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EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
This Agreement is entered into as of this 23rd day of May, 1997 (the
"Effective Date") by and among FTP Software, Inc. ("FTP US"), a Massachusetts
corporation with a principal place of business at 000 Xxxxxxxxxx Xxxxxx, Xxxxx
Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx, 00000, FTP Software Canada Ltd. ("FTP Canada"),
an Alberta corporation and wholly-owned subsidiary of FTP US with a principal
place of business at #000, 000-0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx X0X XX0, Xxxxxx
(FTP US and FTP Canada sometimes individually referred to as a "Seller" and
collectively referred to as "Sellers"), Verity, Inc. ("Verity US"), a Delaware
corporation with a principal place of business at 000 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxx 00000, and 14943 Yukon Inc. ("Verity Canada"), a Yukon corporation
and wholly-owned subsidiary of Verity which will have a principal place of
business at #000, 000-0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx X0X XX0, Xxxxxx (Verity
US and Verity Canada sometimes individually referred to as a "Buyer" and
collectively referred to as "Buyers").
RECITALS
A. FTP US is engaged in, among other things, the development and
licensing of certain viewer and filtering software products known as the
"KEYview Products" as defined in Part I of Exhibit A (Assets).
B. FTP Canada owns or has rights to certain tangible assets and uses
certain of such assets in the course of certain development activities with
respect to the KEYview Products.
X. Xxxxxxx desire to sell to Buyers the Assets (as hereinafter defined)
and to have Buyers assume the Liabilities (as hereinafter defined), and Buyers
desire to acquire the Assets and to assume the Liabilities.
AGREEMENT
THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the parties agree as follows:
1. Transfer of Assets and Liabilities; Covenants. In consideration of
the transactions contemplated hereunder, the parties agree as follows:
1.1. Transfer of Assets.
(a) Subject to the terms and conditions set forth in this
Agreement, at the Closing, FTP US shall sell, convey, transfer, assign and
deliver to Verity US, and Verity US shall acquire and purchase from FTP US, all
right, title and interest of FTP US in, to and under
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the FTP US Assets, as defined in Part I of Exhibit A (Assets), together with all
of the goodwill of FTP US in the business related thereto, subject to the
provisions of the KEYview License (as defined in Section 2.3(g) (KEYview
License)), and no other assets.
(b) Subject to the terms and conditions of this Agreement, at
the Closing, FTP Canada shall sell, convey, transfer, assign and deliver to
Verity Canada, and Verity Canada shall acquire and purchase from FTP Canada, all
right, title and interest of FTP Canada in, to and under the FTP Canada Assets,
as defined in Part II of Exhibit A (Assets), together with all of the goodwill
of FTP Canada in the business related thereto, and no other assets. The FTP US
Assets and the FTP Canada Assets are sometimes collectively referred to as the
"Assets."
1.2. Consideration for Transfer of Assets.
(a) Consideration from Verity US. Subject to the terms and
conditions set forth in this Agreement, and in consideration for Sellers'
transfer of the Assets pursuant to Section 1.1 (Transfer of Assets):
(i) Cash Consideration. Verity US shall pay to FTP US a
cash payment of US$1,300,000 (the "Purchase Price"), with US$1,100,000 payable
at the Closing via wire transfer in accordance with wire instructions to be
provided to Verity US by FTP US prior to the Closing Date (as defined in Section
2.1 (Closing and Closing Date)); the remainder shall be paid at the Closing by
credit of the US$200,000 (the "Deposit") previously paid by Verity US to FTP US.
(ii) Assumption of Liabilities.
(A) Verity US shall acquire and assume from FTP US,
and FTP US shall transfer and assign to Verity US, the liabilities and
obligations of FTP US listed in Part I of Exhibit B (Assumed Liabilities), along
with all liabilities and obligations of FTP US remaining unpaid and unperformed
on the Closing Date or arising thereafter under the FTP US Contracts (as defined
in Exhibit A (Assets)) (collectively, the "FTP US Liabilities"), and no other
liabilities or obligations of FTP US.
(B) Verity Canada shall acquire and assume from FTP
Canada, and FTP Canada shall transfer and assign to Verity Canada, the
liabilities and obligations of FTP Canada listed in Part II of Exhibit B
(Assumed Liabilities), along with all liabilities and obligations of FTP Canada
remaining unpaid and unperformed on the Closing Date or arising thereafter under
the FTP Canada Contracts (as defined in Exhibit A (Assets)) (collectively, the
"FTP Canada Liabilities"), and no other liabilities or obligations of FTP
Canada. The FTP US Liabilities and FTP Canada Liabilities are sometimes
collectively referred to as the "Liabilities."
(b) Undertaking of Verity. To effect Buyers' assumption of the
Liabilities pursuant to this Section 1.2, each Buyer shall deliver to each
Seller (as applicable) at the Closing a document executed by such Buyer in
substantially the form attached as Exhibit C
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(Instrument of Assumption), pursuant to which such Buyer shall
assume and agree to pay, perform or discharge the applicable Liabilities. It is
expressly understood and agreed that neither Buyer shall be liable for any of
the obligations or liabilities of either Seller of any kind and nature other
than the Liabilities, and each Seller shall pay, perform and discharge, and FTP
US shall indemnify each Buyer and hold each Buyer harmless from, all
liabilities, obligations and commitments of Sellers which are not Liabilities,
subject to the provisions of Sections 5.6 (Offer of Employment) and 5.10
(Indemnification) hereof.
(c) Allocation of Purchase Price. Each of the parties agrees to
report this transaction for foreign and domestic state, provincial and federal
tax purposes in accordance with the allocations reasonably proposed in writing
by Buyers within ninety (90) days following the Closing, which proposed
allocation shall be subject to Sellers' written approval, which approval shall
not be unreasonably withheld. If any taxing authority makes or proposes an
allocation different from that so proposed by Buyers and agreed to by Sellers,
Buyers and Sellers shall cooperate with each other in good faith to contest such
taxing authority's allocation (or proposed allocation); provided, however, that,
after consultation with all parties adversely affected by such allocation (or
proposed allocation), any other party hereto may file such protective claims or
returns as may reasonably be required to protect its interests. Each party
requesting cooperation shall reimburse the cooperating party for its reasonable
out-of-pocket expenses (including reasonable legal fees and expenses) incurred
in rendering such cooperation.
(d) Taxes. FTP US shall bear and pay, and discharge promptly
when due, all sales or other similar taxes arising out of the sale and transfer
of the Assets (including but not limited to taxes under the Income Tax Act
(Canada)) (collectively, the "Transfer Taxes"). Buyers shall not be responsible
for any such taxes, or any taxes of any kind related to any period before the
Closing Date, except as specifically set forth in Exhibit B (Assumed
Liabilities) and assumed by Buyers; provided, that Verity Canada shall pay and
remit all goods and services taxes payable pursuant to Part IX of the Excise Tax
Act (Canada) in connection with the acquisition by FTP Canada of the FTP Canada
Assets pursuant to this Agreement. Further, Buyers shall pay all filing fees
associated with assignments or transfers of any Proprietary Rights (as defined
in Exhibit A (Assets)). FTP US acknowledges that Sellers may incur United States
federal and state and Canadian income tax liabilities as a result of the
transactions contemplated by this Agreement, all of which shall be the
obligation and responsibility of, and shall be paid by, FTP US or FTP Canada, as
the case may be, except to the extent expressly set forth in Exhibit B (Assumed
Liabilities).
(e) Excluded Liabilities and Set-Off Rights. Nothing herein
shall be deemed to deprive Buyers of any defenses, set-offs or counterclaims
which Sellers may have had or which Buyers shall have with respect to any of the
Liabilities (collectively, the "Defenses and Claims"). Effective at the Closing,
Sellers hereby transfer, convey and assign to Buyers all Defenses and Claims
with respect to the Liabilities and agree to cooperate with Buyers to maintain,
secure, perfect and enforce such Defenses and Claims, including the signing of
any documents, the giving of any testimony or the taking of any such other
action as is reasonably
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requested by Buyers in connection with such Defenses and Claims, all at the sole
cost and expense of Buyers.
2. Closing.
2.1. Closing and Closing Date. The closing of the transactions
hereunder (the "Closing") shall take place at the office of FTP US in Andover,
Massachusetts, at 2:00 p.m., Eastern Time, on a date no later than June 9, 1997
(the "Closing Date"), or such other time and place as FTP US and Verity US may
agree in writing. Notwithstanding the foregoing, the parties agree to seek to
have the Closing occur as soon as commercially practicable.
2.2. Conditions Precedent to Buyers' Performance. The obligations
of Buyers to purchase the Assets and assume the Liabilities under this Agreement
are subject to the satisfaction, at or before the Closing, of all the following
conditions, any or all of which may be waived by Verity US (on behalf of itself
and Verity Canada) in whole or in part without prior notice:
(a) Accuracy of Representations and Warranties. All
representations and warranties of Sellers in Section 3 (Representations and
Warranties of Sellers) and in all certificates delivered by Sellers to Verity US
pursuant to this Agreement shall be, in all material respects, true and accurate
on and as of the Closing Date as though made at that time, except (i) to the
extent such representations and warranties are made as of a specified date,
provided that such representations and warranties shall continue to be true and
correct in all material respects as of such specified date, and (ii) for changes
resulting from (A) any action taken by FTP US pursuant to and in compliance with
the Agreement between FTP US and Verity US dated April 8, 1997, as supplemented
by the letter agreement dated April 28, 1997, and the Consulting Agreement
between FTP US and Verity US dated April 30, 1997 or (B) any transaction to
which Verity US consents in writing pursuant to Section 5.2 (Conduct of
Business); provided, however, that all representations and warranties of Sellers
shall be, in all material respects, true and accurate with respect to any such
transactions specified in this clause (B) on and as of the Closing Date.
