of disclosure as shown by the files of Seller or its Representatives in
existence at the time of disclosure; (iii) is disclosed with the prior
written approval of Purchaser; (iv) was independently developed by Seller or
its Representatives without any use of the Confidential Information and by
employees or other agents of (or independent contractors hired by) Seller or
its Representatives who have not bee exposed to the Confidential Information;
(v) becomes known to Seller or its Representatives, without confidentiality
restriction, form a source other than Purchaser without breach of this
Agreement by Seller or its Representatives and otherwise not in violation of
Purchaser's rights; (vi) is disclosed to third parties by Purchaser without
restrictions similar to those contained in this Agreement; or (vii) is
disclosed pursuant to the order or requirement of a court, administrative
agency, or other governmental body, provided, however, that Seller or its
Representatives shall provide prompt written notice thereof to enable
Purchaser to seek a protective order or otherwise prevent such disclosure.
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"CONVEYANCE INSTRUMENTS" shall mean the bills of sale,
assignments and other documents required by SECTION 2.07 hereof.
"CORPORATE DOCUMENT" shall mean any of the following: (a) the
Certificate of Incorporation and By-laws of the Seller; (b) any resolution
with continuing effect adopted by the Board of Directors of the Seller; or
(c) any term or provision of any agreement or trust respecting the securities
issued by the Seller or any related rights; in each case whether now or
hereafter existing, and irrespective of whether reduced to writing, and as
each has been and hereafter may be supplemented, modified, amended or
restated from time to time.
"DEVELOPMENTS" shall mean, collectively, any and all
developments, enhancements, refinements, upgrades and documentation of
Software, Source Code, ideas, inventions, products, services, know-how,
programs, procedures, strategies, and other trade secrets and works of
authorship for use in or related to the Assets.
"DOCUMENTS" shall mean, with respect to the Assets only, any
and all documents and other tangible items containing information, including
(without limitation) any and all agreements, books, correspondence, discs,
drawings and pictures, instructions, lists and other collections of
information, manuals, memoranda, notes, programs, software and codes,
proposals and presentations, whether in hard copy or electronic storage.
"EVENT" shall include (without limitation) any event,
occurrence, circumstance, condition or state of facts.
"EXCLUDED ASSET" and "EXCLUDED ASSETS" shall have the meanings
respectively assigned to them in SECTION 2.02 hereof.
"EXCLUDED LIABILITY" and "EXCLUDED LIABILITIES" shall have the
meanings respectively assigned to them in SECTION 2.04 hereof.
"GAAP" shall mean United States generally accepted accounting
principles applied on a basis consistent with the preparation of the
consolidated financial statements referred to in SECTION 4.05 hereof.
"HEREUNDER" , "HEREIN", "HEREOF" and other words and phrases of
like import shall refer to each and every term and provision of this
Agreement.
"INDEMNIFICATION LIMIT" shall have the meaning assigned to it
in SECTION 5.02(a) hereof.
"INTERIM LICENSE AND CONSULTING AGREEMENT" shall mean that
certain agreement between the Seller and the Purchaser, dated as of the date
hereof and attached hereto as Exhibit A.
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"LIABILITY THRESHOLD" shall have the meaning assigned to it in
SECTION 5.02(a) hereof.
"LIEN" and "LIENS" shall respectively refer to any one or more
of the following with respect to the Assets: (a) any assignment, pledge,
mortgage, hypothecation or security interest (irrespective of whether the
Seller is personally obligated with respect to any obligation thereby
secured); (b) any consignment, finance lease, conditional sale contract or
other title retention agreement; (c) any assignment, pledge or other
transfer, restriction or encumbrance of any right to receive any income or
other distributions or proceeds; (d) any lien for Taxes or other assessments
or any mechanics' or other statutory lien; (e) any restrictive covenant,
lease, license, right of use, possession or first refusal, infringement,
community property or other joint ownership interest, limitation or
restriction on use or transfer, exception to title, or other limitation or
restriction on the extent, exercise or enforcement of any right or interest
respecting any asset or property; (f) any covenant or agreement with any
other person to a "Negative Pledge" (I.E., that the Seller will not do any
one or more of the things specified in the preceding clauses); or (g) any
other lien, encumbrance or adverse right or claim of any nature in, to or
against any Asset.
"LOSS" shall mean any loss, damage, injury, harm, detriment,
decline in value, liability, claim, demand, action, suit, investigation,
proceeding, settlement, judgment, award, fine, penalty, Tax, fee, charge,
cost or expense (including any reasonable out-of-pocket disbursement, expense
or fee or other reasonable amount paid to any attorney or other professional
advisor and any reasonable costs of investigation).
"MATERIAL ADVERSE EFFECT" shall mean (i) with respect to
Seller, any material and adverse effect, whether individually or in the
aggregate, upon (a) the Assets, or (b) the ability of the Seller to perform
as and when due of all or any part of its obligations under this Agreement
or any other Purchase Document and (ii) with respect to Purchaser, any
change, event or effect that is or reasonably likely could be materially
adverse, whether individually or in the aggregate, (a) to the current or
continuing business, assets (including intangible assets), financial
condition or results of operations of Purchaser and its subsidiaries taken as
a whole, or (b) upon the ability of Purchaser to perform as and when due of
all or any part of its obligations under this Agreement or any other Purchase
Document.
"MATERIAL CONTRACT" and "MATERIAL CONTRACTS" shall respectively
mean any one or more of each material agreement, contract, instrument,
document, arrangement or other obligation or understanding primarily with
respect to the Assets: (a) to which the Seller is or may be a party; or (b)
by which the Seller or any of the Assets is or may be bound or subject; in
each case, whether now or hereafter existing, and irrespective of whether
reduced to writing, and as each has been supplemented, modified, amended or
restated to the date hereof; PROVIDED, HOWEVER, THAT Material Contract shall
not include any such item pertaining to any Excluded Asset or Excluded
Liability.
"MATERIAL DOCUMENT" shall mean, with respect to the Assets
only, any material instrument, agreement, contract, document, arrangement or
other obligation or understanding relating to the Assets: (a) to which the
Seller is or may be a party; or (b) by which the Seller or any
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of the Assets is or may be bound or subject; in each case, whether now or
hereafter existing, and irrespective of whether reduced to writing, and as
each has been and hereafter may be supplemented, modified, amended or
restated from time to time.
"PRODUCT LIABILITY" shall mean any liability or other
obligation (whether alleged or otherwise) of the Seller or any agent or
affiliate of the Seller respecting any express or implied representation,
warranty, guaranty, agreement, arrangement or understanding made (or claimed
to have been made), or imposed (or claimed to have been imposed) by operation
of applicable law, in respect of the Assets.
"PROSPECTIVE EMPLOYEES" shall mean Xxxx Xxxxxx, Xxx Xxxxxx, Xxx
Xxxxxxxx, Xxxxx Xxxx and Xxxxx Xxxxxxx.
"PURCHASE DOCUMENT" and "PURCHASE DOCUMENTS" shall respectively
mean any one or more of this Agreement, the Conveyance Instruments, the
various other assignments, instruments and other documents creating or
evidencing the sale, assignment or other transfer or delivery of any Asset or
assumption of any Assumed Obligation, and all other agreements and documents
and all waivers, consents, reports, statements, certificates and schedules
executed by the requisite person(s) pursuant to or in connection with any of
the foregoing.
"PURCHASE PRICE shall have the meaning assigned to it in
SECTION 2.05 hereof.
"PURCHASER" shall have the meaning assigned to it in the
Introduction.
"REPRESENTATIVE" and "REPRESENTATIVES" of a referenced person
shall respectively mean any one or more of the affiliates of the referenced
person and the respective shareholders, directors, officers, employees,
consultants, agents and other representatives of the referenced person and
its affiliates.
"RESTRICTED PERIOD" shall have the meaning set forth in Section
5.05 hereof.
"SECURITIES" of any person shall mean equity securities and
debt securities, general or limited partnership interests, investment
contracts and any other instrument or interest commonly understood to be a
security issued by that person.
"SELLER" shall have the meaning assigned to it in the
Introduction.
"SOFTWARE" shall mean all computer software contained or used
in the Software Products, including without limitation, all Source Code
thereto, all related and all updated printed material and documentation with
respect thereto.
"SOFTWARE PRODUCTS" shall mean SiteMaster, SiteSweeper,
QuickSite, Webtools and SiteMarks.
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"SOURCE CODE" shall mean computer software code in human
readable, high-level language form which, when compiled or assembled, becomes
the executable object code of a software program, and shall include all
developer comments concerning the relevant code.
"TAX" shall mean any federal, state, local or foreign tax
(including, without limitation, any income tax, franchise tax, capital gains
tax, gross receipts tax, value-added tax, surtax, excise tax, ad valorem tax,
transfer tax, stamp tax, sales tax, use tax, property tax, inventory tax,
occupancy tax, withholding tax, payroll tax, gift tax, estate tax,
inheritance tax, employment tax, unemployment tax, social security tax,
services tax, value added tax, privilege tax, license tax, profits tax,
capital stock tax, severance tax, minimum tax, environmental tax, occupancy
tax or occupation tax), levy, assessment, tariff, impost, imposition, toll,
duty (including without limitation, any customs duty), deficiency or fee, and
any related charge or amount (including any fine, penalty or interest),
imposed, assessed or collected by or for any governmental authority,
including, without limitation, any liability therefor as a transferee
(including, without limitation, under Section 6901 of the Code or any
comparable applicable law), as a result of Treasury Regulation Section
1.1502-6 or any comparable applicable law, or pursuant to any tax-sharing
agreement or any other agreement, arrangement or understanding relating to
the sharing or payment of any such tax, levy, assessment, tariff, impost,
imposition, toll, duty, deficiency or fee.
"TAX RETURN" shall mean any return, declaration, report,
estimate, claim for refund or credit, or information return or statement, and
any amendment, supplement or modification thereto, together with any
supporting information and schedules, which is filed or required to be filed
under applicable law in connection with the determination, assessment,
collection or administration of any Tax or ERISA, whether on a consolidated,
combined, unitary or separate basis or otherwise.
ARTICLE II
PURCHASE OF ASSETS; PAYMENT
2.01 ASSETS TO BE TRANSFERRED. Upon the terms and subject to
the conditions set forth in this Agreement, and subject to the satisfaction
of the conditions precedent set forth in SECTION 2.08 (or the waiver thereof
by the Seller or the Purchaser, as applicable), at the Closing, the Seller
shall sell, assign, transfer, convey and deliver to the Purchaser, and the
Purchaser shall purchase and accept from the Seller, all right, title and
interest of the Seller or any subsidiary of the Seller, as the case may be,
in and to all of the following assets of Seller, together with all books and
records of the Seller pertaining primarily thereto (individually, an "ASSET",
and collectively, the "ASSETS"):
(a) the Software and the Software Products, files
specifications, design documents, user documentation,
change requests and defects lists, each as listed on
Schedule 2.01(a) hereto;
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(b) all marketing collateral materials, including, but not
limited to, brochures, data sheets, ad and editorial
reprints, web site content, and materials for the Software
and the Software Products, each as listed on Schedule
2.01(b) hereto;
(c) all reseller, consultant, customer and prospect lists,
sales contact management system database, Software and
licenses, customer support system database and forecasts
related to the Software and the Software Products, each as
listed on Schedule 2.01(c) hereto;
(d) Seller's file server relating to Source Code repository and
workstation and all configurations thereto (including the
hardware, Software and licenses), and all peripheral
equipment in primary use for the development of the
Software Products, all Software Product content for the
"xxxxxxxx.xxx" Web site and all applicable Software, each
as listed on Schedule 2.01(d) hereto;
(e) any and all Material Contracts, as listed in SCHEDULE
3.08(a) hereto;
(f) any and all trade names, trademarks, copyrights, trade
secrets and other intellectual and intangible properties
(whether or not registered) relating to the Assets
described in subsection (a) through (e) above, including,
without limitation, the "xxxxxxxx.xxx" Web site URL
("xxx.xxxxxxxx.xxx") and telephone and facsimile numbers
for the Seller's sales and support departments, each as
listed on Schedule 2.01(f) hereto; and
(g) any and all registration, licenses and permits (if
transferrable) related to the Assets described in
subsection (a) through (e) above, Developments,
Confidential Information and other general intangibles and
Documents of the Seller related thereto, and any and all
products and proceeds of and payments and other
distributions, accruing subsequent to the date of this
Agreement with respect to any and all of the foregoing
items as they relate to registrations, licenses and
permits, each as listed on Schedule 2.01(g) hereto.
2.02 EXCLUDED ASSETS. There shall be excluded from the Assets
transferred to the Purchaser hereunder all other assets of the Seller and
subsidiaries of the Seller not specifically listed as an Asset in Section 2.01
hereof (individually, an "EXCLUDED ASSET", and collectively, the "EXCLUDED
ASSETS") including, but not limited to:
(a) any and all leases and other interests of the Seller in
real estate, including all immovable fixtures affixed
thereto, and any and all other leases of equipment or other
assets;
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(b) the rights of the Seller under this Agreement, including
the right to receive the Purchase Price;
(c) all of the accounts receivable of the Seller for the
Software Products unpaid as of the Closing Date, and all
accounts, notes and trade receivables and other instruments
and chattel paper of the Seller;
(d) any and all of the Seller's minute books, tax returns,
accountants' work papers, and insurance policies not
expressly included in the Assets; and
(e) the assets and properties of Seller listed on Schedule
2.02(e) hereto.
2.03 ASSUMED OBLIGATIONS. At the Closing, the Purchaser shall
assume only those commitments of the Seller pertaining to the Assets as of
the Closing Date which are listed on Schedule 3.08(a) hereof (the "ASSUMED
OBLIGATIONS"), which shall thereafter be performed by the Purchaser when due
in accordance with the terms thereof. Furthermore, Purchaser shall be
responsible for all liabilities arising from the operation of the Assets and
the related business from and after the Closing Date. Seller shall use its
commercially reasonable efforts to obtain the consents, waivers and approvals
under any of the Material Contracts as may be required in connection with
this Agreement and the transactions contemplated hereby (all of such consents
and approvals are set forth in Schedule 2.03) so as to preserve all rights
of, and benefits to Seller thereunder, PROVIDED, HOWEVER, that in no event
shall Seller be required to make any payment to obtain such consent.
