EXHIBIT 2
AGREEMENT dated September 26, 1997, between Dataware Technologies Inc., a
Delaware corporation ("Dataware"), and Information Handling Services Group Inc.,
a Delaware corporation ("IHSG").
WHEREAS Dataware and certain of its subsidiaries are engaged in the
services business of converting customer data to various electronic formats and
building CD-ROM products, websites and other electronic products for customers;
WHEREAS IHSG owns all of the issued and outstanding capital stock of
Creative Multimedia Corporation, an Oregon corporation ("CMC"); and
WHEREAS Dataware desires to acquire the capital stock of CMC from IHSG,
and IHSG desires to acquire the Dataware Services Business, as defined below,
from Dataware.
Accordingly, Dataware and IHSG agree as follows:
1. DEFINITIONS. The following shall have the meanings set forth below:
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"Acquired Dataware Assets" means all right, title and interest in and to all of
the assets of Dataware and Dataware UK listed on Schedule 1.1 (other than any
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assets not material to the Dataware Services Business that have been disposed of
in the ordinary course of business) and any other assets of Dataware and
Dataware UK used in the Dataware Services Business, other than (i) the computer
software and intellectual property to be licensed to IHSG pursuant to the
Distribution Agreement, (ii) Dataware's company-wide internal management
information systems ("DTIS"), (iii) desk-top productivity and other off-the-
shelf software licensed from third parties on standard terms ("Third-Party
Software"), and (iv) trademarks, service marks, and trade names (other than any
that are used primarily in connection with the Dataware Services Business).
"Assumed Dataware Contract Obligations" means the obligation to complete
performance after the Closing Date under the contracts of Dataware and Dataware
UK arising out of the Dataware Services Business which are listed on Schedule
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1.2, except and so long as any such contracts cannot by their terms be assigned
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to IHSG.
"Assumed Dataware Payables" means the trade payables of Dataware and Dataware UK
related to the Dataware Services Business incurred in the ordinary course of
business and outstanding on the Closing Date in accordance with the ordinary and
customary practices of Dataware and Dataware UK.
"Assumed Liabilities" means the Assumed Dataware Contract Obligations, the
Assumed Dataware Payables, the CMC liabilities listed in Section 4.2, and IHSG's
obligations under Section 9.7(ii) with respect to contracts listed on Schedule
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1.2.
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"Balance Sheet Dataware Receivables" means the accounts receivable of Dataware,
Dataware UK, and the Dataware Subsidiaries related to the Dataware Services
Business outstanding on July 31, 1997.
"Closing Date CMC Receivables" means the accounts receivable of CMC outstanding
at the close of business on the Closing Date.
"Closing Date Dataware Receivables" means the accounts receivable of Dataware,
Dataware UK, and the Dataware Subsidiaries related to the Dataware Services
Business outstanding at the close of business on the Closing Date.
"CMC Options" means options to purchase shares of CMC Stock issued pursuant to
the CMC Employee Stock Option Plan.
"CMC Stock" means the issued and outstanding capital stock of CMC.
"Dataware Subsidiaries' Stock" means the issued and outstanding capital stock or
other equity interest of the Dataware Subsidiaries.
"Dataware Services Business" means the services business heretofore engaged in
by Dataware (at its offices located in Boulder, Colorado and through certain
personnel listed on Schedule 12.9(a) who are located elsewhere), Dataware UK and
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the Dataware Subsidiaries by using the Acquired Dataware Assets and the assets
of the Dataware Subsidiaries and the computer software and intellectual property
to be licensed to IHSG pursuant to the Distribution Agreement to perform
contracts of the type comprising the Assumed Dataware Contract Obligations and
that fulfilled the contracts reflected on Schedule 12.8.
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"Dataware Subsidiaries" means Dataware Technologies GmbH, Dataware Technologies,
S.r.l., Dataware Technologies Pty Ltd., Dataware Technologies AB, and Dataware
Technologies Limited.
"Dataware UK" means Dataware Technologies (UK) Ltd.
"Distribution Agreement" means the Distribution Agreement in the form of Exhibit
A hereto.
"including" means including, without limitation.
"Losses" means all losses, damages, liabilities, claims, demands, judgments,
settlements, actual costs and expenses (including reasonable attorneys' fees but
excluding lost profits, exemplary damages or opportunity costs), whether or not
arising out of third party claims.
"Taxes" or "Tax" means any federal, state, local, provincial or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
business, occupation, premium, windfall profits, environmental, customs, duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use, ad
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valorem, transfer, registration, value added, alternative or add-on minimum,
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estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereof.
"Transaction Documents" means this Agreement and all other agreements,
instruments, certificates and documents contemplated hereby.
2. TRANSFER OF CMC STOCK; SUBSTITUTION OF CMC OPTIONS.
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2.1 At the closing referred to in Section 7 (the "Closing"), IHSG shall sell,
assign, transfer and deliver to Dataware the CMC Stock, free and clear of
all claims, liens, charges, security interests or other encumbrances.
2.2 At the Closing, Dataware will replace the CMC Options (which shall be
terminated) with options (the "Dataware Options") to purchase shares of
Dataware common stock, $0.01 par value, under the Dataware Technologies
1993 Equity Incentive Plan (the "Dataware Plan"), each Dataware Option to
be exercisable for that number of shares of Dataware common stock as is
determined by multiplying the number of shares of CMC Stock subject to the
respective CMC Option by .10
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(and rounding to the nearest whole number), to have an exercise price per
share equal to the fair market value of Dataware common stock on the
Closing Date, to have the same term and vesting provisions as the
respective CMC Option, and otherwise to be on the terms of the Dataware
Plan.
3. TRANSFER OF ACQUIRED DATAWARE ASSETS. At the Closing, Dataware shall, and
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shall cause Dataware UK to, sell, assign, transfer and deliver to IHSG, or to
one or more IHSG subsidiaries designated by IHSG, the Acquired Dataware Assets,
free and clear of all claims, liens, charges, security interests or other
encumbrances.
4. OBLIGATIONS ASSUMED BY IHSG.
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4.1 At the Closing, IHSG shall assume and agree to perform the Assumed Dataware
Contract Obligations and its obligations under Section 9.7(ii) and the
obligation to pay the Assumed Dataware Payables. IHSG shall not assume
any obligations or liabilities of Dataware or Dataware UK relating to the
Dataware Services Business, whether presently existing or contingent, other
than those included in the Assumed Liabilities. Dataware and Dataware UK
shall retain, perform and discharge all obligations and liabilities arising
out of or relating to the Dataware Services Business, other than those
included in the Assumed Liabilities.
4.2 At the Closing, IHSG shall assume from CMC and agree to perform:
(i) the leases described on Schedule 4.2;
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(ii) all obligations, if any, to pay minimum guaranteed royalties under
all agreements under which CMC has licensed content and agreed to
develop and/or distribute CD-ROM or other electronic products based
on such content ("branded content agreements"), to the extent such
minimum guaranteed royalties exceed the actual royalties paid by CMC
based on sales of such products after the Closing; and
(iii) all obligations and/or liabilities of CMC pursuant to the Agreement
dated June 7, 1995 between IHSG, CMC and IHS Acquisition Subsidiary,
Inc.
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5. TRANSFER OF DATAWARE SUBSIDIARIES' STOCK. At the Closing, Dataware shall
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sell, assign, transfer and deliver to IHSG, or to one or more IHSG subsidiaries
designated by IHSG, the Dataware Subsidiaries' Stock, free and clear of all
claims, liens, charges, security interests or other encumbrances.