(b) Performance of Obligations. Each Seller shall have
performed, satisfied and complied with all covenants, agreements, and conditions
required by this Agreement to be performed, satisfied or complied with by such
Seller, as the case may be, on or before the Closing Date.
(c) Corporate Approval. The execution and delivery of this
Agreement by Sellers, and the performance of Sellers' covenants and obligations
under this Agreement, shall have been duly authorized by all necessary and
required corporate action.
(d) Employment Agreements. (i) At least thirteen (13) of the
employees listed on Exhibit D (Employees) (the "Employees") shall have accepted
the offer of employment made by Verity Canada pursuant to Section 5.6 (Offer of
Employment) with the execution and delivery to Verity Canada of an employment
agreement substantially in the form
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attached as Exhibit E (Standard Offer Letter) (or Exhibit F (Key Employee
Agreement) if identified as a "Key Employee" on Exhibit D (Employees)) and of an
Assignment of Inventions and Nondisclosure Agreement in the form attached hereto
as Exhibit G (Employee Nondisclosure Agreement); (ii) Xxxxxxx Xxxxxx shall have
accepted the offer of employment made by Verity Canada pursuant to Section 5.6
(Offer of Employment) with the execution and delivery to Verity Canada of an
employment agreement substantially in the form attached as Exhibit F (Key
Employee Agreement) and of an Assignment of Inventions and Nondisclosure
Agreement in the form attached hereto as Exhibit G (Employee Nondisclosure
Agreement); and (iii) at least two (2) of the Employees identified as "Key
Employees" in Exhibit D (Employees), other than Xxxxxxx Xxxxxx, shall have
accepted the offer of employment made by Verity Canada pursuant to Section 5.6
(Offer of Employment) with the execution and delivery to Verity Canada of an
employment agreement substantially in the form attached as Exhibit F (Key
Employee Agreement) and of an Assignment of Inventions and Nondisclosure
Agreement in the form attached hereto as Exhibit G (Employee Nondisclosure
Agreement).
(e) Compliance with Laws. Sellers shall have complied with all
applicable laws, if any, relating to bulk sales or transfers with respect to the
transactions contemplated by this Agreement.
(f) No Adverse Change. There shall not have occurred any event
and Verity US shall not have discovered any fact or circumstance which may
reasonably be expected to have a material adverse effect on the Assets or any
other material aspect of FTP US' or FTP Canada's business, legal or financial
condition, in each case that would have a material adverse effect on the Assets
or the business relating to the Assets as conducted by Sellers as of the
Effective Date, except to the extent that any such event, fact, circumstance,
effect or condition is the result of any transaction between FTP US and Verity
US.
(g) No Litigation or Injunctions. No litigation or proceeding
will be threatened or pending against either Seller (i) for the purpose or with
the probable effect of enjoining or preventing the consummation of any of the
transactions contemplated by this Agreement or (ii) which would have a material
adverse effect on the Assets or the business relating to the Assets as conducted
by Sellers as of the Effective Date.
(h) Compliance Certificate. Verity US shall have received
certificates, dated the Closing Date, signed by an authorized officer of each
Seller certifying, in such detail as Verity US may reasonably request, that the
conditions specified in Sections 2.2(a), (b), (c), (e), (f), (g) and (k) have
been fulfilled. Verity US shall have received from each Seller certificates,
dated not more than two (2) business days before the Closing Date, from the
appropriate governmental corporate authority attesting to the good standing of
each Seller in its jurisdiction of incorporation and, with respect to FTP US,
the appropriate taxing authority of the Commonwealth of Massachusetts attesting
to the good standing of FTP US.
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(i) PGP, Inc. OEM License. FTP US shall have executed and
delivered to Verity US an OEM license agreement ("PGP OEM License") in the form
attached as Exhibit H (PGP OEM License).
(j) Legal Opinion. Verity US shall have received an opinion
from the Deputy General Counsel of FTP US, and of Blake, Xxxxxxx & Xxxxxxx,
counsel to FTP Canada, each in substantially the form attached as Exhibit I
(Legal Opinion).
(k) Consents and Releases. All consents, approvals, waivers and
releases from all governmental authorities and other persons necessary to permit
Sellers and Buyers to effect the transactions contemplated by this Agreement
shall have been obtained and shall be reasonably satisfactory in form and
substance to Buyers and their counsel.
2.3. Conditions Precedent to Sellers' Performance. The obligations of
Sellers to sell and transfer the Assets and the Liabilities under this Agreement
are subject to the satisfaction, at or before the Closing, of all the following
conditions, any or all of which may be waived by FTP US (on behalf of itself and
FTP Canada) in whole or in part without prior notice:
(a) Accuracy of Representations and Warranties. All
representations and warranties of Buyers in Section 4 (Representations and
Warranties of Buyers) and in all certificates and other documents delivered by
Buyers to FTP US pursuant to this Agreement shall be, in all material respects,
true and accurate on and as of the Closing Date as though made at that time.
(b) Performance of Obligations. Each Buyer shall have
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by such
Buyer, as the case may be, on or before the Closing Date.
(c) Corporate Approval. The execution and delivery of this
Agreement by Buyers, and the performance of Buyers' covenants and obligations
under this Agreement, shall have been duly authorized by all necessary and
required corporate action.
(d) Employment Agreements. Verity Canada shall have executed
and delivered to each Employee who has accepted employment with Verity Canada
his or her applicable employment agreement.
(e) No Litigation or Injunctions. No litigation or proceeding
will be threatened or pending against either Buyer for the purpose or with the
probable effect of enjoining or preventing the consummation of any of the
transactions contemplated by this Agreement.
(f) Compliance Certificate. FTP US shall have received
certificates, dated the Closing Date, signed by an authorized officer of each
Buyer certifying, in such detail as FTP US may reasonably request, that the
conditions specified in Sections 2.3(a), (b), (c), (e) and
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(i) have been fulfilled. FTP US shall also have received a certificate signed by
Xxxxxx Xxxxxx, Vice President of FTP Canada, certifying that the conditions
specified in Sections 2.3(a) and 2.3(b) have been fulfilled with respect to FTP
Canada. FTP US shall have received from each Buyer certificates, dated not more
than two (2) business days before the Closing Date, from the appropriate
governmental corporate authority attesting to the good standing of each Buyer in
its jurisdiction of incorporation and, with respect to Verity Canada, the
Province of Alberta, and, with respect to Verity US, the appropriate taxing
authority of the State of Delaware attesting to the good standing of Verity US.
(g) KEYview License. Verity US shall have executed and
delivered to FTP US an OEM license agreement in the form attached as Exhibit J
(KEYview License) (the "KEYview License").
(h) Legal Opinion. FTP US shall have received an opinion from
Xxxx Xxxx Xxxx & Freidenrich, counsel to Verity US, and of Fraser and Xxxxxx,
counsel to Verity Canada, each in substantially the form attached as Exhibit I
(Legal Opinion).
(i) Consents and Releases. All consents, approvals, waivers and
releases from all governmental authorities and other persons necessary to permit
Sellers and Buyers to effect the transactions contemplated by this Agreement
shall have been obtained and shall be reasonably satisfactory in form and
substance to Sellers and their counsel.
2.4. Closing Deliveries.
(a) Deliveries by Buyers. FTP US shall receive at or prior to
the Closing, each of the following documents: (i) an Instrument of Assumption
executed by Verity US and an Instrument of Assumption executed by Verity Canada,
each in substantially the form of Exhibit D (Instrument of Assumption); (ii) an
executed election by Verity Canada as to the sale of FTP Canada Assets under
Section 167(1.1) of the Excise Tax Act (Canada); (iii) an executed agreement
substantially in the form of Exhibit L (Assignment Agreement) by which FTP US
assigns to Verity US (or FTP Canada assigns to Verity Canada, as the case may
be) all of such Seller's rights, and Verity US (or Verity Canada, as the case
may be) assumes all of such Seller's obligations, under all the FTP US Contracts
(or FTP Canada Contracts, as the case may be) to which such Seller is a party or
under which such Seller is bound on the Closing Date; (iv) all other documents
FTP US reasonably requests to further evidence the assumption of Liabilities by
Verity US or Verity Canada, as the case may be; and (v) cross-receipts executed
by Verity US and Verity Canada.
(b) Deliveries by Sellers. Verity US shall receive at or prior
to the Closing, each of the following documents: (i) executed bills of sale from
FTP US and FTP Canada, each in substantially in the form attached as Exhibit K
(Xxxx of Sale); (ii) such other instruments of conveyance, assignment and
transfer, in form and substance reasonably satisfactory to Verity US, as shall
be appropriate to convey, transfer and assign to, and to vest in, Verity US and
Verity Canada all right, title and interest of FTP US in the FTP US Assets and
of FTP Canada
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in the FTP Canada Assets, respectively, including assignments of any and all
Proprietary Rights (as defined in Exhibit A (Assets)); (iii) an executed
agreement substantially in the form of Exhibit L (Assignment Agreement) by which
FTP US assigns to Verity US (or FTP Canada assigns to Verity Canada, as the case
may be) all of such Seller's rights, and Verity US (or Verity Canada, as the
case may be) assumes all of such Seller's obligations, under all the FTP US
Contracts (or FTP Canada Contracts, as the case may be) to which such Seller is
a party or under which such Seller is bound on the Closing Date; (iv) all other
documents Verity US reasonably requests to further evidence the transfer of
ownership of the Assets to Verity US or Verity Canada, as the case may be; (v)
an executed election by FTP Canada as to the sale of the FTP Canada Assets under
Section 167(1.1) of the Excise Tax Act (Canada); and (vi) a cross- receipt
executed by FTP US.
2.5. Passage of Title; Risk of Loss. Legal and equitable title and risk
of loss with respect to all of the Assets shall pass to Buyers on transfer of
the Assets on Closing.
