ASSET PURCHASE AGREEMENT
Exhibit 2.3
THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made as of November 12, 2007, by and among
Xxxxx Micro Software, Inc., a Delaware corporation, and E Frontier Acquisition Corporation, a
Delaware corporation and wholly-owned subsidiary of Xxxxx Micro Software, Inc. (collectively the
“Buyer”), on the one hand, and e frontier, Inc., a company organized under the laws of Japan (the
“Parent”), and e frontier America, Inc., a California corporation and wholly-owned subsidiary of
Parent (the “Seller”), on the other hand. Certain capitalized terms used in this Agreement are
defined on Exhibit A hereto.
AGREEMENT
ARTICLE 1
1.1 Purchased Assets. Subject to the terms and conditions of this Agreement, at the Closing,
Parent and Seller shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall
purchase from Parent and Seller, all of Parent’s and Seller’s right, title and interest in the
assets, properties, goodwill and rights of Seller used, held for use or intended to be used in the
Business, other than the Excluded Assets (collectively, the “Purchased Assets”), including the
following:
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1.2 Excluded Assets. Notwithstanding Section 1.1, the following assets of Seller and
Parent (the “Excluded Assets”) shall not be included in the Purchased Assets:
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1.3 Assumed Liabilities. Subject to the terms and conditions of this Agreement, at the
Closing, Seller shall assign, and Buyer shall assume, the Assumed Liabilities. For the purposes of
this Agreement, the “Assumed Liabilities” shall mean only the following Liabilities of Seller, and
in any event shall not include any Excluded Liabilities:
(a) Any Liability arising after the Closing Date under the Seller Contracts; and
(b) The Liabilities of Seller specifically listed on Schedule 1.3.
1.4 Excluded Liabilities. Except for the Assumed Liabilities, Buyer shall not assume and
shall not be liable or responsible for any Liability of Purchaser or Seller (collectively, the
“Excluded Liabilities”). Without limiting the foregoing, Purchaser and Seller shall retain and be
responsible for, and Buyer shall not be obligated to assume, and does not assume, any Liability at
any time arising from or attributable to:
(a) Any assets, properties or Contracts that are not included in the Purchased Assets;
(b) Any breaches of any Seller Contract on or prior to the Closing Date or any payments or
amounts due under any Seller Contract on or prior to the Closing Date;
(c) Taxes attributable to or imposed upon Purchaser or Seller, or attributable to or imposed
upon the Purchased Assets or the Business for the Pre-Closing Period, or any Transfer Taxes;
(d) Any loans, other indebtedness, or accounts payable;
(e) Accidents, misconduct, negligence, or breach of fiduciary duty occurring on or prior to
the Closing Date;
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(f) Any legal proceeding initiated at any time, to the extent related to any action or
omission on or prior to the Closing Date, including any Liability for (i) infringement or
misappropriation of Intellectual Property Rights; (ii) breach of product warranties; (iii) injury,
death, property damage or losses caused by Seller Products; or (iv) violations of any Legal
Requirements;
(g) Any Seller Benefit Plans or any employee group medical, dental or life insurance plans or
any other employee matter;
(h) Except as set forth on Schedule 1.3, any payments to employees or for payroll
taxes;
(i) The performance of this Agreement and the Transaction;
(j) Any Environmental Law, which Liability relates to or arises out of (A) any acts or
omissions of Parent or Seller on or prior to the Closing Date or (B) any facts, circumstances or
conditions existing on or prior to the Closing Date relating to Hazardous Materials, including any
management, disposal or arranging for disposal of Hazardous Materials in connection with the
Business or the Purchased Assets or Assumed Liabilities or activities or operations occurring or
conducted in connection with any predecessor operations off the Business or otherwise;
(k) Any costs or expenses incurred in shutting down and removing equipment not purchased by
Buyer and any expenses associated with any Seller Contracts not assumed by Buyer hereunder;
(l) Any Liability for expenses and fees incurred by Parent and Seller incidental to the
preparation of the Transaction Documents, preparation or delivery of materials or information
required by Buyer, and the consummation of the Transaction, including all broker, counsel and
accounting fees and Transfer Taxes;
(m) Any Liability arising out of the transactions, commitments, infringements, acts or
omissions not in the ordinary course of business;
(n) Any Legal Requirement applicable to Parent and Seller, the Purchased Assets or the Assumed
Liabilities on or prior to the Closing Date or any Liability for a violation of such a Legal
Requirement;
(o) Any Liability to any shareholders; and
(p) Any Liability for credit balances, credit memos and all other amounts due to dealers,
distributors and customers.
(a) Notwithstanding anything herein to the contrary, if an attempted sale, assignment,
transfer or delivery of any Purchased Asset would be ineffective without the Consent of any third
party, or if such an act would violate the rights of any third party in the Purchased Assets or
otherwise affect adversely the rights of Buyer in the Purchased Assets, and
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the applicable Consent has not been obtained on or prior to the Closing Date, this Agreement
shall not constitute an actual or attempted sale, assignment, transfer or delivery of such
Purchased Asset (each, a “Restricted Asset”). Unless and until any such Consent is obtained, such
Restricted Asset shall not constitute a Purchased Asset and any associated Liability shall not
constitute an Assumed Liability for any purpose hereunder.
(b) In any such case, if the Closing has occurred, Parent and Seller shall use their
respective best efforts to obtain, as soon as practicable, such Consent. Buyer shall cooperate
reasonably with Parent and Seller in obtaining such Consents, provided, that Buyer shall
not be required to pay any cash consideration therefor or give or allow to remain in effect any
guaranty, letter of credit, performance bond or other financial assurance.
(c) Until such Consent shall have been obtained, Parent and Seller shall at their expense
effect an alternate arrangement, in the form of a license, sublease, operating agreement or other
arrangement, in any case reasonably satisfactory to Buyer, which results in Buyer receiving all the
benefits with respect to each Restricted Asset.
1.6 Remittances. If, after the Closing, Parent or Seller or any of their Affiliates receives
(i) any refund or other amount which is a Purchased Asset under Section 1.1 (including the
Receivables) or is otherwise properly due and owing to Buyer in accordance with the terms of this
Agreement (including credit card payments) and is not otherwise covered by the Distribution
Agreement referred to in Section 8.1(k), or (ii) any correspondence relating to the
Business (including electronic mail correspondence), Parent and Seller promptly shall forward or
deliver, or shall cause to be forwarded or delivered, such amount or correspondence to Buyer at the
address set forth in Section 11.2.
ARTICLE 2
2.1 Terms of Purchase and Sale. Subject to the terms of this Agreement, as full consideration
for the sale, transfer, conveyance, assignment and delivery of the Purchased Assets and the
execution and delivery of the Transaction Documents by Parent and Seller to Buyer, Buyer shall
deliver to Seller at the Closing Six Million Dollars ($6,000,000) (the “Purchase Price”), less the
Holdback Amount, payable by wire transfer of immediately available U.S. funds, and an executed
Assignment and Assumption. Notwithstanding the foregoing, in the event a new distribution
agreement with Celsys relating to Managa Studio is not entered into, in a form satisfactory to
Buyer, by January 31, 2008, the Purchase Price shall be reduced by $250,000. If the Closing has
occurred prior to January 31, 2008, Buyer may set off such $250,000 against the Holdback Amount.
(a) Notwithstanding the provisions of Section 2.1, as security for the indemnification
obligations of Parent and Seller set forth in this Agreement or any other Transaction Document, at
the Closing Buyer shall retain from the Purchase Price otherwise deliverable pursuant to
Section 2.1 an amount of cash equal to One Million Dollars ($1,000,000)
(the “Holdback Amount”). Buyer shall deposit the Holdback Amount in a separate account at
Buyer’s financial institution.
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(b) Buyer may set off against the Holdback Amount any Buyer Damages (to the extent not paid in
full by Parent and Seller prior to the expiration of the ten (10) Business Day period provided in
clause (ii) below) subject, however, to the following terms and conditions: (i) any claim for Buyer
Damages or for any other damages hereunder shall be made by written notice, and (ii) payment or set
off for any claim made under the foregoing clause (i) shall be effected on the later to occur of
the expiration of ten (10) Business Days from the date of such notice or, if such claim is
contested in writing within such ten (10) Business Day period, the date the dispute is resolved
either by mutual agreement or appropriate legal resources. Notwithstanding the foregoing, Buyer
may withhold from delivery of any remaining amounts of the Holdback Amount the equivalent of any
amounts then in dispute related to indemnification obligations arising under this Agreement or any
other Transaction Document; provided, that the withheld Holdback Amount, to the extent not
applied in satisfaction of such indemnification obligations, shall be paid to Seller promptly upon
resolution of such dispute. Nothing in this Section 2.2 shall be construed as limiting the
liability of Parent and Seller to the Holdback Amount, nor shall payments from the Holdback Amount
be considered as liquidated damages for any breach under this Agreement or any other Transaction
Document.
(c) Unless previously set off against or otherwise withheld by Buyer pursuant to Section
2.2(b), remaining amounts of the Holdback Amount shall be delivered to Seller pursuant to the
following schedule: (i) $100,000 on December 31, 2007; (ii) $150,000 on January 31, 2008; (iii)
$350,000 on March 31, 2008; (iv) $300,000 on June 30, 2008; and (v) $100,000 on September 30, 2008
(each of December 31, 2007, March 31, 2008, June 30, 2008 and September 30, 2008 are referred to
herein as a “Release Date”). Seller shall also receive any accrued interest (calculated from the
Closing Date) on any amounts of the Holdback Amount that are delivered to Seller on the Release
Dates. Parent and Seller acknowledge and agree that (x) the amounts of the Holdback Amount that
may potentially be delivered to Seller on each Release Date shall be reduced to the extent Buyer
sets off against the Holdback Amount or otherwise withholds some or all of the Holdback Amount
pursuant to Section 2.2 (a) or (b), and (y) Seller may not receive any amounts of
the Holdback Amount on any Release Date.
(a) Notwithstanding any Legal Requirements to the contrary, Parent and Seller shall be
responsible for and shall pay any Transfer Taxes when due, and shall, at their own expense, file
all necessary tax returns and other documentation with respect to all such Transfer Taxes;
provided, that, if required by any Legal Requirement, Buyer will join in the execution of
any such tax returns and other documentation.
(b) Parent and Seller shall be responsible for and shall pay any Taxes arising or resulting
from or in connection with the conduct of the Business or the ownership of the Purchased Assets
attributable to the Pre-Closing Period. Buyer shall be responsible for and shall pay any Taxes
arising or resulting from or in connection with the conduct of the Business or the ownership of the
Purchased Assets attributable to the Post-Closing Period.
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(c) All real property, personal property, ad valorem or other similar Taxes (not including
income Taxes) levied with respect to the Purchased Assets or the Business for a taxable period
which includes (but does not end on) the Closing Date shall be apportioned between Buyer and Seller
based on the number of days included in such period through and including the Closing Date and the
number of days included in such period after the Closing Date.
2.4 Allocation of Purchase Price. The parties shall attempt in good faith to agree to an
allocation of the Purchase Price (including any assumed liabilities that are treated as
consideration for the Purchased Assets for federal income tax purposes) within ninety (90) days
following Closing, which allocation shall be consistent with Section 1060 of the Code and the
regulations promulgated thereunder (the “Consideration Allocation”). Each party agrees to timely
file an IRS Form 8594 reflecting the Consideration Allocation for the taxable year that includes
the Closing Date and to make any filings required by applicable state or local laws.