2.04 LIABILITIES NOT ASSUMED BY THE PURCHASER. Except as
otherwise expressly provided herein, the Purchaser has not, and shall not be
deemed or construed to have, in any way assumed or received the Assets
subject to, or in any way become liable or responsible for, any of the
liabilities or other obligations of the Seller or any affiliate of the Seller
(each, an "EXCLUDED LIABILITY", and collectively, the "EXCLUDED
LIABILITIES"), including, without limitation, the following:
(a) any liability or other obligation respecting the Seller's
lease, ownership, operation or use of any real estate;
(b) any liability or other obligation respecting any Product
Liability;
(c) any liability or other obligation for (i) any incomplete,
incorrect, expired or missing license, registration or
other permit required under any Environmental Law or other
applicable law, or (ii) any violation of any applicable
law, in each case respecting any act, omission, condition,
circumstance or other event occurring or existing on,
before or after the Closing Date and relating in any way to
(A) any of the Assets, (B) any of the other assets or
properties of the Seller or any of its affiliates, (C) the
import, procurement, storage, manufacture, use, shipment,
sale or disposal of any
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product or substance, or (D) any conduct of the Seller,
any affiliate of the Seller or any of their respective
Representatives;
(d) any liability or other obligation for any action, suit,
investigation or proceeding at law, in equity, in
arbitration or by or before any governmental authority
threatened, pending, decided or settled on, before or after
the Closing Date involving or affecting the Seller or any
Asset, whether or not disclosed;
(e) any liability or other obligation of the Seller under any
employment agreement or in respect of any Plan;
(f) any liability or other obligation for any Tax for which the
Seller is or may be liable subject to Section 7.05(b);
(g) any liability or other obligation to make any severance or
other payment to any employee who declines any offer of
employment from the Purchaser;
(h) any liability or other obligations of the Seller to
shareholders, officers, employees or other Representatives
of the Seller or any affiliate of the Seller; or
(i) any liability or other obligation of the Seller with
respect to the Excluded Assets.
2.05 PURCHASE PRICE AND PAYMENT.
(a) The aggregate purchase price for the Assets (the
"PURCHASE PRICE") shall be 750,000 newly issued and initially unregistered
shares (the "SHARES") of common stock of Purchaser, each having a par value
of $0.01 per share (the "COMMON STOCK"), as adjusted between the date hereof
and the Closing Date in case the Purchaser shall (i) declare or pay a
dividend in shares of Common Stock or make a distribution in shares of Common
Stock to holders of its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) issue
any shares of its capital stock in a reclassification of the Common Stock. If
the product (the "AGGREGATE CONSIDERATION") of (i) 750,000 (as adjusted) and
(ii) the average of the daily closing bid and ask price of the Common Stock
on the NASDAQ Small Cap Market for the five (5) days immediately preceding
the two (2) Business Days preceding the Closing Date (the "AVERAGE SHARE
PRICE") is less than $500,000 (the "MINIMUM THRESHOLD") or greater than
$1,500,000 (the "MAXIMUM THRESHOLD"), the Purchase Price shall be adjusted by
adding such number of Shares, if the Aggregate Consideration is less than the
Minimum Threshold, or subtracting such number of Shares, if the Aggregate
Consideration is greater than the Maximum Threshold, equal to (x) the
difference between the Minimum Threshold and the Aggregate Consideration or
the difference between the Aggregate
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Consideration and the Maximum Threshold, as the case may be, divided by (y)
the Average Share Price.
(b) The Purchase Price, as adjusted, shall be paid by the
delivery at the Closing (or as promptly as practical thereafter, but in any
event within five (5) Business Days) of stock certificates issued in the name
of the Seller and evidencing the Shares.
2.06 INTENTIONALLY OMITTED.
2.07 INSTRUMENTS OF CONVEYANCE. In order to effectuate the
transfer of the Assets contemplated by SECTION 2.01, upon request, the Seller
will execute and deliver, all such bills of sale, assignments and other
documents or instruments of assignment, transfer or conveyance as the
Purchaser shall reasonably deem necessary or appropriate to vest in or
confirm to the Purchaser good and marketable title to those Assets owned by
the Seller, in each case free and clear of all Liens, each in form and
substance reasonably satisfactory to the Purchaser.
2.08 CONDITIONS PRECEDENT.
(a) CONDITIONS TO THE OBLIGATIONS OF SELLER. The
obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment or waiver by Seller, on or before
the Closing, of the following conditions:
(i) CONSENTS. Purchaser shall have obtained those
consents of third parties listed on Schedule
2.08(a)(i) hereto.
(ii) INTERIM LICENSE AND CONSULTING AGREEMENT. The
Interim License and Consulting Agreement shall have
remained in full force and effect up to and
including the Closing Date unless terminated as a
result of a breach by Seller.
(iii) APPROVAL BY SHAREHOLDERS OF SELLER. The
shareholders of Seller shall have approved this
Agreement and the transactions contemplated hereby
in accordance with the voting requirements of
Seller's Articles of Incorporation, By-laws and
Chapters 12 and 13 of the California Corporations
Code.
(iv) REPRESENTATIONS AND WARRANTIES TRUE. All of the
representations and warranties of Purchaser
contained in this Agreement or in any certificate,
document or instrument delivered pursuant hereto or
in connection with the transactions contemplated
hereby shall be complete and correct in all material
respects on and as of the date hereof and on and as
of the Closing Date as if made on and as of such
date, except with respect to those representations
and warranties specifically made as of an earlier
date in which case such
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representations and warranties shall be true and
correct in all material respects as of such earlier
date.
(v) COVENANTS AND AGREEMENTS PERFORMED. Purchaser shall
have performed or complied in all material respects
with or delivered in all material respects all
covenants, agreements, conditions or documents
required by this Agreement to be performed, complied
with or delivered by Purchaser prior to or at the
Closing.
(vi) OPINION OF COUNSEL TO PURCHASER. Purchaser shall
have delivered to Seller the opinion of Xxxxxx
Xxxxxx Flattau & Klimpl, LLP, counsel to Purchaser,
dated as of the date hereto, in the form attached
hereto as Exhibit A.
(vii) OTHER DOCUMENTS. Purchaser shall have delivered all
such certified resolutions, certificates, documents
and instruments with respect to Purchaser (including
instruments of assumption) as Seller and its counsel
may reasonably request prior to the Closing to carry
out the intent and purpose of this Agreement.
(viii) NO ACTIONS, SUITS OR PROCEEDINGS. No action, suit
or proceeding shall be pending before any court,
governmental body or other authority to restrain or
prohibit this Agreement or the consummation of the
transactions contemplated hereby.
(ix) OFFICERS' CERTIFICATE. Seller shall have been
furnished with a certificate executed on behalf of
Purchaser by its President or a Vice President, and
a Secretary or an Assistant Secretary, dated the
date hereof, certifying, in such detail as Seller
may reasonably request, that (a) the conditions set
forth in Section 2 of this Agreement have been
fulfilled at or prior to the date hereof (including
as of the Closing Date Section 2.08(a)(iv) hereof.
(x) ASSUMPTION OF CONTRACTS AND OTHER ASSUMED
OBLIGATIONS. Purchaser shall have executed and
delivered to Seller such instruments of assumption
as Seller and its counsel may reasonably request in
order to assume the Assumed Obligations.
(b) CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The
obligations of Purchaser to consummate the transactions contemplated by this
Agreement are subject to the fulfillment or waiver by Purchaser, on or before
the Closing, of the following conditions:
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(i) CONSENTS. Seller shall have obtained those consents
of third parties listed on Schedule 2.08 (b)(i)
hereto.
(ii) INTERIM LICENSE AND CONSULTING AGREEMENT. The
Interim License and Consulting Agreement shall have
remained in full force and effect up to and
including the Closing Date unless terminated as
result of a material breach by Purchaser.
(iii) REPRESENTATIONS AND WARRANTIES TRUE. All of the
representations and warranties of Seller contained
in this Agreement or in any certificate, document or
instrument delivered pursuant hereto or in
connection with the transactions contemplated hereby
shall be complete and correct in all material
respects on and as of the date hereof as if made on
and as of the date hereof, except with respect to
those representations and warranties specifically
made as of an earlier date, in which case such
representations and warranties shall be complete and
correct in all material respects as of such earlier
date.
(iv) COVENANTS AND AGREEMENTS PERFORMED. Seller shall
have performed in all material respects or complied
in all material respects with or delivered all
covenants, agreements, conditions or documents
required by this Agreement to be performed, complied
with or delivered by Seller prior to or at the
Closing.
(v) OPINION OF COUNSEL TO SELLER. Seller shall have
delivered to Purchaser the opinion of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, counsel
for Seller, dated the Closing Date, in the form
attached hereto as Exhibit B.
(vi) OTHER DOCUMENTS. Seller shall have delivered all
such certified resolutions, certificates, documents
or instruments with respect to Seller as Purchaser
may reasonably request prior to the Closing to carry
out the intent and purpose of this Agreement.
(vii) NO ACTIONS, SUITS OR PROCEEDINGS. No action, suit
or proceeding shall be pending before any court,
governmental body or other authority to restrain or
prohibit this Agreement or the consummation of the
transactions contemplated hereby.
(viii) INSTRUMENT OF CONVEYANCE. Seller shall have
executed and delivered to Purchaser such instruments
of conveyance as Purchaser may reasonably request to
transfer and vest in Purchaser good and valid title
to the Assets.
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(ix) NO CHANGES. During the period from the date hereof
to the Closing Date, there shall not have been any
material adverse change in the Assets (except due to
Purchaser's action or failure to act) where such
change would have a Material Adverse Effect.
(x) OFFICERS' CERTIFICATE. Purchaser shall have been
furnished with a certificate executed on behalf of
Seller by its President or a Vice President, and
Secretary or Assistant Secretary, dated the Closing
Date, certifying, in such detail as Purchaser may
reasonably request, that the conditions set forth in
Section 2 of this Agreement have been fulfilled at
or prior to the date hereof, (including as of the
Closing Date, Section 2.08(b)(iii))
2.09 CLOSING. Subject to Section 7.02(b), the closing of the
purchase and sale of the Assets shall take place at the offices of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx, within five (5) days after Seller's shareholders approve
this Agreement and the transactions contemplated hereby, or at such other
time as the parties may mutually agree in writing (such time and date being
referred to herein as the "CLOSING DATE").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The disclosures contained in the Schedules hereto for any
paragraph shall qualify each other paragraph contained in this Article III as
it relates to the subject matter of each such other paragraph. Any reference
in this Article III to an agreement being "enforceable" shall be deemed to be
qualified to the extent such enforceability is subject to (i) laws of general
application relating to bankruptcy, insolvency, moratorium and the relief of
debtors, and (ii) the availability of specific performance, injunctive relief
and other equitable remedies. To induce the Purchaser to enter into this
Agreement and the other Purchase Documents to which it is a party and to
purchase the Assets, the Seller hereby represents and warrants to the
Purchaser, as the date hereof and as of the Closing Date (except as otherwise
expressly provided below or on the Schedules attached hereto and
corresponding to the Section numbers contained in this Article III), that:
3.01 ORGANIZATION, POWERS, ETC. The Seller: (a) is duly
organized, validly existing and in good standing under the laws of the State
of California, its state of organization; (b) has the power and authority to
carry on its business as now conducted and to own or hold under lease the
assets and properties it purports to own or hold under lease; (c) is duly
qualified, licensed or registered to transact its business and in good
standing in every jurisdiction in which failure to be so qualified, licensed
or registered would have a Material Adverse Effect; (d) has the power and
authority to execute and deliver this Agreement and each of the other
Purchase Documents to which
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it is or will be a party and to perform all of its obligations hereunder and
thereunder; and (e) currently conducts its business exclusively under the
name set forth in the Introduction at its chief executive office and
principal place of business located in Scotts Valley, California.
3.02 AUTHORIZATION, CONFLICTS AND VALIDITY. The execution
and delivery by the Seller of this Agreement and each of the other Purchase
Documents to which it is or will be a party and the performance by the Seller
of all of its obligations hereunder and thereunder: (a) have been duly
authorized by all requisite corporate action; (b) will not violate or be in
conflict with any term or provision of (i) any applicable law, (ii) any
judgment, order, writ, injunction, decree or consent of any court or other
judicial authority, or (iii) any Corporate Document; (c) will not violate, be
in conflict with, result in a breach of or constitute a default (with or
without the giving of notice or the passage of time or both) under any term
or provision of any Material Document; and (d) will not result in the
creation or imposition of any material Lien of any nature upon any of the
Assets, except in each case (other than (b)(iii)) that would not individually
or in the aggregate have a Material Adverse Effect. This Agreement is, and
the other Purchase Documents to which the Seller is or will be a party when
executed and delivered will be, legal, valid and binding obligations of the
Seller, enforceable in accordance with their respective terms and provisions.
3.03 CONSENTS, ETC. Except as set forth on Schedule 3.03
hereto, no material consent, approval or authorization of, or registration,
declaration or filing with, or notice to, any governmental authority,
creditor or other person that has not been duly and timely obtained or made
(including, without limitation, the consent of the shareholders of the
Seller, but not including any filings and notices under applicable bulk sales
laws, which under applicable law is the responsibility of the Purchaser) is
required as a condition precedent, concurrent or subsequent to or in
connection with the due and valid execution, delivery and performance by the
Seller of this Agreement or any other Purchase Document to which the Seller
is or will be a party or the legality, validity, binding effect or
enforceability of any of their respective representations, warranties,
covenants and other terms and provisions.
3.04 LITIGATION. Except as set forth on Schedule 3.04
hereto, there are no actions, suits, investigations or proceedings (whether
or not purportedly on behalf of the Seller) pending or to the knowledge of
Seller, threatened at law, in equity, in arbitration or by or before any
other governmental authority involving or affecting: (a) the Seller; (b) any
Corporate Document; (c) any part of the Assets, including, without
limitation, any proprietary Software and its underlying Source Code; (d) any
of the Assumed Obligations; or (e) any of the transactions contemplated in
this Agreement and the other Purchase Documents that, if adversely
determined, would have a Material Adverse Effect. The Seller is not in
default with respect to any judgment, order, writ, injunction, decree or
consent of any court or other judicial authority, which default would have or
has had a Material Adverse Effect.
