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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
KLA-TENCOR CORPORATION
AND
OBJECTSPACE, INC.
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TABLE OF CONTENTS
Section Page
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1. TRANSFER OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Personal Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) Prepaid Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(e) Marketing and Sales Information. . . . . . . . . . . . . . . . . . . . . . 2
(f) Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(g) Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. ASSETS EXCLUDED FROM SALE . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Amount of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Manner of Payment of the Purchase Price. . . . . . . . . . . . . . . . . . 4
(c) Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 4
4. ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. LABOR AND EMPLOYMENT MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Employment Transition Provisions . . . . . . . . . . . . . . . . . . . . . 8
(c) Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Location and Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Seller's Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Purchaser's Closing Documents. . . . . . . . . . . . . . . . . . . . . . . 10
(e) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(f) Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(g) Purchase Price Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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(h) Working Capital Adjustment . . . . . . . . . . . . . . . . . . . . . . . . 12
(i) Employee Retention Funds . . . . . . . . . . . . . . . . . . . . . . . . . 14
7. REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . . . . . . . . . . . 14
(a) Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Authorization of Agreement . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Business Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 15
(d) Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Actions, Suits, Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 16
(f) Compliance with Applicable Laws and Other Instruments. . . . . . . . . . . 16
(g) Facility Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(h) Title to the Purchased Assets. . . . . . . . . . . . . . . . . . . . . . . 16
(i) Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . 17
(j) Contracts, Leases, Commitments and Agreements. . . . . . . . . . . . . . . 17
(k) Composition and Condition of Purchased Assets. . . . . . . . . . . . . . . 18
(l) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(m) Major Suppliers and Customers. . . . . . . . . . . . . . . . . . . . . . . 18
(n) Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(o) Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(p) Government License and Regulation. . . . . . . . . . . . . . . . . . . . . 19
(q) Location of the Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(r) Year 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . 19
(a) Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Corporate Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(c) Litigation and Other Proceedings . . . . . . . . . . . . . . . . . . . . . 20
9. CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE. . . . . . . . . . . . . . . . . 20
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 20
(b) Observance and Performance . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Violations of Laws and Ordinances. . . . . . . . . . . . . . . . . . . . . 21
(d) Officer's Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(e) Change in Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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(f) Key Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(g) Searches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i) Closing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(j) Proceedings and Documents. . . . . . . . . . . . . . . . . . . . . . . . . 22
(k) Hiring of Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10. CONDITIONS TO OBLIGATION OF SELLER TO CLOSE . . . . . . . . . . . . . . . . . 22
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 22
(b) Observance and Performance . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Violations of Laws and Ordinances. . . . . . . . . . . . . . . . . . . . . 22
(d) Officer's Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(e) Closing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(f) Proceedings and Documents. . . . . . . . . . . . . . . . . . . . . . . . . 23
(g) Purchase Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11. GOVERNMENTAL FILINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12. COVENANTS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(a) Operation of Business Prior to Closing . . . . . . . . . . . . . . . . . . 23
(b) Notices to Employees; Continuation of Benefits . . . . . . . . . . . . . . 24
(c) Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(d) Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(e) Notice of Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(f) Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(g) No Solicitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(h) Further Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(i) Covenant not to Xxx. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13. COVENANT NOT TO COMPETE . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
14. COVENANTS OF PURCHASER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Notice of Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Further Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Use of Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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15. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Survival of Representations and Warranties . . . . . . . . . . . . . . . . 28
(b) Indemnification by Seller. . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Indemnification by Purchaser . . . . . . . . . . . . . . . . . . . . . . . 29
(d) Procedures for Indemnification . . . . . . . . . . . . . . . . . . . . . . 29
(e) Sole Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
16. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17. DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Discovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Court Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) Rulings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(e) Findings of Fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(f) Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(g) Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(h) Selection of Arbitrator. . . . . . . . . . . . . . . . . . . . . . . . . . 33
(i) Other Arbitration Provisions . . . . . . . . . . . . . . . . . . . . . . . 34
18. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Transition Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
19. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) Amendments and Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(d) Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(e) Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(f) Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(g) Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(h) Disclosure Schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(i) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into as
of this 8th day of March, 2000 by and between KLA-Tencor Corporation, a
Delaware corporation ("PURCHASER"), and OBJECTSPACE, INC., a Delaware
corporation ("SELLER").
RECITALS
A. Seller is engaged, among other things, in the business of providing
software products and services in the area of electronics manufacturing yield
and productivity improvement through development, application, and support of
factory monitoring and control software solutions (collectively, the
"BUSINESS").
B. Seller desires to sell to Purchaser and Purchaser desires to purchase
and acquire from Seller the Purchased Assets (as hereinafter defined) relating
to the Business and Purchaser desires to assume, as part of the purchase price
of the Purchased Assets, the Assumed Liabilities (as hereinafter defined) as of
the Closing Date (as hereinafter defined), all upon the terms and conditions set
forth herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements contained herein, the parties agree as follows:
1. TRANSFER OF ASSETS. On the terms and subject to the conditions of
this Agreement, Seller agrees to sell, transfer, convey, deliver and assign to
Purchaser, and Purchaser agrees to purchase, acquire and accept from Seller, at
and effective as of the Closing Date, for the consideration hereinafter
provided, all of Seller's rights, title and interest in and to the following
assets, properties and rights in and related to the Business, other than the
Excluded Assets (as hereinafter defined) (the "PURCHASED ASSETS"):
(a) PERSONAL PROPERTY. All machinery, equipment, computer hardware,
cabling, data viewers, improvements, tools, furniture, furnishings and
other tangible personal property listed on SCHEDULE 1(A) hereto.
(b) INTELLECTUAL PROPERTY. All of Seller's rights in the trademarks,
trade secrets, copyrights (including those in software), patents, pending
patent applications, and other intellectual property, and all associated
goodwill, and all related applications and registrations for the foregoing
(collectively, the "INTELLECTUAL PROPERTY") that are listed on
SCHEDULE 1(b) attached hereto.
(c) CONTRACTS. To the extent the consents listed on the Disclosure
Schedule to Section 7(j) have been obtained, all rights of Seller under the
contracts, agreements, personal property leases, licenses, purchase orders,
sales orders and other instruments, agreements and arrangements that are
listed on SCHEDULE 1(c) (hereinafter collectively referred to as the
"ASSUMED CONTRACTS").
(d) PREPAID ASSETS. All deposits or other prepaid items relating to
services or products provided by the Business and accepted by Seller prior
to the Closing (as hereinafter defined) but to be delivered by Purchaser on
or subsequent to the Closing that are listed on SCHEDULE 1(d), as such may
be amended by mutual agreement of the parties up to the Closing.
(e) MARKETING AND SALES INFORMATION. All customer lists, vendor or
supplier lists, prospect lists, database information, marketing or
advertising brochures or pamphlets, documents, records or other
information, whether in electronic form or otherwise, owned by Seller and
relating to current or planned sales or marketing operations of the
Business.
(f) DOCUMENTS. All copies of records, computer software and
documents, books, work orders, drawings, electronic art, database
information, program and process documentation owned by Seller and
primarily related to the Business.
(g) LICENSES AND PERMITS. To the extent transferable, all of
Seller's rights in all government licenses, permits and authorizations
listed on SCHEDULE 1(g) hereto.
2. ASSETS EXCLUDED FROM SALE. Notwithstanding other contrary provisions
of this Agreement, the following property and assets of Seller are expressly
excluded from the sale to Purchaser (the "EXCLUDED ASSETS"):
(a) Any employee benefit plan (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974 ("ERISA")) with respect
to which Seller or any entity which, together with Seller, would be deemed
a "single employer" (within the meaning of Sections 414(b), (c), (m) or (o)
of the Internal Revenue Code of 1986, as amended (the "CODE")) is a plan
sponsor or would otherwise have any potential liability.
(b) Any of Seller's causes of action, judgments, claims and demands
of whatever nature, except those related to the Purchased Assets and the
Assumed Liabilities.
(c) Articles of Incorporation, Bylaws, corporate seal and original
minute books of Seller (it being agreed that copies of those minutes
relating to the sale of the Business shall be supplied to Purchaser before
the Closing), qualifications to conduct business as a foreign corporation,
taxpayer and other identification numbers and other documents relating to
the organization, maintenance and existence of Seller as a corporation.
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(d) All financial records of Seller relating to the Business,
including Seller's general ledger and related items, tax returns and
related work papers (it being agreed that copies of those financial records
relating to the Business shall be supplied to Purchaser before the
Closing).
(e) All of Seller's cash (including cash received after the Closing
for products or services relating to the Business delivered on or before
the Closing) and cash equivalents, including all deposits and other prepaid
items not described in Section 1(d) of this Agreement.
(f) All rights of Seller under this Agreement and all other related
agreements to which Seller is a party contemplated by this Agreement.
(g) All of Seller's personnel records and other records that Seller
is required by law to retain in its possession and all invoices, expense
reports and purchase orders.
(h) All of Seller's claims for refunds of Taxes and other
governmental charges of whatever nature relating to periods prior to the
Closing Date.
(i) Other than the licensed software located on the personal
computers used by the Scheduled Employees, all of Seller's enterprise-wide
licensed software including, without limitation, Lotus/Notes software used
for artifact management, server software that connects the Austin IT
infrastructure of the Business to Seller's Dallas office, and corporate
financial systems.
(j) All of Seller's rights in insurance policies and insurance
claims.
(k) All trademarks, trade names, service marks and other intellectual
property relating to or including the name "ObjectSpace" and "Voyager," and
all derivations thereof, and all intellectual property relating to Seller's
Voyager Software and C++ toolkit (Standards Toolkit; Foundations Toolkit;
Communications Toolkit; Systems Toolkit).
(k) All rights of Seller in the T1 line used in the Business to
connect the Business to Seller's Dallas headquarters.
(m) All of Seller's rights in its Dallas server, which is currently
used to host the Web site relating to the Business.
(n) All assets listed on Schedule 2(n) hereto.
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3. PURCHASE PRICE.
