EXHIBIT 1
ASSET PURCHASE AGREEMENT
BETWEEN
GEAC COMPUTER SYSTEMS, INC.
AND
CLARUS CORPORATION
TABLE OF CONTENTS
1. Purchase and Sale of the Assets...........................................................2
1.1. Purchase of the Assets.................................................................2
1.2. Further Assurances.....................................................................3
1.3. Purchase Price for the Acquired Assets.................................................3
1.4. Assumption of Certain Liabilities......................................................4
1.5. Certain Employee Matters...............................................................4
1.6. Allocation of Purchase Price and Assumed Liabilities...................................5
1.7. Closing................................................................................5
1.8. Intentionally Omitted..................................................................6
1.9. A/R Adjustment.........................................................................6
1.10. Company Actions.....................................................................8
2. Representations of the Company............................................................9
2.1. Organization; Capital Stock............................................................9
2.2. Authorization..........................................................................9
2.3. Ownership of Acquired Assets..........................................................10
2.4. Acquired Assets Complete..............................................................10
2.5. Financial Statements..................................................................10
2.6. Absence of Undisclosed Liabilities....................................................11
2.7. Litigation............................................................................11
2.8. Insurance.............................................................................12
2.9. Fixed Assets..........................................................................12
2.10. Change in Financial Condition and Assets...........................................12
2.11. Accounts Receivable................................................................12
2.12. Tax Matters........................................................................12
2.13. Books and Records..................................................................14
2.14. Contracts and Commitments..........................................................14
2.15. Compliance with Agreements and Laws................................................17
2.16. Employee Relations.................................................................17
2.17. Employee Benefit Plans.............................................................17
2.18. Employee Indebtedness..............................................................18
2.19. Powers of Attorney and Suretyships.................................................18
2.20. Suppliers..........................................................................19
2.21. Real and Leased Property...........................................................19
2.22. Environmental Matters..............................................................19
2.23. Warranty and Product Liability Claims..............................................21
2.24. Prepayments and Deposits...........................................................21
2.25. Disclosure.........................................................................21
3. Representations of the Buyer ............................................................21
3.1. Organization and Authority............................................................21
3.2. Authorization.........................................................................22
3.3. Regulatory Approvals..................................................................22
4. Access to Information; Public Announcements; Covenants of the Company....................22
4.1. Access to Management, Properties and Records..........................................22
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4.2. Confidentiality.......................................................................22
4.3. Public Announcements..................................................................23
4.4. Third Party Acquisitions..............................................................23
4.5. Filings; Other Actions; Notification..................................................25
4.6. Information Supplied..................................................................26
4.7. Stockholders Meeting..................................................................27
4.8. Cooperation Regarding Shared Contracts................................................27
4.9. Effect of Termination and Abandonment.................................................27
5. Pre-Closing Covenants of the Company.....................................................28
5.1. Conduct of Business...................................................................28
5.2. Absence of Material Changes...........................................................28
5.3. Continued Truth of Representations and Warranties.....................................28
5.4. Reports, Taxes........................................................................29
5.5. Communications with Customers and Suppliers...........................................29
6. Efforts to Obtain Satisfaction of Conditions.............................................29
7. Conditions to Obligations of the Buyer...................................................29
7.1. Continued Truth of Representations and Warranties of the Company;
Compliance with Covenants and Obligations.............................................29
7.2. Corporate Proceedings and Shareholder Approval........................................29
7.3. The Acquired Assets...................................................................30
7.4. Governmental Approvals................................................................30
7.5. Consent of Third Parties..............................................................30
7.6. Adverse Proceedings...................................................................30
7.7. Opinion of Counsel....................................................................30
7.8. Material Adverse Change...............................................................30
7.9. Trademark License Agreement...........................................................30
7.10. Intentionally Omitted..............................................................31
7.11. Fulfillment of Closing Conditions in IP Asset Purchase Agreement...................31
7.12. Execution of the Stockholders Agreement............................................31
7.13. Intentionally Omitted..............................................................31
7.14. Closing Deliveries.................................................................31
8. Conditions to Obligations of the Company.................................................32
8.1. Continued Truth of Representations and Warranties of the Buyer;
Compliance with Covenants and Obligations ............................................32
8.2. Company Proceedings...................................................................32
8.3. Governmental Approvals................................................................32
8.4. Consents of Third Parties.............................................................32
8.5. Adverse Proceedings...................................................................32
8.6. Opinion of Counsel....................................................................33
8.7. Fulfillment of Closing Conditions in IP Asset Purchase Agreement......................33
8.8. Execution of the Indemnification Agreement............................................33
8.9. Closing Deliveries....................................................................33
8.10. Stockholder Approval...............................................................34
9. Post-Closing Agreements..................................................................34
9.1. Proprietary Information...............................................................34
9.2. Limitation on Use of Name.............................................................34
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9.3. Non-Competition Agreement.............................................................34
9.4. Sharing of Data.......................................................................35
9.5. Cooperation of the Company............................................................35
9.6. Cooperation of the Buyer..............................................................36
9.7. Buyer's Use of Premises for the Business..............................................36
9.8. Onyx Software and Customer Database...................................................36
9.9. Limited License to the Company to use the software comprising the Acquired Assets.....36
9.10. Electronic Commerce Distribution Rights; Fusion....................................37
10. Termination of Agreement; Option to Proceed; Damages.....................................37
10.1. Termination by Lapse of Time.......................................................37
10.2. Termination by Agreement of the Parties............................................37
10.3. Termination by Reason of Breach....................................................37
10.4. Availability of Remedies at Law....................................................37
11. Dispute Resolution.......................................................................38
11.1. General............................................................................38
11.2. Consent of the Parties.............................................................38
11.3. Arbitration........................................................................38
12. Brokers..................................................................................39
12.1. For the Company....................................................................39
12.2. For the Buyer......................................................................39
13. Notices..................................................................................39
14. Successors and Assigns...................................................................40
15. Entire Agreement; Amendments; Attachments................................................40
16. Severability.............................................................................40
17. Expenses.................................................................................41
18. Governing Law............................................................................41
19. Section Headings.........................................................................41
20. Counterparts.............................................................................41
21. Definition of Knowledge..................................................................41
22. Construction.............................................................................41
23. Defined Terms............................................................................41
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of the 24th
day of August, 1999 by and among Clarus Corporation, a Delaware corporation (the
"Company"), and Geac Computer Systems, Inc., a Georgia corporation (the
"Buyer"). All amounts referred to herein as denominated in "dollars" or preceded
by the "$" sign are stated in U.S. dollars.
WHEREAS, the Company desires to sell substantially all of the assets
and transfer certain of the liabilities of the Business for the consideration
set forth below, subject to the terms and conditions of this Agreement;
WHEREAS, the Buyer desires to purchase such assets and assume such
liabilities, subject to the terms and conditions of this Agreement;
WHEREAS, the Board of Directors of the Buyer has approved the
transactions contemplated herein upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, for purposes of this Agreement, the term "Business" means all
of the business conducted by the Company, of each and every nature, relating to
the development, marketing, licensing and sale of products for use in the
Financial, Enterprise Resource Planning and Human Resources markets, and, for
greater certainty, excluding the Electronic Commerce Business;
WHEREAS, for purposes of this Agreement, the term "Electronic Commerce
Business" means the development, marketing, licensing and sale of products for
use in electronic commerce, currently consisting of the "Clarus E Procurement"
and "Clarus Commerce" products;
WHEREAS, as a condition subsequent to the Buyer's entering into this
Agreement, certain stockholders of the Company (the "Signatory Stockholders")
shall have entered into a Stockholders Agreement with the Buyer (the
"Stockholders Agreement") on or before August 26, 1999, pursuant to which the
Signatory Stockholders will have, among other things, granted to the Buyer a
proxy with respect to the voting of their shares of capital stock in the Company
upon the terms and subject to the conditions set forth in the Stockholders
Agreement (the "Proxy");
WHEREAS, the Proxy is to be granted with respect to approximately
2,113,558 shares of capital stock in the Company, which shares represent
approximately 19.1% of the total outstanding capital stock in the Company as of
the date hereof; and
WHEREAS, the Board of Directors of the Company (the "Company's Board of
Directors") has approved this Agreement, has determined that the transactions
contemplated by this Agreement, taken together, are in the best interests of the
Company's stockholders and has
recommended that the stockholders of the Company approve this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereby agree as follows:
1. Purchase and Sale of the Assets.
1.1. Purchase of the Assets. Subject to and upon the terms and
conditions of this Agreement, at the closing of the transactions contemplated by
this Agreement, the Company will sell, transfer, convey, assign and deliver to
the Buyer, and the Buyer will purchase, acquire, accept and pay for, all the
Company's right, title and interest in and to all of the assets set forth below
and used by the Company in the operation of the Business, together with the
goodwill related thereto (collectively, the "Acquired Assets"):
(i) all accounts receivable of the Business, including,
without limitation, trade, e-mail retail and mail order accounts receivable,
existing on the Closing Date;
(ii) all prepaid expenses and other similar assets of the
Company existing on the Closing Date as set forth on Schedule 1.1(ii) hereto,
including the cash represented by such assets, but excluding tax refunds and
insurance proceeds;
(iii) all rights of the Company under the Assumed Contracts;
provided, however, that only those employment or consulting agreements with any
current or past employees of the Company which are designated by the Buyer in
writing shall be assumed by the Buyer;
(iv) all books, records and accounts, correspondence,
production records, technical, manufacturing and procedural manuals, customer
lists, customer files, customer support files, employment records, accounting
records relating to the Accounts Receivable (as defined below), studies, reports
or summaries relating to any environmental conditions or consequences of any
operation, present or former, as well as all studies, reports or summaries
relating to any environmental aspect or the general condition of the Acquired
Assets, and any confidential information which has been reduced to writing and
relating to the Business but excluding all corporate and stockholder records and
minute books, all accounting records not specifically referenced above and all
tax records;
(v) all rights of the Company under express or implied
warranties from the suppliers of the Company, to the extent the same may be
assigned;
(vi) all of the machinery, equipment, tools, fixtures,
office equipment (including, without limitation, all computer equipment, but
excluding telephone equipment, PBX and related software, such as the Symposium
software), owned vehicles and transportation equipment, owned by the Company and
utilized in the Business on the Closing Date whether or not reflected as a
capital asset in the Company's accounting records;
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(vii) all Commercial Software Rights (as defined in Section
2.14 below) (a) used by the Company or its subsidiaries primarily in the
Business which are transferable without the consent of the licensor or, (b) used
by the Company or its subsidiaries in the Business and the Company and its
subsidiaries' other operations which are transferable in part without the
consent of the licensor;
(viii) the rights of the Company to assign, transfer or
convey all contracts, agreements and other understandings or arrangements
between the Company and any other party with respect to the Business relating to
confidentiality (the "Confidentiality Agreements"); and
(ix) all other assets, properties, claims, rights and
interests of the Company which are primarily utilized in the Business and exist
on the Closing Date, of every kind and description, whether tangible or
intangible, personal or mixed, excluding the assets set forth on Schedule 2.4.
1.2. Further Assurances. At any time and from time to time after
the Closing, at the Buyer's request and without further consideration, the
Company shall promptly execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take all such other action as the
Buyer may reasonably request, more effectively to transfer, convey and assign to
the Buyer, and to confirm the Buyer's title to, all of the Acquired Assets and
to carry out the purpose and intent of this Agreement. The parties acknowledge
and agree that from time to time after the Closing the Buyer may request the
Company to transfer, assign and convey any or all of the Confidentiality
Agreements to the Buyer. The Company agrees that it shall take all such action
as the Buyer may reasonably request to effect any such transfer, assignment and
conveyance, except to the extent that such Confidentiality Agreements may not by
their terms permit such transfer, assignment and conveyance.
1.3. Purchase Price for the Acquired Assets.
(a) The aggregate purchase price to be paid by the Buyer for
the Acquired Assets shall be the sum of Five Million Nine Hundred Sixty Thousand
Dollars ($5,960,000) plus the Assumed Liabilities (the "Purchase Price"). The
Purchase Price shall be payable in the manner described in Subsection 1.3(b) and
shall be subject to adjustment as set forth in Section 1.9 below and Section
2.1(d) of the Indemnification Agreement (as defined below).
(b) At the Closing:
(i) the aggregate sum of Three Million Fifty-Three
Thousand Dollars ($3,053,000) shall be delivered by the Buyer to the Company in
cash, by cashier's or certified check, or by wire transfer of immediately
available funds to an account designated by the Company (the "Cash Payment");
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(ii) the aggregate sum of Two Million Nine Hundred
Seven Thousand Dollars ($2,907,000) (the "Escrow Amount") shall be delivered by
the Buyer to a commercial bank designated by the Buyer, as escrow agent, to be
held in escrow (the "Escrow") pursuant to the terms of an Escrow Agreement, in
substantially the form attached hereto as Exhibit A except for the provisions
relating specifically to the escrow agent's liability and responsibilities
thereunder (the "Escrow Agreement"); and
(iii) the Buyer will assume the Assumed Liabilities
pursuant to an Instrument of Assumption of Liabilities, as provided in Section
1.4 below.
1.4. Assumption of Certain Liabilities.
(a) Assumed Liabilities. At the Closing, the Buyer shall
execute and deliver an Instrument of Assumption of Liabilities (the "Instrument
of Assumption") in substantially the form attached hereto as Exhibit B, pursuant
to which it shall assume and agree to perform, pay and discharge, and indemnify
and hold the Company harmless from, the liabilities, obligations and commitments
of the Company listed on Schedule 1.4(a) attached hereto (the "Assumed
Liabilities").