3. Representations and Warranties of Sellers. Except as disclosed in the
disclosure schedule of even date herewith delivered by Sellers to Buyers (the
"Sellers' Disclosure Schedule"), Sellers, jointly and severally, hereby
represent and warrant to Buyers that as of the date of this Agreement and as of
the Closing Date:
3.1. Organization and Good Standing. FTP US is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, and has the requisite corporate power to own and
operate its properties and assets, and to carry on its business as presently
conducted. FTP Canada is a corporation duly organized, validly existing and in
good standing under the laws of the Province of Alberta, Canada, and has the
requisite corporate power to own and operate its properties and assets, and to
carry on its business as presently conducted. Sellers are qualified to do
business in every jurisdiction for which qualification is required unless the
absence of qualification would not have an adverse effect on Sellers' respective
businesses as they relate to the Assets. FTP Canada has made available to Verity
US and its counsel copies of all charter documents of FTP Canada, and all
director and shareholder minutes and written consents of FTP Canada. The copies
are true, correct and complete and contain at the date hereof and will contain
at the Closing Date all amendments thereto. Nothing contained in any of the
foregoing prevents the consummation of the transactions contemplated by this
Agreement.
3.2. Authorization; Consents and Approvals. Each Seller has all
necessary corporate power and authority to execute, deliver and perform its
obligations under this Agreement, and consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by Sellers,
and the consummation by Sellers of the transactions contemplated hereby, have
been duly authorized prior to the execution of this Agreement by all requisite
corporate action on the part of Sellers, and this Agreement constitutes a valid
and binding obligation of each Seller enforceable against such Seller in
accordance with its terms. No consent, approval or authorization of or
designation, declaration or filing with any third party or governmental
authority (other than filings of the documents described in Section 2.4 (Closing
Deliveries)) on the part of Sellers are required in connection with the valid
execution, delivery and
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performance by Sellers of this Agreement, and the consummation by Sellers of the
transactions contemplated hereby.
3.3. FTP Canada Financial Statements.
(a) Financials Statements. FTP Canada has delivered to Verity
US its unaudited statement of operations for each of the years ended December
31, 1995 and December 31, 1996, its unaudited balance sheets as of December 31,
1995 and December 31, 1996 and its balance sheet as of April 30, 1997 and the
related statement of operations for the four (4) months then ended, all of which
are attached as Exhibit M (Financial Statements) (collectively, the "Financial
Statements"), in each case with such adjustments as FTP Canada has determined
are appropriate. To the Sellers' knowledge, the books and records of FTP Canada
upon which the Financial Statements are based reflect all material transactions
of FTP Canada. All Financial Statements delivered to Verity US were prepared in
all material respects in accordance with industry practices for accounting for
operations of immaterial subsidiaries and generally accepted accounting
principles consistently applied throughout the periods indicated, except that
the Financial Statements: (i) are subject to normal year end audit and
adjustments; (ii) do not contain footnotes required by generally accepted
accounting principles; and (iii) were prepared on a cash (and not an accrual)
basis with respect to tax matters. The Financial Statements fairly present in
all material respects the financial position of FTP Canada at the dates thereof
and the results of operations of FTP Canada, including all material liabilities
of FTP Canada required to be reflected in the Financial Statements by generally
accepted accounting principles and subject to the exceptions in clauses (i)
through (iii) of the preceding sentence, for the periods covered thereby. For
the purpose of this Section 3.3(a) only, "material" means that the Financial
Statements do not contain any inaccuracy, understatement or overstatement of
more than US$175,000 for each of the periods covered thereby. The Sellers make
no representation regarding (i) the appropriateness or sufficiency of any of the
Financial Statements for purposes of filing with or satisfying any requirements
of the United States Securities and Exchange Commission, the Securities Act of
1933, the Securities Exchange Act of 1934 or the rules and regulations
thereunder or (ii) the adequacy or sufficiency of any adjustments made in any of
the Financial Statements.
(b) Absence of Undisclosed Liabilities. Except for such claims,
debts and liabilities as are reflected in the Financial Statements or Sellers'
Disclosure Schedule, FTP Canada does not have any outstanding indebtedness and
is not subject to any claims or liabilities, accrued, absolute, contingent or
otherwise, other than trade or business obligations incurred in the ordinary
course of business since April 30, 1997, in amounts usual and normal, both
individually and in the aggregate, for FTP Canada. There are no liabilities of
FTP US with respect to the Assets except as described herein or in Sellers'
Disclosure Schedule.
(c) Absence of Certain Changes. Since April 30, 1997, there has
not been (i) any change in the assets, liabilities, financial condition or
operations of FTP Canada from that reflected in the Financial Statements other
than changes in the ordinary course of business, none of which individually or
in the aggregate have had an adverse effect on such assets, liabilities,
financial condition or operations of FTP Canada; (ii) any damage, destruction or
loss
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whether or not covered by insurance adversely affecting the Assets or the
business of Sellers relating to the Assets; (iii) any mortgage, pledge or
subjection to lien, charge or encumbrance of any kind on any of the Assets; (iv)
any sale, transfer or assignment of any Assets, including any Proprietary Rights
or other intangible assets, except (A) in the ordinary course of business; (B)
pursuant to any of the FTP US Contracts (or FTP Canada Contracts, as the case
may be) included in the Assets; or (C) as permitted by Section 5.2 (Conduct of
Business); (v) any amendment or termination of any FTP US Contracts (or FTP
Canada Contracts, as the case may be), except in the ordinary course of
business; (vi) any issuance of securities, rights to purchase securities or any
agreement concerning securities of FTP Canada; (vii) any amendment of the
charter documents of FTP Canada; or (viii) any other event or condition of any
character adversely affecting the Assets or the business of either Seller
relating to the Assets.
(d) KEYview Revenues. The schedule setting forth revenues of
FTP US and FTP Canada (if any) derived from all licensing and service revenues
of the KEYview Products for the year ended December 31, 1996, delivered by FTP
US to Verity US, is correct and complete in all material respects. For the
purposes of the foregoing representation only, "material" means that the
schedule described in the foregoing sentence does not contain any inaccuracy,
understatement or overstatement of more than US $175,000. The schedule setting
forth outstanding accounts receivable of FTP US arising from sales, licensing
and distribution of the KEYview Products as of May 1, 1997, delivered by FTP US
to Verity US, is correct and complete in all material respects. For the purposes
of the foregoing representation only, "material" means that the schedule
described in the foregoing sentence does not contain any inaccuracy,
understatement or overstatement of more than US$60,000.
3.4. Business Authorizations. Other than those included in the Assets,
no governmental authorizations, permits or approvals are necessary to enable
Buyers to operate FTP Canada's business and FTP US' business relating to the
Assets after the Closing substantially as such business was operated by FTP
Canada (or FTP US, as the case may be) prior to the Closing.
3.5. Title to FTP Canada Assets. FTP Canada has good and defensible
title to all of the FTP Canada Assets owned by FTP Canada, all of the FTP Canada
Assets are free and clear of restrictions on or conditions to transfer or
assignment and, at the Closing, FTP Canada will sell, convey, assign, transfer
and deliver to Buyers good and defensible title and all of FTP Canada's
worldwide right, title and interest in and to all of the FTP Canada Assets that
are owned by FTP Canada, free and clear of any mortgages, liens, pledges,
encumbrances, claims, conditions and restrictions, of any nature whatsoever,
direct or indirect, whether accrued, absolute contingent or otherwise. All of
the tangible FTP Canada Assets are located at its place of business in Calgary,
Canada. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE FTP CANADA ASSETS ARE
PROVIDED AS IS, AND FTP CANADA HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS, IMPLIED
OR STATUTORY, WITH RESPECT TO THE CONDITION OR PERFORMANCE OF SUCH ASSETS,
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
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3.6. Equipment and Other Tangible Assets. All material tangible
personal property, including machinery and equipment, included in the FTP Canada
Assets and currently used by FTP Canada in the operation of its business is, and
at the Closing Date will be, in reasonably good operating condition and repair,
ordinary wear and tear and routine maintenance excepted.
3.7. Taxes. Except, in the case of FTP US, where the failure to do so
would not have an adverse effect on the Assets, each Seller has timely filed
within the time period for filing or any extension granted with respect thereto
all federal, state, provincial, local and other returns and reports relating to
any and all taxes or any other governmental charges, obligations or fees for
taxes and any related interest or penalties ("Tax" or "Taxes") required to be
filed by it and such returns and reports are true and correct. FTP US is a
non-resident of Canada within the meaning of the Income Tax Act (Canada). FTP
Canada is not a non-resident of Canada within the meaning of the Income Tax Act
(Canada) and FTP Canada has paid all Taxes, if any, shown to be due and payable
on said returns and reports and has withheld with respect to employees all
Canadian and all other countries' applicable federal, state, province and local
income Taxes, provincial health insurance Taxes, and other Taxes required to be
withheld and has timely paid all sales, use and similar Taxes. No income, sales,
use or similar Tax return or report of FTP Canada has been examined or audited
by the Canadian taxing authorities, the U.S. Internal Revenue Service or any
other country's federal, state or local taxing authority and there are no
pending or threatened audits, examinations, assessments, asserted deficiencies
or claims for additional Taxes due from FTP Canada. There are no liens or
similar encumbrances relating to or attributable to Taxes on the Assets, other
than liens for Taxes not yet due. After giving effect to the consummation of the
transactions contemplated hereby, the Assets will not be subject to, nor will
Buyers have, any liability in respect of any Taxes arising from or relating to,
the ownership, possession, operation or use of the Assets by Sellers, or the
operation of the business of Sellers related to the Assets, prior to the
Closing.
