EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
------------------------
MADE AS OF MAY 31, 2002
AMONG
LEVEL 8 SYSTEMS, INC.,
LEVEL 8 TECHNOLOGIES, INC.,
AND
STARQUEST VENTURES, INC.
Asset Purchase Agreement
This Asset Purchase Agreement (this "Agreement") is entered into as of May 31,
2002, by and among Starquest Ventures, Inc., a corporation organized under the
laws of California ("the "Purchaser"), Level 8 Systems, Inc., a corporation
organized under the laws of Delaware ("Parent") and Xxxxx 0 Xxxxxxxxxxxx, Xxx.,
a corporation organized under the laws of Delaware ("Subsidiary" and together
with Parent, the "Sellers").
WHEREAS, the Sellers are engaged in the business of developing, distributing,
licensing, maintaining, and supporting its StarSQL Software (the
"Software"); and
WHEREAS, the Purchaser has agreed to purchase from the Sellers, and the Sellers
have agreed to sell to the Purchaser the Assets (as defined below)
relating to the Software.
NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions,
representations and warranties set forth herein, and intending to be legally
bound hereby, the parties agree as follows:
1. Purchase and Sale of the Assets
1.1. Purchase and Sale of Assets
On the terms and subject to the conditions set forth in this
Agreement, as of the Closing Date, the Sellers shall sell, assign,
transfer and deliver to the Purchaser, and the Purchaser (relying
on the representations, warranties, undertakings and indemnities
made by the Sellers) shall purchase free and clear of any lien,
security interest, claim, condition, restriction or encumbrance
("Liens") all of the assets of the Sellers relating to the
Software listed on Schedule 1.1 (the "Assets"). At the Closing,
the Sellers shall effect such sale, assignment, transfer and
delivery by delivery by the Sellers to the Purchaser of the
Instruments of Assignment duly executed as shall be necessary to
vest in the Purchaser good and marketable title to the Assets free
and clear of any Liens.
1.2. Assumed Liabilities
Subject to the terms and conditions set forth herein, Purchaser,
on the Closing Date shall assume and hereafter pay, perform or
discharge when due or required to be performed, as the case may
be, (a) the obligations and liabilities of the Sellers under the
Assigned Contracts listed on Schedule 1.2 arising after May 31,
2002 and (b) the obligations and liabilities of Sellers with
respect to accrued commission payments in the amount of $34,034
relating to the services of Xx. Xxxxxxx (collectively, the
"Assumed Liabilities"). At the Closing, the Purchaser shall effect
the assumption of the Assumed Liabilities by delivery by the
Purchaser to the Sellers of the Instruments of Assignment duly
executed as shall be necessary to evidence the assignment and
assumption of the Assumed Liabilities by the Purchaser.
1.3. Excluded Liabilities
It is understood and agreed that except for the Assumed
Liabilities, the Purchaser shall not assume and shall not be
liable for or have any obligation in relation to any liability or
other obligation of the Sellers of any kind and nature, whether
known or unknown, contingent or non-contingent, disclosed or
undisclosed. All such liabilities and obligations shall be
retained by, remain the obligations of, and be paid and discharged
when due by, Sellers.
Without derogating from the foregoing paragraph, the Purchaser
does not assume and shall not be liable for the following
liabilities and obligations of the Sellers and none of the
following shall be included in the Assumed Liabilities:
1.3.1. Any liability arising under or in relation to the
Assigned Contracts with respect to the period prior to
May 31, 2002;
1.3.2. Any liability arising under or in relation to the Assets
with respect to the period prior to May 31, 2002,
whether such liability is known prior to May 31, 2002 or
not; or
1.3.3. Any liability under or in connection with any
litigation, proceeding or claim of any nature related to
the Assets with respect to the period prior to May 31,
2002, whether or not such litigation, proceeding or
claim is pending, threatened or asserted before, on or
after May 31, 2002.
1.4. Consideration
As consideration for the Assets purchased by the Purchaser
hereunder, the Purchaser shall (a) pay Sellers $300,000 in
immediately available funds by wire transfer upon Closing and (b)
deliver a promissory note in the principal amount of $65,000 in
substantially the form of the attached Exhibit 1.4 (collectively,
the "Consideration").