ARTICLE 3
3.1 Time and Place of Closing. The closing of the purchase and sale provided for in this
Agreement (the “Closing”) shall occur at the offices of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxx Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx, at 10:00 A.M. on the third (3rd) Business Day after
the day on which all of the conditions to closing set forth in Article 8 are satisfied or
waived (other than conditions that are intended to be satisfied at the Closing), or at such other
date, time or place as the parties may agree (the “Closing Date”).
3.2 Closing Deliveries by Parent and Seller. At the Closing, Parent and Seller shall (i) take
all steps necessary to place Buyer in actual possession and operating control of the Business and
the Purchased Assets and (ii) deliver the following items, duly executed by Parent and Seller as
applicable, all of which shall be in form and substance reasonably acceptable to Buyer:
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3.3 Closing Deliveries by Buyer. At the Closing, Buyer shall deliver the following items,
duly executed by Buyer as applicable, all of which shall be in a form and substance reasonably
acceptable to Parent and Seller:
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3.4 Closing Deliveries by Buyer and Seller. At the Closing, Buyer, Parent and Seller shall
deliver the following items, duly executed:
ARTICLE 4
Except as set forth in the corresponding sections of the disclosure schedule of Seller
delivered to Buyer concurrently with the execution and delivery of this Agreement (the “Seller
Disclosure Schedule”) (provided, that if any fact or item disclosed in any section of the
Seller Disclosure Schedule shall be relevant to any other section of this Agreement, then such fact
or item shall be deemed to be disclosed with respect to such other section of this Agreement, but
only to the extent to which it is readily apparent on its face that such fact or item relates),
Parent and Seller hereby jointly and severally represent and warrant to Buyer that, as of the date
hereof:
4.1 Organization and Qualification. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite
power and authority to own, lease and operate its properties and to carry on its business as now
being conducted. Seller is duly qualified or licensed as a foreign corporation to conduct business
and is in good standing in each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or licensing necessary.
4.2 Authority. Seller and Parent each have all necessary power and authority to execute and
deliver this Agreement and the other Transaction Documents, to perform their obligations hereunder,
and to consummate the Transaction. The execution and delivery of this Agreement and the other
Transaction Documents and the consummation by Parent and Seller of the Transaction have been duly
and validly authorized by all requisite action and no other corporate proceedings on the part of
Parent or Seller are necessary to authorize this Agreement or to consummate the Transaction. This
Agreement has been, and at Closing the other Transaction Documents will be, duly and validly
executed and delivered by Parent and Seller. This Agreement constitutes, and at Closing the other
Transaction Documents will constitute, the legal, valid and binding obligation of Parent and
Seller, enforceable against Parent and Seller in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles related to or
limiting creditors’ rights generally and by the availability of equitable remedies and defenses.
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4.3 No Conflicts; Required Consents. No Consents other than those set forth in
Section 4.3 of the Seller Disclosure Schedule are required with respect to Parent’s and
Seller’s execution and delivery of this Agreement, the other Transaction Documents, and the
consummation of the Transaction. The execution, delivery and performance of this Agreement and the
other Transaction Documents by Parent and Seller do not and will not, with or without notice or
lapse of time,
(a) conflict with or violate Parent’s or Seller’s Articles of Incorporation or bylaws or
equivalent organizational documents,
(b) conflict with or violate any Legal Requirement applicable to Parent or Seller or by which
any properties or assets of Parent or Seller is bound or affected,
(c) assuming the Consents listed in Section 4.3 of the Seller Disclosure Schedule are
obtained, result in any breach of or constitute a default under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on any property or asset of Seller pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or obligation,
(d) violate or conflict with any other restriction of any kind or character to which Parent or
Seller is subject, or
(e) require Parent or Seller to obtain any Consent of, or make or deliver any filing or notice
to, a Governmental Authority.
No cost, fee or other payment is required in connection with the assignment of any Seller
Contracts.
4.4 Subsidiaries. Seller does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business association or Entity.
(a) Seller has delivered to Buyer the following financial statements (collectively, the
“Financial Statements”):
(i) the audited balance sheets, and the related statements of operations, changes in
shareholders’ equity and cash flows, of Seller as of and for the fiscal years ended March 31, 2007,
2006 and 2005, together with the notes thereto; and
(ii) the unaudited balance sheets, and the related unaudited statements of operations, changes
in shareholders’ equity and cash flows, of Seller (the “Interim Balance Sheet”) as of and for the
six months ended September 30, 2007 (the “Interim Balance Sheet Date”).
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(b) All of the Financial Statements: (i) are true, accurate and complete in all respects; (ii)
are consistent with the Books and Records of Seller; (iii) present fairly and accurately the
financial condition of Seller as of the respective dates thereof and the results of operations,
changes in shareholders’ equity and cash flows of Seller for the periods covered thereby; and (iv)
have been prepared in accordance with GAAP, applied on a consistent basis throughout the periods
covered.
4.6 Absence of Undisclosed Liabilities. Seller has no Liabilities other than: (a) those set
forth in the Interim Balance Sheet; (b) those incurred in the ordinary course of business and not
required to be set forth in the Interim Balance Sheet under GAAP and not in excess of an aggregate
amount of $5,000; and (c) those incurred in connection with the execution of any of the Transaction
Documents.
4.7 Absence of Changes. Since the Interim Balance Sheet Date, (i) Parent and Seller have
conducted the Business in the ordinary course of business; (ii) no event or circumstance has
occurred that has had or is reasonably likely to have a Material Adverse Effect on Parent or
Seller; and (iii) Parent and Seller have not taken any action, agreed to take any action, or
omitted to take any action that would constitute a breach of Section 6.1 or 6.2 if
such action or omission were taken between the date of this Agreement and the Closing Date.
4.8 Accounts Receivable. Schedule 1.1(a) sets forth an accurate and complete list of
all Receivables existing as of October 31, 2007. Each Receivable is: (a) a valid and legally
binding obligation of the account debtor enforceable in accordance with its terms, free and clear
of all Encumbrances, and not subject to setoffs, adverse claims, counterclaims, assessments,
defaults, prepayments, defenses, and conditions precedent; (b) a true and correct statement of the
account for merchandise actually sold and delivered to, or for services actually performed for and
accepted by, such account debtor; and (c) fully collectible and will be collected within sixty (60)
days.
4.9 Inventory. All of the items in Seller’s Inventory are: (a) of good and merchantable
quality, fit for the purpose for which they are intended, and saleable and useable in the ordinary
course of business; (b) free of defects and damage; and (c) in quantities adequate and not
excessive in relation to the circumstances of the Business and in accordance with Seller’s past
inventory stocking practices. All of the items in Seller’s Inventory meet Seller’s current
standards and specifications.
(a) Section 4.10(a) of the Seller Disclosure Schedule provides a true and complete
list of each of the following contracts to which Seller is party (collectively, the “Material
Contracts”):
(i) Real Property Leases, Personal Property Leases, insurance, Contracts affecting any Seller
Intellectual Property or Seller’s information systems or software, Contracts with Contractors,
Seller Benefit Plans and Governmental Approvals;
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(ii) Any Contract for capital expenditures or for the purchase of goods or services in excess
of $5,000, except those incurred in the ordinary course of business and to be performed in
three (3) months or less;
(iii) Any Contract obligating Seller to sell or deliver any product or service at a price
which does not cover the cost (including labor, materials and production overhead) plus the
customary profit margin associated with such product or service;
(iv) Any Contract involving financing or borrowing of money, or evidencing indebtedness, any
liability for borrowed money, any obligation for the deferred purchase price of property in excess
of $5,000 (excluding normal trade payables) or guaranteeing in any way any Contract in connection
with any Person;
(v) Any joint venture, partnership, cooperative arrangement or any other Contract involving a
sharing of profits;
(vi) Any Contract affecting any right, title or interest in or to real property;
(vii) Any Contract with any Governmental Authority;
(viii) Any Contract with respect to the discharge, storage or removal of effluent, waste or
pollutants;
(ix) Any Contract relating to any license or royalty arrangement;
(x) Any power of attorney, proxy or similar instrument;
(xi) Any Contract for the manufacture, service or maintenance of any product of the Business;
(xii) Any Contract for the purchase or sale of any assets other than in the ordinary course of
business or for the option or preferential rights to purchase or sell any assets;
(xiii) Any requirement or output Contract;
(xiv) Any Contract to indemnify any Person or to share in or contribute to the liability of
any Person;
(xv) Any Contract containing covenants not to compete in any line of business or with any
Person in any geographical area or that would otherwise result in Buyer being bound by, or subject
to, any non-compete or other restriction on the operation or scope of its businesses, including the
Business;
(xvi) Any Contract related to the acquisition of a business or the equity of any other Entity;
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(xvii) Any other Contract which (1) provides for payment or performance by either party
thereto having an aggregate value of $5,000 or more; (2) is not terminable without payment or
penalty on thirty (30) days (or less) notice; or (3) is between, inter alia, an Affiliate and
Seller;
(xviii) Any other Contract that involves future payments, performance of services or delivery
of goods or materials to or by Seller of an aggregate amount or value in excess of $5,000, on an
annual basis, or that otherwise is material to the Business or prospects of Seller;
(xix) Any contract within or needed in the ordinary course of Seller’s Business;
(xx) Any warranty contract with respect to services rendered by Seller or products sold or
leased by Seller;
(xxi) Any customer or supplier Contract not entered into in the ordinary course of business
for usual quantities and at normal prices; and
(xxii) Any proposed arrangement of a type that, if entered into, would be a Contract described
in any of (i) through (xxi) above.
(b) True and complete copies of each written Seller Contract and true and complete written
summaries of each oral Seller Contract (including all amendments, supplements, modifications and
waivers thereof) have been delivered to Buyer by Seller.
(c) Each Material Contract is currently valid and in full force and effect, and is enforceable
by Seller in accordance with its terms.
(d) Seller is not in default, and no party has notified Seller that they are in default, under
any Material Contract. No event has occurred, and no circumstance or condition exists, that might,
with or without notice or lapse of time: (i) result in a violation or breach of any of the
provisions of any Material Contract; (ii) give any Person the right to declare a default or
exercise any remedy under any Material Contract; (iii) give any Person the right to accelerate the
maturity or performance of any Material Contract or to cancel, terminate or modify any Material
Contract; or (iv) otherwise have a Material Adverse Effect on Seller in connection with any
Material Contract.
(e) Seller has not waived any of its rights under any Material Contract.
(f) To the Knowledge of Seller and Parent, each Person against which Seller has or may acquire
any rights under any Material Contract is solvent and able to satisfy such Person’s material
obligations and liabilities to Seller.
(g) The performance of the Material Contracts will not result in any violation of or failure
by Seller to comply with any Legal Requirement.
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(h) The Material Contracts constitute all of the Contracts necessary to enable Parent and
Seller to conduct the Business in the manner in which such Business is currently being conducted
and in the manner in which such Business is proposed to be conducted.
(i) The assignment to Buyer of any of the Seller Contracts shall not result in Buyer being
bound by, or subject to, any non-compete or other restriction on the operation or scope if its
businesses, including the Business.
