ASSET PURCHASE AGREEMENT
EXHIBIT
10.1
This
Asset Purchase Agreement (the “Agreement”) is entered
into effective as of January 1, 2009 (the “Effective Date”), by and among
Primal Solutions, Inc., a Delaware corporation (“Primal”), Wireless Billing
Systems, a California corporation (“WBS”; together with Primal,
“Sellers” and each is a
“Seller”) and BillWise,
Inc., a California corporation (“Purchaser”). Purchaser,
on the one hand, and Sellers, on the other hand, shall hereinafter individually
be referred to as a “Party” and collectively be
referred to as the “Parties.”
RECITALS
WHEREAS,
Sellers are engaged in the business of providing innovative managed solutions
for turning data into revenue, including through its IPC platform which
captures, correlates, tracks, manages, monetizes, and analyzes clients’
communications transactions data (the “Business”); and
WHEREAS,
Purchaser desires to purchase from Sellers, and Sellers desire to sell and
transfer to Purchaser, certain of Sellers’ assets necessary for operation of the
Business on the terms and subject to the conditions of this
Agreement.
NOW,
THEREFORE, in consideration of the premises, and the representations,
warranties, covenants, and agreements contained in the Transaction Documents (as
hereinafter defined), and for such other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
ARTICLE
1
PURCHASE
AND SALE OF ASSETS
1. Purchase and Sale of
Assets
1.1 Purchase and Sale of
Acquired Assets. On the Closing Date but effective as of the
Effective Date, each Seller shall sell, transfer, deliver, convey and assign to
Purchaser, and Purchaser shall purchase, acquire, and accept from such Seller,
upon the terms and conditions stated herein, all of such Seller’s right, title
and interest in and to the following:
(a) All
hardware, third-party software licenses, documentation, third-party trademark
licenses, fixtures, furniture, equipment and other assets of such Seller, in
each case, which is necessary to satisfy such Seller’s obligations under the
Assumed Contracts, as identified on Schedule 1.1 attached
hereto (the “Transferred
Resources”), to the fullest extent transferable by such Seller to
Purchaser (or if not at all transferable, a mutually acceptable arrangement
shall be structured as provided in Section 8.4);
(b) All
right, title, and interest of such Seller in and to the source code, object
code, schematics, design tools, and all associated documentation for all of such
Seller’s past or present software products (including but not limited to Connect
CCB, Connect IXC, Access IM, Connect RTR, IPC, WPM, Marketing Dashboard, Revenue
Assurance Suite, Communications Resources Manager (CRM), and EBP&P), and all
of such Seller’s software tools, subroutines, and other components, whether
completed or under development, all prior or unreleased versions thereof, and
all tangible embodiments (and all copies, extracts, or analyses thereof) in any
medium whatsoever, and all right, title, and interest of such Seller in and to
its copyrights, patents, trademarks, service marks, trade dress, and any
applications therefor (including U.S. patent application number 12055933), and
any related Intellectual Property Rights (as defined in Section 2.2) of such
Seller, and all rights under any and all contracts for
the
acquisition or development of any of the foregoing, including without limitation
assignments to such Seller, covenants to assign inventions to such Seller
(including without limitation those assignments contained in subcontractor
agreements), covenants to cooperate with such Seller’s obtaining protections of
intellectual property, other provisions for ownership by such Seller of a
work-for-hire, any and all confidentiality and non-disclosure agreements in
favor of a Seller and all agreements similar to the foregoing, in each case to
the fullest extent transferable by such Seller to Purchaser (or if not at all
transferable, a mutually acceptable arrangement shall be structured as provided
in Section 8.4) (collectively, the “Intellectual
Property”);
(c) All
right, title, and interest (including rights to payment for customer services
which services were rendered on or following the Effective Date or for Software
(as hereinafter defined) for periods on or following the Effective Date) of such
Seller in and under the Assumed Contracts (as hereinafter defined) on and after
the Effective Date, including any successor agreements to the Assumed Contracts
which are entered into by such Seller with respect to the Business prior to the
Closing Date (the “Contract
Rights”);
(d) Cash in
an amount, when all such payments made by Sellers are aggregated, equal to
Ninety Seven Thousand Three Hundred Seventy-Four Dollars and 52/100 ($97,374.52)
(“Prepaid Customer
Funds” and, together with the Transferred Resources, Intellectual
Property, and Contract Rights, the “Acquired Assets”), which
amount represents prepaid but undelivered maintenance obligations under the
Assumed Contracts with Bresnan (in an amount equal to $7,760); Xxxxxxxxxx (in an
amount equal to $40,000); Westel (in an amount equal to $6,533); and Page One
(in an amount equal to $43,081.52);
(e) All
receivables and rights to payment arising with respect to customer services
provided on or after the Effective Date or Software for periods on or following
the Effective Date relating to any Acquired Assets;
(f) Copies of
those books and records of such Seller directly related to the Acquired Assets,
including invoices, purchase orders, and vendor and customer correspondence;
and
(g) All
goodwill and other intangible assets associated with the foregoing;
in each
case wherever located, but specifically excluding those assets described in
Section 1.2.
1.2 Excluded
Assets. Notwithstanding any term herein to the contrary,
neither Seller is selling, assigning, transferring, or delivering to Purchaser,
and Purchaser is not purchasing, accepting, or acquiring from Sellers, any
assets other than those assets specifically set forth in Section 1.1
herein. Specifically, the Acquired Assets exclude without
limitation:
(a) any cash,
cash equivalents, or short-term investments of Sellers, except as specifically
set forth in Section 1.1(d);
(b) any
rights of either Seller under this Agreement (or any other agreement between
Purchaser and a Seller entered into on or after the Effective
Date);
(c) any
capital stock of either Seller or its subsidiaries;
(d) all of
each Seller’s corporate minute books and related records (including its
Certificate or Articles of Incorporation, qualifications to conduct business as
a foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other
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identification
numbers, seals, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance and existence of Seller as a
corporation);
(e) all of
the intercompany loans and accounts receivable between Sellers;
(f) any
receivable or payable of either Seller relating to state or federal taxes and
any rights of either Seller under any tax returns and related tax
records;
(g) any other
receivable of either Seller, except to the extent (i) of receivables or
amounts due and unpaid which relate to customer services which services were
rendered on or after the Effective Date or Software for periods on or after the
Effective Date under the Assumed Contracts or Acquired Assets or (ii) as
expressly provided in Section 8.3(b);
(h) any
corporate names of either Seller (for use as corporate names rather than in
trademarks or service marks) and Primal’s “Primal Solutions No IP Transaction
Left Behind” trademark (Serial No. 78729753), starburst design (Serial
No. 78729726), and “No IP Transaction Left Behind” trademark (Serial No.
78725977);
(i) any
computer software used by either Seller in its accounting or general
administrative functions, software relating to commercially available software
developer licenses for various third-party products, and software licensed from
a third-party which is not transferable;
(j) all
permits and governmental licenses of the Business (including but not limited to
Seller’s City of Irvine, California business permit; and its permit with the
Orange County Fire Authority);
(k) all
personnel records and other records that either Seller is required by law to
retain in its possession;
(l) all
insurance policies and rights thereunder; and
(m) all
rights in connection with and assets of any employee benefit plans or programs
maintained for employees of either Seller.
1.3 Free and Clear of All Liens
and Liabilities. The Acquired Assets shall be free and clear
of all liens, liabilities, claims, and encumbrances, except as set forth on
Schedule 1.3
attached hereto.
1.4 Delivery of Acquired
Assets. At the Closing, but effective as of the Effective
Date, Purchaser shall take physical possession of the Acquired Assets at
Sellers’ principal place of business in Irvine, California.
ARTICLE
2
PURCHASE
PRICE
2.1 Satisfaction of
Obligations. The consideration for this Agreement and the
transactions contemplated hereby is (a) Purchaser’s execution, delivery,
and full satisfaction of the License Agreement, (b) Purchaser’s full
satisfaction of (i) the Assumed Liabilities, (ii) any indemnification
obligations arising hereunder, and (iii) each of its other obligation
hereunder, and (c) payment of Royalties in accordance with Section 2.2,
below (collectively, the “Purchase Price”).
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2.2 Royalties.
(a) Royalties. Provided
that the Closing occurs, for a period of three (3) years beginning on the
Effective Date (“Royalty
Period”), Purchaser shall pay to Sellers, without offset or deduction of
any kind or manner whatsoever, royalties equal to four percent (4%) of Net
License Sales (“Royalties”). If a
Product is sold in combination with one or more other products that are not
Products, the portion of the license revenue attributable to the Product will be
deemed to be a reasonable portion of the license revenue received for the
combination of the products. Further, to the extent that such
products are invoiced as separate line items, Purchaser shall ensure that the
stated prices for such Products are reasonable.
(b) Payment
Terms. Within sixty (60) days after the end of each quarter
during the Royalty Period, Purchaser shall provide a statement setting forth the
gross revenues, Net License Sales, and other information reasonably requested by
Sellers, and the corresponding Royalties. All Royalties payable to
Sellers will be paid by Purchaser to Sellers concurrently with each such
statement. Outstanding amounts not paid when due will accrue interest
at the lower of one and one-half percent (1½%) per month or the highest monthly
rate allowed by applicable law. The obligation to pay and the payment
of any such interest will not operate to extend any payment due date, and
Sellers waive no rights by accepting late payment with interest.
(c) Taxes. Purchaser
shall pay, or upon receipt of an invoice from Sellers, shall reimburse Sellers
for, all Taxes imposed on Purchaser, or required to be collected by Sellers,
imposed on the transactions contemplated by this Section 2.2; provided, however,
that Purchaser shall not be responsible for any Taxes based on Sellers’ net
income.
(d) Records and
Audit. Purchaser agrees to maintain and keep accurate books of
account and records in connection with Royalties payable to Sellers under this
Section 2.2 (including, without limitation, true and correct copies of relevant
agreements). Sellers shall have the right, upon reasonable notice,
during normal business hours, subject to reasonable confidentiality
requirements, and in a manner not unreasonably disruptive to Purchaser’s
operations, to engage an independent auditor to examine and otherwise audit said
books of account, records and all other documents and materials in the
possession or under the control of Purchaser for purposes of verifying the
Royalties payable to Sellers under this Section 2.2. Purchaser shall
maintain and keep all such books of accounts and records available for at least
three (3) years after the year in which the applicable Royalties are
due. All costs and expenses incurred in performing any such audit
will be paid by Sellers unless the audit discloses at least a five percent (5%)
shortfall in the amounts paid to Sellers, in which case Purchaser will bear the
full cost of the audit.
(e) Confidentiality of
Software. At all times after the Effective Date, Sellers shall
comply with the confidentiality provisions of the License Agreement (as
hereinafter defined) to maintain the confidentiality of the
Software.
(f) Definitions. For
purposes of this Section 2.2, the following terms shall have the meanings set
forth below:
(i) “Affiliate” means, with
respect to an entity, any other entity that controls, is controlled by, or is
under common control with such entity. For the purposes of this
Agreement, the term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of any
such person whether through the ownership of voting securities, by contract, or
otherwise.
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(ii) “Derivative Works” means any
modifications, additions, or extensions made by Purchaser to the Software and
any other works whatsoever based on or containing any portion of the
Software.