3.05 COMPLIANCE WITH APPLICABLE LAWS. The Seller is in
material compliance with and conforms to all material applicable laws. The
procurement, storage, containment, presence, manufacture, distribution,
removal and disposition of all inventory and substances and the use and
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operation of all assets and properties (including, without limitation,
machinery, equipment, real estate and improvements), as now or previously
existing, as now or previously conducted by or for the Seller, or as
contemplated, are in full compliance with and conform to all applicable laws
except as would not have a Material Adverse Effect.
3.06 PAYMENT OF DEBTS AND TAXES. Except as set forth on
Schedule 3.06 hereto, and to the extent to which the failure to do so would
have a Material Adverse Effect, the Seller: (a) has duly and timely filed
all required Tax Returns with the appropriate taxing authorities, which Tax
Returns are true, correct and complete in all material respects; (b) has
duly and timely paid or caused to be paid all Taxes for which the Seller is
or may be liable as shown on those Tax Returns; (c) has made full provision
for the payment of all Taxes that have accrued but which were not due and
payable on or before the Closing Date; and (d) has duly and timely withheld
or collected and paid over to the appropriate taxing authorities all Taxes
required to have been withheld or collected and paid over by it. To the
extent to which the failure to do so would have a Material Adverse Effect, no
adjustment relating to any such Tax Return has been proposed formally or
informally by any taxing authority or any representative thereof, and there
is no request for information currently outstanding that could affect any Tax
for which the Seller is or may be liable or to which any of the Assets or the
Business may be subject. To the Seller's knowledge, there is no pending
audit, examination, investigation, action or other proceeding relating to the
assessment or allocation of any Tax for which any of the Assets may be
subject and to the Seller's knowledge, no such audit, examination,
investigation, action, proceeding, adjustment or request has been threatened.
There is no outstanding waiver or agreement that extends the statute of
limitations for any period with respect to the assessment or collection of
any Tax for which the Seller is or may be liable relating to any of the
Assets. There is no Tax Lien on any of the Assets. The Seller is current in
its payment of debts and performance of obligations with respect to the
Assets (other than Taxes), except to the extent payment or performance is not
or would not yet be required under applicable law and except to the extent
failure to so pay or perform would not have a Material Adverse Effect.
3.07 TITLE TO ASSETS, ENCUMBRANCES, ETC. The Seller or its
subsidiaries owns and has good valid title to all of the Assets, and no part
of the Assets is subject to any Lien of any kind whatsoever except Permitted
Liens (as defined below). There are no claims of third parties that would
prevent any assignee or purchaser of all or any portion of the Assets from
receiving any payments, distributions and proceeds with respect thereto, if
any, without any defense, counterclaim, set-off, right of recoupment,
abatement or other claim or determination whatsoever, except (i) the lien of
current taxes not yet due and payable, (ii) such imperfections of title,
liens and easements as do not and will not materially detract from or
interfere with the use of the Assets, or otherwise materially impair the
Assets and (iii) liens securing debt or royalty payment obligations that are
disclosed to Purchaser ("PERMITTED LIENS").
3.08 MATERIAL CONTRACTS AND OTHER AGREEMENTS.
(a) SCHEDULE 3.08(a) hereto contains a complete and accurate
list of each Material Contract.
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(b) The Seller has made available to the Purchaser true,
complete and correct copies (and, on the Closing Date, will deliver to the
Purchaser all originals in its possession) of all current and proposed
Material Contracts, including all supplements, modifications, amendments and
restatements respecting each made to date or proposed. There are no
renegotiations of, or attempts to renegotiate, or outstanding rights to
renegotiate, any material amounts paid or payable to the Seller under current
or completed contracts, agreements, or commitments with any person having the
contractual or statutory right to demand or require such renegotiation. To
Seller's knowledge, no such person has made written demand for such
renegotiation.
(c) Except as set forth in Schedule 3.08(c) hereto, each
Material Contract fully reflects all agreements and understandings with the
signer with respect thereto, and is assignable to the Purchaser in accordance
with the terms and provisions hereof and thereof. No condition exists or
event has occurred that, with notice or lapse of time or both, would
constitute a default by Seller or to Seller's knowledge, the other party
thereto, under any of the foregoing.
3.09 EMPLOYEES. SCHEDULE 3.09 hereto contains a complete and
accurate current list of each Prospective Employee, specifying for each: (a)
name; (b) job title; (c) existence and date of any employment or other
agreement; (d) current compensation paid or payable and showing any change in
compensation since January 1, 1998; (e) vacation accrued; (f) all benefits
and other entitlements; and (g) ownership interest in the Seller.
3.10 INTELLECTUAL PROPERTY.
(a) Except as set forth on Schedule 3.10, Seller is the sole
and exclusive owner, with all right, title and interest in and to (free and
clear of any liens or encumbrances), or has a right to use (and is not
contractually obligated to pay any compensation to any third party in respect
thereof), the patents, trademarks, trade names, service marks, copyrights,
and any applications, therefor listed in Schedule 3.10, and net lists,
schematics, technology, know-how, computer Software programs or applications
(in both source code and object code form), and tangible or intangible
proprietary information or material that are, in each case, used with respect
to the Assets by the Seller as currently conducted (the "SITE INTELLECTUAL
PROPERTY RIGHTS").
(b) Schedule 3.10 sets forth a complete list of all patents,
registered and material unregistered trademarks, registered copyrights, trade
names and service marks, and any applications therefor, included in the Site
Intellectual Property Rights, and specifies, where applicable, the
jurisdictions in which each such Site Intellectual Property Right has been
issued or registered or in which an application for such issuance and
registration has filed, including the respective registration or application
numbers and the names of all registered owners.
(c) Except as set forth in Schedule 3.10, no claims with
respect to Site Intellectual Property Rights have been asserted or are
threatened by any person, (i) to the effect that the manufacture, sale,
licensing or use of any products relating to the Assets infringes on any
copyright,
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patent, trade xxxx, service xxxx, trade secret or other proprietary right of
others, (ii) against the use by Site of any trademarks, service marks, trade
names, trade secrets, copyrights, maskworks, patents, technology, know-how or
computer Software programs and applications relating to the Assets, or (iii)
challenging the ownership by Site or the validity or effectiveness of any of
Site Intellectual Property Rights. To Seller's knowledge, except as set forth
in the Schedule 3.10, Seller has not infringed as it relates to the Assets
any copyright, patent, trademark, service xxxx, trade secret or other
proprietary right of any third party. To Seller's knowledge, except as set
forth in the Schedule 3.10, there is no material unauthorized use,
infringement or misappropriation of any of Site Intellectual Property Rights
by any third party, including any employee or former employee of Seller
relating to the Assets. No Site Intellectual Property Right or product of
Seller is subject to any outstanding decree, order, judgment, or stipulation
restricting in any manner the licensing thereof by Seller.
(d) Seller has taken reasonable efforts to ensure that each
employee, consultant or contractor of Seller given access to proprietary and
confidential information of Seller as it relates to the Assets has executed a
proprietary information and confidentiality agreement substantially in
Seller's standard forms and Seller is not aware of any person who has not
executed such an agreement. All Software Products included in the Site
Intellectual Property Rights are either commercially available Software
subject to shrinkwrap license or original with Seller and has been either
created by employees of Seller on a work-for-hire basis or by consultants or
contractors who have created such Software themselves and have assigned all
rights they may have had in such Software to Seller.
3.11 ABSENCE OF CERTAIN EVENTS. Except as set forth on
Schedule 3.11, from the date hereof to the Closing Date, Seller has not in
connection with the Assets:
(a) mortgaged, pledged or subjected to any Lien any of the
Assets;
(b) other than the transactions contemplated by this
Agreement and the other Purchase Documents, disposed of any Assets, or
entered into any agreement or other arrangement for any such disposition;
(c) other than the transactions contemplated by this
Agreement and the other Purchase Documents, granted any rights or licenses
under any of its Intellectual Properties included in the Assets or entered
into any licensing or distributorship arrangements with respect thereto; or
(d) entered into any agreement or committed to take any
action set forth in subsections (a) through (c) of this Section 3.11.
3.12 SUPPLIERS AND CUSTOMERS. Schedule 3.12 hereto sets
forth a complete and correct list of the ten (10) largest suppliers and/or
vendors and ten (10) largest customers of Seller with respect to the Software
Products (other than customers of distributors).
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3.13 INSURANCE. Schedule 3.13 sets forth a brief description
(showing the policy number, name of carrier, coverage, deductible amounts,
term, expiration date and annual premium) of all policies of fire, casualty,
liability and other forms of insurance owned by or for the benefit of the
Seller and relating to the Assets, and all self-insurance programs maintained
for the Assets. All such policies are in full force and effect, all premiums
due thereon have been paid in full, and are adequate in amount, scope and
coverage to protect the Seller against any Loss (less the deductible set
forth on Schedule 3.13 with respect to such policy) in connection with the
Assets.
3.14 BROKERS. Except as payable to Alliant Partners, Seller
has not paid or become obligated to pay any fee or commission to any broker,
finder, investment banker or other intermediary in connection with this
Agreement or the transactions contemplated hereby.
3.15 NO MISREPRESENTATION BY THE SELLER, DISCLOSURE, ETC. No
representation or warranty of the Seller made or contained in this Agreement
or any other Purchase Document, and no report, statement, certificate,
schedule or other document or information furnished or to be furnished by or
on behalf of the Seller in connection with the transactions contemplated by
this Agreement and the other Purchase Documents, contains or will contain a
misstatement of a material fact or omits or will omit to state a material
fact required to be stated therein in order to make it, in the light of the
circumstances under which made, not misleading. Except as specifically
disclosed in this Agreement or in Seller's public disclosure documents filed
with the Securities and Exchange Commission, there is no fact known to the
Seller with specific application to the Assets or the Assumed Obligations
(other than general economic or industry conditions) that will or, so far as
the Seller can reasonably foresee, would have a Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
To induce the Seller to enter into this Agreement and the other
Purchase Documents to which it is a party and to sell the Assets, the Purchaser
hereby represents and warrants to the Seller, as of the date hereof and as of
the Closing Date (express as otherwise expressly provided below) that:
4.01 ORGANIZATION, POWERS, ETC. The Purchaser: (a) is duly
organized, validly existing and in good standing under the laws of the State
of Delaware, its state of incorporation; (b) has the power and authority to
carry on its business as now conducted and to own or hold under lease the
assets and properties it purports to own or hold under lease; (c) is duly
qualified, licensed or registered to transact its business and in good
standing in every jurisdiction in which failure to be so qualified, licensed
or registered would have a Material Adverse Effect; (d) has the power and
authority to execute and deliver this Agreement and each of the other
Purchase Documents to which it is or will be a party and to perform all of
its obligations hereunder and thereunder; and (e) conducts its business
exclusively under the name and at the executive office and principal place of
business at the address set forth in the Introduction and has done so since
the date of its incorporation.
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4.02 AUTHORIZATION, CONFLICTS AND VALIDITY. The execution
and delivery by the Purchaser of this Agreement and each of the other
Purchase Documents to which it is or will be a party and the performance by
the Purchaser of all of its obligations hereunder and thereunder: (a) have
been duly authorized by all requisite corporate action; and (b) will not
violate or be in conflict with any term or provision of (i) any applicable
law, (ii) any judgment, order, writ, injunction, decree or consent of any
court or other judicial authority, or (iii) any of its charter or by-laws.
This Agreement is, and the other Purchase Documents to which the Purchaser is
or will be a party when executed and delivered will be, legal, valid and
binding obligations of the Purchaser, enforceable in accordance with their
respective terms and provisions.
4.03 SHARES. Each of the Shares is duly authorized, validly
issued, fully paid, non-assessable, will not be subject to any preemptive or
other statutory right of stockholders, will be issued in compliance with
applicable U.S. Federal and state securities laws and will be free of any
liens or encumbrances other than any liens or encumbrances created by or
imposed upon the holders hereof.
4.04 LITIGATION. There are no actions, suits, investigations
or proceedings (whether or not purportedly on behalf of the Purchaser)
pending or, to the knowledge of Purchaser, threatened or contemplated at law,
in equity, in arbitration or by or before any other governmental authority
involving of affecting the Purchaser that, if adversely determined, would
have a Material Adverse Effect, nor, to the knowledge of Purchaser, is there
any basis for the institution of any such action, suit, investigation or
proceeding. The Purchaser is not in default with respect to any judgment,
order, writ, injunction, decree or consent of any court or other judicial
authority, which default would have a Material Adverse Effect.
4.05 SEC FILINGS. The Purchaser has filed with the
Securities and Exchange Commission all reports, schedules, forms, statements
and other documents required by the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, to be filed by the Purchaser
since January 1, 1995 (collectively, and in each case including all exhibits
and schedules thereto and documents incorporated by reference therein, the
"PURCHASER SEC DOCUMENTS"). As of their respective dates, except to the
extent revised or superseded by a subsequent filing with the Securities and
Exchange Commission on or before the date of this Agreement, the Purchaser
SEC Documents filed by the Purchaser complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may
be, and none of the Purchaser SEC Documents (including any and all financial
statements included therein) filed by the Purchaser as of such dates
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Purchaser and
its consolidated Subsidiaries included in the Purchaser SEC Documents,
including any amendments thereto, are complete, accurate and fairly present
the Purchaser's financial condition as of the date thereof and the results of
its operations for the periods covered thereby comply as to form in all
material respects with applicable accounting requirements (including GAAP
consistently
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applied during such periods) and the published rules and regulations of the
Securities and Exchange Commission with respect thereto. The Purchaser has
filed with the Securities and Exchange Commission as exhibits to the
Purchaser SEC Documents all agreements, contracts and other documents or
instruments required to be so filed, and such exhibits are true and complete
copies of such agreements, contracts and other documents or instruments, as
the case may be.
4.06 TAX RETURNS AND AUDITS. Purchaser and each of its
subsidiaries have timely filed all Tax Returns required to be filed by
Purchaser and each of its subsidiaries with any Tax authority since January
1, 1995, except such Tax Returns which are not material to Purchaser, and
have paid all Taxes shown to be due on such Tax Returns on a timely basis.