4.11 Insurance. Section 4.11 of the Seller Disclosure Schedule sets forth an accurate
and complete list of all insurance policies, self-insurance arrangements and indemnity bonds,
currently in effect, that insure the Business and/or the Purchased Assets (collectively, the
“Insurance Policies”). With respect to each Insurance Policy:
(a) the policy is legal, valid, binding, and enforceable in accordance with its terms and is
in full force and effect,
(b) Seller is not in material breach or default of the policy, and to Parent’s and Seller’s
Knowledge no event has occurred which, with notice or the lapse of time, would constitute such a
breach or default, or permit termination or modification of the policy,
(c) to Parent’s and Seller’s Knowledge, no insurer on the policy has been declared insolvent
or placed in receivership, conservatorship or liquidation,
(d) Seller has not received any notice of cancellation or non-renewal of the policy,
(e) the consummation of the Transaction will not cause a breach, termination, modification, or
acceleration of the policy,
(f) there is no claim under the policy that has been improperly filed or as to which any
insurer has questioned, disputed or denied liability, and
(g) Seller has not received any notice of, nor does Seller have any Knowledge of any facts
that might result in, a material increase in the premium for the policy.
As of the date hereof, Seller is and continually since the later of January 1, 2004 or the
date of acquisition of the Business by the Seller has been, insured by insurers, reasonably
believed by Seller to be of recognized financial responsibility and solvency, against such losses
and risks and in such amounts as are customary in the businesses in which it is engaged.
(a) Seller has good and valid title to all of the Purchased Assets free and clear of any
Encumbrances. Seller has full right and power to sell, convey, assign, transfer and deliver to
Buyer good and valid title to all of the Purchased Assets, free and clear of any and all
Encumbrances. The Purchased Assets are not subject to any preemptive right, right of first refusal
or other right or restriction. Upon Closing, Buyer will receive good and valid title to all of the
Purchased Assets free and clear of any Encumbrances.
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(b) The sale, transfer and assignment of the Purchased Assets as contemplated by this
Agreement will give Buyer possession of, and the right to use, all the assets required for
conducting the Business as presently conducted. Upon Closing, Buyer will be entitled to the
continued possession and use of all Purchased Assets. Except for the Purchased Assets, there are
no other assets properties or rights, including intellectual property rights, that are required by
Parent or Seller, or that will be required by Buyer after the Closing, to conduct the Business in a
manner substantially consistent in all material respects with the manner in which Parent and Seller
currently conduct the Business.
(c) The Purchased Assets: (i) are in good operating condition and repair, ordinary wear and
tear excepted; (ii) are suitable and adequate for continued use in the ordinary course of business;
and (iii) conform to all Legal Requirements.
4.13 Real Property Leases. Seller does not own any real property. Schedule 1.1(e)
sets forth an accurate and complete list of all Real Property Leases. Seller has delivered to
Buyer accurate and complete copies of each Real Property Lease. All Real Property Leases, and all
amendments and modifications thereto, are in full force and effect and have not been modified or
amended, and there exists no default under any such lease by Seller, nor any event which, with
notice or lapse of time or both, would constitute a default thereunder by Seller or by any third
party.
(a) Schedule 1.1(f) sets forth an accurate and complete list of all Seller
Intellectual Property material to the conduct of the Business as currently conducted by Parent and
Seller and either owned by or registered in Seller’s name (the “Seller Registered Intellectual
Property Rights”), or owned by others and licensed to Seller, specifying as to each, as applicable:
(i) the nature of such Seller Intellectual Property,
(ii) the owner of such Seller Intellectual Property,
(iii) in the case of Seller Registered Intellectual Property Rights, the jurisdictions by or
in which such intellectual property has been issued or registered or in which an application for
such issuance or registration has been filed, including the respective registration or application
numbers and dates of issuance, registration or filing, and
(iv) contracts, licenses, sublicenses, agreements and other arrangements as to which Seller is
a party and pursuant to which any person (including Seller) is authorized to use such intellectual
property, including the identity of all parties thereto, a description of the nature and subject
matter thereof, the applicable royalty and the term thereof. There is no third party royalty
payable in connection with Poser SDK.
(b) Each item of Seller Intellectual Property:
(i) is valid, subsisting and in full force and effect,
(ii) has not been abandoned or passed into the public domain, and
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(iii) is free and clear of any Encumbrances.
(c) The Seller Intellectual Property set forth on Schedule 1.1(f) constitutes all the
Intellectual Property Rights used in and/or necessary to the conduct of the Business as it is
currently conducted, and as it is currently planned or contemplated to be conducted by Seller prior
to the Closing and by Buyer following the Closing, including the design, development, manufacture,
use, import and sale of the Seller Products (including those currently under development).
(d) Each item of Seller Intellectual Property either
(i) is exclusively owned by Seller and was written and created solely by employees of Seller
acting within the scope of their employment or by third parties, all of which employees and third
parties have validly and irrevocably assigned all of their rights, including Intellectual Property
Rights therein, to Seller, and no third party owns or has any rights to any such Seller
Intellectual Property, or
(ii) is duly and validly licensed to Seller for use in the manner currently used by Seller in
the conduct of the Business and, as it is currently planned or contemplated to be used by Seller in
the conduct of the Business prior to the Closing and by Buyer following the Closing.
(e) In each case in which Seller has acquired any Intellectual Property Rights from any
Person, Seller has obtained a valid and enforceable assignment sufficient to irrevocably transfer
all rights in such Intellectual Property Rights (including the right to seek past and future
damages with respect thereto) to Seller. No Person who has licensed Intellectual Property Rights
to Seller has ownership rights or license rights to improvements made by Seller in such
Intellectual Property Rights. Seller has not transferred ownership of, or granted any exclusive
license of or right to use, or authorized the retention of any exclusive rights to use or joint
ownership of, any Intellectual Property Rights that is or was Seller Intellectual Property to any
Person.
(f) There are no facts, circumstances or information that: (i) would render any Seller
Intellectual Property invalid or unenforceable, (ii) would adversely affect any pending application
for any Seller Registered Intellectual Property Right, or (iii) would adversely affect or impede
the ability of Seller to use any Seller Intellectual Property in the conduct of the Business as it
is currently conducted or as it is currently planned or contemplated to be conducted by Seller
prior to Closing or by Buyer following the Closing. Seller has not misrepresented, or failed to
disclose, and has no Knowledge of any misrepresentation or failure to disclose, any fact or
circumstances in any application for any Seller Registered Intellectual Property Right that would
constitute fraud or a misrepresentation with respect to such application or that would otherwise
affect the validity or enforceability of any Seller Registered Intellectual Property Right.
(g) All necessary registration, maintenance and renewal fees in connection with each item of
Seller Registered Intellectual Property Rights have been paid and all necessary documents and
certificates in connection with such Seller Registered Intellectual Property Rights have been filed
with the relevant patent, copyright, trademark or other authorities in the United
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States, Japan or other foreign jurisdictions, as the case may be, for the purposes of
maintaining such Seller Registered Intellectual Property Rights. There are no actions that must be
taken by Seller within one hundred twenty (120) days following the Closing Date, including the
payment of any registration, maintenance or renewal fees or the filing of any responses to office
actions, documents, applications or certificates for the purposes of obtaining, maintaining,
perfecting, preserving or renewing any Registered Intellectual Property Rights. To the maximum
extent provided for by, and in accordance with, applicable laws and regulations, Seller has
recorded in a timely manner each such assignment of a Registered Intellectual Property Right
assigned to Seller with the relevant governmental authority, including the United States Patent and
Trademark Office (the “PTO”), the U.S. Copyright Office or their respective counterparts in Japan
and any other relevant foreign jurisdiction, as the case may be. Seller has provided to Buyer all
documents evidencing its ownership, and the validity, of all Seller Registered Intellectual
Property Rights.
(h) Seller has taken all necessary action to maintain and protect:
(i) the Seller Intellectual Property, and
(ii) the secrecy, confidentiality, value and Seller’s rights in the Confidential Information
and Trade Secrets of Seller and those provided by any Person to Seller, including by having and
enforcing a policy requiring all current and former employees, consultants and contractors of
Seller to execute appropriate confidentiality and assignment agreements. All copies thereof shall
be delivered to Buyer at Closing. Seller has no Knowledge of any violation or unauthorized
disclosure of any Trade Secret or Confidential Information related to the Business, the Purchased
Assets or the Assumed Liabilities, or obligations of confidentiality with respect to such. Only
the individuals (who are current and former employees of Seller) named in Section 4.14(h)
of the Seller Disclosure Schedule, which describes their relationship with Seller, have had access
to such Trade Secrets and Confidential Information, and each such individual has signed a
confidentiality agreement with respect thereto.
(i) The operation of the Business as it is currently conducted, or as it is currently planned
or contemplated to be conducted by Seller prior to the Closing, including but not limited to the
design, development, use, import, branding, advertising, promotion, marketing, manufacture and sale
of the Seller Products (including any currently under development), does not and will not, and will
not when operated by Buyer substantially in the same manner following the Closing, infringe or
misappropriate any Intellectual Property Rights of any Person, violate any right of any Person
(including any right to privacy or publicity), defame or libel any Person or constitute unfair
competition or trade practices under the laws of any jurisdiction, and Seller has not received
notice from any Person claiming that such operation or any Seller Product (including any currently
under development) infringes or misappropriates any Intellectual Property Rights of any Person
(including any right of privacy or publicity), or defames or libels any Person or constitutes
unfair competition or trade practices under the laws of any jurisdiction (nor does Seller have
Knowledge of any basis therefor).
(j) No Person is violating, infringing or misappropriating any Seller Intellectual Property
Right.
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(k) There are no Proceedings before any Governmental Authority (including before the PTO)
anywhere in the world related to any of the Seller Intellectual Property, including any Seller
Registered Intellectual Property Rights.
(l) No Seller Intellectual Property or Seller Product is subject to any Proceeding or any
outstanding decree, order, judgment, office action or settlement agreement or stipulation that
restricts in any manner the use, transfer or licensing thereof by Seller or that may affect the
validity, use or enforceability of such Seller Intellectual Property.
(m) Section 4.10(a) of the Seller Disclosure Schedule lists all Material Contracts
affecting any Intellectual Property Rights. Seller is not in breach of, nor has Seller failed to
perform under, any such Material Contracts and, to Parent’s and Seller’s Knowledge, no other party
to any such Material Contracts, is in breach thereof or has failed to perform thereunder.
(n) To the extent not listed on Schedule 4.10(a) of the Seller Disclosure Schedule,
Section 4.14(n) of the Seller Disclosure Schedule lists all Seller Contracts under which
Seller has agreed to, or assumed, any obligation or duty to warrant, indemnify, reimburse, hold
harmless, guaranty or otherwise assume or incur any obligation or liability, or provide a right of
rescission, with respect to the infringement or misappropriation by Seller or such other person of
the Intellectual Property Rights of any Person other than Seller.
(o) There is no Seller Contract affecting any Seller Intellectual Property under which there
is any dispute regarding the scope of such Seller Contract, or performance under such Seller
Contract, including with respect to any payments to be made or received by Seller thereunder.
(p) All Seller Intellectual Property will be fully transferable, alienable or licensable by
Buyer without restriction and without payment of any kind to any third party. The consummation of
the Transaction as contemplated hereby will not result in any loss of, or the diminishment in value
of, any Seller Intellectual Property or the right to use any Seller Intellectual Property.
(q) Neither this Agreement nor the Transaction, including the assignment to Buyer, by
operation of law or otherwise, of any Seller Contracts will result in; (i) Buyer granting to any
third party any right to, or with respect to, any Intellectual Property Right owned by, or licensed
to, Buyer; (ii) Buyer being bound by, or subject to, any non-compete or other restriction on the
operation or scope of its businesses, including the Business; or (iii) Buyer being obligated to pay
any royalties or other amounts to any third party.
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payment of social security and other Taxes. Seller has no Liability under any Legal
Requirements related to employment and attributable to an event occurring or a state of facts
existing prior to the date thereof.
