1
ASSET PURCHASE AGREEMENT
BY AND AMONG
SALESKIT SOFTWARE CORPORATION
AND
ARCH ACQUISITION CORP.
AND
DELTEK SYSTEMS, INC.
FEBRUARY 25, 1998
2
TABLE OF CONTENTS
Page
Article I PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Article II ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Enumeration of Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Liabilities Not Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Article III PRICE AND PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Escrow Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Article IV REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.4 Required Government Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Required Contract Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.6 Title to Tangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.7 Condition of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.8 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.9 Title to Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10 Adequacy of Technical Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.11 Contracts--General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.12 Third-Party Components in Software Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.13 Third-Party Interests or Marketing Rights in Software Programs . . . . . . . . . . . . . . . . . . . . . . . 12
4.14 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.15 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.16. Absence of Joint Ventures, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.17 Major Vendors and Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.18 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.19 Related-Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
i
3
4.20 Court Orders, Decrees, and Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.21 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.22 Personnel and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.23 Seller's Insurance Polices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.24 Sufficiency of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.25 Disabling Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.26 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.27 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.28 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.29 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.30 Truth at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.31 Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Article V REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.5 Valid Issuance of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.7 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Article VI CONDUCT OF SOFTWARE BUSINESS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.1 Relations With Licensors etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Prohibited Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Insurance; Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Article VII COVENANTS OF SELLER AND BUYER PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.3 Updating of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.4 Approvals of Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5 Third-Party Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.6 Negotiation With Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.7 Agreement to Cooperate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.8 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.9 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.10 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ii
4
7.11 Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.12 Closing Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Article VIII CONDITIONS TO SELLER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.2 Performance of Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Article IX CONDITIONS TO BUYER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.2 Performance of Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.4 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.6 Opinion of Seller's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Article X CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 Actions at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Article XI COVENANTS OF SELLER AND BUYER FOLLOWING CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.1 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.2 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.3 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.4 No-Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.5 Nonsolicitation of Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.6 Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Article XII CERTAIN TRANSITION MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.1 Hiring of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.2 Services Provided by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Article XIII INDEMNIFICATION BY SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.2 Survival of Representation and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
iii
5
13.3 Notice of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.4 Defense of Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.5 Resolution of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.6 Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.7 Escrow Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Article XIV CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.1 Confidentiality Obligation of Buyer Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.2 Confidentiality Obligation of Seller Following Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.3 Permitted Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
14.4 Scope of Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Article XV TERMINATION PRIOR TO CLOSING AND DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.1 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.2 Buyer's Default and Seller's Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.3 Seller's Default and Buyer's Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.4 Termination of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Article XVI INDEMNIFICATION BY PARENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
16.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
16.2 Survival of Representation and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
16.3 Notice of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
16.4 Defense of Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
16.5 Resolution of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
16.6 Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Article XVII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.2 Parties Bound by Agreement; Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
17.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
17.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
17.8 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
17.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
17.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
17.11 "Including." . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
iv
6
17.12 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
17.13 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
v
7
List of Schedules
Schedule A Software Programs
Schedule 1.1.a Inventory
Schedule 1.1.c Software Contracts
Schedule 1.1.d Office Equipment
Schedule 1.1.e Leases
Schedule 1.1.f General Contracts
Schedule 1.1.h Authorizations
Schedule 1.1.k Business Interests, Participations and Ownership
Positions
Schedule 1.2 Excluded Assets
Schedule 4.1 Addresses of Seller's Offices
Schedule 4.4 Required Government Consents
Schedule 4.5 Required Contract Consents
Schedule 4.9.a Intellectual Property
Schedule 4.9.b Trade Secret Protection Program
Schedule 4.9.c Assignments
Schedule 4.9.f Infringements
Schedule 4.12 Royalty Obligations
Schedule 4.13.b(1) Other than End-User LicenseAgreements
Schedule 4.13.b(2) Seller's Standard Form End-User License Agreement
Schedule 4.13.b(3) Other Customer Commitments
Schedule 4.13.d Parties to Whom Seller has Delivered Technical
Documentation
Schedule 4.15(1) Seller's Existing Financial Statements
Schedule 4.15(2) Undisclosed Liabilities
Schedule 4.16 Joint Ventures
Schedule 4.17 Major Vendors and Customers
Schedule 4.18(1) Pending Litigation
Schedule 4.18(2) Prior Litigation
Schedule 4.19 Related Party Transactions
Schedule 4.20.c Environmental Compliance
Schedule 4.21.b State Sales Taxes
Schedule 4.22.a List of Personnel
Schedule 4.22.b Compensation Commitments
Schedule 4.22.c Retirement Plans
Schedule 4.22.g Welfare Plans
Schedule 4.23 Seller's Insurance Policies and Notices
Schedule 4.24 Sufficiency of Rights
Schedule 4.25 Disabling Procedures
Schedule 4.28 Principal Shareholders
Schedule 6.2.a Permitted Liens
Schedule 7.12(1) Unearned Revenue as of Closing
vi
8
Schedule 7.12(2) Purchase Price Adjustment as of Closing
Schedule 11.2 Allocation of Purchase Price
List of Exhibits
Exhibit 3.2.d Warrants
Exhibit 3.3.a Escrow Agreement
Exhibit 7.8(1) Seller's Incumbency Certificate
Exhibit 7.8(2) Seller's Legal Opinion
Exhibit 8.1 Buyer's Representations and Warranties Certificate
Exhibit 8.2 Buyer's Performance Certificate
Exhibit 8.3 Buyer's Legal Opinion
Exhibit 9.1 Seller's Representations and Warranties Certificate
Exhibit 9.2 Seller's Performance Certificate
Exhibit 10.2.b(1) Xxxx of Sale and Assignment
Exhibit 10.2.f Assumption Agreement
Exhibit 15.3.b Backup License Agreement
vii
9
Location of Defined Terms
1997 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Advance Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Buyer Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Buyer's Termination Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Buyer's Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Cash Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Claimant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 36
Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Closing Holdback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Escrow Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exclusivity Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Existing Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
General Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Holdback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Indemnity Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Letter of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Material Change in Circumstance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Notice of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 36
Office Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
viii
10
Parent Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Parent SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Principal Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Required Government Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Seller Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Seller's Termination Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Software Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Software Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Software Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Technical Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Unearned Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
written statement of pending claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ix
11
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), made and entered
into this 25th day of February, 1998 (the "Effective Date"), by and among
SalesKit Software Corporation, a Missouri corporation ("Seller"), Arch
Acquisition Corp., a Virginia corporation ("Buyer") and Deltek Systems, Inc., a
Virginia corporation and the parent corporation of Buyer ("Parent").
WITNESSETH:
WHEREAS, the business conducted by Seller (the "Software Business")
consists primarily of the acquisition, development, marketing, distribution,
licensing, maintenance, and support of the systems and applications computer
programs described in Schedule A attached hereto (the "Software Programs"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to buy
from Seller, certain assets of Seller relating to the Software Business, and
Seller desires to transfer, and Buyer desires to assume, certain liabilities of
Seller arising in connection with the Software Business, all upon the terms and
conditions and subject to the limited exceptions set forth herein; and
WHEREAS, Buyer is the wholly owned subsidiary of Parent.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, and agreements of the parties hereinafter set forth, the
parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 PURCHASE AND SALE OF ASSETS. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees to purchase, accept, and acquire
from Seller, and Seller agrees to sell, transfer, assign, convey, and deliver
to Buyer, at the Closing, all right, title, and interest of Seller in and to
those assets, tangible or intangible, relating primarily to the Software
Business, (hereinafter collectively referred to as the "Assets") described in
this Section 1.1 below:
a. INVENTORIES. All inventories of (1) computer program code
(in all media) and materials, including the Software Programs; (2) program
documentation, including user materials; and (3) all other unused or reusable
materials, stores, and supplies, in each case to the
12
extent used in, relating to, or arising out of the Software Business listed by
category and volume level in Schedule 1.1.a (the "Inventory").
b. TECHNICAL DOCUMENTATION All technical and descriptive
materials (other than Inventory) relating to the acquisition, design,
development, use, or maintenance of computer code and program documentation and
materials in the Software Business (the "Technical Documentation").
c. SOFTWARE CONTRACTS. All contracts, agreements, licenses,
and other commitments and arrangements, oral or written, with any person or
entity respecting the ownership, license, acquisition, design, development,
distribution, marketing, use, or maintenance of computer program code, related
technical or user documentation, and databases, in each case relating to or
arising out of the Software Business consisting of the items listed and
classified in Schedule 1.1.c as (1) licenses from third parties (development
and/or marketing); (2) licenses from third parties (internal use only); (3)
development contracts, work-for-hire agreements, and consulting and employment
agreements; (4) distributorships, dealerships, franchises, and manufacturer's
representative contracts; (5) licenses and sublicenses to others; (6)
maintenance, support, or enhancement agreements; and (7) source code escrow
agreements (the "Software Contracts").
d. OFFICE EQUIPMENT. All office furniture, fixtures,
equipment and devices (including data processing hardware and related
telecommunications equipment, media, and tools) used in the Software Business,
including Seller's rights under all related warranties, listed in Schedule
1.1.d (the "Office Equipment").
e. LEASES. The entire leasehold or rental interest arising
under leases of:
(1) Equipment, including data processing hardware and
associated telecommunications equipment, media, and tools;
(2) Office furnishings and fixtures;
(3) Other personality, in each case as used in the
Software Business; and
(4) Real property, including buildings, structures,
and other improvements located thereon, and easements and other rights
relative thereto,
all listed in Schedule 1.1.e (collectively the "Leases").
f. OTHER CONTRACTS. To the extent not otherwise classified as
Software Contracts in Schedule 1.1.c, or Leases in Schedule 1.1.e, all
contracts, agreements, licenses, commitments,
2
13
arrangements, and permissions respect the Software Business listed in Schedule
1.1.f (the "General Contracts").
g. BUSINESS RECORDS. All business and marketing records,
including accounting and operating records, asset ledgers, inventory records,
budgets, personnel records, payroll records, customer lists, employment and
consulting agreements, supplier lists, information and data respecting leased
or owned equipment, files, correspondence and mailing lists, advertising
materials and brochures, and other business records used in the Software
Business (the "Business Records").
h. AUTHORIZATIONS. All governmental approvals,
authorizations, certifications, consents, variances, permissions, licenses, and
permits to or from, or filings, notices, or recordings to or with, federal,
state, and local governmental authorities listed in Schedule 1.1.h (the
"Authorizations"), but subject, as to the reassignability to Buyer, to the
procurement of the Required Government Consents (listed in Schedule 4.4).
i. INTELLECTUAL PROPERTY. All patents, trademarks, service
marks, trade names, and copyrights (including registrations, licenses, and
applications pertaining thereto), and all other intellectual property rights,
trade secrets, and other proprietary information, processes, and formulae used
in the Software Business or otherwise necessary for the ownership and use of
the Assets and the conduct of the Software Business (the "Intellectual
Property").
j. CLAIMS. All claims Seller may have against any person
relating to or arising from the Assets or the Software Business, including
rights to recoveries for damages or defective goods, to refunds, insurance
claims, and chooses in action.
k. BUSINESS INTERESTS, PARTICIPATIONS, AND OWNERSHIP
POSITIONS. All interests, participations, and ownership positions held by
Seller in any corporation, partnership, joint venture, co-marketing
arrangement, or similar enterprise or undertaking relating to the Software
Business listed in Schedule 1.1.k.
1.2 EXCLUDED ASSETS. Seller shall not sell or assign to Buyer, and
Buyer shall not purchase or accept assignment from Seller of, the assets
identified in Schedule 1.2 (the "Excluded Assets").
ARTICLE II
ASSUMPTION OF LIABILITIES
2.1 ENUMERATION OF ASSUMED LIABILITIES. At and after the Closing,
Buyer shall assume and agree to pay or perform only the liabilities and
obligations of Seller that arise out of the Software Business or the Assets and
are expressly identified in this Section 2.1 (the "Assumed
3
14
Liabilities") or are represented by any other covenant, agreement, or indemnity
of Buyer in this Agreement or the other agreements and instruments to be
executed and delivered by Buyer in connection with this Agreement. Subject to
the express exclusions set forth in Section 2.2, the Assumed Liabilities shall
consist of the following:
a. CONTRACTS. All payment and performance obligations arising
out of or relating to (1) the Software Contracts; (2) the Leases; and (3) the
General Contracts after the Closing Date, except to the extent attributable to
(a) any breach or default by Seller under any of the same on or before the
Closing Date or (b) any other liability or obligation not disclosed by Seller
pursuant to this Agreement, insofar as disclosure thereof is required hereunder
and Buyer does not receive property or services of substantially equivalent
value in respect of such liability or obligation.
b. OTHER LIABILITIES. The unearned revenue (determined in
accordance with AICPA Statement of Position 97-2) relating to Seller's
obligation to complete and deliver certain software (either custom or standard
product) and perform certain consulting, training and maintenance services for
which Seller has billed or has billed and collected revenues on or prior to
Closing (the "Unearned Revenue").