(a) AMOUNT OF PURCHASE PRICE. In addition to the assumption of the
Assumed Liabilities (as hereinafter defined) by Purchaser, Purchaser shall
pay to Seller for the Purchased Assets an amount equal to $8,000,000 (the
"PURCHASE PRICE"), including the $800,000 which shall be held in an escrow
account pursuant to Section 6(g), and subject to adjustment as set forth in
Section 6(h). The Purchase Price will be exclusive of all Transfer Taxes
(as hereinafter defined). All references to "$" and "dollars" herein shall
mean United States dollars.
(b) MANNER OF PAYMENT OF THE PURCHASE PRICE. At the Closing,
Purchaser shall assume the Assumed Liabilities and deliver $6,930,000 (the
Purchase Price minus the Purchase Price Escrow Funds (defined below) and
the Employee Retention Funds (defined below)) (the "CASH PURCHASE PRICE")
by wire transfer of immediately available funds to Seller.
(c) ALLOCATION OF PURCHASE PRICE. The parties agree to allocate the
aggregate of the Purchase Price and the Assumed Liabilities to the
Purchased Assets and to the covenants not to compete of Seller as set forth
on SCHEDULE 3(c) hereto which shall comply with Section 1060 of the Code.
Seller and Purchaser agree that they will adopt and utilize the amounts
allocated to each Purchased Asset and such other assets and benefits for
purposes of all Tax Returns (as hereinafter defined) filed by them and that
they will not voluntarily take any position inconsistent therewith.
Purchaser agrees to prepare and timely file all applicable Internal Revenue
Service and other governmental authority forms, and each party hereto
agrees to cooperate with the other party's reasonable request in the
preparation of such forms, and to furnish the other party with a copy of
such forms prepared in draft, within a reasonable period before the filing
due date thereof.
4. ASSUMPTION OF LIABILITIES.
(a) GENERALLY. On the Closing Date, as partial consideration for the
purchase of the Purchased Assets, Purchaser shall assume and agree to pay,
perform and discharge, to the extent not theretofore performed, paid or
discharged, the following (and only the following) liabilities and/or
obligations of Seller relating to the Business (collectively, the "ASSUMED
LIABILITIES"):
(1) FACILITY LEASE. The Office Lease between Xxxxx X. Xxxxx and
Seller dated June 9, 1997, as amended (the "FACILITY LEASE"), relating
to the facility located at 000 Xxxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxx,
Xxxxx 00000-0000 (the "FACILITY").
(2) ASSUMED CONTRACTS. The obligations of Seller under the
Assumed Contracts.
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(3) PRORATED ITEMS. The pro rated amounts determined pursuant
to Section 6(f) of this Agreement.
(4) TAXES. Any and all liabilities and obligations, direct or
indirect, fixed or contingent, for Taxes attributable to and incurred
in connection with the Business or the Purchase Assets after the
Closing Date, including, without limitation, any AD VALOREM, real or
personal or intangible property, sales or other Taxes which are
attributable to any period after the Closing Date.
(5) EMPLOYEE LIABILITIES. All (i) accrued payroll taxes
attributable to the Scheduled Employees on the Closing Date, (ii) all
accrued liabilities owed to the Scheduled Employees on the Closing
Date, including accrued vacation benefits, sick leave benefits,
bonuses, and commissions and (iii) those liabilities set forth on
SCHEDULE 4(a)(5) related to other employee benefits for the Scheduled
Employees.
(b) EXCLUDED LIABILITIES. Except for the liabilities and
obligations of Seller expressly assumed by Purchaser under Section 4(a)
hereof, Purchaser shall not assume, and the term "Assumed Liabilities"
shall not include, any liabilities or obligations of Seller
(collectively, the "EXCLUDED LIABILITIES"), including, without
limitation, the following, and Seller expressly agrees it will remain
liable for, it will indemnify Purchaser, its stockholders, affiliates,
employees, agents and representatives for, and it will discharge, the
Excluded Liabilities:
(1) Any liability or claim with respect to accidents or
occurrences arising on or before the Closing Date.
(2) Any claim by a third party for personal injury, injury or
damage to property or economic loss, whether sounding in tort, breach
of warranty or any other theory of recovery, seeking compensatory,
special, exemplary, punitive or consequential damages, or any other
relief, relating, directly or indirectly, to an alleged defective or
unsuitable product arising prior to the Closing Date.
(3) Any claims (including severance claims) relating to the
termination by Seller of the employment of any of its employees
(including any such termination deemed to have occurred upon the
transfer of any such employee from Seller to Purchaser).
(4) Except as set forth in Section 4(a), any unpaid liability
for Taxes (as hereinafter defined) incurred prior to the Closing
Date, including without limitation the following: any and all
liabilities and obligations, direct or indirect, fixed or
contingent, for Taxes (i) of Seller or any member of any affiliated
group (within the
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meaning of Section 1504(a) of the Code) or any combined, consolidated
or unitary group for state or other tax purposes of which Seller is
or has been a member, whenever incurred; (ii) except as expressly
set forth herein, attributable to or incurred in connection with the
Business or the Purchased Assets prior to or on the Closing Date,
including, without limitation, any AD VALOREM, real or personal or
intangible property, sales or other Taxes which are not due or
assessed until after the Closing Date but which are attributable to
any period (or portion thereof) ending on the Closing Date and (iii)
attributable to interest, fines, additions to tax or penalties
relating to Taxes. For purposes of this Agreement, (A) the term
"TAXES" shall mean any and all taxes, duties, premiums, imposts,
charges, fees, levies, excises, deductions, withholdings or other
like assessments (and all related interest, fines, additions to tax
and penalties), including, without limitation, those levied on, or
measured by, or referred to as income, transfer, gains, gross
receipts, profits, capital, excise, inventory, property (real,
personal or intangible), land transfer, value-added, goods and
services, sales, use, license, withholding, payroll, health,
employment, stamp, business, capital stock, franchise, social
services, education and social security taxes, all surtaxes, all
customs duties and import and export taxes, all license, franchise
and registration fees and all unemployment insurance, health
insurance and other government pension plan premiums, imposed by the
United States or any state, local or foreign government or
subdivision or agency thereof, whether computed on a consolidated,
unitary, combined or any other basis; and (B) the term "TAX RETURNS"
shall mean any and all reports, returns or other information filed
with or required to be supplied to a taxing authority in connection
with Taxes.
(5) Any cause of action or judicial or administrative action,
suit, proceeding or investigation relating to periods prior to the
Closing.
(6) Any governmental compliance, enforcement or regulatory
action, suit or claim or any claim by any person or entity based upon
an actual or alleged failure of Seller to comply prior to the Closing
with, or an actual or alleged violation by Seller prior to the
Closing of, any law, rule, regulation, statute, ordinance, permit,
permit requirement, judgment, injunction, order, decree, license or
other governmental authorization or approval applicable to Seller or
the Purchased Assets.
(7) Any infringement of the rights of any other person or
entity arising out of the use of any of the Purchased Assets prior to
the Closing.
(8) Except as set forth in Section 4(a), any liability under
any employee benefit plan maintained or contributed to by Seller or
any ERISA Affiliate (as hereinafter defined) which is not assumed by,
or plan assets are not transferred to, the Purchaser.
6
(9) Any liabilities with respect to contracts of Seller (other
than the Assumed Contracts).
(10) Any liabilities or obligations of Seller relating to
casualty or liability claims attributable to the period prior to the
Closing.
(11) Bank overdrafts and other liabilities of Seller to banks
for money borrowed.
(12) Any and all other liabilities and/or obligations of Seller
not specifically included in the Assumed Liabilities.
(c) LIMITATIONS. The parties expressly agree (1) that the only
liabilities and obligations of Seller which Purchaser has agreed to pay or
assume are the Assumed Liabilities and (2) that Purchaser has not agreed
to pay, shall not be required to assume and shall not have any liability
or obligation, direct or indirect, absolute or contingent, of Seller, the
Business, or any other person or entity, the assumption of which by
Purchaser is not expressly provided for in this Agreement as an Assumed
Liability.
5. LABOR AND EMPLOYMENT MATTERS.
(a) EMPLOYMENT. Attached hereto as SCHEDULE 5(a) is a list of all
active employees of the Business, on the payroll and available for duty on
the Closing Date (the "SCHEDULED EMPLOYEES"). Purchaser agrees to offer
employment, effective from the Closing, to all of the Scheduled Employees.
In addition, Purchaser agrees to provide Scheduled Employees with group
health insurance benefits immediately after Closing and to waive, and to
cause its appropriate insurer to waive, any pre-existing illness
limitations. Purchaser agrees to provide each Scheduled Employee with past
service credit for the period of time that the Scheduled Employee has been
employed by Seller under Purchaser's group health plan and Purchaser's
401(k) plan and/or any other defined contribution or defined benefit
pension plan maintained by the Purchaser. Subject to the foregoing two
sentences, Purchaser agrees to provide the Scheduled Employees with
medical, dental, 401(k) retirement and other benefits in accordance with
Purchaser's standard employee benefit plans.
(b) EMPLOYMENT TRANSITION PROVISIONS. (i) Seller shall furnish its
employees, their representatives and appropriate governmental authorities
such notice as may be required of Seller by and in accordance with
applicable laws and regulations, including, without limitation, any mass
lay-off laws for events that occur prior to Closing which require such
notices; Purchaser shall be responsible for all such notices for events
which occur on or after Closing. Seller shall be solely responsible for
providing continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") to
7
Scheduled Employees and their dependents who are qualified beneficiaries
(as defined in Section 4980B(g)(1) of the Code) and Seller shall
indemnify Purchaser for any and all loss, cost, or expense relating to
any and all outstanding obligations, liabilities and claims arising under
COBRA and relating to Seller's employment of Scheduled Employees. Each
person employed by Seller in the Business and to be employed after the
Closing by Purchaser in accordance with Section 5(a) hereof shall cease
to be an employee of Seller effective immediately following the Closing.
In addition, except for those items set forth in Section 4(a) hereof,
Seller shall pay or provide for all other employee benefits maintained by
Seller for all periods prior to and including the Closing Date, all in
accordance with applicable law.
(ii) Purchaser and Seller agree to use their commercially reasonable
efforts to enable the Scheduled Employees to transfer their aggregate
account balances from Seller's 401(k) plan to Purchaser's 401(k) plan.