4.17 Seller Benefit Plans. Other than group health, dental, disability and life insurance
plans (collectively, the “Seller Benefit Plans”) Seller does not have and has never maintained or
sponsored any Employee Benefit Plan as defined in ERISA. Neither Seller nor any Member of the
Controlled Group maintains or contributes to, or has ever maintained or contributed to, any Defined
Benefit Plan or Multiemployer Plan. Nothing contained in any of the Seller Benefit Plans will
obligate Buyer to provide any benefits to employees, former employees or beneficiaries of employees
or former employees, or to make any contributions to any plans from and after the Closing.
4.18 Compliance with Laws; Governmental Approvals. Seller is not now, and during the past
five years has not been, in conflict with, or in default, breach or violation of, any Legal
Requirement applicable to Seller, or by which any property or asset of Seller is bound or affected.
Seller is in possession of all Governmental Approvals necessary for Seller to own, lease and
operate its properties or to carry on the Business as it is now being conducted, except where the
failure to obtain such Governmental Approval would not, individually or in the aggregate, have a
Material Adverse Effect. No suspension or cancellation of any Governmental Approvals is pending
or, to the Knowledge of Seller, threatened, and except for those Governmental Approvals set forth
in Section 4.18 of the Seller Disclosure Schedule, no other Governmental Approval is
required to be obtained or filed in connection with the execution and delivery of this Agreement
and the other Transaction Documents.
4.19 Litigation. There is no Proceeding pending or, to the Knowledge of Parent and Seller,
threatened against or affecting Seller, or any property or asset of Seller. No event has occurred,
and no condition or circumstance exists, that might directly or indirectly give rise to or serve as
a basis for the commencement of any such Proceeding. Neither Seller nor any property or asset of
Seller is subject to any Order nor any proposed Order that would prevent or materially delay the
consummation of the Transaction or would have a Material Adverse Effect.
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4.20 Environmental Matters. Seller is not, and at no time has been, in violation of any Legal
Requirement relating to the environment, and no material expenditures are or will be required in
order to comply with any such existing Legal Requirement. Seller has operated all facilities and
properties owned, leased or operated by them in compliance with the Environmental Laws; and no
Hazardous Materials have been stored, used, disposed of, treated, released or discharged by Seller
in material violation of Environmental Laws. Seller has not received any notice from any
Governmental Authority claiming violation of any Environmental Law, or requiring any work, repairs,
construction, investigation, alterations, noise reduction, cleanup or installation, which has not
been fully complied with; and Seller has not received any notice claiming that a release of
Hazardous Materials has occurred or exists on, in or under any facility or property owned, leased
or operated currently or in the past by Seller. Seller does not have in its possession any reports
of environmental consultants relating to the properties of Seller.
(a) Seller has timely filed all Tax Returns relating to the Business that it was required to
file, and such Tax Returns are true, correct and complete in all respects. All Taxes shown to be
payable on such Tax Returns or on subsequent assessments with respect thereto have been paid in
full on a timely basis, and no other Taxes relating to the Business are payable by Seller with
respect to any period ending prior to the date of this Agreement. Seller has withheld and paid all
Taxes relating to the Business required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.
There are no liens for Taxes on the Purchased Assets, other than liens for Taxes not yet due and
payable. Seller has established adequate reserves for the payment of all Taxes and other
government charges for the current period which are not yet due.
(b) To the Knowledge of Parent and Seller, no audit of any Tax Return relating to the Business
is currently pending or threatened. No claim has ever been made by any Governmental Authority in a
jurisdiction where Seller does not file Tax Returns relating to the Business that they are or may
be subject to taxation by that jurisdiction.
(c) Seller has treated itself as owner of each of the Purchased Assets for Tax purposes. None
of the Purchased Assets is the subject of a “safe-harbor lease” within the provisions of former
Section 168(f)(8) of the Code, as in effect prior to amendment by the Tax Equity and Fiscal
Responsibility Act of 1982. None of the Purchased Assets directly or indirectly secures any debt
the interest on which is tax exempt under Section 103(a) of the Code. None of the Purchased Assets
is “tax-exempt use property” within the meaning of Section 168(h) of the Code.
(d) Seller is a “United States person” within the meaning of Section 7701(a)(30) of the Code.
(e) Seller has not waived any statute of limitations with respect to any Taxes, Tax
assessments or deficiency.
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(f) Seller has filed all reports and has created and/or retained all records required under
Section 6038A of the Code with respect to is ownership by and transactions with related parties.
(g) Seller has not been a party to any cost sharing agreement subject to the provisions of
Treas. Reg. §1.482-7. Seller has documentation (which was in existence as of the time an affected
return was filed) meeting the requirements of Section 6662(e)(3)(B) of the Code with respect to all
material transactions with related parties subject to the provisions of Section 482 of the Code.
4.22 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s
or other fee or commission in connection with the Transaction based upon arrangements made by or on
behalf of Parent or Seller.
4.23 Fraudulent Conveyance. Seller is not entering into the Transaction with the intent to
hinder, delay or defraud any Person to which it is, or may become, indebted. The Purchase Price is
not less than the reasonably equivalent value of the Purchased Assets less the Assumed Liabilities.
Seller’s assets, at a fair valuation, exceed its liabilities, and Seller is able, and will
continue to be able after the Closing of the Transaction, to meet its debts as they mature and will
not become insolvent as a result of the Transaction. After the Closing of the Transaction, Seller
will have sufficient capital and property remaining to conduct the business in which it will
thereafter be engaged.
4.24 Transactions with Affiliates. There are no existing contracts, transactions,
indebtedness or other arrangements, or any related series thereof, between Seller and any of the
directors, officers or other Affiliates of Seller.
4.25 Product Warranties. All of the Purchased Assets manufactured, sold or delivered by
Seller are in conformity with all applicable contractual commitments and applicable law and all
express and implied warranties, and Seller is not liable (and, to Parent’s and Seller’s Knowledge,
there is no reasonable basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against Seller giving rise to any such liability)
for replacement thereof or other damages in connection therewith in excess of any warranty reserve
specifically established with respect thereto and included on the face of Seller’s latest balance
sheet. None of the Purchased Assets manufactured, sold or delivered by Seller are subject to any
guaranty, warranty or other indemnity. Seller has not been notified of any claims for (and Parent
and Seller do not have any Knowledge of any threatened claims for) any extraordinary product
returns, warranty obligations or product services relating to any of the Purchased Assets. There
have been no product recalls, withdrawals or seizures with respect to any of the Purchased Assets
manufactured, sold or delivered by Seller.
4.26 Product Liabilities. Seller has not had nor does Seller have any liability (and, to
Parent’s and Seller’s Knowledge, there is no reasonable basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim or demand against it giving rise
to any liability) arising out of any injury to individuals or property as a result of the
ownership, possession or use of any of the Purchased Assets manufactured, sold or delivered by
Seller.
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4.27 Full Disclosure. No statement (including the representations, warranties and covenants)
by Parent and Seller contained in this Agreement, the Seller Disclosure Schedule, the exhibits and
schedules attached hereto, the Transaction Documents, and any document, written statement or
certificate furnished to Buyer and its Representatives by Parent and Seller pursuant hereto or in
connection with the Transaction, contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements contained herein or therein not
misleading.
ARTICLE 5
Buyer hereby represents and warrants to Parent and Seller that, as of the date hereof:
5.1 Organization and Good Standing. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, and has all requisite
power and authority to own, lease and operate its properties and to carry on its business as now
being conducted.
5.2 Authority. Buyer has all necessary power and authority to execute and deliver this
Agreement and the other Transaction Documents, to perform its obligations hereunder, and to
consummate the Transaction. The execution and delivery of this Agreement and the other Transaction
Documents and the consummation by Buyer of the Transaction have been duly and validly authorized by
all requisite action and no other corporate proceeding on the part of Buyer is necessary to
authorize this Agreement and the other Transaction Documents or to consummate the Transaction.
This Agreement has been, and at Closing the other Transaction Documents will be, duly and validly
executed and delivered by Buyer. This Agreement constitutes, and at Closing the other Transaction
Documents will constitute, the legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable principles related to
or limiting creditors’ rights generally and by the availability of equitable remedies and defenses.
5.3 No Conflicts. The execution, delivery and performance of this Agreement and the other
Transaction Documents by Buyer do not and will not, with or without notice or lapse of time,
conflict with or violate Buyer’s Certificate of Incorporation or bylaws.
5.4 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the Transaction based upon arrangements made by or on
behalf of Buyer.
ARTICLE 6
6.1 Conduct of the Business. From the date of this Agreement until the Closing Date, Parent
and Seller covenant and agree that the Business shall be conducted only in, and Parent and Seller
shall not take any action except in, the ordinary course of business and in a
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manner consistent with past practice; and Parent and Seller shall use their best efforts to
preserve substantially intact the business organization of Seller, to keep available the services
of the current officers, employees and consultants of Seller and to preserve the current
relationships of Seller with customers, suppliers and other persons with which Seller has
significant business relations. Parent and Seller shall promptly notify Buyer of any event or
occurrence not in the ordinary course of business of Seller, and any event of which Seller is aware
which reasonably would be expected to have a Material Adverse Effect on Seller (even if the
likelihood of such event has previously been disclosed or could result from any item set forth in
the Seller Disclosure Schedule). Without limiting the generality of the foregoing, except as
expressly contemplated by this Agreement or disclosed in the Seller Disclosure Schedule, Seller
shall not, from the date of this Agreement until the Closing Date, directly or indirectly, do or
propose to do any of the following without the prior written consent of Buyer:
(a) Declare or pay any dividends on or make any other distributions (whether in cash, stock or
property) with respect to any of its capital stock, or split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of their capital stock, or repurchase or otherwise acquire, directly
or indirectly, any shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares at cost in
connection with any termination of service to Seller;
(b) Issue, deliver, sell, or purchase any shares of its stock;
(c) Cause or permit any amendments to their organization documents that would have an adverse
effect on the Transaction;
(d) Enter into any commitment or transaction not in the ordinary course of business;
(e) Terminate any employees or xxxxx xxxxxxxxx or termination pay to any director, officer,
employee or consultant;
(f) Enter into any transaction with their officers, directors or shareholders or their
Affiliates;
(g) Amend or otherwise modify the material terms of any Seller Contract or Governmental
Approval;
(h) Transfer to any person or entity any rights to any of their Intellectual Property Rights;
(i) Sell, lease, license or otherwise dispose of any of its assets outside of the ordinary
course of business;
(j) Commence a Proceeding other than for the routine collection of bills;
(k) Acquire or agree to acquire by merging, consolidating or entering into a joint venture
arrangement with, or by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
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organization or division thereof, or otherwise acquire or agree to acquire any assets which
are material, individually or in the aggregate, to the financial condition, results of operations,
business or properties of Seller taken as a whole;
(l) Adopt, amend or terminate any employee benefit plans, programs, policies or other
arrangements, or enter into any employment contract, pay any special bonus or special remuneration
to any director, employee or consultant, or increase the salaries or wage rates of their employees
other than pursuant to scheduled employee reviews under Seller’s normal employee review cycle, or
in connection with the hiring of employees other than officers in the ordinary course of business,
in all cases consistent with past practice;
(m) Incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or guarantee any debt securities of others;
(n) Revalue any of its assets, including writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business and consistent with past
practice;
(o) Pay, discharge or satisfy any Liability, other than the payment, discharge or satisfaction
of obligations in the ordinary course of business or liabilities reflected or reserved against in
the Financial Statements;
(p) Make any material tax election other than in the ordinary course of business and
consistent with past practice, change any material tax election, adopt any material tax accounting
method other than in the ordinary course of business and consistent with past practice, change any
material tax accounting method, file any material tax return (other than any estimated tax returns,
payroll tax returns or sales tax returns) or any amendment to a material tax return, enter into any
closing agreement, settle any tax claim or assessment, or consent to any extension or waiver of the
limitation period, applicable to any tax claim or assessment;
(q) Fail to pay or otherwise satisfy its monetary obligations as they become due, except such
as are being contested in good faith;
(r) Waive or commit to waive any rights with a value in excess of $5,000, or forgive any
indebtedness owed to Seller;
(s) Cancel, materially amend or renew any insurance policy other than in the ordinary course
of business;
(t) Take any action or fail to take any action that would cause a Material Adverse Effect; or
(u) Enter into any contract or agree, in writing or otherwise, to take any of the actions
described above in this Section 6.1, or any action that would make any of their
representations or warranties contained in this Agreement untrue or incorrect in any material
respect or prevent them from performing or cause them not to perform their covenants hereunder.