(iii) “Intellectual Property Rights”
means any and all of the following (by whatever name or term known or
designated) now known or hereafter existing anywhere in the
world: (i) rights associated with works of authorship,
including, without limitation, all exclusive exploitation rights, copyrights,
moral rights, and mask work rights; (ii) trade secret rights and other
confidential or proprietary information; (iii) patents (including, without
limitation, reissues, divisions, reexaminations, extensions, provisionals,
continuations, and continuations-in-part thereof), designs, and other industrial
property rights; (iv) source code, object code, formulas, ideas, concepts,
mask works, methods, know-how, processes, devices, and the like, whether or not
any of the foregoing are subject to protection under law; (v) all
registrations, applications, renewals, extensions, continuations, divisions,
reissues, and the like; and (vi) all other intellectual property and
proprietary rights of every kind and nature whether arising by operation of law,
contract, license, or otherwise, including trademark, service xxxx, trade dress,
and other marks based on designation of source or origin.
(iv) “Net License Sales” mean all
revenues received by Purchaser (or any of its Affiliates) from the Assumed
Contracts (including the license portion of fees collected from Brighthouse
Networks in 2009) and any new agreements (or amendments to existing agreements)
with third parties (including existing customers and resellers) with respect to
any Products, net of third-party costs as follows: (A) amounts expended, repaid
or credited by reasons of defects or returns; (B) commissions paid to resellers;
and (C) sales and other taxes or similar amounts paid to a governmental entity
(other than Sellers’ income taxes). Net License Sales shall not
include any of the following: (I) license revenues solely from sales
of software products or modules that are not Products, (II) services revenues,
and (III) maintenance revenues; provided, however, that in negotiating and
entering into contracts with customers, Purchaser will reasonably allocate
revenues between Products and those items for which Purchaser has no obligation
to pay Royalties. Purchaser shall pay Royalties on revenues that are
substantively license revenues from Products, irrespective of how such revenues
are characterized in any customer contract.
(v) “Products” means present and
future versions of the Software and all Derivative Works.
(vi) “Software” means all of
Sellers’ software products immediately prior to the Effective Date (including
Connect CCB, Connect IXC, Access IM, Connect RTR, IPC, WPM, Marketing Dashboard,
Revenue Assurance Suite, Communications Resources Manager (CRM), and EBP&P)
as further described in Schedule 2.2 attached
hereto, including all associated source code, object code, documentation, and
related Intellectual Property Rights.
(vii) “Tax” means foreign, federal,
state, provincial, local (including, without limitation, sales, use, excise,
value-added, and goods-and-services taxes) and all other taxes, fees, levies,
and the like, however designated.
(g) Consent to
Assignment. Purchaser hereby acknowledges that Sellers have
assigned to certain creditors of Sellers (the “SSF Entities”) all of Sellers’
respective rights in and to (i) all Royalties, (ii) reimbursement and
payment of all other sums described in this Section 2.2, (iii) preserve,
protect and enforce the payment and reimbursement obligations under this Section
2.2, and (iv) all indemnification rights under Article 12 of this Agreement to
the extent pertaining to any of the foregoing (the “SSF Assignment”) in part in
consideration of the SSF Entities’ consent to the
5
transactions
contemplated hereby and a waiver of their rights in the Acquired
Assets. Purchaser hereby expressly consents to such assignment,
agrees to pay the Royalties to the SSF Entities or as the SSF Entities may
direct, without offset or deduction of any kind or manner whatsoever, and
confirms that the SSF Entities shall have the sole and exclusive right, in their
own name, to enforce the provisions of this Section 2.2 directly against
Purchaser.
2.3 Allocation of Purchase
Price. The Parties agree to allocate the Purchase Price among
the Acquired Assets in accordance with Section 1060 of the Internal Revenue Code
of 1986, as amended, and to cooperate in the preparation of Internal Revenue
Service Form 8594 (and any similar required state or local tax
forms).
ARTICLE
3
ASSUMPTION
OF SPECIFIED LIABILITIES
3. Assumption of Specified
Liabilities.
3.1 No Assumption of Liabilities
Unless Expressly Assumed. Except as specifically provided in
Section 3.2 below, Purchaser does not assume and shall not have any duty or
obligation with respect to any liability, duty, contract, agreement, or
obligation of either Seller, whether by the terms of this Agreement, by
operation of law, or otherwise, whether or not associated with the Business or
any of the Acquired Assets. The Assumed Liabilities shall not include
the Retained Liabilities. The Retained Liabilities shall remain the
sole responsibility of and shall be retained, paid, performed, and discharged
solely by Sellers. “Retained
Liabilities” means every liability and obligation of Sellers other than
the Assumed Liabilities and Purchaser’s liabilities and obligations arising
hereunder, and such term includes, without limitation:
(a) Any
liability for taxes, including (i) any taxes arising as a result of Sellers’
operation of the Business or ownership of the Acquired Assets prior to the
Effective Date, and (ii) any taxes that will arise as a result of the sale of
the Acquired Assets pursuant to this Agreement (except as provided in Section
14.2);
(b) Any
liability or obligation of either Seller under this Agreement or the other
Transaction Documents;
(c) Any
liability or obligation of either Seller relating to any Excluded Asset or any
contract or agreement not assumed by Purchaser under Section 3.2;
(d) Any
liability or obligation arising out of or relating to services provided by
Sellers prior to the Effective Date (including any warranty claims relating
thereto) other than to the extent assumed under Section 3.2;
(e) Any
liability or obligation under any Assumed Contract that arises on or after the
Effective Date but that arises out of or relates to any breach, nonperformance
or other event or circumstance that occurred prior to the Effective
Date;
(f) Any
liability or obligation arising under any Seller employee benefit plan or any
employment, severance, retention, or termination agreement with any employee of
either Seller or relating to payroll, vacation, sick leave, workers’
compensation, unemployment benefits, employee stock option or profit-sharing
plans, health care plans or benefits or any other employee plan or benefit of
any kind for either Seller’s employees or former employees or both;
6
(g) Any
liability arising out of or relating to any employee grievance relating to such
employee’s employment with either Seller whether or not the affected employees
are hired by Purchaser;
(h) Any
liability arising out of or related to Primal’s termination of its real estate
lease or possession of real property; and
(i) Any
liability or obligation related to any indebtedness or payable of Seller other
than as specifically assumed by Purchaser pursuant to Section 3.2.
3.2 Specification of Liabilities
Assumed. On and subject to the terms and conditions of this
Agreement, Purchaser agrees to assume and become responsible for all of the
Assumed Liabilities on the Closing Date but effective as of the Effective
Date. “Assumed
Liabilities” means the following liabilities and obligations of
Sellers:
(a) All
existing and future liabilities and obligations of Sellers under the Assumed
Contracts (as defined on Schedule 3.2 attached
hereto), including without limitation all liabilities and obligations arising on
or after the Effective Date (but excluding any liability or obligation arising
out of or relating to a breach of any Assumed Contract that occurred or, with
the giving of notice or lapse of time, or both, would have occurred prior to the
Effective Date);
(b) All
liabilities and obligations of Sellers arising out of, relating to, or in
connection with its prepaid but undelivered maintenance obligations due for
periods after the Effective Date under the Assumed Contracts with Bresnan,
Hutchinson, and Westel, it being understood and agreed that the fees for such
services have already been paid by such customers to either or both Sellers and
Sellers are transferring the fees to Purchaser as the Prepaid Customer
Funds;
(c) All
liabilities resulting from the ownership, use, operation or maintenance of the
Acquired Assets by Purchaser, or the conduct of the Business by Purchaser,
arising on or after the Effective Date, except to the extent otherwise provided
for under this Agreement; and
(d) All
liabilities and obligations arising on or after the Effective Date in connection
with the Transferred Resources, other than office rent, utilities, and other
normal recurring costs and expenses incurred to March 31, 2009 in connection
with Sellers’ providing any of the Transferred Resources in accordance with this
Agreement.
ARTICLE
4
CLOSING
DATE
4. Closing
Date.
4.1 Closing
Date. Provided that all conditions precedent set forth in this
Agreement have been satisfied or waived, the closing of the transactions
contemplated hereby (the “Closing”) shall occur on
January 15, 2009 (the “Closing
Date”) or such other date mutually agreed upon by the
Parties. The Closing shall be held on the Closing Date at 10:00 a.m.
PST at the offices of Xxxxx Xxxx LLP, located at 0000 Xxxxxxxxx Xxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxxxx 00000, unless another time or place is mutually agreed
upon by the Parties.
4.2 Date of
Transfer. Provided that the Closing occurs, it is the intent
of the Parties that the Acquired Assets be transferred to Purchaser effective as
of 12:00:01 a.m. on the Effective Date. Further,
7
the
Assumed Liabilities shall be transferred to and assumed by Purchaser effective
as of 12:00:01 a.m. on the Effective Date.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF SELLERS
5. Representations and
Warranties of Sellers. As a material inducement to Purchaser
to enter into this Agreement, each Seller jointly and severally makes the
following representations and warranties to Purchaser, each of which such Seller
represents to be true and correct as of the Effective Date (unless otherwise
stated) and will be true and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the Effective Date
throughout this Article 5), except as set forth in the disclosure schedules
accompanying this Agreement (the “Disclosure
Schedules”). The Disclosure Schedules shall be arranged in
paragraphs corresponding to the numbered paragraphs contained in this Article 5,
and the disclosure in any paragraph shall qualify other paragraphs in this
Article 5 to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to such other
paragraphs.
5.1 Organization and
Qualification. Primal is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware, with all
necessary corporate power and authority to own or use its property that it now
owns or uses in connection with Primal’s Business as it is now being
conducted.
5.2 Authorization and
Validity. Each Seller has the requisite power and is (or shall
be as of the Closing) duly authorized to execute, deliver and perform the terms
of this Agreement and to execute, deliver and perform its obligations under the
documents required at the Closing pursuant to Article 11 and any other
documents executed and/or delivered in connection herewith or therewith,
including without limitation any exhibits or schedules hereto or thereto
(collectively, the “Transaction
Documents”). This Agreement and the other Transaction
Documents to which each Seller is a party are, or will be upon execution, legal,
valid and binding obligations of such Seller, duly enforceable against such
Seller according to their respective terms, except as such enforcement may be
limited by the application of bankruptcy, insolvency, reorganization, moratorium
and other laws affecting creditors’ rights generally and as such enforcement may
be limited by the availability of specific performance and the application of
equitable principles, regardless of whether enforcement is sought in a
proceeding at law or in equity.
5.3 Title to
Trademarks. Primal owns and possesses good title to the
following trademarks: Connect CCB (Serial No. 76089883); Out Front
(Serial No. 75694432); Primal Access IM (Serial No. 76037945); Primal Connect
CCB (Serial No. 76088999); KPIPAK (Serial No. 78638828); and Primal (Serial No.
75694434). WBS owns and possesses good title to the following
trademarks: Creditwatch (Serial Nos. 74358508 and
74358507). Sellers have complied, in all material respects, with all
currently outstanding source license requirements. Sellers have not
assigned, transferred, or conveyed any of their respective rights in and to any
of the Intellectual Property, except in favor of Purchaser under this Agreement
and except as set forth on Section 5.3(a) of the
Disclosure Schedules. Sellers have not assigned, transferred,
conveyed or encumbered, or suffered any encumbrance of their respective rights
in and to any of the Acquired Assets (other than the Intellectual Property)
except in favor of Purchaser under this Agreement and except as set forth on
Section 5.3(b) of the
Disclosure Schedules.