2. The Closing
2.1. Closing, Date and Location
Upon the terms and subject to the conditions contained in this
Agreement, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place upon the execution and
delivery of this Agreement or such other date, time and place as
will be agreed between the parties (the "Closing Date"), provided,
however that all the conditions set forth in Section 6 hereof are
satisfied or waived.
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2.2. Deliveries at the Closing
2.2.1. At the Closing, the Sellers shall deliver or cause to be
delivered to the Purchaser against the actual payment of
the Consideration in accordance with the provision of
Section 1.4:
2.2.1.1. One or more executed bills of sale and deeds
of assignment and assumption substantially in
the form of Exhibit 2.2.1.1 hereto
transferring and assigning the Assets and the
Assumed Liabilities to the Purchaser, and any
such other good and sufficient instruments as
shall be reasonably requested by Purchaser to
vest in the Purchaser good and marketable
title in and to all the Assets free and clear
of any Liens (collectively, the "Instruments
of Assignment"); and
2.2.1.2. The duly executed certificate of the
authorized officer of Sellers in the form of
Exhibit 2.2.1.2 certifying the fulfillment of
the conditions set forth in Section 6.2
below.
2.2.1.3. A copy of the fairness opinion delivered to
the Board of Directors of Parent in
connection with the transactions contemplated
herein.
2.2.2. At the Closing, the Purchaser shall deliver or cause to
be delivered to Sellers:
2.2.2.1. the Consideration in accordance with the
provision of Section 1.4;
2.2.2.2. The duly executed certificate of the duly
authorized officer of Purchaser in the form
of Exhibit 2.2.2.2 certifying the fulfillment
of the conditions set forth in Section 6.3
below;
2.2.2.3. A counterpart or counterparts of the
Instruments of Assignments; and
2.2.3. The parties hereto acknowledge and agree that all source
code within the Assets is located in Cary, North
Carolina, and will be delivered to Purchaser at the
Closing by electronic transmission from Sellers in Cary,
North Carolina to Purchaser in California, as Purchaser
shall direct.
2.2.4. All transactions occurring at the Closing shall be
deemed to take place simultaneously and no transaction
shall be deemed to have been completed and no document
or certificate shall be deemed to have been delivered
until all transactions are completed and all documents
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delivered. Unless otherwise indicated, all documents and
certificates shall be dated on or as of the Closing
Date.
3. Representations and Warranties of the Sellers
Except as set forth in the disclosure schedule attached hereto (the
"Disclosure Schedule") (which Disclosure Schedule shall contain
appropriate references to applicable Sections and subsections of the
Agreement to which such Section and subsection references relate), the
Sellers, jointly and severally, represent, warrant and agree that the
following statements are true and correct in all respects (all references
in this Section 3 to a "Schedule" shall be to the indicated subsection of
the Disclosure Schedule):
3.1. Organization and Authority
Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Parent has
all requisite corporate power and authority necessary to conduct
its business as presently conducted. Parent is duly qualified or
licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified would not
have a material adverse affect on the business, financial
condition or results of operation of Parent. Parent has made
available to the Purchaser complete and correct copies of the
certificate of incorporation and bylaws of Parent, as currently in
effect. Parent owns all of the Subsidiary Stock. The Subsidiary is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Subsidiary
has all requisite corporate power and authority necessary to
conduct its business as presently conducted. The Subsidiary is
duly qualified or licensed and in good standing to do business in
each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so
qualified would not have a material adverse affect on the
business, financial condition or results of operation of the
Subsidiary. The Subsidiary has made available to the Purchaser
complete and correct copies of the certificate of incorporation
and bylaws of the Subsidiary, as currently in effect.
Each Seller has all requisite corporate power and authority and
has taken all corporate action necessary, to execute and deliver
this Agreement and has full legal capacity to execute, deliver and
perform this Agreement and to consummate the transactions
contemplated hereby and to perform its obligations hereunder. The
execution, delivery and performance by the Sellers of this
Agreement and each agreement, certificate or other document that
is to be executed and delivered by the Sellers in connection with
the transactions contemplated by this Agreement have been duly and
validly authorized by each Seller's Board of Directors and no
other corporate proceedings on the part of the Sellers or their
stockholders are necessary to authorize this Agreement and the
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transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by each Seller and constitutes, and
each agreement, certificate or other document that is to be
executed and delivered by each Seller in connection with the
transactions contemplated by this Agreement when executed and
delivered by such Seller will constitute, a valid and binding
agreement of such Seller, enforceable against such Seller in
accordance with its terms, subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforceability of
creditors' rights generally, general equitable principles and the
discretion of courts in granting equitable remedies.