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6.2 No Solicitation. Until the earlier of (a) the Closing and (b) the termination of this
Agreement pursuant to its terms, Parent and Seller shall not, and Parent and Seller shall cause
their Representatives not to, directly or indirectly,
(i) initiate, solicit or encourage (including by way of furnishing information regarding the
Business or the Purchased Assets or Assumed Liabilities) any inquiries, or make any statements to
third parties, which may reasonably be expected to lead to any proposal concerning the sale of
Seller, the Business or the Purchased Assets or Assumed Liabilities (whether by way of merger,
purchase of capital shares, purchase of assets or otherwise) (a “Competing Transaction”); or
(ii) hold any discussions or enter into any agreements with, or provide any information or
respond to, any third party concerning a potential Competing Transaction or cooperate in any way
with, agree to, assist or participate in, solicit, consider, entertain, facilitate or encourage any
effort or attempt by any third party to do or seek any of the foregoing.
(iii) If at any time prior to the earlier of (x) the Closing and (y) the termination of this
Agreement pursuant to its terms, Parent or Seller is approached in any manner by a third party
concerning a Competing Transaction (a “Competing Party”), Parent and Seller shall promptly inform
Buyer regarding such contact and furnish Buyer with a copy of any inquiry or proposal, or, if not
in writing, a description thereof, including the name of such Competing Party, and Parent and
Seller shall keep Buyer informed of the status and details of any future notices, requests,
correspondence or communications related thereto.
ARTICLE 7
7.1 Shareholder Vote. Parent and Seller shall promptly after the date hereof obtain the
consent of their shareholders and shall take all action required by Japanese and California Law and
their organizational documents for the purpose of approving this Agreement, the other Transaction
Documents and the consummation of the Transaction.
7.2 Certain Notifications. Parent and Seller shall give prompt notice to Buyer of:
(a) the occurrence or non-occurrence of any event, the occurrence or non-occurrence of which
reasonably could be expected to cause any representation or warranty of Parent or Seller contained
in this Agreement to be untrue or inaccurate in any material respect at or prior to the Closing
Date, and
(b) any failure of Parent or Seller to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by Parent or Seller hereunder;
provided, that the delivery of any notice pursuant to this Section 7.2 shall
not limit or otherwise affect any remedies available to Buyer or affect or be deemed to modify any
representation or warranty made by Parent or Seller hereunder.
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7.3 Access to Information. From the date of this Agreement until the Closing Date, upon
reasonable notice, Parent and Seller shall:
(a) give Buyer and its Representatives full access to Seller’s buildings, offices, and other
facilities, to Persons having business relationships with Seller (including suppliers, licensees,
customers and distributors), and to all of their books and records, whether located on their
premises or at another location,
(b) permit Buyer to make such inspections as it may require,
(c) cause their officers to furnish Buyer with such financial, operating, technical and
product data and other information with respect to the Business and the assets of Seller as it from
time to time may request, including financial statements and schedules,
(d) allow Buyer the opportunity to interview Seller’s employees and other personnel and
Affiliates, and
(e) assist and cooperate with Buyer in the development of integration plans for implementation
by Buyer following the Closing;
provided, that no investigation pursuant to this Section 7.3 shall affect or
be deemed to modify any representation or warranty made by Parent or Seller herein.
7.4 Best Efforts. From the date of this Agreement until the Closing, Parent and Seller shall
use best efforts to cause to be fulfilled and satisfied all of the conditions to Closing set forth
in Article 8.
7.5 Consents. Parent and Seller will use best efforts to obtain prior to Closing all Consents
from Governmental Authorities or under any contracts or other agreements as may be required in
connection with the Transaction so as to preserve all rights of and benefits to Seller thereunder.
At the request of Seller, Buyer shall provide Seller with such assistance and information as is
reasonably requested by Seller to obtain such Consents. Any costs incurred in obtaining the
Consents shall be borne by Seller.
7.6 Expenses. Whether or not the Transaction is consummated, except as otherwise provided
herein, all fees and expenses incurred in connection with the Transaction including, but not
limited to, all legal, accounting, financial, advisory, consulting and all other fees and expenses
of third parties incurred by a party in connection with the negotiation and effectuation of the
terms and conditions of this Agreement and the Transaction contemplated hereby, shall be the
obligation of the respective party incurring such fees and expenses.
7.7 Confidentiality. Except as contemplated by this Agreement, no disclosure of this
Agreement or the subject matter hereof shall be made by Parent or Seller without the prior written
consent of Buyer. At the Closing, the obligations of Buyer under that certain Non-Disclosure
Agreement, dated July 26, 2007 (the “Non-Disclosure Agreement”), between the parties hereto, with
respect to all information relating to the Business and the Business Assets shall terminate. From
and after the Closing, Parent and Seller shall treat all information relating to the Business
(whether disclosed to Parent or Seller by Buyer or held or owned by Parent or Seller prior to the
Closing) as if it had been disclosed to Parent and Seller by Buyer pursuant to such Non-Disclosure
Agreement, or as otherwise provided in any of the Transaction Documents.
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(a) From and after the Closing, neither Parent nor Seller, nor any Affiliate of Parent or
Seller shall, directly or indirectly:
(i) for so long as Parent or Seller distribute Buyer’s products (including any products
relating to the Business and the Purchased Assets), engage or invest in, own, manage, operate,
finance or control, or participate in the ownership, management, operation, finance or control of,
be employed by, associated with or in any manner connected with, or render services or advice to,
any Person whose products or activities are the same as, similar to or in any way competitive with
any of the products or activities of the Business as currently conducted or as currently
contemplated by Parent or Seller to be conducted in the Restricted Territory; provided,
that Parent and Seller may operate in the 3D market so long as such operations are not in any way,
directly or indirectly, competitive with the Poser 3D character design and any human figure 3D
tools; provided, further, that sales by Parent and Seller of the Amapi, Carrara,
Sunny 3D, Magical Sketch, Vue family products and the Shade family products shall not be
interpreted to contravene this Section 7.8(a)(i). “Restricted Territory” shall mean
worldwide;
(ii) at any time, either for itself or for any other Person, solicit or encourage, or take any
action intended to solicit or encourage, any employee, director, partner, independent contractor or
consultant of Buyer or any Affiliate of Buyer to terminate, discontinue or alter his, her or its
relationship with Buyer or any such Affiliate, or in any other way interfere with the relationship
between any such Person and Buyer or any such Affiliate; provided, that the foregoing shall
not apply to general solicitations for job positions not specifically directed at Buyer’s or any
such Affiliate’s employees, directors, partner, contractors or consultants;
(iii) at any time, employ or otherwise engage as a contractor or consultant any Person
employed or engaged as a contractor or consultant by Buyer or any Affiliate of Buyer during such
Person’s employment or engagement with Buyer or any such Affiliate or for one year following
termination of such employment or engagement; or
(iv) at any time, divert or attempt to divert from Buyer or any Affiliate of Buyer any
business of any kind in which they are engaged, or otherwise induce or attempt to induce any
supplier or customer of the Business to terminate, discontinue or alter his, her or its
relationship with Buyer or any Affiliate of Buyer.
(b) Parent and Seller acknowledge that (i) the value of the Purchased Assets and goodwill
thereof are integral components of the value of the Business to Buyer, and (ii) the scope of the
covenants contained in this Section 7.8, including as to time and geography, are necessary
to preserve the value of the Purchased Assets for Buyer and to protect the goodwill of the
Business. Parent and Seller also acknowledge that the limitations of time, geography and scope of
activity agreed to in this Section 7.8 are reasonable because, among other things,
(1) Buyer, Parent and Seller are engaged in a highly competitive industry, (2) Parent and Seller
have had unique access to the trade secrets and know-how of the Purchased Assets, including the
plans and strategy (and, in particular, the competitive strategy) relating to the Purchased Assets,
and (3) Parent and Seller are receiving significant consideration in connection with the
consummation of the transactions contemplated by this Agreement.
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(c) It is the intention of the parties that these covenants be enforced to the greatest extent
(but to no greater extent), as to time, geography, and scope, as is permitted by the law of that
jurisdiction whose law is found to be applicable to any acts in breach of these covenants. These
covenants shall be governed by and construed according to that law (from among those jurisdictions
arguably applicable to this Agreement and those in which a breach of this Agreement is alleged to
have occurred or to be threatened) which best gives them effect. The prohibitions in each of
subsection (a)(i) to (a)(iv) of this Section 7.8 shall be deemed, and shall be construed
as separate and independent agreements between Buyer, Parent and Seller. If any such agreement or
any part of such agreement is held invalid, void or unenforceable by any court of competent
jurisdiction, such invalidity, voidness, or unenforceability shall in no way render invalid, void,
or unenforceable any other part of them or any separate agreement not declared invalid, void or
unenforceable; and this Agreement shall in such case be construed as if the invalid, void, or
unenforceable provisions were omitted. If any court of competent jurisdiction shall determine that
the provisions of this Section 7.8 exceed the time, geographic or scope limitations
permitted by applicable law, then such provisions shall nevertheless be enforceable by such court
against the Parent and Seller upon such shorter term, or within such lesser geographic area or
scope, as may be determined by such court to be reasonable and enforceable.
(d) The parties agree that the covenants of Parent and Seller not to compete contained in this
Section 7.8 may be assigned by Buyer to any Person to whom may be transferred the Business
of Seller by the sale or transfer of their business and assets or otherwise. It is the parties’
intention that these covenants of Parent and Seller shall inure to the benefit of any Person that
may succeed to the Business and Purchased Assets of Seller (as acquired by Buyer under this
Agreement) with the same force and effect as if these covenants were made directly with such
successor.
(e) The parties agree that in the event of a breach by Parent or Seller of any of the
covenants set forth in Section 7.8, monetary damages alone would be inadequate to fully
protect Buyer from, and compensate Buyer for, the harm caused by such breach or threatened breach.
Accordingly, Parent and Seller agree that if they breach or threaten breach of any provision of
Section 7.8, Buyer shall be entitled to, in addition to any other right or remedy otherwise
available, injunctive relief restraining such breach or threatened breach and to specific
performance of any such provision of Section 7.8. Buyer shall not be required to post a
bond or other security in connection with, or as a condition to, obtaining such relief before a
court of competent jurisdiction.
7.9 Bulk Sales Law Waiver. Subject to Section 10.2, each party hereto agrees to waive
compliance by the other with any applicable bulk sales Legal Requirements in connection with the
Transaction.