There is no Tax deficiency outstanding, proposed in writing (or otherwise to
Purchaser's knowledge proposed) or assessed against Purchaser or any of its
subsidiaries, nor has Purchaser or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax. No audit or other examination of
any Tax Return of Purchaser or any of its subsidiaries by any Tax authority
is presently in progress, nor has Purchaser or any of its subsidiaries been
notified in writing (or otherwise to Purchaser's knowledge notified) of any
request for such an audit or other examination. No adjustment relating to
any Tax Returns filed by Purchaser or any of its subsidiaries has been
proposed in writing by any Tax authority to Purchaser or any of its
subsidiaries. Neither Purchaser nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved in
accordance with GAAP on Purchaser's financial statements (or in any Purchaser
SEC Report filed prior to the date hereof, or for liabilities accruing
following the date hereof, in any Purchaser SEC Report filed prior to the
date of the Closing), whether asserted or unasserted, contingent or
otherwise, which is material to Purchaser, other than any liability for
unpaid Taxes that may have accrued since January 1, 1995 in connection with
the operation of the business of Purchaser and its subsidiaries in the
ordinary course. Neither Purchaser nor any of its subsidiaries is party to,
or has any obligation under, or will have any obligation as a result of the
transactions contemplated hereby under, any tax-sharing, tax indemnity or tax
allocation agreement or arrangement. Neither Purchaser nor any of its
subsidiaries is a party to (A) any foreign Tax holidays, (B) any intercompany
transfer pricing agreements, or other arrangement that have been established
by Purchaser or any of its subsidiaries with any Tax authority and (C) any
expatriate programs or policies affecting Purchaser or any of its
subsidiaries.
4.07 CONSENTS, ETC. No consent, approval or authorization
of, or registration, declaration or filing with, or notice to, any
governmental authority, creditor or other person that has not been duly and
timely obtained or made (including, without limitation, any filings and
notices under applicable laws, including bulk sales laws) is required as a
condition precedent, concurrent or subsequent to or in connection with the
due and valid execution, delivery and performance by the Purchaser, of this
Agreement or any other Purchase Document to which the Purchaser is or will be
a party or the legality, validity, binding effect or enforceability of any of
their respective representations, warranties, covenants and other terms and
provisions.
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4.08 ABSENCE OF CHANGE. Since June 30, 1998, except as
disclosed in Purchaser's SEC Documents prior to the date hereof, there has
not occurred a Material Adverse Effect on Purchaser.
ARTICLE V
INDEMNIFICATION AND CERTAIN OTHER CONTINUING OBLIGATIONS
5.01 INDEMNIFICATION BY THE SELLER.
(a) During the one (1) year period following the Closing
Date, the Purchaser and each of its affiliates, and their respective
accountants, attorneys and other Representatives (individually, a
"PURCHASER'S INDEMNIFIED PERSON", and collectively, the "PURCHASER'S
INDEMNIFIED PERSONS") are each hereby indemnified, and shall be reimbursed
and held harmless on demand, by the Seller, upon demand in accordance with
this Article V (with indemnity made first from the Escrow Fund), and (at the
request of the Purchaser) defended at the reasonable expense of the Seller,
with one counsel reasonably selected by the Purchaser, from and against any
and all Losses (excluding, however, the disbursements, expenses and fees of
their respective attorneys) imposed upon, incurred by or asserted against any
of the Purchaser's Indemnified Persons resulting from, arising out of or
directly or indirectly related to: (i) any Excluded Liability; (ii) any
inaccuracy in or omission from any representation, warranty or other
information contained in this Agreement or any other Purchase Document or
contained in any certificate, report, statement, schedule or other document
or information furnished in connection therewith; (iii) any default (whether
in whole or in part) in the due or timely observance, performance or
satisfaction of any covenant or other term or provision of this Agreement or
any other Purchase Document by the Seller and (iv) any third party copyright,
trademark or patent infringement action with respect to the Software Products
and Software related to periods or actions prior to the Closing Date.
(b) INDEMNIFICATION BY THE PURCHASER. During the one (1)
year period following the Closing Date, the Seller and each of its
affiliates, and their respective accountants, attorneys and other
Representatives (individually, a "SELLER'S INDEMNIFIED PERSON", and
collectively, the "SELLER'S INDEMNIFIED PERSONS") are each hereby
indemnified, and shall be reimbursed and held harmless on demand, by the
Purchaser, upon demand, and (at the request of the Seller) defended at the
reasonable expense of the Purchaser, with one counsel reasonably selected by
the Seller, from and against any and all claims, liabilities, expenses
(excluding, however, the disbursements, expenses and fees of their respective
attorneys) and other Losses that may be imposed upon, incurred by or asserted
against any of the Seller's Indemnified Persons resulting from, arising out
of or directly or indirectly related to: (i) any inaccuracy in or omission
from any representation, warranty or other information contained in this
Agreement or any other Purchase Document or contained in any certificate,
report, statement, schedule or other document or information furnished in
connection therewith; (ii) any default (whether in whole or in part) in the
due or timely observance, performance or satisfaction of any covenant or
other term or provision of this Agreement or any other Purchase Document by
the Purchaser; and (iii) any Assumed Liability.
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5.02 LIMITATIONS ON AMOUNT.
(a) The Seller shall have no liability for indemnification
with respect to any Loss based upon Section 5.01 hereof until the aggregate
of all Losses exceeds $100,000 (the "LIABILITY THRESHOLD"). Then if the
Liability Threshold is exceeded, the Seller shall be responsible for all
Losses from the first dollar of Loss, without regard to the Liability
Threshold. Notwithstanding anything to the contrary in this Agreement, the
Seller shall have no liability for indemnification to the extent that the
aggregate amount of all Losses with respect to such matters exceeds an amount
equal to fifty percent (50%) of the product of (i) the Purchase Price, as
adjusted pursuant to Section 2.05(a) hereof, and (ii) the Average Share Price
(as defined in Section 2.05(a), (the "INDEMNIFICATION LIMIT"). At Seller's
sole discretion, any and all claims for Losses by Purchaser's Indemnified
Persons shall be satisfied by (i) the delivery of that number of
Indemnification Shares (as defined in Section 5.03(a)) equal to (a) the
amount of Loss divided by (b) the Average Share Price, (ii) a cash payment
equal to the amount of Loss, or (iii) a combination of (i) and (ii) above.
(b) Notwithstanding anything to the contrary set forth in
Section 5.02(a) hereof, the limitations set forth in Section 5.02(a) shall
not apply to any claim by the Purchaser or other Purchaser's Indemnified
Person with respect to a claim for indemnification with respect to (i) the
representations or warranties set forth in Section 3.02; or (ii) any claim
for indemnification based upon fraud.
5.03 INDEMNIFICATION HOLDBACK.
(a) 250,000 Shares (prior to any adjustment pursuant to
Section 2.05(a)) shall be placed in an escrow account (the "ESCROW FUND")
with Greater Bay Trust Company (the "ESCROW AGENT") following the Closing to
be available for indemnification claims pursuant to Section 5.01, if any (the
"INDEMNIFICATION SHARES") for a period not to exceed three hundred sixty
(360) days following the Closing (the "ESCROW PERIOD"), except as otherwise
provided below. One hundred eighty (180) days after the Closing, 125,000
Shares (less the number of any Shares paid or claimed to be payable in
connection with any claim pursuant to Section 5.01) shall be released from
escrow, and three hundred sixty (360) days after the Closing, the remaining
Shares shall be released from escrow. Notwithstanding the foregoing, to the
extent insufficient shares remain in escrow, Seller shall meet its
responsibilities pursuant to Sections 5.01 and 5.02 to indemnify the
Purchaser's Indemnified Person's with timely cash payments in any amount or
amounts up to and including the Indemnification Limit. Furthermore, existence
of the Escrow Fund shall be extended in an amount equal to that portion of
the Escrow Fund which, in the reasonable judgment of Purchaser, subject to
the objection of Seller and the subsequent arbitration of the matter in the
manner provided in Section 5.03(d) hereof, is necessary to satisfy any
unsatisfied claims specified in any Officer's Certificate (as defined below)
theretofore delivered to the Escrow Agent prior to the end of the Escrow
Period (which amount shall remain in the Escrow Fund until such claims have
been
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resolved). As soon as all such claims have been resolved, the Escrow Agent
shall deliver to Seller the remaining portion of the Escrow Fund not required
to satisfy such claims.
(b) The Escrow Agent shall hold and safeguard the Escrow
Fund during the Escrow Period, shall treat such fund as a trust fund in
accordance with the terms of this Agreement and not as the property of
Purchaser and shall hold and dispose of the Escrow Fund only in accordance
with the terms hereof.
(c) Upon receipt by the Escrow Agent at any time on or
before the last day of the Escrow Period of a certificate signed by any
officer of Purchaser (an "OFFICER'S CERTIFICATE"): (A) stating that Purchaser
has incurred and paid or properly accrued Losses, or reasonably anticipates
that it may have to pay or accrue Losses, and (B) specifying in reasonable
detail the individual items of Losses included in the amount so stated, the
date each such item was incurred and paid or properly accrued, or the basis
for such anticipated liability, and the nature of the misrepresentation,
breach of warranty or claim to which such item is related, the Escrow Agent
shall, subject to the provisions of Sections 5.01 and 5.02 hereof and this
Section 5.03, deliver to Purchaser out of the Escrow Fund, as promptly as
practicable, such amounts held in the Escrow Fund equal to such Losses.
Purchaser shall submit an Officer's Certificate only in good faith.
(d) At the time of delivery of any Officer's Certificate to
the Escrow Agent, a duplicate copy of such certificate shall be delivered to
Seller, and for a period of thirty (30) days after such delivery the Escrow
Agent shall make no delivery to Purchaser of any Escrow Amount specified in
such Officer's Certificate unless the Escrow Agent shall have received
written authorization from the Seller to make such delivery. After the
expiration of such thirty (30) day period, the Escrow Agent shall make
delivery of an amount from the Escrow Fund in accordance with such Officer's
Certificate and Section 5.03(c) hereof, PROVIDED, THAT, no such payment or
delivery may be made if Seller shall object in a written statement to the
claim made in the Officer's Certificate, and such statement shall have been
delivered to the Escrow Agent prior to the expiration of such thirty (30) day
period. Seller shall only submit an objection in good faith.
(e) (i) In case Seller shall so object in writing to any
claim or claims made in any Officer's Certificate, Seller and Purchaser shall
attempt in good faith to agree upon the rights of the respective parties with
respect to each of such claims. If Seller and Purchaser should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties and shall be furnished to the Escrow Agent. The Escrow Agent shall
be entitled to rely on any such memorandum signed by Purchaser and Seller and
distribute amounts from the Escrow Fund in accordance with the terms thereof.
(ii) If no such agreement can be reached after good
faith negotiation, either Purchaser or Seller may demand arbitration of the
matter unless the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration shall not be
commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by
arbitration conducted by one arbitrator. Purchaser and Seller shall each
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select one arbitrator, and the two arbitrators so selected shall select a
third arbitrator (who shall be affiliated with a Big Six accounting firm or a
successor thereto) (the "ARBITRATOR"). The Arbitrator shall, within ten (10)
business days after the last day of any hearings on any motion, issue a
definitive ruling on such motion. The Arbitrator shall also, within twenty
(20) business days from the last day of any hearings regarding the issuance
of any awards, issue a definitive ruling on the issuance of any such award in
such arbitration. The Arbitrator shall also establish procedures designed to
reduce the cost and time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the Arbitrator, to discover
relevant information from the opposing parties about the subject matter of
the dispute. The Arbitrator shall also rule upon motions to compel or limit
discovery and shall have the authority to impose sanctions, including
attorneys fees and costs, to the extent as a court of competent law or
equity, should the Arbitrator determine that discovery was sought without
substantial justification or that discovery was refused or objected to
without substantial justification. The decision of the Arbitrator as to the
validity and amount of any claim in such Officer's Certificate shall be
binding and conclusive upon the parties to this Agreement, and
notwithstanding anything in Section 5.03(f) hereof, the Escrow Agent shall be
entitled to act in accordance with such decision and make or withhold
payments out of the Escrow Fund in accordance therewith. Such decision shall
be written and shall be supported by written findings of fact and conclusions
which shall set forth the award, judgment, decree or order awarded by the
Arbitrator.
(iii) In no event may punitive or exemplary damages be
awarded in any arbitration, and arbitration between the parties shall be
final and binding. Judgment upon any award rendered by the Arbitrator may be
entered in any court having jurisdiction. Any such arbitration shall be held
in Santa Xxxxx County, California under the Commercial Rules then in effect
of the American Arbitration Association. Each party to any arbitration
pursuant to this Section 5.03(e) shall pay its own expenses; the fees of each
arbitrator and the administrative fee of the American Arbitration Association
shall be borne equally by Purchaser, on the one hand, and Seller, on the
other.
(f) For any third party claim which Purchaser believes may
result in a demand against the Escrow Fund, Purchaser shall promptly notify
Seller of such claim, and Seller shall be entitled, at Seller's expense, to
participate in any defense of such claim, and to the extent Seller wishes, to
assume the defense of such claim with counsel satisfactory to Purchaser and,
after notice from Seller to Purchaser of Seller's election to assume the
defense of such claim, the Seller will not, as long as it diligently conducts
such defense, be liable to Purchaser for any fees or other counsel or any
other expenses with respect to the defense of such claim.
(g) The Escrow Agent's duties shall be as follows:
(i) The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set
forth herein, and as set forth in any additional
written escrow instructions which the Escrow Agent
may receive after the date of this Agreement which
are signed by an
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officer of Purchaser and Seller, and may rely
and shall be protected in relying or refraining
from acting on any instrument reasonably
believed to be genuine and to have been signed
or presented by the proper party or parties.
The Escrow Agent shall not be liable for any
act done or omitted hereunder as Escrow Agent
while acting in good faith and in the exercise
of reasonable judgment, and any act done or
omitted pursuant to the written advice of
counsel shall be conclusive evidence of such
good faith.