3.8. Proprietary Rights.
(a) Ownership; Infringement. Each Seller owns all right, title
and interest in and to, or has valid and sufficient licenses in, all Proprietary
Rights (as defined in Exhibit A (Assets)) used in that portion of Sellers'
respective businesses related to the KEYview Products conducted as of the date
hereof, free and clear of all liens, claims and encumbrances (including without
limitation distribution rights). The foregoing representation as it relates to
Third Party Technology (as defined below) is limited to each Seller's interest
pursuant to the Third Party Licenses (as defined below), all of which are valid
and enforceable and in full force and effect. Upon assignment to Verity US of
FTP US' right, title and interest under the Third Party Licenses that are
included in the FTP US Contracts, Verity US shall have all rights to such Third
Party Technology which had been granted to each Seller pursuant to such Third
Party Licenses. Sellers represent and warrant that Sellers' Disclosure Schedule
lists (i) all registered Copyrights (as defined in Exhibit A (Assets)); (ii) all
registered Industrial Designs (as defined in Exhibit A (Assets)); (iii) all
issued or pending United States, Canadian and foreign patents of FTP US included
in the Patent Rights (as defined in Exhibit A (Assets)); (iv) all Trade Rights
that are
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registered or with respect to which an application for registration has been
filed and all common law Trade Rights (as defined in Exhibit A (Assets)); (v) a
list of all licenses and other agreements relating to any of the Proprietary
Rights; and (vi) a list of all licenses and other agreements with third parties
the "Third Party Licenses") relating to any software, technology, know-how or
processes of third parties that are used in or are substantially related to
KEYview Products (such software, technology, know-how and processes are
collectively referred to as the "Third Party Technology"). The Proprietary
Rights are valid and in full force and effect and consummation of the
transactions contemplated hereby will not alter or impair any such rights. No
claims have been asserted against either Seller by any person: (i) challenging a
Seller's use or distribution of any of the Proprietary Rights; (ii) challenging
a Seller's use or distribution of the KEYpak technology under the ANE Agreement
referenced in Sellers' Disclosure Schedule (the "ANE Agreement") (which
agreement is being assigned to Verity US); or (iii) related to, challenging or
questioning the validity, enforceability or effectiveness of any Third Party
Licenses. To each Seller's knowledge, there is no valid basis for any claim of
the type specified in the immediately preceding sentence which could have an
adverse effect on Sellers' respective businesses relating to the Assets. None of
the Assets, including the Proprietary Rights, used by each Seller in the portion
of their business related to the Assets as currently conducted infringes on the
rights of, or constitutes misappropriation of, any proprietary information or
intangible property right of any third person or entity, including without
limitation, any patent, trade secret, copyright, trademark or trade name. None
of Keyword Office Technologies, Ltd., any of its affiliates nor any of their
respective officers, directors or shareholders retained any rights whatsoever
with respect to the FTP US Technology or other Proprietary Rights acquired by
FTP US from such entities pursuant to the Asset Purchase Agreement dated as of
March 1, 1995. FTP US will sell, convey, assign, transfer and deliver to Verity
US good and marketable title and all the Proprietary Rights, free and clear of
any mortgages, liens, pledges, encumbrances, claims, conditions and
restrictions, of any nature whatsoever, direct or indirect, whether accrued,
absolute contingent or otherwise.
(b) Third Party Rights. Neither Seller is a party to any
agreement pursuant to which any third party has any right to manufacture,
reproduce, distribute, market or exploit any of the FTP US Technology or any
adaptations, translations, or derivative works based on the FTP US Technology or
any portion thereof. Except with respect to the rights of third parties to any
Third Party Technology, no third party has rights to manufacture, reproduce,
distribute, market or exploit any works or materials of any portion of the FTP
US Technology if such portion of the FTP US Technology constitutes a "derivative
work" (as that term is defined in the United States Copyright Act, Title 17,
U.S.C. Section 101) of an underlying work of authorship.
(c) Development. All designs, drawings, specifications, source
code, object code, documentation, flow charts and diagrams incorporating,
embodying or reflecting any of the FTP US Technology at any stage of their
development were written, developed and created solely and exclusively by
employees of either or both Sellers without the assistance of any third party or
entity or were created by third parties who assigned ownership of their rights
to FTP US (or FTP US' predecessor in interest with respect to the FTP US
Technology) pursuant to valid and enforceable consultant confidentiality and
invention assignment agreements. To the extent
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that FTP Canada has developed technology, know-how or other intellectual
property related to the FTP US Technology, all such technology, know-how or
other intellectual property rights have been assigned by it to FTP US and
neither FTP Canada nor any of its employees or contractors retain any rights
whatsoever therein. Neither Seller has any obligation to compensate any person
or entity for the development, use, sale or exploitation of the FTP US
Technology. Neither Seller, nor any employee, contractor or agent of any Seller
has (i) developed or assisted in the development of enhancements of the FTP US
Technology except for enhancements included in the FTP US Technology as
delivered to Verity US pursuant to this Agreement or (ii) assisted in the
development by any third party of any computer program based on the FTP US
Technology or any part thereof. Each Seller has at all times used commercially
reasonable efforts to treat the FTP US Technology as containing trade secrets
and has not disclosed or otherwise dealt with such items in such a manner as to
cause the loss of such trade secrets by release into the public domain,
including without limitation, the use of confidentiality agreements with all of
its employees having access to the FTP US Technology source code and the use of
licenses with all individuals or entities provided access to the FTP US
Technology object code (including that included in the KEYview Products)
containing provisions restricting copying and prohibiting decompiling or
disassembly of the FTP US Technology or KEYview Products.
(d) Employees. Given the nature of the business related to the
Assets conducted now or in the past by either Seller, no employee of either
Seller is in violation of any term of any employment contract, patent disclosure
agreement or any other contract or agreement with respect to (i) the Assets or
(ii) the relationship of any such employee with Seller or, to the best of
Seller's knowledge, any other party.
(e) Product Liability. No product liability or warranty claims
related to the Assets have been communicated to or threatened against either
Seller, nor to Sellers' knowledge, is there any specific situation, set of facts
or occurrence that provides a basis for such claim. The value of all KEYview
Products held by FTP US distributors for resale that are subject to a right of
return by such distributors does not exceed US$50,000 (based on the price paid
by such distributors to FTP US therefor) in the aggregate. Sellers have
provided, or will provide prior to Closing, to Verity US an accurate list of all
errors or "bugs" in KEYview Products which are contained in the computer
databases which Sellers maintain for the purpose of tracking errors and "bugs"
in the software included in the Assets.
3.9. Litigation. There is no claim, action, proceeding or
investigation pending or, to the knowledge of each Seller, threatened (a)
against or by FTP Canada, (b) against or by FTP US and involving the Assets, or
(c) which questions or challenges the validity of this Agreement or any action
taken by a Seller pursuant to this Agreement or in connection with the
transactions contemplated hereby; and neither Seller knows of any valid basis
for any such claim, action, proceeding or investigation. Neither Seller is
subject to any judgment, order or decree entered in any lawsuit or proceeding
which has had or may have an adverse effect on its portion of business related
to the Assets.
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3.10. Inventories and Manufacturing Supplies. All KEYview Product
inventories and the other materials described in Section H of Part I in Exhibit
A (Assets), if any, will be included in the FTP US Assets as of the Closing.
3.11. Contracts, Commitments and Agreements. Part I and Part II of
Exhibit A (Assets) of this Agreement lists all contracts, commitments and
agreements of Sellers included in the Assets other than: (i) any outstanding
purchase orders relating to sales of KEYview Products by FTP US; (ii) any
outstanding purchase order relating to items purchased or to be purchased by FTP
Canada or any contract of FTP Canada if such purchase order or contract has a
value of less than US$1,000 to FTP Canada and was issued in the normal course of
business; or (iii) contracts listed on Exhibits to this Agreement other than
Exhibit A (Assets). Although not listed in Part I and Part II of Exhibit A
(Assets), the parties agree that the items in clauses (i), (ii) and (iii) of the
preceding sentence shall be included in the Assets, except as otherwise
expressly provided in Sellers' Disclosure Schedule. Other than the Assets, there
are no other assets, tangible or intangible, used in the development of the
KEYview Products. Each Seller has performed in all aspects all obligations
required to be performed by such Seller on or before the Closing under any and
all such agreements listed in Exhibit A (Assets) to which it is a party or to
which any of its property or assets is subject, and neither it nor, to the best
of its knowledge, any other party thereto is in default under any such agreement
and all such agreements are in full force and effect. The assignment to Buyers
of all of Sellers' rights and obligations under such agreements listed in
Exhibit A (Assets) and the other transactions contemplated by this Agreement
will not be a basis for any party to any such agreement to terminate that
agreement or alter the basis on which it will be doing business with Buyers, as
assignees from Sellers, under that agreement.
3.12. Compliance with Laws. Neither Seller is in violation of any
Canadian or any U.S. federal, state, provincial or local statute, law, rule or
regulations with respect to the Assets. Each Seller has obtained all
governmental licenses, orders, approvals, and authorizations required in
connection with the conduct of its business as it relates to the Assets.
3.13. No Breach or Violation. FTP Canada is not in violation of any
term of its charter documents, or in violation of any term of any mortgage,
indenture, contract, agreement, instrument, judgment, decree or order applicable
to FTP Canada or to which it is a party. The execution, delivery and performance
of this Agreement by Sellers, and the consummation by Sellers of the
transactions contemplated hereby, will not result in or constitute any of the
following: (i) a default, breach or violation or an event that, with notice or
lapse of time or both, would be a default, breach or violation of the charter
documents of Sellers or any agreement, instrument or arrangement to which a
Seller is a party or by which Sellers or the Assets are bound; (ii) the creation
of any mortgage, pledge, lien, encumbrance or charge upon any of the Assets;
(iii) the acceleration of either Seller's performance pursuant to any applicable
mortgage, indenture, contract, agreement, instrument; and (iv) to the best
knowledge of Sellers, the violation of any applicable law, ordinance, rule,
regulation, judgment, order or decree of any court or other governmental body,
department, instrumentality, agency or subdivision having, asserting or claiming
jurisdiction.
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3.14. Complete Copies of Materials. Sellers have delivered to or made
available for inspection by Buyers true and complete copies of each contract,
agreement, license, lease and similar document (or summaries of same) referred
to in any Exhibit hereunder or included in the Assets.