6. CONSIDERATION. The consideration provided by the parties with respect to
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the transactions contemplated by this Agreement is as follows: Dataware is
exchanging the Dataware Services Business, including the Dataware Subsidiaries'
Stock, for the CMC Stock plus payment by IHSG to Dataware of the sum of Six
Million Dollars ($6,000,000), subject to adjustment as provided in Section 10.
7. CLOSING. The Closing of the transactions contemplated by this Agreement
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shall be held at 10:00 a.m. Eastern Standard Time on September 30, 1997 at such
locations as are agreed upon by the parties. The date on which the Closing
shall occur is hereinafter referred to as the "Closing Date". At the Closing,
the parties shall deliver the funds, certificates and documents specified in
Section 8 and 9.
8. CONDITIONS TO CLOSING.
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8.1 The obligation of Dataware to consummate the transactions contemplated by
this Agreement is subject to the satisfaction (or waiver by Dataware) as
of the Closing of the following conditions:
(i) All corporate or other action necessary to authorize the execution,
delivery and performance of each of the Transaction Documents by IHSG
and the consummation of the transactions contemplated by each of the
Transaction Documents shall have been duly and validly taken by IHSG.
(ii) The representations and warranties of IHSG set forth in this
Agreement shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date.
(iii) Dataware shall have received (i) a certificate dated as of the
Closing Date, signed by the Secretary or Assistant Secretary of IHSG
and certifying as to (A) the Certificate of Incorporation and By-Laws
of IHSG and CMC and the incumbency of officers executing each of the
Transaction Documents to which IHSG is a party, and (B) resolutions
of the Board of Directors of IHSG authorizing the execution, delivery
and performance by IHSG of each of the Transaction Documents to which
IHSG is a party, (ii) a certificate,
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dated as of the Closing Date, signed by an authorized officer of
IHSG and certifying as to the fulfillment of the conditions set
forth in this Section and the compliance of IHSG with the covenants
to be performed by it before the Closing, and (iii) the legal
opinion of Xxxxxxx Xxxxx, counsel to IHSG, as to such matters as
Dataware reasonably may request.
(iv) Dataware shall have received copies of resignations from each of the
officers and directors of CMC whose resignations shall have been
requested by the Dataware prior to the Closing.
(v) There shall not have been a material adverse change in the assets,
business, condition (financial or otherwise) or results of
operations of CMC since the date hereof.
(vi) IHSG or its designee shall have made the offers of employment
referred to in Section 13.
(vii) IHSG shall have executed and delivered the Distribution Agreement to
Dataware.
(viii) All CMC Options shall have been terminated in accordance with their
terms and be without further force and effect (provided that such
termination may be subject to the issuance of the Dataware Options).
(ix) No action, suit or proceeding shall have been instituted before or
threatened by any court or governmental or regulatory body to
restrain, modify or prevent the consummation of the transactions
contemplated hereby, or that has or may have, in the reasonable
opinion of Dataware, (a) the effect of restraining, modifying or
preventing the consummation of such transactions or (b) a materially
adverse effect on the assets, properties, business, operations or
condition (financial or otherwise) of CMC.
(x) IHSG and each of its affiliates, as applicable, shall (1) have
capitalized all intercompany payables owed to it by CMC, (2) have
terminated all tax sharing agreements between CMC and its affiliates
such that no party shall have any further rights thereunder, and (3)
by a release in the form of Exhibit B hereto, have released and
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discharged CMC from any and all claims, demands and liabilities
whatsoever arising or accruing before the
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Closing under each and every agreement, arrangement, law, regulation
or state of facts except for such matters as are explicitly covered
in this Agreement.
(xi) IHSG shall have executed and delivered to Dataware a Sublease in the
form of Exhibit C hereto (the "Sublease").
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(xii) Dataware shall have received a schedule of the Closing Date CMC
Receivables, which schedule shall include an aging of such
receivables, and a balance sheet of CMC as of September 30, 1997
(the "Closing Date CMC Balance Sheet"). The Closing Date CMC Balance
Sheet will reflect, and CMC will have, as of the Closing,
shareholders' equity of at least $2.93 million, of which at least
$1.75 million will be cash. CMC will have, on the Closing Date, no
material liabilities of a nature required to be reflected on a
balance sheet prepared in accordance with US generally accepted
accounting principles ("GAAP"), that are not reflected or reserved
in the Closing Date CMC Balance Sheet, nor any other material
liabilities.
(xiii) Dataware shall have received such other instruments or documents as
may be reasonably required by Dataware as necessary or appropriate
to carry out the transactions contemplated hereby.
(xiv) The form and substance of all legal matters contemplated herein and
all papers delivered hereunder shall be acceptable in the reasonable
judgment of Dataware and its counsel.
8.2 The obligation of IHSG to consummate the transactions contemplated by this
Agreement is subject to the satisfaction (or waiver by IHSG) as of the
Closing of the following conditions:
(i) All corporate or other action necessary to authorize the execution,
delivery and performance of each of the Transaction Documents by
Dataware, Dataware UK and the Dataware Subsidiaries and the
consummation of the transactions contemplated by each of the
Transaction Documents shall have been duly and validly taken by
Dataware, Dataware UK and the Dataware Subsidiaries.
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(ii) The representations and warranties of Dataware set forth in this
Agreement shall be correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and
as of the Closing Date.
(iii) IHSG shall have received (i) a certificate dated as of the Closing
Date, signed by the Secretary or Assistant Secretary of Dataware or
Dataware UK and certifying as to (a) the Certificate of
Incorporation, By-laws and other governing documents of Dataware,
Dataware UK and the Dataware Subsidiaries, and incumbency of
officers executing each of the Transaction Documents to which
Dataware, Dataware UK and the Dataware Subsidiaries is party, and
(B) the resolutions of the Board of Directors of Dataware and
Dataware UK authorizing the execution, delivery and performance by
Dataware and Dataware UK, respectively, of each of the documents to
which it is a party, (ii) a certificate, dated as of the Closing
Date, signed by the President or Vice President of Dataware and
certifying as to the fulfillment of the conditions set forth in this
Section and the compliance of Dataware with the covenants to be
performed by it before the Closing, and (iii) the legal opinion of
Xxxxxx & Dodge LLP, counsel to Dataware, as to such matters as IHSG
reasonably may request.
(iv) IHSG shall have received copies of resignations from each of the
officers and directors of the Dataware Subsidiaries whose
resignations shall have been requested by IHSG prior to the Closing.
(v) There shall not have been a material adverse change in the assets,
business, condition (financial or otherwise) or results of
operations of the Dataware Services Business since the date hereof.
(vi) Dataware shall have executed and delivered the Distribution
Agreement to IHSG.
(vii) No action, suit or proceeding shall have been instituted before or
threatened by any court or governmental or regulatory body to
restrain, modify or prevent the consummation of the transactions
contemplated hereby, or that has or may have, in the reasonable
opinion of IHSG, (a) the effect of restraining, modifying or
preventing the consummation of such transactions or (b) a materially
adverse effect on the assets, properties, business, operations or
condition (financial or otherwise) of the Dataware Services
Business.
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(viii) Dataware and each of its affiliates, as applicable, shall (1)
have capitalized all intercompany payables owed to it by any of
the Dataware Subsidiaries and (2), by a release in the form of
Exhibit B hereto, have released and discharged the Dataware
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Subsidiaries from any and all claims, demands and liabilities
whatsoever arising or accruing before the Closing under each and
every agreement, arrangement, law, regulation or state of facts
except for such matters as are explicitly covered in this
Agreement.
(ix) IHSG shall have received such other instruments or documents as
may be reasonably required by IHSG as necessary or appropriate to
carry out the transactions contemplated hereby.