(b) Retained Liabilities. The Buyer shall not at the Closing
assume or agree to perform, pay or discharge, and the Company shall remain
unconditionally liable for, all obligations, liabilities and commitments, fixed
or contingent, known or unknown, of the Company (other than the Assumed
Liabilities), including, without limitation, any liabilities or obligations
related to (i) any of the Company's indebtedness, including, without limitation,
the liabilities comprising the "Current Maturities of Debt" and "Debt, Net of
Current Maturities" line items on the Balance Sheet of the Company dated March
31, 1999 and attached hereto as Schedule 1.4(b) (the "Initial Asset/Liability
Schedule"), (ii) any litigation involving the Company, (iii) brokers or other
third parties acting on behalf of the Company in connection with the sale of the
Acquired Assets, (iv) any Employee Plan maintained by the Company on or prior to
the Closing Date and related to the Business; (v) any Taxes which are or were
due and payable in connection with the Acquired Assets or the Business on or
prior to the Closing Date; (vi) any claim arising from, relating to or made in
connection with any Environmental Law based on any event, action or inaction by
the Company in connection with the Business or the Acquired Assets on or prior
to the Closing Date; (vii) any Contract that is not an Assumed Contract; (viii)
any payments to be made to employees or consultants of the Company related to
the Business that are triggered by the transactions contemplated herein,
including without limitation, golden parachute or golden handcuff payments; (ix)
any liability related to the Company's real estate leases, including, without
limitation, the current space utilized in connection with the Business; (x) the
Employee Bonuses (as defined below); and (xi) any liability related to the
Electronic Commerce Business.
1.5. Certain Employee Matters. (a) The Company covenants and
agrees that it will maintain adequate staffing levels to effectively manage and
operate the Business until the Closing Date (it being understood that so long as
the Company fulfills this covenant the failure of any employees offered
employment by the Buyer in accordance with the provisions of this Section 1.5 to
accept such offer of employment shall not constitute a Business Material Adverse
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Effect (as defined below)). On or prior to the Closing Date, the Buyer shall
offer employment to a minimum of 90% of the individuals listed on Schedule 2.16
attached hereto (the "ERP List") who are still employees of the Company at such
time on terms and conditions which, taken as a whole, are substantially similar
to the economic terms and conditions of such individuals' employment
arrangements as of the date hereof. In the event that any individual on the ERP
List is offered employment by the Buyer and declines such offer of employment,
the Company shall not create or maintain any position (whether as an employee or
consultant) for such individual in the Company's remaining operations for 12
months from and after the Closing Date. To the extent that any obligations arise
as a result of the termination of any individual's employment with the Company,
including severance payments, stay bonuses and accrued vacation and sick time,
such obligations shall be and remain the liability of the Company and shall be
satisfied in full on or prior to the Closing Date.
(b) From and after the date hereof through the Closing Date, the
Buyer shall be entitled to contact the individuals listed on Schedule 1.5(b)
attached hereto to discuss possible employment with the Buyer after the Closing
Date.
(c) On or prior to the Closing Date, the Company shall pay a pro
rata portion of the bonuses payable under its current employee bonus program up
to the Closing Date to all eligible employees on the ERP List who are still
employees of the Company at the Closing Date (the "Employee Bonuses").
(d) Nothing expressed or implied herein shall confer upon any
past or present employee of the Company, their representatives, beneficiaries,
successors and assigns, nor upon any collective bargaining agent, any rights or
remedies of any nature, including, without limitation, any rights to employment
or continued employment with the Buyer, the Company, or any successor or
affiliate; nor shall the Buyer, the Company or their affiliates be precluded or
prevented from terminating or amending any Employee Plan (as defined below).
1.6. Allocation of Purchase Price and Assumed Liabilities. The
parties agree to allocate the Purchase Price, for all tax and financial
accounting purposes, as set forth on Schedule 1.6 attached hereto and agree to
reflect such allocation on all tax returns filed by them which require such
information.
1.7. Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxxx Xxxxxx
& Green, P.C., 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx at 10:00 a.m., Boston
Time, or such other place and time as the parties shall mutually agree, as soon
as all the necessary consents and approvals to the transactions contemplated
herein are obtained by the parties (the "Closing Date"), but in no event later
than the second business day following the satisfaction of the conditions set
forth in Sections 7.4, 7.5 and 8.9. The transfer of the Acquired Assets to the
Buyer shall be deemed to occur at 12:02 a.m., Boston time, on the Closing Date.
1.8. Intentionally Omitted.
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1.9. A/R Adjustment. The Purchase Price set forth in Section 1.3
above shall be further subject to adjustment after the Closing as follows:
(a) The Buyer shall have the right and obligation to collect
all Closing A/R for its own behalf for a period of one hundred eighty (180) days
after the Closing in the case of Non-LT Closing A/R (the "First Collection
Period") and for a period of thirty (30) days after the payment due date for
each such Long-Term Closing A/R in the case of Long-Term Closing A/R (the
"Second Collection Period" and, together with the First Collection Period, the
"Collection Periods") and will use all commercially reasonable efforts to do so
as expeditiously as possible. The Buyer shall use collection efforts
substantially consistent with the Buyer's current collection practices to
collect the Closing A/R and may, in its sole discretion, use a collection agency
or commence legal action in connection with such collection efforts; provided,
that the Buyer shall provide written notice to the Company at least twenty (20)
days prior to the commencement of legal action in connection with such
collection efforts by the Buyer against any customer that is a customer of both
the Buyer and the Company. During the Collection Periods, the Company shall
cooperate with the Buyer, and may participate with the Buyer in the collection
of the Closing A/R, provided that the Buyer shall have control over the timing
and method of such collection efforts.
(b) Within fifteen (15) business days after the end of the
First Collection Period, the Buyer shall deliver a written statement to the
Company certified as accurate by its Chief Financial Officer: (i) setting forth
the amount of the Non-LT Closing A/R that has been collected by the Buyer during
the First Collection Period, the aggregate amount of the Non-LT Closing A/R that
remains uncollected or is deemed uncollected at the end of the First Collection
Period (such uncollected amount, the "Uncollected Non-LT A/R"), and a list of
the Uncollected Non-LT A/R, including the names of the account debtors and the
amounts owed by each and (ii) instructing the Company to pay to the Buyer, by
wire transfer of immediately available funds, an amount equal to the Uncollected
Non-LT A/R net of any reserve for doubtful accounts used in determining the
"Accounts Receivable Balance, net of allowance for Doubtful Accounts" indicated
in the Closing Statement of Value. The Company shall immediately pay the amount
referenced in the Buyer's instructions. The amount of the Uncollected Non-LT A/R
that is paid to the Buyer shall constitute a reduction in Purchase Price. Upon
receipt of payment from the Company, the Buyer shall promptly convey to the
Company all Uncollected Non-LT A/R for the Company's own account and collection,
together with any documentation or other tangible evidence of such Uncollected
Non-LT A/R that will aid the Company in the collection of such amounts.
Notwithstanding the foregoing, in the event that any account debtor that owes
Uncollected Non-LT A/R claims that such Uncollected Non-LT A/R has been paid to
the Buyer, then the Company shall have the right to audit at its own expense the
Buyer's records with respect to such Uncollected Non-LT A/R during normal
business hours and in a manner that does not interfere with the Buyer's ordinary
business operations. In the event that as a result of such audit, the Company
determines that such Uncollected Non-LT A/R has been paid to the Buyer, the
Company shall notify the Buyer in writing (the "A/R Dispute Notice") of the
amount, nature and basis of such dispute within fifteen (15) business days after
conclusion of its audit. In the event of such dispute, the parties shall first
use their best efforts to resolve such dispute among themselves. If the parties
are unable to resolve the dispute within thirty (30) days after delivery of the
A/R Dispute Notice, then the dispute shall be submitted for binding resolution
to
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a mutually acceptable, nationally recognized Big Five accounting firm which is
independent of all parties. Upon the expiration of the First Collection Period,
(x) the Buyer shall no longer have the right or obligation to pursue or collect
the Uncollected Non-LT A/R, or any portion thereof, (y) the Company shall have
the right to pursue all Uncollected Non-LT A/R for its own behalf using any
lawful means it chooses, and (z) the Buyer shall remit promptly (but in any
event with fifteen (15) business days of receipt) to the Company all sums
received with respect to the Uncollected Non-LT A/R.
(c) Within fifteen (15) business days after the end of the
Second Collection Period, the Buyer shall deliver a written statement to the
Company: (i) setting forth the amount of the Long-Term Closing A/R that has been
collected by the Buyer during the Second Collection Period, the aggregate amount
of the Long-Term Closing A/R that remains uncollected or is deemed uncollected
at the end of the Second Collection Period (such uncollected amount, the
"Uncollected LT A/R"), and a list of the Uncollected LT A/R, including the names
of the account debtors and the amounts owed by each and (ii) instructing the
Company to pay to the Buyer, by wire transfer of immediately available funds, an
amount equal to the Uncollected LT A/R net of the remainder of any reserve for
doubtful accounts indicated on the Closing Statement of Value. The Company shall
immediately pay the amount referenced in the Buyer's instructions. The amount of
the Uncollected LT A/R that is paid to the Buyer shall constitute a reduction in
Purchase Price. Upon receipt of payment from the Company, the Buyer shall
promptly convey to the Company all Uncollected LT A/R for the Company's own
account and collection, together with any documentation or other tangible
evidence of such Uncollected LT A/R that will aid the Company in the collection
of such amounts. Upon the expiration of the Second Collection Period, (x) the
Buyer shall no longer have the right or obligation to pursue or collect the
Uncollected LT A/R, or any portion thereof, (y) the Company shall have the right
to pursue all Uncollected LT A/R for its own behalf using any lawful means it
chooses, and (z) the Buyer shall remit promptly (but in any event with fifteen
(15) business days of receipt) to the Company all sums received with respect to
the Uncollected LT A/R.
(d) In the event that any payment received by the Buyer
during the Collection Periods is remitted by a customer which is indebted under
a Closing A/R and under an account receivable arising out of the sale of
services or products in the ordinary course of business after the Closing Date
(a "New Receivable"), such payment shall be applied as follows: (i) if such
customer designates the account receivable to which such payment is to be
applied, such payment shall be applied to the account receivable so designated;
(ii) if such customer fails to designate an account receivable to which such
payment is to be applied, such payment shall be applied to the account
receivable that the Buyer in its reasonable judgment determines is the account
receivable to which such payment relates (provided that the Buyer shall have the
right to contact, but not to influence, any such customer to determine the
account receivable to which such payment relates); or (iii) if such customer
fails to designate an account receivable to which such payment is to be applied
and there is no reasonable basis for determining the account receivable to which
such payment relates, then such payment shall be applied to the Closing A/R due
from such customer and the balance remaining after payment in full of all
Closing A/R due from such customer shall then be applied to the New Receivable
due from such customer; provided, however, that (x) with respect to any Closing
A/R being contested or disputed by the payor thereof, no portion of the amount
in dispute shall be deemed to have been collected by
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the Buyer with respect to such disputed account receivable due from such
customer ("Disputed Account") until all amounts due from such customer have been
paid or the dispute is resolved, whichever occurs first, and in the event that
the Buyer receives any funds with respect to such Disputed Account after the
Company has paid to the Buyer the full amount of such Disputed Account, the
Buyer shall promptly remit such funds to the Company, and (y) the foregoing
priorities shall not apply to payments received by the Buyer which are
designated by the Customer as payment of a C.O.D. sale arising after the Closing
Date.
(e) The Buyer shall not be responsible for the collection of
accounts receivable that arose out of the Electronic Commerce Business
("Electronic Commerce A/R"). If the Buyer receives any payment from a customer
that is designated by the customer as payment of an Electronic Commerce A/R, it
shall forward such payment to the Company within five (5) business days of
receipt.
(f) "Accounts Receivable" has the meaning set forth in
Section 2.11 below.
"Closing A/R" has the meaning set forth in Section 2.11
below.
"Long-Term Closing A/R" shall mean all Closing A/R
identified on Schedule 2.11 attached hereto as having a scheduled payment due
date more than one hundred eighty (180) days after the Closing.
"Non-LT Closing A/R" shall mean all Closing A/R that is
not a Long-Term Closing A/R.
(g) If any amount required to be paid by the Company
pursuant to Section 1.9(b) or 1.9(c) above is not paid within three (3) business
days after it is due, the Buyer shall be entitled to submit a certificate to the
Escrow Agent requesting that upon disbursement of the Escrow Amount at the
termination of the Escrow Agreement, the Escrow Agent retain an amount equal to
the unpaid Uncollected Non-LT A/R or Uncollected LT A/R as applicable (the "A/R
Certificate").
1.10. Company Actions. The Company hereby approves of and
consents to this Agreement and represents that the Company's Board of Directors,
at a meeting duly called and held, has, subject to the terms and conditions set
forth herein, (i) determined that this Agreement and the transactions
contemplated hereby, taken together, are in the best interests of the Company's
stockholders, (ii) approved this Agreement and the transactions contemplated
hereby in all respects, and (iii) resolved to recommend that the stockholders of
the Company approve and adopt this Agreement; provided, however, that such
recommendation and approval may be withdrawn, modified or amended to the extent
that the Company's Board determines in good faith, after taking into
consideration the written advice of its outside legal counsel, that failure to
take such action is reasonably likely to result in a breach of the fiduciary
obligations of the Company's Board of Directors under applicable law. The
Company also represents that the Company's Board of Directors has reviewed the
opinion of US Bancorp Xxxxx Xxxxxxx, financial advisor to the Company's Board of
Directors (the "Financial Advisor"), that, as of the date of this
8
Agreement, the consideration to be received pursuant to this Agreement is fair
to the Company from a financial point of view (the "Fairness Opinion"). The
Company has been authorized by the Financial Advisor to permit, subject to the
prior review and consent by the Financial Advisor (such consent not to be
unreasonably withheld), the inclusion of the Fairness Opinion (or a reference
thereto) in the Proxy Statement (as defined below).