3.2. Consents and Approvals; No Violations
Except as set forth in Schedule 3.2, no filing with, and no
permit, authorization, consent, approval of, or notice to, any
governmental body or any other third party is necessary for the
lawful consummation by the Sellers of the transactions
contemplated by this Agreement. The execution, delivery and
performance of this Agreement by the Sellers and the consummation
by the Sellers of the transactions contemplated hereby, do not and
will not (a) conflict with or result in any violation or breach of
any provision of the respective certificates of incorporation and
bylaws of Parent and the Subsidiary, (b) violate or conflict with
or constitute a default (or an event which, with notice or lapse
of time, or both would constitute a default) or give rise to any
right of termination, cancellation or acceleration, under any of
the terms, conditions, or provisions of any contract or agreement
including, without limitation, the Assigned Contracts, or result
in the creation or imposition of any Lien on the Assets, (c) to
the Sellers' knowledge, violate or conflict with any order, writ,
injunction, decree, statute, rule or regulation of any
governmental body or any other restriction of any kind or
character applicable to the Sellers or any of the Assets, or (d)
to Sellers' knowledge, cause Purchaser to be subject to any
federal or state tax liability. To Sellers' knowledge, there is no
lawsuit, proceeding or investigation pending or threatened against
any Seller that seeks to prevent the consummation of the
transactions contemplated hereby.
3.3. Title to Assets; Encumbrances; Condition of Assets
Each Seller has good and marketable title to all of the Assets to
be sold or transferred by it hereunder and at the Closing,
Purchaser will take all of the Assets to be purchased by it or
transferred hereunder, in each case, free and clear of any Liens
other than those by, through or under Purchaser. The tangible
assets included in the Assets are in good operating condition and
repair, ordinary wear and tear excepted, and are adequate and
suitable in accordance with general industry practices for the
purposes for which they are currently used and intended to be
used. Except as listed on Schedule 3.3(a), neither Parent nor
Subsidiary is obliged or under any liability whatsoever to make
any payments by way of royalties, fees or otherwise with respect
to the Assets or to any owner or licensee of, or other claimant
to, any patent, trademark, service xxxx, trade name,
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copyright or other intangible asset, with respect to the use
thereof or in its activities concerning and relating to the
Assets. Except as listed on Schedule 3.3(b), neither Parent nor
Subsidiary has granted any license or other rights with respect to
any of the Assets.
3.4. Contracts
All Assigned Contracts and all amendments and modifications
thereof are listed on Schedule 1.2 hereto. As of the date hereof,
neither Parent nor Subsidiary is in breach of any of the Assigned
Contracts, has performed all of its respective obligations under
the Assigned Contracts, and none of the Sellers is aware of any
event which would constitute a default on the part of Parent or
Subsidiary, except for such defaults, events of default or other
events as to which requisite waivers or consents have been
obtained or which could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the
Assets or on the use thereof by the Purchaser in a manner
consistent with the use thereof by the Sellers prior to the
Closing. Schedule 3.4 specifies those Assigned Contracts the
assignment of which requires the consent of a third party. Each of
the Assigned Contracts is valid, binding and enforceable by the
Sellers in accordance with its terms and is in full force and
effect. None of the Assigned Contracts is subject to rescission
and to the Sellers' knowledge there are no circumstances which
would modify their terms, prevent their assignment or create a
Lien thereon. The execution of this Agreement by the Sellers and
the consummation of the transactions contemplated hereby do not
constitute a default of the part of Parent or the Subsidiary under
any of the Assigned Contracts, except for such defaults which
could not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the Assets or on the use
thereof by the Purchaser in a manner consistent with the use
thereof by the Sellers prior to the Closing. Neither Parent nor
the Subsidiary has given any power of attorney (revocable or
irrevocable) to any person, firm or corporation concerning or in
relation to the Assets.