2.2 LIABILITIES NOT ASSUMED. Without in any way expanding the
specificity and limitation of Section 2.1, Buyer shall not assume or be
responsible for any of the following liabilities or obligations expressly
identified in this Section 2.2 (the "Excluded Liabilities"):
a. NONENUMERATED LIABILITIES. Any liability or obligation of
Seller of any kind, known or unknown, contingent or otherwise, not either
enumerated as an Assumed Liability in Section 2.1 or resulting from any other
covenant, agreement, or indemnity of Buyer in this Agreement or the other
agreements and instruments to be executed and delivered by Buyer in connection
with Agreement.
b. TAXES. Any liability or obligation of Seller for federal,
state, or local income, franchise, property, sales or use (to the extent
arising from pre-Closing transactions), or recapture taxes, assessments, and
penalties, whether arising out of the transactions contemplated by this
Agreement or otherwise.
c. VIOLATIONS OF LAW. Any liability or obligation resulting
from violations of any applicable laws or regulations by Seller prior to the
Closing Date or infringement of third-party rights or interests.
d. EMPLOYEE LIABILITIES. Any employee liabilities relating to
present and past employees of the Software Business with respect to plans,
programs, policies, commitments, and other benefit entitlement established or
existing on or prior to Closing (whether or not such
4
15
liabilities are accrued or payable at Closing, and whether or not such
liabilities are contingent in nature), including without limitation:
(1) Any liability or obligation for workers'
compensation;
(2) Any current or future liabilities to employees
retiring on, before, or after Closing, and their dependents;
(3) Any current or future liabilities for benefits
that may have been accrued or earned by any employees associated with
the Software Business on or before Closing under any pension plans
relating to service prior to the Closing Date;
(4) Any current of future liabilities for claims
incurred prior to Closing and related expenses with respect to any
employees associated with the Software Business under any welfare or
disability plans established or existing at or prior to Closing,
regardless of when filed with Buyer, Seller, or the claims
administrator for any such plan;
(5) Any retrospective premium on pension, savings,
thrift, or profit-sharing plan contribution relating to any employees
associated with the Software Business incurred or accrued prior to the
Closing Date, regardless of when invoiced or recorded; and
(6) Any monetary liability for severance payments
that may arise at any time in favor of any of Seller's employees under
any plan, program, policy, commitment, or other benefit entitlement.
e. PRODUCT LIABILITY. Any liability or obligation for product
liability or warranty claims or damage claims arising out of defects in or
failures of any product, program, or material of Seller or the Software
Business provided, distributed, licensed, or delivered prior to the Closing
Date.
f. INCIDENTS TO EXCLUDED ASSETS. Any liability or obligation
associated with any of the Excluded Assets.
g. LITIGATION. Any Litigation (as defined in Section 4.18)
pending or threatened against Seller or the Assets.
5
16
ARTICLE III
PRICE AND PAYMENT
3.1 PURCHASE PRICE. The aggregate purchase price for the Assets (the
"Purchase Price") shall be:
a. CASH. An amount equal to Six Million Fifty-four Thousand
Dollars ($6,054,000.00) less any Purchase Price Adjustment (as defined below)
at Closing (the "Cash Purchase Price"); plus
b. WARRANTS. Warrants (which shall be issued by Buyer to
Seller at Closing and may be transferred to or among Seller's security holders
at Closing or in connection with Seller's liquidation) for the purchase of One
Hundred Thirty Thousand (130,000) shares of Buyer's voting common stock (the
"Warrants"). The Warrants will have customary adjustment provisions in the
event of a stock dividend, recapitalization, or similar event. The Warrants to
be issued under this Section 3.1.b. shall be exercisable in full or in part on
or before the third anniversary of the Closing Date at a price of Twenty-two
Dollars ($22) per share.
For the purposes hereof, "Purchase Price Adjustment" means the amount of any
unearned revenue (determined in accordance with AICPA Statement of Position
97-2) relating to (i) Seller's obligations, arising after the Effective Date,
to deliver Seller's standard software and (ii) Seller's obligations to perform
certain software customization or development, consulting, training and
maintenance services, for which, in each case, Seller has billed or has billed
and collected revenues on or prior to Closing.
3.2 PAYMENT.
a. LETTER OF INTENT. Upon execution and delivery of that
certain Letter of Intent by and between the Seller and Parent dated February
12, 1998 (the "Letter of Intent"), Parent paid Seller a One Hundred Thousand
Dollars ($100,000) (the "Exclusivity Fee") in consideration of Seller's
agreement in the Letter of Intent not to negotiate with or solicit offers or
expressions of interest from, or provide information to, any other party with
respect to the possible purchase of the stock or assets of Seller outside the
ordinary course of business. At Closing, the Exclusivity Fee shall be credited
against Buyer's payment of the Purchase Price.
b. ADVANCE. So long as Seller has not failed to perform any
of its obligations under that certain Backup License Agreement by and between
Buyer and Seller of even date herewith or that certain Software Escrow
Agreement by and among Buyer, Seller and The Safe Deposit Company of even date
herewith, Buyer agrees to advance to Seller Four Hundred Thousand Dollars
($400,000) (the "Advance Payment") against payment of the Purchase Price at
Closing upon Seller's obtaining the approval of its shareholders required in
connection with the
6
17
transactions contemplated hereby and delivering to Buyer the certificates and
legal opinion required by Section 7.8, which Advance Payment shall be made out
of the Escrow Fund in accordance with Section 3.3.a.
c. PAYMENT AT CLOSING. On the Closing Date, Buyer shall pay to
Seller (i) an amount equal to the Cash Purchase Price less (i) the Exclusivity
Fee; (ii) the Advance Payment and (ii) a holdback to be held as security for
Seller's indemnification obligations under Section 13.1 (the "Holdback") equal
to $500,000 plus any Closing Holdback, which cash payment shall be made out of
the Escrow Fund in accordance with Section 3.3.b. For the purposes hereof, the
"Closing Holdback" shall be an amount equal to the lesser of (i) total amount,
as reasonably determined by Buyer, of (A) all untrue or inaccurate
representations and warranties that pursuant to Section 9.1 would otherwise
permit Buyer not to perform its obligations hereunder and (B) all Adverse
Changes that pursuant to Section 9.4 would otherwise permit Buyer not to
perform its obligations hereunder or (ii) Two Hundred Fifty Thousand Dollars
($250,000).
d. WARRANTS AT CLOSING. On the Closing Date, Buyer shall
issue to Seller the Warrants in substantially the form attached hereto as
Exhibit 3.2.d.
3.3 ESCROW FUND. On the Effective Date of this Agreement, Buyer,
Seller and Crestar Bank (the "Escrow Agent") shall enter into the escrow
agreement attached hereto as Exhibit 3.3.a (the "Escrow Agreement"), and Buyer
shall deliver to the Escrow Agent Five Million Nine Hundred Fifty Four Thousand
Dollars ($5,954,000) (the "Escrow Fund") to be held by the Escrow Agent in
accordance with the Escrow Agreement to pay in full the cash portion of the
Purchase Price at Closing and, after Closing, to secure Seller's
indemnification obligations under Section 13.1 and to be disbursed by the
Escrow Agent as follows:
a. ADVANCE. Four Hundred Thousand Dollars ($400,000) from
the Escrow Fund shall be delivered to Seller as payment of the Advance Payment
upon Seller's receipt of the approval of its shareholders required in
connection with the transactions contemplated hereby as contemplated by Section
7.8.
b. CLOSING. At Closing an amount equal to the Cash Purchase
Price less the Exclusivity Fee, the Advance Payment and the Holdback shall be
delivered to Seller and the remaining balance of the Escrow Fund in excess of
the Holdback shall be delivered to Buyer.
c. TERMINATION. In the event that this Agreement is
terminated prior to Closing pursuant to Article XV, the entire Escrow Fund,
together with any interest earned thereon, shall be delivered to Buyer.
d. INDEMNIFICATION. After Closing, the Escrow Fund shall be
disbursed in accordance with Section 13.7 hereof.
7
18
3.4 METHOD OF PAYMENT. All payments from one party to another under
this Agreement shall be made by wire transfer of immediately available federal
funds in United States dollars to an account designated in writing by the party
to receive such payment.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.1 ORGANIZATION. Seller is a corporation validly existing and in
good standing under the laws of the State of Missouri with the corporate power
and authority to conduct its business (including the Software Business) and to
own and lease its properties and assets (including the Assets) and, as to the
conduct of the Software Business and the use and ownership of the Assets
specifically, is duly qualified or licensed to do business and is in good
standing as a foreign corporation in each other jurisdiction, if any, in which
properties owned or leased or business conducted by it make such licensing or
qualification necessary. Schedule 4.1 sets forth a list of the addresses of all
offices that Seller has maintained at any time within five (5) years prior to
the Effective Date.
4.2 POWER AND AUTHORITY. Seller has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder, and, subject to approval of this Agreement by Seller's shareholders,
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement, the performance by Seller of its obligations hereunder and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Seller,
except that this Agreement and the transactions contemplated hereby have not,
as of the date of this Agreement, been approved by Seller's shareholders. The
Board of Directors of Seller has, as of February 25, 1998, unanimously (i)
approved this Agreement and the transactions contemplated hereby, (ii)
determined that the transactions contemplated hereby are in the best interests
of the shareholders of Seller and are on terms that are fair to such
shareholders and (iii) recommended that the shareholders of Seller approve this
Agreement and the transactions contemplated hereby. No other corporate
proceeding on the part of Seller is necessary to authorize this Agreement or
the performance of Seller's obligations hereunder or the consummation of the
transactions contemplated hereby thereby, other than the approval of Seller's
shareholders. This Agreement has been duly executed and delivered by Seller and
constitutes the legal, valid and binding obligation of Seller enforceable
against Seller in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, or other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies is subject to discretion of the court before which any
proceeding therefor may be brought.
8
19
4.3 NO CONFLICT. Neither the execution and delivery of this Agreement
and the other agreements and instruments to be executed and delivered in
connection with the transactions contemplated hereby or thereby, nor the
consummation of the transactions contemplated hereby or thereby, will violate
or conflict with (1) except insofar as Required Government Consents are to be
procured prior to Closing, any federal, state, or local law, regulation,
ordinance, zoning requirement, governmental restriction, order, judgment, or
decree applicable to Seller, the Software Business, or the Assets, (2) any
provision of any charter, bylaw or other governing or organizational instrument
of Seller, or (3) except insofar as Required Contract Consents are to be
procured prior to Closing, any mortgage, indenture, license, instrument, trust,
contract, agreement, or other commitment or arrangement to which Seller is a
party or by which Seller or any of the Assets is bound.
4.4 REQUIRED GOVERNMENT CONSENTS. Except for (1) the filing and/or
recording of deeds and other instruments of conveyance, transfer, or assignment
required by federal copyright, patent, or trademark laws or the laws of the
states in which the Assets are located, to occur upon Closing and (2) the
further exceptions set forth in Schedule 4.4 (the foregoing items (1) and (2)
being referred to herein as the "Required Government Consents"), no approval,
authorization, certification, consent, variance, permission, license, or permit
to or from, or notice, filing, or recording to or with, federal, state, or
local governmental authorities is necessary for (i) the execution and delivery
of this Agreement and the other agreements and instruments to be executed and
delivered in connection with the transactions contemplated hereby or thereby by
Seller, (ii) the consummation by Seller of the transactions contemplated hereby
or thereby, or (iii) the ownership and use of the Assets and the conduct of the
Software Business (including by Buyer).