3.15. Environmental Matters. Each Seller has conducted and is
conducting its business as it relates to the Assets in compliance with all
applicable substantive environmental laws. In addition: (i) there are at the
date hereof no pending or, to the best knowledge of Sellers, threatened actions
by any governmental authority or other person relating, directly or indirectly,
to the release of hazardous materials on, at or mitigating to or from the
premises currently occupied by FTP Canada or to any violation of any
environmental laws with respect to any of the Assets; (ii) all environmental
notices, permits or similar authorizations, if any, required to be obtained or
filed in connection with the conduct by each Seller of its business as it
relates to the Assets, including, without limitation, treatment, storage,
disposal or release of hazardous materials or solid waste into the environment,
have been duly obtained or filed, are in full force and effect; and (iii) there
are no obligations or liabilities, whether absolute, contingent or otherwise and
whether due or to become due, of any Seller with respect to the clean-up of the
presence or release of hazardous materials into the premises currently occupied
by FTP Canada. Buyers agree that no violation or breach of any of the foregoing
representations shall be deemed to exist as a result of the use by Sellers of
normal types and quantities of hazardous materials typically used in connection
with general administrative and office purposes.
3.16. Employee Matters. FTP Canada is not a party to any collective
bargaining agreements. FTP Canada has withheld all amounts required by any law,
contract, or agreement to be withheld from the wages or other compensation or
benefits of all the employees of FTP Canada and is not liable for any arrears of
wages or penalties for failure to comply with any of the foregoing. Sellers are
not now engaged in any unfair labor practice or prohibited practice within the
meaning of the Alberta Labor Relations Code or any other applicable law or
regulation, with respect to the employees of FTP Canada. There are no pending
unfair labor practice charges or discrimination complaints by any FTP Canada
employee relating to race, color, national origin, sex, sexual preference,
religion, age, marital status or handicap against any Seller, nor to the best
knowledge of Sellers, does any basis therefor exist. Sellers' Disclosure
Schedule sets forth the current annual salary for each Employee. FTP has not
agreed to increase the salary or other compensation payable to or to become
payable to any such Employees, or declared, or committed to pay, any bonus or
other additional salary or cash compensation to any such Employee that has not
been paid.
3.17. Employee Benefit Plans, Etc. FTP Canada has not maintained or
contributed to any "pension plan" as defined in the Employment Pension Plans Act
(Canada) or any "employee pension plan" as defined in Section 3(2) of ERISA.
Sellers' Disclosure Schedule lists all (i) "employee benefit plans," as defined
in Section 3 of ERISA, maintained or contributed by any Seller for the benefit
of any Employee; (ii) "employee welfare plans," as defined in Section 3 of
ERISA, maintained or contributed to by any Seller for the benefit of any
Employee and (iii) all employment, compensation and consulting contracts, and
bonus, deferred compensation,
16
excess benefits, pension, retirement, profit sharing, stock bonus, stock option,
stock purchase, life and health insurance, hospitalization, savings, holiday,
vacation, severance pay, sick pay, sick leave, disability, dependent care
assistance, death benefit, tuition refund, service award, company car,
scholarship, relocation, patent awards, fringe benefits and other contract or
practices of any Seller or any of its affiliates providing employee or executive
benefits to any Employee (the items described in the preceding clauses (i), (ii)
and (iii) are collectively referred to herein as "Employee Plans"). Buyers will
not become liable for any present or future benefit under any Employee Plan by
virtue of the transactions contemplated hereby, either under the terms of any
Employee Plan presently or formerly maintained by Sellers or any of their
affiliates or by operation of any applicable law, except as provided in Section
5.6 (Offer of Employment).
3.18. Insurance. Each existing insurance policy held by either Seller
relating to the Assets or the Employees is in full force and effect, is with
responsible insurance carriers and is in an amount and scope customary for
companies engaged in business and having assets similar to those of Sellers. All
claims arising under such policies with respect to the Assets or the FTP Canada
employees and all premiums that are due and payable thereunder have been paid in
full.
3.19. Workers Compensation Act. FTP Canada has obtained an exemption
under Section 2 of the Workers Compensation Act (Alberta) Regulation 427/81
pursuant to which the business carried on by FTP Canada is exempt from the
application of the Workers Compensation Act (Alberta) and has otherwise paid any
amounts that were, or may have become, due to the Employees under such law.
4. Representations and Warranties of Buyers. Buyers, jointly and
severally, hereby represent and warrant to Sellers that as of the date of this
Agreement and as of the Closing Date:
4.1. Organization and Good Standing. Verity US is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and is qualified to do business in the State of California. Verity
Canada is a corporation duly organized and validly existing under the laws of
the Yukon Territories, Canada and is duly qualified or licensed to do business
as a corporation and is registered as a corporation which is validly subsisting
in (a) the Province of Alberta, Canada and (b) each other jurisdiction for which
qualification or registration is required unless the absence of qualification or
registration would not have a material adverse effect on Verity Canada. Verity
Canada will be registered on or before the Closing for the purposes of the goods
and services tax pursuant to Part IX of the Excise Tax Act (Canada).
4.2. Authorization; Consents and Approvals. Each Buyer has all necessary
corporate power and authority to execute, deliver and perform its obligations
under this Agreement, and consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by Buyers, and the
consummation by Buyers of the transactions contemplated hereby, have been duly
authorized prior to the execution of this Agreement by all requisite corporate
action on the part of Buyers, and this Agreement constitutes a valid and binding
obligation of each Buyer enforceable against such Buyer in accordance with its
terms. No
17
consent, approval or authorization of or designation, declaration or filing with
any third party or governmental authority (other than filings of the documents
described in Section 2.4 (Closing Deliveries)) on the part of Buyers are
required in connection with the valid execution, delivery and performance by
Buyers of this Agreement, and the consummation by Buyers of the transactions
contemplated hereby.
4.3. No Breach or Violation. The execution, delivery and performance of
this Agreement by Buyers, and the consummation by Buyers of the transactions
contemplated hereby, will not result in or constitute any of the following: (i)
a default, breach or violation or an event that, with notice or lapse of time or
both, would be a default, breach or violation of the charter documents of Buyers
or any agreement, instrument or arrangement to which a Buyer is a party or by
which Buyers or their property are bound or (ii) to the best knowledge of
Buyers, the violation of any applicable law, ordinance, rule, regulation,
judgment, order or decree of any court or other governmental body, department,
instrumentality, agency or subdivision having, asserting, or claiming
jurisdiction.
4.4. Litigation. There is no claim, action, proceeding or investigation
pending or, to the knowledge of each Buyer, threatened (a) against or by Verity
Canada or (b) which questions or challenges the validity of this Agreement or
any action taken by a Buyer pursuant to this Agreement or in connection with the
transactions contemplated hereby; and neither Buyer knows or has any reason to
know of any valid basis for any such claim, action, proceeding or investigation.
5. Covenants.
5.1. Investigation by Verity. At such times prior to the Closing as
may be reasonably requested by either Buyer, each Seller shall make available to
each Buyer and their employees, agents and representatives the charter documents
and minutes required pursuant to Section 3.1 (Organization and Good Standing),
all other documents listed on any exhibit or schedule to this Agreement and all
other documents reasonably requested by a Buyer.
5.2. Conduct of Business. From and after the Effective Date and until
the Closing Date or the termination of this Agreement, whichever shall first
occur, without the prior written approval of Verity US, which shall not be
unreasonably withheld, (i) neither Seller will engage in any activities or
transactions which shall be outside the ordinary course of business as it
relates to the Assets; (ii) each Seller will use all commercially reasonable
efforts to preserve the existing licenses, franchises, rights and privileges
pertinent to that portion of its business which relates to the Assets; (iii) to
the extent related to the Assets, each Seller will use all commercially
reasonable efforts to preserve intact its business organization, preserve its
relationships with its suppliers, customers and others with whom it deals,
continue to develop its business and, subject to Section 5.6 (Offer of
Employment), keep available its present Employees and consultants; (iv) neither
Seller will sell, encumber, pledge, license or otherwise transfer or assign any
of the Assets, including all Proprietary Rights, or enter into any agreement
with respect to such a transaction (provided, however, that this Section shall
not prohibit either Seller from continuing its current
18
practice of distributing the current KEYview Products (together with upgrades)
in the ordinary course to corporate end users, through its current agreements,
or through electronic or retail distribution, but neither Seller shall, after
the Effective Date, license source code included in the Assets to any party,
enter into technology development or consulting agreements with respect to the
Assets or enter into any OEM or similar agreements with respect to the Assets,
except in each case with the prior written consent of Verity US, which consent
shall not be withheld unreasonably); (v) FTP US will not sell any interest in
FTP Canada, or enter into any agreement with respect to such a transaction; and
(vi) FTP Canada will maintain itself at all times as a corporation in good
standing under any applicable local jurisdictions.
5.3. Cooperation. From and after the Effective Date and until the
Closing or the termination of this Agreement, whichever shall first occur, each
party will take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on such party with respect to the
consummation of the transactions contemplated by this Agreement and will
promptly cooperate with and furnish information to the other party in connection
with any such requirements. On or before the Closing Date, each party will use
all commercially reasonable efforts to obtain (and will cooperate with each
other in obtaining) any consent, approval, order or authorization from, and will
use all commercially reasonable efforts to make any registration, declaration or
other filing with, any governmental entity, domestic or foreign, any contracting
party or any other person, required to be obtained or made by either Sellers or
Buyers in connection with the taking of any action contemplated by this
Agreement. Further, Sellers agree to provide to Buyers all assistance, at
Buyers' sole cost and expense, as Verity US may reasonably request with respect
to any audits or filings required to be made by Verity US with respect to its
acquisition of the Assets pursuant to the rules and regulations of the United
States Securities and Exchange Commission, the Securities Act of 1933, the
Securities Exchange Act of 1934 or any applicable rules or regulations
thereunder. Upon request of Verity US after the Closing, Sellers agree to ship
to Verity US, at Buyers' sole cost and expense, any and all of the KEYview
Product inventories and the other materials described in Section H of Part I of
Exhibit A (Assets).