3.5. Litigation and Compliance with Laws
There is no suit, action, charge, claim, inquiry, investigation or
proceeding pending by or against, or to the Sellers' knowledge,
threatened against, the Assets or the transactions contemplated
hereby. Further, there is no action, suit, proceeding or
investigation that the Sellers intend to initiate in connection
with the Assets or the transactions contemplated hereby. The
Sellers have complied with all laws, regulations, orders or
decrees applicable to the Assets and have not received any
complaint or notice from any governmental authority alleging that
any Seller has violated any such law, regulation, order or decree,
except for non-compliance or violations which could not reasonably
be expected to have, individually or in the aggregate, a material
adverse effect on the Assets or on the use thereof by the
Purchaser in a manner consistent with the use thereof by the
Sellers prior to the Closing.
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3.6. Brokers and Finders
Neither Seller has become obligated to pay any fee or commission
to any broker, finder or intermediary for or on account of the
transactions provided for in this Agreement.
3.7. Disclosure
All Schedules and Exhibits hereto are complete and accurate.
Originals, or true and complete copies, of all documents requested
by the Purchaser or other written materials underlying items
listed on the Schedules and Exhibits that have been requested in
writing by the Purchaser have been or will be promptly delivered
to the Purchaser, and such documents have not been modified and
will not be modified prior to the Closing Date without the
Purchaser's prior written consent. No representation or warranty
by the Sellers in this Agreement and no statement contained in any
document (including the documents furnished by the Sellers during
the Purchaser's investigation of the Sellers in connection with
the transactions contemplated hereby) contains any untrue
statement of a material fact or omits to state any material fact
necessary in light of the circumstances under which it was made,
in order to make the statements herein or therein misleading.
There is no material fact or information relating to the Assets
that has not been disclosed to the Purchaser in writing.
3.8. Receivables
Schedule 1.1 includes a true, correct and complete list of all
billed and unbilled accounts receivable arising in connection
with, or related to, the Assets, including the name of the account
debtor, and the face amount and aging thereof (the "Receivables").
To the knowledge of Sellers, no account debtor disputes the amount
of any Receivable.
4. Representations and Warranties of the Purchaser
The Purchaser represents, warrants to, and agrees with the Sellers that
the following statements are true and correct in all respects:
4.1. Organization and Authority
The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority,
and has taken all corporate action necessary, to execute and
deliver this Agreement and has full legal capacity to execute,
deliver and perform this Agreement and to consummate the
transactions contemplated hereby and to perform its obligations
hereunder. The execution, delivery and performance by the
Purchaser of this Agreement and each agreement, certificate or
other document that is to be executed and delivered by Purchaser
in connection with the transactions contemplated by this Agreement
have been duly
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and validly authorized by Purchaser and no other corporate
proceedings on the part of the Purchaser or its stockholders are
necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Purchaser and constitutes, and each
agreement, certificate or other document that is to be executed
and delivered by the Purchaser in connection with the transactions
contemplated by this Agreement when executed and delivered by
Purchaser will constitute, a valid and binding agreement of
Purchaser, enforceable against Purchaser in accordance with its
terms, subject to applicable bankruptcy, insolvency and other
similar laws affecting the enforceability of creditors' rights
generally, general equitable principles and the discretion of
courts in granting equitable remedies.
4.2. Consents and Approvals; No Violations
No filing with, and no permit, authorization, consent, approval
of, or notice to, any governmental, administrative or judicial
authority is necessary for the lawful consummation by the
Purchaser of the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement by the
Purchaser and the consummation by the Purchaser of the
transactions contemplated hereby, do not and will not (a) conflict
with or result in any violation or breach of any provision of the
articles of association, certificate of incorporation, bylaws or
any other similar documents of Purchaser or (b) violate or
conflict with any order, writ, injunction, decree, statute, rule
or regulation of any court, public body or authority or any other
restriction of any kind or character applicable to Purchaser.
There is no lawsuit, proceeding or investigation pending or
threatened against Purchaser that seeks to prevent the
consummation of the transactions contemplated hereby.
4.3. Brokers and Finders
Purchaserhas not become obligated to pay any fee or commission to
any broker, finder or intermediary for or on account of the
transactions provided for in this Agreement.
