EXHIBIT 10.1
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ASSET PURCHASE AGREEMENT
by and among
TANGRAM ENTERPRISE SOLUTIONS INC.
and
AXIAL TECHNOLOGY HOLDING AG and
WYZDOM SOLUTIONS INC.
February 13, 2001
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of February 13,
2001, is made and entered into by and between Tangram Enterprise Solutions Inc.,
a Pennsylvania corporation ("Buyer") and Axial Technology Holding AG, a Swiss
registered company ("ATH") and Wyzdom Solutions Inc., a California corporation
("WSI," and together with ATH, "Sellers").
WHEREAS, ATH is the owner of all of the ATH Assets, as defined in Section
1.01(a) hereof; and
WHEREAS, ATH desires to sell and assign to Buyer, and Buyer desires to
purchase and assume from ATH, on the terms and subject to the conditions set
forth in this Agreement, the ATH Assets; and
WHEREAS, WSI is the owner of the WSI Assets, as defined in Section 1.01(b)
hereof; and
WHEREAS, WSI desires to sell and assign to Buyer, and Buyer desires to
purchase and assume from WSI, on the terms and subject to the conditions set
forth in this Agreement, the WSI Assets
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES; PURCHASE PRICE
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1.01 Purchase and Sale of Assets. On the terms and subject to the
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conditions set forth in this Agreement, each Sellers, or its assigns, agrees to
sell, transfer and assign to Buyer, and Buyer agrees to purchase and acquire
from each of Sellers, free and clear of all liens and encumbrances, all right,
title and interest of each of Sellers, as of the date and time (the "Closing
Date") of the consummation of the transactions contemplated herein (the
"Closing"), in and to:
(a) the following assets of ATH (the "ATH Assets"):
(i) all rights of ownership to ATH's proprietary asset
management technology, some or all of which is commonly known as Wyzdom
("Wyzdom");
(ii) all documents, tools or other tangible materials embodying
technology or intellectual property rights related to Wyzdom owned by,
licensed to or otherwise controlled by ATH, whether such properties are
located on the business premises of either of Sellers or on the business
premises of suppliers or customers of either of Sellers, including, without
limitation all software programs (including both source and object codes)
and related documentation for software used in or developed for support of
Wyzdom and related products and services;
(iii) all rights in patents, patent applications, trademarks,
service marks, trade names, copyrights, trade secrets or other intellectual
property rights owned by, licensed to or otherwise controlled by ATH or
used in, developed for use with or otherwise related to Wyzdom, and all
related products and services;
(iv) all ATH's books, records, databases and other documents
and information relating to Wyzdom, including, without limitation, all
marketing, sales and
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sales information, implementation, customer support, and training
documentation, together with all processes and procedures, customer,
prospect, dealer and distributor lists, sales literature, purchase orders
and invoices, sales orders and sales order log books, customer information,
product data, material safety data sheets and price lists related to Wyzdom
products and services;
(v) all permits, licenses and other governmental approvals
held by ATH with respect to the Wyzdom products and services, to the extent
they are assignable; and;
(vi) all license, maintenance, services and distribution
agreements for Wyzdom products (collectively, the "ATH Purchased
Contracts"), which ATH Purchased Contracts are listed in Schedule
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1.01(a)(vi) hereto; and
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(b) the following assets of WSI (the "WSI Assets" and, together with
the ATH Assets, the "Assets"):
(i) all license, maintenance, services and distribution
agreements for Wyzdom products (collectively, the "WSI Purchased Contracts"
and, together with the ATH Purchased Contracts, the "Purchased Contracts"),
which WSI Purchased Contracts are listed in Schedule 1.01(b)(i) hereto;
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(ii) cash equivalent to funds received with respect to
maintenance/service agreements, to the extent that those funds are unearned
at the time of closing as set forth in Schedule 1.01(b)(ii); and
(iii) all WSI's books, records, databases and other documents
and information relating to Wyzdom, including, without limitation, all
marketing, sales and sales information, implementation, customer support,
and training documentation,
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together with all processes and procedures, customer, prospect, dealer and
distributor lists, sales literature, purchase orders and invoices, sales
orders and sales order log books, customer information, product data,
material safety data sheets and price lists related to Wyzdom products and
services.
1.02 Assumption of Liabilities. Buyer agrees to assume, pay, perform in
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accordance with their terms or otherwise satisfy, as of the Closing Date all
liabilities of Sellers under the Purchased Contracts and the employment
contracts listed on Schedule 1.02 hereto (collectively, the "Assumed
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Liabilities").
1.03. Excluded Liabilities. Other than as set forth in Section 1.02
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hereto, the parties hereto expressly agree that each of Sellers shall retain,
and Buyer shall not assume, and nothing contained in this Agreement shall be
construed as an assumption by Buyer of, any liabilities, obligations or
undertakings of either of Sellers, related to the Assets or otherwise, of any
nature whatsoever, whether accrued, absolute, fixed or contingent, known or
unknown due or to become due, unliquidated or otherwise.
1.04 Purchase Price. The aggregate purchase price (the "Purchase Price")
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to be paid by Buyer to Sellers for the Assets shall be (i) the "Base Price, " as
defined in Section 1.05 hereof, and (ii) the "Contingent Price," as defined in
Section 1.06 hereof.
1.05 Base Price. The portion of the Purchase Price that is payable, at
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the Closing and on each of three "Anniversary Payment Dates," as defined below
(the "Base Price"), is as follows:
(a) Stock Consideration. At the Closing, Buyer shall transfer to
Sellers or Sellers' assigns shares of its common stock, Nasdaq symbol TESI (the
"Buyer Common Stock") in the amount of 3,000,000 shares (the "Stock
Consideration"). The Stock
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Consideration shall be payable, in the manner set forth in Section 1.07 hereof,
in fully paid, nonassessable shares of Buyer Common Stock, issued without
registration under the Securities Act of 1933 pursuant to an exemption
therefrom, and transfer shall be restricted as provided by Section 3.10. The
Stock Consideration shall be delivered free of any liens, security interests or
encumbrances arising by or through Buyer, except for the transfer restrictions
referred to in Section 3.10.
(b) Cash Consideration. Buyer shall pay to Sellers cash in the
aggregate amount of $1,500,000 (the "Cash Consideration"), payable, in the
manner set forth in Section 1.07 hereof, in three installments (each an "Annual
Cash Payment") due, respectively, on each of the first three anniversaries of
the Closing Date (each of such three dates an "Anniversary Payment Date"), as
follows: (1) an Annual Cash Payment of $300,000 on the first Anniversary
Payment Date; (2) an Annual Cash Payment of $500,000 on the second Anniversary
Payment Date; and (3) and an Annual Cash Payment of $700,000 on the third
Anniversary Payment Date. With respect to the first Annual Cash Payment, Buyer
may elect to provide, in lieu of cash, a number of shares of Buyer Common Stock
equivalent in aggregate value to the amount of such Annual Cash Payment, the
value of each such share to be deemed equal to 80% of the average NASDAQ closing
price during the 20 trading days immediately prior to the relevant Anniversary
Payment Date (the "Optional Annual Stock Payment").
1.06 Contingent Price. In addition to the Base Price, Buyer shall pay to
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Sellers, in the manner set forth in Section 1.07 hereof, an additional,
contingent amount (the "Contingent Price") in the form of an earnout (the
"Earnout"), but only if and to the extent Buyer is obligated to pay such Earnout
pursuant to the following procedures:
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(a) The Earnout shall be payable in a maximum of three annual
payments (each an "Earnout Payment"), each due, respectively, 15 days after an
Anniversary Payment Date; provided, however, that no Earnout Payment shall be
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due and payable on the respective Anniversary Payment Date unless the revenues
for products and services related to the Assets, or products and services
resulting from technology derived from the Assets (collectively, "Asset-Related
Revenues") generated during the 12-month period ending on each such Anniversary
Payment Date exceed, the following target amounts (each a "Target Revenue
Amount"): (i) $3,000,000, prior to the first Anniversary Payment Date; (ii)
$5,000,000, between the first and second Anniversary Payment Date, and (iii)
$7,000,000, between the second and third Anniversary Payment Date.