4.5 REQUIRED CONTRACT CONSENTS. Except as set forth in Schedule 4.5
(such scheduled items being referred to herein as the "Required Contract
Consents"), no approval, authorization, consent, permission, or waiver to or
from, or notice, filing, or recording to or with, any person (other than the
governmental authorities addressed in Section 4.4) is necessary for (1) the
execution and delivery of this Agreement and the other agreements and
instruments to be executed and delivered in connection with the transactions
contemplated hereby or thereby by Seller or the consummation by Seller of the
transactions contemplated hereby; (2) the transfer and assignment to Buyer at
Closing of the Software Contracts, the Leases or the General Contracts, or (3)
the ownership and use of the Assets and the conduct of the Software Business
(including by Buyer).
4.6 TITLE TO TANGIBLE PROPERTY. Buyer at Closing shall obtain good
and marketable title to all of the tangible Assets (i.e., the Inventories,
Technical Documentation, Office Equipment and Business Records), free and clear
of all title defects, liens, restrictions, claims, charges, security interests,
or other encumbrances of any nature whatsoever (except for the Leases listed in
Schedule 1.1.e and liens for taxes not yet due and payable).
9
20
4.7 CONDITION OF PROPERTY. All of the tangible Assets are in
sufficient condition for operation of the Software Business by Buyer after the
Closing in substantially the same manner as it has been operated by Seller
during the twelve (12)-month period preceding the Closing.
4.8 INVENTORY. All Inventory is of usable quality and includes no
material amount of obsolete or discontinued items or items that cannot be used
by Buyer in the Software Business in the ordinary course.
4.9 TITLE TO INTELLECTUAL PROPERTY.
a. OWNERSHIP. Except for the rights and licenses validly and
effectively established by the Software Contracts, Seller owns, Buyer shall
receive at Closing, and the Intellectual Property includes, all patents,
trademarks, service marks, trade names, and copyrights (including
registrations, licenses, and applications pertaining thereto) and all other
intellectual property rights, trade secrets, and other proprietary information,
processes, and formulae used in the Software Business or otherwise necessary
for the ownership and use of the Assets and the conduct of the Software
Business. No Intellectual Property is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting in any manner the
licensing thereof by Seller. Seller has the exclusive right to file, prosecute
and maintain all applications and registrations with respect to the
Intellectual Property. Schedule 4.9.a sets forth all registered trademarks and
service marks, all reserved trade names, all registered copyrights and all
filed patent applications and issued patents used in the Software Business or
otherwise necessary for the conduct of the Software Business as heretofore
conducted. All patents and registered trademarks, service marks, and other
company, product or service identifiers and registered copyrights held by
Seller are valid and subsisting.
b. PROCEDURES FOR TRADE SECRET PROTECTION. Seller has
promulgated and used its best efforts to enforce the trade secret protection
program set forth in Schedule 4.9.b. Insofar as Seller knows, there has been no
material violation of such program by any person or entity. The source code and
system documentation relating to the Software Programs (1) have at all times
been maintained in confidence and (2) have been disclosed by Seller only to
employees and consultants having "a need to know" the contents thereof in
connection with the performance of their duties to Seller.
c. PERSONNEL AGREEMENTS. All personnel, including employees,
agents, consultants, and contractors, who have contributed to or participated
in the conception and development of the Software Programs, Technical
Documentation, or Intellectual Property on behalf of Seller either (1) have
been party to a "work-for-hire" arrangement or agreement with Seller, in
accordance with applicable federal and state law, that has accorded Seller
full, effective, exclusive, and original ownership of all tangible and
intangible property thereby arising, or (2) have executed appropriate
instruments of assignment in favor of Seller as assignee that have conveyed to
Seller full, effective, and exclusive ownership of all tangible and
10
21
intangible property thereby arising. Copies of all such instruments of
assignment are attached hereto at Schedule 4.9.c.
d. COPYRIGHT PROTECTION. In no instance has the eligibility
of the Software Programs for protection under applicable copyright law been
forfeited to the public domain.
e. ABSENCE OF CLAIMS. No claims with respect to the
Intellectual Property, including, without limitation, claims challenging
Seller's use of any Intellectual Property or the ownership, validity or
effectiveness of any of the Intellectual Property, have been asserted or, to
the best knowledge of Seller, after reasonable investigation, are threatened by
any person, and Seller does not know of any valid basis for any such claims.
Seller's use of the Intellectual Property does not infringe on the rights of
any person. Seller has not been sued or charged in writing as a defendant in
any claim, suit, action or proceeding which involves a claim of infringement of
any patents, trademarks, service marks, copyrights or other intellectual
property rights and which has not been finally terminated prior to the date
hereof; there are no such charges or claims outstanding; and to the best
knowledge of Seller, Seller has no infringement liability with respect to any
patent, trademark, service xxxx, copyright or other intellectual property right
of another.
f. ABSENCE OF INFRINGEMENTS. Except as set forth in Schedule
4.9.f, to the best knowledge of Seller, there has not been and there is not now
any material unauthorized use, infringement or misappropriation of any of the
Intellectual Property by any third party, including without limitation any
employee or former employee of Seller;
4.10 ADEQUACY OF TECHNICAL DOCUMENTATION. The Technical Documentation
includes the source code, system documentation, statements of principles of
operation, and schematics for all Software Programs, as well as any pertinent
commentary or explanation that may be necessary to render such materials
understandable and usable by a trained computer programmer. The Technical
Documentation also includes any program (including compilers), "workbenches,"
tools, and higher level (or "proprietary") languages used for the development,
maintenance, and implementation of the Software Programs.
4.11 CONTRACTS--GENERAL. The Software Contracts listed in Schedule
1.1.c, and the General Contracts listed in Schedule 1.1.f, are valid, binding,
and enforceable in accordance with their terms and are in full force and
effect. There are no existing defaults by Seller under any such contracts, and
no act, event, or omission has occurred that, whether with or without notice,
lapse of time, or both, would constitute a default thereunder.
4.12 THIRD-PARTY COMPONENTS IN SOFTWARE PROGRAMS. Seller has validly
and effectively obtained the right and license to use, copy, modify, and
distribute the third-party programming and materials contained in the Software
Programs and Technical Documentation pursuant to the Software Contracts
identified as "licenses from third parties (development and/or
11
22
marketing)" or "Licenses from third parties (internal use only)" in Schedule
1.1.c, and Seller is not, nor as a result of the execution and delivery of this
Agreement or the performance of Seller's obligations hereunder will be, in
violation of, or lose any rights pursuant to any such Software Contracts. The
Software Programs and Technical Documentation contain no other programming or
materials in which any third party may claim superior, joint, or common
ownership, including any right or license. The Software Programs and Technical
Documentation do not contain derivative works of any programming or materials
not owned in their entirety by Seller and included in the Assets. Schedule
4.12 sets forth all obligations that Seller has to pay royalties to any third
party to use, copy, modify, and distribute the third-party programming and
materials contained in the Software Programs and Technical Documentation.
4.13 THIRD-PARTY INTERESTS OR MARKETING RIGHTS IN SOFTWARE PROGRAMS.
a. GENERAL. Seller has not granted, transferred, or assigned
any right or interest in the Software Programs, the Technical Documentation, or
the Intellectual Property to any person or entity, except pursuant to the
Software Contracts identified as "distributorships, dealerships, franchises,
and manufacturer's representative contracts," "licenses and sublicenses to
others" or "source code escrow agreements" in Schedule 1.1.c.
b. LICENSES AND SUBLICENSES TO OTHERS. Except as set forth in
Schedule 4.13.b(1), all Software Contracts identified as "licenses and
sublicenses to others' in Schedule 1.1.c constitute only end-user agreements,
each of which (except as noted on Schedule 4.13.b(1)) substantially conforms to
the standard form(s) established by Seller, copies of which are attached hereto
as Schedule 4.13.b(2). Except for reasonable and ordinary marketing and
service commitments and practices, or except as provided in written purchase
orders, license agreements, maintenance contracts, and customer files
identified in Schedule 4.13.b(3), Seller has not made or entered into any
contracts or commitments, written or oral, for the benefit of any current
customers or prospects, including, without limitation, custom software
development and other technical support.
c. DISTRIBUTORSHIPS, DEALERSHIPS, ETC. There are no
contracts, agreements, licenses, and other commitments and arrangements in
effect with respect to the marketing, distribution, licensing, or promotion of
the Software Programs or any other Inventory, the Technical Documentation, or
the Intellectual Property by any independent salesperson, distributor,
sublicensor, or other remarketer or sales organization, except for the Software
Contracts identified as "distributorships, dealerships, franchises, and
manufacturer's representative contracts" in Schedule 1.1.c.
d. SOURCE CODE ESCROW. There are no contracts, agreements,
licenses, and other commitments and arrangements in effect with respect to the
right to access to some or all of the Technical Documentation, except for the
Software Contracts identified as "source code escrow agreements" in Schedule
1.1.c. Schedule 4.13.d sets forth a list of all parties to whom Seller has
12
23
delivered copies of some or all of the Technical Documentation, whether
pursuant to an escrow arrangement or otherwise, or parties who have the right
to receive some or all of the Technical Documentation.
4.14 LEASES. The Leases listed in Schedule 1.1.e constitute all of
the leases in effect: are valid, binding, and enforceable in accordance with
their terms; and are in full force and effect. There are no existing defaults
by Seller thereunder, and no act, event, or omission has occurred that, whether
with or without notice, lapse of time, or both, would constitute a default
thereunder.
4.15 UNDISCLOSED LIABILITIES. Seller has furnished Buyer with
unaudited financial statements of Seller as of its fiscal year end for 1996 and
1997 (collectively, the "Existing Financial Statements"). Copies of the
Existing Financial Statements are attached hereto as Schedule 4.15(1). The
Existing Financial Statements have been prepared in accordance with generally
accepted accounting principles consistently applied (except as may be indicated
in the notes thereto), and fairly present in all material respects the
consolidated financial position of Seller as at the dates thereof and the
consolidated results of their operations and changes in financial position for
the periods then ended, except in the case of the unaudited financial
statements, for the omission of footnote information and for customary year-end
adjustments. There has been no change in Seller's accounting policies, except
as described in the notes to the Financial Statements. Except as set forth in
Schedule 4.15(2), there are no liabilities or obligations, secured or unsecured
(whether absolute, accrued, contingent, or otherwise, and whether due or to
become due), of a nature required by GAAP to be reflected in a balance sheet
of the Software Business evidencing the Assets and the Assumed Liabilities in
their entirety.
4.16. ABSENCE OF JOINT VENTURES, ETC. Except as set forth in Schedule
4.16, Seller is not a party to any joint venture or other similar agreement or
arrangement that involves any sharing of profits of the Software Business or
the Assets or is similar to or competitive with the Software Business, other
than the Software Contracts identified as "licenses from third parties
(development and/or marketing)" or "distributorships, dealerships, franchises,
and manufacturer's representative contracts" in Schedule 1.1.c.
4.17 MAJOR VENDORS AND CUSTOMERS. Schedule 4.17 lists each licensor,
developer, remarketer, distributor, and supplier of property or services to,
and each licensee, end-user, or customer of, Seller, to whom Seller paid or
billed in the aggregate Twenty-Five Thousand Dollars ($25,000) or more during
the most recent fiscal year, together with, in each case, the amount paid or
billed during such period. Seller has received no notice from any such person
or entity that the relationship with such person or entity might not be
continued by Buyer, after its acquisition of the Software Business, at least at
substantially the same level of business and on substantially the same terms as
Seller experienced during the twelve (12)-month period preceding the Closing.
13
24
4.18 LITIGATION. Except as set forth in Schedule 4.18(1), no claim,
action, suit, proceeding, inquiry, hearing, arbitration, administrative
proceeding, or investigation (collectively, "Litigation") is pending, or, to
Seller's best knowledge, threatened against Seller, its present or former
directors, officers, or employees, or any party to any Software Contract,
affecting, involving, or relating to the Software Business or any of the
Assets. Except as set forth in Schedule 4.18(2), no Litigation has been brought
within the last five (5) years against Seller affecting, involving, or relating
to the Software Business or any of the Assets. Seller knows of no facts that
could reasonably be expected to serve as the basis for Litigation against
itself (or the Buyer upon acquisition of the Software Business), its present or
former directors, officers, or employees, or any party to the Software
Contracts, affecting, involving, or relating to the Software Business or the
Assets.