(x) The form and substance of all legal matters contemplated herein
and all papers delivered hereunder shall be acceptable in the
reasonable judgment of IHSG and its counsel.
9. DELIVERIES. At the Closing, the parties shall deliver or cause to be
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delivered the following:
9.1 IHSG shall deliver to Dataware: (i) certificates representing the CMC
Stock, duly endorsed in blank for transfer, (ii) the sum of $6,000,000 (as
adjusted pursuant to Section 10) by wire transfer of immediately available
funds, and (iii) all minute books, stock records, and other corporate
records of CMC.
9.2 (i) Dataware UK shall deliver to IHSG or its designated subsidiary at
the principal office of IHSG or such subsidiary, as the case may
be, such of the Acquired Dataware Assets as are to be delivered by
Dataware UK and are capable of being transferred upon delivery,
whereupon title shall pass on delivery.
(ii) Dataware and Dataware UK shall deliver to IHSG, or its designated
subsidiaries, such conveyances, bills of sale and other documents
necessary to effect the sale, assignment, transfer and delivery of
the other Acquired Dataware Assets from Dataware and Dataware UK to
IHSG and its designated subsidiaries.
9.3 Dataware shall deliver to IHSG (i) certificates or other instruments, as
applicable, representing the Dataware Subsidiaries' Stock, together with
all endorsements and other documents necessary to transfer good and valid
title to the Dataware Subsidiaries' Stock to IHSG or its designated
subsidiaries and (ii) all minute books, stock records, and other corporate
records of the Dataware Subsidiaries that are not located at the Dataware
Subsidiaries.
9.4 IHSG and each applicable subsidiary shall deliver to Dataware and Dataware
UK one or more Assumption Agreements with respect to the Assumed
Liabilities in the form of Exhibit D hereto.
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9.5 Dataware and IHSG shall execute and deliver the Distribution Agreement and
such other certificates, instruments and opinions as are contemplated by
Sections 8.1 and 8.2.
9.6 IHSG will, from time to time after the Closing Date, take such additional
actions and execute such further documents as Dataware may reasonably
request in order to more effectively sell, assign, transfer and deliver the
CMC Stock and/or to confirm IHSG's assumption of the Assumed Liabilities.
9.7 (i) Dataware and Dataware UK will, from time to time after the Closing
Date, take such additional actions and execute and deliver such
further documents as IHSG may reasonably request in order to more
effectively sell, assign, transfer and deliver the Acquired Dataware
Assets and the Dataware Subsidiaries' Stock and to place IHSG and/or
its designated subsidiaries in position to operate and control the
Dataware Services Business.
(ii) Notwithstanding anything herein to the contrary, this Agreement
shall not constitute an agreement (a) by Dataware or Dataware UK to
assign any contract listed on Schedule 1.2 or (b) by CMC to assign
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either lease referred to in Section 4.2, or any claim, right, or
benefit arising from any such contract or lease if such agreement to
assign, without the consent of a third party, would constitute a
breach thereof or in any way adversely affect the rights of IHSG
thereunder. The parties agree to use their best efforts to obtain
all such required consents promptly after the Closing. Until such
consent or an appropriate novation is obtained (at which time the
respective contract or lease shall become an Assumed Dataware
Contract Obligation), Dataware and IHSG shall cooperate with each
other in any arrangement designed to provide for IHSG the benefits
of, and permit IHSG
to assume all liabilities and obligations under, any such contract
or lease; provided, however, that such arrangements shall be for the
benefit and protection of Dataware and/or CMC in respect of
liabilities or obligations thereunder arising after the Closing
Date.
10. PURCHASE PRICE ADJUSTMENTS. The Six Million Dollar cash payment to be made
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by IHSG to Dataware at the Closing shall be adjusted at the Closing and
thereafter as follows:
10.1 At the Closing, such payment shall be (i) either (a) increased by the
amount by which the current assets of the Dataware Services Business
exceeded the liabilities, after deduction (from such liabilities) of all
amounts representing intercompany loans (any such excess is referred to
herein as "Working Capital") of the Dataware Services Business at July 31,
1997, or (b) decreased by the amount by which such current assets were less
than such liabilities, in each case as shown on the pro forma balance sheet
attached as Schedule 10 hereto and (ii) increased by the amount of all cash
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received since July 31, 1997 by IHSG or its affiliates with respect to the
receivables of CMC.
10.2 (i) As of the date 150 days after the Closing Date, the parties shall
determine (a) the difference between the Working Capital of the
Dataware Services Business on the Closing Date and the Working
Capital of the Dataware Services Business at July 31, 1997, (b) the
amount of the Closing Date Dataware Receivables that have not been
collected in full, despite reasonable efforts by IHSG or its
subsidiary, less One Million Dollars, but not less than zero, and
(c) the amount of the Closing Date CMC Receivables that have not
been collected in full, despite reasonable efforts by Dataware or
its subsidiary, less One Million Dollars, but not less than zero. In
the event of a disagreement, the determination shall be referred to
a firm of public accountants acceptable to both parties, whose
determination shall be conclusive.
(ii) If (b) exceeds (a+c), Dataware shall pay the amount of such excess
to IHSG, and, if (a+c) exceeds (b), IHSG shall pay the amount of
such excess to Dataware, in either case within thirty days of
receiving notice of the determination.
(iii) After the determination pursuant to clause (i), either party may
elect to receive an assignment from the other of all rights with
respect to any uncollected receivable
originating with the assignee as to which the assignor has ceased
collection efforts and shall have no obligation thereafter to
account to the assignor for any proceeds thereof.
11. REPRESENTATIONS AND WARRANTIES OF IHSG. IHSG represents and warrants to
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Dataware as follows:
11.1 (i) IHSG is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. IHSG has all
requisite corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. All corporate acts and other
proceedings required to be taken by IHSG to authorize the execution,
delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and properly
taken. This Agreement has been duly executed and delivered by IHSG
and constitutes a legal, valid and binding obligation of IHSG,
enforceable against IHSG in accordance with its terms.
(ii) Except as set forth on Schedule 11.1, the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby will not (a) violate, conflict with
or result in the breach of any of the terms or conditions of, or
require any party's consent or approval under any instrument,
contract, or other agreement to which IHSG or CMC is a party or by
which any of CMC's assets or properties is bound; (b) result in
modification of the effect of, or otherwise give any other
contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any
instrument, contract or other agreement to which CMC is a party or
by which it or any of its assets or properties is bound; (c) violate
any law, ordinance or regulation or any order, judgment, injunction,
decree, permit or other requirement of any court, arbitrator or
governmental or regulatory body applicable to IHSG or CMC or by
which any of CMC's assets, properties or securities is bound; (d)
require any filing with, notice to, or permit, consent or approval
of, any other governmental or regulatory body; or (e) result in the
creation of any lien or other encumbrance on the assets, properties
or securities of CMC; excluding from the foregoing clauses any
exceptions thereto that, in the aggregate, would not have a material
adverse effect on CMC's business or on the ability of IHSG or CMC to
consummate the transactions contemplated hereby.
11.2 IHSG has good and valid title to the CMC Stock, free and clear of any
liens, claims or encumbrances of any kind. Upon delivery to Dataware of
certificates representing the CMC Stock, duly endorsed by IHSG for transfer
to Dataware, good and valid title to the CMC Stock will pass to Dataware,
free and clear of any liens, claims and encumbrances of any kind, other
than those arising from acts of Dataware or its affiliates.
11.3 CMC is a corporation duly organized, validly existing and in good standing
under the laws of the State of Oregon.