Excluded from the provisions of Section 1.06(a) are revenues derived
from additional products/enhancements created due to Buyers additional
investments and development, for which license and periodic maintenance fees are
charged in addition to those normally charged present customers for the Asset-
Related products and services, and which are not incremental adjustments to
Asset-Related revenues for product and service fees.
(b) In the event the Asset-Related Revenues exceed the Target Revenue
Amount with respect to a particular Anniversary Payment Date, an Earnout Payment
shall be due and payable by Buyer in an amount equal to the lesser of (i) 5% of
the portion of such Asset-Related Revenues in excess of such Target Revenue
Amount or (ii) $300,000, with respect to the first Anniversary Payment Date,
$500,000, with respect to the second Anniversary Payment Date, and $700,000,
with respect to the third Anniversary Payment Date. The Earnout Payments are to
be computed independently, such that any or all of the three Earnout Payments
may or may not be paid, depending on achievement of the specified level of Asset
Related
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Revenues for the relevant periods. However, if the average of the daily NASDAQ
closing prices of a share of Buyer Common Stock during the last 20 consecutive
trading days immediately prior to any Anniversary Payment Date upon which an
Earnout Payment is due and payable exceeds $2.00 per share, the Earnout Payment
percentage shall be reduced by 1% for each $1.00 increase in the stock price
above $2.00 per share (e.g. the Earnout Payment percentage would be reduced from
5% to 3% if the Buyer Common Stock price were $4.00 per share and 0% if the
Buyer Common Stock price were $7.00 per share).
1.07 Manner of Payment; Escrow Fund. On the Closing Date Buyer shall
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deliver the Stock Consideration to an escrow agent (the "Escrow Agent") to be
held in escrow (the "Escrow Fund") for a period of 24 months after the Closing
Date pursuant to the terms of an escrow agreement to be executed by the parties
at the Closing (the "Escrow Agreement"). If at the first Anniversary Date the
equivalent publicly traded market value of the shares of Stock Consideration
held in the Escrow Fund is less than $4,000,000, and Buyer elects to provide
shares of Buyer Common Stock in lieu of the first Annual Cash Payment of
$300,000, Buyer may elect to place such stock in the Escrow Fund. The Escrow
Fund shall be subject to utilization as set forth in Section 6.01 hereof.
Releases of amounts from the Escrow Fund by the Escrow Agent shall be allowed
only as follows:
(a) 300,000 shares of Buyer Common Stock shall be released pursuant
to Schedule 1.07(a) hereto on the first business day following the last day of
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the twelve-month period commencing on the Closing Date, provided that there
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shall not have occurred any indemnifiable loss or losses, in an aggregate amount
exceeding the Threshold Claim Amount (as defined in Section 6.02 hereof), for
which Sellers have not fully indemnified Buyer.
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(b) The balance of the Escrow Fund shall be released to Sellers on
the first business day following the earlier to occur of the following:
(i) the date of delivery by Sellers to Buyer of a guaranty in
favor of Buyer, guaranteeing Sellers' Obligations (as defined in Section
6.01 hereof), which guaranty either shall be supported by a letter of
credit in an amount equal to the Maximum Indemnification Amount (as defined
in Section 6.02 hereof), drawn on a United States bank reasonably
acceptable to Buyer, or shall be another form of guaranty acceptable to
Buyer; or
(ii) the last day of the 24-month period commencing on the
Closing Date, unless Buyer objects in writing prior to such release based
on the evidence of an indemnifiable loss or losses, in an aggregate amount
exceeding the Threshold Claim Amount, for which Sellers have not fully
indemnified Buyer.
(c) On each Anniversary Payment Date, if the market value of a number
of publicly traded shares of Buyer Common Stock equal to the number of such
shares held in the Escrow Fund (based on the average of the daily NASDAQ closing
prices of a share of Buyer Common Stock during the last 20 consecutive trading
days immediately prior to any Anniversary Payment Date), is greater than 125% of
$4,000,000, the number of such shares in excess of the number whose equivalent
value equals 125% of $4,000,000 will be released from the Escrow Fund to Seller
within 10 business days of such Anniversary Date.
(d) The balance of the Escrow Fund or any portion thereof may be
released to Sellers
(i) upon and according to the joint written instructions of both
Buyer and Sellers or
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(ii) otherwise by the Escrow Agent in accordance with the Escrow
Agreement.
Sellers, jointly, on the one hand, and Buyer, on the other, shall share equally
all costs related to the establishment and maintenance of the Escrow Fund, as
provided in the Escrow Agreement.
1.08 Allocation of Purchase Price. Buyer and Sellers have mutually agreed
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to allocate the Purchase Price among the Assets in the manner set forth in
Schedule 1.08 hereto, after taking into account the applicable treasury
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regulations ("Treasury Regulations") promulgated under the Internal Revenue Code
of 1986, as amended (the "Code"), and the fair market value of such items.
Buyer shall prepare for filing all tax returns that may be required with respect
to the transaction provided for herein pursuant to Section 1060 of the Code, any
Treasury Regulations promulgated thereunder, any other similar provisions of the
Code and any other similar or applicable foreign, state or local tax law or
regulation. Sellers shall provide information that may be reasonably required
by Buyer for the purpose of preparing such tax returns.
ARTICLE II
THE CLOSING
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2.01 Time and Place of Closing. The Closing shall take place at the
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offices of Hunton & Xxxxxxxx, 000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx Xxxxxxxx,
at such time and on such date as is mutually agreeable to Buyer and Sellers, but
in no event later than March 15, 2001.
2.02 Condition Precedent to Buyer's Obligation to Close. The obligation
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of Buyer to consummate the transactions contemplated by this Agreement is
subject to receipt by Buyer prior to the Closing Date of employment agreements,
the terms of which are satisfactory to Buyer, executed by the individuals whose
names are listed on Schedule 2.02 hereto.
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2.03 Deliveries by Sellers. Sellers shall deliver documents and take
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actions as specified in this Section at the Closing:
(a) Sellers shall deliver (i) the Assets and (ii) a xxxx of sale
relating to the Assets (the "Xxxx of Sale") and such other instruments of
conveyance, transfer, assignment and delivery as Buyer shall have reasonably
requested pursuant to Section 1.01 hereof.
(b) Sellers shall execute the Escrow Agreement in the form of Exhibit
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2.03(b).
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(c) Sellers shall deliver a guaranty agreement executed and delivered
by ATH, in favor of Buyer, in the form of Exhibit 2.03(c) hereto (the "Guaranty
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Agreement," and, together with this Agreement, the Escrow Agreement, the Letter
of Understanding (as defined in Section 5.02 hereof), the "Transaction
Documents"), guaranteeing all of Sellers' representations, warranties,
covenants, agreements, liabilities and obligations under this Agreement and/or
the other Transaction Documents.
(d) Each of Sellers shall deliver resolutions of its Board of
Directors, certified by its corporate secretary, authorizing the consummation of
all of the transactions contemplated by this Agreement and the execution and
delivery of this Agreement and all the other agreements contemplated herein.
(e) Each of Sellers shall deliver (i) a copy of its Bylaws, certified
by its corporate secretary, (ii) a copy of its current Articles of
Incorporation, certified by the Secretary of State or equivalent governmental
agent of its jurisdiction, and (iii) a Certificate of Good Standing, dated as of
a recent date, from such Secretary of State or other official evidencing the
good standing of such Seller in such jurisdiction.
(f) Sellers shall deliver such other certificates, documents and
instruments as Buyer reasonably requests related to the transactions
contemplated hereby.
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2.04 Deliveries by Buyer. Buyer shall deliver documents and take actions
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as specified in this Section at the Closing:
(a) Buyer shall issue an irrevocable instrument instructing Mellon
Investor Services LLC, as transfer agent, to issue to the Escrow Agent the Stock
Consideration, as provided in Section 1.05(a).
(b) Buyer shall execute the Escrow Agreement.
(c) Buyer shall deliver resolutions of its Board of Directors,
certified by its corporate secretary, authorizing the consummation of all of the
transactions contemplated by this Agreement and the execution and delivery of
this Agreement and all the other agreements contemplated herein.
