Exhibit 10.3
ACQUISITION AGREEMENT
by and among
VOXWARE, INC.,
VERBEX ACQUISITION CORPORATION
and
VERBEX VOICE SYSTEMS, INC.
Dated as of February 4, 1999
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TABLE OF CONTENTS
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I. DEFINITIONS
II. PURCHASE AND SALE OF ASSETS
Section 2.1. Purchase and Sale of Assets .................................. 4
Section 2.2. Excluded Assets .............................................. 5
Section 2.3. Assumption of Liabilities .................................... 5
Section 2.4. Excluded Liabilities ......................................... 5
Section 2.5. Closing ...................................................... 7
Section 2.6. Purchase Price; Purchase Price Adjustment .................... 7
Section 2.7. Delivery of Purchase Price and Transfer of Assets ............ 9
Section 2.8. Allocation of Purchase Price ................................. 10
Section 2.9. Charter Amendments ........................................... 10
III. CONDITIONS PRECEDENT TO
OBLIGATIONS OF PURCHASER
Section 3.1. Representations and Warranties Accurate ...................... 11
Section 3.2. Performance by Seller 11
Section 3.3. Certificate .................................................. 11
Section 3.4. Opinion of Counsel for Seller ................................ 11
Section 3.5. Legal Prohibition ............................................ 11
Section 3.6. Permits, Waivers, Orders, Et ................................. 11
Section 3.7. No Material Adverse Change ................................... 11
Section 3.8. Financial Statements ......................................... 12
Section 3.9. Secretary's Certificate ...................................... 12
Section 3.10. Closing Matters ............................................. 12
Section 3.11. Supplemental Disclosure ..................................... 12
Section 3.12. Escrow Agreement ............................................ 12
Section 3.13. UCC-3 Termination Statements ................................ 12
Section 3.14. Non-Disclosure Agreements ................................... 12
Section 3.15. Bulk Sales Notice ........................................... 12
IV. CONDITIONS PRECEDENT TO
OBLIGATIONS OF SELLER
Section 4.1. Representations and Warranties Accurate ...................... 13
Section 4.2. Performance by Purchaser ..................................... 13
Section 4.3. Certificate .................................................. 13
Section 4.4. Legal Prohibition ............................................ 13
Section 4.5. Closing Matters .............................................. 13
Section 4.6. Escrow Agreement ............................................. 13
V. INDEMNIFICATION
Section 5.1. Survival of Representations and Warranties ................... 14
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Section 5.2. Seller's Indemnity ........................................... 14
Section 5.3. Purchaser's Indemnity ........................................ 14
Section 5.4. Limitation ................................................... 15
Section 5.5. Subsequent Tax Liability Indemnification ..................... 15
Section 5.6. Notice and Defense of Claims ................................. 15
VI. REPRESENTATIONS AND
WARRANTIES OF SELLER
Section 6.1. Organization and Qualification ............................... 16
Section 6.2. Due Authorization ............................................ 16
Section 6.3. No Conflict .................................................. 17
Section 6.4. Title to and Condition of Assets ............................. 17
Section 6.5. Financial Information 18
Section 6.6. Taxes ........................................................ 20
Section 6.7. Contracts, Obligations and Commitments ....................... 21
Section 6.8. Litigation ................................................... 21
Section 6.9. Compliance with Law .......................................... 22
Section 6.10. Permits ..................................................... 22
Section 6.11. Brokers ..................................................... 22
Section 6.12. Intellectual Property ....................................... 22
Section 6.13. Plans and Agreements Relating to Employees .................. 23
Section 6.14. No Illegal or Improper Transactions ......................... 24
Section 6.15. Related Transactions 24
Section 6.16. No Product Liabilities; Product Warranties .................. 24
Section 6.17. Suppliers and Customers ..................................... 25
Section 6.18. Availability of Documents ................................... 25
Section 6.19. Disclosure .................................................. 25
VII. REPRESENTATIONS AND WARRANTIES
OF VOXWARE AND PURCHASER
Section 7.1. Organization ................................................. 26
Section 7.2. Due Authorization; No-Conflict ............................... 26
Section 7.3. Brokers ...................................................... 27
VIII. COVENANTS
Section 8.1. Conduct and Preservation of Business ........................ 27
Section 8.2. Access to Information; Confidentiality ...................... 28
Section 8.3. Filings and Authorizations .................................. 28
Section 8.4. Public Announcements ........................................ 28
Section 8.5. Hiring of Employees ......................................... 29
Section 8.6. Schedules ................................................... 29
Section 8.7. Financial Statements ........................................ 29
Section 8.8. Non-Solicitation by Voxware and Purchaser ................... 29
IX. CERTAIN ACTIONS AFTER THE CLOSING
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Section 9.1. Employee Benefits ........................................... 30
Section 9.2. Non-Solicitation by Seller .................................. 30
Section 9.3. Maintenance of Books and Records ............................ 30
Section 9.4. Use of Name ................................................. 31
Section 9.5. Non-Competition ............................................. 31
Section 9.6. Payment of Liabilities; Accounts Receivable and Inventory ... 31
Section 9.7. Tax Returns Through Closing ................................. 31
Section 9.8. Purchaser to Act as Agent for Seller ........................ 31
Section 9.9. Delivery of Property Received by Seller or
Purchaser After Closing .................................. 32
Section 9.10. Purchaser Appointed Attorney for Seller ..................... 32
Section 9.11. Subrogation of Purchaser .................................... 32
Section 9.12. Further Assurances .......................................... 32
X. TERMINATION
Section 10.1. Termination Events ......................................... 33
Section 10.2. Effect of Termination ...................................... 33
XI. MISCELLANEOUS
Section 11.1. Expenses ................................................... 34
Section 11.2. Risk of Loss ............................................... 34
Section 11.3. Amendment .................................................. 34
Section 11.4. Entire Agreement ........................................... 34
Section 11.5. Headings ................................................... 34
Section 11.6. Notices .................................................... 34
Section 11.7. Severability ............................................... 35
Section 11.8. Waiver ..................................................... 36
Section 11.9. Governing Law .............................................. 36
Section 11.10. Remedies .................................................. 36
Section 11.11. Third Parties ............................................. 36
Section 11.12. Counterparts .............................................. 36
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EXHIBITS
Exhibit 3.4 Form of Opinion of Counsel for Seller
Exhibit 3.12 Form of Escrow Agreement
SCHEDULES
Schedule 2.1(a) Tangible Assets
Schedule 2.1(e) Contracts
Schedule 2.1(g) Intellectual Property
Schedule 2.2 Excluded Assets
Schedule 2.3(b) Section 2.3(b) Liabilities
Schedule 2.6(b)(i) Inventory
Schedule 3.6 Consents
Schedule 6.3 Seller Conflicts
Schedule 6.5(a) Interim Balance Sheet
Schedule 6.5(d) Value of Inventory
Schedule 6.7 Contract Exceptions
Schedule 6.13 Plans and Agreements Relating to Employees
Schedule 6.15 Related Transactions
Schedule 6.17 Suppliers and Customers
Schedule 7.2 Purchaser Conflicts
Schedule 9.5 Non-Competition
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ACQUISITION AGREEMENT, dated as of February 4, 1999, by and among Voxware,
Inc., a Delaware corporation ("Voxware") with its principal executive offices at
000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, Verbex Acquisition
Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary
of Voxware with its principal executive offices at 000 Xxxxxxx Xxxx Xxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000, and Verbex Voice Systems, Inc., a Delaware
corporation ("Seller") with its principal executive offices at 000 Xxxxxxx
Xxxxxx Xxxxxxx, Xxxxxx, Xxx Xxxxxx 00000.
WHEREAS, Purchaser desires to purchase, and Seller desires to sell, certain
assets used in connection with the conduct of the Business (as defined herein),
including the value of the Business as a going concern; and
WHEREAS, in order to effectuate the sale and purchase of the Business as
described above and as more fully described herein, Seller shall sell and
Purchaser shall purchase substantially all the assets of Seller used in the
Business, all upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in reliance upon the covenants and agreements set forth
herein, the parties hereto agree as follows:
1. DEFINITIONS
The following terms shall have the following respective meanings for all
purposes of this Agreement:
"Acquisition Transaction" has the meaning set forth in Section 8.1.
"Affiliate" or "affiliate" means, with respect to any Person, any other
Person that, directly or indirectly, controls or is controlled by or is under
common control with such Person. As used in this definition of "Affiliate", the
term "control" and any derivatives thereof mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract, or otherwise.
"Agreement" means this Acquisition Agreement, as it may be from time to
time amended.
"Assets" has the meaning set forth in Section 2.1.
"Assumed Contracts" has the meaning set forth in Section 6.7.
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Business" means the business conducted by Seller relating to speech
recognition technology.
"Cambridge Facility" means the facility located at 000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000, and leased by Seller in connection
with the Business.
"Closing" means the completion of the acquisition of the Assets pursuant to
this Agreement.
"Closing Date" means the date the Closing takes place.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Convertible Notes" means Seller's convertible subordinated promissory
notes issued to various investors in the aggregate principal amount of
$3,999,945 and which were issued at various times between May 1994 and May 1998.
"Employee Plans" has the meaning set forth in Section 6.13.
"Environmental Laws" means all laws, rules, regulations, statutes,
ordinances, decrees or orders of any governmental entity relating to (a) the
control of any potential pollutant or protection of the air, water or land, (b)
solid, gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation, and (c) exposure to hazardous, toxic or other
substances alleged to be harmful, and includes without limitation final and
binding requirements related to the foregoing imposed by (i) the terms and
conditions of any license, permit, approval or other authorization by any
governmental entity, and (ii) applicable judicial, administrative or other
regulatory decrees, judgments and orders of any governmental entity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means The Bank of New York or such other Person as may be
mutually agreed upon.
"Escrow Agreement" means that certain Escrow Agreement to be dated the
Closing Date and to be entered into by and among Purchaser, Seller and the
Escrow Agent, substantially in the form attached hereto as Exhibit 3.12.
"Escrow Fund" has the meaning set forth in Section 2.7(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.4.
"Indemnified Party" has the meaning set forth in Section 5.6.
"Indemnifying Party" has the meaning set forth in Section 5.6.
"Intellectual Property" has the meaning set forth in Section 2.1(g).
"Interim Balance Sheet" has the meaning set forth in Section 6.5.
"Interim Balance Sheet Date" has the meaning set forth in Section 6.5.
"Material Adverse Change" means an occurrence or event which has had or is
reasonably likely to have a material adverse effect on the Assets, the Assumed
Liabilities or the Business. In light of the fact that Seller is reducing the
level of its operations related to the Business, it is understood and agreed
that changes in the levels of Seller's inventory, accounts receivable and/or
accounts payable arising in the ordinary course of business, consistent with
past practice, or in the ordinary course of such reduction in the level of such
operations shall not constitute a Material Adverse Change.
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"Permits" means all permits, licenses, registrations, approvals,
qualifications, consents and other necessary authorizations necessary for the
lawful conduct, ownership and operation of the Assets and the Business.
"Permitted Encumbrances" has the meaning set forth in Section 6.4(a).
"Person" means an individual, partnership, corporation, joint venture,
unincorporated organization, cooperative or a governmental entity or agency
thereof.
"Purchase Price" has the meaning set forth in Section 2.6(a).
"Retained Employees" has the meaning set forth in Section 9.2.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Seller Financial Statements" has the meaning set forth in Section 6.5(a).
"Taxes" has the meaning set forth in Section 6.6.
"Transaction Costs" mean all financial, tax, accounting, consulting,
finders, brokers, investment banking, legal, advisory and similar fees,
commissions and expenses incurred by Seller in connection with the consummation
of the transactions contemplated hereby.
II. PURCHASE AND SALE OF ASSETS
2.1. Section Purchase and Sale of Assets . At the Closing, upon the terms and
subject to the conditions contained herein, Seller shall sell, transfer,
convey, assign and deliver to Purchaser, effective as of the Closing, and
Purchaser shall purchase and accept from Seller, all right, title and
interest of Seller in and to all of the properties, business and assets of
Seller related to the Business, of every kind and description, real,
personal and mixed, tangible and intangible, wherever located, whether or
not appearing on the Interim Balance Sheet, free and clear of all liens,
mortgages, pledges, encumbrances and charges of every kind except for the
Permitted Encumbrances, except the Excluded Assets (collectively, the
"Assets"). Without limiting the generality of the definition of the Assets
being purchased by Purchaser, the Assets shall include the following:
(a) all machinery, equipment, furniture and fixtures, computers, computer
hardware and software, tools, supplies, construction in progress and other
tangible assets of Seller related to the Business, including, without
limitation, those described in Schedule 2.1(a) (collectively, the "Tangible
Assets");
(b) all prepaid items, unbilled costs and fees, and accounts, notes and other
receivables;
(c) all Seller's inventories of raw materials, work-in-process, intermediates,
finished goods and packaging materials used or useful in the conduct of the
Business, including the inventory set forth on Schedule 2.1(c);
(d) all the interest of and the rights and benefits accruing to Seller as
lessee under (i) the leases relating to the Cambridge Facility and Seller's
office space located in Centerville, Utah, and all leasehold improvements
and fixtures relating thereto, and (ii) all leases or rental agreements
covering machinery, equipment, furniture and fixtures, computers, computer
hardware and software, tools, supplies and other tangible assets used in
the Business which are specifically set forth on Schedule 2.1(e);
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(e) all of the rights and benefits accruing to Seller under all written
agreements and contracts entered into in connection with the conduct of the
Business which are specifically set forth on Schedule 2.1(e) hereto;
(f) all operating data and records of Seller relating to the ownership or the
operation of the Assets or the Assumed Liabilities, including, without
limitation, customer and distribution lists and records, production reports
and records, equipment logs, operating guides and manuals, copies of
personnel records for all Retained Employees, correspondence and other
similar documents and records (other than correspondence relating to any
Acquisition Transaction(s));
(g) all industrial and intellectual property rights owned or controlled by
Seller, including, without limitation, products, patents, patent
applications, patent rights, trademarks, trademark applications,
tradenames, service marks, service xxxx applications, copyrights, know-how,
franchises, licenses, trade secrets, proprietary processes and formulae,
technologies, methods, plans, research data, marketing plans and
strategies, forecasts, product designs, fabrication data, research and
development, operating rights, software (including, without limitation, all
source codes and object codes), permits, licenses and other intellectual
property relating to the conduct of the Business (collectively
"Intellectual Property"), including, without limitation, all such property
and rights listed on Schedule 2.1(g);
(h) all non-competition agreements relating to the Business;
(i) all claims, warranty rights, causes of action and other similar rights
arising in the conduct of the Business; and
(j) all goodwill and going concern value of the Business, including, without
limitation, all rights to the name "Verbex," "Listen(TM) for Windows(TM),"
"Speech Commander(TM) "and the other names listed on Schedule 2.1(g). (t)
Section 2.2. Excluded Assets . Anything to the contrary in Section 2.1
notwithstanding, the Assets shall exclude and Purchaser shall not acquire
any cash or cash equivalents in hand or in bank accounts (including those
funds received by a bank and awaiting clearance) and those items
specifically set forth in Schedule 2.2 hereto (the "Excluded Assets").
Section 2.3. Assumption of Liabilities . At the Closing, upon the terms and
subject to the conditions contained herein, Purchaser shall assume,
effective as of the Closing, and discharge in accordance with their terms,
only the following liabilities and obligations of Seller to the extent that
they shall remain uncompleted and outstanding at the Closing Date:
(a) Seller's obligations under the Assumed Contracts arising after the Closing
Date and all outstanding development and support commitments (as identified
on Schedule 2.1(e)) and warranties extended by Seller prior to the Closing
Date with respect to its products in the ordinary course of business
consistent with past practice; and
(b) the liabilities identified on Schedule 2.3(b) in such amounts as reflected
on Seller's books and records as of the Closing Date, but in no event to
exceed the amounts set forth on Schedule 2.3(b) (collectively, the "Section
2.3(b) Liabilities").