5.4 Approval by Special
Committee of the Board and Shareholders. A special committee of Primal’s
Board of Directors, the holders of at least a majority of Primal’s voting stock,
and the holders of at least a majority of WBS’ voting stock have (or, with
respect to such stockholders, prior to the Closing
8
Date will
have) duly and validly authorized and approved the Transaction
Documents. In its deliberations, the special committee has sought
advice of qualified experts, has carefully deliberated and has independently
arrived at its conclusions that the transactions contemplated in this Agreement
are fair and reasonable to the Sellers and their respective stakeholders and
that the consideration described in Section 2 constitutes full and fair value
for the Acquired Assets.
5.5 Creditors. To
Sellers’ current actual knowledge, no creditor of either Seller has claimed,
orally or in writing, that any default, breach or nonperformance has occurred or
shall occur on account of the anticipated purchase and sale of the Acquired
Assets.
5.6 Disclaimer of Other
Representations and Warranties. Except as expressly set forth
in this Article 5, neither Seller makes any representation or warranty, express
or implied, at law or in equity, in respect of any of its assets (including
without limitation the Acquired Assets), liabilities or operations (including
without limitation the Assumed Liabilities), with respect to the condition,
merchantability, suitability or fitness for a particular purpose, with respect
to its rights, title, and interest in and to any of its assets (including
without limitation the Acquired Assets), with respect to the accuracy or
completeness of any information regarding either Seller, the Business, Acquired
Assets or Assumed Liabilities, or with respect to the enforceability, validity,
legality or authorization of this Agreement, the other Transaction Documents,
and the transactions contemplated hereby and thereby, and any such other
representations or warranties are hereby expressly
disclaimed. Purchaser hereby acknowledges that, except to the extent
specifically set forth in this Article 5, Purchaser is purchasing the Acquired
Assets on a “as-is, where-is” basis. Without limiting the generality
of the foregoing, neither Seller makes any representation or warranty regarding
any assets other than the Acquired Assets or any liabilities other than the
Assumed Liabilities, and none shall be implied at law or in equity.
ARTICLE
6
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
6. Representations and
Warranties of Purchaser. As a material inducement to Sellers
to enter into this Agreement, Purchaser makes the following representations and
warranties to Sellers, each of which Purchaser represents to be true and correct
as of the Effective Date (unless otherwise stated) and will be true and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the Effective Date throughout this Article
6):
6.1 Organization. Purchaser
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of California, with all necessary corporate power and
authority to own or use its property that it now owns or uses and to carry on
its business as it is now being conducted.
6.2 Authorization and
Validity. Purchaser has the requisite power and is duly
authorized to execute, deliver and perform the terms of this Agreement and to
execute, deliver and perform its obligations under the Transaction
Documents. This Agreement and the other Transaction Documents are, or
will be upon execution, legal, valid and binding obligations of Purchaser, duly
enforceable against Purchaser according to their respective terms, except as
such enforcement may be limited by the application of bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors’ rights generally
and as such enforcement may be limited by the availability of specific
performance and the application of equitable principles, regardless of whether
enforcement is sought in a proceeding at law or in equity.
6.3 Purchaser’s Due
Diligence. Purchaser represents, warrants, covenants and
agrees that (a) certain founders and officers of Purchaser were, through
and including the Closing Date, long-standing executive officers of Sellers who
had access to and were intimately familiar with financial and
9
other
material information regarding Sellers; (b) therefore, Purchaser has
(i) a preexisting personal or business relationship with the Company or one
or more of its officers, directors, or control persons and (ii) by reason
of the business or financial experience of Purchaser’s founders, officers, and
advisors who are unaffiliated with and who are not compensated, directly or
indirectly, by either Seller, Purchaser is capable of evaluating the risks and
merits of this investment and of protecting Purchaser’s own interests in
connection with the Transaction Documents; (c) Purchaser has received and
reviewed all information that Purchaser considers necessary or appropriate for
deciding whether to execute, deliver, and perform the Transaction Documents and
the transactions contemplated thereby; and (d) Purchaser has had an opportunity
to ask questions and receive answers from Sellers and their respective officers
and employees regarding the Business, financial affairs and other aspects of
Seller and has further had the opportunity to obtain any information (to the
extent either Seller possesses or can acquire such information without
unreasonable effort or expense) which Purchaser deems necessary to evaluate the
Transaction Documents and the transactions contemplated thereby and to verify
the accuracy of the representations, warranties, covenants, and agreements set
forth in the Transaction Documents and of information otherwise provided to
Purchaser.
6.4 Adequate
Capitalization. Purchaser represents, warrants, and agrees
that it is willing and able (financially and otherwise) to, and hereby does,
assume all of the Assumed Liabilities. Purchaser further represents,
warrants, and agrees that it has the financial means to satisfy all obligations
reasonably and ordinarily relating to the Acquired Assets and Assumed
Liabilities and to fully and timely satisfy its obligations under the
Transaction Documents, and that, as of the Effective Date and also immediately
after giving effect to the transactions contemplated by the Transaction
Documents (the “Contemplated
Transactions”), Purchaser, to its actual knowledge, shall have adequate
capital resources to carry on its businesses.
ARTICLE
7
PRE-CLOSING
COVENANTS
7. Pre-Closing
Covenants. The Parties agree as follows with respect to the
period between the Effective Date and the Closing.
7.1 General. Each
of the Parties will use its commercially reasonable efforts to take all actions
and to do all things necessary, proper, or advisable in order to consummate and
make effective the Contemplated Transactions (including satisfaction, but not
waiver, of the Closing conditions set forth in Articles 9 and 10,
below).
7.2 Full
Access. Sellers
will permit representatives of Purchaser (including legal counsel and
accountants) to have full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of Sellers, to all
premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to the Acquired Assets and Assumed
Liabilities. Purchaser will treat and hold as such any Confidential
Information it receives from either Seller in the course of the reviews
contemplated by this Section 7.2,
will not use any of the Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason whatsoever, will
return to Sellers all tangible embodiments (and all copies) of the Confidential
Information that are in its possession. Restrictions on use or
disclosure by Purchaser of such Confidential Information shall terminate on and
as of the Closing Date. “Confidential Information” means all
information regarding a Party’s business or affairs, including, without
limitation, the Software, business concepts, processes, methods, systems,
know-how, devices, formulas, product specifications, marketing methods, prices,
customer lists, methods of operation, or other information, whether in oral,
written, or electronic form, that is either designated as confidential or that
is disclosed under circumstances such that a reasonable person would know it is
confidential. The following information will not be deemed
Confidential Information: (i) information that is or becomes publicly
available
10
through
no fault of the Party obligated to keep it confidential; (ii) information with
regard to the other Party that was rightfully known by a Party prior to
commencement of discussions regarding the subject matter of the Agreement; (iii)
information that was independently developed by a Party without use of the
Confidential Information; and (iv) information rightfully disclosed to a Party
by a third party without continuing restrictions on its use or
disclosure.
7.3 Notice of
Developments. Sellers
may elect at any time to notify Purchaser of any development causing a breach of
any of the representations and warranties in Article 5
above. Unless Purchaser has the right to terminate this Agreement
pursuant to Section 13.1(b)
below by reason of the development and exercises that right within the period of
ten (10) business days referred to in Section 13.1(b)
below, the written notice pursuant to this Section 7.3 will
be deemed to have amended the Disclosure Schedule, to have qualified the
representations and warranties contained in Article 5 above, and
to have cured any misrepresentation or breach of warranty that otherwise might
have existed hereunder by reason of the development.
7.4 Employees; Indemnification;
Directors’ and Officers’ Insurance. Prior
to the Closing, Purchaser shall offer employment to those employees of either
Seller listed on Schedule 7.4 attached
hereto, effective upon the Closing and Purchaser shall not restrict or withdraw
any such offer of employment on or prior to the Closing. Such
employment for all such employees other than Xxxxxx Xxxxxxx and Xxx Xxxxxxxxxx
shall be at not less than each employee’s respective monthly salary as in effect
in connection with his/her employment with either Seller on the Closing
Date. To the extent the persons listed on Schedule 7.4 attached
hereto become employees of Purchaser effective upon the Closing (the “Transferred Employees”), the
Parties agree that all of Sellers’ obligations with respect to such persons
shall terminate effective as of the Closing, subject to payment by Sellers of
all compensation of such employees accrued up to and including the Closing Date
which remains unpaid thereat (e.g., accrued but unpaid salary, incentive
compensation, and expense reimbursements and accrued but unused
vacation). Each Seller also agrees that (a) such Seller remains
responsible for (i) all currently existing contractual indemnification
obligations of such Seller in favor of Xxxxxx Xxxxxxx and Xxx Xxxxxxxxxx and
(ii) all statutory indemnification obligations which exist under applicable
law for Xxxxxx Xxxxxxx, Xxx Xxxxxxxxxx, and all other Transferred Employees, in
each case relating to, arising out of, or in connection with acts or omissions
by such persons prior to the Closing Date and while a director or employee of
such Seller and (b) such Seller shall use commercially reasonable efforts
to maintain tail directors’ and officers’ liability insurance coverage in effect
for a reasonable period following the Closing Date as reasonably determined by
such Seller.
ARTICLE
8
POST-CLOSING
COVENANTS
8. Covenants of the
Parties.
8.1 Taxes. Except
as otherwise specifically provided in Section 14.2, all taxes incurred by each
respective Party shall be payable only by that Party; provided that Sellers
shall include the income of the Business (including income relating to services
or Software provided by Sellers under the Assumed Contracts or relating to the
Acquired Assets prior to the Effective Date) on their income tax returns, and
Purchaser shall include the income of its business (including income relating to
services or Software provided by Purchaser under Assumed Contracts or relating
to the Acquired Assets on or after the Effective Date) on its income tax
returns, except to the extent such income is remitted to the other Party
pursuant to the terms of this Agreement. Purchaser and Sellers shall
each be responsible for their own tax liabilities, if any, for payments received
and retained by it. If revenues are received by one Party and then
remitted to the other Party in accordance with this Agreement, the Party
ultimately receiving and retaining the payment shall incur tax liability to the
extent of the amount of the payment it receives and retains. If one
Party incurs an expense and the other reimburses the first Party in accordance
with this Agreement, the reimbursing Party shall be entitled to any tax
deduction for the expense. The Parties shall consult from time to
time and cooperate to appropriately account for the tax
liabilities.
11
8.2 Public
Announcements. Following the Closing, Purchaser and Sellers
will make an announcement regarding the transaction contemplated by this
Agreement in a mutually agreed upon form; provided, however, that any
Party may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities. Notwithstanding the foregoing, no Party
will be prevented at any time from disclosing any information that is publicly
available, from furnishing any required information to any governmental body or
from complying with that Party’s legal obligations, provided that it gives
reasonable advance notice of such action to the other Party.
8.3 Management
Services.