4.19 RELATED-PARTY TRANSACTIONS. Except as disclosed in Schedule
4.19, Seller is not a party to any contract, agreement, license, lease, or
arrangement with, or any other commitment to, directly or indirectly, (1) any
officer or salaried employee of the Seller in office within two (2) years of
the date of execution hereof; (2) any corporation, trust, or other entity in
which any such officer or salaried employee has a material equity or
participating interest; or (3) or any partnership in which any such officer or
salaried employee has a partnership or participating interest, in each case,
relating to or involving the Software Business, the Assets, or the Assumed
Liabilities, except, in each instance, for existing compensation arrangements
listed in Schedule 4.22.b. Each such contract, agreement, license, lease,
arrangement, and commitment was entered into by Seller in the ordinary course
of business upon terms that are fair and reasonable to the Software Business
without regard to the status and relationship of such other parties.
4.20 COURT ORDERS, DECREES, AND LAWS
a. COMPLIANCE WITH LAWS. There is no outstanding or, to
Seller's best knowledge, threatened order, writ, injunction, or decree of any
court, governmental agency, or arbitration tribunal against Seller affecting,
involving, or relating to the Software Business or the Assets. Seller is not in
violation of any applicable federal, state, or local law, regulation,
ordinance, zoning requirement, governmental restriction, order, judgment, or
decree affecting, involving, or relating to the Software Business or the Assets
except where noncompliance has no material adverse effect upon the financial
condition, operation, or prospects of the Software Business (including under
ownership by Buyer) or the Assets, and Seller has received no notices of any
allegation of any such violation. The foregoing shall be deemed to include laws
and regulations relating to the federal patent, copyright, and trademark laws,
state trade secret and unfair competition laws, and to all other applicable
laws, including equal opportunity, wage and hour, and other employment matters,
and antitrust and trade regulation laws.
b. ADEQUACY OF AUTHORIZATIONS. The Authorizations constitute
all approvals, authorizations, certifications, consents, variances,
permissions, licenses, or permits to or from, or filings, notices, or
recordings to or with, federal, state, or local governmental authorities that
are
14
25
required for the ownership and use of the Assets and the conduct of the
Software Business under federal, state, and local law, regulation, ordinance,
zoning requirement, governmental restriction, order, judgment, or decree.
Seller is in compliance with all terms and conditions of such required
Authorizations. All of the Authorizations are in full force and effect, and, to
the best of Seller's knowledge, no suspension or cancellation of any of them is
being threatened, nor will any of the Authorizations be affected by the
consummation of the transactions described in this Agreement, except to the
extent any such Authorizations are transferable only upon receipt of the
Required Government Consents. Seller is in compliance with all other applicable
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in those laws or contained in
any law, regulation, code, plan, order, decree, judgment, notice, or demand
letter issued, entered, promulgated, or approved thereunder relating to or
affecting the Software Business.
c. ENVIRONMENTAL COMPLIANCE. Except as set forth in Schedule
4.20.c, neither Seller, nor, to the best of seller's knowledge, any prior
owner, user, controller, or occupant, nor any tenant, subtenant, prior tenant,
or prior subtenant has ever used Hazardous Materials (as hereinafter defined)
on, from, or affecting the Assets or any facility, site, area, or property
owned, used, controlled, or occupied by the Software Business in any manner
that violates any federal, state, or local law, regulation, governmental
restriction, order, judgment, or decree governing the use, storage, treatment,
transportation, manufacture, handling, production, or disposal of Hazardous
Materials. For purposes hereof, "Hazardous Materials" include any flammable
materials, explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances, or related materials defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 USC Sections 9601 et seq.), the Hazardous Materials
Transportation Act, as amended (49 USC Sections 1801 et seq.), the Resource
Conservation and Recovery Act, as amended (42 USC Sections 6901 et seq.), and
laws of the states of Missouri, and in the regulations adopted and publications
promulgated pursuant thereto, or any other federal, state, or local
environmental law, ordinance, rule, or regulation. The term "material" includes
asbestos, polychlorinated biphenyls, kerosene, and fuel oil. The term "release"
means any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing into the environment. The
term "environment" means any surface or groundwater water supply, land,
surface, or subsurface strata or the ambient air.
4.21 TAXES
a. TAX RETURNS AND PAYMENT OF TAXES. All tax returns of every
kind (including returns of real and personal property taxes, intangible taxes,
withholding taxes, and FICA and unemployment compensation taxes) relating to
the Software Business that are due to have been filed in accordance with any
applicable law have been duly filed; and all taxes shown to be due on such
returns have been paid in full.
15
26
b. STATE SALES TAXES, ETC. Schedule 4.21.b identifies (1)
each jurisdiction in which the Software Business is conducted in which sales,
use, excise, or intangible taxes are due or paid on Software Programs or other
Inventory sold or licensed by Seller in conjunction with the Software Business
and (2) the Software Programs or other Inventory subject to taxation in such
jurisdiction.
4.22 PERSONNEL AND COMPENSATION
a. LIST OF PERSONNEL. Schedule 4.22.a is a true and complete
list of the names and current compensation levels of (1) all salaried or annual
employees and (2) all consultants involved in the Software Business.
b. COMPENSATION, ETC. Except as set forth in Schedule 4.22.b,
Seller is not subject to, and has no obligation under, any employment,
consulting, or collective bargaining contracts, deferred compensation, pension
(as defined in Section 3(2) of the Employee Retirement Income Security Act
(ERISA)), profit-sharing, bonus, stock option, stock appreciation, stock
purchase, or other nonqualified benefit or compensation commitments, benefit
plans, arrangements, or plans, including any welfare plans (as defined in
Section 3(1) of ERISA), fringe benefit arrangements, or multi-employer plans
(as defined in Section 3(37)(A) of ERISA) of or pertaining to the present or
former employees involved in the Software Business. Seller has complied with
all of its obligations under the foregoing in all material respects.
c. RETIREMENT PLANS. Schedule 4.22.c identifies all of the
retirement plans, by plan name and plan year, that Seller ever has established
for the benefit of persons who are or were involved in the Software Business
(the "Plans"). The Plans and their administration are the sole responsibility
of Seller.
d. COMPLIANCE WITH LAW. Seller is in compliance with the
applicable provisions of ERISA, the regulations and published authorities
thereunder, and all other applicable laws with respect to the Plans. Seller
has performed its obligations under all Plan, including, without limitation,
the full payment of all amounts required to be made as contributions thereto or
otherwise. There are not actions, suits, claims (other than routine claims for
benefits) pending or, to the knowledge of Seller, threatened against the Plans
or their assets, arising out of the Plans, and to the knowledge of Seller, no
facts exist which should give rise to any such actions, suits or claims.
e. SUBMISSION TO BUYER FOR REVIEW. All documents, including
plan and trust instruments, annual reports, actuarial reports and
discrimination tests, relating to the Plans for the Plans' most recently ended
Plan years, have been furnished to Buyer for its review.
f. MULTI-EMPLOYER PLAN. Neither Seller or any predecessor in
interest thereto, nor any trade or business under common control with Seller or
any predecessor in interest thereto
16
27
(within the meaning of Section 414(i) of the Internal Revenue Code) has ever
contributed to any pension Plan that is a Multi-employer Plan for the benefit
of employees involved in the Software Business.
g. ADEQUATE RESERVES FOR WELFARE PLANS. Schedule 4.22.g
identifies all of the welfare plans (as defined in Section 3(2) of ERISA), by
plan name and plan year, that Seller ever has established for the benefit of
persons who are or were involved in the Software Business. Reserves have been
established by Seller or its insurance companies at least sufficient to pay all
claims incurred under the provisions of such plans on or prior to the Closing
Date. Seller has not received notice of, nor does it know any basis for, any
retrospective premium charge for claims relating to any period prior to the
Closing Date under such contracts.
h. COMPLIANCE WITH LAWS. To the best of Seller's knowledge,
Seller is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and occupational safety and health pertaining to the Software Business and the
employees involved in the Software Business, and is not engaged in any unfair
labor practice within the meaning of Section 8 of the National Labor Relations
Act. To the best of Seller's knowledge, there is no unfair labor practice,
charge, or complaint or any other matter against or involving Seller pending
or, to the knowledge of Seller, threatened before the National Labor Relations
Board or any court of law pertaining to the Software Business or the employees
involved in the Software Business. To the best of Seller's knowledge, there
are no charges, investigations, administrative proceedings, or formal
complaints of discrimination (including discrimination based upon sex, age,
marital status, race, national origin sexual preference, handicap, or veteran
status) pending or, to the knowledge of Seller, threatened before the Equal
Employment Opportunity Commission or any federal, state, or local agency or
court against Seller pertaining to the Software Business or the employees of
the Software Business, and, to the knowledge of the Seller, no basis for any
such charge, investigation, administrative proceeding, or complaint exists.
4.23 SELLER'S INSURANCE POLICES. Schedule 4.23 lists all of Seller's
insurance policies as of the Effective Date (the "Insurance Policies"). Other
than as set forth in Schedule 4.23, Seller has not received notice of any
pending or threatened termination or retroactive premium increase with respect
thereto; and Seller is in compliance with all conditions contained therein, the
noncompliance with which could result in termination of insurance coverage or
increased premiums for prior or future periods. There are no pending claims
against such insurance by Seller as to which insurers have denied liability or
are defending under any reservation of rights, and, to the knowledge of Seller,
there exists no claim under such insurance that has not been properly filed by
Seller.
4.24 SUFFICIENCY OF RIGHTS. Except as set forth in Schedule 4.24, and
assuming the renewal or continuation of all business arrangements currently in
place (and, to the best of Seller's knowledge, no reason exists why such
renewal or continuation in favor of Buyer could be
17
28
obstructed), the Assets constitute all of the properties, rights, and
privileges necessary for the continuation of the conduct of the Software
Business by Buyer in substantially the same manner as it has been operated by
Seller during the twelve (12)-month period preceding the closing.
4.25 DISABLING PROCEDURES. Except as set forth in Schedule 4.25, the
Software Programs do not contain any programs, routine, device or other
undisclosed feature, including, without limitation, a time bomb, virus,
software lock, drop dead device, malicious logic, worm, Trojan horse, or trap
door, which is designed to delete, disable, deactivate, interfere with or
otherwise harm the Software Programs or any user's hardware, data or other
programs, or which is intended to provide unauthorized access or produce
unauthorized modifications.
4.26 YEAR 2000 COMPLIANCE. The Software Programs are capable of
performing all functions specified in the applicable related Documentation both
prior to and following January 1, 2000, including, but not limited to, date
data century recognition, calculations which accommodate same century and
multi-century formulas and date values, and date data interface values which
reflect the correct century.
4.27 BROKER'S OR FINDER'S FEES. Seller has not authorized any person
to act as broker or finder or in any other similar capacity in connection with
the transactions contemplated by this Agreement in any manner that may or will
impose liability on Buyer.
4.28 CAPITALIZATION. Seller's authorized capital consists of
20,000,000 (with an amendment previously approved and to be filed for an
increase to 25,000,000) shares of common stock, par value $0.10 per share, of
which 5,749,847 shares are issued and outstanding and 1,000,000 shares of
preferred stock, par value $0.10 per share, of which none are outstanding. The
individuals whose names are listed on Schedule 4.28 are the legal and
beneficial owners of all of the outstanding shares of Seller's common stock.
Prior to the Effective Date, Seller has obtained from the Principal
Shareholders (as defined below) verbal commitments to vote all of their shares
of Seller's common stock at the special meeting of Seller's shareholders
contemplated by Section 7.8 in favor of authorizing the transactions
contemplated by this Agreement. For the purposes hereof, the "Principal
Shareholders" include those persons or entities that own more than two thirds
(2/3) of the shares of Seller's common stock that would be outstanding if (i)
all outstanding rights to subscribe for or to purchase, and all outstanding
options for the purchase of, Seller's common stock or stock or securities
convertible into or exchangeable for Seller's common stock and (ii) all
outstanding stock or securities convertible into or exchangeable for Seller's
common stock, were exercised by the holders thereof.
4.29 DISCLOSURE. No representation, warranty, or statement made by
Seller in this Agreement or in any document or certificate furnished or to be
furnished to Buyer pursuant to this Agreement contains or will contain any
untrue statement or omits or will omit to state any fact necessary to make the
statements contained herein or therein not misleading. Seller has disclosed to
Buyer all facts known or reasonably available to Seller that are material to
the
18
29
financial condition, operation, or prospects of the Software Business, the
Assets, and the Assumed Liabilities.
4.30 TRUTH AT CLOSING. All of the representations, warranties, and
agreements of Seller contained in this Article IV shall be true and correct and
in full force and effect on and as of the Closing Date.