(c) For convenience of reference, the foregoing liabilities and obligations of
Seller assumed by Purchaser are collectively referred to herein as the
"Assumed Liabilities."
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Section 2.4. Excluded Liabilities . The parties hereto agree that Purchaser
shall not assume, pay, discharge, become liable for or perform when due,
and Seller shall not cause Purchaser so to assume, pay, discharge, become
liable for or perform, any liabilities (contingent or otherwise), debts,
contracts, commitments and other obligations of Seller of any nature
whatsoever except the Assumed Liabilities (the "Excluded Liabilities").
Without limiting the foregoing, Purchaser shall not assume, pay or
discharge, and shall not be liable for, any liability, commitment or
expense of Seller as a result of or arising from any of the following:
(a) Seller's obligations and any liabilities arising under this Agreement;
(b) the Convertible Notes (including accrued interest thereon), stock option
accruals and employee interest;
(c) commissions, payroll and payroll taxes, and health insurance relating to
Seller's employment of its employees;
(d) any obligation of Seller for federal, state, local or foreign tax liability
(including interest, penalties or additions to tax relating thereto)
arising from the operation of the Business up to the Closing Date or
arising out of the sale by Seller of the Assets pursuant hereto;
(e) Seller's Transaction Costs;
(f) any liability or obligation to any employee or former employee of Seller or
to any third party, under any pension, insurance, bonus, profit-sharing or
other employee benefit plan or arrangement (whether written, oral or
otherwise) or any obligation relating to salaries, bonuses, vacation
(except as specifically assumed pursuant to Section 2.3) or severance pay,
including, without limitation, any liability or obligation related to
Seller's retention/severance program, or any obligation under any statute,
rule or regulation, including, without limitation, ERISA;
(g) any liability, contract, commitment or other obligation of Seller, known or
unknown, fixed or contingent, the existence of which constitutes or will
constitute a breach of any representation or warranty of Seller contained
in or made pursuant to this Agreement or which Purchaser is not assuming
hereunder;
(h) any liabilities or obligations of Seller under any contracts or agreements
relating to the Excluded Assets;
(i) any violation by Seller of any law or governmental regulation;
(j) FICA and other employee withholding taxes incurred (i) on or prior to the
Closing Date and (ii) after the Closing Date with respect to all employees
who are not Retained Employees;
(k) except with respect to the Accounts Receivable Note (as provided in and
defined on Schedule 2.3(b)), liabilities and obligations of Seller for
borrowed money and guarantees of borrowed money or letters of credit;
(l) other than the Assumed Liabilities, any product liability or similar claim
for injury to person or property, regardless of when made or asserted,
which arises out of or is based upon any express or implied representation,
warranty, agreement or guarantee made by Seller, or alleged to have been
made by Seller, or which is imposed or asserted to be imposed by operation
of law, in connection with any service performed or product sold or leased
by or on behalf of Seller on or prior to the Closing Date, including,
without limitation, any claim relating to any product delivered in
connection with the performance of such service and any claim seeking
recovery for consequential damages, lost revenue or lost profit; and
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(m) any liability or obligation, other than the Assumed Liabilities, arising
out of the conduct of the Business prior to the Closing Date, including,
without limitation, liabilities and obligations arising out of transactions
entered into prior to the Closing Date (including, without limitation,
liabilities or obligations arising out of any breach by Seller of any
provision of any agreement, contract, commitment or lease included in the
Assets, including but not limited to liabilities or obligations arising out
of Seller's failure to perform any agreement, contract, commitment or lease
in accordance with its terms prior to the Closing), any action or inaction
prior to the Closing Date or any state of facts existing prior to the
Closing Date (regardless of when asserted) not expressly assumed by
Purchaser pursuant to this Agreement.
Section 2.5. Closing . The Closing shall take place at the offices of
Verbex Acquisition Corporation, 000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx
Xxxxxx 00000, subject to satisfaction or waiver of the conditions set forth
in Articles III and IV hereof, at the opening of business on February 16,
1999, or at such other date, time and place as the parties may agree. Each
party hereto agrees to use its reasonable efforts to satisfy promptly the
conditions to the obligations of the respective parties hereto in order to
expedite the Closing.
Section 2.6. Purchase Price; Purchase Price Adjustment (a). The purchase
price (the "Purchase Price") for the Assets shall consist of (i)
$5,200,000, subject to adjustment as set forth in Section 2.6(b) and (ii)
the assumption of the Assumed Liabilities.
(b) The Purchase Price will be subject to adjustment as follows:
(i) As soon as practicable and in any event no later than 20 days
following the date six full calendar months after the Closing Date (the
"Determination Date"), Purchaser shall deliver to Seller a statement (the
"Adjusted Net Asset Value Statement") of its calculation of Adjusted Net
Asset Value (as defined below) as of the Determination Date. Purchaser
shall bear the costs of preparing the Adjusted Net Asset Value Statement.
For purposes hereof:
(x) "Adjusted Net Asset Value" means (A) the sum of (i) the
amount of cash actually received by Purchaser (including those funds
received by a bank and awaiting clearance) during the period between
the Closing Date and the Determination Date (the "Initial Escrow
Period") from the sale of inventory included in the Assets acquired
hereunder (the "Inventory Realization Amount") and from the collection
of accounts receivable included in the Assets acquired hereunder, (ii)
the lesser of $40,000 or the value of any inventory included in the
Assets which remains unsold as of the Determination Date, if any,
(such lesser amount being the "Inventory Credit") and (iii) the
Estimated Fair Market Value (as defined below) of the noncurrent
Assets listed on Schedule 2.1(a) and acquired by Purchaser at Closing
minus (B) the sum of (i) the aggregate amount of the Section 2.3(b)
Liabilities, including any and all other liabilities related thereto
which arise after the Closing Date and relate to the period prior to
the Closing Date, and (ii) any damage, loss, cost, expense or
liability for which Purchaser has made or shall (as of the
Determination Date) be entitled to make an indemnification claim under
Section 5.2 hereof.
(y) "Estimated Fair Market Value" means (A) with respect to
equipment, furniture and improvements, 50% of net book value as of
December 31, 1998 and (B) with respect to all other noncurrent Assets,
100% of net book value as of December 31, 1998.
(ii) (x) If the Adjusted Net Asset Value is greater than or equal to
$400,000, the Escrow Agent shall disburse to Seller the entire Escrow
Fund.
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(y) If the Adjusted Net Asset Value is less than $400,000, the
Escrow Agent shall: (1) disburse to Seller the Adjusted Net Asset
Value; (2) subject to subsection (iii) below, retain that portion of
the remaining Escrow Fund equal to the lesser of (A) the value of any
inventory included in the Assets which remains unsold as of the
Determination Date, if any, less the Inventory Credit or (B) $50,000,
provided that, in either event, the Escrow Agent shall not retain any
more than the remaining Escrow Fund; then (3) disburse to Purchaser
the balance of the Escrow Fund, if any.
(z) In the event of either (x) or (y) above, the Escrow Agent
shall disburse the Escrow Fund or any portion thereof subject to
subsection (iv) below and in accordance with the provisions of the
Escrow Agreement. The Escrow Agent shall pay the applicable interest
on the Escrow Fund or any portion thereof to the party receiving the
Escrow Fund or such portion thereof.
(iii) With respect to any portion of the Escrow Fund retained by the
Escrow Agent following the Determination Date (the "Retained Escrow Fund"),
such portion shall be retained for an additional six months following the
Determination Date. At the end of such additional six-month period, if the
amount of cash actually received by Purchaser (including those funds
received by a bank and awaiting clearance) during this period from the sale
of any remaining inventory included in the Assets acquired hereunder minus
any damage, loss, cost, expense or liability for which Purchaser has made
or shall (as of the end of such period) be entitled to make an
indemnification claim under Section 5.2 hereof (the "Final Inventory
Adjustment") is greater than the Retained Escrow Fund, the Escrow Agent
shall disburse to Seller the entire Retained Escrow Fund. If the Final
Inventory Adjustment is less than the Retained Escrow Fund, the Escrow
Agent shall disburse to Purchaser the difference between the Retained
Escrow Fund and the Final Inventory Adjustment and the balance of the
Retained Escrow Fund, if any, to Seller. In all cases, the Escrow Agent
shall disburse the Retained Escrow Fund or any portion thereof subject to
subsection (iv) below (i.e., using the Final Inventory Adjustment in lieu
of the Adjusted Net Asset Value) and in accordance with the provisions of
the Escrow Agreement. The Escrow Agent shall pay the applicable interest on
the Retained Escrow Fund or any portion thereof to the party receiving the
Retained Escrow Fund or such portion thereof.
(iv) Within 20 days after receipt of the Adjusted Net Asset Value
Statement, Seller shall notify Purchaser in writing if it disagrees with
such Statement and the calculation of Adjusted Net Asset Value, including a
specific description of Seller's objections; it being understood and agreed
that Seller shall be deemed to have accepted all other items and amounts
set forth in the Adjusted Net Asset Value Statement. Failure of Seller to
deliver such written notice to Purchaser within such 20-day period shall be
deemed acceptance by Seller of the Adjusted Net Asset Value Statement and
such calculation of Adjusted Net Asset Value. If Seller objects as provided
above and Purchaser does not agree with Seller's objections, and if such
disagreements are not resolved on a mutually agreeable basis within five
days after Purchaser's receipt of Seller's objections, any such
disagreements shall be promptly submitted to a mutually acceptable
"big-five" accounting firm (the "Unaffiliated Firm"). The Unaffiliated Firm
shall resolve within 30 days after said Unaffiliated Firm's engagement by
the parties the differences regarding the Adjusted Net Asset Value
Statement and the calculation of Adjusted Net Asset Value in accordance
with generally accepted accounting principles consistently applied and this
Agreement. The decision of such Unaffiliated Firm shall be final and
binding upon Seller and Purchaser. The fees, costs and expenses of the
Unaffiliated Firm shall be borne equally by Seller and Purchaser. Each
party hereto shall bear the fees, costs and expenses of its own
accountants.
Section 2.7. Delivery of Purchase Price and Transfer of Assets . On the
Closing Date, Purchaser shall pay by wire transfer of immediately available
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funds, and, in the event that Purchaser is unable to so pay,
Voxware shall pay on behalf of Purchaser:
(i) $4,800,000 to Seller to an account specified by
Seller prior to the Closing Date; and
(ii) $400,000 to the Escrow Agent pursuant to the
Escrow Agreement (the "Escrow Fund").
(b) At the Closing, Seller shall deliver to Purchaser such deeds, bills of
sale, endorsements, assignments and other instruments of sale, conveyance,
transfer and assignment, satisfactory in form and substance to Purchaser
and its counsel, as may be reasonably requested by Purchaser, in order to
convey to Purchaser good and marketable title to the Assets, free and clear
of all claims, charges, equities, liens, security interests and
encumbrances, except as permitted by this Agreement. Seller shall pay all
sales, transfer or stamp taxes, or similar charges, payable by reason of
the sale hereunder.
(c) At the Closing, Seller shall deliver to Purchaser copies of all source and
object code relating to recognition engines and related modules and copies
of such other proprietary Intellectual Property as may be reasonably
requested by Purchaser.
(d) At the Closing, Seller shall deliver to Purchaser all written consents
which are required under any Assumed Contract being assigned to Purchaser
hereunder.
Section 2.8. Allocation of Purchase Price . The Purchase Price shall be
allocated in its entirety among the Assets and agreed to in writing by the
parties prior to the Closing; it being understood and agreed that, at
Purchaser's option and expense, the value of any Asset of Seller,
including, without limitation, any Intellectual Property, may be determined
by an independent appraiser to be mutually agreed upon by Seller and
Purchaser. Seller and Purchaser shall file all information and tax returns
(and any amendments thereto) in a manner consistent with this Section 2.8.
If, contrary to the intent of the parties hereto as expressed in this
Section 2.8, any taxing authority makes or proposes an allocation different
from that contained in this Section 2.8, Seller and Purchaser shall
cooperate with each other in good faith to contest such taxing authority's
allocation (or proposed allocation); provided, however, that, after
consultation with the party adversely affected by such allocation (or
proposed allocation), another party hereto may file such protective claims
or returns as may reasonably be required to protect its interests.
Section 2.9. Charter Amendments . On the Closing Date, Seller shall deliver
to Purchaser copies of all such executed documents as may be required to
(i) change Seller's name on that date to another name bearing no similarity
to "Verbex Voice Systems, Inc.", including, without limitation, an
amendment to Seller's Restated Certificate of Incorporation and, if
required by law, an appropriate name change notice in each jurisdiction
where Seller is qualified to transact business; and (ii) amend Section
4(f)(vii) of Article Fourth of Seller's Restated Certificate of
Incorporation in a manner satisfactory to Purchaser. Seller hereby agrees
to file all such documents on the Closing Date.
III. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser under this Agreement to consummate the purchase
of the Assets at the Closing shall be subject to the satisfaction, at or prior
to the Closing, of all of the following conditions, to the reasonable
satisfaction of Purchaser (any of which may be waived in writing in whole or in
part by Purchaser):
Section 3.1. Representations and Warranties Accurate . All representations
and warranties of Seller contained in this Agreement
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(including the Schedules hereto), and all written information (other
than any projections and forecasts) delivered to Purchaser by Seller
on or prior to the Closing Date pursuant to this Agreement, (i) that
are qualified as to materiality shall be true in all respects on and
as of the Closing Date and (ii) that are not qualified as to
materiality shall be true in all material respects on and as of the
Closing Date, with the same force and effect as though such
representations and warranties were made, and such written information
was delivered, on and as of the Closing Date.
Section 3.2. Performance by Seller . Seller shall have performed and
complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed and complied
with by Seller prior to or on the Closing Date.
Section 3.3. Certificate . Purchaser shall have received a
certificate, dated the Closing Date, signed by an authorized officer
of Seller, solely in his or her capacity as an officer of Seller,
certifying that the conditions set forth in Sections 3.1, 3.2 and 3.7
have been satisfied.
Section 3.4. Opinion of Counsel for Seller . Purchaser shall have
received from Xxxxxxxx & Xxxxxxxx, L.L.C., counsel to Seller, a
written opinion, dated the Closing Date, substantially in the form
attached hereto as Exhibit 3.4.
Section 3.5. Legal Prohibition . On the Closing Date, no injunction or
order shall be in effect prohibiting consummation of the transactions
contemplated hereby or which would make the consummation of such
transactions unlawful and no action or proceeding shall have been
instituted and remain pending before a court, governmental body or
regulatory authority to restrain or prohibit the transactions
contemplated by this Agreement and no adverse decision shall have been
made by any such court, governmental body or regulatory authority
which constitutes, or could be reasonably anticipated to constitute, a
Material Adverse Change to the Business or materially increase the
liabilities of the Business. No Federal, state or local statute, rule
or regulation shall have been enacted the effect of which would be to
prohibit, restrict, impair or delay the consummation of the
transactions contemplated hereby or restrict or impair the ability of
Purchaser to own or conduct the Business.
Section 3.6. Permits, Waivers, Orders, Et c. Subject to Section 9.8,
all consents necessary for the assignment of those Assumed Contracts
set forth on Schedule 3.6 shall have been duly obtained and shall be
reasonably satisfactory to Purchaser and its counsel, and copies
thereof shall be delivered to the Purchaser at or prior to the
Closing.
Section 3.7. No Material Adverse Change . There shall have been no
Material Adverse Change in the Business, the Assets or Seller's
liabilities (including the Assumed Liabilities and the Excluded
Liabilities) from the Interim Balance Sheet Date to the Closing Date
not consented to by Purchaser in writing.
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Section 3.8. Financial Statements . Purchaser, at its own expense,
shall have received, at least three days prior to the Closing Date,
audited financial statements at and for the year ended December 31,
1998, together with a signed independent auditors opinion thereon.
1.16.