(a) Purchaser
agrees to provide such management services to Sellers as Sellers may require to
assist Sellers to fulfill Sellers’ respective obligations, under the Retained
Liabilities and to exercise all of Sellers’ respective rights under their
respective Excluded Assets as Sellers may reasonably request from time to time
(the “Management
Services”), including (i) providing all Purchaser personnel and
services, and supervising and managing Sellers’ personnel, as is necessary to
satisfy all obligations and duties of Primal under that certain Transition
Agreement entered into as of October 24, 2008, by and between Time Warner Cable
Inc. and Primal, as such agreement may be amended from time to time (the “Time Warner Transition
Agreement”); and (ii) providing all Purchaser personnel and services
necessary for day-to-day operation of Sellers and conduct of their respective
wind-down activities through and including March 31, 2009. Nothing in
this Section 8.3 shall be deemed or interpreted to mean that Purchaser has
assumed any Retained Liabilities in connection with its provision of the
Management Services.
(b) As
consideration for Purchaser’s provision of the Management Services, Sellers,
jointly and severally hereby agree to pay Purchaser a management fee in the
aggregate amount of $277,790, payable in two
installments: (i) the first installment of $138,895 shall be
paid by Sellers at the Closing by check or wire transfer of immediately
available funds, and (ii) the second installment of $138,895 shall be paid
by Sellers on or prior to the thirtieth (30th) day
following the Closing Date; provided, that in the event the term of the Time
Warner Transition Agreement is extended beyond February 28, 2009 and Management
Services relating to such extension are requested by Sellers and provided by
Purchaser, Sellers shall pay Purchaser an additional fee equal to one hundred
percent (100%) of all services revenue and seventy percent (70%) of all license
fees earned and received by Sellers after February 28, 2009 under such extension
promptly after receipt by Sellers of such services revenue and/or license fees
from Time Warner Cable Inc. under such extension.
(c) The
Parties agree that, in connection with rendering the Management Services
pursuant to this Section 8.3, from and after the Closing Date through and
including March 31, 2009 (subject to earlier termination in the event Sellers no
longer have any right to occupy or use such office space), Purchaser shall be
entitled to use Sellers’ office space located at their principal place of
business as of the Effective Date and Sellers’ general office facilities and
equipment located thereat, in both cases without payment of any rent or
utilities charges relating to such use; provided that Purchaser shall comply
with Sellers’ workplace policies and procedures during such use.
8.4 Further Consents to
Assignment. To the extent that the assignment of any of the
Assumed Contracts or transfer of any Acquired Asset shall require the consent of
any other party, and the Closing shall occur notwithstanding the failure to have
obtained such consent prior to the Closing, this Agreement shall not constitute
a contract by either Seller to assign or transfer the same until such consent is
obtained. Purchaser shall, at its own expense, use its commercially
reasonable efforts after the Effective Date to obtain any consent necessary to
such assignment, and Sellers shall fully cooperate with
12
Purchaser
at Purchaser’s expense in connection therewith. If any such consent
is not obtained, (a) this Agreement shall not constitute or be deemed to be a
contract to assign the same if an attempted assignment without such consent
would constitute a breach of such item or create in any party thereto the right
or power to cancel or terminate such contract or assert any right or control
over any Acquired Asset, and (b) Purchaser shall cooperate at its expense (and
Purchaser will promptly reimburse Sellers to the extent of any expenses incurred
by Sellers pursuant to such agreement) in any reasonable arrangement designed to
provide Purchaser the use or benefit, monetary or otherwise, of Sellers’ rights
under such contract or Acquired Asset; provided that if no consent can be
obtained with respect to an Assumed Contract and/or an assignment of any Assumed
Contract cannot be made, in lieu of such assignment, (i) Purchaser shall
act as a subcontractor of Sellers in connection with such Assumed Contract,
shall provide all Software and services in connection with such Assumed
Contract, and shall indemnify Sellers for all services rendered as a
subcontractor and all risks, liabilities and obligations arising under such
Assumed Contract with respect to the services provided by Purchaser;
(ii) Sellers shall notify the customer with whom the Assumed Contract was
entered into that Purchaser is a subcontractor of Sellers for such Assumed
Contract; and (iii) Sellers shall promptly remit to Purchaser all payments
received from such customer relating to the services performed by Purchaser as
subcontractor under said Assumed Contract, less withholding by such Seller for
any applicable taxes. Sellers and Purchaser hereby acknowledge and
agree that they believe that each of the Assumed Contracts requires the consent
of the Transferred Customer in order to be assigned to Purchaser.
8.5 Assumed Obligations; Renewal
of Assumed Contracts. Purchaser shall pay, perform and
discharge when due the Assumed Liabilities. Purchaser hereby
covenants that it will take all commercially reasonable actions necessary or
advisable to fulfill all express obligations of Sellers under the Assumed
Contracts. Purchaser further agrees that, in the event Trophy
Technologies, Inc., a Michigan corporation (hereinafter “Rural”) satisfies its
outstanding financial obligations under the Settlement Agreement and Mutual
General Release dated December __, 2007 entered into between Primal and Rural
and desires to implement a Master Software License Agreement with Purchaser
substantially in the form of Exhibit A attached to said settlement agreement,
Primal hereby assigns to Purchaser all of Primal’s rights to enter into such
Master Software License Agreement with Rural, and thereafter Purchaser shall use
all commercially reasonable efforts to fulfill all its obligations under said
agreement, and in such case Purchaser shall be entitled to all payments from
Rural under said Master Software License Agreement and any payment under said
settlement agreement. Purchaser further agrees and covenants that,
when any Assumed Contract existing as of the Closing is proposed to be extended,
renewed, modified, assigned or otherwise transferred (including without
limitation entering into a new or successor agreement with Alcatel, Brighthouse,
and any other customer whose contract with either Seller is an Assumed
Contract), Purchaser shall use its commercially reasonable efforts to require
such customer or its assignee to enter into a new agreement with Purchaser to
which neither Seller is a party.
8.6 Anti-Sandbagging. Notwithstanding
anything to the contrary contained in this Agreement (including without
limitation Sellers’ failure to disclose any matter required to be disclosed on
any Disclosure Schedule hereto), Purchaser agrees that no representation or
warranty of either Seller in this Agreement or in any other Transaction Document
shall be deemed to be untrue or incorrect, and Sellers shall not be deemed to be
in breach thereof, if Xxxxxx Xxxxxxx and/or Xxx Xxxxxxxxxx had knowledge on the
Effective Date or the Closing Date, as applicable, of any such undisclosed
matter or that any such representation or warranty was untrue or
incorrect.
8.7 Upsell
Projects. In the event that, between the Effective Date and
February 28, 2009, Purchaser (a) sells and performs any upsell project for any
Transferred Customer (as Transferred Customer is defined on Schedule 3.2 attached
hereto), (b) is engaged, or assists Seller to become engaged, for any other
project for Time Warner Cable Inc. other than under the Time Warner Transition
13
Agreement
as it exists on the Closing Date, or (c) sells and performs any other customer
projects or services of Sellers which have not been commenced as of the
Effective Date or are continuing after the Effective Date, then in each such
case, Purchaser may request the assistance or services of any then-current
employee of either Seller in connection with such project; provided that
Purchaser shall pay such Seller $90.00 for each hour (pro-rated for a fraction
thereof) that an employee of such Seller provides such assistance or services,
as indicated on time-keeping records maintained by each such
employee. Such Seller shall remit to Purchaser, promptly upon the
earlier of completion of any such project or February 28, 2009, an invoice for
such Seller-employee time, and Purchaser shall pay such invoice promptly upon
receipt by Purchaser of payment for such upsell project from the Transferred
Customer. In addition, to the extent that either Seller receives
payment for any such project directly from the customer, such Seller shall remit
such amount to Purchaser, subject to offset for payment of amounts otherwise
payable by Purchaser in accordance with the previous sentence.
8.8 Disclaimer. Purchaser
hereby agrees that, following the Effective Date, Sellers shall have no
obligations to Purchaser or any third party relating to the subject matter
hereof except as expressly provided in this Agreement. Purchaser
further agrees that neither Seller nor any of their respective subsidiaries,
affiliates, or representatives will have or be subject to any liability of
Purchaser or any other person or entity resulting from the distribution in any
form to Purchaser, or Purchaser’s use, of any information regarding either
Seller, the Business, the Acquired Assets, or Assumed Liabilities. In
connection with Purchaser’s investigation of Sellers and the Business, Purchaser
may have received from or on behalf of Sellers certain estimates, projections,
forecasts and plans. Purchaser acknowledges that there are
uncertainties inherent in attempting to make such estimates, projections,
forecasts and plans, that Purchaser is familiar with such uncertainties, that
Purchaser is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all estimates, projections, forecasts and plans so
furnished to it (including the reasonableness of the assumptions underlying such
estimates, projections and forecasts), and that Purchaser shall have no claim
against Sellers with respect thereto.
8.10 Purchaser
Insurance. Purchaser hereby covenants and agrees that it will
maintain the types of insurance coverage in at least the amounts and at least at
the levels required to be maintained by Sellers under the Assumed Contracts in
the calendar year immediately preceding the Closing.
8.11 Adequate
Capitalization. Purchaser hereby covenants and agrees to use
commercially reasonable efforts to maintain working capital in an amount
sufficient to conduct its business and fulfill all of its obligations under this
Agreement and the other Transaction Documents.
8.12 Continuing
Cooperation. To the extent either Seller receives any payment
under the Assumed Contracts for (a) customer services provided by Purchaser
following the Effective Date, including any services provided by Purchaser in
2009 following the Effective Date relating to or in connection with LOEs
(consulting statements of work) entered into by such Seller in 2008 (all of
which are listed on Schedule 8.12
attached hereto or (b) Software for periods following the Effective Date, such
Seller will promptly remit such payment to Purchaser by check or wire transfer
of immediately available funds, subject to withholding by such Seller required
under law for any applicable taxes.
ARTICLE
9
CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF
SELLER
14
9. Conditions Precedent to the
Obligations of Sellers. The obligations of each Seller to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or before the Closing, of all of the following conditions, each
of which shall be deemed independent, severable, and waivable in whole or in
part at the option of Sellers:
9.1 Correctness of
Representations and Warranties. All representations and
warranties of Purchaser in this Agreement and the other Transaction Documents
shall be true and accurate in all material respects at and as of the Closing
Date, except for representations and warranties that speak as of a specific date
or time (which need only be true and correct in all material respects as of such
date or time).
9.2 Performance of
Obligations. All of the covenants, agreements, and conditions
of Purchaser contained in the Transaction Documents and required to be
performed, complied with, or satisfied by it on or before the Closing shall have
been performed, complied with, or satisfied in all material respects through the
Closing, except to the extent that such covenants are qualified by the term
“material,” or contain terms such as “material adverse effect,” in which case
Purchaser shall have performed and complied with all of such covenants (as so
written, including the term “material” or “material”) in all respects through
the Closing.
9.3 Delivery of
Instruments. Sellers shall have received from Purchaser the
documents set forth in Section 11.2 as well as a certificate from Sellers’ Chief
Executive Officer in form and substance reasonably acceptable to
Sellers.
9.4 Consents and
Approvals. All approvals and consents required to be obtained
with respect to the transactions contemplated under the Transactions Documents
shall have been received.