11.4 The authorized capital stock of CMC consists of 20,000,000 shares of Common
Stock, par value $.001 per share, of which 8,193,362 shares, constituting
the CMC Stock, are duly authorized and validly issued and outstanding,
fully paid and nonassessable. IHSG is the record and beneficial owner of
the CMC Stock. Except for the CMC Stock, there are no shares of capital
stock or other equity securities of CMC outstanding. The CMC Stock has not
been issued in violation of, and is not subject to, any purchase option,
call, right of first refusal, preemptive, subscription or similar rights
under any provision of applicable law, the Certificate of Incorporation or
By-laws of CMC, any contract, agreement or instrument to which CMC is
subject, bound or a party or otherwise. The CMC Stock is not subject to
any purchase option, call, right of first refusal, preemptive or similar
rights under any provision of applicable law, the Certificate of
Incorporation or By-laws of CMC, or any contract, agreement or instrument
to which CMC is subject or bound. Except for the CMC Options, there are no
commitments pursuant to which CMC is or may become obligated to issue any
shares of capital stock or other securities.
11.5 The Closing Date CMC Balance Sheet will comply in all respects with the
requirements of Section 8.1(xii), and will present fairly the financial
position of CMC as of the Closing Date. CMC will have good and valid title
to the assets set forth or reflected on the Closing Date CMC Balance Sheet,
free and clear of any liens, changes, security interests or other
encumbrances.
11.6 (i) Except as set forth on Schedule 11.6, the accounts receivable on the
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Closing Date CMC Balance Sheet will have arisen from bona fide
transactions in the ordinary course of business and will, in all
material respects, accurately reflect, in accordance with GAAP, the
accounts receivable of CMC as of the date thereof.
(ii) Since June 30, 1997, there has been no change in accounting practices
with respect to CMC. The books and records of CMC fairly, accurately,
and completely present the financial position and all transactions of
CMC in a form sufficient to permit an audit of the historical
financial statements of CMC to comply with Dataware's filing
obligations under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (collectively, the "Securities Acts").
11.7 Schedule 11.7 sets forth the revenue of CMC for the twelve month period
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ending June 30, 1997 and the customers from which such revenue was
derived.
11.8 Attached as Schedule 11.8(a) is a list of all employees of CMC ("CMC
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Employees") together with their base salary, bonus, commissions, and other
incentive compensation for each such employee. Attached as Schedule
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11.8(b) is a list of all employment agreements, compensation plans, bonus
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plans, incentive compensation plans, profit sharing plans, stock purchase
plans, life insurance, medical insurance, pension plans, welfare benefit
plans and other plans and arrangements providing benefits for CMC
Employees (collectively, "CMC Plans"). CMC is in compliance in all
material respects with the provisions of the CMC Plans. There is no union
representing the interests of any of the CMC Employees, and there are no
such CMC Employees seeking or attempting to organize union representation.
11.9 Except as set forth on Schedule 11.9, there are no pending suits, actions,
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administrative proceedings, hearings, arbitrations or other proceedings
pending or, to the best knowledge of IHSG and CMC, threatened (i) to which
IHSG is a party and that individually or in the aggregate would have a
material adverse effect upon the assets or business of CMC or the
transactions contemplated hereby or (ii) to which CMC is a party or by
which CMC or any of its assets are bound.
11.10 CMC has filed all Tax reports and returns required to be filed by it and
has paid or will timely pay all Taxes and other charges shown as due on
such reports and returns. CMC is not delinquent in the payment of any
material Tax assessment or other governmental charge (including without
limitation applicable withholding taxes). Any provision for Taxes
reflected in the Closing Date CMC Balance Sheet will be adequate for
payment of any and all Tax liabilities for periods ending on or before the
Closing Date, and there are no Tax liens on any assets of CMC except liens
for current taxes not yet due. No audit of any Tax return filed by
CMC is in progress and CMC has not been notified by any Tax authority that
any such audit is contemplated or pending. Neither IHSG nor CMC knows of
any Tax deficiency or claim for additional Taxes asserted or threatened to
be asserted against CMC by any Taxing authority, nor of any grounds for
any such assessment.
11.11 CMC is the owner of all right, title and interest in and to, or is
licensed or otherwise possesses the right to use, all patents, patent
applications, copyrights, trademarks, service marks, trade secrets, know-
how, and all other technology and intangible property (collectively,
"Proprietary Rights") material to its business as presently conducted, and
such Proprietary Rights and CMC's rights therein will remain in full force
and effect following the consummation of the transactions contemplated
hereby. None of the present activities or, to the best knowledge of IHSG
and CMC, the contemplated activities under planning or development, of CMC
infringe on any Proprietary Rights of others, and neither IHSG nor CMC has
received any claim or notice of any claim to that effect.
11.12 Schedule 11.12 contains a list of all branded content agreements to which
--------------
CMC is or has been a party and for which CMC retains any obligation.
Except to the extent disclosed on Schedule 11.12, neither CMC nor any
--------------
other party is in default under any such agreement.
12. REPRESENTATIONS AND WARRANTIES OF DATAWARE. Dataware represents and
------------------------------------------
warrants to IHSG as follows:
12.1 (i) Dataware is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Dataware UK is
a corporation duly organized and validly existing under the laws of
the United Kingdom. Each Dataware Subsidiary is a corporation duly
organized and validly existing under the laws of its jurisdiction of
organization set forth opposite its name in Schedule 12.1. Each of
-------------
Dataware and Dataware UK has all requisite corporate power and
authority, as applicable, to enter into this Agreement, to perform
its obligations hereunder and to consummate the transactions
contemplated hereby, as applicable. All corporate acts and other
proceedings required to be taken by Dataware and Dataware UK to
authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, as
applicable, have been duly and properly taken. All corporate and
other proceedings, if any, required to be taken by each of the
Dataware Subsidiaries to
authorize the execution, delivery and performance of the Transaction
Documents to which it is a party and the consummation of the
transactions contemplated thereby have been, or will prior to the
Closing Date be, duly and properly taken. This Agreement has been
duly executed and delivered by Dataware and constitutes a legal,
valid and binding obligation of Dataware, enforceable against
Dataware in accordance with its terms. Each of the Transaction
Documents executed or to be executed by any of Dataware, Dataware UK
or the Dataware Subsidiaries has been or, prior to the Closing Date,
will be duly executed by Dataware, Dataware UK and the Dataware
Subsidiaries, as applicable, and will constitute a legal, valid and
binding obligation of Dataware, Dataware UK or the respective
Dataware Subsidiary, as applicable, enforceable against such entity
in accordance with its terms.
(ii) Except as set forth on Schedule 12.1, the execution, delivery and
-------------
performance of this Agreement and the consummation of the
transactions contemplated hereby will not (a) violate, conflict with
or result in the breach of any of the terms or conditions of, or
require any party's consent or approval under, any instrument,
contract, or other agreement to which Dataware, Dataware UK, or any
of the Dataware Subsidiaries is a party or by which any of the
Acquired Dataware Assets or any of the assets or properties of any of
the Dataware Subsidiaries is bound; (b) result in modification of the
effect of, or otherwise give any other contracting party the right to
terminate, or constitute (or with notice or lapse of time or both
constitute) a default under, any instrument, contract or other
agreement constituting part of the Assumed Dataware Contract
Obligations or to which any of the Dataware Subsidiaries is a party
or by which any of the assets or properties of any of the Dataware
Subsidiaries is bound; (c) violate any law, ordinance or regulation
or any order, judgment, injunction, decree, permit or other
requirement of any court, arbitrator or governmental or regulatory
body applicable to Dataware, Dataware UK, or any of the Dataware
Subsidiaries or by which any of the Acquired Dataware Assets or any
of the assets, properties or securities of the Dataware Subsidiaries
is bound; (d) require any filing with, notice to, or permit, consent
or approval of, any other governmental or regulatory body; or (e)
result in the creation of any lien or other encumbrance on the
Acquired Dataware Assets or on the assets, properties or securities
of the Dataware Subsidiaries; excluding from the foregoing clauses
any exceptions to the foregoing that, in the aggregate, would not
have a material
adverse effect on the Dataware Services Business or on the ability of
Dataware, Dataware UK, or the Dataware Subsidiaries to consummate the
transactions contemplated hereby.