4.31 DISCLAIMER. Except as expressly set forth in this Agreement or
in any document, certificate, agreement, or other instrument furnished or to be
furnished to Buyer pursuant to this Agreement, SELLER MAKES NO REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE ASSETS OR THE SOFTWARE
BUSINESS, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR THE PERFORMANCE OF ANY SOFTWARE PROGRAM.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent hereby represents and warrants to Seller as follows:
5.1 ORGANIZATION. Each of Buyer and Parent is a corporation validly
existing and in good standing under the laws of the Commonwealth of Virginia
with the corporate power and authority to conduct its business and to own and
lease its properties and assets.
5.2 POWER AND AUTHORITY. Each of Buyer and Parent has the power and
authority to execute, deliver, and perform this Agreement and the other
agreements and instruments to be executed and delivered by it in connection
with the transactions contemplated hereby and thereby, and each of Buyer and
Parent has taken all necessary corporate action to authorize the execution and
delivery of this Agreement and such other agreements and instruments and the
consummation of the transactions contemplated hereby and thereby. This
Agreement is, and, when such other agreements and instruments are executed and
delivered, the other agreements and instruments to be executed and delivered by
Buyer and Parent in connection with the transactions contemplated hereby and
thereby shall be, the legal, valid, and binding obligation of Buyer and Parent,
enforceable in accordance with their terms.
5.3 BROKER'S OR FINDER'S FEES. Neither Buyer, nor Parent has
authorized any person to act as broker, finder, or in any other similar
capacity in connection with the transactions contemplated by this Agreement.
5.4 NO CONFLICT. Neither the execution and delivery by Buyer, or
Parent of this Agreement and of the other agreements and instruments to be
executed and delivered by Buyer and Parent in connection with the transactions
contemplated hereby or thereby, nor the
19
30
consummation by Buyer and Parent of the transactions contemplated hereby or
thereby will violate or conflict with (1) any federal, state, or local law,
regulation, ordinance, governmental restriction, order, judgement, or decree
applicable to Buyer or Parent, or (2) any provision of any charter, bylaw, or
other governing or organizational instrument of Buyer or Parent.
5.5 VALID ISSUANCE OF WARRANTS. The Warrants are duly authorized, and
the shares of stock of Parent subject to the Warrants are reserved for
issuance. When issued and delivered in accordance with the terms of the
Warrants for the consideration provided for therein, the stock issued under the
Warrants shall be duly and validly issued, fully paid and nonassessable and
free of preemptive rights.
5.6 CONSENTS. No approval, authorization, certification, consent,
variance, permission, license, or permit to or from, or notice, filing, or
recording to or with, federal, state, or local governmental authorities or any
other third party is necessary for the execution and delivery of this Agreement
and the other agreements and instruments to be executed and delivered in
connection with the transactions contemplated hereby by Buyer or Parent or the
consummation by Buyer or Parent of the transactions contemplated hereby or
thereby, except for (i) the filing of the S-3 and such other documents with,
and the obtaining of such orders from, the SEC and various state securities or
"blue sky" authorities, and the making of such reports under the Exchange Act
of 1934, as amended (the "Exchange Act"), as are required in connection with
the shares that may be issued in connection with the Warrants and (ii) such
other consents, authorizations, filings, approvals and registrations which if
not obtained or made would not have a material adverse impact. Since September
30, 1997, there has not been any material adverse change in the financial
condition or business of Parent.
5.7 SEC DOCUMENTS. Parent has furnished Seller with or made
available to Seller true and complete copies of each statement, annual,
quarterly and other report, registration statement (without exhibits) filed by
Parent with the SEC since December 19, 1996 (the "Parent SEC Documents"). As of
their respective filing dates, the Parent SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act of 1933, as amended, as the case may be, and none of the Parent SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed Parent
SEC Document. The financial statements of Parent included in the Parent SEC
Documents (the "Parent Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles consistently applied
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) and fairly present the
consolidated financial position of Parent at the dates thereof and the
consolidated results of their operations and changes in financial position for
the periods then ended (subject, in the case of unaudited statements, to
20
31
normal, recurring audit adjustments, provided that the notes and accounts
receivable are collectible in the amounts shown thereon and inventories are not
subject to write-down, except in either case in an amount not material or for
which Parent has provided adequate reserves). There has been no change in
Parent's accounting policies or estimates except as described in the notes to
the Parent Financial Statements.
ARTICLE VI
CONDUCT OF SOFTWARE BUSINESS PRIOR TO CLOSING
6.1 RELATIONS WITH LICENSORS ETC. Seller shall use its best efforts
to preserve intact for Buyer, Seller's relationship with licensors, developers,
consultants, remarketers, suppliers, distributors, customers, and others having
regular business relations with Seller.
6.2 PROHIBITED ACTIONS. Seller shall conduct the Software Business
diligently and substantially in the same manner as heretofore conducted, and
Seller shall not institute any new methods of accounting or operation or engage
in any transaction or activity, enter into any agreement, or make any
commitment, except in the ordinary course of such business and consistent with
past practice. Notwithstanding the foregoing, in no event shall Seller take any
of the following actions without the prior written approval of Buyer:
a. LIENS. Permit any of the Assets to be subjected to any
mortgage, pledge, lien, or encumbrance, except for those liens shown on
Schedule 6.2.a.
b. LICENSES. Dispose of, license, or permit to lapse any
rights in any Intellectual Property.
c. INCREASES IN COMPENSATION. Increase the compensation of
any officers, employees, or consultants whom Buyer has stated an intention to
hire or retain on or after Closing, as referred to in Section 12.1.
d. SOFTWARE CONTRACTS. Enter into any new Software Contracts.
e. MODIFICATION OF CONTRACTS. Violate or materially amend or
otherwise modify the terms of any Software Contracts or Other Contracts. For
the purposes hereof, a material amendment or modification means any amendment
or modification that would increase the obligations under any such Software
Contract or Other Contract by more than $25,000.
f. OTHER ARRANGEMENTS. Authorize or propose any of the
foregoing, or enter into any contract, agreement, commitment or arrangement to
do any of the foregoing.
21
32
6.3 INSURANCE; PROPERTY. Seller shall maintain the Insurance Policies
in effect and shall at all times continue to insure all property constituting
the Assets against all ordinary and insurable casualty risks.
6.4 NO DEFAULT. Seller shall not perform any act or omit to perform
any act, or permit any act or omission, that will cause a breach or default of
any covenant, agreement, warranty, or representation in this Agreement.
ARTICLE VII
COVENANTS OF SELLER AND BUYER PRIOR TO CLOSING
7.1 ACCESS. From the date of this Agreement to the Closing Date,
Seller shall (1) provide Buyer with such information as Buyer may from time to
time reasonably request with respect to the Software Business and the
transactions contemplated by its Agreement; (2) provide Buyer and its officers,
counsel, and other authorized representatives access during regular business
hours and upon reasonable notice to the books, records, and offices of Seller,
as Buyer may from time to time reasonably request; and (3) permit Buyer to make
such inspections thereof as Buyer may reasonably request. Any investigation
shall be conducted in such a manner as not to interfere unreasonably with the
operation of the business of Seller.
7.2 FINANCIAL STATEMENTS. Seller shall take such actions as are
required, including the payments of any past due accounts payable, to cause
Xxxxxx Xxxxxxxx & Co. to complete their audit of Seller's financial statements
for fiscal year 1997 and to prepare, finalize and issue (i) audited financial
statements and footnotes for 1997 all in accordance with SEC SX Regulations and
(ii) an opinion (collectively the "1997 Financial Statements"). Seller shall
also take all actions as may be necessary to cause Xxxxxx Xxxxxxxx to consent
to making the 1997 Financial Statements and their work papers related thereto
available to Buyer's accountants. In addition to the 1997 Financial Statements
Seller shall deliver to Buyer as promptly as practicable after each month-end
or quarter-end, as the case may be, from the date of this Agreement to the
Closing Date, all monthly and quarterly financial reports in the form that it
customarily prepares for its internal purposes concerning the Software
Business.
7.3 UPDATING OF INFORMATION. From the date of this Agreement to the
Closing Date, Seller shall deliver to Buyer revised or supplementary schedules
to this Agreement containing accurate information as of the Closing Date, in
order to enable Buyer to confirm the accuracy of Seller's representations and
warranties and otherwise to give full effect to the provisions of this
Agreement; provided, that any such schedules may not include events or actions
subsequent to the date of such schedules. Any such revised or supplementary
schedule shall be deemed part of this Agreement unless Buyer notifies Seller in
writing within five (5) business days after Buyer's receipt of any such
schedule that Buyer objects to any such schedule.
22
33
7.4 APPROVALS OF THIRD PARTIES. Seller and Buyer shall make good
faith efforts, and shall cooperate with one another, to secure all Required
Government consents and all Required Contract Consents, and to obtain the
satisfaction of the conditions specified in Articles VIII and IX, as shall be
required in order to enable Seller and Buyer to effect the transactions
contemplated hereby in accordance with the terms and conditions hereof.
7.5 THIRD-PARTY CERTIFICATES. Seller shall use its best efforts to
procure for the benefit of Buyer consent, assignment, and/or estoppel
certificates in such form, from such third parties, and with respect to such
Assets to be assigned to Buyer at Closing as Buyer may reasonably specify on or
before Closing.
7.6 NEGOTIATION WITH OTHERS. Seller will not, directly or indirectly,
through any officer, director, shareholder, affiliate or agent of Seller or
otherwise, solicit, initiate, entertain, encourage or negotiate any proposals
or offers from any third party relating to the merger or acquisition of Seller
or a significant portion of its assets or capital stock of Seller, nor will
Seller, during this period participate in any negotiations regarding, or
furnish to any person any information with respect to, or otherwise cooperate
with, facilitate or encourage any effort or attempt by any person to do or seek
any such transaction. Seller shall immediately cease and cause to be terminated
all such negotiations with the third parties (other than Buyer) which have
occurred prior to the date of this Agreement.
7.7 AGREEMENT TO COOPERATE. Subject to the terms and conditions of
this Agreement, each of the parties shall use all reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement.
7.8 SHAREHOLDER APPROVAL. Seller will call a meeting of its
shareholders to be held not later than March 15, 1998, for the purpose of
obtaining the shareholder approval required in connection with the transactions
contemplated hereby and shall use all reasonable efforts to obtain such
approval. The resolution approving the transaction contemplated by this
Agreement shall specifically authorize and direct the directors and officers of
the Seller to execute and deliver this Agreement and to take all such actions
and to execute and deliver all such documents as may be necessary to consummate
the sale of the Assets pursuant to the terms of this Agreement. Seller shall
not change the date of the shareholders meeting without the prior written
consent of Buyer, nor shall Seller adjourn the shareholders meeting without the
prior written consent of Buyer, unless such adjournment is due to the lack of a
quorum, in which case the chairman of the shareholders meeting shall announce
at such meeting the time and place of the adjourned meeting. Buyer agrees to
execute written instructions to the Escrow Agent authorizing release of the
Advance Payment pursuant to Section 3.2.a upon receipt of (i) a copy of the
resolutions adopted by Seller's Board of Directors and shareholders certified
by Seller's corporate secretary authorizing the execution and delivery of this
Agreement, the performance by
23
34
Seller of its obligations hereunder and the consummation of the transactions
contemplated hereby, (ii) an incumbency certificate in the form of Exhibit
7.8(1) and (ii) an opinion of Armstrong, Teasdale, Schlafly & Xxxxx, counsel to
Seller ("Seller's Legal Opinion") in substantially the form attached hereto
Exhibit 7.8(2).
7.9 PUBLIC ANNOUNCEMENTS. Buyer and Seller shall cooperate with each
other prior to releasing information concerning this Agreement and the
transactions contemplated hereby, shall furnish to the other drafts of all
press releases or other public announcements prior to publication and shall
obtain the consent of the other prior to the issuance of press releases or the
release of other public announcements; provided that any party hereto shall
have the right, with prior written notice delivered to such other party where a
written response is required (i) to furnish any information to any Governmental
Entity or (ii) to issue any other release, in each case when in the reasonable
opinion of its counsel it is legally required to do so.
7.10 NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt notice
to Buyer, and Buyer shall give prompt notice to Seller, of the occurrence, or
failure to occur, of any event, which occurrence or failure to occur would be
likely to cause (a) any representation or warranty contained in this Agreement
to be untrue or inaccurate at any time from the date of this Agreement to the
Closing Date, or (b) any failure of Seller or Buyer, as the case may be, or of
any officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement.