5. Covenants of the Parties
5.1. Covenants of the Sellers. Sellers hereby, jointly and severally,
covenant and agree with Purchaser as follows:
5.1.1. To the extent that any Asset to be transferred to
Purchaser is not capable of being validly and fully
assigned and transferred to Purchaser without a consent
or approval, or a consent or approval is necessary to
consummate any of the transactions contemplated hereby,
and such consents or approvals have not been obtained by
Sellers prior to the Closing or do not remain in full
force and effect at the Closing, Sellers shall use their
reasonable best efforts to, as soon as practicable:
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(a) obtain such consents or approvals; and (b) provide
to Purchaser the benefits of any Asset as to which such
consent or approval has not been so obtained or does not
remain in full force and effect.
5.1.2. Sellers will provide the transition services listed on
Schedule 5.1.2 at no cost or expense to the Purchaser.
5.1.3. Sellers agree to use their commercially reasonable
efforts to maintain as confidential any confidential
information, trade secret or intellectual property
information relating to the Assets and to permit
Purchaser to enforce in the name of Sellers any rights
of Sellers under agreements or contracts that require
other persons to hold such information confidential.
Enforcement of agreements with other persons shall be
for the benefit of, and at the sole expense of,
Purchaser.
5.1.4. Parent shall, within 90 days of Closing, cause its
wholly-owned subsidiary, StarQuest Software, Inc., a
California corporation, to change its name to a name
which does not use the word Starquest or any derivative
thereof and which is not the same as or similar to the
name StarQuest Software, Inc.
5.1.5. If, on or after May 31, 2002, Sellers receive any
payment on account of any Receivable or any sales of
products or services associated with the Assets (under
any Assumed Contract or otherwise), Sellers shall
promptly turn over fifty-percent (50%) of such payment
to Purchaser. The additional fifty-percent (50%) of such
payment shall be applied by Sellers as a payment with
respect to the principal of and interest on the
promissory note according to the terms of the promissory
note. After the promissory note is paid in full, Sellers
shall promptly turn over all payments received on
account of any Receivable or any sales of products or
services associated with the Assets (under any Assumed
Contract or otherwise) to the Purchaser. In the event
Sellers fail to turn over such amounts within three (3)
days of Sellers' receipt of such amounts, the portion of
such payment owed to Purchaser shall accrue interest at
ten percent (10%) per annum until such payment is made
by Sellers.
5.1.6. Sellers shall, for 120 days following the Closing, use
its commercially reasonable efforts to provide Purchaser
daily reports on the status of the Receivables.
5.2. Mutual Covenants.
Purchaser covenants and agrees with Sellers, and Sellers jointly
and severally covenant and agree with Purchaser, that from time to
time after the Closing and without further consideration, the
parties will execute and deliver, or arrange for
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the execution and delivery of such other instruments of conveyance
and transfer or other instruments or documents and take or arrange
for such other actions as may reasonably be requested to complete
more effectively any of the transactions provided for in this
Agreement.
6. Closing Conditions
6.1. Conditions to Each Party's Obligations
The respective obligations of each party to consummate the
transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following
conditions, any of which may be waived, in whole or in part, by
mutual agreement of the Sellers and the Purchaser:
6.1.1. The absence of any effective injunction, writ, or
preliminary restraining order of a court of competent
jurisdiction directing that the transactions provided
for herein not be consummated.
6.1.2. No action, suit, proceeding or investigation by or
before any court, administrative agency or other
governmental body shall have been instituted (i) to
restrain, prohibit or invalidate the transactions
contemplated by this Agreement; (ii) which seeks
material or substantial damages by reason of completion
of such transaction; or (iii) which may materially
affect the right of the Purchaser to own, operate or
control the Assets after the Closing Date.
6.1.3. A Separation and Release Agreement shall have been duly
executed by Parent and Xxxx Xxxxxx providing for the
termination of Xx. Xxxxxx'x employment with Parent.
6.2. Conditions to the Obligations of the Purchaser
The obligations of the Purchaser to consummate the transactions
contemplated hereby shall be further subject to the fulfillment at
or prior to the Closing Date of the following conditions, any one
or more of which may be waived, in whole or in part, by the
Purchaser:
6.2.1. The representations and warranties made by the Sellers
in this Agreement, the Services Agreement and the
statements contained in the Disclosure Schedule and in
any statement, deed, certificate or other document
delivered by Seller pursuant to this Agreement shall be
true and correct as of the Closing Date (except as
otherwise contemplated by this Agreement).