(ii) The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the
parties hereto or by any other person, excepting
only orders or process or courts of law, and is
hereby expressly authorized to comply with and obey
orders, judgments or decrees of any court. In case
the Escrow Agent obeys or complies with any such
order, judgment or decree of any court, the Escrow
Agent shall not be liable to any of the parties
hereto or to any other person by reason of such
compliance, notwithstanding any such order, judgment
or decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been
entered without jurisdiction.
(iii) The Escrow Agent shall not be liable in any respect
on account of the identity, authority or rights of
the parties executing or delivering or purporting to
execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the
expiration of any rights under any statute of
limitations with respect to this Agreement or any
documents deposited with the Escrow Agent.
(v) The Escrow Agent may resign at any time upon giving
at least thirty (30) days written notice to
Purchaser and Seller; PROVIDED, HOWEVER, that no
such resignation shall become effective until the
appointment of a successor escrow agent which shall
be accompanied as follows: Purchaser and Seller
shall use their best efforts to mutually agree upon
a successor escrow agent within thirty (30) days
after receiving such notice. If the parties fail to
agree upon a successor escrow agent within such
time, Purchaser shall have the right to appoint a
successor escrow agent (which, in such case, shall
be a financial institution with assets of at least
$1 billion). The successor escrow agent selected in
the preceding manner shall execute and deliver an
instrument accepting such appointment and it shall
thereupon be deemed the Escrow Agent hereunder and
it shall without further acts
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be vested with all the estates, properties,
rights, powers, and duties of the predecessor
Escrow Agent as if originally named as Escrow
Agent. Thereafter, the predecessor Escrow
Agent shall be discharged for any further
duties and liabilities under this Agreement.
(vi) During the Escrow Period, the Escrow Agent shall
invest any cash portion of the Escrow Fund
solely in direct obligations of the United
States government, the principal and interest
of which are fully guaranteed by the United
States government, any daily or weekly
withdrawal money market fund investing solely
in such obligations or interest-bearing or time
deposits fully insured by the Federal Deposit
Insurance Corporation, and short-term bankers'
acceptances in any bank which is rated in one
of the two highest ratings categories by
Xxxxx'x Investor Service, Inc. or Standard &
Poor's Corporation (collectively, the
"PERMITTED INVESTMENTS"), or any combination of
the foregoing. For purposes of this Agreement,
any and all interest earned on the Escrow Fund
during the Escrow Period as a result of any
Permitted Investment shall be reported by
Seller for tax purposes and distributed to
Seller upon termination of the Escrow Fund.
(vii) All fees of the Escrow Agent for performance of its
duties hereunder shall be paid by Purchaser. It is
understood that the fees and usual charges agreed
upon for services of the Escrow Agent shall be
considered compensation for ordinary services.
5.04 "NO SHOP" AND LIQUIDATED DAMAGES COVENANT. In
recognition of the time and expense expended by Purchaser with respect to the
purchase of the Assets, the Seller hereby covenants and agrees that prior to
the Closing Date or the termination of this Agreement, it will not offer, or
accept any offer for, any of the Assets to or from any third party. The
Seller further covenants and agrees, that if any termination of this
Agreement pursuant to Section 7.02(c) shall be followed by a sale of
substantially all the Assets within one hundred eighty (180) days following
any such termination, Seller shall pay to Purchaser the amount of $140,000,
as liquidated damages.
5.05 LOCK-UP AND FIRST REFUSAL OF SHARES.
(a) None of the Shares may be sold for a period of one
hundred eighty (180) days after the Closing. One-half of the Shares, which
are not subject to the indemnification holdback pursuant to Section 5.02, may
be sold after the First Lock-Up Period and the remaining Shares may be sold
after the Second Lock-Up Period.
(b) Purchaser will have a right of first refusal with
respect to any proposed sale of the Shares for a period of five hundred forty
(540) days after the Closing (the "RIGHTS PERIOD"). In the event Seller
proposes to sell any of the Shares during the Rights Period, Seller shall
give
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Purchaser written notice of its intention, with copies to each of Xxx Xxxxxx
and Xxxx Xxxxxx or their replacements (each, a "PRINCIPAL"), describing the
price and general terms upon which Seller proposes to sell the same.
Purchaser shall have forty eight (48) hours after telephonic confirmation of
the receipt of such notice is given to Seller by either of the Principals to
agree to purchase such Shares for the price and upon the terms specified in
the notice by giving written notice to the Seller and stating therein the
quantity of Shares to be purchased by Purchaser.
5.06 THE SELLER'S NONCOMPETITION COVENANT. In order to
prevent the value of the Assets, properties, and Confidential Information
being acquired under this Agreement from being diminished by the activities
of the Seller, in recognition of the competitive and confidential nature of
such information and business, in order to further induce the Purchaser to
make that acquisition, and in consideration of the Purchase Price, the
Seller hereby covenants and agrees that, for a period of three (3) years
after the Closing (the "RESTRICTED PERIOD"), neither of the Seller, nor any
of its subsidiaries will directly or indirectly, under any circumstance other
than through, or at the direction and for the benefit of, the Purchaser,
offer employment to any of the Prospective Employees.
5.07 THE SELLER'S CONFIDENTIALITY COVENANT.
(a) In order to prevent the value of the Assets and
Confidential Information being acquired under this Agreement from being
diminished by the activities of the Seller or any of its Representatives, in
recognition of the competitive and confidential nature of such information,
in order to further induce the Purchaser to make that acquisition, and in
consideration of a portion of the Purchase Price, the Seller hereby
covenants and agrees that, the Seller, will hold all Confidential Information
in strict confidence for the use and benefit of the Purchaser, and the Seller
will not, or permit or cause any of their respective Representatives to,
directly or indirectly, under any circumstance during the 18-month period
following the Closing Date: (a) disclose, publish or otherwise reveal, impart
or deliver in any way any Confidential Information to any other person other
than (i) to authorized Representatives of the Purchaser, (ii) to such other
persons as the Purchaser may direct in writing; and (iii) to such third
persons as reasonably necessary for such third persons to conduct due
diligence on Seller's business and operations relating to any proposed merger
with Seller, any sale of all or substantially all of Seller's assets, or any
purchase of such third person's assets by Seller; (b) fail to use reasonable
precautions to assure that all Confidential Information is properly protected
and kept from all unauthorized persons; (c) act or fail to act so as to
otherwise impair the confidential or proprietary nature of any Confidential
Information; (d) with respect to the Assets, use any customer list or
information, price or cost information, product presentation or strategy,
know-how or other Confidential Information other than at the direction and
for the benefit of the Purchaser; or (e) offer or agree to, or cause or
assist in the inception or continuation of, any such disclosure, impairment
or use.
(b) In the event of a breach or threatened breach by the
Seller of any of the provisions of this Section 5.07, the Purchaser shall be
entitled to an injunction to be issued by any court or tribunal of competent
jurisdiction to restrain the Seller from committing or continuing any such
violation. In any proceeding for an injunction, the Seller agrees that its
ability to answer in
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damages shall not be a bar or be interposed as a defense to the granting of a
temporary or permanent injunction against Seller. The Seller acknowledges
that the Purchaser will not have an adequate remedy at law in the event of
any breach by him as aforesaid and that the Purchaser may suffer irreparable
damage and injury in the event of such a breach by Seller. Nothing contained
herein shall be construed as prohibiting the Purchaser from pursuing any
other remedy or remedies available to the Purchaser in respect of such breach
or threatened breach. In addition, if any term or provision of this Section
5 shall be held invalid or unenforceable because of its duration, geographic
scope, or for any other reason, the Purchaser and the Seller agree that the
court making such determination shall have the power to modify such
provision, whether by limiting the geographic scope, reducing the duration,
or otherwise, to the minimum extent necessary to make such term or provision
valid and enforceable, and such term or provision shall be enforceable in
such modified form.
5.08 DELIVERY OF PROTECTED DOCUMENTS. With respect to the
Assets, at the Closing, the Seller shall deliver to the Purchaser (or
destroy, if and to the extent reasonably requested by the Purchaser) any and
all Documents (a) copyrighted by the Seller, or (b) constituting or
containing any Confidential Information (collectively, "PROTECTED
DOCUMENTS"). In any event, the Seller shall not at any time after the
Closing Date use or reproduce any of the Protected Documents or distribute,
give or otherwise make available any of the Protected Documents to any person
other than the Purchaser or its Representatives.
5.09 SUBLEASE. Seller shall arrange to provide office space
to house three Software developers on mutually satisfactory terms.
5.10 PROXY MATERIALS. Seller shall permit Purchaser to
review and approve, in its reasonable discretion, proxy materials relating to
the approval of this Agreement and the transactions contemplated hereby but
not with respect to any other transaction or subject matter contained
therein, to be submitted to the shareholders of the Seller, prior to the
filing of any such materials with the Securities and Exchange Commission.
5.11 REGISTRATION RIGHTS. Purchaser will use its reasonable
efforts to register the Shares with the Securities and Exchange Commission
within six (6) months of the date hereof by preparing and filing a
registration statement in compliance with the Securities Act and applicable
rules and regulations thereunder, with such registration statement declared
or ordered effective by the Securities and Exchange Commission. All
Registration Expenses (as defined below) incurred in connection with any
registration, qualification or compliance pursuant to this Section 5.11 shall
be borne by Purchaser. "Registration Expenses" shall mean all expenses
incurred in effecting any registration pursuant to this Agreement, including,
without limitation, all registration, qualification, and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for
Purchaser and Seller, blue skys fees and expenses, expenses of any regular or
special audits incident to or required by any such registration and
compensation of regular employees of Purchaser.
5.12 ACCESS TO THE SELLER'S RETAINED BOOKS AND RECORDS. From
and after the Closing Date, at all reasonable times and as often as the
Purchaser reasonably may request, the Seller
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shall, and shall cause each of its affiliates to, permit the Purchaser (and
its accountants, attorneys and other Representatives), to have complete and
unrestricted access to all personnel and all books, records and other factual
information retained by the Seller relating to the Assets as the Purchaser
may reasonably require, and to make copies and excerpts from them and to
discuss with them the Seller's officers, directors, employees, accountants
and agents, in connection with (a) the preparation, filing, audit or any
contest of or with respect to any federal, state, local or foreign income or
other tax returns of the Purchaser or any affiliate of the Purchaser, or with
respect to any dispute, refund, claim or litigation relating to those returns
and the Taxes due pursuant to those returns, (b) the initiation, prosecution
or defense of any other litigation by the Purchaser or any affiliate of the
Purchaser, (c) compliance by the Purchaser or any of its affiliates with any
legal or regulatory obligation of those entities, (d) any Asset or (e) the
release or defense of any Excluded Liability or any Lien. The Seller shall
maintain all retained books, records and information for at least six (6)
years following the Closing, except that the Seller from time to time at its
own cost and expense may deliver all or portions thereof to the Purchaser.
5.13 ALLOCATION OF PURCHASE PRICE. Seller and Purchaser
agree that the Purchase Price shall be allocated among the Assets no later
than five (5) days prior to the Closing (the "ALLOCATION"). For all purposes
(including, without limitation, Section 1060 of the Code), the Seller and the
Purchaser agree to report the allocation of the Purchase Price in accordance
with such Allocation and agree to act in accordance therewith in the
preparation and filing of all relevant Tax Returns.
5.14 PUBLICITY. Seller and Purchaser agree that no
publicity, release or announcement concerning the transactions contemplated
hereby shall be issued without the advance approval, which approval shall not
be unreasonably withheld, of the form and substance thereof by other party
hereto, except any release or announcement required by law or legal process,
including the rules of the Securities and Exchange Commission or any stock
exchange, and will inform the other party in advance of such required
publicity release and/or announcement if reasonably possible.
5.15 OTHER TRANSACTIONS. Notwithstanding anything to the
contrary in this Agreement, nothing in this Agreement or the transaction
contemplated hereby shall prohibit or otherwise impair any transaction
constituting a change of control of Seller to any third party (including
providing Confidential Information to third persons as part of a due
diligence inquiry related thereto).
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ARTICLE VI
OTHER REMEDIES, ETC.
6.01 EQUITABLE RELIEF, ATTORNEYS FEES, ETC. The Seller
acknowledges and agrees that, in addition to any and all other rights,
powers, privileges and remedies that the Purchaser may have under this
Agreement or applicable law, the Purchaser shall be entitled to injunctive
relief, specific performance or such other equitable relief as it may request
to exercise or otherwise enforce any of the terms and provisions of this
Agreement or any other Purchase Document and to enjoin or otherwise restrain
any act prohibited by this Agreement or any other Purchase Document, and the
Seller will not raise and hereby waives any objection or defense that there
is an adequate remedy available at law.
6.02 ENFORCEMENT, ETC. The Purchaser, in its sole
discretion, may proceed to exercise or enforce any right, power, privilege,
remedy or interest that it or they may have under this Agreement, any other
Purchase Document or applicable law: (a) at law, in equity or in any other
forum available under applicable law; (b) without notice except as otherwise
expressly provided herein; (c) without pursuing, exhausting or otherwise
exercising or enforcing any other right, power, privilege, remedy or interest
that it may have against or in respect of the Seller or any other person or
thing; and (d) without regard to any act or omission of the Purchaser or any
other person. The Purchaser may institute one or more proceedings (which may
be separate proceedings) with respect to this Agreement or any other Purchase
Document in such order and at such times as the Purchaser may elect in its
sole and absolute discretion.
6.03 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE; WAIVER
OF PERSONAL SERVICE; WAIVER OF JURY TRIAL; ETC. THIS AGREEMENT AND EACH OF
THE OTHER PURCHASE DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE APPLICABLE LAWS PERTAINING IN THE STATE OF CALIFORNIA, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF LAW. The Purchaser,
the Seller hereby consents and agrees that the state and federal courts
located in Santa Xxxxx County, California shall have personal jurisdiction
and proper venue with respect to any action or proceeding brought by one
party against another relating to this Agreement. In any such action or
proceeding brought in Santa Xxxxx County, California, neither the Purchaser
or the Seller will raise, and each hereby expressly waives, any objection or
defense to any such jurisdiction or venue as an inconvenient forum. IN ANY
ACTION, SUIT OR PROCEEDING IN ANY JURISDICTION BROUGHT AGAINST THE SELLER BY
THE PURCHASER, OR VICE VERSA, THE SELLER AND THE PURCHASER EACH WAIVE TRIAL
BY JURY.