Section 3.9. Secretary's Certificate . Purchaser shall have received
a certificate, dated the Closing Date, signed by the Secretary of
Seller, certifying: (i) that attached thereto is a true and complete
copy of the Restated Certificate of Incorporation of Seller, which
has not been and will not be amended (except in accordance with
Section 2.9); (ii) that attached thereto is a true and complete copy
of the By-laws of Seller as in effect on the Closing Date; and (iii)
that attached thereto is a true and complete copy of all resolutions
adopted by the Board of Directors of Seller authorizing the
execution, delivery and performance of this Agreement and the Escrow
Agreement and the consummation of the transactions contemplated
hereby and thereby, that such resolutions are in full force and
effect as of the Closing Date and that such resolutions are all the
resolutions adopted in connection with the transactions contemplated
hereby.
Section 3.10. Closing Matters . All proceedings (including, without
limitation, the matters referred to in Section 2.7) to be taken by
the Seller in connection with the consummation of the transactions
contemplated hereby and all certificates, opinions, instruments and
other documents required to effect the transactions contemplated
hereby shall be reasonably satisfactory in form and substance to
Purchaser and its counsel.
Section 3.11. Supplemental Disclosure . If Seller shall have
supplemented or amended any Schedule pursuant to its obligations set
forth in Section 8.6 hereof, Purchaser shall not have given notice to
Seller that, as a result of information provided to Purchaser in
connection with any or all of such amendments or supplements which
result or could result in a Material Adverse Change, Purchaser has
determined not to proceed with the consummation of the transactions
contemplated hereby.
Section 3.12. Escrow Agreement . Seller and the Escrow Agent shall
have executed and delivered the Escrow Agreement, substantially in
the form attached hereto as Exhibit 3.12.
Section 3.13. UCC-3 Termination Statements . Seller shall have
delivered UCC-3 Termination Statements executed by Silicon Valley
Bank as necessary to terminate any and all liens on the Assets
existing immediately prior to the Closing.
Section 3.14. Non-Disclosure Agreements . Seller shall have delivered
non-disclosure agreements (in the form provided by Purchaser)
executed by each of Seller's engineers, executives and other key
employees, as determined by Purchaser.
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Section 3.15. Bulk Sales Notice . Purchaser shall have obtained a tax
clearance escrow letter from the New Jersey Division of Taxation
prior to the Closing which limits Purchaser's liability to a
specified amount, which amount shall be withheld from the amount
otherwise due to Seller in accordance with Section 2.7(a) and shall
be held by counsel for Purchaser in a non-interest bearing attorney
trust account until written confirmation from the New Jersey Division
of Taxation is received by counsel for Purchaser authorizing the
release of such amount from escrow.
IV. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller under this Agreement to consummate the sale of the
Assets at the Closing shall be subject to the satisfaction, at or prior to the
Closing, of all of the following conditions, to the reasonable satisfaction of
Seller (any of which may be waived in writing in whole or in part by Seller):
Section 4.1. Representations and Warranties Accurate . All representations
and warranties of Purchaser contained in this Agreement, and all written
information delivered to Seller by Purchaser on or prior to the Closing
Date pursuant to this Agreement, (i) that are qualified as to materiality
shall be true in all respects on and as of the Closing Date and (ii) that
are not qualified as to materiality shall be true in all material respects
on and as of the Closing Date, with the same force and effect as though
such representations and warranties were made, and such written
information was delivered, on and as of the Closing Date.
Section 4.2. Performance by Purchaser . Purchaser shall have performed and
complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed and complied with by
Purchaser prior to or on the Closing Date.
Section 4.3. Certificate . Seller shall have received a certificate, dated
the Closing Date, signed by an authorized officer of Purchaser, to the
effect that the conditions set forth in Sections 4.1 and 4.2 have been
satisfied.
Section 4.4. Legal Prohibition . On the Closing Date, no injunction or
order shall be in effect prohibiting consummation of the transactions
contemplated hereby or which would make the consummation of such
transactions unlawful and no action or proceeding shall have been
instituted and remain pending before a court, governmental body or
regulatory authority to restrain or prohibit the transactions contemplated
by this Agreement.
Section 4.5. Closing Matters . All proceedings to be taken by the
Purchaser in connection with the consummation of the transactions
contemplated hereby and all certificates, opinions, instruments and other
documents required to effect the transactions contemplated hereby shall be
reasonably satisfactory in form and substance to Seller and its counsel.
Section 4.6. Escrow Agreement . Purchaser and the Escrow Agent shall have
executed and delivered the Escrow Agreement, substantially in the form
attached hereto as Exhibit 3.12.
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V. INDEMNIFICATION
-- ---------------
Section 5.1. Survival of Representations and Warranties . All
------------------------------------------
representations and warranties contained in this Agreement shall survive
the Closing and shall remain in full force and effect until eighteen (18)
months after the Closing Date, regardless of any investigation made by
Purchaser or Seller or on their behalf, except as to any matters with
respect to which a bona fide written claim shall have been made or an
action at law or in equity shall have commenced before such date, in which
event survival shall continue (but only with respect to, and to the extent
of, such claim) until the final resolution of such claim or action,
including all applicable periods for appeal; provided, however, that the
representations and warranties relating to (i) environmental matters and
ERISA shall survive for the periods equal to the applicable statutes of
limitation relating thereto and (ii) Taxes shall survive until the latest
to occur of (x) three years from the date of the last filing of a return
or report of Taxes relating to the Assets or the Business and covering all
Taxes relating to all periods prior to the Closing Date, (y) the
expiration of the applicable statute of limitations, or (z) six months
following the ultimate disposition of any claim with respect to any Taxes
relating to the Assets or the Business.
Section 5.2. Seller's Indemnity. Seller shall indemnify and hold harmless
its Affiliates and their respective successors and assigns at all times
after the Closing Date against and in respect of:
(a) any damage, loss, cost, expense or liability (including reasonable
attorneys' fees) resulting to Purchaser from any false, misleading or
inaccurate representation, breach of warranty or nonfulfillment of any
agreement, covenant or condition by or on the part of Seller under
this Agreement or from any misrepresentation in or any omission from
any certificate, list, schedule or other written instrument to be
furnished to Purchaser hereunder;
(b) all liabilities and obligations of Seller (other than the Assumed
Liabilities) of any kind or nature whatsoever, whether accrued,
absolute, fixed, contingent, known or unknown, including, without
limitation, the Excluded Liabilities; and
(c) all claims, actions, suits, proceedings, demands, assessments,
judgments, costs and expenses incident to any of the items described
in subsections (a) or (b) above.
(d) This indemnity agreement in this Section 5.2 shall be in addition to
any liability which Seller may incur to Purchaser and shall not
foreclose any other rights or remedies Purchaser may have to enforce
the provisions of this Agreement, including, without limitation, any
action for fraud.
Section 5.3. Purchaser's Indemnity . Purchaser shall indemnify and hold
harmless Seller and its successors and assigns at all times after the
Closing Date against and in respect of:
(a) any damage, loss, cost, expense or liability (including reasonable
attorneys' fees) resulting to Seller from any false, misleading or
inaccurate representation, breach of warranty or nonfulfillment of any
agreement, covenant or condition by or on the part of Purchaser under
this Agreement or from any misrepresentation in or any omission from
any certificate, list, schedule or other instrument to be furnished to
Seller hereunder;
(b) all Assumed Liabilities; and
(c) all claims, actions, suits, proceedings, demands, assessments,
judgments, costs and expenses incident to any of the items described
in subsections (a) or (b) above;
(d) provided, however, that, if Purchaser is unable to fulfill its
obligations under this Article V for any reason whatsoever, Voxware
shall be liable for, and to the fullest extent of, such obligations of
Purchaser. This indemnity agreement in this Section 5.3 shall be in
addition to any liability which Purchaser may incur to
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Seller and shall not foreclose any other rights or remedies Seller may
have to enforce the provisions of this Agreement, including, without
limitation, any action for fraud.
Section 5.4. Limitation . Neither Seller nor Purchaser shall be
entitled to make any claim for indemnification under Section 5.2 or 5.3
with respect to the breach of any representation and warranty contained
herein after the date on which such representation and warranty ceases
to survive pursuant to Section 5.1.
Section 5.5. Subsequent Tax Liability Indemnification . If, subsequent
to the Closing Date, any liability for Taxes relating to the Assets or
the Business is imposed on Purchaser or its Affiliates with respect to
any period prior to the Closing Date for which Seller prepared and
filed any return or report of Taxes, then Seller shall indemnify and
hold Purchaser and its Affiliates harmless from and against, and shall
pay the full amount of such tax liability, including any interest,
additions to tax and penalties thereon, together with interest on such
additions to tax or penalties (as well as reasonable attorneys' or
other fees and disbursements of Purchaser incurred in determination
thereof or in connection therewith). Seller shall, at its sole expense
and in its reasonable discretion, either settle any tax claim that may
be the subject of indemnification under this Section 5.5 at such time
and on such terms as it shall deem appropriate or assume the entire
defense thereof, provided, however, that Seller shall in no event take
any position in such settlement or defense that subjects Purchaser to
any civil fraud or any civil or criminal penalty. Notwithstanding the
foregoing, Seller shall not consent, without the prior written consent
of Purchaser, which prior written consent shall not be unreasonably
withheld, to any change in the treatment of any item which would, in
any manner whatsoever, affect the tax liability of Purchaser for a
period subsequent to the Closing Date.
Section 5.6. Notice and Defense of Claims . Each party entitled to
indemnification under this Article V (the "Indemnified Party") shall
give notice to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party, at the Indemnifying Party's expense, to
assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense, and provided
further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations under this Article V unless such failure to give notice
materially prejudices the Indemnifying Party's ability to defend such
claim. The Indemnifying Party, in the defense of any such claim or
litigation, shall not, except with the consent of the Indemnified
Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the Indemnified Party of a release from
all liability in respect to such claim or litigation. The Indemnified
Party shall furnish such information regarding itself or the claim in
question as the Indemnifying Party may reasonably request in writing
and as shall be reasonably required in connection with defense of such
claim and litigation resulting therefrom.
VI. REPRESENTATIONS AND WARRANTIES OF SELLER
--------------------
Seller represents, warrants and agrees that:
Section 6.1. Organization and Qualification . Seller is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Delaware, with corporate power and authority and all
licenses necessary to conduct the Business and to own, lease and
operate the properties and assets used in connection therewith and to
enter into and perform this Agreement and the transactions contemplated
hereby. Seller is in good standing as a foreign corporation and
licensed or qualified to transact business in each of Massachusetts,
New Jersey and Utah, which are the only jurisdictions where Seller
leases real property. Seller does not own any capital stock or other
proprietary interest, directly or indirectly, in any
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corporation, association, trust, partnership, joint venture or other
entity which conducts a business constituting any portion or aspect of
the Business.
Section 6.2. Due Authorization (a). Seller has all requisite corporate
power and authority to execute and deliver this Agreement and the
Escrow Agreement and to perform fully its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by Seller of this Agreement, the
Escrow Agreement and the other documents contemplated hereby, the
performance by Seller of its obligations hereunder and thereunder, and
the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action on the part of
Seller and its stockholders. This Agreement has been duly executed and
delivered by Seller, and this Agreement is, and each of the Escrow
Agreement and the other agreement contemplated hereby to which Seller
will be a party will be, upon execution and delivery thereof by Seller,
a legal, valid and binding obligation of Seller, enforceable against it
in accordance with its terms (except as the enforceability thereof may
be limited by any applicable bankruptcy, insolvency or other laws
affecting creditors' rights generally or by general principles of
equity, regardless of whether such enforceability is considered in
equity or at law).
(b) Seller has complete and unrestricted power and the unqualified right to
sell, convey, assign, transfer and deliver the Assets to Purchaser
(subject to any consents or waivers of third parties required in
connection with such sale, conveyance, assignment, transfer and
delivery of the Assets or any part thereof, all of which consent(s) or
waiver(s) have been duly obtained by Seller and are set forth on
Schedule 6.3), and the instruments of transfer, conveyance and
assignment to be executed and delivered by Seller to Purchaser at the
Closing will be valid and binding obligations of Seller, enforceable in
accordance with their respective terms, sufficient for purposes of
recordation and filing where permitted by law, sufficient to transfer,
convey and assign to Purchaser all right, title and interest of Seller
in and to the Assets and to vest in Purchaser the full right, power and
authority to conduct the Business as conducted by Seller.
Section 6.3. No Conflict . Except as set forth on Schedule 6.3, neither
the execution and delivery of this Agreement, the Escrow Agreement or
any of the other documents contemplated hereby by Seller nor the
consummation of the transactions contemplated hereby or thereby will
(a) conflict with, result in a breach or violation of or constitute (or
with notice or lapse of time or both constitute) a default under, (i)
the certificate of incorporation or by laws of Seller or (ii) to the
knowledge of Seller, any law, statute or regulation or (iii) any order,
judgment or decree or any instrument, contract or other agreement to
which Seller is a party or by which Seller (or any of the properties or
assets of Seller) is subject or bound; (b) result in the creation of,
or give any party the right to create, any lien, charge, option,
security interest or other encumbrance upon the Assets or the Business;
(c) terminate or modify, or give any third party the right to terminate
or modify, the provisions or terms of any Assumed Contract; or (d)
require Seller or, to the knowledge of Seller, Purchaser to obtain any
Permit or waiver from, to give any notification to, or to make any
filing with, any governmental body or authority or to obtain the
approval or consent of any other Person.
Section 6.4. Title to and Condition of Assets . Seller has, and, except
for the Excluded Assets as set forth in Schedule 2.2 hereto, upon
payment therefor Purchaser will have, good and marketable title to, or
valid and subsisting leasehold interests in or valid licenses to use,
all of the Assets, free and clear of any liens, charges, options,
security interests or other encumbrances of any nature, options to
purchase or lease, easements, restrictions, covenants, conditions, or
imperfections of title, except the lien of current Taxes not yet due
and payable or of Taxes the validity of which is being contested in
good faith by appropriate proceedings, so long as such contest does not
involve any real danger of the sale, foreclosure or loss of any Assets
which would cause a Material Adverse Change in the Business
(collectively, the "Permitted Encumbrances"). At the Closing, Seller
shall cause to be discharged all mechanics' or materialmen's liens of
which Seller has notice arising from any labor or materials furnished
to the real property prior to the time of Closing.
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(b) Seller owns no real property. Schedules 2.1(a) and 2.1(e) hereto
include a correct and complete list of all machinery, equipment,
computers and computer hardware, tools, supplies, leasehold
improvements, construction in progress, furniture, fixtures, vehicles
and other tangible personal property owned, leased or used in the
Business, except for items having a value of less than $100 but not
more than $50,000 in the aggregate, indicating with respect to all such
listed property whether such property is leased.
(c) Seller enjoys peaceful and undisturbed possession under the lease
relating to the Cambridge Facility, and such lease is valid and
enforceable in accordance with its terms, is in full force and effect,
and there is not under such lease any default by Seller or, to the
knowledge of Seller, by the lessor under such lease, or any condition,
event or act which, with the giving of notice or lapse of time, or
both, would constitute such a default. With respect to such lease,
Seller has not received any notice of any violation of any applicable
zoning ordinance, building code, use or occupancy restriction, or
violation of any thereof, or any condemnation action or proceeding with
respect thereto.
(d) The Assets constitute, in the aggregate, all the material assets
and property necessary to engage in the Business as currently engaged
in by Seller. To the knowledge of Seller, all the Tangible Assets are
located at the Cambridge Facility or at Seller's premises located in
Edison, New Jersey or are in storage at Xxxxx Xxxx Xxxxxx Mini-Storage
located at Xxx Xxxx Xxxxxx, Xxxxx, Xxxxxxxxxxxxx. No person other than
Seller owns any equipment or other Tangible Assets or properties
situated at such premises, except for leased items disclosed in
Schedule 2.1(e) hereto.