5.4. Failure to Obtain Other Consents. In the event that any of the
consents or approvals to the assignment of any FTP US Contracts or FTP Canada
Contracts included in the Assets is not obtained by Sellers prior to the
Closing, Buyers shall have the option to:
(a) in Verity US' discretion, require the applicable Seller to
hold the FTP US Contracts (or FTP Canada Contracts, as the case may be) in
question in trust for Buyers, on terms satisfactory to FTP US and Verity US
pursuant to which one or both Buyers shall, as such Seller's subcontractor,
perform all the obligations of such Seller and indemnify, defend, and hold
Sellers harmless against all claims, demands, losses, liabilities, costs and
expenses arising from Buyers' acts or omissions in performing under such
contract(s), instrument(s) or agreement(s); or
(b) in Verity US' discretion, require Sellers to use all
reasonable efforts to procure the cancellation of the relevant FTP US Contracts
(or FTP Canada Contracts, as the
19
case may be) and to enable Buyers to enter into substitute arrangements with the
other party or parties thereto, provided that Verity US indemnifies, defends,
and hold Sellers harmless against all claims, demands, losses, liabilities,
costs and expenses arising from termination of the FTP US Contracts (or FTP
Canada Contracts, as the case may be) in question; or
(c) if either Seller fails to comply with its covenant set
forth in the second sentence of Section 5.3 (Cooperation), but Buyers have so
complied, obtain from Sellers the assignment of and for Buyers to assume the
liabilities under the FTP US Contracts (or FTP Canada Contracts, as the case may
be) in question, notwithstanding the lack of consent for the assignment;
provided that FTP US shall indemnify, defend, and hold Buyers harmless against
all claims, demands, losses, liabilities, costs and expenses arising from the
assignment of such FTP US Contracts (or FTP Canada Contracts, as the case may
be) to Buyers without consent; or
(d) if both Sellers and Buyers fail to comply with their
covenants set forth in the second sentence of Section 5.3 (Cooperation), subject
to FTP US' prior written approval, which may be withheld for any reason or no
reason, in FTP US' sole discretion, obtain from Sellers the assignment of and
for Buyers to assume the liabilities under the FTP US Contracts (or FTP Canada
Contracts, as the case may be) in question, notwithstanding the lack of consent
for the assignment.
5.5. Accounts Receivable. From and after the Closing, FTP US will
direct all payments received under the Accounts Receivable (as defined in
Exhibit A (Assets)) to Verity US and FTP US will use all commercially reasonable
efforts to cooperate fully at either Buyer's request, at the sole cost and
expense of Verity US, to take such action as Verity US may reasonably request to
help Verity US collect all of the Accounts Receivable (including but not limited
to providing Verity US with all reasonably requested information regarding such
Accounts Receivable). Exercisable at Verity US' option, Verity US shall have
access to FTP US' records related to the Accounts Receivable in order to
facilitate the collection thereof, subject to Verity US' execution of a
confidentiality agreement in a form reasonably acceptable to FTP US, and that
such access shall be during normal business hours, upon reasonable notice, so as
not to interfere with FTP US' business and at Verity US' sole expense. In the
event that FTP US receives any payments after the Closing under any Accounts
Receivable, FTP US will turn over all such payments to Verity US promptly after
receipt thereof. Sellers agree that from and after the Effective Date, neither
of them shall engage in any activities outside the ordinary course of business
in the collection of Accounts Receivable nor will either Seller solicit or
encourage the early payment (i.e. in time periods other than as originally
agreed with customers) of any Accounts Receivable from payors thereunder through
discounts, incentives, or otherwise.
5.6. Offer of Employment.
(a) FTP Canada hereby represents that the Employees are
employees of FTP Canada as of the date hereof. Verity Canada agrees that it
shall, no later than five (5) business days immediately preceding the Closing
Date, offer (in writing) employment to each Employee commencing as of and
contingent upon the consummation of the Closing on
20
substantially similar (or, in the sole discretion of Verity Canada, more
favorable) terms and conditions as exist for the employment of such Employee by
FTP Canada as of the Effective Date, including credit for each such Employee's
accrued vacation for the calendar year 1997 as of the date of the Closing. Such
five (5) day period may be shortened to four (4) days in Buyers' sole discretion
provided that Buyers shall indemnify Sellers against all claims, demands,
losses, liabilities, costs and expenses resulting from the shortening of such
period. Verity Canada shall afford Sellers a reasonable opportunity to review
each such offer prior to the delivery thereof to each such Employee, and each
such offer shall be in form and substance reasonably satisfactory to Sellers.
Sellers shall render all reasonable assistance to encourage each such Employee
to accept such offer in accordance with its terms. Each such Employee who
accepts such offer of employment by Verity Canada is referred to herein as a
"Continuing Employee."
(b) FTP US undertakes to indemnify and hold harmless each Buyer
from and against:
(i) any claims, demands, losses, liabilities, costs and
expenses related to claims by an employee or former employee of FTP Canada
(other than a Continuing Employee) in respect of redundancy or unfair dismissal
arising from the employee or former employee having ceased for any reason to be
employed by FTP Canada at or prior to Closing, or having ceased to be employed
by FTP Canada pursuant to a notice of termination served at or prior to Closing;
provided, however, that to the extent that FTP Canada provides notice, pay in
lieu of notice, termination pay, severance pay or compensation for loss of
benefits (collectively, "Severance Pay") to any FTP Canada employee who is not a
Continuing Employee, Buyers will pay to FTP Canada an aggregate of up to
US$62,500 towards such reasonably documented Severance Pay by FTP Canada
promptly upon FTP Canada's request; and
(ii) all claims, demands, losses, liabilities, costs and
expenses incurred by Verity Canada, other than for accrued vacation and vacation
pay for 1997, in connection with or as a result of any liability or obligation
of FTP Canada to any of the Continuing Employees in relation to their employment
with FTP Canada prior to the Closing, except to the extent that Verity US is
required to indemnify Sellers in respect thereof pursuant to Section 5.6(g).
(c) Sellers will ensure that the Continuing Employees will have
received all entitlements due at the Closing Date or payable with respect to any
period ending at or prior to the Closing Date, including all bonuses, deferred
or otherwise, but excluding accrued vacation and vacation pay, the dollar
amounts of which as of April 30, 1997 are set forth in Exhibit E (Employees).
(d) Without prejudice to any rights of either Buyer in respect
of non-disclosure by the Sellers under Section 5.9 (Confidentiality), Sellers
will at all times hereafter, at the sole cost and expense of Buyers, provide to
the authorized representatives of Verity Canada in relation to any of the
Continuing Employees such information or documents as Verity Canada may
reasonably require relating to the terms and conditions of employment, pension
and life
21
insurance arrangements, health, welfare or any other matter concerning such
employee's employment by FTP Canada in the period prior to the Closing Date.
(e) This Section 5.6 represents the total obligations of Buyers
to Sellers in respect of employees of FTP Canada and in particular, but without
limitation, Buyers shall have no liability to Sellers for or in respect of any
employees of FTP Canada who are not Continuing Employees, except to the extent
expressly provided for in Section 5.6(b).
(f) Neither Buyer shall (and shall ensure that no affiliate of
either Buyer shall), for a period of one (1) year commencing on the Effective
Date, directly or indirectly employ, offer to employ or otherwise solicit the
employment of any of the current employees of FTP Canada who are not Continuing
Employees, except in accordance with this Agreement. Neither Seller shall (and
shall ensure that no affiliate of either Seller shall), without the prior
written consent of Verity US, for a period of one (1) year commencing on the
Closing Date, directly or indirectly employ, offer to employ or otherwise
solicit the employment of any person (whether or not they are a Continuing
Employee) who is in the employment of Verity US, Verity Canada or their
affiliates, at the relevant time.
(g) Buyers shall indemnify Sellers for all claims, demands,
losses, costs, liabilities and expenses incurred by Sellers with respect to
Severance Pay payable to any Continuing Employee by reason of the termination of
such Continuing Employee's employment on or after the Closing Date or as a
result of the transactions contemplated hereby.
5.7. Bulk Sales Laws. Sellers shall prepare and make on a timely basis
all filings and publications required to effect compliance on or before the
Closing Date with the provisions of any so-called bulk transfer laws of any
applicable jurisdiction in connection with the sale of the Assets to Buyers.
Buyers will cooperate with Sellers and, at Sellers' request, will execute all
such required filings and documents in connection with Sellers' efforts to
effect such compliance. FTP US will indemnify and hold harmless Buyers against
any and all liabilities which may be asserted by third parties against either or
both Buyers as a result of any noncompliance with any bulk transfer law
applicable to the transactions contemplated by this Agreement.
5.8. No Public Announcement. Each party agrees that, except as
required by law, it will not make any public announcement concerning the matters
set forth in this Agreement (other than to their respective employees and
professional advisors) without the prior written consent of the other parties,
which consent will not be unreasonably withheld.
5.9 Confidentiality. For the purpose of assuring to Buyers the full
benefit of the Assets and associated goodwill, the Sellers, jointly and
severally, hereby agree with Buyers in further consideration of this Agreement,
as a separate and independent agreement, that it and they will not and will use
their best efforts to ensure that no director, officer or employee of the
Sellers will:
22
(a) (i) at any time during the three (3) year period following
the Closing with respect to any confidential information concerning the
business, accounts, financial or contractual arrangements or other dealings,
transactions or affairs relating to the Assets which may be within or which may
come to its knowledge and (ii) in perpetuity after the Closing with respect to
the FTP US Technology, divulge or communicate any of the foregoing to any person
other than to (A) directors, officers or employees or professional advisors of
the Sellers whose position makes it necessary to know the same; (B) Buyers and
their officers, employees and professional advisors; or (C) as necessary and
permitted by the KEYview License; or
(b) for the period of three (3) years after the Closing, either
on its own account (or that of any of them) or in conjunction with or on behalf
of any person or company with the use of any Competitive Products, solicit or
entice away from Buyers any person who, to its knowledge is, now or has been
during the one (1) year preceding the date hereof, a customer or supplier of
Sellers with respect to the Assets.