7.11 OTHER TRANSACTIONS. The parties acknowledge that any action that
is taken by either party and that has been approved by the other party will not
be deemed a breach of any representation, warranty or covenant, notwithstanding
the terms of any such representation, warranty or covenant.
7.12 CLOSING SCHEDULES. Immediately prior to Closing, Seller shall
prepare (i) Schedule 7.12(1) showing the Unearned Revenue as of Closing and
(ii) Schedule 7.12(2) showing the Purchase Price Adjustment as of Closing.
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS
Each of the obligations of Seller to be performed hereunder shall be
subject to the satisfaction (or waiver by Seller) at or prior to the Closing
Date of each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct in
all material respects (i) as of the date of this Agreement and (ii) as of the
Closing Date, as though made on and as of the Closing Date
24
35
(provided that in the cases of clauses (i) and (ii) any such representation and
warranty made as of a specific date shall be true and correct as of such
specific date), and there shall have been no willful breach by Buyer of any of
its representations or warranties made in the Agreement. Seller shall have
received a certificate in the form attached hereto as Exhibit 8.1 signed by the
chief executive officer of Buyer to such effect on the Closing Date.
8.2 PERFORMANCE OF OBLIGATIONS OF BUYER. Buyer shall have performed
in all material respects all obligations and covenants required to be performed
by it under this Agreement prior to or as of the Closing Date, and Seller shall
have received a certificate in the form attached hereto as Exhibit 8.2 signed
by the chief executive officer and the chief financial officer of Buyer to
such effect.
8.3 LEGAL OPINION. Buyer shall have delivered to Seller an opinion of
Xxxxx & Xxxxxx, P.C., dated as of the Closing Date ("Buyer's Legal Opinion") in
substantially the form attached hereto as Exhibit 8.3.
ARTICLE IX
CONDITIONS TO BUYER'S OBLIGATIONS
Each of the obligations of Buyer to be performed hereunder shall be
subject to the satisfaction (or the waiver by Buyer) at or prior to the Closing
Date of each of the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES. Except to the limited extent
permitted pursuant to Section 9.5 below, the representations and warranties of
Seller set forth in this Agreement shall be true and correct in all respects
(i) as of the date of this Agreement and (ii) as of the Closing Date, as though
made on and as of the Closing Date (provided that in the cases of clauses (i)
and (ii) any such representation and warranty made as of a specific date shall
be true and correct in all respects as of such specific date) and there shall
have been no willful breach by Seller of any of its representations or
warranties made in the Agreement. Buyer shall have received a certificate in
the form attached hereto as Exhibit 9.1 signed by the chief executive officer
of Seller to such effect on the Closing Date.
9.2 PERFORMANCE OF OBLIGATIONS OF SELLER. Seller shall have
substantially performed all obligations and covenants required to be performed
by it under this Agreement prior to or as of the Closing Date, and Buyer shall
have received a certificate in the form attached hereto as Exhibit 9.2 signed
by the chief executive officer and the chief financial officer of Seller to
such effect.
9.3 CONSENTS. All Required Government Consents and Required Contract
Consents shall have been obtained.
25
36
9.4 NO ADVERSE CHANGE. Except to the limited extent permitted
pursuant to Section 9.5 below, Seller shall not have suffered any adverse
change or effect (collectively "Adverse Changes") upon the financial
condition, operation, or prospects of the Software Business (including under
ownership by Buyer), the Assets or Assumed Liabilities (including any act,
omission, event, or circumstances that would entail loss, liability, damage, or
expense to Buyer with respect to the rights and benefits expected by Buyer to
be obtained under this Agreement).
9.5 MATERIAL CHANGE IN CIRCUMSTANCE. Notwithstanding anything to the
contrary, the conditions to Buyer's performance under this Agreement contained
in Sections 9.1 and 9.4 above, shall not apply to the extent, but only to the
extent, that the total amount of (i) any and all untrue or inaccurate
representations and warranties that pursuant to Section 9.1 would otherwise
permit Buyer not to perform its obligations hereunder and (ii) all Adverse
Changes that pursuant to Section 9.4 would otherwise permit Buyer not to
perform its obligations hereunder do not constitute a "Material Change in
Circumstance." For purposes of this Section 9.5 a "Material Change In
Circumstance" shall be found to occur if the total amount of all untrue or
inaccurate representations and warranties under Section 9.1 and all Adverse
Changes under Section 9.4 exceeds Five Hundred Thousand Dollars ($500,000) as
reasonably determined by Buyer.
9.6 OPINION OF SELLER'S COUNSEL. Seller shall have delivered an
update to Seller's Legal Opinion by Armstrong, Teasdale, Schlafly & Xxxxx,
dated as of the Closing Date in form and substance satisfactory to Seller, to
the effect that all opinions originally contained in Seller's Legal Opinion
continue to be true and correct.
ARTICLE X
CLOSING
10.1 CLOSING. Unless this Agreement is first terminated as provided
in Article XVI, the closing of the purchase and sale of the Assets and the
transfer and assumption of the Assumed Liabilities (the "Closing") shall take
place at the offices of Armstrong, Teasdale, Schafly & Xxxxx at Xxx
Xxxxxxxxxxxx Xxxxxx, Xx. Xxxxx, XX 00000-0000, at 9:00 a.m. Central time
o'clock on April 30, 1998, or on such other time, date, and place as the
parties may agree (the "Closing Date").
10.2 ACTIONS AT CLOSING. At Closing, Buyer and Seller shall take the
following actions, in addition to such other actions as may otherwise be
required under this Agreement:
a. COPIES OF CONSENTS. Seller shall deliver to Buyer copies
of all Required Contract Consents and all Required Government Consents.
b. CONVEYANCE INSTRUMENTS. Seller shall deliver to Buyer a
Xxxx of Sale and Assignment in the form attached hereto as Exhibit 10.2.b and
such other instruments of
26
37
conveyance and transfer as Buyer may reasonably request to effect the
assignment to Buyer of the Assets.
c. MASTER COPY OF SOFTWARE PROGRAMS. Seller shall deliver to
Buyer a master copy of each Software Program and related Technical
Documentation (including without limitation both source code and object code
forms of each program).
d. ISSUANCE OF WARRANTS. Buyer shall issue to Seller the
Warrants.
e. PAYMENT FROM ESCROW FUND. The Escrow Agent shall deliver
(i) to Seller Five Million Fifty-four Thousand Dollars ($5,054,000) from the
Escrow Fund (representing the Cash Purchase Price less the Exclusivity Fee, the
Advance Payment and the Holdback) and (ii) to Buyer all of the remaining
balance of the Escrow Fund in excess of the Holdback.
f. ASSUMPTION AGREEMENT. Buyer shall deliver to Seller an
Assumption Agreement in the form attached hereto as Exhibit 10.2.f by which
Buyer assumes and agrees to pay and perform the Assumed Liabilities.
g. CERTIFICATES. Each party shall deliver the certificates
required under Sections 8.1 and 8.2 and Sections 9.1 and 9.2, respectively, as
to the accuracy of the representations and warranties contained herein, the
compliance with the covenants and agreements contained herein, and the
satisfaction of the conditions to Closing contained herein.
h. LEGAL OPINIONS. Seller shall cause its counsel to deliver
to Buyer the Seller's Legal Opinion updated as of Closing as required by
Section 9.6 and Buyer shall cause its counsel to deliver to Seller the Buyer's
Legal Opinion.
i. CLOSING SCHEDULES. Seller shall deliver to Buyer Schedule
7.12(1) and Schedule 7.12(2).
10.3 ADJUSTMENTS. Except as otherwise specifically provided in this
Agreement, all expenses relating to the ownership, operation and enjoyment of
the Assets, including but not limited to lease or other rental payments, ad
valorem, severance, production, property and other taxes, prepaid insurance,
utility and similar charges, shall be prorated by Seller and Buyer as of 5:00
p.m. on the Closing Date.
10.4 FURTHER ASSURANCES. At and after the Closing, without further
consideration, Seller shall take all such other actions and shall procure or
execute, acknowledge, and deliver all such further certificates, conveyance
instruments, consents, and other documents as Buyer or its counsel may
reasonably request (1) to vest in Buyer, and perfect and protect Buyer's right,
title, and interest in, and enjoyment of, the Assets and the Software Business,
or (2) to ensure more
27
38
effectively the compliance of Seller with its agreements, covenants,
warranties, and representatives under this Agreement.
ARTICLE XI
COVENANTS OF SELLER AND BUYER FOLLOWING CLOSING
11.1 TAX MATTERS.
a. SELLER'S RIGHT AND RESPONSIBILITY FOR PRECLOSING TAX
MATTERS. Sellers shall have the right and responsibility to direct the
handling of all tax matters affecting or relating to the conduct of the
Software Business prior to the Closing Date, including the prosecution of all
administrative and judicial remedies, the settlement of all issues, and the
execution of agreements, consents, or waivers, extending the statute of
limitations, provided that no such action, agreement, or stipulation shall have
any effect on the tax position or liability of Buyer, including as successor to
the Software Business, or result in any increase in the Assumed Liabilities.
b. BUYER'S COOPERATION. Buyer shall use its reasonable
efforts to provide Seller such assistance as it may reasonably request in
connection with matters relating to taxes, including information with respect
to Seller's preparation of any returns of taxes, any audit or other examination
by any taxing authority, any judicial or administrative proceeding relating to
Seller's liability for taxes, or any claims arising hereunder respecting the
Software Business. Buyer shall retain and provide Seller with records or
information which may be relevant to any such return, audit, examination,
proceeding, or determination, and Buyer shall retain all such books and records
for so long as necessary in keeping with applicable statutes of limitations.
11.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated to the Assets and Assumed Liabilities as set forth in Schedule 11.2,
and all tax returns and reports filed by Seller and Buyer with respect to the
transactions contemplated by this Agreement shall be consistent with that
allocation.
11.3 TRANSFER TAXES. All sales, transfer, and similar taxes and fees
(including all recording fees, if any) incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by Seller,
and Seller shall file all necessary documentation with respect to such taxes.
11.4 NO-COMPETE. For a period of five (5) years after the Closing
Date, Seller shall not engage in the business of acquiring, developing,
marketing, distributing, licensing, or maintaining systems and application
computer programs having any function similar to, competitive with, or
substitutable for, the Software Programs, anywhere in the world , except as a
customer or authorized distributor of Buyer or otherwise with Buyer's consent
(which may be
28
39
withheld in Buyer's sole discretion). Seller acknowledges and agrees that the
current market for the Software Programs extends throughout the entire world,
and it is therefore reasonable to prohibit Seller from competing with Buyer
anywhere in such territory. Seller shall not engage in any such activity,
directly or indirectly, on its own behalf or in the service of or on behalf of
others. Notwithstanding the foregoing, this Section 11.4 shall not restrict in
any manner the acquisition or use of any programming or materials by Seller
solely for internal purposes.
11.5 NONSOLICITATION OF PERSONNEL. For a period of five (5) years
after the Closing Date, Seller shall not solicit, divert, or recruit, for its
own benefit or for the benefit of any other person or entity, any of Seller's
managerial or executive employees whom Buyer has expressed interest in hiring
or retaining.
11.6 SHELF REGISTRATION. Within nine (9) months after Closing, Parent
agrees at its sole expense (i) to file with the United States Securities and
Exchange Commission a registration statement under the Securities Act of 1933
to register the shares of Parent's common stock issuable upon the exercise of
the Warrants, (ii) to use its best efforts to cause such registration statement
to become effective as soon thereafter as is practicable and to remain
effective until the earlier of the sale pursuant thereto of the shares so
registered or the expiration date of the Warrants and (iii) to qualify under
applicable blue sky laws to permit the sale of such shares.
ARTICLE XII
CERTAIN TRANSITION MATTERS
12.1 HIRING OF EMPLOYEES. Prior to and after Closing, Seller shall
use its best efforts to enable Buyer to hire, on such terms as Buyer may
reasonably establish, such of Seller's employees associated with the operation
or management of the Software Business as Buyer may specify on or before
Closing. Buyer shall, at least fourteen (14) days prior to Closing, advise
Seller which is Seller's employees Buyer intends to hire after Closing.