(e) The Tangible Assets as of each of the date hereof and the Closing
Date are in reasonable operating condition and repair, having
consideration for their age and subject to normal wear, and are usable
in the regular and ordinary course of business. No portion of the lease
relating to the Cambridge Facility has suffered any material damage by
fire or other casualty which has not heretofore been completely
repaired and restored to reasonable operating condition as described
above.
Section 6.5. Financial Information (a). Seller has delivered to
Purchaser (i) true and complete copies of Seller's audited balance
sheets as of December 31, 1996 and 1997, and the related statements of
operations and cash flows (together with the auditors' reports thereon)
for each of the years ended December 31, 1996 and December 31, 1997,
together with notes to such financial statements (the "Audited
Financial Statements"), and (ii) true and complete copies of Seller's
unaudited balance sheets as at December 31, 1998 and the related
statements of operations and cash flows for the 12 months ended
December 31, 1998 (the "Unaudited Financial Statements"). The Audited
Financial Statements and Unaudited Financial Statements are herein
collectively referred to as the "Seller Financial Statements." The
balance sheet of Seller at December 31, 1998 is attached as Schedule
6.5(a) and is herein referred to as the "Interim Balance Sheet," and
December 31, 1998 is herein referred to as the "Interim Balance Sheet
Date."
(b) The Audited Financial Statements have been audited by KPMG Peat Marwick
LLP ("KPMG") and are accompanied by a report thereon containing
opinions of KPMG, consistent with those previously provided to
Purchaser. The Unaudited Financial Statements for the 12 months ended
December 31, 1998 present fairly the financial position of Seller as of
the Interim Balance Sheet Date, have been prepared in accordance with
generally accepted accounting principles, consistently applied (except
for those changes promulgated and required by accounting authority),
and show all material liabilities, absolute or contingent, of Seller
required to be recorded thereon in accordance with generally accepted
accounting principles as of the Interim Balance Sheet Date.
(c) The accounts receivable of Seller arising from the Business as set
forth on the Interim Balance Sheet, which have not been collected, or
arising since the date thereof are valid and genuine; have arisen
solely out of bona fide sales and deliveries of goods, performance of
services and other business transactions in the ordinary course of
business consistent with past practice; are not subject to valid
defenses, set-offs or counterclaims; and are collectible at the full
recorded amount thereof, which have not been collected (less, in the
case of accounts receivable appearing on the Interim Balance Sheet, the
recorded allowance for collection losses on the Interim Balance Sheet),
over the period of usual trade terms
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(by use of Seller's normal collection methods without resort to
litigation or reference to a collection agency). The allowance for
collection losses on the Interim Balance Sheet has been determined in
accordance with generally accepted accounting principles consistent
with past practice.
(d) All inventory of Seller used in the conduct of the Business, including,
without limitation, raw materials, work-in process and finished goods,
reflected on the Interim Balance Sheet or acquired since the date
thereof was acquired and has been maintained in the ordinary course of
the Business; is of good and merchantable quality; consists
substantially of a quality, quantity and condition usable, leasable or
saleable in the ordinary course of the Business; is valued at
reasonable amounts based on the ordinary course of business of Seller
during the past 12 months; and is not subject to any write-down or
write-off, except as set forth on Schedule 6.5(d). Seller is not under
any liability or obligation with respect to the return of inventory in
the possession of wholesalers, retailers or other customers. Seller has
not caused its inventory to be materially increased or decreased other
than in the ordinary course of business consistent with past practice.
(e) Seller does not have any liability or obligation, contingent or
absolute (individually or in the aggregate), other than (i) liabilities
disclosed in the Seller Financial Statements and (ii) liabilities which
have arisen after the Interim Balance Sheet Date in the ordinary course
of business and consistent with past practice which, individually or in
the aggregate, could not reasonably be expected to result in a Material
Adverse Change.
(f) Since the Interim Balance Sheet Date, Seller has not, with respect to
the ownership or operation of the Assets or the Assumed Liabilities a)
borrowed any amount or incurred or become subject to any liability
(absolute, accrued or contingent), except current liabilities incurred,
liabilities under contracts entered into, borrowings under banking
facilities disclosed in the Schedules hereto (including the Accounts
Receivable Note) and liabilities in respect of letters of credit issued
under such banking facilities, all of which were in the ordinary course
of business; (b) discharged or satisfied any lien or incurred or paid
any obligation or liability (absolute, accrued or contingent) other
than current liabilities shown on the Interim Balance Sheet and current
liabilities incurred since the Interim Balance Sheet Date in the
ordinary course of business; (c) failed to pay or discharge when due
any material liability or obligation (other than in the ordinary course
of business, consistent with past practice); (d) declared or made any
payment or distribution to its stockholders or purchased or redeemed
any capital stock or other securities; (e) mortgaged, pledged or
subjected to lien any of its assets, tangible or intangible, other than
liens of current taxes not yet due and payable; (f) sold, assigned or
transferred any of its tangible assets which would have been included
in the Assets if the Closing had been held on the Interim Balance Sheet
Date or on any date since then except for the sale of inventory in the
ordinary course of business, canceled any debt or claim, or waived any
right of substantial value whether or not in the ordinary course of
business; (g) sold, assigned, transferred or granted any license with
respect to any patent, trademark, tradename, service xxxx, copyright,
trade secret or other intangible asset or Intellectual Property; (h)
suffered any damage, destruction or loss, whether or not covered by
insurance, or suffered any repeated, recurring or prolonged shortage,
cessation or interruption of supplies or utility or other services
required to conduct the Business; (i) received notice or had knowledge
of any actual or threatened labor trouble, strike or other occurrence,
event or condition of any similar character which has had or could
reasonably be expected to have an adverse effect on its business,
operations, assets, properties, prospects or condition (financial or
otherwise); (j) suffered any Material Adverse Change in its relations
with, or any loss or threatened loss of, any of its suppliers,
customers or distributors disclosed pursuant to Section 6.17; (k) made
any material change in the manner of its business or operations; (l)
made any material change in any method of accounting or accounting
practice, except for any such change required by reason of a concurrent
change in generally accepted accounting principles or disclosed in the
Seller Financial Statements; or (m) entered into any commitment
(contingent or otherwise) to do any of the foregoing. Since the Interim
Balance Sheet Date, there has been no Material Adverse Change in the
Assets or liabilities or in the Business or condition, financial or
otherwise, of the Business, whether as a result of any legislative or
regulatory change, revocation of any license or right to do business,
fire, explosion, accident, casualty, labor trouble, flood,
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drought, riot, storm, condemnation or act of God or otherwise, and no
fact or condition exists or is contemplated or threatened which could
reasonably be anticipated to cause such a change in the future. There
has been no Material Adverse Change since the Interim Balance Sheet
Date in the amount of accounts receivable (or the allowance with
respect thereto) or accounts payable of Seller from that reflected in
the Interim Balance Sheet.
Section 6.6. Taxes . (i) Seller has filed on a timely basis (taking
into account any extensions received from the relevant taxing
authorities) all returns and reports pertaining to all U.S. federal,
state, local and foreign income, profits, unemployment compensation,
payroll, social security, franchise, unincorporated business, capital,
general corporate, sales, use, occupation, property, excise and any and
all other taxes (all such taxes, irrespective of the period for which
such taxes are payable or attributable, hereinafter referred to as
"Taxes") relating to the Assets or the Business that are or were
required to be filed with the appropriate taxing authorities in all
jurisdictions in which such returns and reports are or were required to
be filed, and all such returns and reports are true, correct and
complete in all material respects, (ii) all Taxes (including interest,
additions to tax and penalties thereon together with interest on such
additions to tax and penalties) relating to the Assets or the Business
that are due from or may be asserted against Seller (including deferred
taxes) in respect of or attributable to all periods ending on or before
the Closing Date have been fully paid, deposited or adequately provided
for on the books and financial statements of the Seller and the
Business, (iii) no issues have been raised (or are currently pending)
by any taxing authority in connection with any of the returns and
reports referred to in clause (i) which might be determined adversely
to the Seller and which could have a material adverse effect on the
Business, (iv) Seller has not given or been requested to give waivers
or extensions of any statute of limitations with respect to the payment
of Taxes relating to the Business, and (v) to the knowledge of Seller,
no tax liens which have not been satisfied or discharged by payment or
concession by the relevant taxing authority or as to which sufficient
reserves have not been established on the books and financial
statements of the Seller and the Business are in force as of the date
hereof with respect to any of the Assets or the Business.
Section 6.7. Contracts, Obligations and Commitments . Except as set
forth on Schedules 2.1(e) or 2.2 hereto, Seller has no existing
contract, obligation or commitment of any nature which is material to
the ownership or operation of the Assets or the Assumed Liabilities.
Each contract, agreement, arrangement, plan, lease, license or similar
instrument included in the Assets and set forth on Schedule 2.1(e)
(collectively, the "Assumed Contracts") is a valid and binding
obligation of Seller and, to the knowledge of Seller, the other parties
thereto, enforceable in accordance with its terms (except as the
enforceability thereof may be limited by any applicable bankruptcy,
insolvency or other laws affecting creditors' rights generally or by
general principles of equity, regardless of whether such enforceability
is considered in equity or at law), and is in full force and effect
(except for any Assumed Contracts which by their terms expire after the
date hereof or are terminated after the date hereof in accordance with
the terms thereof, provided, however, that Seller shall not terminate
any material Assumed Contract after the date hereof without the prior
written consent of Purchaser, which consent shall not be unreasonably
withheld or delayed), and neither Seller nor, to the knowledge of
Seller, any other party thereto has breached any material provision of,
nor is in default in any material respect under the terms of (and, to
the knowledge of Seller, no condition exists which, with the passage of
time, the giving of notice, or both, would result in a default under
the terms of), any of the Assumed Contracts. Except as set forth on
Schedule 6.7 hereto, each of the Assumed Contracts is validly
assignable to the Purchaser without the consent of any other party
thereto so that, after the assignment thereof to the Purchaser pursuant
to this Agreement, the Purchaser will be entitled to the full economic
and other benefits thereof. Seller shall give Purchaser written notice
of each Assumed Contract which is terminated after the date hereof.
Section 6.8. Litigation . Neither Seller, any Affiliate of Seller, nor
any director, officer, employee or agent of Seller (in their capacity
as such), is a party to any pending or, to the knowledge of Seller,
threatened action, suit, proceeding or investigation, at law or in
equity or otherwise in, before or by any court or governmental board,
commission, agency, department or office, or private arbitration
tribunal, nor does Seller know, after due inquiry, of any basis
therefor, (A) arising in connection with the conduct by
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Seller of the Business, (B) to restrain, prohibit or invalidate, or to
obtain damages or other relief from Seller, or any of its directors or
officers, or equitable or other relief in respect of this Agreement or
the transactions contemplated hereby, (C) which arises out of any
contract, agreement, letter of intent or arrangement alleged to have
been entered into or agreed to by Seller and which conflicts with this
Agreement or the transactions contemplated hereby, or gives rise to a
claim or right of any kind of any person as a result of the execution
of this Agreement or the consummation of the transactions contemplated
hereby, or (D) which, if successful, could adversely affect the right
of Purchaser after the Closing Date to own the Assets or, in the
reasonable judgment of Seller, to conduct the Business; and (ii) Seller
is not a party or subject to any order, ruling, judgment, decree or
stipulation which affects the Business, or which would prevent the
transactions contemplated by this Agreement. To the knowledge of Seller
after due inquiry, no facts exist, and no investigation has been
instituted by any governmental agency, which might result in any such
action or proceeding.
Section 6.9. Compliance with Law . The Business has been conducted, and
is now being conducted, in compliance in all material respects with all
applicable laws, rules, regulations and court or administrative orders
and processes (including, without limitation, any that relate to
consumer protection, health and safety, products and services,
proprietary rights, anti-competitive practices, collective bargaining,
ERISA, equal opportunity, improper payments and Environmental Laws).
Seller and, to the knowledge of Seller, its directors, officers and
employees (i) are not, and during the past five years were not, in
violation of, or not in compliance with, in any material respect all
such applicable laws, rules, regulations, orders and processes with
respect to the conduct of the Business; (ii) have not received any
notice from any governmental authority, and to the knowledge of Seller,
none is threatened, alleging that Seller has violated, or not complied
with, any of the above; and (iii) are not a party to any agreement or
instrument, or subject to any judgment, order or writ, or subject to
any rule, regulation, code or ordinance known to Seller, which
adversely affects, or might reasonably be expected to adversely affect,
the Business.
Section 6.10. Permits . Seller has no Permits in connection with the
ownership of the Assets or operation of the Business, and, to the
knowledge of Seller, its officers, directors and employees no Permits
are necessary to own the Assets and operate the Business.
Section 6.11. Brokers . Except for Xx. Xxxxxxxx Meyercord (and/or his
assigns) and certain employees of Seller, neither Seller nor, to the
knowledge of Seller, any of its Affiliates has paid or become obligated
to pay any fee or commission to any broker, finder, investment banker
or other intermediary in connection with the transactions contemplated
by this Agreement.
Section 6.12 Intellectual Property . Seller in the conduct of the
Business did not and does not utilize any patent, trademark, tradename,
service xxxx, copyright, licensed technology, software or other
Intellectual Property except for those listed on Schedule 2.1(g).
Except as set forth on Schedule 2.1(g), Seller owns or is licensed
exclusively or otherwise has the exclusive right to use all the
Intellectual Property necessary to permit Purchaser to carry on the
Business. All licenses, if any, of Seller to use all Intellectual
Property necessary to permit Purchaser to carry on the Business as
conducted by Seller are in full force and effect and neither the Seller
nor, to the knowledge of Seller, any of the other parties to such
licenses are in breach in any material respect of any provision of, or
in default in any material respect under any of the terms of, such
licenses. Except as set forth on Schedule 2.1(g), Seller has not
granted any person any license or other right to use any of the
Intellectual Property necessary to permit Purchaser to carry on the
Business as conducted by Seller, whether requiring the payment of
royalties or not. To the knowledge of Seller, the Business or any
product or service marketed or sold by Seller, which utilizes any of
the Intellectual Property, does not infringe upon or unlawfully or
wrongfully use any patent, trademark, tradename, service xxxx,
copyright, trade secret or know-how owned or claimed by another, and to
the knowledge of Seller, no Person is infringing upon, or is in
violation of, any of Seller's Intellectual Property or rights thereto.
Schedule 2.1(g) contains a true and complete list of all patents,
trademarks and servicemarks (either registered, common law or
registration applied for), tradenames, copyrights and third party
licenses which are owned, used, registered in the name of or licensed
by Seller for use in the
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Business, or in which Seller otherwise has an interest. Except as shall
be set forth on Schedule 2.1(g), subsequent to the Closing, neither
Seller nor any of its current or former directors, officers or
employees shall own, have an interest in or have the right to use any
Intellectual Property utilized in the Business. Except as set forth on
Schedule 2.1(g), all licenses, trademarks, servicemarks, copyrights,
tradenames and other Intellectual Property which are necessary to the
conduct of the Business, as it presently exists or as heretofore
conducted, are owned, controlled or are usable on a royalty-free basis
by Seller, and will continue to be so owned, controlled or usable on a
royalty-free basis by Purchaser after the Closing Date. There is no
pending or, to the knowledge of Seller, threatened claim or litigation
against Seller contesting the right to use its Intellectual Property in
the conduct of the Business, asserting the misappropriation or misuse
of any thereof or asserting that Seller has violated or infringed the
rights of another party. This Agreement and the transactions
contemplated hereby will not in any manner affect Purchaser's rights
with respect to, or ability to use, the Intellectual Property necessary
to permit Purchaser to carry on the Business. Since July 9, 1993, the
Business has not been conducted under any corporate, trade or
fictitious name other than the names listed on Schedule 2.1(g) hereto.