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6.2.2. Each Seller shall have performed and complied with the
agreements contained in this Agreement required to be
performed and complied with by it at or prior to the
Closing Date.
6.2.3. Each Seller shall have delivered to the Purchaser a
certificate, dated the Closing Date and executed by a
duly authorized signatory of Sellers certifying the
fulfillment of all conditions set forth in this Section
6.2.
6.2.4. Each Seller shall have delivered to Purchaser the
Instruments of Assignment and other documents and
instruments required to be delivered pursuant to Section
2.2 of this Agreement, in each case, as appropriate,
duly executed and in form and substance satisfactory to
counsel to the Purchaser.
6.2.5. There shall not have been a material adverse change in
the Assets or any development which is reasonably likely
to result in a material adverse change in the Assets.
6.2.6. No Seller shall have commenced any proceedings to be
adjudicated as bankrupt or insolvent or made any filing
pursuant to any bankruptcy or insolvency law.
6.3. Conditions to the Obligations of the Sellers
The obligations of the Sellers to consummate the transactions
contemplated hereby shall be further subject to the fulfillment at
or prior to the Closing Date of the following conditions, any one
or more of which may be waived, in whole or in part, by the
Sellers:
6.3.1. The representations and warranties made by the Purchaser
in this Agreement and the Services Agreement, and in any
statement, deed, certificate or other document delivered
by the Purchaser pursuant to this Agreement shall be
true and correct as of the Closing Date (except as
otherwise contemplated by this Agreement).
6.3.2. The Purchaser shall have performed and complied with the
agreements contained in this Agreement required to be
performed and complied with by it at or prior to the
Closing Date.
6.3.3. Purchaser shall have delivered to the Sellers a
certificate, dated the Closing Date and executed by an
authorized executive officer of Purchaser certifying the
fulfillment of all conditions set forth in this Section
6.3.
6.3.4. Purchaser shall have delivered to Sellers the
Instruments of Assignment and other documents required
to be delivered pursuant to
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Section 2.2 of this Agreement, in each case, as
appropriate, duly executed and in form and substance
satisfactory to counsel to the Sellers.
6.3.5. Each of Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, Cisco Systems, Inc. and Liraz Systems Ltd.
shall have consented to the transactions contemplated by
this Agreement.
6.3.6. The Board of Directors of Parent shall have received an
opinion from its financial advisor to the effect that
the transactions contemplated by this Agreement are fair
to the Parent and its stockholders from a financial
point of view and such fairness opinion shall not have
been withdrawn or materially modified.
7. Indemnification; Survival Of Representations, Warranties And Agreements
7.1. Survival of Representations
All representations, warranties, covenants, and obligations in
this Agreement, the Disclosure Schedule and any other certificate
or document delivered pursuant to this Agreement will survive the
Closing for a period of one year. The right to indemnification,
payment of Damages (as defined in Section 7.2 below) or other
remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being
acquired) at any time, whether before or after the Closing Date,
with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant, or obligation. The
waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance
with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
7.2. Indemnification of the Purchaser
The Sellers will jointly and severally indemnify and hold harmless
the Purchaser and its respective representatives, stockholders,
employees, officers, directors, controlling persons, and
affiliates (collectively, the "Purchaser Indemnified Persons")
for, and will pay and reimburse to the Purchaser Indemnified
Persons the amount of, any loss, liability, claim, damage, expense
(including costs of investigation and defense and reasonable
attorneys' expenses and fees) or diminution of value, whether or
not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with: (a)
any breach of any representation or warranty made by the Sellers
in this Agreement, the Schedules, any supplements to the
Schedules, or any other certificate or document delivered by the
Sellers pursuant to this Agreement; (b) any breach by the Sellers
of any covenant or obligation of the Sellers in this Agreement,
the
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Schedules, any supplements to the Schedules, or any other
certificate or document delivered by the Sellers pursuant to this
Agreement; (c) the claims of any broker, finder, or similar person
engaged by the Sellers in connection with any of the transactions
contemplated hereby; or (d) without in any manner limiting the
foregoing, Damages which arise from the operation of the
Subsidiary's business, or from the ownership or condition of the
Assets by Parent or the Subsidiary during any period or periods on
or prior to the Closing Date or which arise otherwise out of or in
relation to the Assets on or prior to the Closing Date, including,
without limitation, product liability or warranty.