9.5 Approval of Sellers’
Stockholders. Sellers shall have received the approval or
consent of their respective stockholders as required under applicable
law.
9.6 Transferred Employee
Waivers. Sellers shall have received from each of the
Transferred Employees a severance agreement and general release and waiver with
respect to any rights or claims each such employee may have against Sellers in
connection with his/her employment with either Seller (“Employee Waivers”), excluding
accrued but unpaid salary and incentive compensation and accrued but unused
vacation as of the Closing Date which will be paid on or prior to the Closing
Date by the Seller that is such employee’s employer and excluding any rights or
benefits that survive the Effective Date in accordance with the express terms of
Section 7.4.
9.7 No
Litigation. No action or proceeding shall be threatened or
pending against Purchaser that has resulted or is likely to result in a
judgment, decree, injunction, or order that would prevent or make unlawful the
consummation of the transactions under this Agreement.
ARTICLE
10
CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF PURCHASER
10. Conditions Precedent to the
Obligations of Purchaser. The obligations of Purchaser to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or before the Closing, of all of the following conditions, each
of which shall be deemed independent, severable, and waivable in whole or in
part at the option of Purchaser:
10.1 Correctness of
Representations and Warranties. All representations and
warranties of Sellers contained in the Transaction Documents shall be true and
accurate in all material respects at and
15
as of the
Closing Date, except for representations and warranties that speak as of a
specific date or time (which need only be true and correct in all material
respects as of such date or time).
10.2 Performance of
Obligations. All of the covenants, agreements, and conditions
of Sellers contained in the Transaction Documents and required to be performed,
complied with, or satisfied by it on or before the Closing shall have been
performed, complied with, or satisfied in all material respects through the
Closing, except to the extent that such covenants are qualified by the term
“material,” or contain terms such as “material adverse effect,” in which case
Sellers shall have performed and complied with all of such covenants (as so
written, including the term “material” or “material”) in all respects through
the Closing.
10.3 Delivery of
Instruments. Purchaser shall have received from Sellers the
documents set forth in Sections 11.1(a) and 11.1(c).
10.4 Consents and
Approvals. All approvals and consents required to be obtained
with respect to the transactions contemplated under the Transaction Documents
shall have been received, including the approval or consent of SSF, as may be
required under any of their agreements with Sellers, and of any customer, as may
be required under the terms of any Assumed Contract.
10.5 Approval of Sellers’
Stockholders. Sellers shall have received the approval or
consent of their respective stockholders as required under applicable
law.
10.6 No
Litigation. No action or proceeding shall be threatened or
pending against either Seller that has resulted or is likely to result in a
judgment, decree, injunction, or order that would prevent or make unlawful the
consummation of the transactions under this Agreement.
ARTICLE
11
CLOSING
DELIVERIES
11. Closing
Deliveries.
11.1 Seller’s
Deliveries. In connection with and at the time of the Closing,
each Seller shall deliver to Purchaser the following:
(i) This
Agreement;
(ii) A
xxxx of sale relating to the Acquired Assets in form and substance reasonably
acceptable to the Parties;
(iii) Any
and all documents necessary for valid, legal transfer of marketable title to any
titled Acquired Assets, including, but not limited to, equipment and fixtures
included in the Acquired Assets;
(iv) An
assignment and assumption of the Assumed Contracts and Assumed Liabilities
executed by Sellers and Purchaser in form and substance reasonably acceptable to
the Parties;
16
(v) A
license agreement relating to Sellers’ use for the limited purpose of customer
support obligations during the contractual support period of the Software (the
“License Agreement”) in
form and substance reasonably acceptable to the Parties;
(vi) Employee
Waivers signed by each of the Transferred Employees in form and substance
reasonably acceptable to the Parties;
(vii) A
certificate of the Chief Executive Officer of Sellers in favor of Sellers in
form and substance reasonably acceptable to Sellers; and
(vii) All
other instruments and documents required to consummate the transactions
contemplated by the Transaction Documents.
(c) Corporate
Action. Executed resolutions or a written consent of the
(i) board of directors of each Seller, (ii) holders of at least a
majority of the outstanding voting stock of each Seller, and (iii) special
committee of the board of directors of Primal, in each case, authorizing the
transactions contemplated hereby.
11.2 Purchaser’s
Deliveries. In connection with and at the time of the Closing,
Purchaser shall deliver to Sellers executed copies of each of the documents
listed in Section 11.1(a), to the extent that Purchaser is a party to such
document; and executed resolutions of the board of directors of Purchaser
authorizing the transactions contemplated hereby. Purchaser shall
cause to be delivered to Sellers Employee Waivers signed by each of the
Transferred Employees in form and substance reasonably acceptable to the
Parties.
ARTICLE
12
SURVIVAL
AND INDEMNIFICATION; REMEDIES
12. Survival and
Indemnification; Remedies.
12.1 Survival of Representations,
Warranties, Covenants and Agreements. All
of the representations and warranties of Sellers shall survive the Closing
hereunder (unless Purchaser knew or had reason to know of any misrepresentation
or breach of warranty at the time of Closing) and continue in full force and
effect for a period of one (1) year thereafter. All of the
representations and warranties of Purchaser shall survive the Closing hereunder
(unless the members of the special committee of the board of directors of Primal
knew or had reason to know of any misrepresentation or breach of warranty at the
time of Closing) and continue in full force and effect for a period of one (1)
year thereafter. The covenants and agreements of the Parties
contained in this Agreement shall, subject to the express terms thereof, survive
the Closing.
12.2 Indemnification Provisions
for Purchaser’s Benefit.
(a) If the
Closing occurs, and provided that Purchaser makes a written claim for
indemnification against Sellers pursuant to Section 14.4 below within the
survival period (if there is an applicable survival period pursuant to
Section 12.1 above), which written claim must specify the factual basis of
the claim, the amount of such claim (if known) and the method of computation of
such claim, all with reasonable specificity, Sellers, jointly and severally,
shall indemnify and hold Purchaser harmless
17
against
all Adverse Consequences Purchaser has suffered or shall suffer relating to,
arising from, or in connection with: (a) the failure of either Seller to
perform its respective covenants, agreements, and obligations under this
Agreement or any other Transaction Document; (b) the breach of any
representation or warranty made by either Seller under this Agreement or any
other Transaction Document; (c) any liability or other obligation of either
Seller whatsoever, real or alleged, previously, currently, or hereafter arising,
not specifically assumed by Purchaser under Section 3.2 of this Agreement
or any other Transaction Document; (d) operation of the Business by Sellers
or Sellers’ ownership or use of the Acquired Assets prior to the Effective Date,
other than the Assumed Liabilities (for which Purchaser will be obligated
pursuant to the terms of this Agreement); (e) employment of the Transferred
Employees on or prior to the Closing Date; and (f) destruction, damage, or loss
of any physical property owned or leased by Purchaser resulting from Sellers’
negligence in their use or occupation of Sellers’ principal place of business as
provided herein; provided that in no event shall Sellers indemnify Purchaser for
any Adverse Consequences suffered by Purchaser arising out of, relating to or in
connection with any conflict or breach of, or consent required to be obtained
pursuant to, any other agreement or obligation of Sellers (including without
limitation the Assumed Contracts) arising out of, relating to, or occurring in
connection with this Agreement, any other Transaction Document, or the
transactions contemplated hereby or thereby. For purposes of this
Agreement, “Adverse
Consequences” means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages (excluding, except as otherwise provided in
this Agreement, all incidental, consequential, special, enhanced and punitive
damages), dues, penalties, fines, costs (including costs of investigation and
defense, court costs and attorneys’ fees), amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses, and fees.
(b) Sellers
shall not have any obligation to indemnify Purchaser from and against, and shall
have no liability with respect to, any Adverse Consequences caused by the breach
of any representation or warranty of Sellers unless and until the total amount
of Adverse Consequences suffered by Purchaser with respect to all such breaches
exceeds USD $10,000 (the “Bucket”), and then only to the
extent that such Adverse Consequences exceed the Bucket.
(c) In no
event shall the aggregate obligation of Sellers to indemnify Purchaser for any
Adverse Consequences caused by the breach of any representation or warranty of
Sellers exceed the value of the transactions contemplated hereunder (the “Cap”).
(d) Purchaser
agrees that in the event of any breach giving rise to an indemnification
obligation of Sellers hereunder, Purchaser shall take and cause its affiliates
to take, or cooperate with Sellers, if so requested by Sellers, in order to
take, all reasonable measures to mitigate the consequences of the related breach
(including taking steps to prevent any contingent liability from becoming an
actual liability).
(e) Purchaser
agrees that no claim of indemnification hereunder shall form the basis of or be
asserted as a defense or right of offset against any Royalties payable by
Purchaser hereunder, all of which are hereby waived to the maximum extent
permitted by applicable law.
12.3 Indemnification Provisions
for Sellers’ Benefit. If
the Closing occurs, and provided that either Seller makes a written claim for
indemnification against Purchaser pursuant to Section 14.4 below within the
survival period (if there is an applicable survival period pursuant to
Section 12.1 above), which written claim must specify the factual basis of
the claim, the amount of such claim (if known) and the method of computation of
such claim, all with reasonable specificity, Purchaser shall indemnify and hold
Sellers harmless against all Adverse Consequences either Seller has suffered or
shall suffer relating to, arising from, or in connection with: (a) the
failure of Purchaser to perform its covenants, agreements,
18
and
obligations under this Agreement or any other Transaction Document; (b) the
breach of any representation or warranty made by Purchaser under this Agreement
or any other Transaction Document; (c) services and activities performed by
Purchaser under the Assumed Contracts on and following the Effective Date;
(d) any Assumed Liabilities and any other liability or obligation of either
Seller specifically assumed by Purchaser under this Agreement or any other
Transaction Document (including without limitation any Adverse Consequences
relating to, arising from, or in connection with Purchaser’s failure to render
Management Services as provided herein in full satisfaction of Sellers’
obligations and liabilities under the Time Warner Transition Agreement and/or
its failure to provide Management Services in accordance with the directives and
guidance given by Sellers); (e) employment of the Transferred Employees
following the Closing Date; (f) operation of the Business by Purchaser or
Purchaser’s ownership or use of the Acquired Assets on and after the Effective
Date (including without limitation infringement by Purchaser of any third
party’s intellectual property or intellectual property rights arising out of,
relating to, or in connection with use of the Intellectual Property, and all
taxes arising with respect to periods beginning on or after the Effective Date);
and (g) destruction, damage, or loss of any physical property owned or leased by
Sellers resulting from Purchaser’s negligence in its use or occupation of
Sellers’ principal place of business as provided herein; provided that in no
event shall Purchaser indemnify Sellers for any Adverse Consequences either
Seller has suffered or shall suffer arising out of, relating to or in connection
with any conflict or breach of, or consent required to be obtained pursuant to,
any other agreement or obligation of either Seller (including without limitation
the Assumed Contracts) arising out of, relating to, or occurring in connection
with this Agreement, any other Transaction Document, or the transactions
contemplated hereby or thereby.
12.4 Matters Involving Third
Parties.