(d) Buyer shall deliver (i) a copy of its Bylaws, certified by its
corporate secretary, (ii) a copy of its current Articles of Incorporation,
certified by the Secretary of State of Pennsylvania, and (iii) a Certificate of
Good Standing, dated as of a recent date, from such Secretary of State
evidencing the good standing of Buyer in such jurisdiction.
(e) Buyer shall deliver such other certificates, documents and
instruments as Sellers reasonably request related to the transactions
contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
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Each of Sellers hereby represents and warrants, with respect to itself only
and also in the case of ATH, with respect to the ATH Assets only, and in the
case of WSI, with respect to the WSI Assets only, to Buyer that, except as set
forth in Sellers' disclosure schedules attached as schedules to this Agreement
(Sellers' Disclosure Schedules," which schedules set forth the
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exceptions to the representations and warranties contained in this Article III
under captions referencing the Sections to which such exceptions apply):
3.01 Incorporation and Corporate Power. Each of Sellers is a corporation
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duly incorporated, validly existing and in good standing under the laws of its
jurisdiction and has the corporate power and authority and all authorizations,
licenses, permits and certifications necessary to own and operate its properties
and to carry on its business as now conducted. The copies of the Articles of
Incorporation and Bylaws of Sellers, which have been furnished by Sellers to
Buyer prior to the date hereof, reflect all amendments made thereto and are
correct and complete as of the date hereof. Each of Sellers is qualified to do
business as a foreign corporation in every jurisdiction in which the nature of
their businesses or their ownership of property requires it to be so qualified.
3.02 No Breach. The execution, delivery and performance of this Agreement
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by each of Sellers and the consummation by such Seller of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under, result in a violation of, result in
the creation of a right of termination or acceleration or any lien, security
interest, charge or encumbrance upon any of the Assets, or require any
authorization, consent, approval, exemption or other action by or notice to any
court or other governmental body, under the provisions of the Articles of
Incorporation or Bylaws of such Seller or any material agreement or instrument
executed in connection with the Assets by which such Seller is bound or
affected.
3.03 Execution, Delivery; Valid and Binding Agreement. The execution,
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delivery and performance of this Agreement by each of Sellers and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action, and
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no other corporate proceedings on its part are necessary to authorize the
execution, delivery or performance of this Agreement. This Agreement has been
duly executed and delivered by each of Sellers and constitutes the valid and
binding obligations of such Seller, enforceable in accordance with its terms,
subject to bankruptcy, insolvency and other similar laws affecting the rights of
creditors generally and subject to the exercise of judicial discretion in
accordance with principles of equity.
3.04 Governmental Authorities; Consents. Neither Seller is required to
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submit any notice, report or other filing with any governmental authority in
connection with the execution or delivery by it of this Agreement or the
consummation of the transactions contemplated hereby, with the exception that
prior consent to such transaction is required from the South African Reserve
Bank for ATH, and has been obtained for ATH. No consent, approval or
authorization of any governmental or regulatory authority is required to be
obtained by either of Sellers in connection with the execution, delivery and
performance of this Agreement or the transactions contemplated hereby.
3.05 Absence of Undisclosed Liabilities. Neither of Sellers has
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liabilities or obligations required to be described in accordance with GAAP on a
balance sheet of such Seller which have not been disclosed on the December 31,
2000 unaudited balance sheet of such Seller (with respect to such Seller, the
"Latest Balance Sheet"), except liabilities which have arisen after the date of
the Latest Balance Sheet in the ordinary course of business or as otherwise set
forth in Sellers' Disclosure Schedule under the caption referencing this Section
3.05.
3.06 Title to Assets. Each of ATH and WSI, with respect to the ATH Assets
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and the WSI Assets, respectively, owns good and marketable title to each of such
Assets, free and clear of all liens and encumbrances, except for (i) liens for
current taxes not yet due and payable,
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(ii) liens set forth under the caption referencing this Section in Sellers'
Disclosure Schedule, (iii) Assets disposed of since the date of the Latest
Balance Sheet in the ordinary course of business, (iv) liens imposed by law and
incurred in the ordinary course of business for obligations not yet due to
carriers, warehousemen, laborers and materialmen and (v) liens in respect of
pledges or deposits under workers' compensation laws, all of which liens
aggregate less than $10,000. Further, and without in any way limiting the
forgoing, each of Sellers specifically represents and warrants that its title to
such Assets is free and clear of all liens and encumbrances held by any
subsidiary of either of Xxxxxxx, Xxxx Commercial Credit Corporation, a Delaware
corporation, or any other entity.
3.07 No Tax Liens. There are no liens for Taxes upon any of the Assets,
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except liens for Taxes not yet due. For purposes of this Agreement, the term
"Taxes" means all federal, state, local or foreign taxes, charges, fees, levies,
or other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, social security, unemployment,
excise, estimated, severance, stamp, occupation, property, or other taxes,
customs duties, fees, assessments, or charges of any kind whatsoever.
3.08 Purchased Contracts. A true and correct list of the Purchased
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Contracts is set forth in Schedule 1.01(a)(vi) and Schedule 1.01(b)(i) hereto.
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True and correct copies of the Purchased Contracts have been made available to
Buyer. Each of the Purchased Contracts is in full force and effect as of the
date hereof, constitutes binding obligations of each party thereto, and is valid
and enforceable in accordance with its terms. To Sellers knowledge, neither of
Sellers nor any other party is in default under the terms of any of the
Purchased Contracts, and there exists no occurrence, event, condition or act
which, upon the giving of notice or the lapse of
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time or otherwise, would likely become such a default. Except for any notices
relating to disputes with respect to purported amendment to the EAMS
Distribution Agreement (as defined in Section 6.01 hereof), neither of Sellers
has given to or received from any other individual or entity any notice or other
communication, whether oral or written, regarding any actual, alleged, possible
or potential violation or breach of, or default under, any of the Purchased
Contracts. None of the Purchased Contracts (a) is subject to cancellation or
termination upon the sale of the Assets to Buyer or (b) requires the consent of
a third party prior to the transfer thereof. Sellers expressly acknowledge their
liability for disputes relating to purported amendments to the EAMS Distribution
Agreement.
3.09 Intellectual Property Rights. Set forth under the caption
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referencing this Section in Sellers' Disclosure Schedule is a complete, true and
accurate list of all registered and non-registered or common law: (a) patents,
trademarks, service marks, design marks, copyrights, trade names and brand names
held by either of Sellers relating to the Assets, including all applicable
registration or serial numbers, countries and jurisdictions, dates of filing,
grant, renewal and expiration, xxxx, class and all other pertinent information
(collectively, "Marks"), and (b) all trade secrets, know-how, formulae,
proprietary processes and inventions that are material to the Assets, in each
case which have been reduced to writing and excluding all retail/commercially-
available computer software (collectively, the "Trade Secrets," and together
with the Marks, the "Intellectual Property"). With respect to the Intellectual
Property,
(a) Sellers possess (exclusively, either individually or jointly, and
without other persons/entities): (x) all right, title and interest in and full
unencumbered ownership of and title to all the Intellectual Property, free and
clear of all liens, claims and encumbrances of every type; all license and other
agreements from third parties for Sellers' use of any Intellectual
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Property are effective, valid and binding, in full force and effect and Sellers'
use thereof does not violate any such agreements;
(b) all registrations of Intellectual Property with governmental
authorities have been duly issued and have not been canceled, abandoned or
otherwise terminated; all renewals due through the Closing Date have been filed,
and all applications for registration of Intellectual Property have been duly
filed and are in process as of the Closing Date; and Sellers have taken all
appropriate steps to protect and maintain the Intellectual Property;
(c) to Seller's knowledge, with respect to the Intellectual Property,
neither of Sellers is infringing upon any intellectual property rights of any
other person or entity in any respect, nor has either of Sellers received any
notice or communication regarding infringement upon or conflict with respect to
intellectual property of any other person or entity with regard to the
Intellectual Property;
(d) Neither of Sellers has received any notice or communication
challenging or questioning the validity of Sellers' ownership of the
Intellectual Property or the validity or effectiveness of any license or similar
agreement held by it with respect to any Intellectual Property, and neither of
Sellers is aware of any facts that could reasonably be expected to lead to such
an allegation;
(e) Neither of Sellers has granted any other person or entity any
rights (ownership, revenue-sharing or otherwise) with respect to any of the
Intellectual Property; and
(f) to the actual knowledge of Sellers, no person is using any
intellectual property that is confusingly similar to, which infringes upon, or
which violates Sellers' rights with respect to the Intellectual Property.