2. Representations of the Company. The Company represents and warrants
to the Buyer as follows:
2.1. Organization; Capital Stock. (a) Each of the Company and its
subsidiaries: (i) is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and (ii)
has all requisite power and authority (corporate and otherwise) to own its
properties and to carry on its business as now being conducted. The Company has
made available to the Buyer a complete and correct copy of the Company's
certificate of incorporation and bylaws (or comparable operating documents),
each as amended to date. The Company's certificate of incorporation and bylaws
(or comparable governing documents) so made available are in full force and
effect. The Company does not own any shares of capital stock or other equity
interest in any other entity that owns any of the Acquired Assets or conducts
any portion of the Business.
(b) On the date hereof, the Company's authorized capital stock
consists of 25,000,000 shares of capital stock, of which approximately
11,072,151 shares are issued and outstanding.
2.2. Authorization.
The Company has all requisite power (corporate and otherwise) and
authority to execute, deliver and perform its obligations hereunder except for
the required approval of the stockholders of the Company. The execution and
delivery by the Company of this Agreement and the agreements provided for
herein, and the consummation by the Company of all transactions contemplated
hereunder and thereunder, have been duly authorized by all requisite corporate
and shareholder action except for the required approval of the stockholders of
the Company. This Agreement has been duly executed by the Company. This
Agreement and all other agreements and obligations entered into and undertaken
in connection with the transactions contemplated hereby to which the Company is
a party constitute the valid and legally binding obligations of the Company,
enforceable against it in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally, and
equitable principles. The execution, delivery and performance by the Company of
this Agreement and the agreements provided for herein, and the consummation by
the Company of the transactions contemplated hereby and thereby following
approval by the Company's stockholders, will not, with or without the giving of
notice or the passage of time or both: (a) violate the provisions of any law,
rule or regulation applicable to the Company; (b) violate the provisions of the
charter or Bylaws of the Company; (c) violate any judgment, decree, order or
award of any court, governmental body or arbitrator; or (d) conflict with or
result in the breach or termination of any term or provision of, or constitute a
default under, or cause any acceleration under, or cause the creation of any
lien,
9
charge or encumbrance upon the properties or assets of the Business pursuant to,
any indenture, mortgage, deed of trust or other agreement or instrument to which
the Company is a party or by which the Company is or may be bound, except as set
forth on Schedule 2.2. Schedule 2.2 attached hereto sets forth a true, correct
and complete list of all consents and approvals of third parties that are
required in connection with the consummation by the Company of the transactions
contemplated by this Agreement.
2.3. Ownership of Acquired Assets. Schedule 2.3 attached hereto
sets forth a true, correct and complete list of all claims, liabilities,
security interests, mortgages, liens, pledges, charges, encumbrances and
equities of any kind affecting the Acquired Assets (collectively, the
"Encumbrances"). The Company is, and at the Closing will be, the true and lawful
owner of the Acquired Assets, and will have the right to sell and transfer to
the Buyer good title to the Acquired Assets, free and clear of all Encumbrances
of any kind. The delivery to the Buyer of the instruments of transfer of
ownership contemplated by this Agreement will vest good title to the Acquired
Assets in the Buyer, free and clear of all Encumbrances.
2.4. Acquired Assets Complete. Except as set forth on Schedule
2.4 attached hereto, the Acquired Assets are, when utilized by a labor force
substantially similar to those employed by the Company on the date hereof,
adequate and complete to conduct the Business as currently conducted by the
Company.
2.5. Financial Statements.
(a) The Company has made available to the Buyer its Balance Sheet and
Statement of Operations and Cash Flows for the year ended December 31, 1998 and
the three (3) month period ended March 31, 1999 (the "Company Reports"). Each of
the consolidated balance sheets included in the Company Reports (including the
related notes and schedules) fairly presents in all material respects the
consolidated financial position of the Company and its subsidiaries as of its
date and each of the consolidated statements of operations and cash flows
included in the Company Reports (including any related notes and schedules)
fairly presents in all material respects, the results of operations, retained
earnings and cash flows, as the case may be, of the Company and its subsidiaries
for the periods set forth therein (subject, in the case of unaudited statements,
to notes and normal year-end audit adjustments that will not be material in
amount or effect), in each case in accordance with GAAP consistently applied
during the periods involved, except as may be noted therein. Except as set forth
in Company Reports filed with the SEC prior to the date hereof or as incurred in
the ordinary course of business since March 31, 1999, neither the Company nor
any of its subsidiaries has any material liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) which would be
required under GAAP to be set forth on a consolidated balance sheet of the
Company and its subsidiaries taken as a whole.
(b) The Company has previously delivered to the Buyer the Initial
Asset/Liability Schedule and a Schedule of Assets Purchased and Liabilities
Assumed reflecting the Business of the Company dated as of July 31, 1999, a copy
of which is attached as Schedule 2.5(b) (the "July Schedule"). The accounts
reflected on the Initial Asset/Liability Schedule and the July Schedule have
been prepared in accordance with GAAP consistently applied with the Company's
past practices, are complete and correct in all material respects and present
fairly as of their respective
10
dates the assets and liabilities of the Business for the periods stated therein.
The Initial Asset/Liability Schedule and the July Schedule contain and reflect
adequate reserves, which are determined consistent with previous reserves taken,
for all reasonably anticipated material losses, impairment of asset values,
costs and expenses with respect to the contracts and commitments of the
Business.
2.6. Absence of Undisclosed Liabilities. Except as and to the
extent (a) reflected and reserved against in the Initial Asset/Liability
Schedule, (b) set forth on Schedule 2.6 attached hereto or (c) incurred in the
ordinary course of business after the date of the Initial Asset/Liability
Schedule, the Company has no liability or obligation, secured or unsecured,
whether accrued, absolute, contingent, unasserted or otherwise, which would
reasonably be expected to have a Business Material Adverse Effect. For purposes
of this Agreement, "Business Material Adverse Effect" means a material adverse
effect on any of the financial condition, properties, business, results of
operations or reasonably foreseeable prospects of the Business as contemplated
on the date hereof, taking such Business as a whole (either directly or as a
result of its effect on the Company), but excluding any effect on the sales of
the Business or the collection of the accounts receivable of the Company
resulting from the announcement of the transactions contemplated by this
Agreement. For purposes of this Agreement, when a representation or warranty is
qualified by the phrase "Business Material Adverse Effect," the determination of
whether or not there is a Business Material Adverse Effect with respect to the
matters referenced in such representation or warranty shall be made both with
respect to each matter referenced therein on an individual basis and with
respect to all matters referenced therein on a collective basis.
2.7. Litigation. Except as set forth on Schedule 2.7 attached
hereto, (a) there is no action, suit or proceeding to which the Company is a
party and has been served pending or, to the Company's knowledge, threatened
before any court or governmental agency, authority, body or arbitrator which,
taken individually or together with all other such actions, suits or
proceedings, would reasonably be expected to have a Business Material Adverse
Effect; (b) the Company has not been permanently or temporarily enjoined by any
order, judgment or decree of any court or any governmental agency, authority or
body from engaging in or continuing any conduct or practice in connection with
the business, assets, or properties of the Company or the Acquired Assets; and
(c) there is not in existence on the date hereof any order, judgment or decree
of any court, tribunal or agency naming the Company or enjoining or requiring
the Company to take any action of any kind with respect to its business, assets
or properties or the Acquired Assets.
2.8. Insurance. The Company maintains insurance policies (the
"Insurance Policies") against all risks of a character and in such amounts as
are usually insured against by similarly situated companies in the same or
similar businesses.
2.9. Fixed Assets. Schedule 2.9 contains a true, correct and
complete list as of July 31, 1999 of all fixed assets of the Business having a
material value, as the term "fixed assets" is generally understood pursuant to
GAAP (the "Fixed Assets"), including a description of each such asset, its
original cost, the depreciation taken since its date of acquisition and the net
book value thereof. Such list, as updated at the Closing, shall set forth a
true, correct and
11
complete list of all Fixed Assets as of the Closing Date, including a
description of each asset, its original cost, the depreciation taken since its
date of acquisition and the net book value thereof. All of the Fixed Assets are
in reasonable operating condition and repair, normal wear and tear excepted, are
currently used by the Company in the ordinary course of conducting the Business,
and normal maintenance has been performed with respect to such Fixed Assets.
2.10. Change in Financial Condition and Assets. Except as set
forth on Schedule 2.10 attached hereto, since the date of the Initial
Asset/Liability Schedule there has been no change which could reasonably be
expected to have a Business Material Adverse Effect. The Company does not have
any knowledge of any existing or threatened occurrence, event or development
(excluding general economic conditions) which, as far as can be reasonably
foreseen, could have a Business Material Adverse Effect.
2.11. Accounts Receivable. Schedule 2.11 attached hereto sets
forth a true, correct and complete schedule of the accounts receivable of the
Company included in the Business (the "Accounts Receivable"), including the
aging thereof, as of the date of the July Schedule. Such schedule, as updated at
the Closing, shall represent a true, correct and complete schedule of the
Accounts Receivable of the Company, including (i) the aging thereof, as of the
Closing Date, (ii) the invoice date thereof and (iii) the scheduled payment due
date thereof (the "Closing A/R"). All Accounts Receivable arose out of the
licensing of software in the ordinary course of conducting the Business. All
Non-LT A/R set forth on Schedule 2.11 as of the date hereof and as of the
Closing Date are collectible in the face value thereof net of the reserve for
doubtful accounts reflected on the July Schedule within one hundred eighty (180)
days of the date of invoice, using normal collection procedures. All Long-Term
A/R set forth on Schedule 2.11 as of the date hereof and as of the Closing Date
are collectible in the face value thereof net of the reserve for doubtful
accounts reflected on the July Schedule within one hundred eighty (180) days of
the scheduled payment due date, using normal collection procedures.
2.12. Tax Matters. Except as set forth on Schedule 2.12,
(a) the Company and its subsidiaries have timely filed or will timely
file all returns and reports required to be filed by them with any taxing
authority with respect to Taxes in connection with the Acquired Assets and
Assumed Liabilities for any period ending on or before the date hereof, taking
into account any extension of time to file granted to or obtained on behalf of
the Company or any of its subsidiaries, and all such returns and reports are
correct and complete in all material respects;
(b) all Taxes shown to be payable on such returns or reports that are
due prior to the date hereof have been timely paid;
(c) as of the date hereof, no deficiency for any amount of Tax has been
asserted or assessed or, to the Company's knowledge, has been threatened or is
likely to be assessed by a taxing authority against the Company or any of its
subsidiaries in connection with the Acquired Assets or Assumed Liabilities,
other than deficiencies as to which adequate reserves have been provided for in
the July Schedule;
12
(d) no claim has ever been made by an authority in a jurisdiction where
the Company or any of its subsidiaries do not file Tax Returns that any of the
Acquired Assets are or may be subject to taxation by that jurisdiction;
(e) neither the Company nor any subsidiary has been included in any
consolidated, combined or unitary Tax Return (other than for a group of which
the Company is the common parent) provided for under the laws of the United
States, any state or locality with respect to Taxes for any taxable period for
which the statute of limitations has not expired; and neither the Company nor
any subsidiary has any liability for the Taxes of any Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract, or otherwise;
(f) the Company and each subsidiary as of the Closing Date (A) will
have paid or accrued all Taxes it is required to pay or accrue in connection
with the Acquired Assets and Assumed Liabilities and (B) will have withheld with
respect to its employees all federal and state income taxes, Taxes pursuant to
the Federal Insurance Contribution Act ("FICA"), Taxes pursuant to the Federal
Unemployment Tax Act ("FUTA"), and other Taxes required to be withheld;
(g) neither the Company nor any subsidiary has been delinquent in the
payment of any Tax, nor has the Company nor any subsidiary executed any
unexpired waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax;
(h) no audit or other examination of any Tax Return of the Company or
any subsidiary by any Tax authority is presently in progress, nor has the
Company or any subsidiary been notified of any request for such an audit or
other examination;
(i) no adjustment relating to any Tax Returns filed by the Company or
any subsidiary has been proposed formally or informally by any Tax authority to
the Company or any of its subsidiaries or any representative thereof;
(j) the Company has provided the Buyer with copies of all federal,
state, and foreign income and all state sales and use Tax Returns of the Company
or any Subsidiary for each of the Company's last fiscal year;
(k) there are (and, as of immediately following the Closing Date, there
will be) no liens or Encumbrances on the Acquired Assets relating to or
attributable to Taxes, other than liens for Taxes not yet due and payable;
(l) neither the Company nor any subsidiary has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by the Company;
(m) neither the Company nor any subsidiary is party to or has any
obligation under any tax-sharing, tax indemnity or tax allocation agreement or
arrangement;
13
(n) the Company and the subsidiaries have not been and will not be
required to include any adjustment in taxable income for any tax period (or
portion thereof) pursuant to Section 481 or Section 263A of the Code or any
comparable provision under state or foreign tax laws as a result of
transactions, events or accounting methods employed prior to the Closing Date;
and
(o) none of the Acquired Assets is tax exempt use property within the
meaning of Section 168(h) of the Code.
For purposes of this Agreement, "Taxes" means any and all taxes, fees, levies,
duties, tariffs, imposts and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Entity or other taxing authority,
including taxes or other charges on or with respect to net or gross income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added or gains taxes;
license, registration and documentation fees; and customers' duties, tariffs and
similar charges.
2.13. Books and Records. The general ledgers and books of account
of the Company with respect to the Acquired Assets and the Business, and all
other books and records of the Company related to the Acquired Assets and the
Business are in all material respects complete and correct and have been
maintained in accordance with reasonable business practice and in accordance
with all applicable procedures required by laws and regulations.