12.2 The Acquired Dataware Assets and the assets owned by the Dataware
Subsidiaries, together with the software and intellectual property to be
licensed to IHSG pursuant to the Distribution Agreement, constitute all
assets relating to or necessary for the conduct and operation of the
Dataware Services Business as that business has been conducted over the
prior twelve months, other than the DTIS and the Third-Party Software.
Dataware and Dataware UK each is the owner of all right, title and interest
in and to or is licensed or otherwise possesses the right to use all
Proprietary Rights material to the Dataware Services Business as presently
conducted (all of which Proprietary Rights are included in the Acquired
Dataware Assets, other than the computer software and intellectual property
to be licensed to IHSG pursuant to the Distribution Agreement and other
than any Proprietary Rights related to the DTIS and Third-Party Software),
and such Proprietary Rights and the rights of IHSG or its subsidiaries
therein as transferee will remain in full force and effect following the
consummation of the transactions contemplated hereby. Except as set forth
on Schedule 12.2, Dataware and Dataware UK, respectively, have good and
-------------
valid title to all of the Acquired Dataware Assets, free and clear of any
liens, charges, security interests or other encumbrances, and the sale and
delivery of the Acquired Dataware Assets to IHSG or its designated
subsidiaries pursuant hereto shall vest in IHSG or its designated
subsidiaries good and valid title to the Acquired Dataware Assets, free and
clear of any liens, charges, security interests or other encumbrances.
None of the present activities or, to the best knowledge of Dataware, the
contemplated activities under planning or development of Dataware or
Dataware UK with respect to the Dataware Services Business or of any
Dataware Subsidiary infringe on any Proprietary Rights of others, and none
of such parties has received any claim or notice of any claim to that
effect.
12.3 Dataware has good and valid title to the Dataware Subsidiaries' Stock, free
and clear of any liens, claims and encumbrances of any kind.
12.4 The authorized capital stock and issued and outstanding capital stock,
constituting the Dataware Subsidiaries' Stock, of each of the Dataware
Subsidiaries is set forth on Schedule 12.4. The outstanding shares of
-------------
Dataware Subsidiaries' Stock are duly authorized and validly issued and
outstanding, fully paid and nonassessable. Dataware is the record and
beneficial owner of the Dataware Subsidiaries' Stock. Except for the
Dataware Subsidiaries' Stock, there are no shares
of capital stock or other equity securities of the Dataware Subsidiaries
outstanding. The Dataware Subsidiaries' Stock has not been issued in
violation of, and is not subject to any purchase option, call, right of
first refusal, preemptive, subscription or similar rights under any
provision of applicable law, the Certificate of Incorporation or By-laws or
other governing documents of the Dataware Subsidiaries, any contract,
agreement or instrument to which any of the Dataware Subsidiaries is
subject, bound or a party or otherwise. The Dataware Subsidiaries' Stock is
not subject to, any purchase option, call, right of first refusal,
preemptive or similar rights under any provision of applicable law, the
Certificate of Incorporation or By-laws or other governing documents of the
Dataware Subsidiaries, or any contract, agreement or instrument to which
any of the Dataware Subsidiaries is subject or bound. There are no
commitments pursuant to which any of the Dataware Subsidiaries is or may
become obligated to issue any shares of capital stock or other securities.
12.5 The pro forma balance sheets of the Dataware Services Business as of July
31, 1997 attached as Schedule 10, including the balance sheets of the
-----------
Dataware Subsidiaries contained therein, present fairly the financial
position of the Dataware Services Business as of the date thereof. Except
as set forth on Schedule 12.5, the Dataware Subsidiaries have good and
-------------
valid title to the assets set forth or reflected on the balance sheets of
the Dataware Subsidiaries included in Schedule 10, in each case free and
-----------
clear of any liens, charges, security interests or encumbrances.
12.6 (i) Except as set forth on Schedule 12.6, as of July 31, 1997, Dataware
-------------
and Dataware UK had no material liabilities with respect to the
Dataware Services Business and the Dataware Subsidiaries had no
material liabilities, of a nature required to be reflected on a
balance sheet prepared in accordance with GAAP, which are not
reflected or reserved in the balance sheet set forth as Schedule 10.
-----------
(ii) Except as set forth on Schedule 12.6, as of the Closing Date,
-------------
Dataware and Dataware UK (with respect to the Dataware Services
Business) and the Dataware Subsidiaries will have no material
liabilities other than (i) those set forth or reflected on Schedule 10
-----------
and (ii) any that will have been incurred since July 31, 1997, in the
ordinary course of business consistent with past practice.
(iii) Since June 30, 1997, there has been no change in accounting practices
with respect to the Dataware Services Business. The books and records
of the Dataware Service Business
fairly, accurately, and completely present the financial position and
all transactions of the Dataware Services Business.
12.7 The accounts receivable on the balance sheets attached as Schedule 10
-----------
arose from bona fide transactions in the ordinary course of business and,
in all material respects, accurately reflect, in accordance with GAAP, the
accounts receivable of Dataware and Dataware UK with respect to the
Dataware Services Business and of the Dataware Subsidiaries as of the date
hereof.
12.8 Schedule 12.8 sets forth the amounts invoiced with respect to the Dataware
-------------
Services Business during the twelve month period ending June 30, 1997 and
the customers to whom such amounts were invoiced.
12.9 Attached as Schedule 12.9(a) is a list of employees of the Dataware
----------------
Services Business ("DSB Employees") together with their base salary,
bonus, commissions and other incentive compensation for each such
employee. Attached as Schedule 12.9(b) is a list of all employment
----------------
agreements, compensation plans, bonus plans, incentive compensation plans,
profit sharing plans, stock purchase plans, life insurance, medical
insurance pension plans, welfare benefit plans and other plans and
arrangements providing benefits for DSB Employees (collectively, the "DSB
Plans"). Dataware, Dataware UK, and the Dataware Subsidiaries, as
applicable, are in compliance in all material respects with the provisions
of the DSB Plans. Except as described on Schedule 12.9(c), there is no
----------------
union representing the interests of any of the DSB Employees, and there
are no such DSB Employees seeking or attempting to organize union
representation.
12.10 Except as set forth on Schedule 12.10, there are no pending suits,
--------------
actions, administrative proceedings, hearings, arbitrations or other
proceedings pending or, to the best knowledge of Dataware, threatened (i)
to which Dataware or Dataware UK is a party arising out of the Dataware
Services Business or (ii) to which any of the Dataware Subsidiaries is a
party or by which any of the Acquired Dataware Assets are bound.