Section 6.13. Plans and Agreements Relating to Employees (a). Except as
set forth on Schedule 6.13 hereto, there are no employee benefit plans,
contracts or arrangements (whether written, oral or otherwise) of any
type (including, without limitation, any personnel policies, deferred
compensation plans, incentive plans, bonus plans or arrangements, stock
option plans, stock purchase plans, golden parachute agreements,
severance pay plans, dependent care plans, cafeteria plans, employee
assistance programs, scholarship programs, employment contracts and
other similar plans, agreements and arrangements which are not so
described) which are currently in effect, which have been approved but
are not yet effective, or which were sponsored, maintained or
contributed to by Seller within six years prior to the date hereof, for
the benefit of current or former employees of the Seller (or
beneficiaries of such employees) who provide or provided services
primarily to or in connection with the Business. Each of such employee
benefit plans, contracts or arrangements is herein referred to as an
"Employee Plan." Each Employee Plan has been maintained and
administered in accordance with its terms and in compliance in all
material respects with the provisions of applicable law.
(b) Purchaser does not and will not assume the sponsorship of, the
responsibility for contributions to, or any liability or obligation in
connection with, any Employee Plan.
(c) Schedule 6.13 sets forth a complete and accurate list showing the
names, the rate of compensation (and the portions thereof attributable
to salary and bonuses, respectively) and location of all current
officers and employees of and consultants to the Business that
received, for the year ended December 31, 1998, or are expected to
receive, during the year ending December 31, 1999, annual base salary
or other compensation in excess of $5,000. There are no covenants,
agreements or restrictions to which the Business is a party or bound,
including but not limited to employee non-compete agreements,
prohibiting, limiting or in any way restricting any officer or employee
listed on Schedule 6.13 from engaging in any types of business activity
in any location. To the knowledge of Seller, no officer or employee
listed on Schedule 6.13, and no group of the Business' employees, has
any plans to terminate their employment.
Section 6.14. No Illegal or Improper Transactions . To the knowledge of
Seller, neither Seller nor any officer, director, employee, agent or
Affiliate of Seller has offered, paid or agreed to pay to any person or
entity (including any governmental official) or solicited, received or
agreed to receive from any such person or entity, directly or
indirectly, any money or anything of value for the purpose or with the
intent of (i) obtaining or maintaining business for the Business, (ii)
facilitating the purchase or sale of any product or service, or (iii)
avoiding the imposition of any fine or penalty, in any such case in any
manner which is in violation of any applicable ordinance, regulation or
law; and there have been no false or fictitious entries made in the
books or records of Seller.
Section 6.15. Related Transactions . To the knowledge of Seller, except
as set forth on Schedule 6.15, and except for compensation to employees
for services rendered, no stockholder or current or former
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director, officer or employee or any Affiliate or associate (as defined
in the rules promulgated under the Securities Act) of Seller, is
presently, or during the last three fiscal years has been, (a) a party
to any transaction with Seller with respect to the Business (including,
but not limited to, any contract, agreement or other arrangement
providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring payments to, any such
director, officer, employee, Affiliate or associate), or (b) the direct
or indirect owner of an interest in any corporation, firm, association
or business organization which is a present (or potential) competitor,
supplier or customer of Seller with respect to the Business, nor does
any such person receive income from any source other than Seller which
relates to the business of, or should properly accrue to, Seller with
respect to the Business.
Section 6.16. No Product Liabilities; Product Warranties (a). Except as
has been or may be incurred in the ordinary course of business
(consistent with past practice), Seller has not incurred, nor does
Seller know of or have any reason to believe there is any basis for
alleging, any liability, damage, loss, cost or expense as a result of
any defect or other deficiency (whether of design, materials,
workmanship, labeling, instructions or otherwise) ("Product Liability")
with respect to any product sold or service rendered by Seller, whether
such Product Liability is incurred by reason of any express or implied
warranty (including, without limitation, any warranty of
merchantability or fitness), any doctrine of common law (tort, contract
or other), any statutory provision or otherwise and irrespective of
whether such Product Liability is covered by insurance.
(b) Seller has furnished Purchaser with all forms of warranties or
guarantees of Seller's products and services that are in effect or
proposed to be used by Seller in the conduct of the Business. Except as
has been or may be incurred in the ordinary course of business
(consistent with past practice), there are no pending or, to the
knowledge of Seller, threatened claims under any warranty or guaranty
against Seller. Seller did not make any payments or settlements in
respect of any such warranty or guaranty (including, without
limitation, any returns or allowances) in excess of $10,000 since
January 1, 1998.
Section 6.17. Suppliers and Customers (a). Schedule 6.17 lists (i) all
suppliers of the Business to which Seller made payments during the year
ended December 31, 1998, or expects to make payments during the year
ending December 31, 1999, in excess of five percent (5%) of Seller's
cost of sales as reflected on Seller's statement of operations for each
such year and (ii) all customers that paid Seller during the year ended
December 31, 1998 or that Seller expects will pay to it during the year
ending December 31, 1999, more than five percent (5%) of Seller's sales
revenues as reflected on Seller's statement of operations for each such
year.
(b) Seller has no information which might reasonably indicate that any of
the customers or suppliers of the Business listed on Schedule 6.17
intend to cease purchasing from, selling to, or dealing with, the
Business, nor has any information been brought to its attention which
might reasonably lead it to believe any such customer or supplier
intends to alter in any material respect the amount of such purchases,
sales or the extent of dealings with the Business or would alter in any
material respect such purchases, sales or dealings in the event of the
consummation of the transactions contemplated by this Agreement. Seller
has no information which might reasonably indicate, nor has any
information been brought to its attention which might reasonably lead
it to believe that, (i) any supplier will not be able to fulfill
outstanding or currently anticipated purchase orders placed by Seller,
or (ii) any customer will cancel outstanding or currently anticipated
purchase orders placed with Seller.
Section 6.18. Availability of Documents . Except as relates to any
Acquisition Transaction(s), Seller has made available to Purchaser
copies of all documents, including, without limitation, all agreements,
contracts, commitments, insurance policies, leases, plans, instruments,
undertakings authorizations, Permits, licenses, patents, trademarks,
tradenames, service marks, copyrights and applications therefor listed
in the Schedules hereto or referred to herein. Such copies are true and
complete and include all amendments, supplements and modifications
thereto or waivers currently in effect thereunder.
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Section 6.19. Disclosure . Except as relates to any Acquisition
Transaction(s), Seller has not failed to disclose to Purchaser any
material information adverse to the ownership and operation of the
Assets or the Assumed Liabilities, except as to matters affecting the
economy generally, and no information furnished (other than any
projections or forecasts) by or on behalf of Seller to Purchaser, taken
generally with other information furnished to Purchaser, contains any
untrue statement of a material fact or omits to state a material fact
necessary to make such statement, in the light of the circumstances
under which it was made, not misleading. All written information (other
than any projections or forecasts), in whatever form, furnished by
Seller to Purchaser was true and correct as of the date so furnished
and, except as the accuracy thereof is affected by the passage of time,
remains true and correct as of the date hereof.
VII. REPRESENTATIONS AND WARRANTIES OF VOXWARE AND PURCHASER
A. Purchaser hereby represents and warrants as follows:
Section 7.1. Organization . Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own or lease its
properties and carry on its business as presently conducted. Purchaser
is licensed or qualified to transact business and is in good standing
as a foreign corporation in each jurisdiction where the character of
its business or the nature of its properties makes such qualification
or licensing necessary, except where the failure to be so licensed or
qualified would not have a material adverse affect on Purchaser.
Section 7.2. Due Authorization; No-Conflict (a). Purchaser has all
requisite corporate power and authority to execute and deliver this
Agreement and the Escrow Agreement and to perform fully its obligations
hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Escrow Agreement by Purchaser, the performance by
Purchaser of its obligations hereunder and thereunder, and the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Purchaser.
This Agreement has been duly executed by Purchaser, and this Agreement
is, and the Escrow Agreement will be, upon execution and delivery
thereof by Purchaser, a legal, valid and binding obligation of
Purchaser, enforceable against it in accordance with its terms (except
as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency or other laws affecting creditors' rights
generally or by general principles of equity, regardless of whether
such enforceability is considered in equity or at law).
(b) Except as set forth on Schedule 7.2, neither the execution and delivery
of this Agreement or the Escrow Agreement by Purchaser nor the
consummation of the transactions contemplated hereby or thereby by
Purchaser will (i) conflict with, result in a breach or violation of or
constitute (or with notice or lapse of time or both constitute) a
default under, (A) the certificate of incorporation or by-laws of
Purchaser or (B) any law, statute, regulation, order, judgment or
decree or any instrument, contract or other agreement to which
Purchaser is a party or by which it (or any of its properties or
assets) is subject or bound; (ii) result in the creation of, or give
any party the right to create, any lien, charge, encumbrance, security
interest or other adverse interest upon any property or asset of
Purchaser; (iii) terminate or modify, or give any third party the right
to terminate or modify, the provisions or terms of any agreement or
commitment to which Purchaser is a party or by which it (or any of its
properties or assets) is subject or bound which would have a material
adverse effect on the business of Purchaser; or (iv) require Purchaser
to obtain any authorization, consent, approval or waiver from, to give
notification to, or to make any filing (other than filing to qualify as
a foreign corporation where necessary) with, any governmental body or
authority, or to obtain the approval or consent of any other Person.
Section 7.3. Brokers . Except for Ladenburg Xxxxxxxx & Co. Inc.,
neither Purchaser nor any of its Affiliates has paid or become
obligated to pay any fee or commission to any broker, finder,
investment banker or other intermediary in connection with the
transactions contemplated by this Agreement.
B. Voxware hereby represents and warrants as follows:
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Section 7.4. Organization . Voxware is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own or lease its
properties and carry on its business as presently conducted. Voxware
is licensed or qualified to transact business and is in good standing
as a foreign corporation in each jurisdiction where the character of
its business or the nature of its properties makes such qualification
or licensing necessary, except where the failure to be so licensed or
qualified would not have a material adverse affect on Voxware and its
subsidiaries taken as a whole.
Section 7.5. Due Authorization; No-Conflict (a). Voxware has all
requisite corporate power and authority to execute and deliver this
Agreement and to perform fully its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Voxware, the performance by Voxware of
its obligations hereunder, and the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action
on the part of Voxware. This Agreement has been duly executed by
Voxware, and this Agreement is a legal, valid and binding obligation of
Voxware, enforceable against it in accordance with its terms (except as
the enforceability thereof may be limited by any applicable bankruptcy,
insolvency or other laws affecting creditors' rights generally or by
general principles of equity, regardless of whether such enforceability
is considered in equity or at law).
(b) Except as set forth on Schedule 7.5, neither the execution and
delivery of this Agreement by Voxware nor the consummation of the
transactions contemplated hereby by Voxware will (i) conflict with,
result in a breach or violation of or constitute (or with notice or
lapse of time or both constitute) a default under, (A) the certificate
of incorporation or by-laws of Voxware or (B) any law, statute,
regulation, order, judgment or decree or any material instrument,
contract or other agreement to which Voxware is a party or by which it
(or any of its properties or assets) is subject or bound; (ii) result
in the creation of, or give any party the right to create, any lien,
charge, encumbrance, security interest or other adverse interest upon
any property or asset of Voxware; (iii) terminate or modify, or give
any third party the right to terminate or modify, the provisions or
terms of any agreement or commitment to which Voxware is a party or by
which it (or any of its properties or assets) is subject or bound
which would have a material adverse effect on the business of Voxware;
or (iv) require Voxware to obtain any authorization, consent, approval
or waiver from, to give notification to, or to make any filing (other
than filing to qualify as a foreign corporation where necessary) with,
any governmental body or authority, or to obtain the approval or
consent of any other Person.
Section 7.6. Brokers . Except for Ladenburg Xxxxxxxx & Co. Inc.,
neither Voxware nor any of its Affiliates has paid or become obligated
to pay any fee or commission to any broker, finder, investment banker
or other intermediary in connection with the transactions contemplated
by this Agreement.
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VIII. COVENANTS
Section 8.1. Conduct and Preservation of Business . Except as
contemplated by this Agreement, during the period from the date of
this Agreement to the Closing Date, Seller shall (i) conduct the
Business in the usual manner and not enter into any transactions
outside the ordinary course of business; (ii) use its best efforts to
maintain, preserve and protect the Assets and the Business, including,
without limitation, to preserve its relationship with its employees,
suppliers and customers and to preserve its goodwill; (iii) comply in
all material respects with all laws, ordinances, rules, regulations
and orders applicable to the Business or the Assets; (iv) not cause
nor permit to occur any of the events or occurrences described in
Section 6.5(f); (v) continue to maintain and service the physical
assets used in the conduct of the Business in the same manner as has
been its consistent past practice; and (vi) not take any action or
omit to take any action which act or omission would result in the
inaccuracy of any of its representations and warranties set forth
herein if such representations or warranties were to be made
immediately after the occurrence of such act or omission. Without
limiting the foregoing, until the Closing Date or termination of this
Agreement, Seller will not (a) change the compensation of any of its
officers or, except in the ordinary course of business, its employees
or consultants, or enter into any employment, severance or other
agreement with any of its officers, employees or consultants; (b)
enter into or engage in negotiations with, or solicit offers from, any
other party, directly or indirectly, relating to a possible
acquisition of Seller or the Business, whether by way of merger,
reorganization, purchase of shares of capital stock, purchase of
assets, management agreement, license or distribution agreement with
respect to any of Seller's products or otherwise (each, an
"Acquisition Transaction").
Section 8.2. Access to Information; Confidentiality . Between the date
of this Agreement and the Closing Date, except as relates to any
Acquisition Transaction(s), Seller will: (i) permit Purchaser's
respective authorized representatives and financing parties reasonable
access during normal business hours to all of the books, records, tax
returns, reports and other tax related materials, offices and other
facilities and properties of Seller and the Business; (ii) permit
Purchaser to make such inspections thereof as Purchaser may reasonably
request; (iii) furnish the Purchaser with such financial and operating
data and other information of Seller with respect to the Business as
Purchaser may from time to time reasonably request; (iv) cause its
management to provide necessary cooperation and assistance in
connection with the audit of Seller's 1998 financial statements,
including obtaining access to the work papers of Seller's independent
accountants; and (v) permit Purchaser and its representatives to
inspect all of Seller's source and object code and other Intellectual
Property; provided, however, that any such investigation shall be
conducted in such a manner as not to interfere unreasonably with the
operations of the Business. Each of Voxware, Purchaser and Seller will
hold, and shall cause their counsel, independent certified public
accountants, appraisers and investment bankers to hold in confidence
any confidential data or information made available to it by the other
in connection with this Agreement using the same standard of care to
protect such confidential data or information as is used to protect
its own confidential information. If the transactions contemplated by
this Agreement are not consummated, each of Purchaser and Seller
agrees that it shall return or cause to be returned to the other all
written materials and all copies thereof that were supplied to it by
the other and that contain any such confidential data or information.
Section 8.3. Filings and Authorizations . Each of Seller and
Purchaser, as promptly as practicable, (i) will make, or cause to be
made, all filings and submissions required under laws, rules and
regulations applicable to it, or to its subsidiaries and affiliates,
as may be required for it to consummate the transactions contemplated
hereby; (ii) will use their respective reasonable efforts to obtain,
or cause to be obtained, all Permits, if any, from all Persons and
governmental or public authorities or bodies necessary to be obtained
by each of them, or any of their respective subsidiaries or
Affiliates, in order for each of them, respectively, so to consummate
such transactions; and (iii) will use their respective best efforts to
take, or cause to be taken, all other actions necessary, proper or
advisable in order for each of them to fulfill their respective
obligations hereunder. In particular, Seller shall seek and use its
reasonable best efforts to obtain all consents necessary to any
assignment to Purchaser of the Assumed Contracts and the Intellectual
Property. It is understood that it shall be Purchaser's responsibility
to file any assignments, consents or other
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documents of transfer relating to the Intellectual Property. Seller
and Purchaser will coordinate and cooperate with one another in
exchanging information and supplying such reasonable assistance as
may be reasonably requested by each in connection with the foregoing.