Seller shall amend its 401(k) plan to transfer an amount equal to the
account balances of the Scheduled Employees in the Seller's 401(k) plan
valued at the most recent valuation date preceding the date the transfer
is made to Buyer's 401(k) plan. The transfer will be accomplished by way
of a single transfer of plan assets, except that any outstanding
participant loans from the Seller's 401(k) plan to Scheduled Employees
that are not in default may be transferred in kind to the extent not
repaid prior to the transfer. Seller and Purchaser agree to cooperate
fully and to file in a timely manner whatever reports, forms, and notices
(including, without limitation, Form 5310-A) as necessary or appropriate
under applicable law as a result of, and to effect, the transfer. Seller
agrees to provide to Purchaser in a timely manner all information and
documentation concerning its 401(k) plan that Purchaser reasonably
requests in order to ensure that Seller's 401(k) plan and the transfer
described herein are in compliance with applicable law, including without
limitation ERISA and the Code. Seller also agrees to provide to Purchaser
in a timely manner all information for each Scheduled Employee, including
without limitation the account balances under the Seller's 401(k) plan as
of the date of transfer, vesting service, and any other employee
information reasonably required by Purchaser to determine the status of
each such Scheduled Employee's account under the 401(k) plans of Buyer
and Seller.
(iii) Seller shall be solely responsible for providing any and all
severance benefits owed to Scheduled Employees (and, as applicable, their
beneficiaries) under the terms of any severance, separation or retention
plan, policy or arrangement maintained by Seller or relating to the
Seller's employment of a Scheduled Employee and Seller shall indemnify
Buyer for any and all loss, cost or expense arising under any severance,
separation or retention plan, policy or arrangement maintained by Seller
or relating to Seller's employment of a Scheduled Employee.
(c) CONSTRUCTION. Sections 5(a) and 5(b) hereof are solely for the
purpose of defining the obligations between Purchaser and Seller concerning
the Scheduled Employees and shall in no way be construed as creating any
employment contract or other contract between Purchaser or Seller and any
employee.
8
6. CLOSING.
(a) LOCATION AND TIME. The closing of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at the offices of
Xxxxxx and Xxxxx, LLP, 000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, at 9:30
a.m., local time, on March 9, 2000 (the "CLOSING DATE"), or at such other
time and place as is mutually agreed to by the parties.
(b) COSTS. Except as provided in Section 12(f) hereof, Purchaser and
Seller shall each bear their respective expenses, costs and fees
(including attorneys and accountants fees and expenses) in connection
with the transactions contemplated hereby, including the negotiation,
preparation, execution and delivery of this Agreement and compliance
herewith, whether or not the transactions contemplated hereby are
consummated.
(c) SELLER'S CLOSING DOCUMENTS. On the Closing Date, Seller shall
deliver to Purchaser the following (collectively, "SELLER'S CLOSING
DOCUMENTS"):
(1) bills of sale, in form and substance satisfactory to
Purchaser, for all personal property constituting a part of the
Purchased Assets and Seller shall deliver actual possession of the
Purchased Assets, free and clear of all encumbrances (except
Permitted Encumbrances (as hereinafter defined));
(2) assignments, in form and substance reasonably satisfactory
to Purchaser, of all intangibles constituting a part of the Purchased
Assets and all Assumed Contracts, licenses, appurtenances and rights
relating to the Business, except to the extent consent from a third
party is required to assign such Assumed Contracts, licenses,
appurtenances and rights and such consent has not been obtained;
(3) an assignment of the Facility Lease duly executed by Seller
evidencing the assignment and assumption of the Facility Lease by
Purchaser;
(4) such other instrument or instruments of transfer as shall
be necessary or appropriate to vest in Purchaser all rights and title
to the Purchased Assets;
(5) such keys, lock and safe combinations and other similar
items as Purchaser shall require to obtain full occupation,
possession and control of the Facility and the Purchased Assets;
(6) duly certified copies of the resolutions adopted by
Seller's board of directors authorizing the execution, delivery and
due performance of this Agreement and all transactions contemplated
hereby;
9
(7) good standing or similar certificates from the Secretaries
of State and the appropriate taxing authorities of the States of
Delaware and Texas with respect to Seller;
(8) the license agreement relating to the license of Seller's
Voyager technology in the form set forth as Exhibit 6(c)(1) (the
"LICENSE AGREEMENT") duly executed by Seller;
(9) the Purchase Price Escrow Agreement (defined below) duly
executed by Seller;
(10) such other documents, certificates, instruments or
agreements which Seller is required to deliver to Purchaser or the
Scheduled Employees pursuant to this Agreement; and
(11) Seller shall prepare and deliver to Purchaser, at least
three business days before the Closing Date, the Current Balance
Sheet.
(d) PURCHASER'S CLOSING DOCUMENTS. On the Closing Date, Purchaser
shall deliver to Seller the following (collectively, "PURCHASER'S CLOSING
DOCUMENTS");
(1) payment of the Cash Purchase Price as provided in Section
3(c);
(2) duly certified copies of the resolutions adopted by
Purchaser's board of directors authorizing the execution, delivery,
and due performance of this Agreement and all transactions
contemplated hereby and all documents to be executed and delivered
hereunder by Purchaser at Closing;
(3) instruments executed by Purchaser, in form and substance
satisfactory to Seller, whereby Purchaser agrees to assume the
Assumed Liabilities;
(4) an assignment of the Facility Lease duly executed by Seller
evidencing the assignment and assumption of the Facility Lease by
Purchaser;
(5) such further instruments as any person to whom Seller is
obligated with respect to any Assumed Liability may timely and
reasonably request in order to effect the assumption by Purchaser of
Seller's obligations thereunder;
(6) the License Agreement duly executed by Purchaser;
(7) the Purchase Price Escrow Agreement duly executed by
Purchaser; and
10
(8) such other documents, certificates, instruments,
agreements, which Purchaser is required to deliver to Seller or the
Scheduled Employees pursuant to this Agreement.
(e) FURTHER ASSURANCES. Seller and Purchaser agree that, at and
after the Closing Date:
(1) at the request of Purchaser, Seller shall execute and
deliver such further instruments of transfer and assumption as may be
necessary or appropriate, and shall take all commercially reasonable
action as may be necessary or appropriate (A) to vest in Purchaser
title to the Purchased Assets, (B) to transfer to Purchaser all
licenses, agreements and permits necessary for the operation of the
Business (other than the Excluded Assets) and to the extent that
consents to the assignment of such licenses, agreements and permits
have not been obtained prior to Closing, to secure the benefits and
liabilities of such licenses, agreement and permits in some other
manner and (c) to aid and assist Purchaser in collecting and reducing
to possession any or all of the Purchased Assets; and
(2) each will at any time and from time to time after the
Closing, upon the request of the other, execute, acknowledge,
deliver, and perform, or cause to be executed, acknowledged,
delivered, and performed, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney, assumption agreements,
and assurances as may reasonably be required in connection with the
transactions contemplated by this Agreement.
Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any agreement,
license, approval, authorization, contract, lease or other commitment
if an attempted assignment thereof without the consent of a third
party thereto would constitute a breach thereof.
(f) PRORATIONS. At Closing, Seller and Purchaser shall prorate as
of the Closing Date:
(1) all rent payable on the Facility Lease or any leases of
equipment which are being assumed by Purchaser;
(2) all utility bills for utilities provided to the Facility;
and
(3) all personal property taxes levied or assessed against any
of the Purchased Assets for the current tax year.
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(g) PURCHASE PRICE ESCROW. Purchaser shall deliver to Bank One,
Texas, NA (the "ESCROW AGENT") $800,000.00 by wire transfer of immediately
available funds at the Closing (the "PURCHASE PRICE ESCROW FUNDS").
Purchaser and Seller shall enter into an escrow agreement in the form of
EXHIBIT 6(g) (the "PURCHASE PRICE ESCROW AGREEMENT") with the Escrow Agent
that provides the following:
(1) Purchaser shall deliver to the Escrow Agent the Purchase
Price Escrow Funds by wire transfer of immediately available funds at
the Closing.
(2) The Purchase Price Escrow Funds shall remain in the escrow
account for 365 days (the "PURCHASE PRICE ESCROW PERIOD"). If no
claims against Seller exist at the end of the Purchase Price Escrow
Period, the Purchase Price Escrow Funds shall be paid to Seller on
the day after the end of the Purchase Price Escrow Period. Interest
income shall accrue to the benefit of Seller. The Purchase Price
Escrow Funds shall be placed in an interest bearing account
acceptable to Seller, Purchaser and the Escrow Agent. Purchaser and
Seller shall each pay 50% of all of the costs and expenses of the
Escrow Agent in connection with the Purchase Price Escrow Funds.
(3) The Purchase Price Escrow Funds shall be released only as
set forth in the Purchase Price Escrow Agreement.
(h) WORKING CAPITAL ADJUSTMENT. The Purchase Price shall be subject
to adjustment in accordance with the following:
(1) On a date not more than twenty (20) days after the Closing
Date, Seller shall prepare and deliver to Purchaser a "CLOSING DATE
BALANCE SHEET" (herein so called) consisting of an unaudited balance
sheet of the Business as of the Closing Date which shall reflect the
Current Assets (defined below) and Current Liabilities (defined
below) as of the Closing Date. Such Closing Date Balance Sheet
shall be prepared by the Seller. If within ten (10) days following
delivery of the Closing Date Balance Sheet, Purchaser has not given
Seller notice of its objection to the Closing Date Balance Sheet
(such notice must contain a statement of the basis of Purchaser's
objection), then the Closing Date Balance Sheet prepared by Seller
shall be used in computing the Adjustment Amount (defined below).
If Purchaser gives such notice of objection, then Ernst & Young LLP,
Seller's certified public accountants and PricewaterhouseCoopers
LLP, Purchaser's certified public accountants, shall use their best
efforts to resolve the issues in dispute. If such accounting firms
are unable to resolve the issues in dispute within twenty (20) days
thereafter, then the issues in dispute shall be submitted to
mutually agreed upon certified public accountants (the
"ACCOUNTANTS"), for resolution. If issues in dispute are submitted
to the Accountants for resolution, (i) each party shall furnish to
the Accountants such work papers and
12
other documents and information relating to the disputed issues as
the Accountants may request and are available to that party, and
shall be afforded the opportunity to present to the Accountants any
material relating to the determination and to discuss the
determination with the Accountants; (ii) the determination by the
Accountants, as set forth in a notice delivered to both parties by
the Accountants, shall be binding and conclusive on the parties; and
(iii) Purchaser and Seller shall each bear 50% of the fees of the
Accountants for such determination. The Accountants shall use their
best efforts to resolve any disputes within thirty (30) days after
submission.