Notwithstanding anything to the contrary herein, the Sellers,
jointly and severally, will indemnify and hold harmless the
Purchaser Indemnified Persons from and against any Damages
arising, directly or indirectly, from or in connection with the
failure of the Sellers to make any tax filing in any jurisdiction
or the failure of the Sellers to pay any employment tax or
transfer tax, including any sales, use and other taxes, mandatory
payments and charges (if such failure to file or pay relates to
any period on or prior to May 31, 2002, or is attributable to the
failure of Sellers to pay the taxes provided for in Section 8.11).
Such indemnification obligation shall not be limited in time.
The remedies provided in this Section 7.2 will not be exclusive of
or limit any other remedies that may be available to the Purchaser
or the other Purchaser Indemnified Persons.
7.3. Indemnification of the Sellers
The Purchaser will indemnify and hold harmless the Sellers and
their respective representatives, shareholders, employees,
officers, directors, controlling persons, and affiliates
(collectively, the "Seller Indemnified Persons"), for, and will
pay to the Seller Indemnified Persons the amount of any Damages
arising, directly or indirectly, from or in connection with: (a)
any breach of any representation or warranty made by the Purchaser
in this Agreement or in any certificate or document delivered by
the Purchaser pursuant to this Agreement; (b) any breach by the
Purchaser of any covenant or obligation of the Purchaser in this
Agreement; (c) the claims of any broker, finder, or similar person
engaged by the Purchaser in connection with any of the
transactions contemplated hereby; and (d) any liabilities or
obligations of, or claims or causes of action against the Sellers
which arise from the use of the Assets by the Purchaser during any
period or periods after the Closing Date.
The remedies provided in this Section 7.3 will not be exclusive of
or limit any other remedies that may be available to the Sellers
or the other Seller Indemnified Persons.
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7.4. Limitations
7.4.1. Notwithstanding the foregoing, neither the Sellers and
the Seller Indemnified Persons on the one hand, nor the
Purchaser and the Purchaser Indemnified Persons on the
other, shall be entitled to indemnification for Damages
arising out of matters referred to in Sections 7.2 or
7.3, as applicable unless it shall have given written
notice to the other party, setting forth its claim for
indemnification in reasonable detail, within one year
after the Closing Date; provided, however, that the
foregoing limitation shall not apply with respect to
claims by the Sellers for payment of the Consideration.
7.5. Procedure
If the matter with respect to which a party seeks indemnification
(the "Indemnitee") involves a claim asserted against the
Indemnitee by a third party, promptly after receipt by the
Indemnitee of notice of the commencement of any action, it will
notify the party from whom it is entitled to indemnification (the
"Indemnitor") in writing of the commencement thereof, but the
omission so to notify the Indemnitor will not relieve the
Indemnitor from any liability which it may have to the Indemnitee
unless the Indemnitor is prejudiced by such omission. In case any
such action shall be brought against the Indemnitee and it shall
notify the Indemnitor of the commencement thereof, the Indemnitor
shall be entitled to participate in, and, to the extent that it
may wish to assume the defense thereof, with counsel satisfactory
to the Indemnitee, and after notice from the Indemnitor to the
Indemnitee of its election to assume the defense thereof, the
Indemnitor shall not be liable to the Indemnitee for any legal or
other expenses subsequently incurred by the Indemnitee in
connection with the defense thereof unless (a) the Indemnitee
shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to this
sentence, (b) the Indemnitor shall not have employed counsel
satisfactory to the Indemnitee to represent the Indemnitee within
a reasonable time, (c) the Indemnitor and its counsel do not
actively and vigorously pursue the defense of such action, or (d)
the Indemnitor has authorized the employment of counsel for the
Indemnitee at the expense of the Indemnitor; provided, however,
that the Indemnitee shall have the right to employ counsel to
represent it if, in its reasonable judgment, it is advisable for
it to be represented by separate counsel because separate defenses
are available, or because a conflict of interest exists between
the Indemnitee and the Indemnitor in respect to such claim, and in
such event the fees and expenses of such separate counsel shall be
paid by the Indemnitor. In such circumstance, the Indemnitee shall
designate the counsel. The Indemnitor will not be liable to the
Indemnitee for any settlement of any action or claim without the
consent of the Indemnitor and the Indemnitor may not unreasonably
withhold its consent to any settlement. The Indemnitor will not
consent to entry of any judgment or enter into any settlement or
compromise any claim which does not include as an unconditional
term thereof the giving by the
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claimant or plaintiff to the Indemnitee of a full release from all
liability with respect to such claim or litigation.