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3.10. Investment Intent; Legend on Shares. Each of Sellers hereby
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represents and warrants as follows:
(a) Sellers are acquiring the Stock Consideration for their own
account and not with a view to distribution thereof within the meaning of
Section 2(11) of the Securities Act of 1933 (the "Securities Act"). None of the
Stock Consideration will be registered under the Securities Act or the
securities laws of any state and each Seller agrees that none of such restricted
shares will be sold (or pledged, assigned or otherwise disposed, except pursuant
to the Escrow Agreement) or offered for sale without registration under the
Securities Act or the availability of an exemption therefrom or in violation of
any other law, statute, regulation or other legal requirement of the United
States of America or any state political subdivision thereof. Each Seller
further understands and agrees that Buyer is not obligated to honor any attempt
by it to sell, pledge, transfer or otherwise dispose of any such shares of Buyer
Common Stock in the absence of an effective registration statement for such
shares under the Securities Act and applicable state securities laws or an
opinion of counsel, provided at the expense of Sellers and satisfactory in form
and substance to Buyer and their counsel, that an exemption from registration is
available. As a consequence of the foregoing, Buyer shall have the right (at
its discretion) to cause any certificate evidencing shares of Buyer Common Stock
constituting Stock Consideration to bear the following legends in substantially
the following form:
The shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended (the "1933 Act"), or the securities laws of any
state. The shares may not be sold, transferred, pledged
or hypothecated in the absence of any effective
registration statement under the 1933 Act and such
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registration or qualification as may be necessary under
the securities laws of any jurisdiction, or an opinion
of counsel satisfactory to Tangram Enterprise
Solutions, Inc. that such registration or qualification
is not required.
(b) On request of Sellers, Buyer will use best efforts to promptly
cause the legend to be removed once the underlying shares of Buyer Common Stock
are no longer subject to such share transfer restrictions and such removal, in
the opinion of Buyer's counsel, is no longer required under applicable legal
requirements.
(c) Each Seller further represents and warrants to Buyer that:
(i) it has been furnished and has carefully read the information
contained in this Agreement, the Schedules hereto, the documents referred to
herein and in the Schedules hereto, and the reports filed by Buyer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934
(the "Reports") previously delivered to it;
(ii) it has been provided an opportunity to obtain additional
information concerning Buyer, the Buyer Common Stock and any other relevant
matters;
(iii) it has been given the opportunity to ask questions of, and
receive answers from, knowledgeable representatives of Buyer concerning Buyer
and the Buyer Common Stock.
3.11 Litigation. There are no actions, suits, proceedings, orders or
-----------
investigations pending or, to the best knowledge of Sellers, threatened against
either of Sellers, at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which if adversely
18
determined against such Seller would have a material adverse effect on such
Seller's ability to consummate the transactions contemplated in this Agreement.
Neither of Sellers is subject to any order, consent decree, settlement or other
similar written agreement of or with, or pending, to the knowledge of such
Seller, any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
any judgment, order, writ, injunction, decree or award of any federal, state or
municipal regulatory agency or arbitrator.
3.12 Insurance. Sellers have at all times maintained insurance relating to
---------
the Assets and covering property, fire, casualty, liability, life, worker's
compensation, and all other forms of insurance customarily obtained by
businesses in the same industry.
3.13 Permits. Sellers have, in full force and effect, all licenses,
-------
permits and certificates, from federal, state, local and foreign authorities
necessary to conduct the business of Sellers related to the Assets
(collectively, the "Permits"). A true, correct and complete list of all the
Permits is set forth under the caption referencing this Section in Sellers'
Disclosure Schedule. Sellers have conducted the business related to the Assets
in compliance with all material terms and conditions of the Permits.
3.14 Disclosure. No representation or warranty by Sellers contained in
----------
this Agreement or in Sellers' Disclosure Schedule, or any certificate or other
instrument referred to herein contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact which is
necessary in order to make the statements contained herein or therein, not
misleading. There is no fact known to Sellers relating to the Assets or to the
business, affairs, operations, or condition of Sellers that materially adversely
affects the Assets and which has not been disclosed to Buyer by Sellers.
19
3.15 Brokerage. No third party shall be entitled to receive any brokerage
---------
commissions, finder's fees, fees for financial advisory services or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of Sellers, except
pursuant to the agreement between Sellers and Xxxxxxxxx Xxxxxx, Inc.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Sellers that:
4.01 Incorporation and Corporate Power. Buyer is a corporation duly
---------------------------------
incorporated, validly existing and in good standing under the laws of the State
of Pennsylvania, with the requisite corporate power and authority to enter into
this Agreement and perform its obligations hereunder.
4.02 Execution, Delivery; Valid and Binding Agreement. The execution,
------------------------------------------------
delivery and performance of this Agreement by Buyer and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action, and no other corporate proceedings on its part are
necessary to authorize the execution, delivery or performance of this Agreement.
This Agreement has been duly executed and delivered by Buyer and constitutes the
valid and binding obligations of Buyer, enforceable in accordance with its
terms, subject to bankruptcy, insolvency and other similar laws affecting the
rights of creditors generally and subject to the exercise of judicial discretion
in accordance with principles of equity.
4.03 Disclosure. The information pertaining to Buyer, the business of
----------
Buyer and the condition of Buyer that is contained in the Reports does not
contain any untrue statement of
20
material fact and does not omit any fact necessary to prevent the statements
made from being misleading.
4.04 Capitalization. The capitalization of Buyer is as follows:
--------------
authorized capital stock of 48,000,000 shares of Common Stock, $0.01 par value,
of which 10,816,604 shares are issued and outstanding to Safeguard Scientifics,
Inc. ("Safeguard"). Buyer does not have any other class of capital stock
outstanding. There are no outstanding options, warrants or any other rights
whatsoever to acquire Buyer Common Stock or convertible/exercisable into Buyer
Common Stock, except as disclosed in the Reports, and except for the anticipated
debt-to-preferred-equity exchange, a draft of which has been disclosed to
Sellers.
4.05 Valid Issuance of Stock. The shares of Buyer Common Stock
-----------------------
constituting the Stock Consideration and any Optional Annual Payment, when sold
and delivered in accordance with the terms hereof, will be duly authorized and
validly issued, fully paid and nonassessable and will be issued in compliance
with all applicable federal and state securities laws.
4.06 Brokerage. No third party shall be entitled to receive any brokerage
---------
commissions, finder's fees, fees for financial advisory services or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of Buyer.
ARTICLE V
POST-CLOSING COVENANTS
----------------------
5.01 Provision of Buyer Board Seat to Sellers' Designee. Buyer agrees
--------------------------------------------------
that Sellers shall be entitled to one seat on Buyer's board of directors for as
long as Sellers (i) remain entitled to any Earnout Payment pursuant to Section
1.06 hereof or (ii) collectively hold shares, or possess voting control, of
Buyer Common Stock constituting more than 10% of the shares of
21
Buyer Common Stock issued and outstanding. Pursuant to this covenant, Buyer
agrees that Xxxxxx X. Xxxxx, or another qualified officer of either of Sellers
designated by Sellers, will become a member of Buyer's board of directors of
Buyer upon the Closing. His initial term will be one year, and he will be
provided all voting rights and privileges as normally granted to other outside
directors; however, he or his successor will vacate such seat and forfeit all
such rights and privileges immediately upon the failure of either of Sellers to
meet the condition set forth in the first sentence of this Article. Within 30
days of the Closing Date, Buyer shall deliver a shareholder voting agreement,
executed by Safeguard, pursuant to which Safeguard shall agree to cast its votes
in the election of Buyer's board of directors as necessary to accomplish Buyer's
covenants in this Section 5.01.