ARTICLE VII
MISCELLANEOUS
7.01 NOTICE. Except as otherwise expressly provided, any
notice, request, demand or other communication permitted or required to be
given under this Agreement or any other
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Purchase Document shall be in writing, shall be sent by one of the following
means to the addressee at the address set forth above or at such other
address as shall be designated hereunder by notice to the other parties and
persons receiving copies, effective upon actual receipt (with a copy thereof,
in the case of the Purchaser, to Xxxxxx X. Xxxxxxxx, Esq., Xxxxxx Xxxxxx
Flattau & Klimpl, LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
and, in the case of the Seller, to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx
Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, Attn: Xxxxxxx X. Xxxxx and Xxxx
Xxxxxx), and shall be deemed conclusively to have been given: (i) on the
first Business Day following the day timely deposited with Federal Express
(or other equivalent national overnight courier) or United States Express
Mail, specifying overnight delivery, with the cost of delivery prepaid or for
the account of the sender; (ii) on the fifth Business Day following the day
duly sent by certified or registered United States mail, postage prepaid and
return receipt requested; or (iii) when otherwise actually received by the
addressee on a Business Day, whether in writing or by facsimile transmission
(or on the next Business Day if received after the close of normal business
hours or on any non-Business Day).
7.02 TERMINATION. Except as provided in Section 7.03 below,
this Agreement may be terminated at any time prior to the Closing:
(a) by mutual consent of Purchaser and Seller;
(b) by Purchaser or Seller if the Closing has not occurred by
June 30, 1999; or
(c) by Purchaser or Seller if the Seller shareholder approval
required as a condition to the Closing shall not have been
approved at such Seller shareholder meeting or any
postponement thereof.
Where action is taken to terminate this Agreement pursuant to
this Section 7.02, it shall be sufficient for such action to be authorized by
the Board of Directors (as applicable) of the party taking such action.
Notwithstanding anything in this Section 7.02, neither Purchaser nor Seller
may terminate this Agreement if such party is in material breach of its
obligations hereunder and such breach caused, directly or indirectly, the
Closing not to occur.
7.03 EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided in Section 7.02, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
Purchaser or Seller, or their respective officers, directors or stockholders,
provided that each party shall remain liable for any breaches of this
Agreement prior to its termination; and provided further that, the provisions
of Sections 5.04, 5.12 and this Article VII of this Agreement shall remain in
full force and effect and survive any termination of this Agreement.
7.04 FURTHER ASSURANCES. (a) The Seller agrees to do such
further acts and things and to execute and deliver such statements,
assignments, agreements, instruments and other documents as the Purchaser
from time to time reasonably may request (a) in order to evidence or confirm
the transfer of any Asset, or (ii) the release of any Excluded Liability or
any Lien, or (b) in
-31-
connection with the administration, enforcement or adjudication of this
Agreement and the other Purchase Documents, in order to effectuate the
purpose and the terms and provisions of this Agreement and the other Purchase
Documents, each in such form and substance as may be acceptable to the
Purchaser.
(a) The Purchaser agrees to do such further acts and things
and to execute and deliver such statements, assignments, agreements,
instruments and other documents as Seller from time to time reasonably may
request (a) in order to evidence or confirm (i) the transfer of any Asset, or
(ii) the release of any Excluded Liability or any Lien, or (b) in connection
with the administration, enforcement or adjudication of this Agreement and
the other Purchase Documents, in order to effectuate the purpose and the
terms and provisions of this Agreement and the other Purchase Documents, each
in such form and substance as may be acceptable to the Seller.
7.05 EXPENSES.
(a) Each party shall bear its own expenses in connection
with the negotiations and execution of this Agreement and the transactions
contemplated hereby.
(b) All sales, use and other transfer Taxes and all filing,
recording and registration fees payable in connection with the transactions
contemplated hereby shall be paid equally by Purchaser and Seller and
evidence of any such payment by the Seller shall be promptly delivered to the
Purchaser. The Parties agree to cooperate with each other to minimize taxes
payable as a result of the transactions contemplated by this Agreement.
7.06 INTERPRETATION, HEADINGS, SEVERABILITY, ETC. The
parties acknowledge and agree that the terms and provisions of this Agreement
and the other Purchase Documents have been negotiated, shall be construed
fairly as to all parties hereto, and shall not be construed in favor of or
against any party, including, without limitation, by reason of such party
having caused this Agreement or any of the Purchase Documents to be drafted.
The section headings contained in this Agreement and the other Purchase
Documents are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement or any other Purchase Document. In the
event that any term or provision of this Agreement or any other Purchase
Document shall be finally determined to be superseded, invalid, illegal or
otherwise unenforceable pursuant to applicable law by a governmental
authority having jurisdiction and venue, that determination shall not impair
or otherwise affect the validity, legality or enforceability (a) by or before
that authority of the remaining terms and provisions of this Agreement and
the other Purchase Documents, which shall be enforced as if the
unenforceable term or provision were deleted or reduced pursuant to the next
sentence, as applicable, or (b) by or before any other authority of any of
the terms and provisions of this Agreement and the other Purchase Documents.
If any term or provision of this Agreement or any other Purchase Document is
held to be unenforceable because of the scope or duration of any such
provision, the parties agree that any court making such determination shall
have the power, and is hereby requested, to reduce the scope or duration of
such term or provision to the maximum
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permissible under applicable law so that said term or provision shall be
enforceable in such reduced form.
7.07 SUCCESSORS AND ASSIGNS; ASSIGNMENT; INTENDED
BENEFICIARIES. Whenever in this Agreement or any other Purchase Document
reference is made to any person, such reference shall be deemed to include
the successors, assigns, heirs and legal representatives of such person, and,
without limiting the generality of the foregoing, all representations,
warranties, covenants and other agreements made by or on behalf of the Seller
in this Agreement and the other Purchase Documents shall inure to the benefit
of the successors and assigns of the Purchaser; PROVIDED, HOWEVER, that
nothing herein shall be deemed to authorize or permit the Seller to assign
any of the Seller's rights or obligations under this Agreement to any other
person (other than an affiliate of the Seller), and the Seller covenants and
agree that the Seller shall not make any such assignment. The
representations, warranties and other terms and provisions of this Agreement
and the other Purchase Documents are for the exclusive benefit of the parties
hereto and, except as otherwise expressly provided herein, no other person,
including creditors of any party hereto, shall have any right or claim
against any party by reason of any of those terms and provisions or be
entitled to enforce any of those terms and provisions against any party.
7.08 SURVIVAL OF REPRESENTATIONS, ETC. Notwithstanding any
right of Purchaser fully to investigate the affairs of Seller and
notwithstanding any knowledge of the facts determined or determinable by
Purchaser pursuant to such investigation or right of investigation, each
party hereto has the right to rely fully upon representations, warranties,
covenants and agreements of the other party contained in this Agreement and
Purchase Documents as modified by the Disclosure Schedules. All such
representations, warranties, covenants and agreements of Seller and Purchaser
made in this Agreement and the Purchase Documents or in any certificate
delivered pursuant hereto shall survive the execution and delivery hereof and
for one (1) year following the Closing.
7.09 NO WAIVER BY ACTION, ETC. Any waiver or consent
respecting any representation, warranty, covenant or other term or provision
of this Agreement or any other Purchase Document shall be effective only in
the specific instance and for the specific purpose for which given and shall
not be deemed, regardless of frequency given, to be a further or continuing
waiver or consent. The failure or delay of a party at any time or times to
require performance of, or to exercise its rights with respect to, any
representation, warranty, covenant or other term or provision of this
Agreement or other Purchase Document in no manner (except as otherwise
expressly provided herein) shall affect its right at a later time to enforce
any such provision. No notice to or demand on either party hereto in any
case shall entitle such party to any other or further notice or demand in the
same, similar or other circumstances. The acceptance by the Purchaser of (a)
any partial or late payment shall not constitute a satisfaction or waiver of
the full amount then due or the resulting default, or (b) any payment during
the continuance of any default shall not constitute a waiver or cure thereof;
and the Purchaser may accept or reject any such payment without affecting any
of its rights, powers, privileges, remedies and other interests under this
Agreement, the other Purchase Documents and applicable law. All rights,
powers, privileges, remedies and other interests of the Purchaser hereunder
are cumulative and not alternatives, and they are in addition to
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and shall not limit (except as otherwise expressly provided herein) any other
right, power, privilege, remedy or other interest of the Purchaser under this
Agreement, any other Purchase Document or applicable law.
7.10 COUNTERPARTS; AMENDMENTS; ENTIRE AGREEMENT. This
Agreement shall be effective as of the date first written above when executed
by the Seller and delivered to the Purchaser; and unless otherwise provided
each other Purchase Document shall be effective as of the date first written
therein when executed by the Seller or other party and delivered to the
Purchaser. This Agreement may have been executed in two or more counterpart
copies of the entire document or of signature pages to the document, each of
which may be executed by one or more of the parties hereto or thereto, but
all of which, when taken together, shall constitute a single agreement
binding upon all of the parties hereto or thereto, as applicable. Each and
every modification and amendment of this Agreement or any other Purchase
Document shall be in writing and signed by all of the parties hereto or
thereto, as applicable, and each and every waiver of, or consent to any
departure from, any representation, warranty, covenant or other term or
provision of this Agreement or any other Purchase Document shall be in
writing and signed by each affected party hereto or thereto, as applicable.
This Agreement and the other Purchase Documents contain the entire agreement
of the parties and supersede all prior and other representations, agreements
and understandings, oral or otherwise, between the parties with respect to
the matters contained herein or therein.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement on the date first written above.
SITE TECHNOLOGIES, INC.
By:/s/ Xxxxxxx X. Ait
---------------------------------------
Xxxxxxx X. Ait, Chief Executive Officer
STARBASE CORPORATION
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Vice Chairman
GREATER BAY TRUST COMPANY (WITH RESPECT
TO SECTIONS 5.01, 5.02 AND 5.03 ONLY)
By:/s/ Xxxx Xxxxx
---------------------------------------
Xxxx Xxxxx, Vice President
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LIST OF SCHEDULES
TO THE ASSET PURCHASE AND SALE AGREEMENT
SCHEDULE 2.01 Assets
SCHEDULE 2.02(e) Excluded Assets
SCHEDULE 2.03 Assumed Obligations
SCHEDULE 2.08(a)(1) Purchaser's Consents
SCHEDULE 2.08(b)(1) Seller's Consents
SCHEDULE 3.03 Consents, etc.
SCHEDULE 3.04 Litigation
SCHEDULE 3.06 Tax Returns
SCHEDULE 3.08(a) Material Contracts
SCHEDULE 3.08(c) Certain Conditions and Obligations
SCHEDULE 3.09 Employees
SCHEDULE 3.10 Intellectual Properties
SCHEDULE 3.11 Absence of Certain Events
SCHEDULE 3.12 Suppliers and Customers
SCHEDULE 3.13 Insurance
EXHIBIT A
INTERIM LICENSE AND CONSULTING AGREEMENT
This Interim License and Consulting Agreement (this "License Agreement") is
entered into as of December 18, 1998 by and between StarBase Corporation, a
Delaware corporation ("StarBase") and Site Technologies, Inc., a California
corporation ("Site") (StarBase and Site may be referred to collectively as the
"Parties").
RECITALS
A. StarBase and Site, as of the date hereof, have entered into an Asset
Purchase and Sale Agreement (the "Purchase Agreement") pursuant to which
StarBase will acquire certain Assets from Site.
B. In addition to the transactions contemplated by the Purchase
Agreement, StarBase desires, for the period from the date hereof to the Closing
Date, to (i) distribute the Software Products and any "Derivative Works"
developed by StarBase during the term of this License Agreement; (ii) obtain a
license from Site to modify and develop the Software Products and related Source
Code and (iii) engage certain of Site's employees as consultants to further
develop the Software Products and related Source Code, and Site agrees to such
distribution, license and consulting arrangement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Purchase Agreement.
(a) "Derivative Works" shall have the meaning ascribed thereto by the
Copyright Act of 1976, as amended, as interpreted by applicable case law.
(b) "Documentation" shall mean the manuals and other documentation
generally distributed to End-Users with the Software Products for End-User's
internal use.
(c) "End-User" means a customer of a Software Product who shall use
the Software Product for internal purposes only and who agrees be bound to the
terms of an End-User agreement which is at least as protective of Site's
interests in the Software as the End-User agreement which is attached as Exhibit
B hereto.
(d) "Modified Product" means the Software Products (as they exist as
of the date of the execution of this License Agreement) as modified by the
Derivative Works created by StarBase pursuant to the terms and conditions of
this License Agreement. A Software Product shall be considered a Modified
Product only if Site's branding of such Software Product is replaced in its
entirety by StarBase's own proprietary branding.
2. LICENSES.
(a) USE OF SOFTWARE. Subject to the terms and conditions of this
License Agreement, Site hereby grants to StarBase, for the Term (as hereinafter
defined) of this License Agreement, a worldwide, non-exclusive, non-transferable
license to use the Software (as it exists as of the date of the execution of
this License Agreement) for StarBase's internal purposes for quality assurance
and technical support.
(b) SOFTWARE PRODUCTS DISTRIBUTION. Subject to the terms and
conditions of this License Agreement, Site hereby grants to StarBase, for the
Term of this License Agreement, a worldwide, exclusive, non-transferable license
to copy, market, demonstrate and distribute the Software Products in object code
format only, in an unmodified form, to End-Users.
(c) DERIVATIVE WORKS OF SOFTWARE PRODUCTS. Subject to the terms and
conditions of this License Agreement, Site hereby grants to StarBase, for the
Term of this License Agreement, a worldwide, exclusive, non-transferable license
to use, develop and make Derivative Works of the Software for the purpose of
creating Modified Products. Site hereby further grants to StarBase, for the
Term of this License Agreement, a worldwide, exclusive, non-transferable license
to market, demonstrate and distribute such Modified Products in object code
format only to End-Users. StarBase shall use a modification method that will
allow easy separation of any Derivative Works from the Software upon termination
of this License Agreement.