Purchaser shall use its reasonable efforts to assist Seller in
obtaining all consents required under the Assumed Contracts and the
Intellectual Property as a result of this Agreement and the
transactions contemplated hereby.
Section 8.4. Public Announcements . Unless and to the extent required
by law, each party hereto will agree in advance prior to the issuance
by either of any press release or the making of any public statement
with respect to this Agreement and the transactions contemplated
hereby and shall not issue any such press release or make any such
public statement without the agreement of the other party. In the
event that either party is required to issue a press release or make
a public statement by law, it will notify the other party of the
contents thereof in advance of the issuance or making thereof.
Section 8.5. Hiring of Employees . Purchaser shall be permitted to
interview all employees of Seller engaged in the Business and discuss
with, and offer employment to, any of such employees. It is
understood and agreed, however, that Purchaser shall not be obligated
to offer employment to any of Seller's employees.
Section 8.6. Schedules . From time to time prior to the Closing,
Seller will in a timely manner supplement or amend its disclosure
schedules and the exhibits hereto with respect to any matter
hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in
such Schedules and Exhibits hereto. No supplement or amendment of a
Schedule or Exhibit made pursuant to this Section, which is not
accepted by Purchaser pursuant to Section 3.11, shall be deemed to
cure any breach of, affect or otherwise diminish any representation
or warranty made in this Agreement unless Purchaser specifically
agrees thereto in writing.
Section 8.7. Financial Statements (a). As soon as available and in
any event within 30 days after the end of each fiscal month of Seller
prior to the Closing Date, Seller shall deliver to Purchaser such of
its balance sheets and statements of operations as are prepared by it
in the ordinary course of business (all such financial statements
shall be covered by and conform to the representations and warranties
set forth in Section 6.5 hereof and shall be included in the term
"Seller Financial Statements" for purposes of this Agreement).
(b) Seller, at Purchaser's expense, shall provide Purchaser, as soon as
practicable and in any event no later than 30 days after Purchaser's
written request therefor, with such financial statements relating to
the Business as may be required by the securities laws in connection
with the preparation and filing of any registration statement or
periodic report by Purchaser pursuant to the Securities Act or the
Exchange Act, including with limitation unqualified opinions thereon
of independent public accountants and consents thereof as required by
the Securities Act or the Exchange Act or the rules and regulations
thereunder.
Section 8.8. Non-Solicitation by Voxware and Purchaser . In the event
that the Closing does not occur, prior to January 5, 2000, neither
Voxware nor Purchaser shall solicit business from Seller's current
customers in competition with Seller or, directly or indirectly,
solicit or offer employment to any person who is an employee of
Seller or who has terminated such employment without the consent of
Seller within 180 days of such solicitation or offer.
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IX. CERTAIN ACTIONS AFTER THE CLOSING
Section 9.1. Employee Benefits . Subject to any binding agreements
between Seller and any of its employee(s), Seller shall pay directly
to each employee of the Business that portion of all benefits
(including the arrangements, plans and programs set forth in Schedule
6.13) which has been accrued on behalf of that employee (or is
attributable to expenses properly incurred by that employee) as of the
Closing Date, and Purchaser shall assume no liability therefor, unless
specifically set forth on Schedule 2.3(b). No portion of the assets of
any plan, fund, program or arrangement, written or unwritten,
heretofore sponsored or maintained by Seller (and no amount
attributable to any such plan, fund, program or arrangement) shall be
transferred to Purchaser, and Purchaser shall not be required to
continue any such plan, fund, program or arrangement after the Closing
Date. The amounts payable on account of all benefit arrangements shall
be determined with reference to the date of the event by reason of
which such amounts become payable, without regard to conditions
subsequent, and Purchaser shall not be liable for any claim for
insurance, reimbursement or other benefits payable by reason of any
event which occurs prior to the Closing Date. All amounts payable
directly to employees, or to any fund, program, arrangement or plan
maintained by Seller therefor, shall be paid by Seller as soon as
practicable after the Closing Date to the extent that such payment is
not inconsistent with the terms of such fund, program, arrangement or
plan. All employees of Seller who are employed by Purchaser on or
after the Closing Date shall be new employees of Purchaser and any
prior employment by Seller of such employees shall not affect
entitlement to, or the amount of, salary or other cash compensation,
current or deferred, which Purchaser may make available to its
employees.
Section 9.2. Non-Solicitation by Seller . As of the Closing Date,
Purchaser shall offer employment to, and Seller shall use its best
efforts to assist Purchaser in employing as new employees of
Purchaser, all persons presently engaged in the Business who are
identified by Purchaser prior to the Closing Date and hired by
Purchaser immediately following the Closing (the "Retained
Employees"). Seller shall terminate effective as of the Closing Date
all employment agreements it has with any of the Retained Employees.
Until the first anniversary of the Closing Date, Seller will not
directly or indirectly solicit or offer employment to any Retained
Employee who terminates employment with Purchaser without the consent
of Purchaser within 180 days of such solicitation or offer.
Section 9.3. Maintenance of Books and Records . Except as otherwise
required by law, each of Seller and Purchaser shall preserve until the
fifth anniversary of the Closing Date all records possessed or to be
possessed by such party relating to any of the assets, liabilities or
business of the Business prior to the Closing Date. After the Closing
Date, where there is a legitimate purpose, such party shall provide
the other party with access, upon prior reasonable written request
specifying the need therefor, during regular business hours, to (i)
the officers and employees of such party and (ii) the books of account
and records of such party, but, in each case, only to the extent
relating to the assets, liabilities or business of the Business prior
to the Closing Date, and the other party and its representatives shall
have the right to make copies of such books and records; provided,
however, that the foregoing right of access shall not be exercisable
in such a manner as to interfere unreasonably with the normal
operations and business of such party; and further, provided, that, as
to so much of such information as constitutes trade secrets or
confidential business information of such party, the requesting party
and its officers, directors and representatives will use due care to
not disclose such information except (i) as required by law, (ii) with
the prior written consent of such party, which consent shall not be
unreasonably withheld, or (iii) where such information becomes
available to the public generally, or becomes generally known to
competitors of such party, through sources other than the requesting
party, its Affiliates or its officers, directors or representatives.
Section 9.4. Use of Name . From and after the Closing Date, Seller
will sign such consents and take such other action as Purchaser shall
reasonably request in order to permit Purchaser to use the name
"Verbex Voice Systems, Inc." and variants thereof. From and after the
Closing Date, Seller will not use the name "Verbex Voice Systems,
Inc." or any names similar thereto or variants thereof.
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Section 9.5. Non-Competition . Except as set forth on Schedule 9.5,
Seller agrees that neither it nor any of its officers, directors or
subsidiaries will, for a period of one year from the Closing Date,
directly or indirectly (i) own, operate or perform services (as
advisor, employee or otherwise) for any person, firm, corporation,
business or other organization or enterprise engaged in a business
that is competitive in any material way with the Business, or (ii)
interfere with, disrupt or attempt to disrupt the relationship
between the Purchaser and any of its lessors, lessees, licensors,
licensees, customers or suppliers.
Section 9.6. Payment of Liabilities; Accounts Receivable and
Inventory (a). Following the Closing Date, each of Purchaser and
Seller agrees to discharge, extinguish or cancel in accordance with
their terms the Assumed Liabilities and the Excluded Liabilities,
respectively.
(b) Purchaser shall credit any payments from customers, which are
received by Purchaser during the Initial Escrow Period, against those
outstanding accounts receivable (which are not disputed or contested)
for such customers which have been outstanding for the longest period
of time. In addition, Purchaser shall, during the Initial Escrow
Period, spend an aggregate of $500,000 for purposes of selling and
marketing efforts.
Section 9.7. Tax Returns Through Closing . Seller shall prepare and
file on a timely basis all reports and returns of Taxes relating to
the Assets or the Business with respect to all periods through and
including the Closing Date and shall pay or cause to be paid when due
all Taxes relating to the Assets or the Business for such periods,
including any interest, additions to tax or penalties thereon
together with interest on such additions to tax or penalties. Upon
request, Seller shall deliver to Purchaser copies of all historical
records relating to such Taxes. Seller shall be entitled to receive
any tax refund to which the Seller may be entitled in respect of any
period prior to, through and including the Closing Date.
Section 9.8. Purchaser to Act as Agent for Seller . This Agreement
shall not constitute an agreement to assign any contract right
included among the Assets if any attempted assignment of the same
without the consent of the other party thereto would constitute a
breach thereof or in any way adversely affect the rights of Seller
thereunder. If such consent is not obtained or if any attempted
assignment would be ineffective or would adversely affect Seller's
rights thereunder so that Purchaser would not in fact receive all
such rights, then Purchaser shall act as the agent for Seller in
order to obtain for Purchaser the benefits thereunder. Nothing herein
shall be deemed to make Purchaser Seller's agent in respect of the
Excluded Assets.
Section 9.9. Delivery of Property Received by Seller or Purchaser
After Closing. From and after the Closing, Purchaser shall have the
right and authority to collect, for the account of Purchaser, all
assets which shall be transferred or are intended to be transferred
to Purchaser as part of the Assets as provided in this Agreement, and
to endorse without recourse with the name of Seller any checks or
drafts received on account of any such assets. Seller agrees that it
will transfer or deliver to Purchaser, promptly after the receipt
thereof, any cash or other property which Seller receives after the
Closing Date in respect of any assets transferred or intended to be
transferred to Purchaser as part of the Assets under this Agreement.
Purchaser agrees that it will transfer or deliver to Seller, promptly
after receipt thereof, any cash or other property which Purchaser
receives after the Closing Date in respect of any assets not
transferred or intended to be transferred to Purchaser as part of the
Assets under this Agreement.
Section 9.10. Purchaser Appointed Attorney for Seller . Seller,
effective at the Closing Date, hereby constitutes and appoints
Purchaser, its successors and assigns, the true and lawful attorney
of Seller, in the name of either Purchaser or Seller (as Purchaser
shall determine in its sole discretion) but for the benefit of
Purchaser: (i) to institute and prosecute all proceedings which
Purchaser may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Assets as provided for
in this Agreement; (ii) to defend or compromise any and all actions,
suits or proceedings in respect of any of the Assets, and to do all
such acts and things in relation thereto as Purchaser shall deem
advisable; and (iii) to take all action which Purchaser, its
successors or assigns may reasonably deem proper in order to provide
for Purchaser, its successors or assigns, the benefits under any of
the Assets where any required consent of
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another party to the sale or assignment thereof to Purchaser pursuant
to this Agreement shall not have been obtained. Seller acknowledges
that the foregoing powers are coupled with an interest and shall be
irrevocable. Purchaser shall be entitled to retain for its own
account any amounts collected pursuant to the foregoing powers,
including any amounts payable as interest in respect thereof.
Purchaser agrees to act in good faith in seeking to collect, assert
or enforce any claim against any third party in accordance with this
Section 9.10.
Section 9.11. Subrogation of Purchaser . In the event Purchaser shall
become liable for or suffer any damage with respect to any matter
which was covered by insurance maintained by Seller on or prior to
the Closing Date, Seller agrees that Purchaser shall be and hereby
is, to the extent permitted under such policies and to the extent
consistent with Article V hereof, subrogated to any rights of Seller
under such insurance coverage, and, in addition, Seller agrees to
promptly remit to Purchaser any insurance proceeds which they may
receive on account of any such liability or damage.
Section 9.12. Further Assurances . Seller from time to time after the
Closing, at Purchaser's request, will execute, acknowledge and
deliver to Purchaser such other instruments of conveyance and
transfer and will take such other actions and execute and deliver
such other documents, certifications and further assurances as
Purchaser may reasonably require in order to vest more effectively in
Purchaser, or to put Purchaser more fully in possession of, any of
the Assets, or to better enable Purchaser to complete, perform or
discharge any of the Assumed Liabilities. Each of the parties hereto
will cooperate with the other and execute and deliver to the other
such other instruments and documents and take such other actions as
may be reasonably requested from time to time by the other party
hereto as necessary to carry out, evidence and confirm the intended
purposes of this Agreement.
X. TERMINATION
Section 10.1 Termination Events . Subject to the provisions of
Section 10.2, this Agreement may, by written notice given at or prior
to the Closing in the manner hereinafter provided, be terminated and
abandoned:
(a) By any of Seller, Voxware or Purchaser if a material default or
breach shall be made by the other party with respect to the due and
timely performance of any of its covenants and agreements contained
herein, or with respect to the due compliance with any of the
representations and warranties contained in Article VI or VII, as the
case may be, and such default cannot be cured and has not been
waived;
(b) By written mutual consent of Seller and Purchaser;
(c) By either Seller or Purchaser if the Closing shall not have occurred,
other than through failure of such party to fulfill its obligations
hereunder, on or before March 2, 1999 or such later date as may be
agreed upon by the parties;
(d) By Purchaser if Seller amends or supplements any Schedule hereto in
accordance with Section 8.6 hereof and such amendment or supplement
constitutes a Material Adverse Change in the Business after the date
hereof; or
(e) By Purchaser, if the conditions set forth in Article III hereof shall
not have been met (or shall not, in the reasonable judgment of
Purchaser, be capable of being met), and Seller, if the conditions
set forth in Article IV hereof shall not have been met, in each case
by the day prior to the Closing
Section 10.2. Effect of Termination . In the event this Agreement is
terminated pursuant to Section 10.1, all further obligations of the
parties hereunder shall terminate, no party shall have any right
against the other party hereto, except as set forth in Sections 3.8,
8.7 and 8.8 and this Section 10.2, and each party
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shall bear its own costs and expenses, except that if this Agreement
is so terminated by one party because one or more of the conditions to
such party's obligations hereunder is not satisfied as a result of the
other party's failure to comply with its obligations under this
Agreement, it is expressly agreed and understood that the terminating
party's right to pursue all legal remedies for breach of contract or
otherwise, including, without limitation, damages relating thereto,
shall survive such termination unimpaired.
XI. MISCELLANEOUS
Section 11.1. Expenses . Except as provided in Sections 3.8 and 10.2,
each party to this Agreement shall pay its own Transaction Costs
relating to this Agreement, the negotiations leading up to this
Agreement and the transactions contemplated by this Agreement.
Section 11.2. Risk of Loss . The risk of loss or damage to any of the
Assets, transfer of which is contemplated hereby, shall remain with
Seller until the Closing, and the Seller shall maintain its insurance
policies covering the Assets and the Business through the Closing.
With respect to the Assets, if prior to the Closing, all or any part
of the Assets are destroyed or damaged by fire or the elements or by
any other cause, Seller shall within ten (10) days provide written
notice thereof to Purchaser and shall also provide Purchaser, together
with such notice, copies of all insurance then in force relating to
such Assets, whereupon Purchaser may, by written notice to Seller
within twenty (20) days after receipt of notice of the occurrence,
elect in writing not to purchase such Assets if such damage exceeds
$50,000 and Seller does not agree to repair, restore and replace such
Assets to Purchaser's reasonable satisfaction and in compliance with
all state licensing requirements and Laws within 60 days of the notice
of the casualty delivered to Purchaser. Purchaser's election to so
terminate may be exercised, however, if after Seller agrees to so
repair, restore and replace, Seller fails to effect such repair,
restoration and replacement within such 60 day period. Upon such
election, this Agreement shall wholly cease and terminate. If all or
any part of the Assets are so destroyed and Seller has not made the
required repairs or restoration but this Agreement is not so
terminated by Purchaser, this Agreement shall not be affected, but
Seller, at the Closing, shall assign, transfer and set over to
Purchaser all of Seller's right, title and interest in and to the
policies of insurance insuring against the loss and Seller's interest
in sums payable thereunder and Seller shall pay to Purchaser the
amount of any deductibles under such insurance policies and any
payments theretofore made on account of the destruction or damage.
Section 11.3. Amendment . This Agreement shall not be amended or
modified except by a writing duly executed by all the parties hereto.