(a) If any
third party shall notify any Party (the “Indemnified Party”) with
respect to any matter (a “Third-Party Claim”) which may
give rise to a claim for indemnification against any other Party (the “Indemnifying Party”) under
this Article 12, then the Indemnified Party shall, if a claim is to be made
against an Indemnifying Party under this Article 12, promptly (and in any event
within five (5) business days after receiving notice of the Third-Party Claim)
notify each Indemnifying Party thereof in writing. Thereafter, the
Indemnified Party shall deliver to the Indemnifying Party, within five (5)
business days after the Indemnified Party’s receipt thereof, copies of all
notices and documents (including court papers) received by the indemnified party
relating to the Third-Party Claim. Notwithstanding anything in the
foregoing to the contrary, the failure of an Indemnified Party to give such
notice to the Indemnifying Party shall not relieve the Indemnifying Party of any
liability that it may have to any Indemnified Party, except to the extent that
the Indemnifying Party demonstrates that the defense of the matter giving rise
to the Indemnified Party’s claim is prejudiced by the Indemnified Party’s
failure to give or delay in giving such notice.
(b) Any
Indemnifying Party will have the right at any time to assume and thereafter
conduct the defense of the Third-Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party; provided, however, that the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third-Party Claim without the prior written
consent of the Indemnified Party (not to be unreasonably withheld) unless the
judgment or proposed settlement involves only the payment of money damages and
does not impose an injunction or other equitable relief upon the Indemnified
Party. Should an Indemnifying Party so elect to assume the defense of
a Third-Party Claim, the Indemnifying Party shall not be liable to the
Indemnified Party for legal expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof. If the Indemnifying
Party assumes such defense, the Indemnified Party shall have the right to
participate in the defense thereof and to employ counsel at its own expense,
separate from the counsel employed by the Indemnifying Party, it being
understood, however, that the Indemnifying Party shall control such
defense.
19
The
Indemnifying Party shall be liable for the reasonable fees and expenses of
counsel employed by the Indemnified Party for any period during with the
Indemnifying Party has not assumed the defense thereof.
(c) Unless
and until an Indemnifying Party assumes the defense of the Third-Party Claim as
provided in Section 12.4(b) above, however, the Indemnified Party may
defend against the Third-Party Claim in any manner it may reasonably deem
appropriate.
(d) In no
event will the Indemnified Party consent to the entry of any judgment on or
enter into any settlement with respect to the Third-Party Claim without the
prior written consent of the Indemnifying Party (not to be unreasonably
withheld).
12.5 Determination of Adverse
Consequences. The
amount of any and all Adverse Consequences under this Article 12 shall be
determined net of (a) the net present value of any tax benefits reasonably
expected to be realized (calculated using a discount rate of 7.25%) by any party
seeking indemnification hereunder arising from the deductibility of such Adverse
Consequences and (b) any amounts recovered or recoverable by the Indemnified
Party under insurance policies, indemnities or other reimbursement arrangements
with respect to such Adverse Consequences. Each Party hereby waives,
to the extent permitted under its applicable insurance policies, any subrogation
rights that its insurer may have with respect to any indemnifiable Adverse
Consequences. Sellers shall have no liability with respect to any
Adverse Consequences that would have been covered by insurance had Purchaser
maintained for the benefit of the Business and the Acquired Assets the same
insurance coverage following the Closing that was in effect for the Business and
the Acquired Assets immediately prior to the Closing. Sellers shall
be subrogated to all rights of Purchaser in respect of any Adverse Consequences
borne by Sellers. In no event shall Purchaser be entitled to recover
or make a claim for any amounts in respect of exemplary, consequential,
incidental, liquidated, or indirect damages, lost profits, or punitive, special,
treble, or statutory damages or any other money damages that are not measured by
and limited to the Indemnified Party’s actual direct damages resulting from such
breaches and, in particular, no “multiple of profits” or “multiple of cash flow”
or similar valuation methodology shall be used in calculating the amount of any
Adverse Consequences; provided, however, that to the
extent an indemnification claim arises hereunder as a result of a Third-Party
Claim against an Indemnified Party, the Adverse Consequences shall be deemed to
include incidental, consequential, special, enhanced, and punitive damages to
the extent claimed by a third party against an Indemnified Party. Any
indemnity payment under this Agreement shall be treated as an adjustment to the
Purchase Price for tax purposes.
12.6 Exclusive
Remedy. Purchaser
and Sellers acknowledge and agree that, from and after the Closing, the
foregoing indemnification provisions in this Article 12 shall be the sole and
exclusive remedy of Purchaser and Sellers with respect to the transactions
contemplated hereby.
ARTICLE
13
TERMINATION
13. Termination.
13.1 Events of
Termination. This Agreement may, by notice given prior to or
at the Closing, be terminated:
(a) (i) by
Purchaser if a material breach of any provision of this Agreement has been
committed by Sellers (and not cured within 20 days of written notice if capable
of cure) and such breach has not been waived; or (ii) by Sellers if a
material breach of any provision of this Agreement has been
20
committed
by Purchaser (and not cured within 20 days of written notice if capable of
cure) and such breach has not been waived;
(b) (i) by
Purchaser if any of the conditions in Article 10 has not been satisfied as of
the Closing Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of Purchaser to comply with its obligations
under this Agreement) and Purchaser has not waived such condition on or
before the Closing Date; or (ii) by Sellers, if any of the conditions in
Article 9 has not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of
Sellers to comply with its obligations under this Agreement) and Sellers
have not waived such condition on or before the Closing Date;
(c) by mutual
consent of Purchaser and Sellers; or
(d) by either
Purchaser or Sellers if the Closing has not occurred (other than through the
failure of any Party seeking to terminate this Agreement to comply fully with
its obligations under this Agreement) on or before January 31, 2009, or
such later date upon which the Parties may agree.
13.2 Effect of
Termination. Each Party’s right of termination under
Section 13.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to
Section 13.1, all further obligations of the Parties under this Agreement
will terminate; provided, however, that if this
Agreement is terminated by a Party because of the breach of the Agreement by the
other Party or because one or more of the conditions to the terminating Party’s
obligations under this Agreement is not satisfied as a result of the other
Party’s failure to comply with its obligations under this Agreement, the
terminating Party’s right to pursue all legal remedies will survive such
termination unimpaired.
ARTICLE
14
MISCELLANEOUS
PROVISIONS
14. Miscellaneous
Provisions.
14.1 Further
Assurances. Subject to the terms and conditions herein, each
of the Parties hereto agrees to use its reasonable efforts to take, or cause to
be taken, all appropriate action, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable law and regulations
to consummate and make effective the transactions contemplated by this Agreement
and the other Transaction Documents.
14.2 Taxes. Purchaser
shall pay all taxes arising out of the transfer of the Acquired Assets to
Purchaser pursuant to this Agreement and the other transactions contemplated by
this Agreement (including without limitation any sales taxes).
14.3 Expenses. Each
of the Parties shall pay all costs and expenses (including without limitation
fees, costs and expenses of attorneys, accountants, brokers, finders, or
advisors and the expenses of such Party’s representatives) incurred or to be
incurred by it in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by the Transaction
Documents.
14.4 Notices. All
notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given as of the date of delivery
if delivered in person, three business days after being mailed (certified,
return receipt requested, postage prepaid), the next
21
business
day after deposit with a reputable overnight courier or the date of
delivery via facsimile (if receipt of the facsimile is acknowledged by the
receiving party):
(a) If
to Sellers, addressed to:
Primal
Solutions, Inc.
Wireless
Billing Systems
|
|
c/o
Xxxxx Xxxx LLP
|
0000
Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Attention: Xxxxx
X. Xxxxx, Esq.
Fax: 000-000-0000
with a
copy to (which copy shall not constitute notice):
|
|
Xxxxx
Xxxx LLP
|
0000
Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Attention: Xxxxx
X. Xxxxx, Esq.
Fax: 000-000-0000
(b) If
to Purchaser, addressed to:
BillWise,
Inc.
00 Xxx
Xxxxxxx
Xxxx xx
Xxxx, XX 00000
Attention: Xxxxxx
X. Xxxxxxx
Fax: (000)
000-0000
with a
copy to (which copy shall not constitute notice):
The Xxxxx
Law Firm LLP
00000
XxxXxxxxx Xxxxxxxxx
Xxxxx
000
Xxxxxx,
XX 00000
Attention: Xxxxxxxx
X. Xxxxx, Esq.
Fax: 000-000-0000
Either
Party hereto may from time to time, by written notice to the other Party,
designate a different address, which shall be substituted for the one specified
above for such Party.
14.5 Attorneys’
Fees. In the event of any controversy, claim or dispute
between the Parties hereto arising out of or relating to this Agreement or any
of the documents provided for herein, or the breach thereof, the prevailing
Party shall be entitled to recover from the losing Party its reasonable
attorneys’ fees, expenses, and costs incurred in connection with such
controversy, claim, or dispute or any appeal thereof.
14.6 Binding Effect;
Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective permitted successors and
assigns. Neither Party may
22
assign
this Agreement, voluntarily or by operation of law, without the prior written
consent of the other Party, which it may deny in its sole
discretion.
14.7 Parties in
Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the Parties to it and their respective
successors and permitted assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
Party to this Agreement. Notwithstanding the foregoing, the SSF
Entities shall be deemed to be express third-party beneficiaries of the
provisions of Section 2.2 (other than Section 2.2(e)) and Section 12.2(e) and
shall have the right to enforce such provisions directly against the parties
hereto as if it were a party hereto.
14.8 Counterparts. This
Agreement may be executed in any number of counterparts, any of which may be
transmitted by facsimile or via portable document format by other electronic
means, each of which shall be deemed to be an original and all of which together
shall be deemed to be one and the same instrument. However, this Agreement shall
be ineffective for any purposes whatsoever unless or until executed by all
Parties hereto.
14.9 Headings. The
subject headings of the paragraphs and subparagraphs of this Agreement are
included for purposes of convenience only and shall not affect the construction
or interpretation of any of its provisions.
14.10 Entire
Agreement. This Agreement (together with the Transaction
Documents and the schedules and exhibits hereto and thereto) sets forth all
of the agreements and understandings between the Parties hereto relating to the
transactions contemplated hereby or thereby or the subject matter hereof, and
supersedes all prior agreements and understandings, inducements or conditions,
express or implied, oral or written.
14.11 Amendment;
Waivers. This Agreement may not be modified or amended, except
in a writing signed by the Parties hereto. No waiver of any provision
of this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing
waiver. Notwithstanding the foregoing, no amendment, modification or
waiver of the provisions of Section 2.2 (other than Section 2.2(e)) or Section
12.2(e) shall be effective without the express prior written consent of the SSF
Entities. Any purported amendment, modification or waiver in
violation of the provisions of the immediately preceding sentence shall be null
and void ab initio.
14.12 Severability. In
the event that any of the provisions of this Agreement shall be held by a court
or other tribunal of competent jurisdiction to be invalid or unenforceable, the
remaining portions of this Agreement shall remain in full force and effect and
construed so as to best effectuate the intention of the Parties in executing
it.
14.13 Interpretation. Words
used herein, regardless of the number and gender specifically used, shall be
deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine, or neuter, as the context
requires. The provisions of this Agreement, and the documents and
instruments referred to herein, have been examined, negotiated, drafted, and
revised by the Parties and no implication shall be drawn nor made against any
Party hereto by virtue of the drafting of this Agreement. The term
“including” used herein shall mean “including without
limitation.” All amounts stated in this Agreement are in U.S.