7.10 Consents; Revenue. If Parent and Seller do not obtain all Consents under all contracts
or other agreements as may be required in connection with the Transaction, including those Consents
listed in Section 4.3 of the Disclosure Schedule and any other Consents necessary to assign
the Seller Contracts to Buyer, before November 30, 2007, Seller shall assign and pay to Buyer all
revenues of the Business generated after such date.
29
7.11 Employees. The parties intend that existing contracts of employment of any employees of
Parent or Seller shall not be assumed by Buyers as a result of the Transaction. Except as set
forth on Schedule 1.3, Parent and Seller shall be solely responsible for all obligations
and liabilities for severance or termination pay, benefits or notice under any plan, program,
policy or Legal Requirement with respect to any employee of Parent or Seller which accrues on or
prior to the Closing Date.
7.12 Receivables. Within one business day of the Closing Date, Parent and Seller shall
deliver to Buyer an accurate and complete preliminary list of all Receivables existing as of the
Closing Date (the “Preliminary Receivables”). Within twenty days of the Closing Date, Parent and
Seller shall deliver to Buyer an accurate and complete final list of all Receivables existing as of
the Closing Date (the “Final Receivables”). The parties acknowledge and agree that the
representation set forth in Section 4.8 shall apply to the Preliminary Receivables and the
Final Receivables.
ARTICLE 8
8.1 Conditions Precedent to Obligations of Buyer. The obligations of Buyer to consummate the
Transaction are subject to the satisfaction of the following conditions, unless waived by Buyer in
writing:
(a) Representations and Warranties. The representations and warranties of Parent and
Seller set forth in this Agreement, or in any written statement or certificate that shall be
delivered to Buyer by Parent and Seller under this Agreement, without regard to qualifications
therein as to “materiality” or “Material Adverse Effect,” shall be true and correct on and as of
the date made and as of the Closing Date as if made on the date thereof (except to the extent such
representation or warranty specifies an earlier date).
(b) Performance of Obligations. Parent and Seller shall have performed all
obligations and covenants required to be performed by them under this Agreement and any other
agreement or document entered into in connection herewith prior to the Closing Date.
(c) No Material Adverse Change. There shall have been no material adverse change in
the assets, liabilities, business, financial condition or prospects of Seller from the date hereof
through the Closing Date, and Seller shall not have suffered any material loss or damage to any of
its assets, whether or not covered by insurance.
(d) Shareholder Consent. Seller shall have obtained the consent of its shareholders
approving this Agreement, the Transaction Documents and the consummation of the Transaction.
(e) Legal Requirements. No Legal Requirement shall be in effect which prohibits or
materially restricts the consummation of the Transaction at the Closing, or which otherwise
adversely affects in any material respect the right or ability of Buyer to own, operate or control
the Business or the Purchased Assets, in whole or material part, and no Proceeding
shall be pending or threatened in writing by a Governmental Authority which is reasonably
likely to result in a Legal Requirement having such an effect.
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(f) Closing Deliveries. Parent and Seller shall have delivered to Buyer all of the
closing documents and agreements set forth in Sections 3.2 and 3.4.
(g) Employees. Not less than 85% of the individuals listed on Schedule 8.1(g)
shall have entered into an offer letter providing for them to become employees of Buyer following
the Closing.
(h) Use of Name. Parent, Seller and Buyer shall have executed and delivered a
royalty-free license, in a form acceptable to Buyer, for Buyer to use (i) the name “e frontier” and
any logo associated with the name “e frontier” for a period of one year from the Closing Date; and
(ii) the “xxxxxxxxx.xxx” Internet domain name and address for a period of three months from the
Closing Date. Further, such license shall provide that, for a period of one year from the Closing
Date, Parent and Seller shall redirect all electronic traffic relating to the Business and the
Purchased Assets from the “xxxxxxxxx.xxx” Internet domain and address to an Internet domain and
address designated by Buyer.
(i) Poser License. Parent, Seller and Buyer shall have executed and delivered a
royalty-free license, in a form acceptable to Buyer, for Parent and Seller to use Poser SDK and the
name of PoserFusion™ in their Shade product.
(j) Japanese Content Paradise. Parent, Seller and Buyer shall have executed and
delivered an agreement, in a form acceptable to Buyer, pursuant to which Parent and Seller agree to
manage and operate the Japanese version of Content Paradise for a period of one year following the
Closing.
(k) Distribution Agreement. Parent, Seller and Buyer shall have executed and
delivered a distribution agreement, in a form acceptable to Buyer and Parent, pursuant to which
Parent and Seller agree to distribute Buyer’s products in such territories as may be agreed by the
parties and Buyer agrees to distribute Parent’s Seller’s products in such territories as may be
agreed by the parties.
(l) Work for Hire Agreement. Buyer, Seller and the Aquazone engineer and artist shall
have entered into a work for hire agreement in a form acceptable to Buyer and Parent.
(m) Serial Number Generator SDK License. Parent, Seller and Buyer shall have executed
and delivered a royalty-free license, in a form acceptable to Buyer, for Parent and Seller to use
the serial number generator SDK that is included in the Purchased Assets.
(n) Other Agreements. Parent, Seller and Buyers shall have executed and delivered
such additional distribution, license and other agreements as shall be requested by Buyer to
conduct the Business and operate the Purchased Assets as currently conducted and as proposed to be
conducted by Buyer following the Closing Date.
(o) Termination of Agreements. Parent and Seller shall have (i) terminated all rights
in all agreements relating to the Purchased Assets that are not assigned to Buyer in
connection with this transaction; and (ii) provided evidence satisfactory to Buyer of such
terminations in the form of a letter of notification.
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8.2 Conditions Precedent to Obligations of Parent and Seller. The obligations of Parent and
Seller to consummate the Transaction are subject to the satisfaction of the following conditions,
unless waived by Parent and Seller in writing:
(a) Representations and Warranties. The representations and warranties of Buyer set
forth in this Agreement, or in any written statement or certificate that shall be delivered to
Seller by Buyer under this Agreement, without regard to qualifications therein as to “materiality”
or “Material Adverse Effect,” shall be true and correct on and as of the date made and as of the
Closing Date as if made on the date thereof (except to the extent such representation or warranty
specifies an earlier date).
(b) Performance of Obligations. Buyer shall have performed in all material respects
all obligations and covenants required to be performed by it under this Agreement and any other
agreement or document entered into in connection herewith prior to the Closing Date.
(c) Deliveries. Buyer shall have delivered to Seller all of the closing documents and
agreements set forth Sections 3.3 and 3.4
ARTICLE 9
9.1 Circumstances for Termination. At any time prior to the Closing, this Agreement may be
terminated by written notice:
(a) by a written consent signed by Buyer, on the one hand, and Parent and Seller, on the other
hand;
(b) by Buyer, on the one hand, or Parent and Seller, on the other hand, if the other party is
in breach of any provision of this Agreement, which breach would give rise to a failure to satisfy
any condition set forth in Section 8.1(a) and (b), and Section 8.2(a) and
(b);
(c) by either Buyer, on the one hand, or Parent and Seller, on the other hand, if the Closing
has not occurred on or prior to March 31, 2008 (the “Outside Closing Date”) for any reason; and
(d) by Buyer, on the one hand, or Parent and Seller, on the other hand, if satisfaction of a
closing condition of the terminating party in Article 8 is impossible, provided,
that the terminating party is not, on the date of termination, in material breach of any material
provision of this Agreement.
9.2 Effect of Termination. If this Agreement is terminated in accordance with Section
9.1, all obligations of the parties hereunder shall terminate, except for the obligations set
forth in this Article 9 and Sections 7.7, 11.3, 11.12,
11.13, and 11.14; provided, that such termination shall not release either
party from any liability that has already accrued as of the effective date of such termination, and
shall not constitute a waiver or release of, or otherwise be
deemed to prejudice or adversely affect, any rights, remedies or claims, whether for damages
or otherwise, which a party may have hereunder, at law, equity or otherwise or which may arise out
of or in connection with such termination.
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ARTICLE 10
(a) All representations and warranties of Parent and Seller in this Agreement or any other
Transaction Document shall survive the Closing; provided, that the representations and
warranties of Parent and Seller contained in Section 4.14 shall survive only until the
fifth anniversary of the Closing Date.
(b) All of Buyer’s representations and warranties in this Agreement or any other Transaction
Document shall terminate on the Closing Date, and shall thereafter be of no further force or
effect.
(c) The representations and warranties contained in this Agreement (and any right to
indemnification for breach thereof) shall not be affected by any investigation, verification or
examination by Buyer or by any Representative of Buyer or by Buyer’s Knowledge of any facts with
respect to the accuracy or inaccuracy of any such representation or warranty.
10.2 Indemnification by Parent and Seller. Parent and Seller shall jointly and severally
indemnify, defend and hold harmless Buyer and its Representatives from and against any and all
Damages, whether or not involving a third-party claim, including reasonable attorneys’ fees
(collectively, “Buyer Damages”), arising out of, relating to or resulting from:
(a) any breach of a representation or warranty of Parent or Seller contained in this Agreement
or in any other Transaction Document;
(b) any breach of a covenant of Parent or Seller contained in this Agreement or in any other
Transaction Document;
(c) any Excluded Asset or Excluded Liability;
(d) any Liability for Poser product returns in Japan; provided that (i) the amount of
Parent’s and Seller’s indemnification obligations under this Section 10.2(d) shall not
exceed $125,000, and (ii) Seller’s indemnification obligations under this Section 10.2(d)
shall not apply to any Liability after Poser 8 is released by Buyer following the Closing Date; or
(e) any noncompliance with applicable bulk sales or fraudulent transfer Legal Requirements in
connection with the Transaction.
10.3 Procedures for Indemnification. Promptly after receipt by a party entitled to
indemnification hereunder (the “Indemnitee”) of written notice of the assertion or the commencement
of any Proceeding by a third-party with respect to any matter referred to in
33
Sections 10.2, the Indemnitee shall give written notice thereof to the party obligated
to indemnify Indemnitee (the “Indemnitor”), which notice shall include a description of the
Proceeding, the amount thereof (if known and quantifiable) and the basis for the Proceeding, and
thereafter shall keep the Indemnitor reasonably informed with respect thereto; provided,
that failure of the Indemnitee to give the Indemnitor notice as provided herein shall not relieve
the Indemnitor of its obligations hereunder except to the extent that the Indemnitor is prejudiced
thereby. A claim for indemnification for any matter not involving a third-party Proceeding may be
asserted by notice to the party from whom indemnification is sought and shall be paid promptly
after such notice. The Indemnitee shall have the right in its sole discretion to conduct the
defense of any such Proceeding (at the expense of the Indemnitor). If any such action or claim is
settled with the prior written consent of Seller, or if there be a final judgment for the plaintiff
in any such action, the Indemnitee shall be entitled to indemnification for the amount of any
Damages relating thereto.
10.4 Remedies Cumulative. The remedies provided in this Agreement shall be cumulative and
shall not preclude Buyer from asserting any other right, or seeking any other remedies, against
Parent and Seller.
ARTICLE 11
11.1 Amendments and Waivers. This Agreement may not be amended, supplemented or modified,
except by an agreement in writing signed by each of the parties. Either party may waive compliance
by the other party with any term or provision of this Agreement; provided, that such waiver
shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure.
11.2 Notices. All notices, requests, demands and other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly given, made and
received (i) when delivered personally or by telecopy, (ii) one (1) day following the day when
deposited with a reputable, established overnight courier service for delivery to the intended
addressee, or (iii) three (3) days following the day when deposited with the United States Postal
Service as first class, registered or certified mail, postage prepaid and addressed as set forth
below:
If to Buyer:
Xxxxx Micro Software, Inc.