5.02 Good Faith Negotiation of Distribution Agreement. Buyer agrees to
------------------------------------------------
negotiate in good faith with ATH, a distribution agreement, as contemplated in
Item 6(c)-(e) of the Term Sheet attached to the Mutual Letter of Understanding
among the parties, dated December 28, 2000 (the "Letter of Understanding"),
attached as Schedule 5.02 hereto, pursuant to the terms of which ATH will serve
-------------
as a distributor for Buyer in Europe and Africa (the "Contemplated Distribution
Agreement"); provided, however, that the Contemplated Distribution Agreement
-------- -------
shall not be competitive with existing sales channels of Buyer.
5.03 Cooperation in Preparation of Shares for Marketability. Upon release
------------------------------------------------------
from the Escrow Fund to Sellers of any shares of the Stock Consideration, Buyer
agrees to cooperate with Sellers in the timely preparation of such shares for
marketability by effecting the removal of the legend when it is no longer
legally required. Buyer agrees to allow Sellers to participate in any
registration of shares by Buyer, provided Sellers pay any additional costs of
such registration incurred as a consequence of Sellers participation therein.
22
5.04 Licenses and Related Agreements. Within 30 days of the Closing Date,
-------------------------------
ATH and Buyer shall enter into certain business licenses and other agreements
related to the Assets, as contemplated in Item 6(a)-(b) of the Term Sheet
attached to the Letter of Understanding, which is attached as Schedule 5.02
-------------
hereto (collectively, the "Licenses and Related Agreements").
5.05 Assignments of Purchased Contracts. Within 30 days of the Closing
----------------------------------
Date, Sellers shall (i) execute an agreement assigning to Buyer all Purchased
Contracts and providing for the assumption by Buyer of the Assumed Liabilities
(the "Assignment and Assumption Agreement") and (ii) deliver to Buyer executed
assignment agreements of third parties as required for effective assignment of
all Purchased Contracts to Buyer; provided, that the parties agree that the
Purchase Price shall be reduced by the actual unearned income remaining for the
contract period for each such third-party assignment agreement Sellers fail so
to deliver.
5.06 Cooperation in Regulatory Filings. Buyer and Sellers covenant to
---------------------------------
cooperate in the provision of information required for, and the preparation of,
such regulatory filings, if any, as may be required with respect to the
transactions contemplated in this Agreement; and Buyer and Sellers agree that
Sellers shall bear all expenses related to such filings. If such required
information includes an audit of WSI, Buyer agrees to bear one half the cost of
such audit.
5.07 Cessation of Use of Corporate Name. Sellers agree to cease use of
----------------------------------
the "Wyzdom" name upon closing and covenant that to this end Sellers will cause
WSI to change its corporate name within sixty (60) days after closing.
ARTICLE VI
INDEMNIFICATION AND SURVIVAL
----------------------------
6.01 Indemnification; Escrow Fund. Sellers agree to indemnify and hold
----------------------------
Buyer and its affiliates, directors, officers, employees and representatives
("Buyer Indemnified Parties")
23
harmless from and against all liability, loss, damage, claim or injury,
including reasonable attorneys fees and costs ("Damages") suffered or incurred
by Buyer Indemnified Parties, except consequential or indirect damages in excess
of $1,000,000, arising from (i) any claim for any debt, obligation or liability
which is not specifically and expressly assumed by the Buyer pursuant to this
Agreement, including, but not limited to, any liability arising from or in
connection with purported amendments to that certain distribution agreement,
dated April 22, 1999, between ATH and Enterprise Asset Management Solutions Ltd.
(the "EAMS Distribution Agreement"); (ii) any misrepresentation, breach or
violation of any covenant, agreement, representation or warranty of Sellers
contained in this Agreement and/or any other of the Transaction Documents, or
from any misrepresentation in or omission from any certificate or instrument
furnished or to be furnished by Sellers hereunder; and (iii) any suit, action,
proceeding, claim or investigation, pending or threatened, against or affecting
the Assets, including, but not limited to, any such action related to the EAMS
Distribution Agreement, regardless of whether such is disclosed in a disclosure
schedule hereto, that arose in any manner prior to the Closing Date, all of the
above herein collectively referred to as the "Sellers Obligations." The Escrow
Fund shall be utilized to fund indemnification payments to Buyer pursuant to
this Article.
6.02 Limitation on Right to Indemnification. Except for indemnification
--------------------------------------
with respect to the EAMS Distribution Agreement (as to which no limitations to
the right to indemnification provided in this Article VI shall apply, provided
Buyer shall accept the April, 1999 EAMS Distribution Agreement prior to any
amendment thereof): (i) none of the Buyer Indemnified Parties shall be entitled
to seek indemnification from Sellers under this Article VI unless and until the
aggregate amount of such party's or parties' claims for indemnification
hereunder
24
exceeds the sum of $25,000 (the "Threshold Claim Amount"); provided, however,
-------- -------
that once the Threshold Claim Amount has been exceeded, such party or parties
shall be entitled to seek indemnification for the full amount of its or their
claims, including the Threshold Claim Amount; and (ii) the aggregate amount of
indemnification payments to the Buyer Indemnified Parties for which Sellers may
be liable pursuant to this Article shall be limited to $4,000,000 (the "Maximum
Indemnification Payment Amount").
6.03 Survival. The representations and warranties contained in Articles
--------
III and IV hereof, the covenants set forth in Article V and VII hereof and the
Sellers Obligations shall survive the Closing for a period of 24 months
following the Closing Date, except that there will be no such limitation on any
claim for or resulting from fraud other than the applicable statute of
limitations.
ARTICLE VII
MISCELLANEOUS
-------------
7.01 Press Releases and Announcements. Sellers and Buyer agree that the
--------------------------------
existence, nature and terms and conditions of this Agreement and discussions
between the parties regarding the transactions contemplated hereby are, and
shall be treated as, confidential by the parties. Accordingly, each party agrees
that, unless it receives consent from the other parties, it will (a) make no
public comment concerning or announcement of the transactions contemplated
hereby, (b) respond to all inquiries concerning the transactions contemplated
hereby by stating that it is such party's policy not to comment on such
inquiries (c) take reasonable steps to restrict knowledge of the transactions
contemplated hereby to those who need to know and (d) notify the other parties
of any rumor external to the parties of the transactions contemplated hereby.
Sellers
25
agree that after Closing Buyer may publicly announce the consummation of the
transaction contemplated herein.
7.02 Expenses. Except as otherwise expressly provided for herein, each
--------
party will pay all of its own fees, costs and expenses incurred (whether the
transactions contemplated hereunder are consummated or not) in connection with
the transactions contemplated by this Agreement.
7.03 Further Assurances. Sellers and Buyer agree that, on and after the
------------------
Closing Date, they shall take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the provisions hereof.
7.04 Amendment and Waiver. This Agreement may not be amended or waived
--------------------
except in a writing executed by the party against which such amendment or waiver
is sought to be enforced. No course of dealing between or among any persons
having any interest in this Agreement will be deemed effective to modify or
amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
7.05 Notices. All notices, demands and other communications to be given
-------
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or three
days after being mailed by first class mail, return receipt requested, or when
receipt is acknowledged, if sent by facsimile, telecopy or other electronic
transmission device. Notices, demands and communications to Buyer and Sellers
will, unless another address is specified in writing, be sent to the address
indicated below:
26
Notices to Sellers: with a copy to:
------------------ --------------
Axial Technology AG Axiam Holdings Ltd.
Xxxxxxxxxxxxx Xxxxxxx 0 Xxxxx Xxxxx, Xxxxxxxx Xxxxxx
0000 Xxxxxxxxxxx Xxxxxxxxxxx 0 Xxxxxxxx Xxxxx
Xxxxxxxxx: Xxx Xxxxxxxx Xxxxxxxx 0000 Xxxxx Xxxxxx
Facsimile: x0000 0000000 Attention: Chief Executive Officer
Facsimile: x0000 0000000
Notices to the Buyer: with a copy to:
-------------------- --------------
Tangram Enterprise Solutions Inc. Hunton & Xxxxxxxx
00000 Xxxxxxx Xxxxxxx, Xxxxx 000 000 Xxxxxxxxxxxx Xxxxxx Xxxx, Xxxxx
Xxxx, XX 00000-0000 1400 Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
7.06 Assignment. This Agreement and all of the provisions hereof will be
----------
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by either party
hereto without the prior written consent of the other party hereto.