12.11 Each of the Dataware Subsidiaries has filed all Tax reports and returns
required to be filed by it and has paid or will timely pay all Taxes and
other charges shown as due on such reports and returns. None of the
Dataware Subsidiaries is delinquent in the payment of any material Tax
assessment or other governmental charge (including without limitation
applicable withholding
taxes). Any provision for Taxes reflected in the balance sheet included as
Schedule 10 is adequate for payment of any and all Tax liabilities of the
-----------
respective Dataware Subsidiary for periods ending on or before the Closing
Date, and there are no Tax liens on any of the Acquired Dataware Assets
except liens for current taxes not yet due. No audit of any Tax return
filed by any Dataware Subsidiary is in progress and no Dataware Subsidiary
has been notified by any Tax authority that any such audit is contemplated
or pending. Dataware Subsidiary knows of no Tax deficiency or claim for
additional Taxes asserted or threatened to be asserted against any
Dataware Subsidiary by any Taxing authority, nor of any grounds for any
such assessment.
12.12 Except to the extent disclosed on Schedule 12.12, none of Dataware,
--------------
Dataware UK, or any of the Dataware Subsidiaries is in default under any
of the Assumed Dataware Contract Obligations.
13. EMPLOYEES.
---------
13.1 At or before the Closing, IHSG or its designated subsidiaries will, after
such consultation as may be required by any applicable law or regulation,
offer or provide employment or a consulting position, as applicable, to
the employees and consultants of Dataware and Dataware UK listed on
Schedule 12.9(a) on substantially the same terms, including salary, bonus,
-------- -------
commissions, incentive compensation (but not stock options), and accrued
vacation and sick leave and with substantially the same medical and other
benefits as in effect immediately prior to the date of this Agreement as
set forth on Schedules 12.9(a) and 12.9(b). If any of the employees of
----------------- -------
Dataware or Dataware UK listed on Schedule 12.9(a) do not accept such
----------------
offer or transfer of employment with IHSG or its designated subsidiary and
any of Dataware, Dataware UK, IHSG, or IHSG's designated subsidiary
terminates or is deemed to have terminated such employee's employment in
connection with or within sixty days after the Closing, IHSG will reimburse
Dataware or Dataware UK, as applicable, for any amounts paid to such
terminated employees as severance or other termination liability pursuant
to applicable law or in accordance with the severance policy with respect
to Dataware Services Business included on Schedule 12.9(b).
----------------
13.2 IHSG agrees that, until November 30, 1997, it (i) will continue to pay the
compensation, including benefits, of each of the persons listed on Schedule
--------
13.2(a), on terms and conditions at least as favorable to such employees as
-------
in effect on the date of this Agreement, (ii) will be responsible for and
pay all Taxes and will comply with all other governmental regulation
related to their employment, and (iii) will permit such employees to work
full-time for and under the
supervision and control of CMC. CMC may, but shall have no obligation to
offer employment to any such employee.
14. ADDITIONAL AGREEMENTS.
---------------------
14.1 In order to induce each other to enter into this Agreement, the parties
agree as follows:
(i) For a period of three years from the Closing Date, Dataware will not,
directly or indirectly through any entity over which it has control,
engage in either (a) the United States or the United Kingdom
("Territory 1") or (b) Germany, Sweden, Canada, Italy, or Xxxxxxxxx
("Xxxxxxxxx 0") any business directly competitive with the Dataware
Services Business (as such business has been conducted through the
Closing Date); provided that this shall not restrict Dataware from (x)
providing multimedia services of the types heretofore provided by CMC
or Dataware's Ledge Multimedia Division, which shall include but not
be limited to the development, maintenance and hosting of sites on the
World Wide Web, and any natural extension of such business permitted
by developing technology ("Multimedia Services") or (y) providing any
services to any customer in either Territory if IHSG has ceased to
operate the Dataware Services Business in such Territory.
(ii) For a period of three years from the Closing Date, Dataware will not,
and will not permit any entity over which it has control to, sell,
license or otherwise transfer any of the software that is licensed by
Dataware to IHSG pursuant to the Distribution Agreement to any Current
DSB Customer (as such term is defined below) for use with a specific
software application that was developed by or on behalf of such
customer prior to the Closing Date. For the purposes of this section,
"Current DSB Customer" shall mean any third party which, as of the
Closing Date, is a party to an agreement for services to be provided
by the Dataware Services Business.
(iii) For a period of three years from the Closing Date, Dataware will not,
and will not permit any entity over which it has control to, (i)
intentionally or knowingly interfere with a relationship of IHSG or
its subsidiaries with any Current DSB Customer, or (ii) endeavor to
entice away from IHSG or its subsidiaries, in connection with the
Dataware Services
Business as operated by IHSG or its subsidiaries after the Closing
Date, any Current DSB Customer.
(iv) For a period of three years from the Closing Date, Dataware will, and
will cause any entity over which it has control to, use reasonable
efforts to recommend that customers for Dataware software that are
located in the Territory and use or require services of the type
provided by the Dataware Services Business, obtain such services from
IHSG or its subsidiaries, subject to IHSG and its subsidiaries
maintaining sufficient facilities, personnel and resources to support
such customers in a manner consistent with the support provided by
Dataware and its subsidiaries prior to the Closing Date. Such efforts
may include providing IHSG or its subsidiaries with names of such
customers, subject to any confidentiality or other restrictions by
which Dataware or such entity may be bound, and recommending IHSG or
its subsidiaries to such customers where appropriate.
(v) For a period of three years from the Closing Date, IHSG will not,
directly or indirectly through any entity over which it has control,
provide Multimedia Services for entities that are customers of CMC or
Dataware's Ledge Multimedia Division for the specific multimedia
application that was developed for such customers as of the Closing
Date.
(vi) For a period of three years from the Closing Date, IHSG will, and will
cause any entity over which it has control to, use reasonable efforts
to recommend that customers of the Dataware Services Business as
operated by IHSG or its subsidiaries after the Closing Date that use
or require Multimedia Services or other services of the type currently
or hereafter provided by CMC and are not at the time provided by IHSG
or any affiliate, obtain such services from CMC or its affiliates,
subject to CMC and its affiliates maintaining sufficient facilities,
personnel and resources to support such customers in a manner
consistent with the support provided by CMC prior to the Closing Date.
Such efforts may include providing CMC or its affiliates with names of
such customers, subject to any confidentiality or other restrictions
by which IHSG or such entity may be bound, and recommending CMC or its
affiliates to such customers where appropriate. In addition, before
IHSG engages any unaffiliated third party to provide Multimedia
Services, it will offer CMC or any of its affiliates the opportunity
to bid on such work on terms at least as favorable as those offered to
any other person.
(vii) For a period of three years from the Closing Date, neither party
and its subsidiaries and affiliates, shall, without the prior
written consent of the other party, solicit, recruit or employ any
person who is presently or during this non-solicitation period
becomes, an employee or independent contractor of the other party,
other than any current employee of Dataware or Dataware UK who
elects not to accept IHSG's offer of employment following the
Closing.
(viii) It is understood and agreed that the provisions of subsections
(i) through (iv) do not prevent Dataware from licensing or
otherwise authorizing any VAR or other reseller over which Dataware
does not otherwise have control to engage in any activity referred
to in such subsections.
14.2 All payments made by any third party after the Closing Date (a) in the name
of or to Dataware or Dataware UK to which IHSG or its affiliates is
entitled or (b) in the name of or to IHS to which CMC is entitled, in each
case in accordance with this Agreement and the transactions contemplated
hereby, shall be held in trust for the benefit of IHSG or CMC, as the case
may be, and, promptly upon receipt of any such payment by Dataware,
Dataware UK or IHSG, respectively, Dataware and Dataware UK shall pay over
to IHSG, or IHSG shall pay over to Dataware, as the case may be, the amount
of such payment.