Dollars. All payments made by Purchaser to Primal under this
Agreement will be made in the U.S. and in U.S. Dollars.
23
14.14 Governing
Law. This Agreement shall be governed by, construed in
accordance with and enforced under the laws of the State of California
applicable to agreements executed and to be performed solely within such
State.
14.15 Consent and Jurisdiction;
Service. Each party hereto irrevocably and
unconditionally: (i) agrees that any suit, action or other legal
proceeding arising out of this Agreement may be brought in the state and federal
courts sitting in the Orange County, California; (ii) consents to the exclusive
jurisdiction of any such court in any such suit, action or proceeding; and (iii)
waives any objection which such party may have to the laying of venue of any
such suit, action or proceeding in any such court.
[SIGNATURE
PAGE TO FOLLOW]
24
IN WITNESS WHEREOF, the Parties hereto
have executed or have caused a duly authorized representative to execute this
Agreement all as of the day and year first above written.
|
SELLER:
|
PURCHASER:
|
|
|
Primal
Solutions, Inc.,
a
Delaware corporation
|
BillWise,
Inc.,
a
California corporation
|
|
|
By: /s/ Xxxx X.
Xxxxxxx
Name:
Xxxx X. Xxxxxxx
Its: Authorized
Person
|
By: /s/ Xxxxxx X.
Xxxxxxx
Name:
Xxxxxx X. Xxxxxxx
Its: President
|
|
|
Wireless
Billing Systems,
a
California corporation
|
||
|
By: /s/ Xxxx X.
Xxxxxxx
Name:
Xxxx X. Xxxxxxx
Its: Authorized
Person
|
25
SCHEDULE
1.1
Acquired
Assets
Transferred
Resources
|
Make/Mdl
|
||
|
11737
|
IBM
ThinkPad T40
|
|
|
11947
|
IBM
ThinkPad T43p
|
|
|
11810
|
IBM
ThinkPad T42
|
|
|
11755
|
IBM
ThinkPad T40
|
|
|
11739
|
IBM
ThinkPad T40
|
|
|
11948
|
IBM
ThinkPad T42
|
|
|
11812
|
IBM
ThinkPad T42
|
|
|
11841
|
IBM
ThinkPad T42
|
|
|
11808
|
IBM
ThinkPad T42
|
|
|
11740
|
Dell
Inspiron 8500
|
|
|
11747
|
IBM
ThinkPad X31
|
|
|
Apple
Powerbook Pro (2)
|
||
|
11741
|
HP
Proliant ML570
|
|
|
12017
|
No-name
brand
|
|
|
12016
|
HP
Proliant DL360
|
|
|
11824
|
HP
Proliant DL380
|
|
|
11825
|
HP
Proliant DL380
|
|
|
HW068
|
Dell
PowerEdge 750
|
|
|
HW069
|
Dell
PowerEdge 750
|
|
|
HW072
|
Dell
PowerEdge 750
|
|
|
11967
|
Sun
V240
|
|
|
11776
|
Sun
V240
|
|
|
11929
|
Sun
V240
|
|
|
11826
|
Sun
V240
|
|
|
12055
|
Sun
V440
|
|
|
11939
|
Sun
V100
|
|
|
11934
|
Sun
V210
|
|
|
11829
|
XxxXxxxx
000
|
|
|
00000
|
XxxXxxxx
150
|
|
|
11936
|
Sun
V120
|
|
|
HW083
|
Dell
Dimension XPS Gen 4
|
|
|
HW080
|
Dell
Dimension XPS Gen 4
|
|
|
HW082
|
Dell
Dimension XPS Gen 4
|
|
|
HW081
|
Dell
Dimension XPS Gen 4
|
|
|
HW076
|
Dell
Dimension XPS Gen 4
|
|
|
HW075
|
Dell
Dimension XPS Gen 4
|
|
Asset
#
|
Make/Mdl
|
|
|
HW077
|
Dell
Dimension XPS Gen 4
|
|
|
HW123
|
Dell
PowerEdge 1800
|
|
|
HW124
|
Dell
PowerEdge 1800
|
|
|
HW125
|
Dell
PowerEdge 1800
|
|
|
HW126
|
Dell
PowerEdge 1800
|
|
|
11762
|
Dell
Dimension XPS Xxx 0
|
|
|
00000
|
Xxxx
Dimension XPS Gen 2
|
|
|
11761
|
Dell
Dimension XPS Xxx 0
|
|
|
00000
|
Xxxx
Dimension XPS Gen 2
|
|
|
HW056
|
Dell
Dimension 4700
|
|
|
12039
|
IBM
ThinkPad Dock
|
|
|
12040
|
IBM
ThinkPad Dock
|
|
|
12041
|
Dell
Docking Station
|
|
|
11813
|
Dell
3300MP Overhead Projector
|
|
|
11732
|
Dell
3200MP Overhead Projector
|
|
|
HW085
|
Dell
3300MP Overhead Projector
|
|
|
12044
|
Protocol
Analyzer
|
|
|
12018
|
Cybex
Autoview Commander
|
|
|
12019
|
Cybex
Autoview Commander
|
|
|
HW118
|
Dell
17” FPD
|
|
|
11855
|
Dell
17” FPD
|
|
|
HW117
|
Dell
17” FPD
|
|
|
11928
|
Dell
17” FPD
|
|
|
11972
|
Samsung
22” FPD
|
|
|
11959
|
Dell
24” FPD
|
|
|
11853
|
Dell
17” FPD
|
|
|
11960
|
Dell
17” FPD
|
|
|
12037
|
Dell
17” FPD
|
|
|
HW119
|
Dell
17” FPD
|
|
|
11968
|
Dell
17” FPD
|
|
|
11975
|
Samsung
20” FPD
|
|
|
HW079
|
Dell
17” FPD
|
|
|
HW078
|
Dell
17” FPD
|
|
|
12038
|
Dell
17” FPD
|
|
|
HW116
|
Dell
17” FPD
|
|
|
11973
|
Samsung
20” FPD
|
|
|
11989
|
Microsoft
Bluetooth Kbd/Mouse
|
|
|
11980
|
Apple
Wireless Keyboard
|
|
|
11976
|
Treo
755p
|
|
| 11978 | Treo 755p | |
| 11680 | HP LaserJet 1200 |
2
|
Asset
#
|
Make/Mdl
|
|
|
11757
|
HP
LaserJet 1300
|
|
|
11778
|
HP
LaserJet 1300
|
|
|
11734
|
HP
LaserJet 1200
|
|
|
HP
Color LaserJet CP1518ni
|
||
|
12009
|
Telco
Rack (qty 1)
|
|
|
Computer
Rack
|
||
|
Linksys
WRT54G Wireless
|
||
|
LinkSys
WAP54GP Wireless
|
||
|
LinkSys
WAP54GP Wireless
|
||
|
LinkSys
WAP54GP Wireless
|
||
|
LinkSys
WAP54GP Wireless
|
||
|
12053
|
Sun
StorEdge 3520 Array
|
|
|
11931
|
Sun
StorEdge A1000 Array
|
|
|
12012
|
Dell
PowerConnect 2624
|
|
|
12013
|
Dell
PowerConnect 2124
|
|
|
12022
|
Dell
PowerConnect 2624
|
|
|
HW060
|
Cisco
Catalyst 3550
|
|
|
HW061
|
Cisco
Catalyst 3550
|
|
|
11833
|
Cisco
PIX 515E
|
|
|
11834
|
Cisco
PIX 515E
|
|
|
11995
|
APC
Smart UPS 5000
|
|
|
Minuteman
Enterprise E750 UPS
|
||
|
12000
|
APC
AP9211 Masterswitch PDU
|
|
|
12002
|
APC
AP9211 Masterswitch PDU
|
|
|
Cisco
Phones: (15 units)
|
||
|
Quartet
Electronic Whiteboard
|
||
|
Desks
(12 offices)
|
||
|
Chair
(12 offices)
|
||
|
Cradenza
(12 offices)
|
||
|
File
Cabinets (finance/HR)
|
||
|
White
Boards (12 offices)
|
||
|
Book
Case(s) (12 offices)
|
||
|
Couch/Lounge
Chairs (2 exec offices)
|
||
|
End
Tables 9 2 exec offices)
|
||
|
Fire
Safes (finance/HR)
|
||
|
File
Cabinets (finance/HR)
|
||
|
War
Room Tables & Chairs
|
||
| Round Tables & Chairs | ||
| Folding Tables - work tables | ||
| Office Equipment - miscellaneous |
3
|
Asset
#
|
Make/Mdl
|
|
|
Supplies
- misc office
|
||
|
Sales/Tradeshow
booth
|
||
|
Computer
cables and parts
|
The
Parties acknowledge and agree that the Acquired Assets do not include six
computers, printers, and monitors included in the list above, the ownership of
which is being transferred to the Transferred Employees in connection with their
separation of employment from Sellers.
4
SCHEDULE
1.3
Liens
and Liabilities
(a) Assignments, Transfers,
and/or Conveyances of the Intellectual Property:
Sellers
make no representations or warranties with respect to any Intellectual Property
except as set forth in the first, second, third, and fourth sentences of Section
5.3. Notwithstanding the foregoing, and without making any other
representation or warranty:
· TransAmerica
Business Credit Corporation has a security agreement in place on the Creditwatch
(Serial Nos. 74358508 and 74358507) trademarks of WBS, which was granted by
Subscriber Computing, Inc., the prior owner of the marks.
· TransAmerica
Business Credit Corporation also has a security interest on U.S. patent
registration 5,291,543 (“Cellular Telephone Real Time Account Administration
System”), which was granted by Subscriber Computing, Inc. In
addition, there is no assignment from the inventors of the patent to Subscriber
Computing, Inc. (or any predecessor company); and Seller believes that
TransAmerica holds a security interest, although the record filed with the U.S.
Patent and Trademark Office appears as an “assignment of assignors interest”
rather than as a security interest.
· With
respect to U.S. patent registration 5,291,453 (“Serial Memory Apparatus Having
Units for Presetting Reading Bit Lines to a Given Voltage”), the investors of
that patent assigned it to Ricoh Company, and then Subscriber Computing, Inc.
assigned the patent to WBS. The chain of title is missing the
assignment from Ricoh to Subscriber Computing, Inc. Therefore, WBS’
title is not clear.
· Sellers
have entered into certain escrow arrangements with certain or all of their
respective customers pursuant to which ownership of certain Seller Intellectual
Property would be assigned to such customers upon a default by
Seller. In addition, Sellers have granted customers licenses to use
the Intellectual Property (including perpetual licenses).
· Sellers
have assigned to SSF certain rights in the Intellectual Property , which rights
will be conditionally released pursuant to the consent being granted by SSF in
connection with the Contemplated Transactions, subject to full compliance with
the terms of the consent by Sellers.