"CURRENT ASSETS" means the cash, consolidated inventory, accounts
receivable, prepaid expenses and other current assets of the
Business, and noncurrent investments, in each case determined in a
manner consistent with the presentation in the Current Balance
Sheet. "CURRENT LIABILITIES" means the consolidated accounts
payable, accrued expenses, customer deposits, and other current
liabilities of the Business, in each case determined in accordance
with the presentation in the Current Balance Sheet.
(2) On the tenth business day following the final resolution of
any disputes with respect to the Closing Date Balance Sheet if the
Closing Date Balance Sheet shows the Working Capital (defined below)
of the Business on the Closing Date is less than $300,000.00, Seller
shall pay the difference to Purchaser. If the Closing Date Balance
Sheet shows the Working Capital of the Business on the Closing Date
exceeds $300,000, Purchaser shall pay the excess to the Seller. The
amount owed or owing shall constitute the "ADJUSTMENT AMOUNT" (herein
so called). To the extent any amounts are owed by Seller, it is
understood and agreed that Purchaser shall be entitled to receive
such amount from the Escrow Funds, to the extent then available.
"WORKING CAPITAL" shall mean the difference between Current Assets
and Current Liabilities as shown on the Closing Date Balance Sheet.
(i) EMPLOYEE RETENTION FUNDS. At the Closing, $270,000 (the
"EMPLOYEE RETENTION FUNDS") shall be deducted from the Purchase Price paid
to Seller. The Employee Retention Funds shall be used by Purchaser solely
to make payments to the Scheduled Employees for the purpose of retaining
such employees in the employment of Purchaser.
7. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents
and warrants to Purchaser as follows (each such representation and warranty
being qualified in its entirety by the disclosures set forth on the Disclosure
Schedule of Seller attached hereto) (the "DISCLOSURE SCHEDULE"):
13
(a) ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Seller has the requisite corporate power and authority to own its property
and assets and to carry on its business as now being conducted. Seller is
duly qualified, registered or licensed to do business as a foreign
corporation in each other jurisdiction wherein the nature of its activities
or of its properties owned or leased makes such qualification necessary and
failure to be so qualified, registered or licensed could have a material
adverse effect upon the Business or the Purchased Assets. No stockholder,
officer, director or employee of Seller or any affiliated entity is
currently a party to any transaction with Seller relating to any aspect of
the Business.
(b) AUTHORIZATION OF AGREEMENT. Seller has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Seller and the performance by Seller of its obligations
hereunder have been duly authorized by all necessary action on the part of
Seller, including without limitation approval by Seller's board of
directors. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
conflict with, or result in a breach of, or constitute a default under, the
terms or conditions of Seller's Certificate of Incorporation, Bylaws, any
court or administrative order, judgment or decree, any agreement or
instrument to which Seller is a party or by which Seller or any of its
assets is bound (subject to obtaining consents to the assignment of the
agreements set forth on SCHEDULE 7(j)) or, to the knowledge of Seller, any
statute or regulation of any governmental agency. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby do not require the consent of any third party. This
Agreement and all other instruments required hereby to be executed and
delivered by Seller are, or when delivered will be, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting
the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceedings
therefor may be brought.
(c) BUSINESS FINANCIAL STATEMENTS. Schedule 7(c) sets forth the
Seller's unaudited balance sheet for the Business as of December 31, 1999
(the "CURRENT BALANCE SHEET"). The Current Balance Sheet is correct in all
material respects and has been prepared in accordance with GAAP
consistently applied on a basis consistent throughout the periods indicated
and consistent with each other (except as set forth therein and except that
it does not contain footnotes and other presentation items that may be
required by GAAP). The Current Balance Sheet presents fairly the financial
condition, of the Business as of the date indicated therein, subject to
normal year-end adjustments, which are not material in amount or
significance in any individual case or in the aggregate.
14
(d) TAX MATTERS.
(1) Seller has duly and timely filed all Tax Returns with the
appropriate governmental or taxing authority and has duly completed
and correctly reported in all material respects all income and all
other amounts and information required to be reported thereon.
(2) Seller has duly and timely paid, accrued or properly
provided for all Taxes, including all installments on account of Taxes
for the current year, that are due and payable or collectible by it.
(3) Neither Seller nor any member of any affiliated group
(within the meaning of Section 1504 of the Code), combined group,
consolidated or unitary group (any such affiliated, combined,
consolidated or unitary group hereinafter referred to as an
"AFFILIATED GROUP") of which Seller is or was a member has received
notice of any deficiency or assessment from any federal, state, local
or foreign governmental authority with respect to any liability for
Taxes attributable to the Business or the Purchased Assets. No
administrative, judicial or other proceeding is presently pending with
respect to any Taxes or Tax Returns of Seller or any member of an
Affiliated Group of which Seller is or was a member or otherwise with
respect to the Business or the Purchased Assets.
(4) There are no actions, suits, proceedings, investigations,
audits or claims now pending or threatened in a writing delivered to
Seller against Seller relating to the Business in respect of any Taxes
and there are no matters under discussion, audit or appeal with any
governmental authority relating to Taxes.
(5) There are no liens for Taxes upon the Purchased Assets,
except for liens for Taxes not yet due.
(6) None of the Purchased Assets transferred pursuant to this
Agreement is property that is or will be required to treat as being
owned by another person pursuant to the provisions of Section 168(f)
of the Code (as in effect prior to the amendment by the Tax Reform Act
of 1986) or is "tax-exempt use property" within the meaning of Section
168 of the Code.
(7) Seller has timely deducted and withheld and will deduct and
withhold from any amount paid or credited or deemed paid or credited
up to and including the Closing Date by it to or for the account or
benefit of any person, including, without limitation, any of its
employees, officers or directors, the amount of all Taxes and other
deductions required by any applicable law to be deducted or withheld
from any
15
such amount and has duly and timely collected and remitted and will
collect and remit the same to the appropriate governmental authority.
(e) ACTIONS, SUITS, PROCEEDINGS. There are no actions, suits or
proceedings (including, without limitation, condemnation proceedings and
actions, suits or proceedings in respect of product liability claims)
pending or, to the knowledge of Seller, threatened against Seller or any of
its properties or business in any court or before any federal, state,
municipal, foreign or other governmental agency relating to the Purchased
Assets or the Business or the consummation of the transactions contemplated
hereby. Neither Seller, the Business nor the Purchased Assets are subject
to any order, writ, injunction or decree of any court or governmental
agency relating to the Business or the Purchased Assets.
(f) COMPLIANCE WITH APPLICABLE LAWS AND OTHER INSTRUMENTS. The
Business is being, and since its inception has been, conducted in all
material respects in compliance with all applicable laws, rules or
regulations of all governmental authorities. Seller is not in violation of
its Certificate of Incorporation or Bylaws.
(g) FACILITY LEASE. The Facility Lease is the only lease or sublease
of real property relating to real property used or occupied by Seller in
connection with the Business. All payments required to be made by Seller
pursuant to the Facility Lease have been duly paid and Seller is not
otherwise in default in meeting its obligations under the Facility Lease or
in violation of any provision of the Facility Lease.
(h) TITLE TO THE PURCHASED ASSETS. Seller has good and marketable
title to all of the personal property included in the Purchased Assets,
free and clear of all security interests, liens, mortgages, encumbrances
and restrictions, except encumbrances listed and described in SCHEDULE 7(h)
hereto (the "PERMITTED ENCUMBRANCES"). To the extent that any Permitted
Encumbrances contain covenants or obligations by which Seller is bound,
Seller is not in default under such covenants or obligations.
(i) INTELLECTUAL PROPERTY RIGHTS. SCHEDULE 7(i) hereto contains a
complete and accurate list as of the date hereof of (1) all patents,
registered trademarks, trade names, registered service marks and registered
copyrights (and all applications therefor) owned by Seller that are
reasonably necessary to conduct the Business in the manner and to the
extent presently conducted by Seller, and (2) all agreements relating to
the Intellectual Property which Seller is licensed or authorized to use by
others and included in the Purchased Assets. Seller owns or has the right
to use all Intellectual Property included in the Purchased Assets. Other
than with respect to the agreements listed in SCHEDULE 7(i), Seller is not
a party to any agreement or contract which obligates Seller to pay
royalties, fees or other payments to any owner of, licensor of, or other
claimant to, any Intellectual Property included in the Purchased Assets.
Seller has not transferred or conveyed any rights to others in the
Intellectual Property of Seller included in the Purchased Assets other than
rights to use that
16
are expressly granted in connection with customer licenses. No claims
have been asserted in writing and delivered to Seller by any person to
the use in the conduct of the Business of any Intellectual Property
included in the Purchased Assets or challenging or questioning the
validity or effectiveness of any such Intellectual Property. To the
Seller's knowledge, there exists no valid basis for any such claim,
except for such claims an adverse determination of which, in the
aggregate, could not have a material adverse effect on the Business;
and, to the knowledge of Seller, the use of the Intellectual Property
included in the Purchased Assets in the conduct of the Business does not
infringe on the rights of any person. Except for the Excluded Assets,
the Intellectual Property included in the Purchased Assets constitute
all of the Intellectual Property reasonably necessary to conduct the
Business in the manner and to the extent presently conducted.
(j) CONTRACTS, LEASES, COMMITMENTS AND AGREEMENTS. All material
contracts, leases, agreements and commitments relating to the Business or
the Purchased Assets that exist as of the date hereof are set forth on
SCHEDULE 1(c). For the purpose of the foregoing sentence, material
contracts, leases, agreements or commitments are contracts, leases,
agreements or commitments providing for payment or receipt of $5,000 or
more over the life of the contract or which may not be terminated without
penalty with notice of 30 days or less. Seller and each other party
thereto have in all respects substantially performed all obligations
required to be performed by them to date, and are not in default under any
of the Assumed Contracts. Each of the Assumed Contracts is in full force
and effect and is assignable to Purchaser without the consent of third
parties, and Seller has not waived or assigned to any other person any of
its rights thereunder.