14.3 Except as otherwise provided, each party shall bear its respective expenses
incurred in connection with the negotiation, preparation, or execution and
performance of this Agreement and the transactions contemplated hereby,
including all fees and expenses of counsel and accountants. Dataware (but
not Dataware UK) shall bear any sales, transfer, recording, registration
and other similar taxes and fees in connection with the transfer of the
Acquired Dataware Assets (other than any UK stamp duty payable with respect
to the Transaction Documents) and the Dataware Subsidiaries' Stock. IHSG
shall bear any sales, transfer, registration and other similar taxes and
fees in connection with the transfer of the CMC Stock.
14.4 The parties will consult and agree with each other before issuing any press
release or otherwise making 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 prior to such
consultation and agreement, except to the extent that either party is
advised by counsel that public disclosure of the transactions contemplated
hereby is mandated by applicable law or
regulation, in which case the party that intends to make disclosure shall
use reasonable efforts to consult with the other before disclosure. The
foregoing shall not require Dataware to consult with IHSG before making any
filings that it is advised by counsel are required under the Securities
Acts.
14.5 IHSG shall pay all amounts described in (S)4.2(ii) within thirty days after
invoice by CMC or Dataware.
14.6 (i) In order to permit Dataware to comply with its obligations under the
Securities Acts, IHSG shall, and shall cause each of its subsidiaries
to, permit Dataware's accountants access, upon reasonable notice
during ordinary business hours, to the books and records of the
Dataware Services Business in order to perform such review as is
necessary to enable Dataware to comply with its financial reporting
obligations under the Securities Acts. IHSG shall cause its firm of
certified public accountants to provide such assistance as Dataware or
its accountants may reasonably request, and Dataware shall reimburse
IHSG for the reasonable costs of such assistance.
(ii) Dataware will deliver the pro forma balance sheet of the Dataware
Services Business as of the Closing Date, in the same format as the
balance sheet attached as Schedule 10 and showing the Closing Date
-----------
Dataware Receivables and the Assumed Dataware Payables, as soon after
the Closing Date as reasonably practical.
14.7 IHSG agrees to change the names of the Dataware Subsidiaries as soon as
reasonably possible after the Closing Date to remove the word "Dataware"
therefrom. Following the Closing Date, neither IHSG nor any of its
subsidiaries shall use the name "Dataware" or any trademark, service xxxx,
or trade name of Dataware in such a manner as to suggest that its services
are being provided by Dataware or any of its subsidiaries.
14.8 Dataware and IHSG shall use their respective best efforts to effect an
orderly transition of the Dataware Services Business and CMC's business.
This shall include, without limitation:
(i) Dataware shall provide a perpetual, paid-up license to IHSG to use,
for the internal use of IHSG and its subsidiaries only, those portions
of DTIS that were used in the Dataware Services Business before the
Closing, together with the data residing in DTIS relating to
accounts of customers of the Dataware Services Business from 1996
through the Closing Date; subject to (a) IHSG's provision at its own
expense of all necessary off-the-shelf software and equipment and
(b) IHSG's payment to Dataware at Dataware's normal services rates
for assisting in the conversion of the system; provided that
Dataware shall not be obligated to provide such support for more
than 90 days after the Closing Date unless mutually agreed. DTIS
will be provided to IHSG without warranty or maintenance obligation
of any kind.
(ii) IHSG shall permit those Dataware employees located at Dataware's
Boulder, Colorado facility who do not transfer employment to IHSG to
continue to work at such facility for up to 90 days after Closing,
including without limitation, using the equipment previously used by
them in the normal course.
(iii) To the extent that Dataware has the right to assign or sublicense
any of its licenses of Third-Party Software used by any of the
employees listed on Schedule 12.9(a) (other than pursuant to an
----------------
enterprise-wide license also covering employees or locations not
engaged in the Dataware Services Business, Dataware will cooperate
with IHSG at IHSG's expense in assigning or otherwise providing the
right to use any such Software to IHSG.
(iv) To the extent that any of the activities of either party during the
90-day transition period following the Closing Date involves the
provision by one of the parties to the other of software development
or support, training, or other professional services for which no
cost structure is otherwise provided, the party receiving such
services shall pay the party providing them at the rate of 2 times
the base salary of the employee(s) performing the services, prorated
for the time spent.
15. TAXES.
-----
15.1 IHSG shall indemnify and hold Dataware and its affiliates harmless from and
against, and pay and reimburse Dataware and its affiliates for, any and all
Taxes of CMC (other than Taxes of CMC reserved against in the Closing Date
CMC Balance Sheet) for any taxable year or period ending on or before the
Closing Date, and IHSG shall be entitled to all refunds of such taxes.
15.2 Dataware shall indemnify and hold IHSG and its affiliates harmless from and
against, and pay and reimburse IHSG and its affiliates, any and all Taxes
of Dataware, Dataware UK, and the Dataware Subsidiaries (other than taxes
of the Dataware Subsidiaries reserved against on the balance sheets
attached as Schedule 10) for any taxable year or period ending on or before
-----------
the Closing Date, and Dataware shall be entitled to all refunds of such
taxes.
16. LIMITATION OF LIABILITY
-----------------------
16.1 The indemnification provisions of Section 17 shall be the parties' sole
remedy for any misrepresentation or breach of a warranty contained herein.
17. INDEMNIFICATION.
---------------
17.1 The representations and warranties of IHSG contained in Section 11 herein
and of Dataware contained in Section 12 herein shall survive the closing of
the transactions contemplated by this Agreement and shall remain in full
force and effect for a period of one year from the Closing Date.
17.2 Subject to the provisions of this Section 17, IHSG shall indemnify, defend,
and hold Dataware and its affiliates harmless from and against any and all
Losses resulting from or arising out of (i) any breach of any
representation, warranty, or covenant of IHSG contained in this Agreement,
including IHSG's covenant to assume and pay or perform the Assumed
Liabilities, or (ii) the branded content agreements, except to the extent
any such Loss under this clause (ii) either (a) is reserved against on the
Closing Date CMC Balance Sheet or (b) arises from the nonperformance after
the Closing Date of CMC's obligations under any such agreement (other than
any obligation to pay minimum royalties), which obligations arise and are
to be performed after the Closing Date.
17.3 Subject to the provisions of this Section 17, Dataware shall indemnify,
defend, and hold IHSG and its affiliates harmless from and against any and
all Losses resulting from or arising out of any breach of any
representation, warranty, or covenant of Dataware contained in this
Agreement, including Dataware's covenant to retain, perform, and discharge
all obligations of Dataware and Dataware UK arising out of or relating to
the Dataware Services Business other than those included in the Assumed
Liabilities.
17.4 No indemnification shall be required from either party in respect of any
misrepresentation or breach of warranty unless the aggregate of all amounts
for which such indemnity would otherwise be due exceeds $50,000, in which
case the indemnifying party shall be responsible only for such
indemnifiable amount in excess of $50,000, and no indemnification shall be
required from either party in respect of any misrepresentation or breach of
warranty as to any amounts in excess of $2,000,000. Any indemnifiable
liability with respect to breach of a representation or warranty shall be
limited to the amount of actual damages sustained by the indemnified party
by reason of such breach or nonperformance net of any insurance or tax
benefits realized by the indemnified party.
17.5 Neither Dataware nor IHSG shall be entitled to make any claim for
indemnification under this Section 17 with respect to the breach of any
representation and warranty contained herein after one year from the
Closing Date; provided, however, that, if prior to the first anniversary of
the Closing Date, the indemnifying party shall have received written
notification of a claim for indemnity hereunder specifying in reasonable
detail the basis of any such claim, and such claim shall not have been
finally resolved or disposed of at such date, such claim shall continue as
a basis for indemnity until it is finally resolved or disposed of.