7.07 Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
7.08 Complete Agreement. This Agreement, and the other exhibits hereto,
------------------
and the other documents referred to herein contain the complete agreement
between the parties and supersede any prior understandings, agreements or
representations by or between the parties, written or oral, which may have
related to the subject matter hereof in any way.
27
7.09 Counterparts. This Agreement may be executed in one or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
7.10 Governing Law. The internal law, without regard to conflicts of laws
-------------
principles, of the State of North Carolina will govern all questions concerning
the construction, validity and interpretation of this Agreement and the
performance of the obligations imposed by this Agreement.
28
IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
Agreement as of the day and year first above written.
TANGRAM ENTERPRISE SOLUTIONS, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx, President and CEO
AXIAL TECHNOLOGY HOLDING AG
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx, Director
WYZDOM SOLUTIONS INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxxx X. Xxxxxx, President and CEO
29
Schedule 1.01(a)(vi)
ATH Purchased Contracts
The following are the license, maintenance, services and distribution agreements
for Wyzdom products (collectively, the "ATH Purchased Contracts")
1. Distributor Agreement dated 22 April 1999 without amendment, between
Enterprise Asset Management Services Limited and Axial Technology Holding
AG
2. Distributor Agreement dated 5 October 2000 between Unisys Africa Limited
and Axial Technology Holding AG
3. Software Licence Agreement dated 31 August 2000 between Unisys Africa
Limited and Axial Technology Holding AG
4. Software Maintenance Agreement dated 31 August 2000 between Unisys Africa
Limited and Axial Technology Holding AG
5. Software Licence Agreement dated 13 June 2000 between Unisys Hungary Kft
and Axial Technology Holding AG
30
Schedule 1.01(b)(i)
WSI Purchased Contracts
The following are the license, maintenance, services and distribution agreements
for Wyzdom products (collectively, the "WSI Purchased Contracts").
Software License and Maintenance Agreements
-------------------------------------------
1. Software License Agreement dated May 8, 1998, between Federal Reserve
Bank of New York and DCCC.
2. Addendum dated January 18, 1999 to Software License Agreement, dated
May 8, 0000 xxxxxxx Xxxxxxx Xxxxxxx Xxxx xx Xxx Xxxx and DCCC.
3. Software Maintenance Agreement, dated December 31, 1999 by and between
BlueCross BlueShield of South Carolina and Wyzdom Solutions, Inc.
4. Software license agreement dated December 31, 1999 by and between
BlueCross BlueShield of South Carolina and Wyzdom Solutions, Inc.
5. Software license agreement dated September 18, 2000 by and between
Micropath Inc. and Wyzdom Solutions, Inc.
6. Software License Agreement, dated February 1, 1999, by and between
Axial Rentals (Pty) Limited and DCCC
7. Software License Agreement, dated December 31, 1998, by and between
BancBoston Xxxxxxxxx Xxxxxxx, Inc. and DCCC.
8. Software License Agreement, dated December 31, 1998, by and between
OfficeMax, Inc. and DCCC.
9. Software Maintenance Agreement, dated December 31, 1998, by and
between OfficeMax, Inc. and DCCC.
10. Software License Agreement dated as of July 21, 2000 by and between
Wyzdom Solutions, Inc. and Science Applications International Corp.
11. Software Maintenance Agreement dated as of July 21, 2000 by and
between Wyzdom Solutions, Inc. and Science Applications International
Corp.
Wyzdom Reseller or Distribution Agreements
------------------------------------------
12. Authorized Value-Added Reseller Agreement, dated March 20, 2000, by
and between Orion Lightworks, L.P. doing business as Orion
Communications and Wyzdom Solutions, Inc.
13. Authorized Value-Added Reseller Agreement, dated September 8, 1998, by
and between CompuCom and DCCC.
14. Authorized Value-Added Reseller Agreement, dated March 1, 1999, by and
between Technology Asset Management and DCCC.
31
Schedule 1.01(b)(i)
WSI Purchased Contracts
Other Agreements
----------------
15. Software Escrow Agreement, dated March 27, 1992, by and between Xxxxxx
Software Systems, Inc. and National Safe Depository and Amendment A,
dated October 2, 1998, to Software Escrow Agreement, dated March 27,
1992. (Acknowledges name change from Xxxxxx Software Systems to DCCC.)
16. Onyx Software License Agreement, dated December 31, 1996, between Xxxx
Commercial Credit Corporation and ONYX Software Corporation.
17. Mutual Non-Disclosure Agreement, dated June 26, 1998, by and between
Ascent Information Technology Limited and DCCC.
18. Mutual Non-Disclosure Agreement, dated October 27, 1998, by and
between Technology Asset Management and DCCC. (Term of Agreement is 1
year but parties' obligations under Agreement upon receipt of
Confidential Information is 3 years from October 27, 1998 or the last
date on which any Confidential Information is received.)
19. Employee/Contractor Protection of Confidential Data Agreement, between
Xxxxx Xxxxxxxxx and DCCC.
20. Employee/Contractor Protection of Confidential Data Agreement, between
Xxxxxx Xxxxxxxxx and DCCC.
21. Employee/Contractor Protection of Confidential Data Agreement, between
Xxxxxxxxx Xxxx and DCCC.
22. Non-Disclosure and Confidentiality Agreement dated October 22, 1999
between Xxxxxxxx Xxxxxx and Wyzdom Solutions, Inc.
23. Employee/Contractor Protection of Confidential Data Agreement, between
Xxxxx Xxxxx and Wyzdom Solutions, Inc.
32
Schedule 1.01(b)(ii)
Unearned Maintenance Revenue
The cash equivalent to funds received with respect to maintenance/service
agreements, to the extent that those funds are unearned at the time of closing.
WYZDOM
VERSION MAINT FEE MAINT FEE UNEARNED
CUSTOMER TYPE INSTALLED AMOUNT PAID MAINT PERIOD SVCE MTCE
--------------------------------------------------------------------------------------------------------------------------
Axial Group Holding AG Distributor 6.0 $ 6,390 Y 6/1/2000 - 5/31/2001 $ 1,597.50
BlueCross BlueShield SC Direct 6.0 $16,650 Y 4/15/2000 - 4/14/2001 $ 2,775.00
Enterprise
Customer
OfficeMax Direct 5.5 SP3 $16,470 Y 3/4/2000 - 3/3/2001 $ -
Enterprise
Customer
SAIC-DESC Direct 6.0S $378/mo Y 36 months From $ 1,890.00
Enterprise Effective -
Customer 7/21/00
$1722/mo $ 8,610.00
Unisys Africa Distributor 6.0 $11,790 Y 6/1/2000-5/31/2001 $ 2,947.50
Unisys Hungary Distributor 5.5 SP3 $ 9,090 Y 6/1/2000-5/31/2001 $ 2,272.50
----------
$20,092.50
==========
33
Schedule 1.02
WSI Employment Contracts
1. Employment Agreement between Xxxxxxxx Xxxxxx and Wyzdom Solutions, Inc.
dated as of February 12, 2001.
2. Employment Agreement between Xxxxx Xxxxxxxxx and Wyzdom Solutions, Inc.
dated as of February 12, 2001.
3. Employment Agreement between Xxxxx Xxxxx and Wyzdom Solutions, Inc. dated
as of February 12, 2001.
4. Employment Agreement between Xxxxxx Xxxxxxxxx and Wyzdom Solutions, Inc.
dated as of February 12, 2001.
5. Employment Agreement between Xxxxxxxxx Xxxx and Wyzdom Solutions, Inc.
dated as of February 12, 2001.
34
Schedule 1.07a
Release of 300,000 Shares
Instructions by ATH, and confirmed by Tangram, will be issued to Escrow Agent to
release up to 300,000 shares from Escrow to Transfer Agent, for distribution to
former Wyzdom employees. Shares are vested according to a schedule set forth in
a separate agreement between ATH and the below named former Wyzdom employees.