Section 11.4. Entire Agreement . This Agreement, including the
Exhibits and Schedules hereto, the Escrow Agreement and the other
instruments, agreements and documents delivered pursuant to this
Agreement contain all of the terms, conditions and representations and
warranties agreed upon by the parties relating to the subject matter
of this Agreement and supersede all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral
or written, respecting such subject matter.
Section 11.5. Headings . The headings contained in this Agreement are
intended solely for convenience and shall not affect the rights of the
parties to this Agreement.
Section 11.6. Notices . All notices, requests, demands and other
communications made in connection with this Agreement shall be in
writing and shall be deemed to have been duly given (a) on the date of
delivery, if delivered to the persons identified below, (b) seven
calendar days after mailing if mailed, with proper postage, by
certified or registered first-class mail, postage prepaid, return
receipt requested, addressed as follows:
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If to Seller: c/o Xx. Xxxxx Xxxxxxx
00 Xxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telecopy: ____________
Attention: Xx. Xxxxx Xxxxxxx
With a copy to: Xxxxxxxx & Xxxxxxxx, L.L.C.
000 Xxxx Xxxxxx
X.X. Xxx 00
Xxxxxxxxxx, Xxx Xxxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
If to Voxware Voxware, Inc.
or Purchaser: Verbex Acquisition Corporation
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxxxx Xxxxxxxx
With a copy to: Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
(c) on the date of receipt if sent by telecopy, and confirmed in writing in
the manner set forth in (b) on or before the next day after the sending of
the telecopy or (d) one business day after delivery to a nationally
recognized overnight courier service marked for overnight delivery. Such
addresses and numbers may be changed, from time to time, by means of a
notice given in the manner provided in this Section 11.6.
Section 11.7. Severability . If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
Section 11.8. Waiver . Waiver of any term or condition of this
Agreement by any party shall only be effective if in writing and shall
not be construed as a waiver of any subsequent breach or failure of
the same term or condition, or a waiver of any other term or condition
of this Agreement.
Section 11.9. Governing Law . This Agreement shall be governed by and
construed in accordance with the law of the State of New Jersey,
without regard to the conflicts of laws principles thereof.
Section 11.10. Remedies . Any remedy chosen by the parties hereto
shall be cumulative and not exclusive and shall be in addition to any
other remedies which any party may have under this Agreement or
otherwise.
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Section 11.11. Third Parties . Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended
or shall be construed to confer upon or give to any person other than
the parties hereto and their successors or assigns any rights or
remedies under or by reason of this Agreement.
Section 11.12. Counterparts . This Agreement may be signed in two or
more counterparts with the same effect as if the signatures to each
counterpart were upon a single instrument, and all such counterparts
together shall be deemed an original of this Agreement.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the date set forth above.
VOXWARE, INC.
By:
------------------------
Name: Bathsheba Malsheen
Title: President
Subscribed and sworn to before me
this _____ day of February, 1999:
--------------------------------
Notary Public
VERBEX ACQUISITION CORPORATION
By:
---------------------------
Name: Bathsheba Malsheen
Title: President
Subscribed and sworn to before me
this _____ day of February, 1999:
--------------------------------
Notary Public
VERBEX VOICE SYSTEMS, INC.
By:
---------------------------
Name: Xxxxx Xxxxxxx
Title: President
Subscribed and sworn to before me
this _____ day of February, 1999:
--------------------------------
Notary Public
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EXHIBIT 3.4
[Form of Opinion of Counsel to Seller]
1. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with corporate power
and authority and all licenses necessary to conduct the Business and
to own, lease and operate the properties and assets used in connection
therewith and to enter into and perform the Acquisition Agreement and
the transactions contemplated thereby. Seller is in good standing as a
foreign corporation and licensed or qualified to transact business in
each of Massachusetts, New Jersey and Utah.
2.
3. Seller has all requisite corporate power and authority to execute and
deliver the Acquisition Agreement and the Escrow Agreement and to
perform fully its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery by
Seller of the Acquisition Agreement, the Escrow Agreement and the
other documents contemplated thereby, the performance by Seller of its
obligations thereunder, and the transactions contemplated thereby have
been duly and validly authorized by all necessary corporate action on
the part of Seller and its stockholders. The Acquisition Agreement and
the Escrow Agreement have been duly executed and delivered by Seller,
and the Acquisition Agreement is, and each of the Escrow Agreement and
the other agreements contemplated thereby to which Seller will be a
party will be, upon execution and delivery thereof by Seller, a legal,
valid and binding obligation of Seller, enforceable against it in
accordance with its terms (except as the enforce ability thereof may
be limited by any applicable bankruptcy, insolvency or other laws
affecting creditors' rights generally or by general principles of
equity, regardless of whether such enforce ability is considered in
equity or at law).
4.
5. Seller has complete and unrestricted power and the unqualified right
to sell, convey, assign, transfer and deliver the Assets to Purchaser
(subject to any consents or waivers of third parties required in
connection with such sale, conveyance, assignment, transfer and
delivery of the Assets or any part thereof, all of which consent(s) or
waiver(s) have been duly obtained by Seller and are set forth on
Schedule 6.3 to the Acquisition Agreement), and the instruments of
transfer, conveyance and assignment to be executed and delivered by
Seller to Purchaser at the Closing will be valid and binding
obligations of Seller, enforceable in accordance with their respective
terms, sufficient for purposes of recondition and filing where
permitted by law, sufficient to transfer, convey and assign to
Purchaser all right, title and interest of Seller in and to the Assets
and to vest in Purchaser the full right, power and authority to
conduct the Business as conducted by Seller.
6.
7. Except as set forth on Schedule 6.3 to the Acquisition Agreement,
neither the execution and delivery of the Acquisition Agreement, the
Escrow Agreement or any of the other documents contemplated thereby by
Seller nor the consummation of the transactions contemplated thereby
will (a) conflict with, result in a breach or violation of or
constitute (or with notice or lapse of time or both constitute) a
default under, (i) the certificate of incorporation or by laws of
Seller or (ii) any law, statute, regulation, order, judgment or decree
or, to our knowledge, any instrument, contract or other agreement] to
which Seller is a party or by which Seller (or any of the properties
or assets of Seller) is subject or bound; (b) to our knowledge, result
in the
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creation of, or give any party the right to create, any lien, charge,
option, security interest or other encumbrance upon the Assets or the
Business; or (c) require Seller or, to our knowledge, Purchaser to
obtain any Permit or waiver from, to give any notification to, or to
make any filing with, any governmental body or authority or to obtain
the approval or consent of any other Person.
8.
9. Except as set forth on Schedule 6.9 to the Acquisition Agreement, (i)
neither Seller, any Affiliate of Seller, nor any director, officer,
employee or agent of Seller (in their capacity as such), is a party to
any pending or, to our knowledge, threatened action, suit, proceeding
or investigation, at law or in equity or otherwise in, before or by
any court or governmental board, commission, agency, department or
office, or private arbitration tribunal, nor do we know, after due
inquiry, of any basis therefor, which, if successful, could adversely
affect the right of Purchaser after the Closing Date to own the Assets
or to conduct the Business, and (ii) to our knowledge, Seller is not a
party or subject to any order, ruling, judgment, decree or stipulation
which affects the Business, or which would prevent the transactions
contemplated by the Acquisition Agreement. To our knowledge after due
inquiry, no facts exist, and no investigation has been instituted by
any governmental agency, which might result in any such action or
proceeding.
10.
11. To our knowledge, Seller has no Permits in connection with the
ownership of the Assets or operation of the Business, and no Permits
are necessary to own the Assets and operate the Business.
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EXHIBIT 3.12
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of February __, 1999 among Verbex Acquisition
Corporation, a Delaware corporation ("Purchaser"), Verbex Voice Systems, Inc., a
Delaware corporation ("Seller"), and ____________________, a _________________,
as escrow agent (the "Escrow Agent").
WHEREAS, concurrently with the execution and delivery of this Agreement and
pursuant to an Acquisition Agreement dated as of February __, 1999 (the
"Acquisition Agreement"; capitalized terms not defined herein shall have the
meanings ascribed to them in the Acquisition Agreement) by and among Voxware,
Inc., Purchaser and Seller relating to Purchaser's acquisition of the Assets and
the Assumed Liabilities of Seller; and
WHEREAS, the Acquisition Agreement requires as a condition to the sale of
the Assets that Purchaser, Seller and the Escrow Agent enter into this Agreement
and that Purchaser deposit a portion of the Purchase Price with the Escrow Agent
in order to provide a fund for any subsequent adjustments of the Purchase Price
which may result in a return of a portion of such Purchase Price to the
Purchaser and for indemnity payments that Seller becomes obligated to make to
Purchaser or its officers, directors, employees, agents or Affiliates (together,
the "Indemnified Parties").
NOW, THEREFORE, Purchaser, Seller and the Escrow Agent hereby agree as
follows:
1. Appointment of the Escrow Agent; Deposit of Escrow Amount. Seller and
Purchaser hereby constitute and appoint the Escrow Agent as, and the Escrow
Agent hereby agrees to assume and perform the duties of, the escrow agent under
and pursuant to this Agreement. The Escrow Agent acknowledges receipt of an
executed copy of the Acquisition Agreement and of the amount of Four Hundred
Thousand dollars ($400,000) (the "Escrow Amount") from Purchaser as provided in
Section 2.7 of the Acquisition Agreement.
2. The Escrow Fund. The Escrow Amount and all earnings thereon (the Escrow
Amount and all such earnings being referred to herein together as the "Escrow
Fund") shall be held by the Escrow Agent as a trust fund in a separate account
maintained for the purpose, on the terms and subject to the conditions of this
Agreement. The Escrow Fund shall not be subject to lien or attachment by any
creditor of any party hereto and shall be used solely for the purpose set forth
in this Agreement. Amounts held in the Escrow Fund shall not be available to,
and shall not be used by, the Escrow Agent to set off any obligations of either
Purchaser or Seller owing to the Escrow Agent in any capacity.
3. Investment of the Escrow Fund; Taxes.
(a) The Escrow Agent shall invest and reinvest all cash funds held from
time to time as part of the Escrow Fund, in an interest-bearing account or such
other investments as Purchaser and Seller shall approve in writing.
(b) All taxes in respect of earnings on the Escrow Fund shall be the
obligation of the party to whom the Escrow Fund or any portion thereof shall be
paid.
4. Claims Against the Escrow Fund.
(a) Concurrently with the delivery of a notice of claim to Seller pursuant
to Section 5.6 of the Acquisition Agreement, Purchaser will deliver to the
Escrow Agent a certificate in substantially the form of Annex I attached hereto
(a "Certificate of Instruction"). No Certificate of Instruction may be delivered
by Purchaser after the
34
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close of business on the business day immediately preceding the Termination
Date. The Escrow Agent shall give written notice to Seller of its receipt of a
Certificate of Instruction not later than the second business day next following
receipt thereof, together with a copy of such Certificate of Instruction.
(b) If the Escrow Agent (i) shall not, within five (5) calendar days
following its receipt of a Certificate of Instruction (the "Objection Period"),
have received from Seller a certificate in substantially the form of Annex II
attached hereto (an "Objection Certificate") disputing Seller's obligation to
pay the Owed Amount referred to in such Certificate of Instruction, or (ii)
shall have received such an Objection Certificate within the Objection Period
and shall thereafter have received either (x) a certificate from Purchaser and
Seller substantially in the form of Annex III attached hereto (a "Resolution
Certificate") stating that Purchaser and Seller have agreed that the Owed Amount
referred to in such Certificate of Instruction (or a specified portion thereof)
is payable to one or more of the Indemnified Parties or (y) a copy of final
order of a Board of Arbitration (accompanied by a certificate of Purchaser
substantially in the form of Annex IV attached hereto (an "Arbitration
Certificate")) stating that the Owed Amount referred to in such Certificate of
Instruction (or a specified portion thereof) is payable to one or more of the
Indemnified Parties by Seller, then the Escrow Agent shall, on the second
business day next following (x) the expiration of the Objection Period or (y)
the Escrow Agent's receipt of a Resolution Certificate or an Arbitration
Certificate, as the case may be, pay over to Purchaser from the Escrow Fund, by
wire transfer of immediately available funds to a bank account of Purchaser's
designation, the amount set forth in said Certificate of Instruction or, if such
Resolution Certificate or Arbitration Certificate specifies that a lesser amount
than such Owed Amount is payable, such lesser amount (or the entire Escrow
Amount if it is less than the foregoing amounts).
(c) The Escrow Agent shall give written notice to Purchaser of its receipt
of an Objection Certificate not later than the second business day next
following receipt thereof, together with a copy of such Objection Certificate.
The Escrow Agent shall give written notice to Seller of its receipt of an
Arbitration Certificate not later than the second business day next following
receipt thereof, together with a copy of such Arbitration Certificate.
(d) Upon the payment by the Escrow Agent of the Owed Amount referred to in
a Certificate of Instruction, such Certificate of Instruction shall be deemed
canceled. Upon the receipt by the Escrow Agent of a Resolution Certificate or an
Arbitration Certificate and the payment by the Escrow Agent of the Owed Amount
referred to therein, the related Certificate of Instruction shall be deemed
canceled.
(e) Upon Purchaser's determination that it has no claim or has released its
claim with respect to an Owed Amount referred to in a Certificate of Instruction
(or a specified portion thereof), Purchaser will promptly deliver to the Escrow
Agent a certificate substantially in the form of Annex V attached hereto (a
"Purchaser Cancellation Certificate") canceling such Certificate of Instruction
(or such specified portion thereof, as the case may be), and such Certificate of
Instruction (or portion thereof) shall thereupon be deemed canceled. The Escrow
Agent shall give written notice to Seller of its receipt of a Purchaser
Cancellation Certificate not later than the second business day next following
receipt thereof, together with a copy of such Purchaser Cancellation
Certificate.
(f) Upon receipt of a final order of a Board of Arbitration stating that
none of the Owed Amount referred to in a Certificate of Instruction as to which
Seller delivered an Objection Certificate within the Objection Period is payable
to any Indemnified Party by Seller, Seller may deliver a copy of such order
(accompanied by a certificate of Seller substantially in the form of Annex VI
attached hereto (a "Seller Cancellation Certificate")) canceling such
Certificate of Instruction, and such Certificate of Instruction shall thereupon
be deemed canceled. The Escrow Agent shall give written notice to Purchaser of
its receipt of a Seller Cancellation Certificate not later than the second
business day next following receipt thereof, together with a copy of such Seller
Cancellation Certificate.
35
Page
5. Release of Escrow Fund. Following the Determination Date and the date
six months thereafter, as the case may be, in accordance with and pursuant to
Section 2.6(b) of the Acquisition Agreement, Seller and Purchaser shall deliver
to the Escrow Agent a joint notice with respect to the disbursement of the
Escrow Fund and the retention of the Retained Escrow Fund, if any. Within one
day of the Escrow agent's receipt of any such joint notice, the Escrow Agent
shall disburse the Escrow Fund in accordance with such joint notice, by wire
transfer of immediately available funds to the bank account(s) designated
therein, less the sum of any amounts designated in Certificates of Instruction
received by the Escrow Agent that have not been canceled in accordance with
paragraph (d), (e) or (f) of Section 4. This escrow shall terminate on the date
that the Escrow Agent receives a joint notice to disburse the entire balance of
the Escrow Fund (the "Termination Date"). The Escrow Agent shall not accept any
Certificates of Instruction after the Termination Date. At such time on or
following the Termination Date as all Certificates of Instruction received by
the Escrow Agent prior to the Termination Date have been canceled in accordance
with paragraph (d), (e) or (f) of Section 4, the Escrow Agent shall promptly pay
over to Seller the balance in the Escrow Fund, by wire transfer of immediately
available funds to a bank account of Seller's designation, and this Agreement
(other than Sections 6, 7 and 8) shall automatically terminate.