18. PROCEDURE FOR INDEMNIFICATION
-----------------------------
18.1 Any notice of a claim for indemnification under Section 17 (which shall be
given as promptly as possible) shall state with reasonable specificity the
provision(s) of this Agreement with respect to which the claim is made, the
facts giving rise to the claim, and if ascertainable, the amount of the
liability asserted by reason of the claim. Promptly after receipt by an
indemnified party under Section 17 of notice of the commencement of any
action, the indemnified party shall, if a claim in respect of the action is
to be made against an indemnifying party under Section 17, give notice to
the indemnifying party of the commencement of the action, but the failure
so to notify the indemnifying party shall not relieve it of any liability
that it may have to any indemnified party, except to the extent the
indemnifying party demonstrates that the defense of the action is
prejudiced by the delay (it being understood that any notice of a claim for
misrepresentation or breach of warranty must be given within the applicable
time period set forth in Section 17.1). In case any such action shall be
brought against an indemnified party and it shall give notice to the
indemnifying party of the commencement of the action, the indemnifying
party shall be entitled to participate in the action, and to the extent
that it shall wish, to assume
the defense of the action with counsel reasonably satisfactory to the
indemnified party. If the indemnifying party notifies the indemnified party
of its election so to assume the defense of the action, the indemnifying
party shall control the defense of the action and shall not be liable to
the indemnified party under Section 17, for any fees of other counsel or
any other expenses, in each case subsequently incurred by the indemnified
party in connection with the defense of the action (it being understood,
however, that the indemnified party shall be entitled to participate in the
action at its own cost and expense) unless and to the extent that
representation of the indemnified party by the same counsel would be
inappropriate due to actual or potential differing interests between them,
in which case the indemnifying party shall not have the right to direct the
defense of such action on behalf of the indemnified party. If notice is
given to an indemnifying party of the commencement of any action and it
does not, within ten days after the indemnified party's notice is given,
give notice to the indemnified party of its election to assume the defense
of the action, the indemnified party may assume the defense of the action
and may compromise or settle such action and the indemnifying party shall
be bound by any determination made in such action or any reasonable
compromise or settlement of the action effected in good faith by the
indemnified party. The parties shall cooperate with each other in defense
of any claims described in this Section 18.
19. CONDUCT PRIOR TO CLOSING.
------------------------
19.1 During the period from the date of this Agreement and continuing until the
Closing, IHSG agrees (except as expressly contemplated by this Agreement or
to the extent that Dataware shall otherwise consent in writing) to cause
CMC to carry on its business in the ordinary course and consistent with
prior practice.
19.2 During the period from the date of this Agreement and continuing until the
Closing, Dataware agrees (except as expressly contemplated by this
Agreement or to the extent that IHSG shall otherwise consent in writing) to
carry on the Dataware Services Business and to cause Dataware UK and the
Dataware Subsidiaries to carry on the Dataware Services Business in the
ordinary course and consistent with past practice.
20. TERMINATION.
-----------
20.1 Anything contained herein to the contrary notwithstanding, this Agreement
may be terminated and the transactions contemplated hereby abandoned at any
time prior to the Closing Date:
(i) by mutual written consent of Dataware and IHSG;
(ii) by Dataware if any of the conditions set forth in Section 8.1 shall
have become incapable of fulfillment, and shall not have been waived
by Dataware;
(iii) by IHSG if any of the conditions set forth in Section 8.2 shall have
become incapable of fulfillment, and shall not have been waived by
IHSG; or
(iv) by either Dataware or IHSG, if the Closing does not occur on or
prior to October 15, 1997;
provided, however, that the party seeking termination pursuant to clause
-------- -------
(ii), (iii) or (iv) is not in breach in any material respect of any of its
representations, warranties, covenants or agreements contained in this
Agreement.
20.2 In the event of termination by Dataware or IHSG pursuant to this Section
20, written notice thereof shall forthwith be given to the other party and
the transactions contemplated by this Agreement shall be terminated,
without further action by either party. If this Agreement is terminated
and the transactions contemplated hereby are abandoned as described in this
Section 20, this Agreement shall become void and of no further force or
effect. Nothing in this Section 20 shall be deemed to release a party from
any liability for any breach by such party of the terms and provisions of
this Agreement.
21. NOTICES. Any notice, request, instruction or other document to be given
-------
hereunder by any party hereto shall be in writing and shall be effective three
days after being sent by registered or certified mail addressed as set forth
below:
If to IHSG:
Information Handling Services Group Inc.
00 Xxxxxxxxx Xxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: President
with a copy to:
TBG Services Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
If to Dataware and the Dataware Subsidiaries:
Dataware Technologies Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
with a copy to:
Xxxxxx & Dodge, LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
or such other address as IHSG or Dataware hereafter shall designate to the other
in conformity with the foregoing.
22. MISCELLANEOUS.
-------------
22.1 This Agreement, and the Exhibits and Schedules hereto (all of which are
an integral part of this Agreement), constitute the entire agreement and
understanding of the parties hereto with respect to the subject matter
hereof and all prior negotiations and understanding relating to the subject
matter of this Agreement are merged herein and are superseded and cancelled
by this Agreement. No party shall be liable or bound to any other party in
any manner by any representations, warranties or covenants relating to such
subject matter except as specifically set forth herein.
22.2 This Agreement may be amended, modified, superseded, cancelled, renewed or
extended, and the terms and conditions hereof may be waived, only by a
written instrument signed by the parties hereto.
22.3 The headings in this Agreement, and in the Exhibits and Schedules hereto,
are for the convenience of reference only and shall not limit or otherwise
affect any of the terms or provisions hereof. In interpreting any
provision of this Agreement no presumption shall be drawn against the party
drafting the provision.
22.4 Except as may be expressly provided in this Agreement, there are no
intended third party beneficiaries to this Agreement and nothing herein
shall confer any rights upon any person or entity which is not party to
this Agreement.
22.5 This Agreement shall be governed by, and be construed in accordance with,
the laws of the State of Colorado applicable to agreements made and to be
performed within such state.
22.6 This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
[The rest of this page intentionally blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
INFORMATION HANDLING SERVICES GROUP INC.
BY: /S/ XXXXXXX XXXXX
--------------------------------
TITLE: VICE PRESIDENT
-------------------------
DATAWARE TECHNOLOGIES INC.
BY: /S/ XXXX XXXXXXX
-----------------------------
TITLE: PRESIDENT AND CEO
--------------------------
Exhibits
--------
A Distribution Agreement.
B Form of Releases.
C Sublease.
D Form of Assignment and Assumption Agreement.
Schedules
---------
1.1 Acquired Dataware Assets.
1.2 Assumed Dataware Contract Obligations.
4.2 CMC Leases Assumed by IHS.
10 Pro Forma Balance Sheet of Dataware Services Business as of 7/31/97.
11.1 CMC/IHS Contracts Breached.
11.6 Accounts Receivable Discrepancies.
11.7 CMC Customers and Revenues for year ending 6/30/97.
11.8(a) CMC Employees.
11.8(b) CMC Employee Benefits.
11.9 CMC Litigation.
11.12 CMC Branded Content Agreements.
12.1 Subsidiaries; Required Consents.
12.2 Title to Dataware and Dataware UK Assets.
12.3 Title to Subsidiary Stock.
12.4 Authorized Capital.
12.5 Title to Subsidiary's Assets.
12.6 Material Liabilities.
12.8 Revenue and Customers of Dataware Services Business.
12.9(a) Employees.
12.9(b) Employee Agreements.
12.9(c) Unions.
12.10 Litigation.
12.12 Assumed Dataware Contract Obligations In Default.
13.2 IHS Employees to work with CMC through 11/30/97.