(k) COMPOSITION AND CONDITION OF PURCHASED ASSETS. The Purchased
Assets comprise all material property and assets currently employed by
Seller in the Business, except for the Excluded Assets. Except for the
Excluded Assets, the Purchased Assets are all assets that are reasonably
necessary to conduct the Business in the manner and to the extent presently
conducted by Seller.
(l) INSURANCE. Seller maintains and will maintain prior to the
Closing such policies of insurance, issued by responsible insurers, as are
appropriate to the Business and the Purchased Assets, in such amounts and
against such risks as it believes are adequate. All such policies of
insurance are in full force and effect and Seller is not in default, as to
the payment of premiums or otherwise, under the terms of any such policy.
(m) MAJOR SUPPLIERS AND CUSTOMERS. SCHEDULE 7(m) lists each
supplier of goods and services related to the Business to whom Seller paid
in excess of $15,000 in the aggregate, and each customer related to the
Business to whom Seller billed in excess of $25,000 in the aggregate,
during the 12 month period ending December 31, 1999. No material supplier
or customer has expressed, either orally or in writing, any intention to
change its relationship or the terms upon which it conducts business with
respect to the
17
Business as a result of the transfer of the Purchased Assets as
contemplated in this Agreement.
(n) EMPLOYEE PLANS.
(1) The requirements of Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA relating to COBRA continuation of
health coverage have been materially satisfied with respect to each
"group health plan" (within the meaning of Section 4980B(g)(2) of the
Code) of Seller in which any employee whose last employment was with
respect to the assets sold pursuant to this Agreement participated.
(2) Neither Seller nor any ERISA Affiliate maintains or has ever
maintained a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA.
(o) LABOR MATTERS.
(1) Seller is not a party to any collective bargaining
agreement, and no union or association of employees has been certified
or recognized as the collective bargaining representative of any of
Seller's employees or has attempted to engage in negotiations with
Seller regarding terms and conditions of employment.
(2) Seller is in compliance in all material respects with
applicable federal, state and local laws and regulations governing
employee relations, including but not limited to anti-discrimination
laws, wage/hour laws, labor relations laws and occupational safety and
health laws, and no suits, charges or administrative proceedings
relating to any such law or regulation are pending, and no suit,
charge or administrative investigation alleging a violation of any
such law or regulation has been threatened orally to Seller or in a
writing delivered to Seller.
(p) GOVERNMENT LICENSE AND REGULATION. Set forth on SCHEDULE 1(g) is
a list of all material domestic and foreign governmental and third party
licenses, permits, certificates, consents, approvals, waivers,
authorizations, and registrations (collectively, "APPROVALS") as of the
date hereof which Seller has obtained, which are all of the material
Approvals necessary to conduct the Business as presently conducted and to
own and use the Purchased Assets, and such Approvals are in full force and
effect. All of the rights of Seller under such Approvals are transferable
to Purchaser under applicable law solely upon the assignment of such
Approvals by Seller to Purchaser hereunder and will be exercisable by
Purchaser after the consummation of the transactions contemplated by this
Agreement. No proceeding is pending or threatened regarding the revocation
or limitation of any such Approvals and there is no basis or grounds for
any such revocation or limitation.
18
(q) LOCATION OF THE ASSETS. All of the tangible Personal Property
included in the Purchased Assets will be located at the Facility at the
Closing Date.
(r) YEAR 2000. All computer hardware and software included in the
Purchased Assets and material to the operations of the Business that were
created by Seller and, to the knowledge of Seller, were not created by
Seller are Year 2000 Complaint (defined below). "YEAR 2000 COMPLIANT" means
that the hardware and software will not materially fail to operate
according to their specifications as a result of the use of properly
formatted date data, before and after the year 2000, for dates within the
normal operating life of such hardware and software.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to Seller as follows:
(a) CORPORATE ORGANIZATION. Purchaser is a corporation duly
organized and validly existing under the laws of the State of Delaware.
Purchaser has the corporate power and authority to own its property and
assets and to carry on its business as now conducted.
(b) CORPORATE AUTHORITY. Purchaser has the requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and performance by Purchaser of its obligations hereunder have
been duly authorized by all necessary corporate action on the part of
Purchaser. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
conflict with, or result in a breach of, or constitute a default under, the
terms and conditions of the Certificate of Incorporation or Bylaws of
Purchaser, any court or administrative order, judgment or decree any
agreement or instrument to which Purchaser is a party or by which it or any
of its assets is bound or, to the knowledge of Purchaser, any statute or
regulation of any governmental agency. This Agreement and all other
instruments required hereby to be executed and delivered by Purchaser are,
or when delivered will be, valid and binding obligations of Purchaser
enforceable against Purchaser in accordance with their terms, except to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of
the court before which any proceedings therefor may be brought. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby do not require the consent of any third
party.
(c) LITIGATION AND OTHER PROCEEDINGS. There is no litigation,
action, suit, investigation or proceeding pending or, to Purchaser's
knowledge, threatened against or affecting Purchaser's business before any
court, agency or other governmental body that
19
would result in any material adverse effect upon Purchaser's ability to
perform its obligations under this Agreement.
9. CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE. The obligations of
Purchaser to effect the closing of the transactions contemplated by this
Agreement is subject to the satisfaction prior to or at the Closing of the
following conditions (each of which is acknowledged to be included for the
exclusive benefit of Purchaser and may be waived by Purchaser in whole or in
part):
(a) REPRESENTATIONS AND WARRANTIES. There shall be no failure of the
representations and warranties of Seller to be true and correct at the
Closing Date that would have a material adverse effect on the Purchaser,
except as otherwise expressly contemplated by this Agreement and except for
such representations and warranties made as of a particular date.
(b) OBSERVANCE AND PERFORMANCE. Seller shall have performed and
complied in all material respects with all covenants, obligations and
agreements required by this Agreement to be performed and complied with by
it prior to or as of the Closing Date.
(c) VIOLATIONS OF LAWS AND ORDINANCES. On or before the Closing
Date, Seller shall not have received any notice or have knowledge of any
injunction or lawsuit pending or threatened, any violation or alleged
violation of any city ordinance, state law, rule or regulation of any
governmental authority, with respect to Seller's use and operation of any
of the Purchased Assets or Assumed Liabilities that could materially
interfere with, or materially adversely affect, the Business, the Purchased
Assets or Seller's ability to consummate the transactions contemplated by
this Agreement.
(d) OFFICER'S CERTIFICATE. Seller shall have delivered to Purchaser
a certificate, dated the Closing Date, executed by a duly authorized
executive officer of Seller and certifying to the satisfaction of the
conditions specified in Sections 9(a), (b), and (c) hereof.
(e) CHANGE IN ASSETS. There shall have been no material adverse
change in the nature of the Purchased Assets between the date hereof and
the Closing;
(f) KEY EMPLOYEES. All employees designated as key employees on
Schedule 5(a) shall have accepted employment offers with Purchaser.
(g) SEARCHES. Purchaser shall have received, as of a date no more
than 15 days prior to the Closing Date, Uniform Commercial Code searches
against Seller from the Secretaries of State of the States of Delaware and
Texas and from such other jurisdictions as Purchaser shall reasonably
request, together with tax lien and judgment searches, disclosing no liens
or security interests against the Purchased Assets other than the Permitted
20
Encumbrances and liens and security interests for which Seller shall have
obtained releases on or before the Closing Date.
(h) CONSENTS. Purchaser shall have received duly executed copies of
all material consents and agreements necessary to effect (i) the transfer
of the Purchased Assets to Purchaser, including, without limitation, the
assignment to Purchaser of the Assumed Contracts, and (ii) the assumption
of the Assumed Liabilities. Purchaser hereby agrees to use commercially
reasonable efforts to assist Seller in obtaining such consents and
agreements.
(i) CLOSING DOCUMENTS. Purchaser shall have received duly executed
copies of the Seller's Closing Documents and such other bills of sale,
assignments and other documents of transfer reasonably required to transfer
to Purchaser the interests of Seller in the Purchased Assets and the
Business, and to assume the Assumed Liabilities, consistent with the terms
of this Agreement.
(j) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
and actions taken in connection with the transactions contemplated hereby
and all certificates, opinions, agreements, instruments and documents
mentioned herein or incident to any such transaction shall be reasonably
satisfactory in form and substance to Purchaser and its counsel.
(k) HIRING OF EMPLOYEES. Purchaser shall have offered at-will
employment to all Scheduled Employees and before the Closing eighty-five
percent (85%) of such individuals shall have accepted employment with
Purchaser.
10. CONDITIONS TO OBLIGATION OF SELLER TO CLOSE. The obligation of
Seller to effect the transactions contemplated by this Agreement is subject
to the satisfaction prior to or at the Closing of the following conditions
(each of which is acknowledged to be included for the exclusive benefit of
Seller and may be waived by Seller in whole or in part):
(a) REPRESENTATIONS AND WARRANTIES. There shall be no failure of the
representations and warranties of Purchaser to be true and correct at the
Closing Date that would have a material adverse effect on the Seller,
except as expressly contemplated by this Agreement.
(b) OBSERVANCE AND PERFORMANCE. Purchaser shall have performed and
complied in all material respects with all covenants and agreements
required by this Agreement to be performed and complied with by it prior to
or as of the Closing Date.
(c) VIOLATIONS OF LAWS AND ORDINANCES. On or before the Closing
Date, Purchaser shall not have received any notice or have knowledge of any
injunction or lawsuit pending or threatened, any violation or alleged
violation of any city ordinance, state law, rule
21
or regulation of any governmental authority that could materially
interfere with, or materially adversely affect, the Purchaser's ability
to consummate the transactions contemplated by this Agreement.
(d) OFFICER'S CERTIFICATE. Purchaser shall have delivered to Seller
a certificate, dated the Closing Date, executed by a duly authorized
executive officer of Purchaser and certifying to the satisfaction of the
conditions specified in Sections 10(a), (b) and (c) hereof.