6. Duties and Obligations of the Escrow Agent. The duties and obligations
of the Escrow Agent shall be limited to and determined solely by the provisions
of this Agreement and the certificates delivered in accordance herewith, and the
Escrow Agent is not charged with knowledge of or any duties or responsibilities
in respect of any other agreement or document. In furtherance and not in
limitation of the foregoing:
(i) the Escrow Agent shall not be liable for any loss of interest
sustained as a result of investments made hereunder in accordance with the
terms hereof, including any liquidation of any investment of the Escrow
Fund prior to its maturity effected in order to make a payment required by
the terms of this Agreement;
(ii) the Escrow Agent shall be fully protected in relying in good
faith upon any written certification, notice, direction, request, waiver,
consent, receipt or other document that the Escrow Agent reasonably
believes to be genuine and duly authorized, executed and delivered;
(iii) the Escrow Agent shall not be liable for any error of judgment,
or for any act done or omitted by it, or for any mistake in fact or law, or
for anything that it may do or refrain from doing in connection herewith;
provided, however, that notwithstanding any other provision in this
Agreement, the Escrow Agent shall be liable for its willful misconduct or
gross negligence or breach of this Agreement;
(iv) the Escrow Agent may seek the advice of legal counsel selected
with reasonable care in the event of any dispute or question as to the
construction of any of the provisions of this Agreement or its duties
hereunder, and it shall incur no liability and shall be fully protected in
respect of any action taken, omitted or suffered by it in good faith in
accordance with the opinion of such counsel;
(v) in the event that the Escrow Agent shall in any instance, after
seeking the advice of legal counsel pursuant to the immediately preceding
clause, in good faith be uncertain as to its duties or rights hereunder, it
shall be entitled to refrain from taking any action in that instance and
its sole obligation, in addition to those of its duties hereunder as to
which there is no such uncertainty, shall be to keep safely all property
held in the Escrow Fund until it shall be directed otherwise in writing by
each of the parties hereto or by a final, nonappealable order of a court of
competent jurisdiction; provided, however, in the event that the Escrow
Agent has not received such written direction or court order within one
hundred eighty (180) calendar days after requesting the same, it shall have
the right to interplead Purchaser and Seller in any court of competent
jurisdiction and request that such court determine its rights and duties
hereunder; and
36
Page
(vi) the Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either
directly or by or through agents or attorneys selected with reasonable
care, nothing in this Agreement shall be deemed to impose upon the Escrow
Agent any duty to qualify to do business or to act as fiduciary or
otherwise in any jurisdiction other than the State of New Jersey and the
Escrow Agent shall not be responsible for and shall not be under a duty to
examine into or pass upon the validity, binding effect, execution or
sufficiency of this Agreement or of any agreement amendatory or
supplemental hereto.
7. Cooperation. Purchaser and Seller shall provide to the Escrow Agent all
instruments and documents within their respective powers to provide that are
necessary for the Escrow Agent to perform its duties and responsibilities
hereunder.
8. Fees and Expenses; Indemnity. Seller shall pay the fees of the Escrow
Agent for its services hereunder as and when billed by the Escrow Agent, and
Seller shall reimburse and indemnify the Escrow Agent for, and hold it harmless
against, any loss, damages, cost or expense, including but not limited to
reasonable attorneys' fees, reasonably incurred by the Escrow Agent in
connection with the Escrow Agent's performance of its duties and obligations
under this Agreement, as well as the reasonable costs and expenses of defending
against any claim or liability relating to this Agreement; provided that
notwithstanding the foregoing, Seller shall not be required to indemnify the
Escrow Agent for any such loss, liability, cost or expense arising as a result
of the Escrow Agent's willful misconduct or gross negligence or breach of this
Agreement.
9. Resignation and Removal of the Escrow Agent.
(a) The Escrow Agent may resign as such thirty (30) calendar days following
the giving of prior written notice thereof to Seller and Purchaser. In addition,
the Escrow Agent may be removed and replaced on a date designated in a written
instrument signed by Seller and Purchaser and delivered to the Escrow Agent.
Notwithstanding the foregoing, no such resignation or removal shall be effective
until a successor escrow agent has acknowledged its appointment as such as
provided in paragraph (c) below. In either event, upon the effective date of
such resignation or removal, the Escrow Agent shall deliver the property
comprising the Escrow Fund to such successor escrow agent, together with such
records maintained by the Escrow Agent in connection with its duties hereunder
and other information with respect to the Escrow Fund as such successor may
reasonably request.
(b) If a successor escrow agent shall not have acknowledged its appointment
as such as provided in paragraph (c) below, in the case of a resignation, prior
to the expiration of thirty (30) calendar days following the date of a notice of
resignation or, in the case of a removal, on the date designated for the Escrow
Agent's removal, as the case may be, because Seller and Purchaser are unable to
agree on a successor escrow agent, or for any other reason, the Escrow Agent may
select a successor escrow agent and any such resulting appointment shall be
binding upon all of the parties to this Agreement, provided that any such
successor selected by the Escrow Agent shall be a Permitted Bank referred to in
subclause (A) of clause (iii) of paragraph (a) of Section 3.
(c) Upon written acknowledgment by a successor escrow agent appointed in
accordance with the foregoing provisions of this Section 9 of its agreement to
serve as escrow agent hereunder and the receipt of the property then comprising
the Escrow Fund, the Escrow Agent shall be fully released and relieved of all
duties, responsibilities and obligations under this Agreement, subject to the
proviso contained in clause (iii) of Section 6, and such successor escrow agent
shall for all purposes hereof be the Escrow Agent.
10. Notices. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given if delivered personally
or by facsimile transmission or mailed (first class postage prepaid) to the
parties at the following addresses or facsimile numbers:
37
Page
If to Purchaser, to:
Verbex Acquisition Corporation
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxx Xxxxxxx, Esq.
If to Seller, to:
c/o Xx. Xxxxx Xxxxxxx
00 Xxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telecopy: ____________
Attention: Xx. Xxxxx Xxxxxxx
With a copy to:
Xxxxxxxx & Xxxxxxxx, L.L.C.
000 Xxxx Xxxxxx
X.X. Xxx 00
Xxxxxxxxxx, Xxx Xxxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
If to the Escrow Agent, to:
[Name]
[Address]
Facsimile No.:
Attn:
with a copy to:
[Name]
[Address]
Facsimile No.:
Attn:
All notices, requests, demands and other communications made in connection with
this Agreement shall be in writing and shall be deemed to have been duly given
(a) on the date of delivery, if delivered to the persons identified above, (b)
seven calendar days after mailing if mailed, with proper postage, by certified
or registered first-class mail, postage prepaid, return receipt requested,
addressed as indicated above, (c) on the date of receipt if sent by telecopy,
and confirmed in writing in the manner set forth in (b) on or before the next
day after the sending of the telecopy or
38
Page
(d) one business day after delivery to a nationally recognized overnight courier
service marked for overnight delivery. Such addresses and numbers may be
changed, from time to time, by means of a notice given in the manner provided in
this Section.
11. Amendments, etc. This Agreement may be amended or modified, and any of
the terms hereof may be waived, only by a written instrument duly executed by or
on behalf of Purchaser and Seller and, with respect to any amendment that would
adversely affect the Escrow Agent, the Escrow Agent. No waiver by any party of
any term or condition contained of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
13. Business Day. For all purposes of this Agreement, the term "business
day" shall mean a day other than Saturday, Sunday or any day on which banks
located in the State of New Jersey are authorized or obligated to close.
14. Miscellaneous. This Agreement is binding upon and will inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof. This
Agreement may be executed in any number of counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
VERBEX ACQUISITION CORPORATION
By:
---------------------------
Name:
Title:
VERBEX VOICE SYSTEMS, INC.
By:
---------------------------
Name:
Title:
[ESCROW AGENT]
By:
---------------------------
Name:
Title:
39
Page
ANNEX I
CERTIFICATE OF INSTRUCTION
to
------------------------------,
as Escrow Agent
The undersigned, Verbex Acquisition Corporation, a Delaware corporation
("Purchaser"), pursuant to Section 4(a) of the Escrow Agreement dated as of
_____________, 1999 among Purchaser, Verbex Voice Systems, Inc., a Delaware
corporation ("Seller"), and you (terms defined in said Escrow Agreement have the
same meanings when used herein), hereby:
(a) certifies that (i) Purchaser has sent to Seller a notice of claim
pursuant to Article II or Article V of the Acquisition Agreement), a copy
of which is attached hereto, and (ii) the amount of $___________ (the "Owed
Amount") is payable to Purchaser by Seller pursuant to Article II or
Article V of the Acquisition Agreement by reason of the matter described in
such notice of claim; and
(b) instructs you to pay to Purchaser or another Indemnified Party
from the Escrow Fund the Owed Amount, by wire transfer of immediately
available funds to Purchaser's account at _________________,
__________________, _________, _________ (Account No.:_________), (i)
unless you receive an Objection Certificate from Seller prior to the
expiration of the Objection Period, within two business days following the
expiration of the Objection Period, or (ii) if you receive an Objection
Certificate within the Objection Period, within two business days following
your receipt of a Resolution Certificate or a Litigation Certificate.
PURCHASER
By:
---------------------------
Name:
Title:
Dated:________, ____
1
Page
ANNEX II
OBJECTION CERTIFICATE
to
------------------------------,
as Escrow Agent
The undersigned, Verbex Voice Systems, Inc., a Delaware corporation
("Seller"), pursuant to Section 4(b) of the Escrow Agreement dated as of
__________, 1999 among Verbex Acquisition Corporation, a Delaware corporation
("Purchaser"), Seller and you (terms defined in said Escrow Agreement have the
same meanings when used herein), hereby:
(a) disputes that the Owed Amount referred to in the Certificate of
Instruction dated _________, ____ is payable to Purchaser by the
undersigned pursuant to Article II or Article V of the Acquisition;
(b) certifies that the undersigned has sent to Purchaser a written
statement dated ___________, ____ of the undersigned, a copy of which is
attached hereto, disputing its liability to Purchaser for the Owed Amount;
and
(c) objects to your making payment to Purchaser as provided in such
Certificate of Instruction.
VERBEX VOICE SYSTEMS, INC.
By:
---------------------------
Name:
Title:
Dated: _________, ____
1
Page
ANNEX III
RESOLUTION CERTIFICATE
to
------------------------------------,
as Escrow Agent
The undersigned, Verbex Acquisition Corporation, a Delaware corporation
("Purchaser"), and Verbex Voice Systems, Inc., a Delaware corporation
("Seller"), pursuant to Section 4(b) of the Escrow Agreement dated as of
____________, 1999 among Purchaser, Seller and you (terms defined in said Escrow
Agreement have the same meanings when used herein), hereby:
(a) certify that (i) Purchaser and Seller have resolved their dispute as to the
matter described in the Certificate of Instruction dated __________, ____ and
the related Objection Certificate dated ___________, ____ and (ii) the final
Owed Amount with respect to the matter described in such Certificates is
$______________;
(b) instruct you to pay to Purchaser from the Escrow Fund the Owed Amount
referred to in clause (ii) of paragraph (a) above, by wire transfer of
immediately available funds to Purchaser's account at ____________________,
_________________, ________, ________ (Account No.: ___________), within two
business days of your receipt of this Certificate; and
(c) agree that the Owed Amount designated in such Certificate of Instruction, to
the extent, if any, it exceeds the Owed Amount referred to in clause (ii) of
paragraph (a) above, shall be deemed not payable to the Indemnified Parties and
such Certificate of Instruction is hereby canceled.
VERBEX ACQUISITION CORPORATION
By:
--------------------------------
Name:
Title:
VERBEX VOICE SYSTEMS, INC.
By:
--------------------------------
Name:
Title:
Dated:___________, ____
Page
ANNEX IV
ARBITRATION CERTIFICATE
to
-----------------------------,
as Escrow Agent
The undersigned, Verbex Acquisition Corporation, a Delaware corporation
("Purchaser"), pursuant to Section 4(b) of the Escrow Agreement dated as of
____________, 1999 among Purchaser, Verbex Voice Systems, Inc., a Delaware
corporation ("Seller"), and you (terms defined in said Escrow Agreement have the
same meanings when used herein), hereby:
(a) certifies that (i) attached hereto is a final order of a Board of
Arbitration in accordance with Section [____] of the Acquisition Agreement
resolving the dispute between Purchaser and Seller as to the matter
described in the Certificate of Instruction dated ____________, ____ and
the related Objection Certificate dated ____________, ____ and (ii) the
final Owed Amount with respect to the matter described in such
Certificates, as provided in such order, is $______________;
(b) instructs you to pay to Purchaser from the Escrow Fund the Owed
Amount referred to in clause (ii) of paragraph (a) above, by wire transfer
of immediately available funds to Purchaser's account at
_____________________, ________________, _______, _______ (Account No.:
____________), within two business days of your receipt of this
Certificate; and
(c) agrees that the Owed Amount designated in such Certificate of
Instruction, to the extent, if any, it exceeds the Owed Amount referred to
in clause (ii) of paragraph (a) above, shall be deemed not payable to the
Indemnified Parties and such Certificate of Instruction is hereby canceled.
VERBEX ACQUISITION CORPORATION
By:
---------------------------
Name:
Title:
Dated: __________, ____
2
Page
ANNEX V
PURCHASER CANCELLATION CERTIFICATE
to
----------------------------,
as Escrow Agent
The undersigned, Verbex Acquisition Corporation, a Delaware corporation
("Purchaser"), pursuant to Section 4(e) of the Escrow Agreement dated as of
____________, 1999 among Purchaser, Verbex Voice Systems, Inc., a Delaware
corporation ("Seller"), and you (terms defined in said Escrow Agreement have the
same meanings when used herein), hereby:
(a) certifies that (i) it hereby releases its claim against Seller
with respect to [all] [specify portion] of the Owed Amount designated in
the Certificate of Instruction dated _____________, ____ and (ii) as a
result the Owed Amount with respect to such Certificate of Instruction is
$__________; and
(b) agrees that such Certificate of Instruction is, to the extent
released as provided in clause (i) of paragraph (a) above, canceled.
VERBEX ACQUISITION CORPORATION
By:
---------------------------
Name:
Title:
Dated:__________, ____
3
Page
ANNEX VI
SELLER CANCELLATION CERTIFICATE
to
-----------------------------,
as Escrow Agent
The undersigned, Verbex Voice Systems, Inc., a Delaware corporation
("Seller"), pursuant to Section 4(f) of the Escrow Agreement dated as of
____________, 1999 among Verbex Acquisition Corporation, a Delaware corporation
("Purchaser"), Seller and you (terms defined in said Escrow Agreement have the
same meanings when used herein), hereby certifies that (i) attached hereto is a
final order of a Board of Arbitration in accordance with Section [_____] of the
Acquisition Agreement resolving the dispute between Purchaser and Seller as to
the matter described in the Certificate of Instruction dated ____________, ____
and the related Objection Certificate dated ____________, ____ and (ii) as
provided in such order, there is no Owed Amount with respect to the matter
described in such Certificates.
VERBEX VOICE SYSTEMS, INC.
By:
---------------------------
Name:
Title:
Dated:________, ____
1
SCHEDULES*
---------
Schedule 2.1 Interim Balance Sheet
Schedule 2.1(a) Tangible Assets
Schedule 2.1(e) Contracts
Schedule 2.1(g) Intellectual Property
Schedule 2.2 Excluded Assets
Schedule 2.3(b) Section 2.3(b) Liabilities
Schedule 2.6(b)(i) Inventory
Schedule 3.6 Consents
Schedule 6.3 Seller Conflicts
Schedule 6.5(d) Value of Inventory
Schedule 6.7 Contract Exceptions
Schedule 6.13 Plans and Agreements Relating to Employees
Schedule 6.15 Related Transactions
Schedule 6.17 Suppliers and Customers
Schedule 9.5 Non-Competition
---------
*These schedules have been omitted in accordance with the rules of the
Securities and Exchange Commission. The Company agrees to furnish suplementally
a copy of any omitted schedule to the Securities and Exchange Commission upon
request.