2.14. Contracts and Commitments
(a) Schedule 2.14(a) attached hereto contains a true,
complete and correct list and description of the following contracts and
agreements, whether written or oral, which are related to the Business
(collectively, the "Contracts"):
(i) all pledges, conditional sale or title retention
agreements, security agreements (including but not limited to maintenance
agreements), equipment leases and other equipment obligations, other personal
property leases and lease purchase agreements to which the Company is a party or
by which the Company or any of its property is bound, and all material leases of
personal property, whether operating, capital or otherwise, under which the
Company is lessor or lessee;
(ii) all contracts, agreements, commitments, purchase
orders or other understandings or arrangements to which the Company is a party
or by which the Company or any of its property is bound which either involve
payments or receipts by the Company of more than $25,000 in the case of any
single contract, agreement, commitment, understanding or arrangement under which
full performance (including payment) has not been rendered by all parties
thereto, or may materially adversely effect the condition (financial or
otherwise) or the properties, assets, business or prospects of the Company;
14
(iii) all collective bargaining agreements, employment
and consulting agreements, executive compensation plans, bonus plans, deferred
compensation agreements, pension plans, retirement plans, employee stock option
or stock purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, arrangements or commitments to which the
Company is a party;
(iv) all agency, distributor, sales representative,
franchise or similar agreements to which the Company is a party;
(v) all contracts, agreements or other understandings
or arrangements between the Company and any of its affiliates (as such term is
defined in the Securities Act of 1933 and the regulations promulgated
thereunder);
(vi) all contracts, agreements and other documents or
information relating to past disposal of waste (whether or not hazardous);
(vii) all agreements pursuant to which the Company or
its subsidiaries is an end user licensee of commercially available software
programs generally available to the public (including without limitation both
so-called "shrinkwrap" software and enterprise software) that are in no way a
component of or incorporated in any of the Company's or any of its subsidiaries'
products that are included in the Business ("Commercial Software Rights");
(viii) any other material agreements or contracts
entered into by the Company;
(ix) all contracts, agreements and other understandings
or arrangements pursuant to which the Company has rights or obligations related
both to the Business and the Electronic Commerce Business (the "Shared
Contracts").
(b) Except as set forth on Schedule 2.14(b):
(i) each Contract that is included in the Assumed
Liabilities (each an "Assumed Contract" and, collectively, the "Assumed
Contracts") is a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights generally, and equitable principles, and
the Company has no knowledge that any material Assumed Contract is not a valid
and binding agreement of the other parties thereto;
(ii) the Company has fulfilled all material obligations
required pursuant to the Assumed Contracts to have been performed by the Company
on its part prior to the date hereof, and the Company has no reason to believe
that it will not be able to fulfill, when due, all of its obligations under the
Assumed Contracts which remain to be performed after the date hereof to the
extent required to be performed prior to the Closing Date;
15
(iii) the Company is not in material breach of or
material default under any Assumed Contract, and no event has occurred which
with the passage of time or giving of notice or both would constitute such a
material breach or material default, result in a loss of rights or result in the
creation of any lien, charge or encumbrance thereunder or pursuant thereto;
(iv) to the knowledge of the Company, there is no
existing material breach or default by any other party to any Assumed Contract
and no event has occurred which with the passage of time or giving of notice or
both would constitute a default by such other party, result in a loss of rights
or result in the creation of any lien, charge or encumbrance thereunder or
pursuant thereto;
(v) the Company is not restricted by any Assumed
Contract from carrying on the Business anywhere in the world; and
(vi) the Company has no written or oral Assumed
Contracts to sell products or perform services for the Business which are
expected to be performed at, or to result in, a loss.
(c) Except as set forth on Schedule 2.2 or Schedule 2.14(b),
the continuation, validity and effectiveness of each Assumed Contract, will not
be affected by the transfer thereof to the Buyer under this Agreement and all
such Assumed Contracts are assignable to the Buyer without consent. True and
correct copies of each Assumed Contract have been provided to the Buyer.
2.15. Compliance with Agreements and Laws. The Company has all
material licenses, permits and certificates, including, without limitation,
environmental, health and safety permits, from federal, state and local
authorities necessary to conduct the Business and own and operate the Acquired
Assets (collectively, the "Permits"). Schedule 2.15(a) attached hereto sets
forth a true, correct and complete list of all such Permits, copies of which
have been provided to the Buyer. Except as set forth on Schedule 2.15(b), to the
knowledge of the Company, the Business as conducted by the Company on the date
hereof does not, and as conducted on the Closing Date will not, violate any
federal, state, local or foreign laws, regulations, ordinances or orders in any
material respect (including, but not limited to, any of the foregoing relating
to employment discrimination, occupational safety, hazardous waste,
conservation, or corrupt practices but excluding those relating to environmental
protection). The Company has not had notice or communication from any federal,
state or local governmental or regulatory authority since January 1, 1995 of any
such violation or noncompliance and, to the knowledge of the Company, there are
no other outstanding notices of any such violation or noncompliance which have
not been cured. To the knowledge of the Company, the Company's pricing policies,
including those imposed by the Company on distributors and resellers, are in
compliance with all federal, state, local or foreign laws, regulations,
ordinances and orders.
16
2.16. Employee Relations. The Company is in compliance in all
material respects with all federal, state and municipal laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and is not engaged in any unfair labor practice, and there are
no arrears in the payment of wages or social security taxes. None of the
Company's employees are represented by a union and there have been no union
organizing efforts conducted at the Company and none are now being conducted.
The Company has not had at any time, nor, to the knowledge of the Company, is
there now threatened, any strike or other labor trouble. Schedule 2.16 sets
forth a true, correct and complete list as of July 31, 1999 of each employee of
the Company working in the Business for a majority of his or her total working
time, showing each employee's base compensation, bonuses and other cash
compensation. For purposes of this Section 2.16, the term "employee" shall be
construed to include sales agents and other independent contractors who spend a
majority of their working time in the Business.
2.17. Employee Benefit Plans.
(a) Employee Plans. Schedule 2.17 attached hereto contains a
true, correct and complete list of all pension, benefit, profit sharing,
retirement, deferred compensation, welfare, insurance, disability, bonus,
vacation pay, severance pay and other similar plans, programs and agreements,
whether reduced to writing or not, relating to the employees of the Business
(the "Employee Plans"). All Employee Plans comply in all material respects with
the requirements prescribed by all statutes, orders or governmental rules or
regulations currently in effect and applicable to such Employee Plans. The
Company has in all material respects performed all obligations required to be
performed by it under the Employee Plans. The Company has not ever been
obligated to contribute to any "multiemployer plan," as such term is defined in
Section 3(37) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and has no "defined benefit plan," as such term is defined in Section
3(35) of ERISA.
(b) Prohibited Transactions. Neither the Company nor any of
its directors, officers, employees or agents, nor any "party in interest" or
"disqualified person," as such terms are defined in Section 3 of ERISA and
Section 4975 of the Code, has, with respect to any Employee Plan, engaged in or
been a party to any nonexempt "prohibited transaction," as such term is defined
in Section 4975 of the Code or Section 406 of ERISA, in connection with which,
directly or indirectly, the Buyer or any of its affiliates, directors or
employees or any Employee Plan or any related funding medium could be subject to
either a penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed
by Section 4975 of the Code.
(c) Copies of Employee Plans and Related Documents. True,
correct and complete copies of all Employee Plans which have been reduced to
writing and written descriptions of all Employee Plans which have not been
reduced to writing, and all agreements, including trust agreements and insurance
contracts, related to such Employee Plans, and the Summary Plan Description and
all modifications thereto for each Employee Plan communicated to employees have
been delivered to Buyer.
(d) Qualifications; Claims. Each Employee Plan and all
amendments thereto intended to qualify under Section 401(a) of the Code have
been determined by the Internal
17
Revenue Service to so qualify, and the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501(a) of the
Code, and copies of all determination letters with respect to each such Employee
Plan have been provided to the Buyer, and nothing has since occurred, or is
expected to occur prior to the Closing Date, which might cause the loss of such
qualification or exemption. There are no pending claims, suits or other
proceedings by present or former employees of the Company or their affiliates,
plan participants, beneficiaries or spouses of any of the above, including
claims against the assets of any trust, involving any Employee Plan, or any
rights or benefits thereunder, other than ordinary and usual claims for benefits
by participants or beneficiaries.
2.18. Employee Indebtedness. Except as set forth on Schedule 2.18
attached hereto, the Company is not indebted, directly or indirectly, to any
person who is an employee of the Business or any affiliate of any such person in
any amount whatsoever other than for salaries for services rendered or
reimbursable business expenses, all of which have been reflected in the Company
Reports, and no such employee is indebted to the Company, except for advances
made to employees of the Company in the ordinary course of business to meet
reimbursable business expenses anticipated to be incurred by such obligor.
2.19. Powers of Attorney and Suretyships. Except as set forth on
Schedule 2.19 attached hereto, the Company does not have any powers of attorney
outstanding and has no obligation or liability related to the Acquired Assets or
Assumed Liabilities, as guarantor, surety, co-xxxxxx, endorser, co-maker,
indemnitor or otherwise in respect of the obligation of any person, corporation,
partnership or other entity except as endorser to makers of checks or letters of
credit, respectively, endorsed or made in the ordinary course of business.
2.20. Suppliers. Schedule 2.20 attached hereto sets forth a true,
correct and complete list of the names and addresses of the twenty (20)
suppliers of the Company which accounted for the largest dollar volume of
purchases by the Company in connection with the Business during the twelve (12)
months ended July 31, 1999. Except as set forth on Schedule 2.20, there has been
no actual or threatened termination or cancellation of, and no adverse
modification or change in, the business relationship of the Company with any
supplier where same would have a Business Material Adverse Effect. The Company
has no reason to believe that the benefits of any relationship with any of the
suppliers of the Business will not continue after Closing in substantially the
same manner as prior to Closing. Except as specified in Schedule 2.20, none of
the Company's suppliers of software has announced its intention to cease to
maintain, support, update or further enhance such software.
2.21. Real and Leased Property. The Company does not currently
and has not in the past owned any real property in connection with the Business.
The Company shall remain liable for any all lease obligations with respect to
real property leased in connection with the Business (the "Leased Real
Property").
2.22. Environmental Matters.
18
(a) The Company has complied and is in compliance with all
applicable Environmental Laws, except for such noncompliance as could not
individually, or in the aggregate, reasonably be expected to have a Business
Material Adverse Effect, and the Company has received no written notice, report,
communication or information regarding any liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), or any corrective,
investigatory or remedial obligations, arising under any applicable
Environmental Laws.
(b) Without limiting the generality of the foregoing and to
the best of the Company's knowledge, none of the following exists at the Leased
Real Property, except as set forth on Schedule 2.22 hereto:
(i) underground or above-ground storage tanks;
(ii) asbestos-containing material in a form or
condition which, if not removed or encapsulated, would constitute a hazard to
human health or the environment; or
(iii) PCB-containing materials or equipment.
(c) The Company does not now, and in the past neither the
Company nor its predecessors ever did, maintain, store, use, generate, treat,
release, dispose (or cause to be disposed) of Hazardous Substances (other than
office products, equipment, supplies and cleaning fluids customarily found in a
commercial office setting) in, at, under, upon or from any real property at any
time owned, leased, operated or controlled by the Company, including, without
limitation, the Leased Real Property.
(d) To the best of the Company's knowledge, there have been
no releases of Hazardous Substances in, at, under, upon or from any other real
property not owned, leased, operated or controlled by the Company that could be
reasonably expected to have an impact on the Leased Real Property.
(e) Neither the Company nor its predecessors ever utilized
any hazardous waste transporters or any treatment, storage or disposal
facilitators.
(f) The Company is not subject to, nor has it received any
notice of, any private, administrative or judicial action, or an intended
private, administrative or judicial action relating to the presence or alleged
presence of Hazardous Substances in, at, under or upon the Leased Real Property,
and there are no pending or, to the Company's knowledge, threatened actions or
proceedings (or notices or potential actions or proceedings) against the Company
from any Governmental Authority regarding any matter relating to any
Environmental Laws.
For the purposes of this Agreement, "Environmental Laws" means all
applicable federal, provincial, state and local laws, rules, regulations,
ordinances, requirements and common law relating to public health and safety,
worker health and safety and pollution and protection of the environment
pertaining to (i) treatment, storage, disposal, generation and transportation of
toxic or hazardous substances or solid or hazardous waste; (ii) air, water and
noise pollution, (iii)
19
groundwater and soil contamination, (iv) the release or threatened release into
the environment of toxic or hazardous substances, or solid or hazardous waste,
including, without limitation, emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals, (v) the protection
of wild life, marine sanctuaries and wetlands, including, without limitation,
all endangered and threatened species, (vi) storage tanks, vessels and
containers, (vii) underground and other storage tanks or vessels, abandoned,
disposed or discarded barrels, containers and other closed receptacles, (viii)
health and safety of employees and other persons and (ix) manufacture,
processing, use, distribution, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or toxic or hazardous substances
or oil or petroleum products or solid or hazardous waste, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, U.S.C. ss.9601 et seq., the Resource Conservation and Recovery Act of 1976,
42 U.S.C. ss.6901 et seq., the Emergency Planning and Community Right-to Know
Act, 42 U.S.C. ss.11001 et seq., the Clean Air Act, 42 U.S.C. ss.7401 et seq.,
the Federal Water Pollution Control Act, 33 U.S.C. ss.1251 et seq., the Toxic
Substance Control Act, 15 U.S.C. ss.2601 et seq., the Safe Drinking Water Act,
42 U.S.C. ss.300f et seq., and the Occupational Safety and Health Act, 42 U.S.C.
ss.1891 et seq., all as amended, and any regulations, rules, ordinances adopted
or publications promulgated pursuant thereto.