(d) DOCUMENTATION. Subject to the terms and conditions of this
License Agreement, Site hereby grants to StarBase, for the Term of this License
Agreement, a worldwide, non-exclusive, non-transferable license to copy and
distribute the Documentation in unmodified form to End-Users.
(e) RESERVATION. Site hereby reserves all rights not expressly
granted to StarBase under this License Agreement.
3. PROPRIETARY MATTERS AND RESTRICTIONS.
(a) OWNERSHIP. Title to the Software, Software Products and
Documentation and all intellectual property rights therein, shall remain the
sole and exclusive property of Site. Derivative Works made solely by StarBase
under the terms and conditions of this License Agreement shall be owned by
StarBase.
(b) PROPRIETARY NOTICES. StarBase shall not remove, alter, cover or
obscure any copyright notice, trademark, trade name, service xxxx or other
proprietary rights notice placed by Site (the "Marks") on any Software, Software
Product or Documentation or any copy or portion thereof. All copies shall
faithfully reproduce such marks. StarBase shall ensure that all Modified
Products carry notices of Site's proprietary rights printed in each piece of
documentation supplied, affixed to each media container, and embedded in the
object code, including partial copies or updated versions thereof. StarBase
hereby acknowledges that it shall not acquire ownership of the
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Marks or any part thereof by reason of its use of the Marks under this
Agreement. All use of the Marks shall inure to Site's benefit.
(c) RESTRICTIONS. StarBase shall not cause or permit disclosure, copying,
display, loan, publication, transfer of possession (whether by sale, exchange,
gift, operation of law or otherwise) or other dissemination of the Software,
Software Products or Documentation in whole or in part, to any third party,
except as permitted in this License Agreement. StarBase shall not disassemble
or reverse compile any Software or Software Product or portion thereof, nor
create any Derivative Works thereof except as expressly provided under this
License Agreement, or as allowed under the law.
4. DELIVERY.
(a) DELIVERY. Within five (5) days of execution of both the Purchase
Agreement and this License Agreement, Site shall deliver to StarBase one (1)
copy of the Software in Source Code format and one (1) copy of the
Documentation.
(b) NO OBLIGATION TO CREATE MATERIALS. Site shall not be obligated
to create any new Documentation or other materials which do not already exist.
5. PRICE AND PAYMENT. In consideration for the licenses granted under
this License Agreement:
(a) SOFTWARE PRODUCT. StarBase shall pay to Site Ten Percent (10%)
of StarBase's aggregate actual selling price payable to StarBase from its
marketing and distribution of the Software Products and Modified Products, less
taxes, duties, excises, other governmental charges and fees of any kind,
refunds, credits and returns (the "Net Product Revenue"); and
(b) DISTRIBUTION OF DEMONSTRATION COPIES. StarBase may distribute
non-revenue copies of the Software Products and Modified Products to End-Users
for demonstration, testing and evaluation purposes only.
(c) ROYALTY REPORTS AND PAYMENTS. StarBase shall render royalty
reports ("Royalty Reports") on a country by country basis to Site on a monthly
basis within thirty (30) days after the close of each calendar month during the
Term of this License Agreement, regardless of whether any payment is shown to be
due to Site thereunder. Each Royalty Report shall include a statement from
StarBase stating the number of units of each Software Product and Modified
Product sold by StarBase, the actual selling price payable to StarBase for each
unit sold and the amount and description of permissible deductions therefrom as
stated above. StarBase shall remit all payments due Site pursuant to this
Section 5, if any, along with the Royalty Reports to: Site Technologies, Inc.,
000 Xx Xxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxxxxxx 00000, attention: Xxxxxxx X. Ait.
(d) CURRENCY. All royalties under this License Agreement shall be
paid in U.S. Dollars and the acceptance thereof by Site shall not preclude Site
from questioning the correctness of royalty payments at any time. All royalty
payments shall be made without any set off of any amount
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whatsoever, whether based upon any claimed debt or liability of Site to
StarBase. Any amounts not paid when due shall bear interest of 1% per month
to the maximum allowed by law, whichever is less.
(e) AUDIT. StarBase shall keep and maintain accurate books of
account and records covering all transactions relating to this License
Agreement. Site, at Site's sole expense (subject to the last sentence of this
Section 5(e)) shall be entitled to have an independent Certified Public
Accountant (the "Accountant") chosen by Site and reasonably acceptable to
StarBase, who agrees in writing to be bound by confidentiality provisions of
this License Agreement, audit and inspect such books and records as may be
necessary to verify the royalty reports, at any time or times, but not more than
once annually during or within one year after the term of this License Agreement
during reasonable business hours and upon five (5) business days prior written
notice to StarBase. The Accountant shall have the right to make copies and
summaries of such books and records but shall not disclose to Site any
information relating to the business of StarBase other than the relevant sales
totals (but not customer names) and the accuracy of the royalty reports
submitted hereunder. All confidential business information received by the
Accountant or Site as a result of such audit, and all written reports submitted
by StarBase, shall be kept in confidence for five (5) years from the date of the
receipt thereof and shall not be used for any purposes other than evaluating
StarBase's obligations under this License Agreement. All books of account and
records shall be retained by StarBase for a minimum of one (1) year after
submission of each Royalty Report to which they relate. If the Accountant
discovers a deficiency in the royalties paid to Site for any period under the
audit ("an Audit Deficiency"), StarBase shall promptly pay such Audit Deficiency
to Site, and, if such Audit Deficiency is five (5%) percent or more of the
royalties paid to Site for such audit period, StarBase shall also reimburse Site
for all reasonable costs and expenses (including the Accountant's fees and
expenses) incurred by Site in connection with such audit.
(f) TAXES. StarBase shall be solely responsible for and hereby
indemnifies Site against any taxes, duties, excises, other governmental charges
and fees of any kind or other deductions relating to the marketing or
distribution of the Software Products or Modified Products during the Term of
this License Agreement.
6. TECHNICAL ASSISTANCE. Site's sole obligation in providing technical
assistance to StarBase shall be to make available to StarBase Xxxx Xxxxxx, Xxx
Xxxxxx, Xxx Xxxxxxxx, Xxxxx Xxxx, Xxxxx Xxxxxxx and Xxxxx Xxxxxxx (the
"Consultants"), on a full-time basis, to assist StarBase with its modifications
to the Software as contemplated by Section 2 hereof, pursuant to a Consulting
Agreement as set forth in EXHIBIT A attached hereto.
7. REPRESENTATIONS OF SITE. Site represents and warrants to StarBase
that (i) it is the sole and absolute owner of all right, title and interest in
the Software, together with any and all trade secret rights, moral rights,
patent rights, copyrights and other intellectual property rights (except for
certain binary libraries, with respect to which it represents and warrants that
it has sufficient license rights in such libraries to enter into this License
Agreement); (ii) the Software is either exclusively owned by Site or is an
original work of Site and has been exclusively authored by Site's employees who
have assigned in writing all of their copyright, patent, ownership, moral and
other intellectual property rights in and to the Software; (iii) Site has the
lawful right to enter into this License
-4-
Agreement and that, as of the date that it is delivered to StarBase, the
Software will not infringe any United States copyright, patent, moral right,
trade secret or other intellectual property right of any person or business
entity whatsoever; and (iv) Site has no knowledge of any claim, dispute,
suit, or controversy of any nature whatsoever which, in whole or in part, is
based upon the ownership of the Software or any patent rights, moral rights,
trade secrets, copyrights or other intellectual property rights in the
Software.
8. LIMITED WARRANTY. THE REPRESENTATIONS AND WARRANTIES EXPRESSED IN
SECTION 7 ABOVE ARE LIMITED AND ARE THE ONLY REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, MADE BY SITE. ANY AND ALL OTHER REPRESENTATIONS AND
WARRANTIES, INCLUDING SPECIFICALLY WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE, ARE EXPRESSLY EXCLUDED.
9. INDEMNIFICATION.
(a) Except as limited by Section 8 hereof, each Party (the
"Indemnifying Party") shall indemnify, defend and hold harmless the other (the
"Indemnified Party"), from and against any and all actions, proceedings,
damages, costs, fees, expenses and other liability to the extent arising out of
third party claims caused by a breach by the Indemnifying Party of this License
Agreement or by the negligent or illegal acts of the Indemnifying Party. As a
condition to the foregoing indemnity obligation, the Indemnified Party shall
provide the Indemnifying Party with prompt notice of any claim for which
indemnification is sought hereunder and shall cooperate in all reasonable
respects with the Indemnifying Party in connection with any such claim. The
Indemnifying Party shall be entitled to control the handling of any such claim
and to defend or settle any such claim, in the Indemnifying Party's sole
discretion, with counsel of its own choosing. The Indemnifying Party shall not
be responsible under this Section 9 for costs, expenses and fees incurred by the
Indemnified Party without the Indemnifying Party's prior written authorization.
(b) StarBase shall defend, at its sole expense, any action brought
against Site, to the extent based on a third party claim that the Modified
Products infringe any third party patent, trade xxxx, copyright or other
intellectual property rights arising under the laws of any country. StarBase
shall pay any settlement and other costs, damages and attorneys' fees awarded
against Site in such action which are caused by such claim; provided that
StarBase is (i) promptly informed in writing of such claim and action; and (ii)
provided with all reasonable assistance that it requests in connection with such
claim and action. StarBase shall be entitled to control the handling of any
such claim and to defend or settle any such claim, in StarBase's sole
discretion, with counsel of its own choosing. StarBase shall not be responsible
under this Section 9(b) for costs, expenses and fees incurred by Site without
StarBase's prior written authorization.
10. LIMITATION OF LIABILITY.
(a) IN NO EVENT WILL SITE BE LIABLE FOR ANY LOST PROFITS, COSTS OF
COVER OR ANY SPECIAL OR CONSEQUENTIAL, ECONOMIC, EXEMPLARY OR INDIRECT DAMAGES
ARISING OUT OF THIS AGREEMENT, EVEN IF IT HAS BEEN
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ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SITE'S LIABILITY IS LIMITED TO
THE AMOUNTS PAID BY STARBASE UNDER THIS AGREEMENT.
(b) SITE SHALL HAVE NO LIABILITY ARISING OUT OF THE MISUSE,
MODIFICATION OR TAMPERING WITH THE SOFTWARE, SOFTWARE PRODUCTS OR DOCUMENTATION.
11. TERM.
(a) TERM. The "Term" of this License Agreement shall commence as of
the date of execution of this License Agreement and shall terminate on the first
to occur of:
(i) the Closing, or
(ii) the termination of the Purchase Agreement prior to the Closing
Date;
PROVIDED, HOWEVER, that, if such termination of this License Agreement is
effected by termination of the Purchase Agreement prior to the Closing Date, the
parties may mutually agree in writing to continue this License Agreement beyond
the initial Term.
(b) BREACH. Notwithstanding anything to the contrary herein, either
Party may terminate this License Agreement in the event of an uncured material
breach by the other Party with written notice of such breach and a period of ten
(10) business days after the date of the notice to cure such breach.
(c) OBLIGATIONS UPON TERMINATION. Upon termination or expiration of
this License Agreement for any reason, the licenses granted under this License
Agreement will be terminated immediately and StarBase will immediately deliver
to Site all copies of the Software, Software Products, Documentation and all
other materials (including without limitation Confidential Information)
delivered by Site or reproduced by StarBase, in StarBase's possession or under
its control, without retaining any copies or abstracts.
(d) SURVIVAL. Upon termination or expiration of this License
Agreement for any reason, the following provisions shall survive: Sections
2(e), 3, 5(c), 5(d), 5(e), 5(f), 8, 9, 10, 11(c), 11(d), 12, 13, 14, 15, and 16.
In addition, all End-User licenses granted by StarBase while this License
Agreement is in effect shall survive termination of this License Agreement
according to their terms.
12. CONFIDENTIALITY.
(a) DEFINITION. All information disclosed (whether provided in a
tangible or oral form) by a party designated as "Confidential " or "Proprietary"
or in some other manner to indicate its confidential nature shall be deemed
"Confidential Information." Confidential Information includes (without
limitation) the Source Code for the Software.
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(b) OBLIGATIONS. The party receiving Confidential Information (the
"Receiving Party") shall treat as confidential all Confidential Information of
the other party (the "Disclosing Party"), shall not use such Confidential
Information except as set forth herein, and shall not disclose such Confidential
Information to any third party except as may be reasonably required in the use,
or distribution of a product pursuant to the terms of this License Agreement.
Such disclosure to such a third party shall only be made subject to
confidentiality obligations at least as protective as those set forth in this
License Agreement. Without limiting the foregoing, a Receiving Party shall use
at least the same degree of care it uses to prevent the disclosure of its own
confidential information of like importance to prevent the disclosure of
Confidential Information disclosed to it by a Disclosing Party under this
License Agreement.
(c) EXCEPTIONS. Notwithstanding the above, neither party shall have
liability to the other with regard to Confidential Information of the other
which:
(i) was in the public domain at the time it was disclosed or
becomes in the public domain through no fault of the receiver;
(ii) was known to the receiver, without confidentiality
restriction, at the time of disclosure as shown by the files of the
receiver in existence at the time of disclosure;
(iii) is disclosed with the prior written approval of the
discloser (provided however, that nothing in this License Agreement
shall be construed as providing approval to disclose Confidential
Information);
(iv) was independently developed by the receiver without any use
of the Confidential Information and by employees or other agents of
(or independent contractors hired by) the receiver who have not been
exposed to the Confidential Information;
(v) becomes known to the receiver, without confidentiality
restriction, from a source other than the discloser without breach of
this License Agreement by the receiver and otherwise not in violation
of the discloser's rights;
(vi) is disclosed to third parties by the discloser without
restrictions similar to those contained in this License Agreement; or
(vii) is disclosed pursuant to the order or requirement of a
court, administrative agency, or other governmental body, provided,
however, that the receiver shall provide prompt written notice thereof
to enable the discloser to seek a protective order or otherwise
prevent such disclosure.
(d) COMPLIANCE OBLIGATIONS. StarBase shall exert its best efforts,
including, but not limited to, the execution of proprietary non-disclosure
agreements with employees and consultants, and, where appropriate, legal action,
to enforce compliance with the provisions of this
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section by its directors, officers, employees, and any third party having
access to the other party's Confidential Information.