(e) CLOSING DOCUMENTS. Seller shall have received the Purchaser's
Closing Documents and such assumption agreements and other documents of
transfer reasonably required to transfer to Purchaser all obligations of
Seller with respect to the Assumed Contracts and the Assumed Liabilities
consistent with the terms of this Agreement.
(f) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
and actions taken in connection with the transactions contemplated hereby
and all certificates, opinions, agreements, instruments and documents
mentioned herein or incident to any such transaction which are to be
prepared and delivered by Purchaser shall be reasonably satisfactory in
form and substance to Seller and its counsel.
(g) PURCHASE ORDER. Seller shall have entered into a purchase order
with Motorola, Inc. with respect to services that are being performed as of
the date hereof on the premises of Motorola, Inc., a consultant of Seller.
11. GOVERNMENTAL FILINGS. Seller and Purchaser shall cooperate with
respect to, and diligently pursue completion of, all filings with or approvals
of governmental agencies required in connection with the transactions
contemplated by this Agreement, if any.
12. COVENANTS OF SELLER.
(a) OPERATION OF BUSINESS PRIOR TO CLOSING. Seller covenants and
agrees that, except with the prior written consent of Purchaser, from and
after the date hereof to the Closing Date:
(1) Seller shall use commercially reasonable efforts to preserve
intact the business organization rights and privileges pertinent to
the Business, to preserve for Purchaser the good will of suppliers,
customers and others having business relationships with the Business,
to preserve intact its credit arrangements with banks, other financial
institutions and its creditors, and to preserve its relationship with
its officers, directors, and employees, consultants and independent
contractors;
(2) Seller shall maintain its books and records during such
period in a manner consistent with past practice;
22
(3) Seller shall not sell, transfer, dispose of or abandon any
portion of the Purchased Assets, except inventory sold in the ordinary
course of business and consistent with past practice in an amount less
than $5,000;
(4) Seller shall not permit any of the Purchased Assets to
become subject to any lien, pledge, security interest, conditional
sale agreement, license agreement, charge or encumbrance, other than
Permitted Encumbrances;
(5) Seller shall not modify or amend any of the Assumed
Contracts or waive or assign to any third party any of its rights
thereunder;
(6) Seller shall maintain and keep all tangible Purchased Assets
in good condition and repair, ordinary wear and tear excepted, and
will continue to perform all usual and normal maintenance of and upon
the Purchased Assets in accordance with Seller's past practice;
(7) Seller shall pay accounts payable and other obligations of
the Business when they become due and payable in the ordinary course
of business consistent with prior practice;
(8) Seller shall not disclose any confidential information
related to the Business to any person or entity unless such person is
employed by Seller or Purchaser;
(9) Except as contemplated by this Agreement, Seller shall not
grant any salary increase or bonus to any Scheduled Employee, or enter
into any new, or amend or alter any existing, employment-related
agreement with any Scheduled Employee, or provide other compensatory
benefits to any Scheduled Employee (except normal wage or salary
payments consistent with past practices).
(10) Without limiting the generality of the foregoing, Seller
shall in all other respects operate the Business in the usual, regular
and ordinary course and consistent with past practice in compliance
with all applicable laws, rules and regulations.
(b) NOTICES TO EMPLOYEES; CONTINUATION OF BENEFITS. Upon cessation
of employment of the Scheduled Employees hereunder by Seller, Seller shall
give each of the Scheduled Employees all required notices and information
with respect to the continuation of certain health insurance benefits by
Seller. Seller agrees to provide continuation health care coverage, if
any, required pursuant to Section 4980B of the Code on behalf of any
23
Scheduled Employee (or any spouse or dependent of such Scheduled Employee)
who elects not to accept employment with Purchaser or any of its
affiliates.
(c) ACCESS AND INFORMATION. Prior to the Closing Date, Seller will
(and will cause each of its accountants, counsel, consultants, employees
and agents) give the Purchaser and the Purchaser's accountants, counsel,
consultants, employees and agents ("PURCHASER'S REPRESENTATIVES"), full
access during normal business hours to, and furnish them with all
documents, records, course templates, work papers and information with
respect to, all of Seller's properties, assets, books, contracts,
commitments, reports and records relating to the Business, as the Purchaser
shall reasonably request. In addition, prior to the Closing Date, Seller
will permit Purchaser's Representatives reasonable access to such personnel
of Seller during normal business hours as may be necessary or useful to the
Purchaser in its review of the assets and business affairs of the Business
and will keep the Purchaser generally informed as to the affairs of the
Business.
(d) PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, except as
required by applicable law, the Seller shall not, and it shall not permit
any affiliate or representative to, make any public announcement in respect
of this Agreement or the transactions contemplated hereby without the prior
written consent of the Purchaser.
(e) NOTICE OF CHANGES. At all times prior to the Closing, Seller
will, promptly upon becoming aware of such information, notify Purchaser in
writing of any fact, condition, event or occurrence that will or may
reasonably be likely to result in a failure of any of the conditions
contained in Sections 9(a), (b), or (c) to be satisfied.
(f) TRANSFER TAXES. Seller shall be responsible for the timely
payment of, and shall indemnify and hold harmless the Purchaser against,
all sales, use, value added, documentary, stamp, gross receipts,
registration, transfer, conveyance, excise, recording, license and other
similar taxes and fees ("TRANSFER TAXES"), arising out of or in connection
with or attributable to the transactions effected pursuant to this
Agreement. Seller shall prepare and timely file all tax returns required
to be filed in respect of any Transfer Taxes; PROVIDED that Purchaser shall
be permitted to prepare any such tax returns that are the primary
responsibility of Purchaser under applicable law. Purchaser's preparation
of any such tax returns shall be subject to Seller's approval, which
approval shall not be unreasonably withheld.
(g) NO SOLICITATIONS. The Seller shall not, directly or indirectly,
through any officer, director, employee, stockholder, representative or
agent of the Seller, solicit or encourage the initiation or submission of
any inquiries, proposals or offers regarding the acquisition of all or any
portion of the Purchased Assets, whether in writing or not, or similar
transactions involving the Purchased Assets (any of the foregoing referred
to herein as an "ACQUISITION PROPOSAL"). Seller further agrees that it
will not, and that none of its officers
24
will, and that Seller will direct and cause its employees, agents and
representatives (including any investment banker, attorney or accountant
retained by any of them) not to, directly or indirectly, engage in any
negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal. Seller shall promptly notify Purchaser
after receipt of any Acquisition Proposal or any request for information
relating to Purchased Assets in connection with an Acquisition Proposal
or for access to the Purchased Assets that informs the Board of Directors
of Seller that a third party is considering making, or has made, an
Acquisition Proposal. Seller shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
(h) FURTHER ACTIONS. Seller shall take all other actions prior to,
on, or after the Closing Date as shall be reasonably required to comply
with all other covenants of this Agreement or which shall be reasonably
required to put Purchaser in actual possession and operating control of the
Purchased Assets. Subject to the terms and conditions of this Agreement,
Seller shall use its commercially reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, including, but not limited to (1) Seller
using its commercially reasonable efforts to obtain, prior to the Closing
Date, all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to
contracts with Seller as are necessary to the consummation of the
transactions contemplated hereby, (2) Seller using its commercially
reasonable efforts to effect all necessary registrations and filings, and
(3) Seller using its commercially reasonable efforts to furnish Purchaser
such information as is reasonably requested in connection with the
foregoing.
(i) COVENANT NOT TO XXX. Seller hereby agrees that Seller shall not
institute, prosecute or in any way aid in the institution or prosecution of
any claim, suit, or cause of action against Purchaser for the Purchaser's
use of the assets listed on Schedule 2(n).
13. COVENANT NOT TO COMPETE. In consideration of the payment by Purchaser
of the Purchase Price and the assumption of the Assumed Liabilities, Seller
hereby agrees that, for a period of two years from the Closing Date, it shall
not, through any person controlling, controlled by or under common control with
Seller, alone or in association with any other person, firm, corporation,
partnership or other business organization, except as expressly provided for
herein:
(a) Directly engage in, or own or acquire any controlling interest in
any company whose primary business is to engage in, electronics
manufacturing yield and productivity improvement through development,
application, and support of factory monitoring and control software
solutions (a "COMPETITIVE BUSINESS"). For purposes of this Section 13(a),
Seller may acquire any interest which arises solely from the ownership of
less than a 5%
25
equity interest in a corporation whose stock is regularly traded on any
national securities exchange or in the over-the-counter market.
(b) Seller acknowledges that the failure or threatened failure to
comply with the provisions of this Section 13 will result in irreparable
and continuing damage to Purchaser for which there will be no adequate
remedy at law and that, notwithstanding any other provision of this
Agreement, in the event of such failure or threatened failure, Purchaser
and its successors and assigns shall be entitled to injunctive relief and
to such other and further relief as may be proper and necessary to ensure
compliance with the provisions of this Section 13.
14. COVENANTS OF PURCHASER.
(a) PUBLIC ANNOUNCEMENTS. Prior to the Closing, except as required
by applicable law, Purchaser shall not, and it shall not permit any
affiliate or representative to, make any public announcement in respect of
this Agreement or the transactions contemplated hereby without the prior
written consent of Seller.
(b) NOTICE OF CHANGE. At all times prior to the Closing, Purchaser
will, promptly upon becoming aware of such information, notify Seller in
writing of any fact, condition, event or occurrence that will reasonably be
likely to result in a failure of any of the conditions contained in
Sections 10(a), (b) or (c) to be satisfied.
(c) FURTHER ACTIONS. Purchaser agrees to use reasonable good faith
efforts to take actions and to do those things reasonably necessary, proper
or advisable to consummate the transactions contemplated hereby by the
Closing Date. Subject to the terms and conditions of this Agreement,
Purchaser shall use commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
(d) USE OF NAMES. It is expressly agreed that the Purchaser is not
purchasing or acquiring any right, title, or interest in any trade names,
trademarks, logos or service marks employing the words "ObjectSpace" or
"Voyager" (the "SELLER NAMES"). Except as set forth in the License
Agreement and as promptly as practicable, but in no event later than three
months following the Closing Date, the Purchaser shall remove, strike or
otherwise obliterate all Seller Names from all materials constituting their
properties and assets, including any buildings, vehicles, business cards,
schedules, stationery, displays, signs, promotional materials, manuals,
forms and other materials.