"Hazardous Substances" means (i) hazardous materials, hazardous
substances, extremely hazardous substances, toxic substances, hazardous wastes
or words of similar import as defined under any Environmental Laws; (ii)
petroleum, including without limitation, crude oil or any fraction thereof;
(iii) any radioactive material; (iv) asbestos in any form or condition; (v)
polychlorinated byphenyls ("PCBs") or PCB-containing materials; and (vi) any
other material, substance or waste to which liability or standards of conduct
are currently imposed under any Environmental Laws.
"Governmental Authority" means any governmental agency, department,
bureau, commission or similar body.
2.23. Warranty and Product Liability Claims. Schedule 2.23
attached hereto contains a true, correct and complete (i) list of all product
liability claims made against the Company from January 1, 1995 through the date
hereof, the current status of all such claims and the costs of all actions taken
in satisfaction of such claims and (ii) summary of the Company's warranty
policy. All information relative to such claims and those arising thereafter
shall be available to the Buyer from and after the date hereof.
2.24. Prepayments and Deposits. Schedule 2.24 attached hereto
sets forth all prepayments and deposits, which have been received by the Company
as of the date specified thereon, from customers for products to be shipped, or
services to be performed, after the Closing Date.
2.25. Disclosure. The representations and warranties made by the
Company in this Agreement, in the Exhibits hereto and the Schedules delivered or
to be delivered pursuant to this Agreement, taken as a whole, do not contain and
will not contain any untrue statement of a material fact, and do not omit and
will not omit any material fact, necessary in order to make the
20
statements contained therein, in light of the circumstances under which they
were made, not misleading. Copies of all documents heretofore or hereafter
delivered or made available to the Buyer, including, without limitation, the
documents disclosed in the Schedules to this Agreement, are complete and
accurate copies of such documents.
3. Representations of the Buyer.
The Buyer represents and warrants to the Company as follows:
3.1. Organization and Authority. The Buyer is (a) a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation; (b) has all requisite power (corporate and
otherwise) and authority to own its properties and to carry on its business as
now being conducted and (c) is qualified to do business and in good standing as
a foreign corporation in each jurisdiction where the ownership or operation of
its properties or conduct of its business requires such qualification, except
where the failure to be so qualified or in such good standing, when taken
together with all other such failures, has not had and is not reasonably likely
to have a Buyer Material Adverse Effect. The Buyer has made available to the
Company a complete and correct copy of the certificate of incorporation and
bylaws of the Buyer, as amended to date. The certificate of incorporation and
bylaws so delivered are in full force and effect. For purposes of this Agreement
"Buyer Material Adverse Effect" means a material adverse effect on the financial
condition, properties, results of operations or prospects of the Buyer, taken as
a whole.
3.2. Authorization. The Buyer has all requisite corporate power
and authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement. This Agreement and all
such other agreements and obligations entered into and undertaken in connection
with the transactions contemplated hereby to which the Buyer is a party
constitute the valid and legally binding obligations of it, enforceable against
the Buyer in accordance with their respective terms except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally, and
equitable principles. The execution, delivery and performance of this Agreement
and the agreements provided for herein, and the consummation by the Buyer of the
transactions contemplated hereby and thereby, will not, with or without the
giving of notice or the passage of time or both, (a) violate the provisions of
any law, rule or regulation applicable to the Buyer; (b) violate the provisions
of the charter or Bylaws of the Buyer; or (c) violate any judgment, decree,
order or award of any court, governmental body or arbitrator. Schedule 3.2
attached hereto sets forth a true, correct and complete list of all consents and
approvals of third parties that are required in connection with the consummation
by the Buyer of the transactions contemplated by this Agreement.
3.3. Regulatory Approvals. All consents, approvals,
authorizations and other requirements prescribed by any law, rule or regulation
which must be obtained or satisfied by the Buyer and which are necessary for the
consummation of the transactions contemplated by this Agreement have been, or
prior to the Closing Date will be, obtained and satisfied, including, without
limitation, filings and approvals pursuant to the HSR Act (as defined below) and
Canadian and provincial securities laws.
21
4. Access to Information; Public Announcements; Covenants of the
Company
4.1. Access to Management, Properties and Records. From the date
of this Agreement until the Closing Date, the Company shall afford the officers,
attorneys, accountants and other authorized representatives of the Buyer access
upon reasonable prior notice and during normal business hours to all management
personnel, offices, properties, books and records of the Business, for the sole
purpose of facilitating the Closing of the transactions contemplated hereunder.
The Company shall furnish to the Buyer such financial and operating data and
other information as to the Business as the Buyer shall reasonably request. Upon
prior approval of the Company, which shall not be unreasonably withheld or
delayed, the Buyer shall also have the right to contact the Company's vendors
and customers, and other persons having business dealings with the Company for
the sole purpose of facilitating the Closing of the transactions contemplated
hereunder. The Company shall be entitled to participate in such communications
and to make the initial introductions. The activities contemplated by this
subsection are hereinafter referred to as "Due Diligence Activities."
4.2. Confidentiality. All information not previously disclosed to
the public or generally known to the persons engaged in the respective
businesses of the Buyer or the Company which shall have been furnished by either
the Buyer or the Company to the other party in connection with the transactions
contemplated hereby or as provided pursuant to this Section 4 shall not be
disclosed to any other person other than their respective employees, directors,
attorneys, accountants, lenders or financial advisors or other than as
contemplated herein. In the event that the transactions contemplated by this
Agreement shall not be consummated and upon request by the either party in the
case of information disclosed by such party, all such information which shall be
in writing shall be returned to the party furnishing the same, including, to the
extent reasonably practicable, all copies or reproductions thereof which may
have been prepared, or destroyed by the receiving party (in which case the
receiving party shall provide the disclosing party with a certificate certifying
that such documents were destroyed) and neither party shall at any time
thereafter disclose to any third parties, or use, directly or indirectly, for
its own benefit, any such information, written or oral, about the business of
the other party hereto. Notwithstanding the foregoing, the receiving party shall
be entitled to retain that portion of such confidential information that the
receiving party's counsel advises it is necessary or advisable to be retained
for the purposes of any subsequent legal action involving the receiving party
and the disclosing party or its shareholders, officers or directors, subject
however to all of the confidentiality provisions hereof for so long as such
confidential information is retained.
4.3. Public Announcements. Except as otherwise required by law,
the parties agree that prior to the Closing Date any and all general public
pronouncements or other general public communications concerning this Agreement
and the purchase of the Acquired Assets by the Buyer, and the timing, manner and
content of such disclosures, shall be subject to the mutual agreement of the
Company and the Buyer, provided that the Company and Geac Computer Corporation
Limited shall be permitted to make such disclosures as may be required by law or
rules of its securities exchange.
22
4.4. Third Party Acquisitions.
(a) The Company agrees that neither it nor any of its
subsidiaries nor any of its or its subsidiaries' employees or directors shall,
and it shall direct and use its best efforts to cause its and its Subsidiaries'
agents and representatives (including any investment banker or other financial
advisor and any attorney or accountant retained by it or any of its subsidiaries
(collectively, "Company Advisors")) not to, directly or indirectly, initiate,
solicit or otherwise facilitate any inquiries in respect of, or the making of
any proposal for, a Third Party Acquisition (as defined in clause (b) below).
The Company further agrees that neither it nor any of its subsidiaries nor any
of its or its subsidiaries' employees or directors shall, and it shall direct
and use its best efforts to cause all Company Advisors not to engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any Third Party (as defined in clause (b) below)
relating to the proposal of a Third Party Acquisition, or otherwise attempt to
make or implement a Third Party Acquisition; provided, however, that if at any
time prior to the Closing, the Company's Board of Directors determines in good
faith, after taking into consideration the written advice of its outside legal
counsel, that it is required in order for its members to comply with their
fiduciary duties under applicable law, the Company may, in response to an
inquiry, proposal or offer for a Third Party Acquisition which was not solicited
subsequent to the date hereof, (x) furnish non-public information with respect
to the Company to any such person pursuant to a confidentiality agreement on
terms substantially similar to the confidentiality agreement entered into
between the Company and the Buyer prior to the execution of this Agreement and
(y) participate in discussions and negotiations regarding such inquiry, proposal
or offer; and provided, further, that nothing contained in this Agreement shall
prevent the Company or the Company's Board of Directors from complying with
Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to any
proposed Third Party Acquisition or withdrawing its recommendation to the
stockholders of the Company to approve the transactions contemplated herein. The
Company shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Third Parties conducted
heretofore with respect to any of the foregoing. The Company shall take the
necessary steps to promptly inform all Company Advisors of the obligations
undertaken in this Section 4.4(a). The Company agrees to notify the Buyer as
promptly as reasonably practicable in writing if (i) any inquiries relating to
or proposals for a Third Party Acquisition are received by the Company, any of
its subsidiaries or any of the Company Advisors, (ii) any confidential or other
non-public information about the Company or any of its subsidiaries is requested
from the Company, any of its subsidiaries or any of the Company Advisors, or
(iii) any negotiations or discussions in connection with a possible Third Party
Acquisition are sought to be initiated or continued with the Company, any of its
subsidiaries or any of the Company Advisors indicating, in connection with such
notice, the principal terms and conditions of any proposals or offers, and
thereafter shall keep the Buyer informed in writing, on a reasonably current
basis, on the status and terms of any such proposals or offers and the status of
any such negotiations or discussions. The Company also agrees promptly to
request each Person that has heretofore executed a confidentiality agreement in
connection with its consideration of acquiring the Company or any of its
subsidiaries, if any, to return all confidential information heretofore
furnished to such Person by or on behalf of the Company or any of its
subsidiaries.
23
(b) Except as permitted by this clause (b), the Company's Board
of Directors shall not withdraw its recommendation to the stockholders of the
Company to approve the transactions contemplated herein or approve or recommend,
or cause the Company to enter into any agreement with respect to, any Third
Party Acquisition. Notwithstanding the preceding sentence, if the Company's
Board of Directors determines in its good faith judgment, after taking into
consideration the written advice of its outside legal counsel, that it is
required in order for its members to comply with their fiduciary duties under
applicable law, the Company's Board of Directors may withdraw its recommendation
to its stockholders of the approval of the transactions contemplated hereby, or
approve or recommend or cause the Company to enter into an agreement with
respect to a Superior Proposal (as defined below); provided, however, that the
Company shall not be entitled to enter into any agreement with respect to a
Superior Proposal unless this Agreement is concurrently terminated by its terms
pursuant to Section 10.3. For purposes of this Agreement, "Third Party
Acquisition" means the occurrence of any of the following events: (i) the
acquisition of the Company by merger or otherwise by any Person (which includes
a "person" as such term is defined in Section 13(d)(3) of the Exchange Act)
other than the Buyer or any affiliate thereof (a "Third Party"); (ii) the
acquisition by a Third Party of assets comprising the Business, or any part
thereof, outside the ordinary course of business; (iii) the acquisition by a
Third Party of 50% or more of the outstanding capital stock of the Company and
its subsidiaries; or (iv) the adoption by the Company of a plan of partial or
complete liquidation or the declaration or payment of an extraordinary dividend.
For purposes of this Agreement, a "Superior Proposal" means any bona fide
proposal to acquire directly or indirectly for consideration consisting of cash
and/or securities more than 50% of the capital stock of the Company then
outstanding or all or substantially all the assets of the Company and its
subsidiaries, taken as a whole, or the assets comprising the Business, or any
part thereof and outside the ordinary course of business, and otherwise on terms
which the Company's Board of Directors by a majority vote determines in its good
faith judgment (after consultation with its Financial Adviser or other financial
advisors of nationally recognized reputation) to be reasonably capable of being
completed (taking into account all material legal, financial, regulatory and
other aspects of the proposal and the Third Party making the proposal, including
the availability of financing therefor) and more favorable to the Company's
stockholders from a financial point of view than the transactions contemplated
by this Agreement.
4.5. Filings; Other Actions; Notification.
(a) A vote of the Company's stockholders is required by law in
order to consummate the transactions contemplated hereunder. Accordingly, the
Company shall promptly prepare and file with the SEC a Proxy Statement (as
defined in Section 4.6 below), which shall include the recommendation of the
Company's Board of Directors that stockholders of the Company vote in favor of
the approval and adoption of this Agreement and the Fairness Opinion. The
Company shall use all reasonable efforts to have the Proxy Statement cleared by
the SEC as promptly as practicable after such filing, and promptly thereafter
mail the Proxy Statement to the stockholders of the Company. The Company shall
also use its best efforts to obtain all necessary state securities law or "blue
sky" permits and approvals required in connection with the consummations of the
transactions contemplated by this Agreement and will pay all expenses incident
thereto.
24
(b) Upon and subject to the terms and conditions set forth in
this Agreement, the Company and the Buyer shall cooperate with each other and
use (and shall cause their respective subsidiaries to use) all reasonable
efforts to take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable under this Agreement and applicable laws
to consummate the transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions, filings
and other documents and to obtain as promptly as practicable all permits,
consents, approvals and authorizations necessary or advisable to be obtained
from any third party and/or any Governmental Entity in order to consummate the
transactions contemplated by this Agreement; provided, however, that nothing in
this Section 4.5 shall require, or be construed to require, the Company or the
Buyer to proffer to, or agree to, sell or hold separate and agree to sell,
before or after the Closing Date, any material assets, businesses or any
interest in any material assets or businesses of the Buyer, the Company or any
of their respective Affiliates (or to consent to any sale, or agreement to sell,
by the Company of any of its material assets or businesses) or to agree to any
material change in or material restriction on the operations of any such assets
or businesses; provided, further, that nothing in this Section shall require, or
be construed to require, a proffer or agreement that would, in the reasonable
judgment of the Company or the Buyer, as the case may be, be likely to have a
material adverse effect on the anticipated financial condition, properties,
business or results of operations of the Company and its subsidiaries or the
Buyer and its subsidiaries, as the case may be, after the consummation of the
transactions contemplated herein, taken as a whole, in order to obtain any
necessary or advisable consent, registration, approval, permit or authorization
from any Governmental Entity. Subject to applicable laws relating to the
exchange of information, the Buyer and the Company shall have the right to
review in advance, and to the extent practicable each will consult the other on,
all the information relating to the Buyer or the Company, as the case may be,
and any of their respective subsidiaries, that appears in any filing made with,
or written materials submitted to, any third party and/or any Governmental
Entity in connection with the transactions contemplated by this Agreement,
including the Proxy Statement to the extent it describes the transactions set
forth herein. In exercising the foregoing right, the Company and the Buyer shall
act reasonably and as promptly as practicable.