(b) Liens, claims and
encumbrances exist on the Acquired Assets pursuant to the
following:
|
·
|
Amended
and Restated 10% Senior Convertible Note, dated March 31, 2006, as amended
and restated as March 31, 2008, issued to Special Situations Private
Equity Fund, L.P., Special Situations Technology Fund, L.P., Special
Situations Technology Fund II, L.P., Special Situations Fund III, L.P.,
and Special Situations Fund III QP, L.P. (collectively, “SSF”), related
Pledge and Security Agreement, dated as of March 31, 2006, in favor of
SSF, and other related agreements with
SSF;
|
|
·
|
Lease
agreement with CIP Centerpointe 123 LLC, dated April 16,
2007;
|
|
·
|
Operating
lease agreement with Dell Financial Services L.P. (lease number
012-004765674-014) (provided that on or before February 28, 2009, Sellers
intend to satisfy their obligations under said lease so that any Acquired
Assets leased thereunder will be released and thereafter be free of liens
and encumbrances of Dell; Sellers shall not assign such liened Acquired
Assets to Purchaser until such Acquired Assets are free of liens and
encumbrances and then shall promptly thereafter assign ownership thereof);
and
|
|
·
|
The
security interests existing under operating lease agreements with Dell
Financial Services L.P. (lease numbers 000-0000000-000 &
032-4765674-016) are currently in the process of being released but likely
will not be released prior to the Closing Date; Sellers shall not assign
such liened Acquired Assets to Purchaser until such Acquired Assets are
free of liens and encumbrances and then shall promptly thereafter assign
ownership thereof;
|
|
·
|
Capital
lease agreement with CIT Technology Financial Service Inc. (contract no.
911-0001540-000) (provided that on or before February 28, 2009, Sellers
intend to satisfy their obligations under said lease so that any Acquired
Assets leased thereunder will be released and thereafter be free of liens
and encumbrances of CIT; Sellers shall not assign such liened Acquired
Assets to Purchaser until such Acquired Assets are free of liens and
encumbrances and then shall promptly thereafter assign ownership thereof);
and
|
|
·
|
Pursuant
to the terms of each of the Assumed Contracts, the consent of each
Transferred Customer is required to be obtained in connection with the
Contemplated Transactions.
|
2
SCHEDULE
2.2
Software
Primal
Software
|
q
|
Connect
CCB
|
|
q
|
Connect
IXC
|
|
q
|
Connect
RTR
|
|
q
|
Access
IM
|
|
q
|
EBP&P
|
|
q
|
WPM
|
|
q
|
IPC
Platform
|
|
q
|
IPC
Marketing Dashboard
|
|
q
|
IPC
Revenue Assurance Dashboard
|
|
q
|
CRM
(Communications Resource Manager)
|
3
SCHEDULE
3.2
Assumed
Liabilities
The
following are the “Assumed
Contracts” for purposes of this Agreement:
1. Amended
and Restated Schedule 5, dated as of January 1, 2006, to the Master Software
License Agreement dated as of December 11, 2002 by and between Time Warner Cable
Information Services (Maine), LLC and Primal, as amended pursuant to
(a) Amendment 1 dated as of January 1, 2004, (b) Amendment 2 dated as of
January 1, 2005, (c) the Third Amendment dated as of July 27, 2006, and (d) the
Fourth Amendment dated as of January 1, 2006 to Master Software License
Agreement, and any successor agreement thereto which may be entered into among
Advance/Xxxxxxxx, Advance/Xxxxxxxx Communications, LLC and Bright House
Networks, LLC (collectively “Brighthouse”) and Primal on or
prior to the Closing Date; provided that the Master Software License Agreement
dated as of December 11, 2002, by and between Time Warner Cable Information
Services (Maine), LLC and Primal, as amended pursuant to the Amendment 1 dated
as of January 1, 2004, as amended by Amendment 2 dated as of January 1, 2005, as
amended pursuant to (a) Amendment 1 dated as of January 1, 2004, (b)
Amendment 2 dated as of January 1, 2005, (c) the Third Amendment dated as of
July 27, 2006, and (d) the Fourth Amendment dated as of January 1, 2006 to
Master Software License Agreement, is not, and shall not be, an “Assumed
Contract.”
2. Software
License and Services Agreement dated as of December 8, 2006, by and between
Bresnan Communications LLC (“Bresnan”) and
Primal
3. Software
License and Services Agreement dated as of June 30, 2005, by and between Bend
Cable Data Services, LLC (“Bend”) and Primal
4. License
Agreement dated as of June 1, 1991, by and between Mercury Paging Ltd. (“Page One”) and
Primal
5. Master
Software License Agreement and Maintenance Agreement dated as of October 1,
1999, by and between Xxxxxxxxx Telecommunications (Australia) Limited (“Xxxxxxxxx”) and
Primal
6. Software
License Agreement dated as of September 1, 2005, by and between [Alcatel]-Lucent
Technologies (“Alcatel”)
and Primal, any rights under the course of dealing and/or undocumented extension
of said agreement following the term specified therein (including any
potentially effective automatic month-to-month renewal of said term), and any
successor agreement thereto which may be entered into between Alcatel and Primal
on or prior to the Closing Date
7. The
Master Software License Agreement dated as of September 3, 2004, by and between
West Tel Limited (“Westel”) and
Primal
For
purposes of this Agreement, each of Brighthouse, Bresnan, Bend, Page One,
Xxxxxxxxxx, Alcatel, and Westel is a “Transferred Customer” and
together they are the “Transferred
Customers.”
4
SCHEDULE
7.4
Transferred
Employees
Xxxxxx
Xxxxxxxxx
Xxxxxxx
Xxxxxx
Xxxxxx
Xxxxx
Xxxx
Xxxxxxxx
Xxx
Xxxxxxxxxx
Xxxxxx
Xxxxxxx
SCHEDULE
8.12
Open
LOEs
Primal Solutions,
Inc.
Open
LOEs
|
Customer
|
Task
#
|
Booking
Amount
|
As
of 12.31.08
|
#
of Hours
Needed
|
Resources
by Staff/Hours
|
|
|
Rev
Recog’d
|
Open
Revenue
|
|||||
| Bend Cable | BCD141 |
$7,200.00
|
$4,800.00
|
$2,400.00
|
16
|
Xxxxxx (16) |
| Bresnan | BCL56 |
$34,500.00
|
$28,254.32
|
$6,245.68
|
42
|
Xxxxxx (24), Xxx (2), Xxxx (16) |
| Xxxxxxx | BCL96 |
$6,000.00
|
$3,750.00
|
$2,250.00
|
24
|
Sanjay (8), Xxx (8), Xxxxxx (8) |
| Bright House | BHN178 |
$28,500.00
|
$24,750.00
|
$3,750.00
|
8
|
Xxxx X. (8) |
| Xxxxxxxxx | HT048 |
$45,000.00
|
$35,700.00
|
$9,300.00
|
62
|
Xxxxxx (62) |
| Page One | MP096 |
$18,000.00
|
$
-
|
$18,000.00
|
120
|
Xxxxxx (60), Xxxx F (60) |
| Time Warner | TWCR185 |
$3,000.00
|
$
-
|
$3,000.00
|
16
|
Joann (16) |
| Time Warner | TWCR193 |
$20,000.00
|
$
-
|
$20,000.00
|
115
|
Andy (75), Xxx (hourly, up to 40) |
| West Tel | WTL73 |
$18,000.00
|
$
-
|
$18,000.00
|
96
|
Xxxxxx (48), Andy (48) |
|
$180,200.00
|
$97,254.32
|
$82,945.68
|
||||
Note: There are currently an open XXX to Bright House and another open XXX to Time Warner.
Disclosure
Schedules
Section
5.3 – Title to Properties
(a) Assignments, Transfers,
and/or Conveyances of the Intellectual Property:
Sellers
make no representations or warranties with respect to any Intellectual Property
except as set forth in the first, second, third, and fourth sentences of Section
5.3. Notwithstanding the foregoing, and without making any other
representation or warranty:
· TransAmerica
Business Credit Corporation has a security agreement in place on the Creditwatch
(Serial Nos. 74358508 and 74358507) trademarks of WBS, which was granted by
Subscriber Computing, Inc., the prior owner of the marks.
· TransAmerica
Business Credit Corporation also has a security interest on U.S. patent
registration 5,291,543 (“Cellular Telephone Real Time Account Administration
System”), which was granted by Subscriber Computing, Inc. In
addition, there is no assignment from the inventors of the patent to Subscriber
Computing, Inc. (or any predecessor company); and Seller believes that
TransAmerica holds a security interest, although the record filed with the U.S.
Patent and Trademark Office appears as an “assignment of assignors interest”
rather than as a security interest.
· With
respect to U.S. patent registration 5,291,453 (“Serial Memory Apparatus Having
Units for Presetting Reading Bit Lines to a Given Voltage”), the investors of
that patent assigned it to Ricoh Company, and then Subscriber Computing, Inc.
assigned the patent to WBS. The chain of title is missing the
assignment from Ricoh to Subscriber Computing, Inc. Therefore, WBS’
title is not clear.
· Sellers
have entered into certain escrow arrangements with certain or all of their
respective customers pursuant to which ownership of certain Seller Intellectual
Property would be assigned to such customers upon a default by
Seller. In addition, Sellers have granted customers licenses to use
the Intellectual Property (including perpetual licenses).
· Sellers
have assigned to SSF certain rights in the Intellectual Property , which rights
will be conditionally released pursuant to the consent being granted by SSF in
connection with the Contemplated Transactions, subject to full compliance with
the terms of the consent by Sellers.
(b) Liens, claims and
encumbrances exist on the Acquired Assets pursuant to the
following:
|
·
|
Amended
and Restated 10% Senior Convertible Note, dated March 31, 2006, as amended
and restated as March 31, 2008, issued to SSF, related Pledge and Security
Agreement, dated as of March 31, 2006, in favor of SSF, and other related
agreements with SSF;
|
|
·
|
Lease
agreement with CIP Centerpointe 123 LLC, dated April 16,
2007;
|
|
·
|
Operating
lease agreement with Dell Financial Services L.P. (lease number
012-004765674-014) (provided that on or before February 28, 2009, Sellers
intend to satisfy their obligations under said lease so that any Acquired
Assets leased thereunder will be released and thereafter be free of liens
and encumbrances of Dell; Sellers shall not assign such liened Acquired
Assets to Purchaser until such Acquired Assets are free of liens and
encumbrances and then shall promptly thereafter assign ownership
thereof);
|
|
·
|
The
security interests existing under operating lease agreements with Dell
Financial Services L.P. (lease numbers 000-0000000-000 &
032-4765674-016) are currently in the process of being released but likely
will not be released prior to the Closing Date; Sellers shall not assign
such liened Acquired
|
2
|
|
Assets
to Purchaser until such Acquired Assets are free of liens and encumbrances
and then shall promptly thereafter assign ownership
thereof;
|
|
·
|
Capital
lease agreement with CIT Technology Financial Service Inc. (contract no.
911-0001540-000) (provided that on or before February 28, 2009, Sellers
intend to satisfy their obligations under said lease so that any Acquired
Assets leased thereunder will be released and thereafter be free of liens
and encumbrances of CIT; Sellers shall not assign such liened Acquired
Assets to Purchaser until such Acquired Assets are free of liens and
encumbrances and then shall promptly thereafter assign ownership thereof);
and
|
|
·
|
Pursuant
to the terms of each of the Assumed Contracts, the consent of each
Transferred Customer is required to be obtained in connection with the
Contemplated Transactions.
|
3