00 Xxxxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
00 Xxxxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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With a copy, which shall not constitute notice, given in the manner prescribed above, to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 000000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 000000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Parent or Seller:
e frontier, Inc.
e frontier America, Inc.
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
e frontier America, Inc.
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy, which shall not constitute notice, given in the manner prescribed above, to:
Comstock, Thompson, Xxxxx & Xxxxxxx
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Any party may alter its notice address by notifying the other parties of such change of
address in conformity with the provisions of this section.
11.3 Governing Law. This Agreement is to be construed in accordance with and governed by the
internal laws of the State of California, without giving effect to any choice of law rule that
would cause the application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties.
11.4 Exhibits and Schedules. All Exhibits and Schedules attached hereto are hereby
incorporated by reference into, and made a part of, this Agreement.
11.5 Assignments Prohibited; Successors and Assigns. Neither Parent nor Seller may assign, or
suffer or permit an assignment (by operation of law or otherwise) of, its respective rights or
obligations under or interest in this Agreement without the prior written consent of Buyer. Any
purported assignment or other disposition by Parent or Seller, except as permitted herein, shall be
null and void. For purposes of this section, the terms “assign” and
35
“assignment” shall be deemed to include (i) a merger in which a party hereto is not the
surviving entity, (ii) a consolidation or division of a party hereto, (iii) a sale of all or
substantially all of the assets of a party hereto, or (iv) a change of control resulting from a
sale or repurchase of shares or similar transaction involving a party hereto. Subject to the
foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties and
their respective successors and permitted assigns.
11.6 No Third-Party Beneficiaries. Except as provided in Section 10.2, the terms and
provisions of this Agreement are intended solely for the benefit of each party hereto and their
respective successors and permitted assigns, and the parties do not intend to confer third-party
beneficiary rights upon any other person.
11.7 Counterparts. This Agreement may be executed (including, without limitation, by
facsimile signature) in one or more counterparts, with the same effect as if the parties had signed
the same document. Each counterpart so executed shall be deemed to be an original, and all such
counterparts shall be construed together and shall constitute one agreement.
11.8 Severability. If any provision of this Agreement, or the application of any such
provision to any Person or set of circumstances, shall be determined to be invalid, unlawful, void
or unenforceable to any extent, the remainder of this Agreement, and the application of such
provision to Persons or circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.
11.9 Entire Agreement. This Agreement and the Transaction Documents contain the entire
understanding among the parties hereto with respect to the subject matter hereof and supersede all
prior and contemporaneous agreements and understandings, inducements or conditions, express or
implied, oral or written. The parties intend that this Agreement and the Transaction Documents be
the several, complete and exclusive embodiment of their agreement, and that any evidence, oral or
written, of a prior or contemporaneous agreement that alters or modifies this Agreement shall not
be admissible in any proceeding concerning this Agreement. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with any of the terms
hereof.
11.10 Interpretation. Unless otherwise indicated herein, with respect to any reference made
in this Agreement to a Section (or Article, Subsection, Paragraph, Subparagraph or Clause), Exhibit
or Schedule, such reference shall be to a section (or article, subsection, paragraph, subparagraph
or clause) of, or an exhibit or schedule to, this Agreement. Any article, section, subsection,
paragraph or subparagraph headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words
“include,” “includes” or “including” are used in this Agreement, they shall be deemed, as the
context indicates, to be followed by the words “but (is/are) not limited to.” Words used herein,
regardless of the number and gender specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine or neuter, as the
context indicates is appropriate. Where specific language is used to clarify or illustrate by
example a general statement contained herein, such specific language shall not be deemed to modify,
limit or restrict the construction of the general statement which is being clarified or
illustrated.
36
11.11 Construction. The construction of this Agreement shall not take into consideration the
party who drafted or whose representative drafted any portion of this Agreement, and no canon of
construction shall be applied that resolves ambiguities against the drafter of a document. Each
party acknowledges that: (a) it has read this Agreement; (b) it has been represented in the
preparation, negotiation and execution of this Agreement by legal counsel of its own choice or has
voluntarily declined to seek such counsel; and (c) it understands the terms and consequences of
this Agreement and is fully aware of the legal and binding effect of this Agreement.
11.12 Expenses of the Parties. Subject to provisions contained herein relating to recovery of
fees in connection with legal actions or proceedings, each party shall bear the expenses incurred
by such party in connection with the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby.
11.13 Jurisdiction; Service of Process. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be brought against any of
the parties only in the courts of the State of California, County of Orange, or, if it has or can
acquire the necessary jurisdiction, in the United States District Court for the Southern District
of California. Each of the parties consents to the exclusive jurisdiction of such courts (and the
appropriate appellate courts) in any such action or proceeding and waives any objection to venue
laid therein. Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
11.14 Waiver of Jury Trial. THE PARTIES HEREBY EXPRESSLY WAIVE THE RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING BROUGHT BY OR AGAINST EITHER OF THEM RELATING TO THIS AGREEMENT. THE
PARTIES ACKNOWLEDGE THAT THIS AGREEMENT INVOLVES COMPLEX TRANSACTIONS AND THAT DISPUTES HEREUNDER
WILL BE MORE QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT DECISION MAKER.
ACCORDINGLY, THE PARTIES AGREE, BASED ON THE ADVICE OF THEIR COUNSEL, THAT ANY DISPUTE HEREUNDER BE
RESOLVED BY A JUDGE APPLYING APPLICABLE LAW.
11.15 Recovery of Fees by Prevailing Party. If any legal action, including, without
limitation, an action for arbitration or injunctive relief, is brought relating to this Agreement
or the breach or alleged breach hereof, the prevailing party in any final judgment or arbitration
award, or the non-dismissing party in the event of a voluntary dismissal by the party instituting
the action, shall be entitled to the full amount of all reasonable expenses, including all court
costs, arbitration fees and actual attorneys’ fees paid or incurred in good faith.
11.16 Further Assurances. Each party agrees (a) to furnish upon request to each other party
such further information, (b) to execute and deliver to each other party such other documents, and
(c) to do such other acts and things, all as another party may reasonably request for the purpose
of carrying out the intent of this Agreement and the transactions contemplated by this Agreement.
11.17 Time of the Essence. With regard to all dates and time periods set forth or referred to
in this Agreement, time is of the essence.
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[Signatures Follow On a Separate Page]
38
IN WITNESS WHEREOF, each of the parties has caused this Asset Purchase Agreement to be
executed on its behalf by their respective officers thereunto duly authorized all as of the date
first written above.
“Buyer” | ||
Xxxxx Micro Software, Inc. | ||
By: /s/ Xxxxxxx X. Xxxxx, Xx. | ||
Name: Xxxxxxx X. Xxxxx, Xx. | ||
Title: President and Chief Executive Officer | ||
E Frontier Acquisition Corporation | ||
By:/s/ Xxxxxxx X. Xxxxx, Xx. | ||
Name: Xxxxxxx X. Xxxxx, Xx. | ||
Title: President and Chief Executive Officer | ||
“Parent” | ||
e frontier, Inc. | ||
By: /s/ Xxxxxxx Xxxx | ||
Name: Xxxxxxx Xxxx | ||
Title: President | ||
“Seller” | ||
e frontier America, Inc. | ||
By: /s/ Xxxxxxx Xxxx | ||
Name: Xxxxxxx Xxxx | ||
Title: CEO and President |
[Signature Page to Asset Purchase Agreement]
EXHIBIT A
CERTAIN DEFINITIONS
CERTAIN DEFINITIONS
“Affiliate” shall mean any member of the immediate family (including spouse, brother,
sister, descendant, ancestor or in-law) of any officer, director or holder of 5% or more of the
outstanding equity interests of Parent or Seller or any corporation, partnership, trust or other
entity in which Parent or Seller or any such family member has a five percent (5%) or greater
interest or is a director, officer, partner or trustee. The term Affiliate shall also include any
entity which controls, is controlled by, is under common control with any of the individuals or
entities described in the preceding sentence.
“Agreement” shall mean the Asset Purchase Agreement to which this Exhibit A is
attached (including the Seller Disclosure Schedule and all other schedules and exhibits attached
hereto), as amended from time to time.
“Assignment and Assumption” shall have the meaning specified in
Section 3.4(a).
“Assumed Liabilities” shall have the meaning specified in Section 1.3.
“Books and Records” shall have the meaning specified in Section 1.1(k).
“Business” shall have the meaning set forth in the first Recital.
“Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on
which banking and savings and loan institutions are authorized or required by law to be closed.
“Buyer” shall have the meaning set forth in the Preamble.
“Buyer Damages” shall have the meaning specified in Section 10.2.
“Closing” shall have the meaning specified in Section 3.1.
“Closing Date” shall have the meaning specified in Section 3.1.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Competing Party” shall have the meaning specified in Section 6.2.
“Competing Transaction” shall have the meaning specified in Section 6.2.
“Confidential Information” shall mean all Trade Secrets and other confidential and/or
proprietary information of a Person, including information derived from reports, investigations,
research, work in progress, codes, marketing and sales programs, financial projections, cost
summaries, pricing formula, contract analyses, financial information, projections, confidential
filings with any state or federal agency, and all other confidential concepts, methods of doing
business, ideas, materials or information prepared or performed for, by or on behalf of such Person
by its employees, officers, directors, agents, representatives, or consultants.
Exhibit A-1
“Consent” shall mean any approval, consent, ratification, permission, waiver or
authorization (including any Governmental Approval).
“Contract” shall mean any agreement, contract, consensual obligation, promise,
understanding, arrangement, commitment or undertaking of any nature (whether written or oral and
whether express or implied), whether or not legally binding.
“Contractors” shall have the meaning specified in Section 4.16(a).
“Copyrights” shall mean all copyrights, including in and to works of authorship and
all other rights corresponding thereto throughout the world, whether published or unpublished,
including rights to prepare, reproduce, perform, display and distribute copyrighted works and
copies, compilations and derivative works thereof.
“Damages” shall mean and include any loss, damage, injury, decline in value, lost
opportunity, Liability, claim, demand, settlement, judgment, award, fine, penalty, Tax, fee
(including any legal fee, accounting fee, expert fee or advisory fee), charge, cost (including any
cost of investigation) or expense of any nature.
“Defined Benefit Plan” shall mean either a plan described in Section 3(35) of ERISA or
a plan subject to the minimum funding standards set forth in Section 302 of ERISA and Section 412
of the Code.
“Deposits and Advances” shall have the meaning specified in Section 1.1(g).
“Encumbrance” shall mean any lien, pledge, hypothecation, charge, mortgage, security
interest, encumbrance, equity, trust, equitable interest, claim, preference, right of possession,
lease, tenancy, license, encroachment, covenant, infringement, interference, Order, proxy, option,
right of first refusal, preemptive right, community property interest, legend, defect, impediment,
exception, reservation, limitation, impairment, imperfection of title, condition or restriction of
any nature (including any restriction on the voting of any security, any restriction on the
transfer of any security or other asset, any restriction on the receipt of any income derived from
any asset, any restriction on the use of any asset and any restriction on the possession, exercise
or transfer of any other attribute of ownership of any asset).
“Entity” shall mean any corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture, estate, trust or
company (including any limited liability company or joint stock company).
“Environmental Law” shall mean all applicable Legal Requirements governing, regulating
or otherwise affecting the environment, health or safety, including the federal Clean Air Act, the
federal Clean Water Act, the federal Resource Conservation and Recovery Act, the federal
Comprehensive Environmental Response, Compensation and Liability Act, the federal Toxic Substances
Control Act and their state and local counterparts.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
Exhibit A-2
“Estoppel Letters” shall have the meaning specified in Section 3.2(e).