(c) Each of the Company and the Buyer shall, upon request by the
other, furnish the other with all information concerning itself, its
subsidiaries, directors, officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with filings pursuant to the
HSR Act, the Proxy Statement or any other statement, filing, notice or
application made by or on behalf of the Buyer, the Company or any of their
respective subsidiaries to any governmental entity or other person (including
the NASD) in connection with the transactions contemplated by this Agreement.
(d) Each of the Company and the Buyer shall keep the other
apprised of the status of matters relating to completion of the transactions
contemplated hereby, including promptly furnishing the other with copies of
notices or other communications received by the Buyer or the Company, as the
case may be, or any of their respective subsidiaries, from any third party
and/or any governmental entity alleging that the consent of such third party or
governmental entity is or may be required with respect to the transactions
contemplated by this Agreement. Each of the Company and the Buyer shall give
prompt notice to the other of (i) the
25
occurrence or non-occurrence of any fact or event which would be reasonably
likely (x) to cause any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect at any time from the date
hereof to the Closing Date or (y) to cause any covenant, condition or agreement
under this Agreement not to be complied with or satisfied and (ii) any failure
of the Company or the Buyer, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
4.6. Information Supplied. Each of the Buyer and the Company
agrees, as to information provided by itself and its subsidiaries, that none of
the information included or incorporated by reference in the proxy statement, if
any, delivered by the Company to its stockholders in connection with the
transactions contemplated herein and any amendment or supplement thereto (the
"Proxy Statement") will, at the time the Proxy Statement is cleared by the SEC,
at the date of mailing to stockholders of the Company, and at the time of the
Stockholders Meeting (as defined in Section 4.7), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.7. Stockholders Meeting. The Company will take, in accordance
with applicable laws and its certificate of incorporation and bylaws, all
reasonable action necessary to convene a meeting of holders of the capital stock
of the Company (the "Stockholders Meeting") as promptly as practicable after the
Proxy Statement is cleared by the SEC to consider and vote upon the approval of
this Agreement. The Proxy Statement shall include a statement that the Company's
Board of Directors approved this Agreement, determined that this Agreement and
the transactions contemplated hereby are in the best interests of the Company's
stockholders and recommended that the Company's stockholders vote in favor of
the transactions contemplated herein, and the Company shall use all reasonable
and customary efforts to solicit such approval; provided, however, that if the
Company's Board of Directors determines in good faith, after taking into
consideration the written advice of its outside legal counsel, that the Proxy
Statement not containing such recommendation is required in order for its
members to comply with their fiduciary duties under applicable law, then any
failure of the Proxy Statement to contain such recommendation shall not
constitute a breach of this Agreement.
4.8. Cooperation Regarding Shared Contracts. The Buyer and the
Company agree to use best efforts to reach mutually acceptable arrangements with
respect to the Shared Contracts pursuant to which (i) the rights and obligations
of the Company under the Shared Contracts relating to the Business would be
transferred, assigned or otherwise made available on a stand-alone basis (i.e.,
in a manner that does not involve the Company) to the Buyer and (ii) the rights
and obligations of the Company under the Shared Contracts relating to the
Electronic Commerce Business would be retained or otherwise made available to
the Company.
4.9. Effect of Termination and Abandonment
(a) If a proposal by a Third Party for a Third Party Acquisition
has been publicly announced the Buyer shall have terminated this Agreement
pursuant to Section 10.3 (a) or (b), the Company shall pay to the Buyer within
two (2) business days of such termination an amount equal to $1,400,000 plus all
out-of-pocket costs and expenses (including reasonable
26
attorneys' fees and expenses) incurred by the Buyer in connection with the
negotiation, drafting and execution of this Agreement and the agreements
contemplated hereby and the consummation of the transactions contemplated
herein.
(b) The Company acknowledges that the agreements contained in
Section 4.9 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, the Buyer would not enter into
this Agreement. Accordingly, if the Company fails promptly to pay the amounts
required pursuant to Section 4.9 and, in order to obtain such payment the Buyer
commence a suit which results in a final non-appealable judgment against the
Company for such amounts, the Company shall pay to the Buyer (i) its costs and
expenses (including attorneys' fees) in connection with such suit and (ii) if
(and only if) this Agreement has been terminated pursuant to Section 10.3,
interest on the amount at the rate announced by Citibank, N.A. as its "reference
rate" in effect on the date such payment was required to be made.
5. Pre-Closing Covenants of the Company
5.1. Conduct of Business. The Company shall carry on the Business
substantially in the same manner as heretofore and, without the consent of the
Buyer (which shall not be unreasonably withheld or delayed), shall not make or
institute any unusual or new methods of manufacture, purchase, sale, shipment or
delivery, lease, management, accounting or operation; shall not ship, purchase
or deliver any quantity of products less than or in excess of normal shipment or
delivery levels; and shall continue to pay all vendors and suppliers in the
ordinary course of business consistent with the Company's past practices in
connection with the Business. All of the property of the Company comprising the
Acquired Assets shall be used, operated, repaired and maintained in a normal
business manner consistent with past practice.
5.2. Absence of Material Changes. Without the prior written
consent of the Buyer, the Company shall not: (a) take any action to amend its
charter documents or bylaws in a manner which would adversely impact the
Business or this transaction; (b) incur any obligation or liability with respect
to the Business (absolute or contingent), except current liabilities incurred
and obligations under contracts entered into in the ordinary course of the
Business; (c) mortgage, pledge, or subject to any lien, charge or any other
encumbrance (other than purchase money security interests arising in the
ordinary course of business) any of the Acquired Assets; (d) sell, assign, or
transfer any of its assets, except for sales or licensing in the ordinary course
of business, which comprise the Acquired Assets; (e) cancel any debts or claims
of the Business, except in the ordinary course of the Business; (f) merge or
consolidate with or into any corporation or other entity; (g) make, accrue or
become liable for any bonus, profit sharing or incentive payment, except for
accruals under existing plans, if any, or increase the rate of compensation
payable or to become payable by it to any of its employees of the Business; (h)
make any election or give any consent under the Code or the tax statutes of any
state or other jurisdiction or make any termination, revocation or cancellation
of any such election or any consent or compromise or settle any claim for past
or present tax due in connection with the Acquired Assets; (i) waive any rights
of material value related to the Acquired Assets or the Business; (j) modify,
amend, alter or terminate any of its executory contracts of a material value or
which are material in amount and are related to the Business; (k) take or permit
any act or omission constituting a material breach or default under any
contract, indenture or agreement by
27
which the Business or the Acquired Assets are bound; (l) enter into any lease,
contract, agreement or understanding on behalf of the Business, other than those
entered into in the ordinary course of business; (m) incur any capital
expenditure in excess of $5,000 in any single instance or $20,000 in the
aggregate in connection with the Business; (n) change the Company's methods of
inventory valuation with respect to the Business or the Acquired Assets; or (o)
commit or agree to do any of the foregoing in the future.
5.3. Continued Truth of Representations and Warranties. The
Company will not take any action which would result in any of the
representations or warranties set forth in Section 2 hereof being untrue in any
material respect.
5.4. Reports, Taxes. The Company will duly and timely file all
reports or returns required to be filed with federal, state, local and foreign
authorities and will promptly pay all federal, state, local and foreign taxes,
assessments and governmental charges levied or assessed upon it in connection
with the Business or any of the Acquired Assets (unless contesting such in good
faith and adequate provision has been made therefor).
5.5. Communications with Customers and Suppliers. The Company
will continue to accept customer orders related to the Business in the ordinary
course of business and consistent with past practice for all products related to
the Business and offered by the Company but expected to be shipped after the
Closing Date. The Company and the Buyer will cooperate in communications with
suppliers and customers in connection with the transfer of the Acquired Assets
to the Buyer on the Closing Date.
6. Efforts to Obtain Satisfaction of Conditions
The Company and the Buyer each covenant and agree to use all
commercially reasonable efforts to obtain the satisfaction of the conditions
specified in this Agreement.
7. Conditions to Obligations of the Buyer
The obligations of the Buyer under this Agreement are subject to
the fulfillment, at the Closing Date (or, in the case of the condition precedent
set forth in Section 7.12 on or before the date specified therein), of the
following conditions precedent, each of which may be waived in writing in the
sole discretion of the Buyer:
7.1. Continued Truth of Representations and Warranties of the
Company; Compliance with Covenants and Obligations. The representations and
warranties of the Company shall be true in all material respects on and as of
the Closing Date as though such representations and warranties were made on and
as of such date, except for any changes permitted by the terms hereof or
consented to in writing by the Buyer. The Company shall have performed and
complied in all material respects with all terms, conditions, covenants,
obligations, agreements and restrictions required by this Agreement to be
performed or complied with by it prior to or at the Closing Date.
Notwithstanding the foregoing, the materiality qualifications in the preceding
two sentences shall not apply to any representation, warranty, term, condition,
covenant, obligation, agreement or restriction that is itself qualified by
28
materiality. At the Closing, the Company shall have delivered to the Buyer a
certificate signed by the President of the Company as to its compliance with
this Subsection 7.1.
7.2. Corporate Proceedings and Shareholder Approval. All
corporate, Board of Directors, shareholder and other proceedings required to be
taken to authorize the Company to carry out this Agreement and the transactions
contemplated hereby, and to convey, transfer, assign and deliver the Acquired
Assets to the Buyer, shall have been taken.
7.3. The Acquired Assets. At the Closing the Buyer shall receive
good, clear, record and marketable title to the Acquired Assets, free and clear
of all liens, liabilities (including taxes), security interests and encumbrances
of any kind or nature whatsoever.
7.4. Governmental Approvals. All governmental agencies,
department, bureaus, commissions and similar bodies, the consent, authorization
or approval of which is necessary under any applicable law, rule, order or
regulation for the consummation by the Company or the Buyer of the transactions
contemplated by this Agreement shall have consented to, authorized, permitted or
approved such transactions, including, without limitation, consents of the
Department of Justice and Federal Trade Commission required pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and filings and approvals from the SEC.
7.5. Consent of Third Parties. The Company shall have received
all requisite consents and approvals of all lenders, lessors and other third
parties whose consent or approval is required in order for the Company to
consummate the transactions contemplated by this Agreement, including without
limitation, those set forth on Schedule 2.2 attached hereto.
7.6. Adverse Proceedings. No action or proceeding by or before
any court or other governmental body shall have been instituted or, to the
knowledge of the Company, threatened by any governmental body or person
whatsoever which shall seek to restrain, prohibit or invalidate the transactions
contemplated by this Agreement or which might materially and adversely affect
the right of the Buyer to own or operate the Acquired Assets after the Closing.
7.7. Opinion of Counsel. The Buyer shall have received an opinion
of Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx PLLC, counsel to the Company, dated as of the
Closing Date, in substantially the form attached hereto as Exhibit C, and as to
such other matters as may be reasonably requested by the Buyer or its counsel.
7.8. Material Adverse Change. There shall have been no Business
Material Adverse Effect from and after the date hereof through the Closing Date.
7.9. Trademark License Agreement. On or prior to the Closing
Date, the Company shall have executed and delivered to the Buyer a Trademark
License Agreement in the form attached hereto as Exhibit D (the "Trademark
License Agreement"), which shall provide that, for a period of six months after
the Closing, the Buyer may refer to the Business and the Acquired Assets as "the
former Financial, Enterprise Resources Planning and Human Resource
29
business of the Clarus Corporation" or a mutually acceptable derivation thereof,
and the Buyer to refer to the Company by name.
7.10. Intentionally Omitted.
7.11. Fulfillment of Closing Conditions in IP Asset Purchase
Agreement. On or prior to the Closing, the Company shall have fulfilled all
conditions to Closing set forth in the IP Asset Purchase Agreement.
7.12. Execution of the Stockholders Agreement. On or prior to
August 26, 1999, all of the Signatory Stockholders shall have executed and
delivered the Stockholders Agreement.
7.13. Intentionally Omitted.
7.14. Closing Deliveries. The Buyer shall have received at or
prior to the Closing all documents set forth in this Section 7 and such other
documents, instruments or certificates as the Buyer may reasonably request
including, without limitation:
(a) an executed Xxxx of Sale in substantially the form
attached hereto as Exhibit E (the "Xxxx of Sale");
(b) an executed Instrument of Assumption;
(c) such other instruments of transfer and conveyance, in
form and substance reasonably satisfactory to counsel for the Buyer, as the
Buyer shall reasonably request to effectively vest in the Buyer all of the
right, title and interest in the Acquired Assets;
(d) all technical data, formulations, product literature and
other documentation relating to the Acquired Assets;
(e) such contracts, files and other data and documents
pertaining to the Acquired Assets as the Buyer may reasonably request;
(f) a certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing of the Company in Delaware;
(g) a certificate of the Secretaries of State for each
jurisdiction in which the Company is qualified to do business as to the legal
existence and good standing of the Company in each such jurisdiction;
(h) a certificate signed by the Secretary of the Company
attesting to the incumbency of the Company's officers, the authenticity of the
resolutions authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the charter documents and bylaws
delivered pursuant to Section 2.1; and
30
(i) such other documents, instruments or certificates
necessary to accomplish the transactions set forth herein as the Buyer may
reasonably request.