13. EXPORT CONTROLS. StarBase shall not export the Software, Software
Products, the Derivative Works or Modified Products to any foreign country in
violation of any United States statute or regulation, including without
limitation, regulations of the United States Department of Commerce and the
United States Office of Export Administration.
14. RELATIONSHIP OF THE PARTIES. No agency, partnership, joint venture or
employment is created between Site and StarBase by this License Agreement.
Neither Party has any authority, express or implied, to create any obligation or
responsibility on behalf of the other Party. No third party (including any
employee, consultant or subsidiary of either Party) has any rights under this
License Agreement.
15. NOTICE. Any notice, request, demand or other communication
permitted or required to be given under this License Agreement shall be in
writing, shall be sent by one of the following means to the address set forth by
each Party's signature hereto, and shall be deemed conclusively to have been
given: (i) on the first Business Day following the day timely deposited with
Federal Express (or other equivalent national overnight courier) or United
States Express Mail, specifying overnight delivery, with the cost of delivery
prepaid or for the account of the sender; (ii) on the fifth (5th) Business Day
following the day duly sent by certified mail, postage prepaid and return
receipt requested; or (iii) when otherwise actually received by the addressee on
a Business Day, whether in writing or by facsimile transmission (or on the next
Business Day if received after the close of normal business hours or on any non-
Business Day).
16. GENERAL PROVISIONS.
(a) WAIVER. No failure or delay on the part of either party in
exercising its right of termination hereunder for any one or more causes shall
be construed to prejudice its right of termination for such or for any other or
subsequent cause.
(b) AMENDMENT. No alteration, amendment, waiver, cancellation or any
other change in any term or condition of this License Agreement shall be valid
or binding on either party unless the same shall have been mutually assented to
in writing by both parties.
(c) PREVAILING TERMS. In the event of any conflict or
inconsistencies between the provisions of this License Agreement and the
provisions of any exhibits attached hereto or the provisions of any documents
incorporated by reference, the provisions of this License Agreement shall
prevail.
(d) DISCLOSURE OF TERMS. Each party agrees that the terms and
conditions of this License Agreement shall be treated as confidential
information and that no reference to this License Agreement or to activities
pertaining thereto can be made in any form of public or commercial advertising
without the prior written consent of the other party, provided, however, that
each party may disclose the terms and conditions of this License Agreement:
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(i) as required by any court or other governmental body;
(ii) as otherwise required by law;
(iii) to legal counsel of the parties;
(iv) in confidence, to accountants, banks, and financing sources
and their advisors;
(v) in confidence, in connection with the enforcement of this
License Agreement or rights under this License Agreement; or
(vi) in confidence, in connection with a merger or acquisition or
proposed merger or acquisition, or the like.
(e) SECTION HEADINGS. The section headings contained in this License
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) BINDING AGREEMENT; ASSIGNMENT. This License Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. This License Agreement may not be assigned
by either party without the consent of the other party.
(g) AUTHORIZATION. Site and StarBase each represent and warrant that
its execution, delivery and performance of this License Agreement have been duly
authorized by all necessary corporate action.
(h) GOVERNING LAW. This License Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to its conflict of law principles.
(i) SEVERABILITY. If any provision in this License Agreement shall
be found or be held to be invalid or unenforceable in any jurisdiction in which
this License Agreement is being performed, then the meaning of said provision
shall be construed, to the extent feasible, so as to render the provision
enforceable, and if no feasible interpretation would save such provision, it
shall be severed from the remainder of this License Agreement which shall remain
in full force and effect. In such event, the parties shall negotiate, in good
faith, a substitute, valid and enforceable provision which most nearly effects
the parties' intent in entering into this License Agreement.
(j) ENTIRE AGREEMENT. This License Agreement and the Purchase
Agreement contain the entire understanding of the Parties respecting the subject
matter hereof and supersedes all prior discussions and understandings.
Notwithstanding this Section 16(j), nothing in this License Agreement shall
alter or modify the obligations of any party to any non-disclosure provisions
which may exist between the parties.
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IN WITNESS WHEREOF, the parties hereto have caused this License Agreement
to be executed by their duly authorized respective officers as of the date first
written above.
SITE TECHNOLOGIES
By: /s/ Xxxxxxx X. Ait
------------------------------------------
Xxxxxxx X. Ait, Chief Executive Officer
Address: 000 Xx Xxxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
STARBASE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Title: Vice Chairman
------------------------------------------
Address: 0 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxx, XX 00000
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EXHIBIT A
CONSULTING AGREEMENT
-11-
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made and entered into as of
December 18, 1998 by and between StarBase Corporation, a Delaware corporation
(the "Company"), and Site Technologies, Inc., a California corporation
("Consultant"). The Company desires to retain Consultant as an independent
contractor to perform consulting services for the Company and Consultant is
willing to perform such services, on terms set forth more fully below.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in that certain Asset Purchase and Sale Agreement by and
between the Company and Consultant, dated December 18, 1998 (the "Purchase
Agreement"). In consideration of the mutual promises contained herein, the
parties agree as follows:
1. SERVICES AND COMPENSATION
(a) Consultant agrees to perform for the Company the services
("Services") described in Exhibit A, attached hereto.
(b) The Company agrees to pay Consultant the compensation set forth
in Exhibit A for the performance of the Services.
2. OWNERSHIP
Subject to the terms and conditions set forth in the Purchase
Agreement and that certain Interim License and Consulting Agreement by and
between the Company and Consultant, dated as of December 18, 1998 (the
"License Agreement"), Consultant agrees that all copyrightable material,
notes, records, drawings, designs, inventions, improvements, developments,
discoveries and trade secrets (collectively, "Inventions") conceived, made or
discovered by Consultant, solely or in collaboration with others, during the
period of this Agreement which relate in any manner to the business of the
Company that Consultant may be directed to undertake, investigate or
experiment with, or which Consultant may become associated with in work,
investigation or experimentation in the line of business of Company in
performing the Services hereunder, are the sole property of the Company.
Consultant further agrees to assign (or cause to be assigned) and does hereby
assign fully to the Company all Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto.
3. TERM AND TERMINATION
(a) TERM. This Agreement will commence on the date first
written above and will continue until the earlier of (i) the Closing or (ii)
termination of the Purchase Agreement prior to the Closing Date (the "Term");
provided, however, that if such termination of this Agreement is effected by
termination of the Purchase Agreement prior to the Closing Date, the parties
may mutually agree to, in writing, continue this Agreement beyond the initial
Term.
(b) SURVIVAL. Upon such termination all rights and duties
of the parties toward each other pursuant to this Agreement shall cease
except:
(i) that the Company shall be obliged to pay, within
thirty (30) days of the effective date of termination, all amounts owing to
Consultant for Services completed on or prior to the termination date and
related expenses, if any, in accordance with the provisions of Section 1
(Services and Compensation) hereof; and
(ii) Section 2 (Ownership) and Section 5 (Independent
Contractors) shall survive termination of this Agreement.
4. BINDING AGREEMENT; ASSIGNMENT
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns. This
Agreement may not be assigned by either party without the prior written
consent of the other party.
5. INDEPENDENT CONTRACTOR
It is the express intention of the parties that Consultant is an
independent contractor. Nothing in this Agreement shall in any way be construed
to constitute Consultant as an agent, employee or representative of the Company,
but Consultant shall perform the Services hereunder as an independent
contractor. Consultant acknowledges and agrees that Consultant is obligated to
report as income all compensation received by Consultant pursuant to this
Agreement, and Consultant agrees to and acknowledges the obligation to pay all
self-employment and other taxes thereon.
6. BENEFITS
Consultant acknowledges and agrees and it is the intent of the
parties hereto that Consultant's employees receive no Company-sponsored
benefits from the Company. Such benefits include, but are not limited to,
paid vacation, sick leave, medical insurance, and 401(k) participation. If
Consultant's employees are reclassified by a state or federal agency or court
as an employee, Consultant's employees will become reclassified employees and
will receive no benefits except those mandated by state or federal law, even
if by the terms of the Company's benefit plans in effect at the time of such
reclassification Consultant's employees would otherwise be eligible for such
benefits.
7. ARBITRATION AND EQUITABLE RELIEF
(a) DISPUTES. Except as provided in Section 9(d) below, the
Company and Consultant agree that any dispute or controversy arising out of,
relating to or in connection with the interpretation, validity, construction,
performance, breach or termination of this Agreement shall be settled by
binding arbitration to be held in Santa Xxxxx County, California, in
accordance with the Commercial Arbitration Rules, supplemented by the
Supplemental Procedures for Large Complex Disputes, of the American
Arbitration Association as then in effect (the "Rules"). The arbitrator
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may grant injunctions or other relief in such dispute or controversy. The
decision of the arbitrator shall be final, conclusive and binding on the
parties to the arbitration. Judgment may be entered on the arbitrator's
decision in any court of competent jurisdiction.
(b) CONSENT TO PERSONAL JURISDICTION. The arbitrator(s)
shall apply California law to the merits of any dispute or claim, without
reference to conflicts of law rules. Consultant hereby consents to the
personal jurisdiction of the state and federal courts located in California
for any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants.
(c) COSTS. The Company and Consultant shall each pay
one-half of the costs and expenses of such arbitration, and each shall
separately pay its counsel fees and expenses unless otherwise required by law.
(d) EQUITABLE RELIEF. The parties may apply to any court of
competent jurisdiction for a temporary restraining order, preliminary
injunction, or other interim or conservatory relief, as necessary, without
breach of this arbitration agreement and without abridgment of the powers of the
arbitrator.
(e) ACKNOWLEDGMENT. CONSULTANT AND THE COMPANY HAVE READ AND
UNDERSTAND SECTION 7, WHICH DISCUSSES ARBITRATION. CONSULTANT AND THE COMPANY
UNDERSTAND THAT BY SIGNING THIS AGREEMENT, CONSULTANT AND THE COMPANY AGREE TO
SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS
AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR
TERMINATION THEREOF, TO BINDING ARBITRATION, EXCEPT AS PROVIDED IN SECTION 7(d),
AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EACH PARTY'S RIGHT TO A
JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS
OF THE RELATIONSHIP BETWEEN THE PARTIES.
8. NOTICE
Any notice, request, demand or other communication permitted or
required to be given under this Agreement shall be in writing, shall be sent
by one of the following means to the address set forth by each party's
signature hereto, and shall be deemed conclusively to have been given: (i)
on the first Business Day following the day timely deposited with Federal
Express (or other equivalent national overnight courier) or United States
Express Mail, specifying overnight delivery, with the cost of delivery
prepaid or for the account of the sender; (ii) on the fifth (5th) Business
Day following the day duly sent by certified mail, postage prepaid and return
receipt requested; or (III) when otherwise actually received by the addressee
on a Business Day, whether in writing or by facsimile transmission (or on the
next Business Day if received after the close of normal business hours or on
any non-Business Day).
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9. GOVERNING LAW
This Agreement shall be governed by the internal substantive
laws, but not the choice of law rules, of the State of California.
10. ENTIRE AGREEMENT
This Agreement is the entire agreement of the parties and
supersedes any prior agreements between them, whether written or oral, with
respect to the subject matter hereof. No waiver, alteration, or modification
of any of the provisions of this Agreement shall be binding unless in writing
and signed by duly authorized representatives of the parties hereto.
11. ATTORNEY'S FEES
In any court action at law or equity which is brought by one of
the parties to enforce or interpret the provisions of this Agreement, the
prevailing party will be entitled to reasonable attorney's fees, in addition
to any other relief to which that party may be entitled.
12. SEVERABILITY
The invalidity or unenforceability of any provision of this
Agreement, or any terms thereof, shall not affect the validity of this
Agreement as a whole, which shall at all times remain in full force and
effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
SITE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Ait
---------------------------------------
Xxxxxxx X. Ait, Chief Executive Officer
Address: 000 Xx Xxxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
STARBASE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Title: Vice Chairman
------------------------------------
Address: 0 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxx, XX 00000
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EXHIBIT A
SERVICES AND COMPENSATION
1. CONTACT. Consultant's principal Company contact:
Name: Xxxxxxx X. Ait
---------------------------------------------
Title: CEO
--------------------------------------
2. SERVICES. Consultant will render to the Company the following
Services:
Provide the services of Xxx Xxxxxxxx, Xxxxx Xxxx, Xxxxx Xxxxxxx and
Xxxxx Xxxxxxx (the "Employees") not to exceed 40 hours per Employee per week
(less time off for holidays, sick days and vacation per Consultant's existing
internal policies) for the purpose of modifying the Software during the term
of this Agreement as set forth in Section 2(c) of the License Agreement.
3. TERMINATION.
The Company may terminate its use of the services of one or more of the
Employees upon giving two weeks prior written notice thereof to Consultant,
except in the case of Xxx Xxxxxxxx whose services to the Company shall terminate
on December 31, 1998.
4. COMPENSATION.
(a) The Company shall pay Consultant (i) $2,192.30 per
week for the services of Xxx Xxxxxxxx; (ii) $1384.62 per week for the
services of Xxxxx Xxxx; (iii) $1846.15 per week for the services of Xxxxx
Xxxxxxx and (iv) $738.46 plus commissions (calculated according to
Consultant's commission schedule attached hereto as EXHIBIT B) per week for
the services of Xxxxx Xxxxxxx (or an aggregate of $12,507.68 plus commissions
per week for all four (4) Employees) during the Term of this Agreement
payable at the end of each period ending the 1st and the 15th day of each
calendar month. Partial periods shall be paid on a pro-rata basis.
(b) The Company shall reimburse Consultant for (i) all
reasonable expenses incurred by Consultant in connection with the sales phone
number, sales 800 phone number, sales fax number, support phone number and
support fax number and (ii) one-half of the T-1 connection maintained by
Consultant.
(c) The Company shall reimburse Consultant for all travel and
other reasonable expenses incurred by the Employees in performing Services
pursuant to this Agreement.
EXHIBIT B
COMMISSION SCHEDULE
MONTHLY ANNUAL
COMMISSION COMMISSION TARGET REVENUE
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Xxxxx Xxxxxxx $416.67 $5,000.00 $14,000