“Excluded Assets” shall have the meaning specified in Section 1.2.
“Excluded Liabilities” shall have the meaning specified in Section 1.4.
“Financial Statements” shall have the meaning specified in Section 4.5(a).
“GAAP” means U.S. generally accepted accounting principles in effect on the date on
which they are to be applied pursuant to this Agreement, applied consistently throughout the
relevant periods.
“General Assignment and Xxxx of Sale” shall have the meaning specified in
Section 3.2(a).
“Governmental Approval” shall mean any: (a) permit, license, certificate, concession,
approval, consent, ratification, permission, clearance, confirmation, exemption, waiver, franchise,
certification, designation, rating, registration, variance, qualification, accreditation or
authorization issued, granted, given or otherwise made available by or under the authority of any
Governmental Authority or pursuant to any Legal Requirement; or (b) right under any Contract with
any Governmental Authority.
“Governmental Authority” shall mean any: (a) nation, principality, state,
commonwealth, province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or
quasi governmental authority of any nature (including any governmental division, subdivision,
department, agency, bureau, branch, office, commission, council, board, instrumentality, officer,
official, representative, organization, unit, body or Entity and any court or other tribunal);
(d) multinational organization or body; or (e) individual, Entity or body exercising, or entitled
to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or
taxing or arbitral authority or power of any nature.
“Hazardous Materials” shall mean the existence in any form of polychlorinated
biphenyls, asbestos or asbestos containing materials, urea formaldehyde foam insulation, oil,
gasoline, petroleum, petroleum products and petroleum-derived substances (other than in vehicles
operated in the ordinary course of business), pesticides and herbicides, and any other chemical,
material or substance regulated under any Environmental Laws.
“Holdback Amount” shall have the meaning specified in Section 2.2(a).
“Indemnitee” shall have the meaning specified in Section 10.3.
“Indemnitor” shall have the meaning specified in Section 10.3.
“Insurance Policies” shall have the meaning specified in Section 4.11.
“Intellectual Property Rights” shall mean any or all rights in and to intellectual
property and intangible industrial property rights, including, without limitation, (i) Patents,
Trade Secrets,
Copyrights, Mask Works, Trademarks and (ii) any rights similar, corresponding or equivalent to
any of the foregoing anywhere in the world.
Exhibit A-3
“Interim Balance Sheet” shall have the meaning specified in Section 4.5(a).
“Interim Balance Sheet Date” shall have the meaning specified in
Section 4.5(a).
“Inventory” shall have the meaning specified in Section 1.1(b).
“IRS” means the Internal Revenue Service.
“Knowledge” An individual shall be deemed to have “Knowledge” of a particular fact or
other matter if: (i) such individual is actually aware of such fact or other matter or (ii) a
prudent individual could be expected to discover or otherwise become aware of such fact or other
matter in the course of conducting a reasonably comprehensive investigation concerning the truth or
existence of such fact or other matter. Parent and Seller shall be deemed to have “Knowledge” of a
particular fact or other matter if any of their respective directors, officers or employees has
Knowledge of such fact or other matter.
“Legal Requirement” shall mean any federal, state, local, municipal, foreign or other
law, statute, legislation, constitution, principle of common law, resolution, ordinance, code,
Order, edict, decree, proclamation, treaty, convention, rule, regulation, permit, ruling,
directive, pronouncement, requirement (licensing or otherwise), specification, determination,
decision, opinion or interpretation that is, has been or may in the future be issued, enacted,
adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under
the authority of any Governmental Authority.
“Liability” shall mean any debt, obligation, duty or liability of any nature
(including any unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect,
conditional, implied, vicarious, derivative, joint, several or secondary liability), regardless of
whether such debt, obligation, duty or liability would be required to be disclosed on a balance
sheet prepared in accordance with generally accepted accounting principles and regardless of
whether such debt, obligation, duty or liability is immediately due and payable.
“Machinery and Equipment” shall have the meaning specified in Section 1.1(c).
“Mask Works” shall mean all mask works, mask work registrations and applications
therefor, and any equivalent or similar rights in semiconductor masks, layouts, architectures or
topology.
“Material Adverse Effect” means:
(i) with respect to Buyer, any event, change or effect that, when taken individually or
together with all other adverse events, changes and effects, is or is reasonably likely to prevent
or materially delay consummation of the Transaction or otherwise to prevent Buyer or its
subsidiaries from performing its obligations under this Agreement; and
Exhibit A-4
(ii) with respect to Parent or Seller, any event, change or effect that, when taken
individually or together with all other adverse events, changes and effects, is or is reasonably
likely (a) to be materially adverse to the condition (financial or otherwise), properties, assets
(including Purchased Assets), liabilities (including Assumed Liabilities), business, operations,
results of operations or prospects of Parent or Seller or the Business or (b) to prevent or
materially delay consummation of the Transaction or otherwise to prevent Parent or Seller from
performing their obligations under this Agreement.
“Material Contracts” shall have the meaning specified in Section 4.10.
“Member of the Controlled Group” shall mean each trade or business, whether or not
incorporated, that would be treated as a single employer with Seller under Section 4001 of ERISA or
Section 414(b), (c), (m) or (o) of the Code.
“Multiemployer Plan” shall mean a plan described in Section 3(37) of ERISA.
“Order” shall mean any: (a) temporary, preliminary or permanent order, judgment,
injunction, edict, decree, ruling, pronouncement, determination, decision, opinion, verdict,
sentence, stipulation, subpoena, writ or award that is or has been issued, made, entered, rendered
or otherwise put into effect by or under the authority of any court, administrative agency or other
Governmental Authority; or (b) Contract with any Governmental Authority that is or has been entered
into in connection with any Proceeding.
“Outside Closing Date” shall have meaning specified in Section 9.1(c).
“Patents” shall mean all United States and foreign (including Japanese) patents and
utility models and applications therefor and all reissues, divisions, re-examinations, renewals,
extensions, provisionals, continuations and continuations-in-part thereof, and equivalent or
similar rights anywhere in the world in inventions and discoveries, including invention disclosures
related to the Business or any Purchased Assets or Assumed Liabilities.
“Person” shall mean any individual, Entity or Governmental Authority.
“Personal Property” shall have the meaning specified in Section 1.1(d).
“Personal Property Leases” shall have the meaning specified in Section 1.1(e).
“Post-Closing Period” shall mean any taxable period beginning after the close of
business on the Closing Date or, in the case of any tax period which includes, but does not begin,
after the close of business on the Closing Date, the portion of such period beginning after the
close of business on the Closing Date.
“Pre-Closing Period” shall mean any taxable period ending on or before the close of
business on the Closing Date or, in the case of any taxable period which includes, but does not end
on, the Closing Date, the portion of such period up to and including the Closing Date.
Exhibit A-5
“Proceeding” shall mean any action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate proceeding),
prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation that is, has been or may in the
future be commenced, brought, conducted or heard at law or in equity or before any Governmental
Authority or any arbitrator or arbitration panel.
“PTO” shall have the meaning specified in Section 4.14(g).
“Purchase Price” shall have the meaning specified in Section 2.1.
“Purchased Assets” shall have the meaning specified in Section 1.1.
“Real Property Leases” shall mean all real estate leases to which Seller is a party
used, held for use or intended to be used in the Business.
“Receivables” shall have the meaning specified in Section 1.1(a).
“Registered Intellectual Property Rights” shall mean all United States, Japan,
international and foreign: (i) Patents, including applications therefor; (ii) registered
Trademarks, applications to register Trademarks, including intent-to-use applications, or other
registrations or applications related to Trademarks; (iii) Copyright registrations and applications
to register Copyrights; (iv) Mask Work registrations and applications to register Mask Works; and
(v) any other Intellectual Property Rights that is the subject of an application, certificate,
filing, registration or other document issued by, filed with, or recorded by, any state, government
or other public legal authority at any time.
“Representatives” shall mean officers, directors, employees, attorneys, accountants,
advisors, agents, distributors, licensees, shareholders, subsidiaries and lenders of a party. In
addition, all Affiliates of Seller shall be deemed to be “Representatives” of Seller.
“Restricted Asset” shall have the meaning specified in Section 1.5(a).
“Restricted Territory” shall have the meaning specified in Section 7.8(a)(i).
“Seller” shall have the meaning set forth in the Preamble.
“Seller Benefit Plans” shall have the meaning specified in Section 4.17.
“Seller Claims” shall have the meaning specified in Section 1.1(j).
“Seller Contracts” shall have the meaning specified in Section 1.1(h).
“Seller Disclosure Schedule” shall have the meaning specified in Article 4.
“Seller Intellectual Property” shall mean all Intellectual Property Rights related to
the Business, the Purchased Assets or the Assumed Liabilities and held by Seller, whether owned or
controlled, licensed, owned or controlled by or for, licensed to, or otherwise held by or for the
benefit of Seller, including the Seller Registered Intellectual Property Rights.
Exhibit A-6
“Seller Products” shall mean all products and services manufactured, made, designed,
maintained, supported, developed, sold, licensed, marketed, or otherwise distributed or provided
(or planned or envisioned to be manufactured, made, designed, maintained, supported,
developed, sold, licensed, marketed, or otherwise distributed or provided) by or for Seller
(including all versions and releases thereof, whether already distributed or provided, under
development, planned or conceived, or otherwise), together with any related materials, information
or data, including, without limitation, the names, numbers (e.g., part numbers) and packaging
associated with such products and services.
“Seller Registered Intellectual Property Rights” shall have the meaning specified in
Section 4.14(a).
“Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other assessment or charge of any kind whatsoever, together with any interest
or any penalty, addition to tax or additional amount and any interest on such penalty, addition to
tax or additional amount, imposed by any Tax Authority.
“Tax Authority” means Governmental Authority responsible for the imposition,
assessment or collection of any Tax (domestic or foreign).
“Tax Return” shall mean any return, statement, declaration, notice, certificate or
other document that is or has been filed with or submitted to, or required to be filed with or
submitted to, any Governmental Authority in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration, implementation or
enforcement of or compliance with any Legal Requirement related to any Tax.
“Trade Secrets” shall mean all trade secrets under applicable law and other rights in
know-how and confidential or proprietary information, processing, manufacturing or marketing
information, including new developments, inventions, processes, customer lists, ideas or other
proprietary information that provide Seller with advantages over competitors who do not know or use
it and documentation thereof (including related papers, blueprints, drawings, chemical
compositions, formulae, diaries, notebooks, specifications, designs, source code and object code,
methods of manufacture and data processing software, compilations of information) and all claims
and rights related thereto.
“Trademarks” shall mean any and all trademarks, service marks, logos, trade names,
corporate names, Internet domain names and addresses and general-use e-mail addresses, and all
goodwill associated therewith throughout the world.
“Transaction” shall mean, collectively, the transactions contemplated by this
Agreement.
“Transaction Documents” shall mean this Agreement and all other agreements,
certificates, instruments, documents and writings delivered by Buyer, Parent and/or Seller in
connection with the Transaction, including the Non-Disclosure Agreement.
Exhibit A-7
“Transfer Taxes” shall mean all federal, state, local or foreign sales, use, transfer,
real property transfer, mortgage recording, stamp duty, value-added or similar Taxes that may be
imposed in connection with the transfer of Purchased Assets or assumption of Assumed
Liabilities, together with any interest, additions to Tax or penalties with respect thereto and any
interest in respect of such additions to Tax or penalties.
“WARN Act” shall have the meaning specified in Section 4.16(e).
Exhibit A-8