12.2 SERVICES PROVIDED BY BUYER. After Closing, Buyer shall collect
and promptly pay over to Seller all accounts receivable, including all license
fees and maintenance fees and charges owing to Seller under Software Contracts,
that arose from the Software Business prior to, and that were outstanding as
of, the Closing Date. All amounts collected by Buyer hereunder shall be
applied to the oldest outstanding invoice.
ARTICLE XIII
INDEMNIFICATION BY SELLER
13.1 INDEMNIFICATION. From the date of Closing through December 15,
1998 (the "Indemnity Period"), Seller hereby agrees, subject to the terms and
conditions of this Article XIII, to indemnify, defend and hold Buyer, Parent
and their respective successors and assigns
29
40
and the directors, officers, employees and agents of each (collectively the
"Buyer Group") harmless from and against any and all claims, losses,
obligations, demands, actions or causes of action, assessments, damages,
judgments, liabilities, costs and expenses (including, without limitation,
costs of court and reasonable attorney and accounting fees) of every kind and
nature (collectively "Claims") imposed upon or incurred by the Buyer Group,
directly or indirectly by reason of or resulting from:
a. BREACH OF REPRESENTATION OR WARRANTY. Any inaccuracy or
breach of any representation or warranty of Seller contained in this Agreement
or any Schedule or document related to this Agreement including, but not
limited to any representation, or warranty, or Adverse Change that Buyer
included in its determination that a Material Change in Circumstance had not
occurred;
b. NONPERFORMANCE. Any nonperformance of the covenants and
obligations to be performed by Seller under this Agreement or under any
document delivered hereunder at Closing;
c. THIRD PARTY CLAIMS. Any claims of or liabilities and
obligations to parties other than Seller or the Buyer Group ("Third Party
Claims") (whether absolute, accrued, contingent or otherwise) existing as of
the time of the Closing Date or arising out of facts or circumstances existing
as of the Closing Date or prior thereto, whether or not known at the Closing
Date to Buyer, which arise from or relate to the conduct of the Software
Business, the ownership or use of the Assets prior to the Closing Date, the
consummation of the transactions contemplated by this Agreement or any failure
to comply with any "bulk sales" or similar laws relating to notices to
creditors, except for the Assumed Liabilities (Notwithstanding the foregoing
exception for Assumed Liabilities, refunds payable by the Buyer Group to
customers under the Software Contracts, where Seller received the benefit prior
to the Closing Date of the amount refunded, shall be deemed to be Third Party
Claims for which the Buyer Group is entitled to indemnification by Seller
pursuant to the terms and conditions of this Article XIII); or
d. INCIDENTAL MATTERS. To the extent not covered by the
foregoing, any and all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs, and expenses, including
reasonable fees and expenses of counsel, other expenses of investigation,
handling, and litigation, and settlement amounts, together with interest and
penalties, incident to the foregoing.
The remedies provided in this Section 13.1 shall be the Buyer Group's exclusive
remedy for any of the foregoing Claims.
13.2 SURVIVAL OF REPRESENTATION AND WARRANTIES. The representation
and warranties of Seller, which are contained herein or in any certificate or
other document delivered pursuant hereto, shall survive the Closing for a
period not to exceed the Indemnity Period.
30
41
13.3 NOTICE OF CLAIM. Whenever a Third Party Claim covered by
Seller's indemnification obligation pursuant to Section 13.1 is made against
any member of the Buyer Group (the "Claimant"), the Claimant shall notify
Seller in writing (the "Notice of Claim") within thirty (30) days after the
Claimant has received written notice of the facts constituting the basis for
such Third Party Claim; provided that such Notice of Claim shall be given
earlier if Seller would be materially prejudiced by delay. Whenever any Claim
for indemnification pursuant to Section 13.1 not involving a Third Party Claim
is made by a Claimant, the Claimant shall send a Notice of Claim to Seller as
soon as practicable after the Claimant becomes aware of such Claim. The Notice
of Claim shall specify all facts known to the Claimant giving rise to such
Claim and the amount or an estimate of the amount of the liability arising
therefrom. The Claimant shall provide to Seller as promptly as practicable
thereafter information and documentation reasonably requested by Seller to
support and verify the claim asserted, provided that, in so doing, it may
restrict or condition any disclosure in the interest of preserving privileges
of importance in any foreseeable litigation.
13.4 DEFENSE OF THIRD PARTY CLAIMS. Seller shall have the right to
assume and thereafter conduct the defense of any Third Party Claim with counsel
of its choice, which counsel shall be reasonably satisfactory to the Claimant;
provided, however, that Seller shall not consent to the entry of any judgment
or enter into any settlement with respect to such Third Party Claim without the
prior written consent of the Claimant, which consent shall not be unreasonably
withheld, but such consent shall not be required if the judgment or proposed
settlement involves only the payment of money damages, all of which shall be
paid by Seller or out of the Escrow Funds, and does not impose an injunction or
other equitable relief upon the Claimant. The Claimant shall have the right to
employ counsel separate from counsel employed by Seller in the defense of any
Third Party Claim and to participate therein, but the fees and expenses of such
counsel employed by the Claimant shall be at its expense. Seller's assumption
and conduct of such defense shall be deemed to be an acknowledgment of Seller's
indemnification obligation under Section 13.1 and an authorization for the
Escrow Agent to pay from the Escrow Funds the amount of such Third Party Claim
upon its final adjudication. Unless and until Seller assumes the defense of the
Third Party Claim as provided herein, the Claimant may defend against the Third
Party Claim in any manner it reasonably may deem appropriate. In no event
shall the Claimant consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of Seller, which consent shall not be unreasonably withheld; provided,
however, if Seller withholds its consent, Seller shall explain in writing its
reasons for withholding consent, and upon receipt of such written explanation,
the Claimant shall nevertheless be authorized to consent to the entry of any
judgment or enter into any settlement, the terms of which are reasonable.
Seller shall, within ten (10) business days of Seller's being notified of the
proposed consent judgment or settlement, provide its consent or its written
explanation of the reasons for refusing to consent. The parties hereto shall
cooperate in the defense of any Third Party Claim and shall furnish such
records, information, and testimony, and attend such conferences, discovery
proceedings, hearings, trials, and appeals, as may be reasonably requested in
connection therewith.
31
42
13.5 RESOLUTION OF CLAIMS. The parties shall undertake, in good
faith, to resolve any dispute with respect to any Claim. If the parties are
unable to agree on such resolution within thirty (30) days after Seller
receives the Notice of Claim, the respective rights of the parties shall be
determined in accordance with the rules of the American Arbitration
Association, unless the issue of Seller's indemnification obligation pursuant
to Section 13.1 has been or will be decided in litigation involving a Third
Party Claim in which Seller and the Claimant are each parties. The arbitration
shall be conducted in the St. Louis, Missouri area by three arbitrators, each
of whom shall have experience reasonably related to the business of Seller.
The Claimant and Seller each shall have the right to designate one of the
arbitrators. The third arbitrator shall be designated by mutual agreement of
the parties or, if they cannot agree, by mutual agreement of the two
arbitrators. The decision of the arbitrators in any arbitration pursuant
hereto will be final and binding upon the parties, and the judgment of a court
of competent jurisdiction may be entered thereon. Fees of the arbitrators and
costs of arbitration shall be borne by the parties in such manner as shall be
determined by the arbitrators.
13.6 THRESHOLD. No indemnification or any other claim for damages
under this Agreement or any other instrument or agreement to be executed and
delivered by Seller in connection with the transactions contemplated hereby
shall be payable by Seller to the Buyer Group until (and then only to the
extent that) the total of all Claims against Seller equals or exceeds $50,000.
However, this Section 13.6 will not apply to any breach of Seller's
representations or warranties of which Seller had actual knowledge at any time
prior to the date on which such representation or warranty is made or any
intentional breach by Seller of any covenant or obligation, and Seller shall be
liable for all Claims with respect to such breaches. Seller shall be deemed to
have "actual knowledge" of a particular fact or matter only if Xxxxxxx X.
Xxxxxxxx, Xxxx Xxxxx, Xxxxxxx X. Xxxxxx or Xxxxxxx X. Xxxx is actually aware of
such fact or other matter.
13.7 ESCROW FUND. Seller and Buyer have agreed that the Holdback
shall not be delivered to Seller at Closing but shall continue to be held in
the Escrow Fund by the Escrow Agent after Closing in accordance with the terms
of the Escrow Agreement as security for Seller's indemnification obligations
under Section 13.1. The Escrow Fund may be drawn upon by the Buyer Group in
payment of any Claims incurred by the Buyer Group arising out of, based upon,
relating to, or in connection with Indemnity matters set forth in Section 13.1
so long as the Escrow Agreement is in existence. The Claimant shall be paid
promptly by the Escrow Agent from the Escrow Fund such amount or amounts of
Claims as may from time to time be specified in written instructions executed
by Buyer and Seller or in any final decisions of the arbitrators with respect
to Claims for indemnity submitted to arbitration pursuant to Section 13.5 or of
any court with respect to litigation involving a Third Party Claim in which
both Seller and the Claimant are parties and in which Seller's indemnification
obligation pursuant to Section 13.1 has been decided. The Escrow Fund shall
constitute security for the obligations of Seller under the indemnification
under Section 13.1 and any indemnity claims shall be limited to the amount of
the Escrow Fund. The Escrow Agent shall deliver to Seller the amount of the
Escrow Fund
32
43
held in the escrow on December 15, 1998; unless, prior to said date, Buyer
provides to the Escrow Agent a "written statement of pending claims" (with a
copy to Seller). A "written statement of pending claims" shall mean a
statement, executed by Buyer, setting forth pending or threatened Claims or
other matters which may result in Claims for which Buyer believes Seller is
obligated to provide indemnification pursuant to Section 13.1. In such
statement Buyer shall also make a good faith estimate of the amount of such
possible damages. Following receipt of such a written statement, Escrow Agent
shall continue to hold a sufficient amount of the Escrow Fund to reimburse the
Buyer Group for such estimated Claims until such time as the Claimants and
Seller have agreed upon a resolution of such Claims and Buyer and Seller have
provided joint written instructions to the Escrow Agent or the arbitrators have
issued a final decision with respect to those Claims that have been submitted
to arbitration pursuant to Section 13.5 or of any court with respect to
litigation involving a Third Party Claim in which both Seller and the Claimant
are parties and in which Seller's indemnification obligation pursuant to
Section 13.1 has been decided.
ARTICLE XIV
CONFIDENTIALITY
14.1 CONFIDENTIALITY OBLIGATION OF BUYER PRIOR TO CLOSING. Until
Closing (and, if this Agreement is terminated for any reason, forever
thereafter), each of Buyer and Parent shall, and shall use its best efforts to
cause its personnel and agents to, hold in strict confidence, not disclose to
any person without the prior written consent of Seller, and not use in any
manner except in connection with the transactions contemplated hereby, any
confidential business or technical information obtained from Seller in
connection with the transactions contemplated hereby concerning the Software
Business or the Assets. This obligation shall cease to apply to Buyer and
Parent upon the occurrence of Closing. In the event that this Agreement
terminates for any reason, Buyer and Parent shall return to Seller or destroy
all materials in its possession containing any such confidential information,
including all copies, extracts, adaptations, and transcriptions thereof.
14.2 CONFIDENTIALITY OBLIGATION OF SELLER FOLLOWING CLOSING.
Following the occurrence of Closing, Seller shall, and shall use its best
efforts to cause its personnel and agents to, hold in strict confidence, not
disclose to any person without the prior written consent of Buyer, and not use
in any manner whatsoever, any confidential business or technical information
remaining in its possession concerning the Software Business or the Assets.
Such confidential information specifically includes all source code, system and
user documentation, and other Technical Documentation pertaining to the
Software Programs, including any proposed design and specifications for future
products and products in development, marketing plans, and all other technical
and business information concerning the Software Business. Promptly following
Closing, Seller shall surrender to Buyer or destroy all materials remaining in
its possession
33
44
containing any such confidential information, including all copies, extracts,
adaptations, and transcriptions thereof.
14.3 PERMITTED DISCLOSURES. Notwithstanding Sections 14.1 and 14.2,
either party may disclose confidential information (1) where necessary to any
regulatory authorities or governmental agencies pursuant to legal process or
(2) if required by court order or decree.
14.4 SCOPE OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, information shall not be deemed confidential (1) if such information
is available in full from public sources; (2) if such information is received
from a third party not under an obligation to keep such information
confidential; or (3) if the recipient can conclusively demonstrate that such
information was independently developed by the recipient.