8. Miscellaneous Provisions
8.1. Amendment and Modification
Subject to applicable law, this Agreement may be amended, modified
or supplemented only by written agreement of both of the parties
hereto.
8.2. Waiver of Compliance; Consents
Except as otherwise provided in this Agreement, any failure of any
of the parties to comply with any obligation, covenant, agreement
or condition herein may be waived by the party or parties entitled
to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement
or condition shall not operate as a waiver of, or stopped with
respect to, any subsequent or other failure. Whenever this
Agreement requires or permits, consent by or on behalf of any
party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set
forth in this Section 8.2.
8.3. Notices
All notices or other communications in connection with this
Agreement shall be in writing and shall be considered given when
personally delivered or when mailed by registered or certified
mail, postage prepaid, return receipt requested, or when sent via
commercial courier or facsimile, directed to the parties at the
following addresses (or at such other address for a party as shall
be specified by written notice; provided that notices of a change
of address shall be effective only upon deemed receipt thereof):
(a) if to the Purchaser, to
StarQuest Ventures, Inc.
XX Xxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Greene, Radovsky, Xxxxxxx & Share, LLP
0 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
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Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx
(b) if to any of the Sellers, to
Level 8 Systems, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxx, Xxxxx Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx
with a copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xx.; 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxx
8.4. Severability
If any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable under applicable law, then such
provision shall be excluded from this Agreement and the remainder
of this Agreement shall be interpreted as if such provision were
so excluded and shall be enforceable in accordance with its terms;
provided, however, that in such event this Agreement shall be
interpreted so as to give effect, to the greatest extent
consistent with, and permitted by, applicable law.
8.5. Assignment
This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties, nor is this
Agreement intended to confer upon any other person except the
parties hereto any rights or remedies hereunder.
8.6. Governing Law; Dispute Resolution
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware. In the event of a dispute
that cannot be resolved
16
amicably between the parties, the dispute shall be resolved
through binding arbitration, conducted in Berkeley, California by
a sole arbitrator in accordance with the rules of the American
Arbitration Association. The sole arbitrator shall be appointed by
agreement of the parties. In the event the parties fail to agree
upon the appointment of the sole arbitrator within thirty (30)
days after a notice of arbitration is given by either party to the
other, then the arbitrator shall be selected and appointed by the
American Arbitration Association. The arbitration award and/or
determination shall be final and binding and judgment may be
entered thereon in any court of competent jurisdiction.
8.7. Bulk Sales
The parties hereby waive compliance with any applicable Bulk Sales
Laws in any jurisdiction.
8.8. Counterparts
This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
8.9. Interpretation
The article and section headings in this Agreement are solely for
the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, the
term "person" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
8.10. Entire Agreement
This Agreement, including the exhibits attached hereto and the
documents, schedules, certificates and instruments referred to
herein, embody the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated by this
Agreement. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly
set forth or referred to herein. Other than as provided for
herein, this Agreement supersedes all prior agreements and
understandings between the parties with respect to such
transactions.
8.11. Expenses
Sellers, on the one hand, and Purchaser, on the other hand, shall
pay their own expenses (including the fees and expenses of their
accountants, advisors and counsel) in connection with negotiating,
preparing, closing and carrying out this Agreement and the
transactions contemplated hereby and thereby. Sellers shall
17
pay timely all transfer taxes, including, without limitation,
sales, use and other taxes, mandatory payments and charges
applicable to Sellers resulting from the sale and transfer to
Purchaser of the Assets.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASER
STARQUEST VENTURES, INC.
By: ______________________________
Name:______________________________
Its: ______________________________
SELLERS
XXXXX 0 SYSTEMS, INC.
By: ______________________________
Xxxx X. Xxxxxxxxx
Chief Financial Officer and Secretary
LEVEL 8 TECHNOLOGIES, INC.
By: ______________________________
Xxxx X. Xxxxxxxxx
Chief Financial Officer and Secretary
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