Buyers and Sellers hereby agree that information within the scope of
Section 5.9(a) shall not include any information (a) which is or becomes known
generally to the public (other than as a result of disclosure in violation
hereof by Sellers or any of their employees or affiliates) or (b) which is
independently developed by Sellers after the Closing without violation of this
Agreement or the KEYview License, as evidenced by Sellers' written records
related to such development. Disclosure of any information within the scope of
Section 5.9(a) shall not be precluded if such disclosure is in response to a
valid order of a court or other governmental body or as otherwise required by
law; provided, however, that Sellers shall first have given notice to Buyers and
shall have made a reasonable effort, at Buyers' sole cost and expense, to obtain
a protective order requiring that the information to be disclosed be used only
for the purpose specified in such order and otherwise be treated as confidential
and under seal.
Notwithstanding the foregoing, Sellers may use "residuals" on an
incidental basis in the conduct of Sellers' ordinary and customary course of
business; provided, however, that residuals may not be used to develop or assist
in the development of Competitive Products for a period of three (3) years after
the Closing. For the purposes of this paragraph, "residuals" means information
which may be retained in the memory of persons who have had access to FTP US
Technology and which is (a) related to knowledge and concepts generally
applicable in the computer industry and (b) not solely comprised of information
which is unique or particular to the FTP US Technology; provided, however, that
such information is not the result of the efforts of persons who have refreshed
their recollection, or intentionally memorized such information, with reference
to material which is written, stored in magnetic, electronic or physical form or
other fixed medium in anticipation of or in conjunction with the use of such
information. Sellers represent and warrant that neither of them have encouraged,
and covenant that neither of them will encourage, any employee, agent or
contractor (or those employed by any of the foregoing) to commit to his or her
memory any confidential information pertaining to the Assets so as to reduce it
to a residual for later use. Except for the rights granted under the KEYview
License, (a) nothing in this paragraph shall be deemed to grant either Seller a
license under the Proprietary Rights and (b) nothing herein shall relieve either
Seller of any liability for copyright or patent
23
infringement, misappropriation of trade secrets or any other breach of
confidentiality obligations under this Agreement or the other agreements between
FTP US and Verity US referenced in Section 6.3(b)(i) hereof.
For the purposes of this Section 5.9, "Competitive Products" means
general viewing, filtering and conversion products (excluding, for example, file
transfer products) or text-based search and/or Information Retrieval products
without "substantial value." "Substantial Value" is measured either (i) by lines
of code, whereby at least 80% of the total lines of code in a product is
attributable to functionality which is not general viewing, filtering and
conversion functionality (excluding, for example, file transfer functionality)
or text-based search and/or Information Retrieval functionality or (ii) ultimate
end use, whereby the ultimate use of a product involves only incidental use of
general viewing, filtering and conversion functionality (excluding, for example,
file transfer functionality) or text-based search and/or Information Retrieval
functionality.
5.10. Indemnification.
(a) Indemnity by FTP US.
(i) For a period of two (2) years after the Closing, FTP US
shall indemnify and hold harmless Buyers and each of their officers, directors,
employees and agents (collectively, "Buyer Indemnified Parties") from, against,
for and in respect of any liability, and all costs, amounts paid as judgment or
in settlement, expenses (including reasonable attorneys fees and costs) and
other damages incurred by any such Buyer Indemnified Party arising out of any
claim, suit or proceeding in connection with (i) any actual or alleged breach by
either Seller of any representations, warranties, covenants and agreements by
either such party in this Agreement or (ii) any liability arising out of or
relating to the use, ownership or operation by Sellers of the Assets prior to
the Closing, other than a Liability. Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
(ii) No Buyer Indemnified Party shall be entitled to
indemnification under this Section 5.10 until the aggregate claims against all
Buyer Indemnified Parties together exceed $100,000 in the aggregate, and further
provided that FTP US shall not be liable for indemnification payments in excess
of US$1,300,000 in the aggregate.
(b) Indemnity by Verity US.
(i) For a period of two (2) years after the Closing, Verity
US shall indemnify and hold harmless Sellers and each of their officers,
directors, employees and agents (collectively, "Seller Indemnified Parties")
from, against, for and in respect of any liability, and all costs, amounts paid
as judgment or in settlement, expenses (including reasonable attorneys fees and
costs) and other damages incurred by any such Seller Indemnified Party arising
out of
24
any claim, suit or proceeding, in connection with (i) any actual or alleged
breach by either Buyer of any representations, warranties, covenants and
agreements by either such party in this Agreement; (ii) any Liability; or (iii)
any liability arising out of or relating to the use, ownership or operation by
Buyers of the Assets after the Closing. Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
(ii) No Seller Indemnified Party shall be entitled to
indemnification under this Section 5.10 until the aggregate claims against all
Seller Indemnified Parties together exceed $100,000 in the aggregate, and
further provided that Verity US shall not be liable for indemnification payments
in excess of US$1,300,000 in the aggregate.
5.11. Exclusive Dealing. From the date hereof until the earlier of (i)
the Closing and (ii) the termination of this Agreement, neither Seller, nor any
director, officer, employee or agent thereof, will directly or indirectly (a)
solicit, initiate or encourage submission of proposals or offers from any person
or entity relating to any acquisition, purchase, encumbrance or license of all
or any portion of the Assets (except as permitted by Section 5.2 (Conduct of
Business)), the sale of any equity interest or any right to acquire any equity
interest in FTP Canada or any equity investment, merger, consolidation or
business combination with FTP Canada or (b) participate in any discussions or
negotiations regarding, or furnish to any other person, any non-public
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. Sellers shall promptly notify Verity
US if any such proposal or offer, or any inquiry or contact with any person with
respect thereto, is made, although Sellers shall not be required to disclose the
terms of any such proposal or offer to Verity US.
5.12. ANE Resources. Verity US agrees that prior to the Closing it will
not contact or discuss the ANE Agreement with ANE or disclose to ANE any FTP
"Confidential Information" as defined in the mutual nondisclosure agreement
dated February 10, 1997, which agreement is incorporated herein by reference
(the "Nondisclosure Agreement").
5.13. OEM Agreement. Verity US and FTP US will work together in good
faith to negotiate as soon as commercially practicable a detailed, customary
form of OEM agreement to be applicable from the effective date of such agreement
until (i) the Closing or (ii) if the Closing fails to occur, April 8, 1999. The
OEM Agreement will permit Verity, in part, to incorporate KEYview Products with
Verity products and distribute Verity products incorporating the KEYview
Products.
5.14. Corporate Name. Buyers understand and agree that nothing in this
Agreement confers upon Buyers any rights to or under the name "FTP Software" or
any other trademark or any service xxxx, logo or trade name of FTP, FTP Canada
or any of their affiliates other than those specifically listed in Exhibit A
(Assets) (collectively, the "Marks"). Buyers agree that they will, as soon as
practicable following the Closing, remove by stickering or other
25
reasonable means, to the extent possible, all references to and representations
of any of the Marks from the Assets.
5.15. Reseller Agreements. FTP US agrees to deliver, as promptly as
practicable following the Closing, to each of its resellers under its reseller
agreements providing for the sale of both the KEYview Products and other FTP
products, a notice discontinuing the sale of the KEYview Products under such
reseller agreements, such notice to be mutually satisfactory to FTP US and
Verity US. FTP US agrees to promptly deliver to Verity US any payments received
by either Seller in respect of the sale following the Closing of any of the
KEYview Products pursuant to any such reseller agreements.
5.16. Access to Information by Sellers. Buyers agree to, following the
Closing Date, afford Sellers and their accountants and counsel, during normal
business hours, upon reasonable request and prior written notice to Buyers,
access to financial books and records included in the Assets to the extent such
access is reasonably required by Sellers in anticipation of, or preparation for,
any legal proceedings or financial, tax or audit matters involving Sellers or
any of their affiliates and which is related to either (i) the use or ownership
of the Assets; (ii) operation of business related to the Assets by Sellers; or
(iii) Employee Plans related to, or the employment of any employees of, FTP
Canada, prior to the Closing; provided, however, that any such access shall be
had in a manner so as to not interfere with the normal conduct of the business
of Buyers, is subject to the execution of a written confidentiality agreement in
a form acceptable to Verity US and all costs and expenses associated with such
access (including the provision thereof by Buyers) will be borne solely by
Sellers. Buyers shall not destroy or dispose of any of such records unless
Buyers shall have offered first in writing, at least sixty (60) days prior to
such destruction or disposition, to surrender them to Sellers, subject to the
confidentiality obligations of Section 5.9 (Confidentiality). Buyers further
agree to make available to Sellers, from time to time upon request by a Seller
and at Sellers' expense, the appropriate personnel of Buyers whose assistance or
participation is reasonably required by Sellers in anticipation of, or
preparation for, any legal proceedings or tax or audit matters of the nature
described above, provided, that any such access to personnel shall be had in
such a manner so as to not interfere with normal conduct of the business of
Buyers. Without limiting the generality of the foregoing, Buyers agree to use
all commercially reasonable efforts, at FTP US' sole cost and expense, to assist
Sellers in closing its books with respect to FTP Canada for all periods ending
on or prior to the Closing Date as promptly as possible.