15. INDEMNIFICATION.
26
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made herein by Purchaser or Seller shall survive the
execution and delivery of this Agreement and, other than the
representations and warranties contained in Section 7(d), which shall
survive for the period of the applicable statutes of limitation, shall
remain in full force and effect for a period of eighteen months following
the Closing Date, and shall be deemed to have been relied upon by each
other party hereto, notwithstanding any investigation made by or on behalf
of such party. Actions for a breach of a representation or warranty may be
commenced only during the period in which such representation or warranty
survives.
(b) INDEMNIFICATION BY SELLER. Seller shall indemnify and hold
harmless Purchaser and its affiliates and each of their directors,
officers, employees, advisors, agents and stockholders at all times from
and after the Closing Date against and with respect to any and all claims,
demands, lawsuits, proceedings, losses, assessments, taxes, fines,
penalties, administrative orders, obligations, costs, expenses,
liabilities, damages, interest, reasonable attorneys' fees and costs of
investigation (all of the foregoing hereinafter referred to collectively as
"CLAIMS") which arise or result from and to the extent they are
attributable to:
(1) the Excluded Liabilities and/or the Excluded Assets;
(2) the untruth or breach of any representation or warranty made
by Seller pursuant to this Agreement or any other agreement or
document executed and delivered by Seller in connection with the
transactions contemplated hereby;
(3) the breach of, or failure to perform, any of the covenants,
commitments, obligations or agreements on the part of Seller under
this Agreement or any other agreement or document executed and
delivered by Seller in connection with the transactions contemplated
hereby;
(4) the operation by Seller of the Business prior to the Closing
(except with respect to Assumed Liabilities relating to such
pre-Closing operation); and
(5) any and all demands, claims, actions, suits, proceedings,
assessments, judgments, costs and legal and other expenses incident to
any of the foregoing.
Seller shall have no liability with respect to the matters described in
Sections 15(b)(2), (3) and (5) until the aggregate of all claims for which
an indemnity would otherwise be payable by Seller exceeds $50,000 in the
aggregate (the "BASKET"), and in such event, Seller shall be responsible
only for the amount in excess of the Basket, but in no case shall the
liability of Seller with respect to the matters described in
Sections 15(b)(2), (3) and (5) exceed $4,000,000 (the "CAP"). This
limitation on indemnification, however, will not apply to, and Seller's
liability shall be unlimited for any breach of any of the Seller's
27
representations and warranties of which the Seller had knowledge as defined
in Section 19(f) at any time prior to the date on which such representation
and warranty is made or any intentional breach by Seller of any covenant or
obligation pursuant to this Agreement or any other agreement or document
executed and delivered by Seller in connection with the transactions
contemplated hereby.
(c) INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify and hold
harmless Seller and its directors, officers, employees, advisors,
affiliates, agents and stockholders at all times from and after the Closing
Date against and with respect to any and all Claims which arise or result
from and to the extent that are attributable to:
(1) the Assumed Liabilities and the Assumed Contracts;
(2) the untruth or breach of any representation or warranty made
by Purchaser pursuant to this Agreement or any other agreement or
document executed and delivered by Purchaser in connection with the
transactions contemplated hereby;
(3) the breach of, or failure to perform, any of the covenants,
commitments, obligations or agreements on the part of Purchaser under
this Agreement or any other agreement or document executed and
delivered by Purchaser in connection with the transactions
contemplated hereby;
(4) the operation by Purchaser of the Business after the
Closing;
(5) any and all demands, claims, actions, suits or proceedings,
assessments, judgments, costs and legal and other expenses incident to
any of the foregoing:
(d) PROCEDURES FOR INDEMNIFICATION. Promptly after receipt by an
indemnified party pursuant to the provisions of Sections (b) or (c) of this
Section 15 of notice of a Claim, such indemnified party shall promptly
notify such indemnifying party of the commencement thereof; but the
omission to so notify such indemnifying party will not relieve it from any
liability which it may have to the indemnified party otherwise than
hereunder unless the indemnified party is materially prejudiced thereby.
In case such action is brought against an indemnified party and it notifies
the indemnifying party of the commencement thereof, the indemnifying party
shall have the right to participate in, and, to the extent that it may
wish, to assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party; provided, however, if the defendants in any
action include both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded that there may be
legal defenses available to it which are different from or additional to
those available to the indemnifying party, or if there is a conflict of
interest which would prevent counsel for the indemnifying party from also
representing the indemnified party, the
28
indemnified party shall have the right to select separate counsel to
participate in the defense of such action on behalf of such indemnified
party. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to the indemnified party pursuant to the
provisions of such Sections 15(b) or (c) for any legal or other expense
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless (1)
the indemnified party shall have promptly employed counsel in accordance
with the proviso of the preceding sentence, (2) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after
the notice of the commencement of the action, or (3) the indemnifying
party has authorized the employment of counsel for the indemnified party
at the expense of the indemnifying party. No indemnifying party, in the
defense of any such claim or litigation, shall, except with the consent
of each indemnified party (such consent not to be unreasonably withheld),
consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the release from all liability
in respect to such claim or litigation.
(e) SOLE REMEDY. This Article 15 is intended to set forth the
exclusive and entire remedy of Seller and Purchaser against each other in
respect of any losses that are in the nature of those subject to
indemnification under this Article 15; the limitations on survival and
commencement of actions in Section 15(a), the limitations on Seller's
liability through the Cap and the Basket, and the other provisions of this
Article 15, are intended to apply to all claims, actions and losses covered
in substance by this Article 15, regardless of form, whether based on
contract, tort, statute or any other theory or basis of liability, and
whether of a legal, equitable or other nature.
16. TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by the written agreement of Purchaser and Seller;
(b) by either Purchaser or Seller by written notice to the other
party if the transactions contemplated hereby shall not have been
consummated by 5:00 p.m. Dallas, Texas time on March 31, 2000, unless such
date shall be extended by the mutual written consent of Purchaser and
Seller;
(c) by Purchaser by written notice to Seller if (i) a non-curable
breach of a representation or warranty of Seller occurs that would have a
material adverse effect on the Purchased Assets or the ability of the
parties to consummate the transactions contemplated by this Agreement, or
(ii) any of the conditions set forth in Section 9 shall not have been, or
if it become apparent that any of such conditions will not be, fulfilled by
5:00 p.m. Dallas, Texas time on March 31, 2000, unless such failure shall
be due to the failure of Purchaser
29
to perform or comply with any of the covenants, agreements or conditions
hereof to be performed or complied with by it prior to the Closing; or
(d) by Seller by written notice to Purchaser if (i) a non-curable
breach of a representation or warranty of Purchaser occurs that would have
a material adverse effect on the Purchased Assets or the ability of the
parties to consummate the transactions contemplated by this Agreement, or
(ii) any of the conditions set forth in Section 10 shall not have been, or
if it become apparent that any of such conditions will not be, fulfilled by
5:00 p.m. Dallas, Texas time on March 31, 2000, unless such failure shall
be due to the failure of Seller to perform or comply with any of the
covenants, agreements or conditions hereof to be performed or complied with
by it prior to the Closing.
Each party's right of termination under Section 16 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of such
right of termination will not be an election of remedies. If the obligations of
the parties to effect the transactions contemplated by this Agreement are
terminated pursuant to Section 16, all further obligations of the parties under
this Agreement will terminate, except that the obligations in this paragraph of
Section 16, Section 18(a) and Section 19(b) will survive; PROVIDED, HOWEVER,
that if obligations under this Agreement are terminated by a party because of
the breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
17. DISPUTE RESOLUTION.
(a) ARBITRATION. The parties agree that (except as expressly set
forth herein) all actions, claims, controversies or disputes of any kind
(E.G. whether in contract or in tort, statutory or common law) ("DISPUTES")
between them relating, directly or indirectly, to this Agreement or the
transactions contemplated hereby, whether now existing or hereafter
arising, are to be resolved by arbitration as provided in this Agreement.
This agreement to arbitrate will survive the termination of this Agreement.
All arbitration will be conducted pursuant to and in accordance with the
following order of priority (1) the terms of this Agreement, (2) the
Commercial Arbitration Rules of the American Arbitration Association, (3)
the Federal Arbitration Act and (4) to the extent the foregoing are
inapplicable, unenforceable or invalid, the laws of the State of Texas.
The arbitrator used will be selected from impartial arbitrators designated
by the American Arbitration Association who are familiar with the nature of
the subject matter of the Dispute. Any hearing regarding arbitration will
be held in Dallas, Texas, or at another location mutually acceptable to
Purchaser and Seller. The arbitrator will use his/her best efforts to
conduct the arbitration hearing no later than three (3) months from the
date of the arbitrator's appointment and will use best efforts to render a
decision within four (4) months from such date.
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(b) DISCOVERY. Each party may submit in writing to the other party,
and the other party shall respond to a maximum of any combination of
thirty-five (35) (none of which may be subparts) of the following:
interrogatories, demands to produce documents and requests for admissions.
Each party is also entitled to take the oral deposition of no more than
five (5) individuals. Additional discovery may be permitted upon mutual
agreement of the parties. The arbitrator will resolve any discovery
disputes by such pre-hearing conferences as may be needed. All parties
agree that the arbitrator will have the power of subpoena process as
provided by law. Disputes concerning the scope of depositions or document
production, its reasonableness and enforcement of discovery requests will
be subject to agreement by the parties or will be resolved by the
arbitrator. All discovery requests will be subject to the proprietary
rights and rights of privilege and other protections granted by applicable
law to the parties and the arbitrator will adopt procedures to protect such
rights. With respect to any Dispute, each party agrees that all discovery
activities will be expressly limited to matters directly relevant to the
Dispute and the arbitrator will be required to fully enforce this
requirement.