Any unvested former Wyzdom employee shares will remain in escrow in accordance
with the terms of this Asset Purchase Agreement and be distributed to ATH. The
maximum share distribution, if all terms of the Wyzdom employee bonus program
are met is:
Xxxxxxxx Xxxxxx: 175,000 shares
Xxxxxx Xxxxxxxxx: 90,000 shares
Xxxxx Xxxxxxxxx: 15,000 shares
Xxxxxxxxx Xxxx: 12,000 shares
Xxxxx Xxxxx: 8,000 shares
Maximum Release 300,000 shares
Instruction details for the Escrow Agent, labeled "Instructions for Release of
Stock", contain specific share distribution for the former employees and will be
contained in a separate document.
35
Schedule 1.08
Allocation of Purchase Price
ATH's Proprietary Asset Management Technology,
some or all of which is commonly
known as Wyzdom $ 3,700,100
Purchased Contracts from WSI $ 106,300
-----------
$ 3,806,400
36
Schedule 2.02
Employment Agreements
Employment Agreements executed by five employees named below and accepted by
Buyer:
1. Xxxxxxxx Xxxxxx
2. Xxxxx Xxxxxxxxx
3. Xxxxx Xxxxx
4. Xxxxxx Xxxxxxxxx
5. Xxxxxxxxx Xxxx
37
Schedule 3.0
Disclosure Schedule
Except as disclosed below, Sellers offer no other disclosures as
exceptions to the representations and warranties contained in Article III of the
Asset Purchase Agreement.
Section 3.02 No Breach:
There are outstanding notes or commitments with Xxxx Commercial Credit
Corporation, the original vendor of Wyzdom to Axial that could be
accelerated or considered breached by DCCC.
Section 3.05 Absence of Undisclosed Liabilities:
(a) According to Deloitte & Touche Auditor's report for year ended
December 31, 1999 for ATH " In our opinion, the accounting records,
the financial statements and the proposed appropriation of available
earnings comply with the law and company's articles of incorporation,
...". Since ATH financials are prepared to comply with Swiss law,
Seller cannot represent that Swiss law and GAAP are identical.
(b) Version 6.0 of Wyzdom contains software licensed from ChiMu
Corporation. A Software License Agreement dated November 1, 1997 was
executed by DCCC and sent to ChiMu, but the signed agreement was never
signed by ChiMu. Subsequently the ChiMu software has been removed from
Wyzdom, and future releases after V6.0 will not include it.
(c) There are letters dated 1 November, 2000, 6 February, 2001 and 7
February, 2001 from Axial to EAMS, which have been provided to
Tangram. Sellers shall remain liable for disputes arising from these
letters.
Section 3.06 Title to Assets:
A letter from DCCC dated 26 January 2001 confirms to Axial that "DCCC holds
no further rights or claims to Wyzdom software", and there are no other
liens or security interests.
38
Schedule 3.0
Disclosure Schedule
Section 3.09 Intellectual Property Rights:
------------------------------------------------------------------------------------------------------------------
XXXX APPLICATION / CLASS: STATUS ACTION
REGISTRATION GOODS/SERVICES DUE
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
XXXXXX XXXXXX
===================================================================================================================
ASSETWYZE Application No. 76/095,491 Int'l Class 9: Filed 7/11/00 Office Action
--------------
computer software for Office Action response due
evaluating and issued 2/15/01 8/15/01
analyzing information
technology needs and
solutions, and for
managing information
technology assets
-------------------------------------------------------------------------------------------------------------------
LEASEWYZE Application No. 75/873,261 Int'l Class 9: Filed 12/16/99 Statement of
--------------
computer software for Allowed 10/3/00 Use and/or 1/st/
evaluating and Extension
analyzing information Request due
technology needs and 4/3/01
solutions, and for
managing information
technology assets
-------------------------------------------------------------------------------------------------------------------
LINKWYZE Application No. 75/873,258 Int'l Class 9: Filed 12/16/99 Statement of
--------------
computer software for Allowed 10/3/00 Use and/or 1/st/
evaluating and Extension
analyzing information Request due
technology needs and 4/3/01
solutions, and for
managing information
technology assets
-------------------------------------------------------------------------------------------------------------------
NEEDWYZE Application No. 76/093,291 Int'l Class 9: Filed 7/11/00 Check status
-------------
computer software Scheduled for Publication
for evaluating and Publication Notice 3/15/01
analyzing information
technology needs and
solutions, and for
managing information
technology assets
39
-------------------------------------------------------------------------------------------------------------
XXXX APPLICATION / CLASS: STATUS ACTION DUE
REGISTRATION GOODS/SERVICES
=============================================================================================================
ORDERWYZE Application No. Int'l Class 9: Filed 12/16/99 Statement of
-------------
75/873,257 computer software Allowed 10/3/00 Use and/or 1/st/
for evaluating and Extension
analyzing information Request due
technology needs and 4/3/01
solutions, and for
managing information
technology assets
-------------------------------------------------------------------------------------------------------------
PROCUREWYZE Application No. Int'l Class 9: Filed 12/16/99 Statement of
-------------
75/873,031 computer software Allowed 10/3/00 Use and/or 1/st/
for evaluating and Extension
analyzing information Request due
technology needs and 4/3/01
solutions, and for
managing information
technology assets
-------------------------------------------------------------------------------------------------------------
REPORTWYZE Application No. Int'l Class 9: Filed 12/16/99 Statement of
-------------
75/873,260 computer software Allowed 10/3/00 Use and/or 1/st/
for evaluating and Extension
analyzing information Request due
technology needs and 4/3/01
solutions, and for
managing information
technology assets
-------------------------------------------------------------------------------------------------------------
40
------------------------------------------------------------------------------------------------------------------------
XXXX APPLICATION / CLASS: STATUS ACTION DUE
REGISTRATION GOODS/SERVICES
========================================================================================================================
Application No. Int'l Class 42: Filed 8/11/99 Office
*WYZDOM 75/773,484 -------------- Action
SOLUTIONS consulting services, Amendment to response due
namely, documenting Allege Use filed 8/13/01
and analyzing others'
processes for asset Office Action HBMVR note:
management of issued 2/13/01 application
information suspended per
technology; Office action
re-engineering and issued
developing more 2/13/01,
efficient and pending
cost-effective disposition of
asset-management WISDOM
processes for others; application
documenting and 75/612,211-
outlining how -for which a
asset-management tools final refusal
will be deployed and to register
interacted with; and issued 2/13/01
software development,
implementation and
customization
------------------------------------------------------------------------------------------------------------------------
Registration No. Int'l Class 42: Filed 1/8/98 Section 8
*STRATEGIC 2,347,772 -------------- Declaration
ASSET consulting services, Registered 5/2/00 due 5/2/06
MANAGEMENT namely, for assisting (Supplemental
ANALYSIS in the selecting and Register) Renewal
sizing of asset Application &
management software HBMVR correction: Section 8
and determining the assignment to Axial Declaration
return on investment Technology Holding due 5/2/10
of computer systems AG recorded 12/13/99
at reel/frame
002009/0178.
------------------------------------------------------------------------------------------------------------------------
41
--------------------------------------------------------------------------------------------------------------------
XXXX APPLICATION / CLASS: STATUS ACTION DUE
REGISTRATION GOODS/SERVICES
====================================================================================================================
*WYZDOM Registration No. 1,697,483 Int'l Class 9: Filed 8/9/91 Renewal
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computer programs for Registered 6/30/92 Application &
asset management of Section 8
owned, leased and HBMVR note: Sec. 8 & Declaration
rental computer and 15 accepted 9/23/98; due 6/30/02
computer-related
equipment HBMVR correction:
assignment to Axial
Technology Holding
AG recorded 12/13/99
at reel/frame
002009/0178
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CTM (EUROPE)
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WYZDOM Registration No. 292078 Int'l Class 9: Filed 6/6/96 Renewal due
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computer software, for Registered 10/1/98 6/6/06
an asset management
system
Int'l Class 35: HBMVR note: as of
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providing business 2/27/01, local
information; services counsel is
in connection with completing recordal
computer software for of assignment to
asset management Axial Technology
systems; asset Holding AG
management services
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Section 3.10 Investment Representations:
Axial is acquiring stock for its own account except for a certain minority
distribution of the shares to key Wyzdom Solutions, Inc. employees, Xxxxxxxxx
Xxxxxx, and others, all of which has been disclosed to Buyers.