5.17. Xxxxxx License. Upon written notice by Verity US delivered to
FTP US at or prior to the Closing, FTP US shall sell, convey, transfer, assign
and deliver to Verity US all right, title and interest of FTP US in, to and
under that certain Software License Agreement dated August 22, 1996 between FTP
US and Xxxxxx Software, Inc. (the "Xxxxxx License") and Verity US shall acquire
and assume from FTP US all liabilities and obligations of FTP US remaining
unpaid and unperformed on the Closing Date or arising thereafter under the
Xxxxxx License. Notwithstanding anything in this Agreement to the contrary,
Sellers make no representation or warranty regarding the Xxxxxx License or any
technology licensed by FTP US pursuant to the Xxxxxx License, and the Xxxxxx
License and such technology shall not be deemed to be included
26
in the Assets, and Sellers shall have no obligation to indemnify Buyers pursuant
to this Agreement with respect to any liability relating thereto.
5.18. Other Third Party Software. FTP US shall transfer to Verity
Canada all right, title and interest of FTP US in, to and under all copies of
third party software installed on computer hardware included in the FTP Canada
Assets and listed on Attachment 5 to Exhibit A (Assets) and Verity Canada or
Verity US (as determined by Verity US) shall acquire and assume from FTP US all
liabilities and obligations of FTP US with respect thereto. Notwithstanding
anything in this Agreement to the contrary, FTP US makes no representation or
warranty regarding such copies or the licenses pursuant to which such copies are
licensed by FTP US. Such copies shall not be deemed to be included in the
Assets, and FTP US shall have no obligation to indemnify Buyers pursuant to this
Agreement with respect to any liability relating thereto. To the extent
necessary, FTP US will deliver all notices, and use commercially reasonable
efforts to obtain any consents, necessary to effect the transfer of such copies.
6. Survival; Finders; Termination.
6.1. Survival of Representations, Warranties and Covenants. The
representations and warranties of the parties hereto made in this Agreement or
Exhibits hereto, or in any certificate or document delivered by them pursuant
hereto shall survive until the date two years from the Closing irrespective of
any investigation made by Verity US or FTP US. The covenants and agreements of
the parties hereto contained herein shall survive for the periods stated in the
applicable covenant or agreement, of if no period is stated, such covenant or
agreement shall continue indefinitely.
6.2. Brokers and Finders. Each of the Buyers and Sellers warrants and
represents to each of the others that it does not know of any person, firm,
corporation or other entity entitled to or who or which may assert any right to
brokerage commissions, finders' fees or other similar claims for bringing about
or representing it or any of its affiliates in any of the transactions
contemplated hereby.
6.3 Termination.
(a) Termination Events. This Agreement may be terminated
(i) at any time prior to the Closing upon the mutual written consent of Verity
US and FTP US; (ii) at any time after 2:00 p.m. Eastern Time, on June 9, 1997
(the "Outside Date") by either Verity US or FTP US if the Closing is not
consummated by such time or such other date and time as Verity US and FTP US may
agree upon in writing; or (iii) by Verity US at any time prior to the Closing if
an event, fact, circumstance, effect or condition specified in Sections 2.2(f)
(No Adverse Change) or 2.2(g) (No Litigation or Injunctions) exists with respect
to the Assets or if (A) eight or more of the Employees, (B) Xxxxxxx Xxxxxx or
(C) more than two (2) of the other Employees identified as "Key Employees" on
Exhibit E, other than Xxxxxxx Xxxxxx, reject Verity Canada's offer of employment
made pursuant to Section 5.6 (Offer of Employment).
27
(b) Effect of Termination.
(i) In the event of termination of this Agreement by
either Verity US or FTP US pursuant to Section 6.3(a) above, written notice
thereof shall forthwith be given by the terminating party to all of the other
parties hereto specifying the basis for termination and this Agreement shall
thereupon become void and have no effect, with no liability on the part of any
party or its affiliates in respect thereof except as expressly set forth in this
Section 6.3, and each party will return to the others any confidential
information furnished pursuant to this Agreement, the Nondisclosure Agreement,
the Agreement between FTP US and Verity US dated April 8, 1997, as supplemented
by the letter agreement dated April 28, 1997 and the Consulting Agreement
between FTP US and Verity US dated April 30, 1997. Notwithstanding the
foregoing, nothing herein shall relieve any party hereto from any liability
incurred for any breach of this Agreement prior to such termination and the
provisions of this Section and Sections 6.2 (Brokers and Finders), 6.3
(Termination) and 7.9 (Expenses) shall survive any termination of this
Agreement.
(ii) If this Agreement is terminated by Verity US
pursuant to Section 6.3(a)(iii) above, all of the Deposit shall be refunded by
FTP US to Verity US in full upon Verity US' request.
(iii) If Verity US terminates this Agreement pursuant
to Section 6.3(a)(ii) above due to a failure of any of the conditions set forth
in Sections 2.2(d) (Employment Agreements), 2.2(f) (No Adverse Change) or 2.2(g)
(No Litigation or Injunctions) being fulfilled by the Outside Date and such
conditions are not waived by Verity US, all of the Deposit shall be refunded by
FTP US to Verity US in full upon Verity US' request.
(iv) If either Verity US or FTP US terminates this
Agreement pursuant to Section 6.3(a)(ii) above, and either Seller has failed to
act in good faith or use reasonable commercial efforts, but Verity US and Verity
Canada have at all times since April 8, 1997 so acted and used such efforts, to
effect the Closing as soon as practicable, all of the Deposit shall be refunded
by FTP US to Verity US in full upon Verity US' request.
(v) If either Verity US or FTP US terminates this
Agreement pursuant to Section 6.3(a)(ii) above, and Buyers and Sellers all have
at all times since April 8, 1997 acted in good faith and used commercially
reasonable efforts to effect the Closing by the Outside Date, $150,000 of the
Deposit shall be non-refundable and retained by FTP US and the remaining $50,000
shall constitute prepaid royalties paid by Verity US under the OEM Agreement
referenced in Section 5.14 (OEM Agreement), as more particularly provided
therein.
7. Miscellaneous.
7.1. Governing Law. This Agreement shall be governed in all respects
by the laws of the Commonwealth of Massachusetts, as such laws are applied to
agreements between Massachusetts residents entered into and to be performed
entirely within Massachusetts;
28
provided, however, that (a) with respect to matters of law concerning the
internal corporate affairs of any party to this Agreement, the laws of the
jurisdiction of formation of such party shall govern and (b) the provisions of
Section 5.6 (Offer of Employment), to the extent such provisions address local
jurisdictions and local employment issues, respectively, shall be governed by
the applicable laws of Alberta, Canada.
7.2. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and permitted assigns of the parties hereto; provided
however, that none of the parties hereto may assign its obligations or rights
under this Agreement, whether by operation of law or otherwise, without the
prior express written consent of the others.
7.3. Entire Agreement. This Agreement, the exhibits and schedules
hereto, and the other documents delivered pursuant hereto, and the Nondisclosure
Agreement, constitute the full and entire understanding and agreement between
the parties with regard to the subject matter hereof and no party shall be
liable or bound to the other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein. Nothing in
this Agreement, express or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
7.4. Amendment. Any waiver, modification or amendment of this
Agreement, the exhibits or schedules to this Agreement, and the other documents
delivered pursuant hereto shall be effective only if in writing and executed by
Verity US and each Seller.
7.5. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be (i) mailed by first class
mail, registered or certified, return receipt requested, postage prepaid or (ii)
sent by an overnight courier with a national reputation, addressed to the other
party at the address indicated under its signature below, or to such other
address as a party has notified the other parties in writing. Notice shall be
considered to have been received three (3) days following the deposit of the
notice in the mail, or upon receipt if delivered by overnight courier.
7.6. Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
7.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.8. Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party hereto upon any breach
or default of any other party hereto shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of
29
any such breach or default, or any acquiescence therein, or of or in any similar
breach or default thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind or character on the part of any party
hereto of any breach or default under this Agreement, or any waiver of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing and that all
remedies, either under this Agreement, or by law or otherwise afforded to such
party, shall be cumulative and not alternative.
7.9. Expenses. Except as otherwise provided in this Agreement, Buyers
and Sellers shall each bear their own respective expenses and costs, including
legal and accounting fees, incurred in connection with this Agreement and the
transactions contemplated herein.
7.10. Further Assurances. At any time and from time to time following
the Closing, each party agrees to execute such further instruments and documents
and to do such further acts as may be reasonably requested by, and at the sole
cost and expense of, the other party to carry out the transactions contemplated
hereby.
7.11. No Rights Conferred Upon Third Parties. No provisions of this
Agreement are intended or shall be interpreted to provide or create any rights
of any kind in any third party (including, without limitation, any employees of
FTP Canada) unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof shall be personal solely to the parties to this
Agreement.
7.12. Attorneys' Fees. Should any litigation or arbitration be
commenced by any party hereto concerning any provision of this Agreement or the
rights and duties of any person party hereto, then the prevailing party in such
litigation or arbitration shall be entitled, in addition to such other relief as
may be granted, to reasonable attorneys' fees, expert witness expenses, and
other related costs.
30
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement on the day and year first above written.
"FTP US" "Verity US"
FTP Software, Inc. Verity, Inc.
By:______________________ By:_______________________________
Title:___________________ Title:____________________________
Address: 000 Xxxxxxxxxx Xxxxxx, Xxxxx Address: 000 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx, 00000 California 94089
"FTP Canada" "Verity Canada"
FTP Software Canada, Ltd. 14943 Yukon Inc.
By:______________________ By:_______________________________
Title:___________________ Title:____________________________
Address: Address:
c/o FTP Software, Inc., 100 c/o Verity, Inc., 000 Xxxx Xxxxxx,
Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000
Xxxxxxx, Xxxxxxxxxxxxx 00000
31
EXHIBITS
Exhibit No. Description
----------- -----------
A Assets
B Assumed Liabilities
C Instrument of Assumption
D Employees
E Standard Offer Letter
F Key Employee Agreement
G Employee Nondisclosure Agreement
H PGP OEM License
I Legal Opinion
J KEYview License
K Xxxx of Sale
L Assignment Agreement
M Financial Statements