8. Conditions to Obligations of the Company
The obligations of the Company under this Agreement are subject
to the fulfillment, at the Closing Date, of the following conditions precedent,
each of which may be waived in writing in the sole discretion of the Company:
8.1. Continued Truth of Representations and Warranties of the
Buyer; Compliance with Covenants and Obligations. The representations and
warranties of the Buyer in this Agreement shall be true in all material respects
on and as of the Closing Date as though such representations and warranties were
made on and as of such date, except for any changes permitted by the terms
hereof or consented to in writing by the Company. The Buyer shall have each
performed and complied in all material respects with all terms, conditions,
covenants, obligations, agreements and restrictions required by this Agreement
to be performed or complied with by it prior to or at the Closing Date.
Notwithstanding the foregoing the materiality qualifications in the preceding
two sentences shall not apply to any representation, warranty, term, condition,
covenant, obligation, agreement or restriction that is itself qualified by
materiality. At the Closing, the Buyer shall have delivered to the Company a
certificate signed by the President of the Buyer as to the Buyer's compliance
with this Section 8.1.
8.2. Company Proceedings. All corporate, Board of Directors,
shareholder and other proceedings required to be taken to authorize the Buyer to
carry out this Agreement and the transactions contemplated hereby shall have
been taken.
8.3. Governmental Approvals. All governmental agencies (including
Canadian and provincial agencies and authorities), departments, bureaus,
commissions and similar bodies, the consent, authorization or approval of which
is necessary under any applicable law, rule, order or regulation for the
consummation by the Buyer or the Company of the transactions contemplated by
this Agreement shall have consented to, authorized, permitted or approved such
transactions, including, without limitation, consent of the Department of
Justice and Federal Trade Commission as required pursuant to the HSR Act.
8.4. Consents of Third Parties. The Buyer shall have received all
requisite consents and approvals of all lenders, lessors and other third parties
whose consent or approval is required in order for the Buyer to consummate the
transactions contemplated by this Agreement.
8.5. Adverse Proceedings. No action or proceeding by or before
any court or other governmental body shall have been instituted or threatened by
any governmental body or person whatsoever which shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or which
might affect the right of the Company to transfer the Acquired Assets.
8.6. Opinion of Counsel. The Company shall have received (i) an
opinion of Xxxxxxx Xxxxxxxx, general counsel of the Buyer, dated as of the
Closing Date, in substantially the
31
form attached as Exhibit F-1, and (ii) an opinion of Xxxxxxx Xxxxxx & Green,
P.C., special counsel to the Buyer, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit F-2, and as to such other
matters as may be reasonably requested by the Company or its counsel.
8.7. Fulfillment of Closing Conditions in IP Asset Purchase
Agreement. On or prior to the Closing, the IP Buyer shall have fulfilled all
conditions to Closing set forth in the IP Asset Purchase Agreement.
8.8. Execution of the Indemnification Agreement. On or prior to
the Closing, the Buyer and the IP Buyer shall have executed and delivered the
Indemnification Agreement.
8.9. Closing Deliveries. The Company shall have received at or
prior to the Closing all documents set forth in this Section 8 and such other
documents, instruments or certificates as the Company may reasonably request
including, without limitation:
(a) such certificates of the Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 8
as the Company shall reasonably request;
(b) a certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing of the Buyer;
(c) a certificate of the Secretary of State of the State of
Georgia as to the legal existence and good standing of the Buyer;
(d) a certificate signed by an authorized representative of
the Buyer attesting to the authenticity of the resolutions authorizing the
transactions contemplated by this Agreement;
(e) a certificate signed by an authorized representative of
the Buyer attesting to the authenticity of the resolutions authorizing the
transactions contemplated by this Agreement and the authenticity and continuing
validity of the certificate of incorporation and bylaws (or similar governing
documents) delivered pursuant to Section 3.1;
(f) the Cash Payment;
(g) an executed Instrument of Assumption;
(h) an executed Xxxx of Sale;
(i) an executed Trademark License Agreement; and
(j) such other documents, instruments or certificates as the
Company may reasonably request.
32
8.10. Stockholder Approval. All shareholder approvals required to
authorize the Company to carry out this Agreement and the transactions
contemplated hereby, and to convey, transfer, assign and deliver the Acquired
Assets to the Buyer, shall have been obtained.
9. Post-Closing Agreements
The Company agrees that from and after the Closing Date:
9.1. Proprietary Information. The Company shall hold in
confidence all knowledge and information of a secret or confidential nature with
respect to the terms of this Agreement and the agreements contemplated hereby or
the Business of the Company and not to disclose, publish or make use of the same
without the consent of the Buyer, except to the extent that such information
shall have become public knowledge other than by breach of this Agreement by the
Company. The Company agrees that the remedy at law for any breach of this
Subsection 9.1 would be inadequate and that the Buyer shall be entitled to
injunctive relief in addition to any other remedy it may have upon breach of any
provision of this Subsection 9.1.
9.2. Limitation on Use of Name. From and after the Closing Date,
neither the Company nor any affiliate thereof shall use the name "SQL" or any
derivation thereof in connection with any business related to, competitive with,
or an outgrowth of, the Business as it is conducted on the date hereof, or in
any new venture to which the Company, or any affiliate thereof, is a party.
9.3. Non-Competition Agreement.
(a) For a period of five (5) years after the Closing Date,
the Company shall not, directly or indirectly, within the United States, Canada
and Mexico (i) engage in any business competitive with the Business of the
Company as of the Closing Date, (ii) solicit customers, business, patronage or
orders for, or sell any products, or perform any services which are, directly or
indirectly, competitive with the products sold by and services rendered by the
Business as of the Closing Date, or (iii) directly or indirectly hire, solicit
for employment or encourage to leave the employment of the Buyer any of the
employees of the Company who become employed by the Buyer pursuant to Section
1.5 herein unless such employees have ceased to be employed by the Buyer for at
least six months.
(b) For a period of five (5) years after the Closing Date,
the Buyer shall not, directly or indirectly, hire, solicit for employment or
encourage to leave the employment of the Company any of the employees of the
Company not listed on the ERP List unless such employees have ceased to be
employed by the Company for at least six (6) months.
(c) The parties hereto agree that the duration and
geographic scope of the non-competition provision set forth in this Subsection
9.3 are reasonable. In the event that any court determines that the duration or
geographic scope, or both, are unreasonable and that such provision is to that
extent unenforceable, the parties hereto agree that the provision shall remain
in full force and effect for the greatest time period and in the greatest area
that would not render
33
it unenforceable. The parties intend that this non-competition provision shall
be deemed to be a series of separate covenants, one for each and every county of
each and every state of the United States of America and each and every province
of Canada. The parties also agree that damages are an inadequate remedy for any
breach of this provision and that the Buyer or the Company, as the case may be,
shall, whether or not it is pursuing any potential remedies at law, be entitled
to equitable relief in the form of preliminary and permanent injunctions without
bond or other security upon any actual or threatened breach of this
non-competition provision.
9.4. Sharing of Data.
(a) The Company shall have the right for a period of six (6)
years following the Closing Date to have reasonable access to such books,
records and accounts, including financial and tax information, correspondence,
production records, employment records and other similar information as are
transferred to the Buyer pursuant to the terms of this Agreement for the limited
purposes of concluding its involvement in the Business and the Acquired Assets
prior to the Closing Date and for complying with its obligations under
applicable securities, tax, environmental, employment or other laws and
regulations. The Buyer shall have the right for a period of six (6) years
following the Closing Date to have reasonable access to those books, records and
accounts, including financial and tax information, correspondence, production
records, employment records and other similar records which are retained by the
Company pursuant to the terms of this Agreement to the extent that any of the
foregoing relates to the Business or Acquired Assets transferred to the Buyer
hereunder or is otherwise needed by the Buyer in order to comply with its
obligations under applicable securities, tax, environmental, employment or other
laws and regulations.
(b) The Company and the Buyer agree that from and after the
Closing Date they shall cooperate fully with each other to facilitate the
transfer of the Acquired Assets from the Company to the Buyer and the operation
thereof by the Buyer. Each party acknowledges and agrees that the transition
contemplated by the preceding sentence may take up to sixty (60) days following
the Closing Date, during which time the Company shall provide the Buyer with
reasonable access to the Company's senior management for the purposes of
facilitating the transfer of the Business and Acquired Assets to the Buyer.
9.5. Cooperation of the Company. The Company will cooperate with
the Buyer in furnishing information or other assistance reasonably requested in
connection with any actions, proceedings, arrangements or disputes involving the
Business or Acquired Assets and based upon contracts, arrangements, property
rights, acts or omissions of the Company which were in effect or carried on
prior to the Closing Date.
9.6. Cooperation of the Buyer. The Buyer will cooperate with the
Company in furnishing information or other assistance reasonably requested in
connection with any actions or proceedings required by the Company in order to
collect the Uncollected Non-LT A/R and Uncollected LT A/R upon the expiration of
the respective Collection Periods.
9.7. Buyer's Use of Premises for the Business. The Company hereby
grants to the Buyer a rent-free license to use the current office space utilized
by the Company for the
34
Business and located at 0000 Xxxxx Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx, for a period
of up to ninety (90) days after the Closing Date. The Buyer hereby agrees to (i)
abide by the terms of the Company's lease and the rules and regulations
associated with such office building(s); (ii) pay to the Company its
proportionate share of the reasonable operating costs associated with such
license, including, without limitation, utilities, taxes and cleaning fees; and
(iii) cooperate and provide full access to the Company for the purpose of the
Company subletting such space after the termination of the license granted
herein. The Company shall maintain its current insurance coverage for all such
facilities and the Buyer agrees to reimburse the Company for the proportionate
cost thereof. The Company shall invoice the Buyer for its share of such
operating and insurance costs once per month, which shall be due and payable
within thirty (30) days after the date of such invoice. The parties agree that
the Company shall designate a certain amount of space for use by the Buyer and
that Buyer will not exceed such allotted space, nor will the Buyer move the
office of more than five (5) managers of the Buyer or its affiliates to such
facility and the Buyer may replace any employee of the Company who terminates
his or her employment with the Company with employees of the Buyer or its
affiliates.
9.8. Onyx Software and Customer Database. The Company shall
provide to the Buyer electronic reports generated by the Company's software
currently known as "Onyx" and the predecessor software to "Onyx" for a period of
180 days after the Closing in order for Buyer to transfer and utilize the
Company's customer database(s) related to the Business (the "Customer
Database"). The Company will assist the Buyer in the electronic migration of the
Customer Database to the Buyer's system (it being understood that such
assistance shall not involve travel by any of the Company's employees and shall
not extend beyond 90 days after the Closing). The Company further agrees that,
within such 180 day period, the Company will provide a true and complete copy of
all customer information related to the Business contained in the Customer
Database to the Buyer, it being understood that Buyer will have all ownership
rights to such copy of the Customer Database to the extent related to the
Business.
9.9. Limited License to the Company to use the software
comprising the Acquired Assets. The Buyer hereby grants to the Company a
paid-up, non-exclusive, royalty-free, worldwide, irrevocable, perpetual license
to use the software programs set forth on Schedule 9.9 solely for the Company's
internal use and subject to the terms and conditions set forth in the Software
License Agreement attached hereto as Exhibit G.
9.10. Electronic Commerce Distribution Rights; Fusion. The
Company and the Company hereby agree that the parties intend for the Buyer to
acquire the distribution rights to the products and services currently
comprising the Company's Electronic Commerce business, including use of
so-called "Fusion" software. To this end, the Buyer and the Company agree that,
during the six months after the Closing Date, each will negotiate in good faith
to determine the scope and cost of such distribution rights, provided that
failure to reach agreement shall have no impact on this Agreement.
10. Termination of Agreement; Option to Proceed; Damages
35
10.1. Termination by Lapse of Time. This Agreement shall
terminate at 5:00 p.m., Boston Time, on (a) October 15, 1999 if the Company has
not set a date for its Stockholders' Meeting and mailed all materials required
by law for such meeting or (b) November 5, 1999, if the transactions
contemplated hereby have not been consummated, unless such date is extended by
the written consent of the Company and the Buyer.
10.2. Termination by Agreement of the Parties. This Agreement may
be terminated by the mutual written agreement of the Company and the Buyer. In
the event of such termination by agreement, the Buyer shall have no further
obligation or liability to the Company under this Agreement, and the Company
shall have no further obligation or liability to the Buyer under this Agreement.
10.3. Termination by Reason of Breach. This Agreement may be
terminated by the Company if at any time prior to the Closing there shall occur
a material breach of any of the representations, warranties or covenants of the
Buyer or the failure by the Buyer to perform any condition or obligation
hereunder (a "Pre-Closing Breach"). This Agreement may be terminated by the
Buyer if at any time prior to the Closing there shall occur a material breach of
any of the representations, warranties or covenants of the Company or the
failure of the Company to perform any condition or obligation hereunder. Subject
to Section 4.9 herein, this Agreement may be terminated by either the Company or
the Buyer if at any time prior to the Closing: (a) the Board of Directors of the
Company shall have withdrawn or modified its approval or recommendation of this
Agreement and the transactions contemplated herein, (b) Company enters into a
binding written agreement with respect to a Superior Proposal, or (c) the IP
Asset Purchase Agreement is terminated.
10.4. Availability of Remedies at Law. In the event this
Agreement is terminated by the Buyer or the Company pursuant to the provisions
of Section 10.3 (other than as permitted pursuant to Section 4.4(b)), the
parties hereto shall have available to them all remedies afforded to them by
applicable law or in equity, including, without limitation, claims for specific
performance and other equitable remedies.