(c) COURT PROCEEDINGS. Except for proceedings seeking equitable
remedies, an arbitration proceeding commenced pursuant to this Section 17
is a condition precedent to and is a complete defense to the commencement
of any suit, action or proceeding in any court or before any tribunal with
respect to any Dispute. Either party may bring an action in court to
compel arbitration. Any party who fails or refuses to submit to binding
arbitration following demand by the other party shall, if the dispute is
within the scope of this Section 17, bear all costs and expenses incurred
by the opposing party in compelling arbitration.
(d) RULINGS. The arbitrator is empowered to resolve Disputes by
summary rulings substantially similar to summary judgments and motions to
dismiss. The arbitrator will resolve all Disputes in accordance with the
applicable substantive law. The arbitrator may grant any remedy or relief
deemed just and equitable and within the scope of this Agreement and may
also grant such ancillary relief as is necessary to make effective any
award.
(e) FINDINGS OF FACT. The arbitrator will be required to make
specific, written findings of fact and conclusions of law, and the parties
will have the right to appeal or seek vacation or modification of an award
only (1) if that award is based in whole, or in part, upon fraud or a
failure to follow the procedures set forth in this Section 17 or (2) to
the extent otherwise allowed by applicable law. Subject to the foregoing,
the determination of the arbitrator shall be binding on all parties and
shall not be subject to further review or appeal. Any judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The decision of the arbitrator will be enforceable in
any court of competent jurisdiction. To the extent permitted by applicable
law, the arbitrator will have
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the power to award recovery of all costs and fees (including attorneys'
fees, administrative fees, and arbitrators' fees) to the prevailing party.
(f) AUTHORITY. The arbitrator will be limited to interpreting the
applicable provisions of this Agreement and will not have the authority or
power to alter, amend, modify, revoke or suspend any condition or provision
of this Agreement or to create, draft or form a new agreement between the
parties, or to render an award which, by its terms, has the effect of
altering or modifying any condition or provision of this Agreement. The
arbitrator will have the sole authority to resolve issues regarding whether
Disputes are subject to arbitration, including the applicability of any
statute of limitations.
(g) EQUITABLE REMEDIES. No provision of, nor the exercise of any
rights under, this Agreement will limit the right of any party, during any
Dispute, to seek, use, and employ ancillary or provisional equitable
remedies. Such rights may be exercised at any time except to the extent
such action is contrary to an award or decision of the arbitrator. The
pursuit of provisional or ancillary equitable remedies will not constitute
a waiver of the right of any party, including the plaintiff, to submit a
Dispute to arbitration, nor render inapplicable the compulsory arbitration
provisions of this Section 17.
(h) SELECTION OF ARBITRATOR. The arbitrator will be chosen by mutual
agreement of Purchaser and Seller. If they cannot agree within 30 days
upon the selection of the arbitrator, the arbitrator will be selected by
the Dallas, Texas office of the American Arbitration Association in
accordance with its rules and procedures. Subject to the provisions of
Section 15 and any other indemnification obligation set forth in this
Agreement, (1) each party will be responsible for one-half of the expenses
and fees of the arbitrator and (2) each party will bear its own attorney's
and expert's fees.
(i) OTHER ARBITRATION PROVISIONS.
(1) All arbitration proceedings will be conducted in the English
language and all monetary awards will be denominated in and will be
payable in United States Dollars.
(2) The statute of limitations applicable to any Dispute shall
be tolled upon the initiation of arbitration under this Agreement and
shall remain tolled until the arbitration process is completed.
(3) Except to the extent necessary to enforce the rights of the
parties or as required by law, the parties agree to keep confidential
the existence, content and results of any arbitration proceeding
conducted pursuant to this Section 17.
18. ADDITIONAL AGREEMENTS
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(a) CONFIDENTIAL INFORMATION. From and after the date of this
Agreement, Purchaser shall not (and shall take all reasonably necessary
steps to ensure that its respective officers, directors, employees, agents
and other representatives do not), without the prior written consent of
Seller, use, disclose, publish, copy, distribute or furnish to any person
or entity any list, summary, schedule, description, record, document or
data storage device, describing, containing, or relating to, or any
information about, any Seller Confidential Information (as defined below).
From and after the date of this Agreement, Seller shall not (and shall take
all reasonably necessary steps to ensure that its respective officers,
directors, employees, agents and other representatives do not), without the
prior written consent of Purchaser, use, disclose, publish, copy,
distribute or furnish to any person or entity any list, summary, schedule,
description, record, document or data storage device, describing,
containing, or relating to, or any information about, any Purchaser
Confidential Information (as defined below).
(1) As used herein, "PURCHASER CONFIDENTIAL INFORMATION" shall
mean, the various trade secrets and other proprietary and
confidential information (except as such pertain to the Excluded
Assets) of the Business which is of a special and unique nature and
value relating to such matters as, but not limited to, the Business'
prior business operations, financial affairs, programs, software,
systems, procedures, manuals, confidential reports and marketing
methods which consist of compilations of information, records, and
similar items relating to the Business and included in the Purchased
Assets. As used herein, "SELLER CONFIDENTIAL INFORMATION" shall mean,
with respect to information owned by Seller, any non-public
information concerning Seller which was obtained by Purchaser in
connection with the transactions contemplated by this Agreement, other
than information pertaining to the Purchased Assets.
(2) A party's obligations under this Section 18(a) with respect
to any portion of the Seller Confidential Information or Purchaser
Confidential Information will terminate if such party can document
that (i) such confidential information was in the public domain as of
the date hereof, (ii) such confidential information entered the public
domain subsequent to the date hereof (but prior to the use or public
disclosure of such confidential information by the disclosing party)
through no fault of the disclosing party, or (iii) the communication
of such confidential information is in response to a valid order by a
court or other governmental body or was otherwise required by law (but
only to the extent of such order or requirement).
(3) Either party may disclose the terms of this Agreement to
those its employees who have a need to know such information.
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(4) Seller's obligations under this Section 18(a)(x) will not
limit Seller's ability to use the Purchaser Confidential Information
in the normal course of business, consistent with past practices, in
order to operate the Business from the date hereof through the Closing
Date and (y) will terminate upon the termination of this Agreement in
accordance with Article 16.
(b) TRANSITION SERVICES. For three months after the Closing Date,
Seller shall maintain the information technology systems and support that
were in effect before the Closing Date that relate solely to electronic
mail, Internet access, and system accounts related to these services.
Purchaser shall reimburse Seller for the reasonable cost or reasonable
allocated share of such information technology systems and support on the
same basis as it was calculated before the Closing Date.
19. MISCELLANEOUS
(a) AMENDMENTS AND WAIVER. This Agreement may be amended only by an
agreement in writing by the parties hereto. The failure of any party to
insist, in any one or more instances, upon performance of any of the terms
and conditions of this Agreement shall not be construed as a waiver or
relinquishment of any rights granted hereunder or of the future performance
of any such term, covenant or condition. If any provision, clause or part
of this Agreement, or the application thereof under certain circumstances,
is held invalid, the remainder of this Agreement, or the application of
each provision, clause or part under other circumstances, shall not be
affected thereby.
(b) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
GIVING EFFECT TO CHOICE OF LAW PRINCIPLES. TO THE MAXIMUM EXTENT
PRACTICABLE, THIS AGREEMENT IS PERFORMABLE IN SANTA XXXXX COUNTY,
CALIFORNIA.
(c) NOTICES. Any notice to be given hereunder shall be deemed given
and sufficient if either (1) delivered by hand messenger or (2) mailed via
an overnight "express mail" service with a telecopy being sent within two
days of such "express mail" notice, in the case of Purchaser, to:
KLA-Tencor
000 Xxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Vice President, General Counsel
Fax: 000-000-0000
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with a copy to: KLA-Tencor
000 Xxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Operating Officer
Fax: 000-000-0000
or in the case of Seller to: ObjectSpace, Inc.
00000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx, Chief Executive
Officer
Fax: (000) 000-0000
with a copy to: Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
Each party may designate by notice in writing a new address to which any notice,
claim, instruction or communication may thereafter be so given, served or sent.
(d) BENEFIT. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by Purchaser and Seller and their respective
successors and permitted assigns. This Agreement may not be assigned without
the written consent of the other party or parties hereto, except that Purchaser
may assign this Agreement to an affiliate of Purchaser upon written notice to
Seller but any such assignment shall not release Purchaser from its obligations
hereunder.
(e) ENTIRE AGREEMENT. This Agreement, including the schedules and
exhibits attached hereto, constitutes the entire agreement and understanding
among Purchaser and Seller with respect to the sale and purchase of the
Purchased Assets and the other transactions contemplated by this Agreement and
supercedes any prior understandings or written or oral agreements.
(f) DEFINITIONS. The qualification of a statement made in this Agreement
by the phrase "to the knowledge of Seller," "to Seller's knowledge", or a
similar phrase shall indicate that no information that would give any officer,
director or manager of Seller actual knowledge of the inaccuracy of such
statement has come to the attention of any such person, but that such persons
have not undertaken any independent investigation to determine the accuracy of
such statement.
(g) BROKERS. Purchaser and Seller represent and warrant to each other
that there are no brokerage or finder's fees in connection with the transactions
contemplated hereby resulting from any actions taken by them and they hereby
indemnify, save and hold each other harmless from and
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against any claims by any broker or finder for a fee or expense which is
based in any way on an agreement, arrangement or understanding made or
alleged to have been made by them relating to the transactions contemplated
hereby.
(h) DISCLOSURE SCHEDULE. Disclosure of any fact or item in any Schedule
hereto referenced by a particular paragraph or section in this Agreement shall,
should the existence of the fact or item or its contents be relevant to any
other paragraph or section, be deemed to be disclosed with respect to that other
paragraph or section whether or not an explicit cross-reference appears.
(i) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed to be an original and all of which
will be deemed to be a single agreement.
[The remainder of this page has intentionally been left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day, month and year first above written.
KLA-TENCOR CORPORATION
By: /s/ XXX XXXXXXX
---------------------------------------
Name: Xxx Xxxxxxx
----------------------------------
Title: Senior Vice President
---------------------------------
OBJECTSPACE, INC.
By: /s/ XXXXX XXXXXX
---------------------------------------
Xxxxx Xxxxxx, Chief Executive Officer
EXHIBIT 6(c)(i)
LICENSE AGREEMENT
EXHIBIT 6(g)
ESCROW AGREEMENT