Section 3.11 Litigation
There is a dispute between WSI and OnDisplay. WSI licensed OnDisplay's
software for the purpose facilitating access to supplier catalogs over the web.
The software did not work as advertised and was returned, and there is a dispute
over payment of the software license fee. The OnDisplay software is not used in
the Wyzdom software product. They have filed a claim and WSI's legal counsel is
pursuing WSI's legal remedies and resolution.
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On Tuesday, February 27, 0000 XXX was served a summons by Molalla Holdings
Inc. DBA Accounts Receivable Management Solutions on behalf of Digital
Engraving, Inc. claiming non payment of $2,736.83. WSI paid Digital Engraving
the full amount owing on February 23, 2001. WSI is pursuing Molalla to dismiss
the suit.
Section 3.13 Permits:
There are no permits known to be required that are related to the Assets
described in this agreement.
Section 3.15 Brokerage:
By agreement, Xxxxxxxxx Xxxxxx Inc., a Washington corporation, is entitled
to a percentage of the total purchase consideration received by Seller. This
amount shall be 5% of the Stock Consideration, 5% the Cash Consideration and 4%
of the Contingent Price. Seller shall instruct Buyer to make the payment of
Xxxxxxxxx Xxxxxx'x share of the Cash Consideration and the Contingent Price
considerations directly to them. Where Stock Consideration is held in Escrow,
Seller shall provide instructions to Escrow Agent whereby upon release from
Escrow to the Transfer Agent, the Transfer Agent is instructed to record the
designated certificates in the name of Xxxxxxxxx Xxxxxx Inc.
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Schedule 3.0
Disclosure Schedule
Any notices for Xxxxxxxxx Xxxxxx Inc. should be sent to:
Attn: Corporate Secretary
Xxxxxxxxx Xxxxxx Inc.
000 Xxxxx Xxx. - Xxxxx 0000
Xxxxxxx XX 00000
Tel: (000) 000-0000
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Schedule 5.02
Term Sheet attached to the Letter of Understanding
TANGRAM-AXIAL TERM SHEET
1. "Tangram" agrees to acquire, and "Axial" (collectively Axial Technology
Holding AG plus Axial Investments and Trading Limited plus Wyzdom Solutions
Inc. or their respective assignees) agree to sell to Tangram, free and
clear of all liens and encumbrances, the following assets owned by Axial:
a. All rights of ownership to the Axial proprietary asset management
technology commonly known as Wyzdom
b. All source code, and all documentation and tools developed to create,
implement and support Wyzdom and related products and services
c. All intellectual property trademarks, copyrights, naming rights,
domains and patents related to Wyzdom and related products and services.
d. All license and distribution agreements for Wyzdom products and
related services.
e. All support contracts for Wyzdom products and services.
f. All client and prospect lists, databases, and related proprietary
marketing and sales information for Wyzdom products and services.
g. All marketing, Sales, Implementation Customer Support, and Training
documentation, together with all processes and procedures, related to
Wyzdom products.
2. Tangram agrees to pay Axial the following compensation for the assets
defined in Item 1 by the following three steps.
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a. Tangram common stock (Nasdaq symbol TESI) - 3,000,000 shares at closing,
provided the outstanding stock pre-closing is less than 17 million shares.
Tangram shall deliver 1,500,000 shares at closing and escrow 1,500,000 shares
to secure Axial's indemnification of Tangram with regard to any breach of the
representations and warranties given by Axial in the definitive agreement.
Absent an indemnifiable event the escrowed shares shall be delivered six
months following closing or the Tangram/Wyzdom -Asset Management product
launch date, whichever comes first. Axial has the right to renegotiate or
decline if the closing price average of the prior five trading days before
closing is below $0.25 per share, and Tangram has similar right to
renegotiate or decline if the closing price average of the five trading days
before closing is greater than $1.00 per share.
b. Cash in the amount of $1,500,000, payable during the three years after
closing as follows:
. End of 12/th/ month - $300,000 USD, with Tangram having the option to
provide Tangram common stock in lieu of cash, with the per share price
computed at 80% of the average market closing price during the 10 trading
days preceding the end of month 12.
. End of 24/th/ month - $500,000 USD
. End of 36/th/ month - $700,000 USD
c. An upside cash bonus, payable during the three years after closing, provided
the revenue generated for asset management products and services in aggregate
exceeded $3 million during first 12 months, $5 million during second 12
months, and $7 million during third 12 months. When revenues exceed these
baseline amounts during each respective 12 month
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period, Axial will earn a 5% cash bonus on asset management revenue in excess
of the agreed baseline amounts up to a limit of an additional $300,000,
$500,000, and $700,000 over and above the amounts specified in item 2b above
computed through end of month 12, 24, and 36 respectively. The upside cash
bonuses are to be computed independently, such that any or all of the 3
bonuses may or may not be paid depending upon the achievement of the revenue
goal for any one period. However, if the Tangram common stock price exceeds
an average price of $2.00 per share (computed based on the average of the
closing prices during the last month of each of the 12 month periods), the
cash bonus is reduced 1.0% for each $1.00 increase in stock price above
$2.00, up to a limit of $7.00. (e.g. If the average stock price is $4, the
bonus is reduced to 3%; If the limit is reached -$7 or above for any defined
12 month period, the bonus is reduced to 0%.)
3. Axial agrees that Tangram may enter into employment negotiations with key
people currently employed by Wyzdom Solutions. A prerequisite to closing
shall be Tangram having employed sufficient Wyzdom employees to transfer to
Tangram the necessary domain expertise. If closing does not occur, Tangram
agrees not to employ them during the following 12 months without the consent
of Axial.
4. Axial agrees to work diligently with Tangram to determine strong incentives
for key people from Wyzdom Solutions that become Tangram employees, such that
there is incentive through Axial as well as through Tangram for mutual
success by all parties for a period of twelve months following closing.
5. Axial shall be entitled to one board seat of Tangram as long as Axial has
outstanding earn-out entitlement and/or collectively holds greater than 10%
of the ordinary issued stock of TESI. Xxxxxx X. Xxxxx, or another qualified
officer of Axial or its holding company, will become
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a member of the Board of Directors of Tangram upon closing. His initial term
will be one year, and he will be provided all voting rights and privileges as
normally granted to other outside directors.
6. Axial and Tangram will enter into a set of business licenses and other
agreements at closing:
a. Axial will be granted a perpetual, non-exclusive, no-cost license, plus
source and object code software, for the most current version by Wyzdom at
the time of closing for use within the business of Axial. This license
does not allow for sale or lease of Wyzdom to other end users or
distributors but does envisage the use of Wyzdom for the provision of
hosted asset management services by Axial as part of its business
offerings.
b. Axial will enter into agreement and will pay normal product maintenance
fees for future Tangram product upgrades at the most favored client rate.
During the efficacy of the agreement, Axial will be provided the product
upgrades to Wyzdom, or its successor product created by Tangram. In
addition, source code upgrades will be provided under same conditions as
item 6.a.
c. Axial will be able to acquire other Tangram products and support at most
favored distributor rate for its internal use.
d. Where Axial's business needs special features for the Wyzdom/Tangram
product, upon reasonable notice Tangram agrees to provide custom technical
support at their most favored client rates. When Axial pays for such
features, Tangram agrees to provide *Axial exclusive use of such special
features for six months after acceptable delivery to Axial. Tangram
retains the ownership and right to use such features in their products
thereafter at Tangram's option.
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e. Axial and Tangram agree to negotiate a separate distribution agreement
whereby Axial may serve as a distributor or similar value function for
Tangram in Europe and Africa, to the extent such an agreement will not be
competitive with existing sales channels.
7. Wyzdom Solution Inc's capital equipment and building lease are not included
as part of the consideration paid by Tangram in Item 2. However, if Tangram
desires any such equipment prior to closing that is not already sold to
others, Axial agrees to sell it to Tangram at Axial's then book value.
8. Closing is scheduled for on or before 31 January 2001, and will require
approval of the board of directors of Axial and Tangram as well as of all
applicable regulatory authorities prior to closing. Time is of the essence.
9. No public announcement regarding this transaction will be made by either
party without the prior approval of Tangram's or Axial's legal counsel.
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