11. Dispute Resolution
11.1. General. In the event that any dispute should arise between
the parties hereto with respect to any matter covered by this Agreement,
including, without limitation, the occurrence of a Pre-Closing Breach, the
parties hereto shall resolve such dispute in accordance with the procedures set
forth in this Section 11.
11.2. Consent of the Parties. In the event of any dispute between
the parties with respect to any matter covered by this Agreement or any of the
agreements entered into in connection herewith, the parties shall first use
their best efforts to resolve such dispute among themselves. If the parties are
unable to resolve the dispute within sixty (60) calendar days after the
commencement of efforts to resolve the dispute, the dispute will be submitted to
arbitration in accordance with this Section 11.
11.3. Arbitration.
36
(a) The Buyer, on the one hand, or the Company, on the other
hand, may submit any matter referred to in Section 11.2 hereof to arbitration by
notifying the other parties hereto, in writing, of such dispute. Within 10 days
after receipt of such notice, the Buyer and the Company shall designate in
writing one arbitrator to resolve the dispute; provided, that if the parties
hereto cannot agree on an arbitrator within such 10-day period, the arbitrator
shall be selected by the American Arbitration Association's Boston office if the
arbitration is initiated by the Company and selected by the American Arbitration
Association's Atlanta office if initiated by the Buyer. The arbitrator so
designated shall not be an employee, consultant, officer, director or
stockholder of any party hereto or any Affiliate of any party to this Agreement.
(b) Within 15 days after the designation of the arbitrator,
the arbitrator, the Buyer and the Company shall meet, at which time the Buyer
and the Company shall be required to set forth in writing all disputed issues
and a proposed ruling on each such issue.
(c) The arbitrator shall set a date for a hearing, which
shall be no later than 30 days after the submission of written proposals
pursuant to paragraph (b) above, to discuss each of the issues identified by the
Buyer and the Company. Each such party shall have the right to be represented by
counsel. The arbitration shall be governed by the rules of the American
Arbitration Association; provided, that the arbitrator shall have sole
discretion with regard to the admissibility of evidence.
(d) The arbitrator shall use his best efforts to rule on
each disputed issue within 30 days after the completion of the hearings
described in paragraph (c) above. The determination of the arbitrator as to the
resolution of any dispute shall be binding and conclusive upon all parties
hereto. All rulings of the arbitrator shall be in writing and shall be delivered
to the parties hereto.
(e) Any arbitration pursuant to this Section 11 shall be
conducted in Boston if initiated by the Company and Atlanta if initiated by the
Buyer. Any arbitration award may be entered in and enforced by any court having
jurisdiction thereover and the parties hereby consent and commit themselves to
the jurisdiction of the courts of the State of Georgia for purposes of the
enforcement of any arbitration award.
12. Brokers
12.1. For the Company. The Company represents and warrants that
other than US Bancorp Xxxxx Xxxxxxx no person, firm or corporation has acted in
the capacity of broker or finder on its or their behalf to bring about the
negotiation of this Agreement. The Company agrees to indemnify and hold harmless
the Buyer against any claims or liabilities asserted against it by any person
acting or claiming to act as a broker or finder on behalf of the Company.
12.2. For the Buyer. The Buyer represents and warrants that no
person, firm or corporation has acted in the capacity of broker or finder on its
behalf to bring about the negotiation of this Agreement. The Buyer agrees to
indemnify and hold harmless the Company
37
against any claims or liabilities asserted against it by any person acting or
claiming to act as a broker or finder on behalf of the Buyer.
13. Notices
Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered personally, by telecopy, or
sent by federal express, registered or certified mail, postage prepaid,
addressed as follows or to such other address of which the parties may have
given notice:
To the Buyer: Geac Computer Systems, Inc.
c/o Geac Computer Corporation Limited
00 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attn: General Counsel
Fax: (000) 000-0000
With a copy to: Xxxxx Xxxxx, Esq.
Xxxxxxx Xxxxxx & Green, P.C.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
To the Company: Clarus Corporation
0000 Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, President and CEO
Fax: (000) 000-0000
With a copy to: Xxxxxx X. XxXxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx PLLC
0000 Xxxx Xxxxxxxxx Xxxxxx, XX
Xxxxx 0000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date actually delivered, if delivered personally, by
overnight courier or by telecopy or (b) three business days after being sent, if
sent by registered or certified mail.
14. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that the
Buyer, on the one hand, and
38
the Company, on the other hand, may not assign their respective obligations
hereunder without the prior written consent of the other party. Any assignment
in contravention of this provision shall be void. No assignment shall release
the Buyer or the Company from any obligation or liability under this Agreement.
15. Entire Agreement; Amendments; Attachments
The Exhibits and Schedules attached hereto or to be attached
hereafter are hereby incorporated as integral parts of this Agreement. This
Agreement, all Schedules and Exhibits hereto, and all agreements and instruments
to be delivered by the parties pursuant hereto represent the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior oral and written and all
contemporaneous oral negotiations, commitments and understandings between such
parties. The parties hereto may amend or modify this Agreement by a written
instrument executed by the Buyer or the Company.
16. Severability
Any provision of this Agreement which is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such jurisdiction or
rendering that or any other provision of this Agreement invalid, illegal or
unenforceable in any other jurisdiction.
17. Expenses
Except as otherwise expressly provided herein, the Buyer, on the
one hand, and the Company, on the other hand, will pay all other fees and
expenses incurred by them in connection with the transactions contemplated
hereunder.
18. Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the State of Georgia.
19. Section Headings
The section headings are for the convenience of the parties and
in no way alter, modify, amend, limit, or restrict the contractual obligations
of the parties.
20. Counterparts
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which shall be one and
the same document.
21. Definition of Knowledge
The term "knowledge" as used in the phrases "to the knowledge of
the Company", "to the Company's knowledge" or any other similar phrase
attributing knowledge to the Company means the actual knowledge of the officers
and key employees (i.e., vice presidents and above) of the Company after
reasonable inquiry.
39
22. Construction
In the construction of this Agreement general words introduced by
the word "other" shall not be given a restrictive meaning by reason of the fact
that they are preceded by words indicating a particular class of acts, matters
or things and general words shall not be given a restrictive meaning by reason
of the fact that they are followed by particular examples intended to be
embraced by the general words.
23. Defined Terms
------------------------------------------- ------------------------------------
DEFINED TERM SECTION
------------------------------------------- ------------------------------------
"Accounts Receivable" Section 2.11
------------------------------------------- ------------------------------------
"Agreement" Introduction
------------------------------------------- ------------------------------------
"Acquired Assets" Section 1.1
------------------------------------------- ------------------------------------
"A/R Certificate" Section 1.9(g)
------------------------------------------- ------------------------------------
"Assumed Contracts" Section 2.14(b)(i)
------------------------------------------- ------------------------------------
"Assumed Liabilities" Section 1.4(a)
------------------------------------------- ------------------------------------
"Xxxx of Sale" Section 7.14(a)
------------------------------------------- ------------------------------------
"Blue Sky" Section 4.5(a)
------------------------------------------- ------------------------------------
"Business" Introduction
------------------------------------------- ------------------------------------
"Business Material Adverse Effect" Section 2.6
------------------------------------------- ------------------------------------
"Buyer" Introduction
------------------------------------------- ------------------------------------
"Buyer Material Adverse Effect" Section 3.1
------------------------------------------- ------------------------------------
"Cash Payment" Section 1.3(b)(i)
------------------------------------------- ------------------------------------
"Clarus Commerce" Introduction
------------------------------------------- ------------------------------------
"Clarus E Procurement" Introduction
------------------------------------------- ------------------------------------
"Closing" Section 1.7
------------------------------------------- ------------------------------------
"Closing A/R" Section 2.11
------------------------------------------- ------------------------------------
"Closing Date" Section 1.7
------------------------------------------- ------------------------------------
"Collection Periods" Section 1.9(a)
------------------------------------------- ------------------------------------
"Commercial Software Rights" Section 2.14(a)(vii)
------------------------------------------- ------------------------------------
"Company" Introduction
------------------------------------------- ------------------------------------
"Company Advisors" Section 4.4(a)
------------------------------------------- ------------------------------------
"Company's Board of Directors" Introduction
------------------------------------------- ------------------------------------
"Company Reports" Section 2.6(a)
------------------------------------------- ------------------------------------
"Confidentiality Agreements" Section 1.1(viii)
------------------------------------------- ------------------------------------
"Contracts" Section 2.14(a)
------------------------------------------- ------------------------------------
"Current Maturities of Debt" Section 1.4(b)
------------------------------------------- ------------------------------------
"Customer Database" Section 9.8
------------------------------------------- ------------------------------------
"Debt, Net of Current Maturities" Section 1.4(b)
------------------------------------------- ------------------------------------
"Defined Benefit Plan" Section 2.17(a)
------------------------------------------- ------------------------------------
"Disputed Account" Section 1.9(d)
------------------------------------------- ------------------------------------
"Disqualified Person" Section 2.17(b)
------------------------------------------- ------------------------------------
"Due Diligence Activities" Section 4.1
------------------------------------------- ------------------------------------
"Electronic Commerce A/R" Section 1.9(e)
------------------------------------------- ------------------------------------
"Electronic Commerce Business" Introduction
------------------------------------------- ------------------------------------
"Employee" Section 2.16
------------------------------------------- ------------------------------------
"Employee Bonuses" Section 1.5(c)
------------------------------------------- ------------------------------------
"Employee Plans" Section 2.17(a)
------------------------------------------- ------------------------------------
40
------------------------------------------- ------------------------------------
"Encumbrances" Section 2.3
------------------------------------------- ------------------------------------
"Environmental Laws" Section 2.22
------------------------------------------- ------------------------------------
"ERISA" Section 2.17(a)
------------------------------------------- ------------------------------------
"ERP List" Section 1.5(a)
------------------------------------------- ------------------------------------
"Escrow" Section 1.3(b)(ii)
------------------------------------------- ------------------------------------
"Escrow Agreement" Section 1.3(b)(ii)
------------------------------------------- ------------------------------------
"Escrow Amount" Section 1.3(b)(ii)
------------------------------------------- ------------------------------------
"Fairness Opinion" Section 1.10
------------------------------------------- ------------------------------------
"FICA" Section 2.12(f)
------------------------------------------- ------------------------------------
"Financial Advisor" Section 1.10
------------------------------------------- ------------------------------------
"First Collection Period" Section 1.9(a)
------------------------------------------- ------------------------------------
"Fixed Assets" Section 2.9
------------------------------------------- ------------------------------------
"Fusion" Section 9.10
------------------------------------------- ------------------------------------
"FUTA" Section 2.12(f)
------------------------------------------- ------------------------------------
"Governmental Authority" Section 2.22
------------------------------------------- ------------------------------------
"Hazardous Substances" Section 2.22
------------------------------------------- ------------------------------------
"HSR Act" Section 7.4
------------------------------------------- ------------------------------------
"Initial Balance Sheet" Section 1.4(b)
------------------------------------------- ------------------------------------
"Initial Asset/Liability Schedule" Section 1.4(b)
------------------------------------------- ------------------------------------
"Instrument of Assumption" Section 1.4(a)
------------------------------------------- ------------------------------------
"Insurance Policies" Section 2.8
------------------------------------------- ------------------------------------
"July Schedule" Section 2.6(b)
------------------------------------------- ------------------------------------
"Knowledge" Section 21
------------------------------------------- ------------------------------------
"Leased Real Property" Section 2.21
------------------------------------------- ------------------------------------
"Long-Term Closing A/R" Section 1.9(f)
------------------------------------------- ------------------------------------
"Multiemployer Plan" Section 2.17(a)
------------------------------------------- ------------------------------------
"New Receivable" Section 1.9(d)
------------------------------------------- ------------------------------------
"Non-LT Closing A/R" Section 1.9(f)
------------------------------------------- ------------------------------------
"Onyx" Section 9.8
------------------------------------------- ------------------------------------
"Other" Section 22
------------------------------------------- ------------------------------------
"Party In Interest" Section 2.17(b)
------------------------------------------- ------------------------------------
"Permits" Section 2.15
------------------------------------------- ------------------------------------
"Person" Section 4.4(b)
------------------------------------------- ------------------------------------
"Pre-Closing Breach" Section 10.3
------------------------------------------- ------------------------------------
"Proxy" Introduction
------------------------------------------- ------------------------------------
"Proxy Statement" Section 4.6
------------------------------------------- ------------------------------------
"Purchase Price" Section 1.3(a)
------------------------------------------- ------------------------------------
"Reference Rate" Section 4.9(b)
------------------------------------------- ------------------------------------
"Second Collection Period" Section 1.9(a)
------------------------------------------- ------------------------------------
"Shared Contracts" Section 2.14(a)(ix)
------------------------------------------- ------------------------------------
"Signatory Stockholders" Introduction
------------------------------------------- ------------------------------------
"SQL" Section 9.2
------------------------------------------- ------------------------------------
"Stockholders Agreement" Introduction
------------------------------------------- ------------------------------------
"Stockholder's Meeting" Section 4.7
------------------------------------------- ------------------------------------
"Superior Proposal" Section 4.4(b)
------------------------------------------- ------------------------------------
"Taxes" Section 2.12
------------------------------------------- ------------------------------------
"Third Party" Section 4.4(b)
------------------------------------------- ------------------------------------
"Third Party Acquisition" Section 4.4(b)
------------------------------------------- ------------------------------------
"Trademark License Agreement" Section 7.9
------------------------------------------- ------------------------------------
"Uncollected LT A/R Section 1.9(c)
------------------------------------------- ------------------------------------
"Uncollected Non-LT A/R" Section 1.9(b)
------------------------------------------- ------------------------------------
41
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of and on the date first above written.
CLARUS CORPORATION
By: _____________________________
Title: __________________________
GEAC COMPUTER SYSTEMS, INC.
By: _____________________________
Title: __________________________