ARTICLE XV
TERMINATION PRIOR TO CLOSING AND DEFAULT
15.1 TERMINATION OF AGREEMENT. This Agreement may be terminated at
any time prior to the Closing by the mutual consent of Buyer and Seller.
15.2 BUYER'S DEFAULT AND SELLER'S REMEDY. If (i) there has been a
breach by Buyer of any representation, warranty, covenant or agreement set
forth in this Agreement on the part of Buyer; or (ii) any representation or
warranty of Buyer shall have become untrue, in either case such that the
condition set forth in Sections 8.1 or 8.2 would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall
have become untrue and which breach or inaccuracy Buyer, as the case may be,
fails to cure within seven (7) days after notice thereof is given by Seller
(except that no cure period shall be provided for a breach by Buyer or Sub
which by its nature cannot be cured) or (iii) the conditions set forth in
Section 8.3 have not been satisfied as of Closing; then the Seller as its sole
remedy and exclusive remedy may terminate this Agreement by written notice to
Buyer and Escrow Agent ("Seller's Termination Notice") and Seller shall retain
(i) the Exclusivity Fee (if the Advance Payment has not then been paid) and
(ii) the Exclusivity Fee and the Advance Payment (once the Advance Payment is
made) as liquidated damages in lieu of any and all other remedies, or damages
that may be available at law, or at equity. Upon the termination of this
Agreement by Seller pursuant to this Section 15.2, the Escrow Agent shall
deliver the Escrow Fund and all interest thereon to Buyer.
15.3 SELLER'S DEFAULT AND BUYER'S REMEDY. If (i) there has been a
breach by Seller of any representation, warranty, covenant or agreement set
forth in this Agreement on the part of Seller; or (ii) if any representation or
warranty of Seller shall have become untrue, in either case such that the
condition set forth in Sections 9.1 or 9.2 would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall
have become untrue and
34
45
which breach or inaccuracy Seller fails to cure within seven (7) days after
notice thereof is given by Buyer (except that no cure period shall be provided
for a breach by Seller or inaccuracy which by its nature cannot be cured); or
(iii) the conditions set forth in Sections 9.3, 9.4, 9.6 or 9.7 have not been
satisfied as of Closing; and in any of such events then Buyer as its sole and
exclusive remedies may elect in its sole and absolute discretion to do either
(but not both) of the following:
a. TERMINATION OF AGREEMENT AND RETURN OF ADVANCE PAYMENT.
Terminate this Agreement by written notice to Seller and Escrow Agent ("Buyer's
Termination Notice") and require (by election in the Buyer's Termination
Notice) that Seller pay to Buyer within three (3) days of Seller's Termination
Notice an amount equal to the Advance Payment. Upon the termination of this
Agreement by Buyer pursuant to this Section 15.3.a, the Escrow Agent shall
deliver the Escrow Fund and all interest thereon to Buyer.
b. TERMINATION OF AGREEMENT AND LICENSE FOR SOFTWARE.
Terminate this Agreement by Buyer's Termination Notice and elect (by election
in the Buyer's Termination Notice) to exercise Buyer's rights under Backup
License Agreement by and between Buyer and Seller dated as of the Effective
Date, a copy of which is attached hereto as Exhibit 15.3.b. Upon the
termination of this Agreement by Buyer pursuant to this Section 15.3.b, the
Escrow Agent shall deliver the Escrow Fund and all interest thereon to Buyer.
15.4 TERMINATION OF OBLIGATIONS. Termination of this Agreement
pursuant to this Article XV shall terminate all obligations of the parties
hereunder, except for the obligations set forth in Articles XIII
[Indemnification] and XIV [Confidentiality] and in Sections 3.4. 15.2 and 15.3
with respect to the disposition of the Escrow Fund as provided therein and
Section 16.13.
ARTICLE XVI
INDEMNIFICATION BY PARENT
16.1 INDEMNIFICATION. From the date of Closing through the Indemnity
Period, Parent hereby agrees, subject to the terms and conditions of this
Article XVI, to indemnify, defend and hold Seller and its respective successors
and assigns and the directors, officers, employees and agents of each
(collectively the "Seller Group") harmless from and against any and all Claims
imposed upon or incurred by the Seller Group, directly or indirectly by reason
of or resulting from:
a. BREACH OF REPRESENTATION OR WARRANTY. Any breach of any
representation or warranty of Buyer or Parent contained in this Agreement;
b. NONPERFORMANCE. Any breach of any covenant or obligation
by Buyer or Parent contained herein or in any document delivered hereunder at
Closing;
35
46
c. ASSUMED LIABILITIES. Any failure of Buyer or Parent to pay
or otherwise discharge the Assumed Liabilities, except in so far as such Claim
represents (i) an Excluded Liability or (ii) a refund payable by the Buyer
Group to customers under the Software Contracts, where Seller received the
benefit prior to the Closing Date of the amount refunded and the refund is a
Claim to which Buyer is entitled to indemnification by Seller pursuant to
Article XIII; or
d. INCIDENTAL MATTERS. To the extent not covered by the
foregoing, any and all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs, and expenses, including
reasonable fees and expenses of counsel, other expenses of investigation,
handling, and litigation, and settlement amounts, together with interest and
penalties, incident to the foregoing.
16.2 SURVIVAL OF REPRESENTATION AND WARRANTIES. The representation
and warranties of Seller, which are contained herein or in any certificate or
other document delivered pursuant hereto, shall survive the Closing for a
period not to exceed the Indemnity Period.
16.3 NOTICE OF CLAIM. Whenever a Third Party Claim covered by Buyer's
indemnification obligation pursuant to Section 16.1 is made against any member
of the Seller Group (the "Claimant"), the Claimant shall notify Parent in
writing (the "Notice of Claim") within thirty (30) days after the Claimant has
received written notice of the facts constituting the basis for such Third
Party Claim; provided that such Notice of Claim shall be given earlier if
Parent would be materially prejudiced by delay. Whenever any Claim for
indemnification pursuant to Section 16.1 not involving a Third Party Claim is
made by a Claimant, the Claimant shall send a Notice of Claim to Parent as soon
as practicable after the Claimant becomes aware of such Claim. The Notice of
Claim shall specify all facts known to the Claimant giving rise to such Claim
and the amount or an estimate of the amount of the liability arising therefrom.
The Claimant shall provide to Parent as promptly as practicable thereafter
information and documentation reasonably requested by Parent to support and
verify the claim asserted, provided that, in so doing, it may restrict or
condition any disclosure in the interest of preserving privileges of importance
in any foreseeable litigation.
16.4 DEFENSE OF THIRD PARTY CLAIMS. Parent shall have the right to
assume and thereafter conduct the defense of any Third Party Claim with counsel
of its choice, which counsel shall be reasonably satisfactory to the Claimant;
provided, however, that Parent shall not consent to the entry of any judgment
or enter into any settlement with respect to such Third Party Claim without the
prior written consent of the Claimant, which consent shall not be unreasonably
withheld, but such consent shall not be required if the judgment or proposed
settlement involves only the payment of money damages, all of which shall be
paid by Seller, and does not impose an injunction or other equitable relief
upon the Claimant. The Claimant shall have the right to employ counsel separate
from counsel employed by Parent in the defense of any Third Party Claim and to
participate therein, but the fees and expenses of such counsel employed by the
Claimant shall be at its expense. Parent's assumption and conduct of such
defense shall be
36
47
deemed to be an acknowledgment of Parent's indemnification obligation under
Section 16.1 and an authorization for the Escrow Agent to pay from the Escrow
Funds the amount of such Third Party Claim upon its final adjudication. Unless
and until Parent assumes the defense of the Third Party Claim as provided
herein, the Claimant may defend against the Third Party Claim in any manner it
reasonably may deem appropriate. In no event shall the Claimant consent to the
entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of Parent, which consent shall
not be unreasonably withheld; provided, however, if Parent withholds its
consent, Parent shall explain in writing its reasons for withholding consent,
and upon receipt of such written explanation, the Claimant shall nevertheless
be authorized to consent to the entry of any judgment or enter into any
settlement, the terms of which are reasonable. Parent shall, within ten (10)
business days of Parent's being notified of the proposed consent judgment or
settlement, provide its consent or its written explanation of the reasons for
refusing to consent. The parties hereto shall cooperate in the defense of any
Third Party Claim and shall furnish such records, information, and testimony,
and attend such conferences, discovery proceedings, hearings, trials, and
appeals, as may be reasonably requested in connection therewith.
16.5 RESOLUTION OF CLAIMS. The parties shall undertake, in good
faith, to resolve any dispute with respect to any Claim. If the parties are
unable to agree on such resolution within thirty (30) days after Parent
receives the Notice of Claim, the respective rights of the parties shall be
determined in accordance with the rules of the American Arbitration
Association, unless the issue of Parent's indemnification obligation pursuant
to Section 16.1 has been or will be decided in litigation involving a Third
Party Claim in which Parent and the Claimant are each parties. The arbitration
shall be conducted in the St. Louis, Missouri area by three arbitrators, each
of whom shall have experience reasonably related to the business of Parent.
The Claimant and Parent each shall have the right to designate one of the
arbitrators. The third arbitrator shall be designated by mutual agreement of
the parties or, if they cannot agree, by mutual agreement of the two
arbitrators. The decision of the arbitrators in any arbitration pursuant
hereto will be final and binding upon the parties, and the judgment of a court
of competent jurisdiction may be entered thereon. Fees of the arbitrators and
costs of arbitration shall be borne by the parties in such manner as shall be
determined by the arbitrators.
ARTICLE XVII
MISCELLANEOUS
17.1 ENTIRE AGREEMENT. This Agreement (including the Schedules), and
the other certificates, agreements, and other instruments to be executed and
delivered by the parties in connection with the transactions contemplated
hereby constitute the sole understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements between the parties
with respect to the subject matter hereof. No amendment, modification, or
alteration of
37
48
the terms or provisions of this Agreement shall be binding unless the same
shall be in writing and duly executed by the parties hereto.
17.2 PARTIES BOUND BY AGREEMENT; SUCCESSORS AND ASSIGNS. Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties except that Buyer may assign any of its rights
under this Agreement to any subsidiary of Parent. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give
any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
17.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
17.4 HEADINGS. The headings of the Sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
17.5 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
17.6 EXPENSES. Seller and Buyer shall each pay all costs and expenses
incurred by it or on its behalf in connection with this Agreement and the
transactions contemplated hereby, including fees and expenses of its own
financial consultants, accounts, and counsel.
17.7 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by
38
49
hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
if to Seller to:
SalesKit Software Corporation
00000 Xxxxx Xxxxxxxxx
Xxxxx 000
Xx. Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
with a copy to:
Armstrong, Teasdale, Schafly & Xxxxx
Xxx Xxxxxxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esquire
Facsimile No. (000) 000-0000
if to Buyer to:
Arch Acquisition Corp.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. xxXxxxx
Telephone No. (000) 000-0000 Ext. 4410
Facsimile No. (000) 000-0000
39
50
with a copy to:
Xxxxx & Xxxxxx, P.C
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esquire
Facsimile No. (000) 000-0000
if to Parent to:
Deltek Systems, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. xxXxxxx
Facsimile No. (000)000-0000
with a copy to:
Xxxxx & Xxxxxx, P.C
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esquire
Facsimile No. (000) 000-0000
17.8 BULK SALES LAW. The parties waive compliance with any bulk sales
laws or similar laws relating to notices to creditors.
17.9 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the Commonwealth of Virginia without giving
effect to the principles of conflicts of law thereof.
17.10 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or
unenforceable.
17.11 "INCLUDING." Words of inclusion shall not be construed as terms
of limitation herein, so that references to "included" matters shall be
regarded as nonexclusive, noncharacterizing illustrations.
40
51
17.12 REFERENCES. Whenever reference is made in this Agreement to any
Article, Section, or Schedule, such reference shall be deemed to apply to the
specified Article or Section of this Agreement or the specified Schedule to
this Agreement.
17.13 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf on the date first above written.
ARCH ACQUISITION CORP.
By: /s/ XXXXXXX X. XXXXXXX
------------------------------------
Xxxxxxx X. xxXxxxx, President
SALESKIT SOFTWARE CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX
------------------------------------
Xxxxxxx X. Xxxxxxxx, President
DELTEK SYSTEMS, INC.
By: /s/ XXXXXXX X. XXXXXXX
------------------------------------
Xxxxxxx X. xxXxxxx, President
41
