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EXHIBIT 2.1
[THE SYMBOL '**' IS USED THROUGHOUT THIS EXHIBIT TO INDICATE THAT A PORTION OF
THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.]
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of this 23rd day of January 1998, by and between ICS Deloitte
Management LLC, a Delaware limited liability company (the "Seller"), and
IntelliCorp, Inc., a Delaware corporation (the "Buyer").
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each party, the
parties, intending legally to be bound, agree as follows:
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DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings set forth in this Article I:
1.1 "Acquired Assets" has the meaning assigned to it in
Section 2.1.
1.2 "Affiliate" means, with respect to a specified Person, any
other Person (x) which controls, is controlled by or is under common control
with such specified Person or (y) which beneficially owns 50% or more of the
equity securities of such specified Person or (z) of which such specified Person
beneficially owns 50% or more of the equity securities. For purposes of the
definition of Affiliate, the term "beneficially owns" means possesses, directly
or indirectly, the power to vote (or direct the voting of) or dispose of (or
direct the disposition of) an equity security. For purposes of the definition of
Affiliate, the term "control" (including the terms "controls", "controlled by",
and "under common control with") means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
1.3 "Agreement" means this Agreement and all Exhibits and
Schedules annexed hereto, as the same may be amended, supplemented or modified
from time to time.
1.4 "Assumed Liabilities" means (i) the obligations of the
Seller required to be performed under any Purchased Contract after the Closing
including, without limitation, any maintenance or warrantee obligation, (ii)
accrued vacation for all Employees of the Seller employed by the Buyer after
Closing, (iii) all prepaid maintenance obligations relating to existing customer
licenses and maintenance contracts included among the Purchased Contracts and
(iv) all standard license warranties and related obligations entered into by the
UPI Business (as
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hereinafter defined) in connection with the Purchased Contracts prior to the
Closing (as hereinafter defined); provided, however, that Assumed Liabilities
shall not exceed $400,000.
1.5 "Xxxx of Sale" means the xxxx of sale and assignment
annexed hereto as Exhibit A, sufficient to vest the Buyer with title in and to
the Acquired Assets free and clear of all debts, Taxes, claims, options,
liabilities, obligations and Liens (whether matured or unmatured) other than
Assumed Liabilities and Permitted Liens.
1.6 "Buyer's Execution Date" has the meaning assigned to it in
Section 5.2 .
1.7 "Clients" has the meaning assigned to it in Section 4.8.
1.8 "Closing" has the meaning assigned to it in Section 3.3.
1.9 "Closing Date" means the date on which the Closing is
consummated.
1.10 "Closing Date Sale Price" has the meaning assigned to it
in Section 11.2.
1.11 "Code" means the Internal Revenue Code of 1986, as
amended.
1.12 "Copyright(s)" shall mean all copyright interests owned or
claimed by the Seller in the UPI Product, including, without limitation, all
common-law rights, and all rights to register and obtain renewals and extensions
of copyright registrations, together with all other copyright interests
occurring by reason of international copyright convention, and the right to xxx
for past, present, or future infringement and to collect and retain all damages
and profits therefor.
1.13 "Excluded Assets" has the meaning assigned to it in
Section 2.2.
1.14 "Excluded Liabilities" means any and all debts, Taxes,
claims, options liabilities (whether absolute, accrued, contingent or
otherwise), Liens (whether matured or unmatured) and other obligations of or
owing by the Seller other than the Assumed Liabilities.
1.15 "Identified Prospects" has the meaning assigned to it in
Section 4.8.
1.16 "Intellectual Property" has the meaning assigned to it in
Section 2.1(b).
1.17 "Laws" means, with respect to any Person, any foreign,
Federal, state or local laws, statutes, ordinances, rules, regulations, orders,
judgments or decrees applicable to such Person.
1.18 "Liens" means, with respect to any asset of any Person,
any mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset.
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1.19 "Permitted Liens" means (a) any Lien for Taxes which are
not yet due or which are being contested in good faith by appropriate
proceedings diligently prosecuted; (b) any carrier's, warehouseman's,
mechanic's, materialman's, repairman's, landlord's or similar statutory or
inchoate lien incidental to the ordinary conduct of business which involves an
obligation that is not past due or which is being contested in good faith by
appropriate proceedings diligently prosecuted; or (c) any Lien the continued
existence of which will not have a material adverse effect on the Buyer's use of
the applicable Acquired Asset.
1.20 "Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization, governmental body or authority or any other entity.
1.21 "Purchase Price" means the purchase price payable by the
Buyer to the Seller pursuant to Section 3.1.
1.22 "Purchased Contracts" means all of the contracts listed or
described on Schedule 2.1(a) excluding, however, any such contract as to which
(x) the relevant Client or licensor has rejected the assignment thereof to the
Buyer or (y) the relevant Client has objected to the assignment to the Buyer of
the related Work Product or Work-in-Progress.
1.23 "Registered IP" has the meaning assigned to it in Section
2.2(b).
1.24 "Resources" has the meaning assigned to it in Section
2.2(b).
1.25 "Seller's Execution Date" has the meaning assigned to it
in Section 4.2.
1.26 "Share Value" has the meaning assigned to it in Section
11.2.
1.27 "Support Period" has the meaning assigned to it in Section
2.10.
1.28 "Taxes" means all taxes, assessments, fees, levies and
similar charges imposed by any United States Federal, state or local taxing
authority or any foreign national, state or local taxing authority, including,
without limitation, interest, penalties and additions thereto.
1.29 "UPI Business" means the business conducted by the
Universal Portable Interface unit of the Seller as of the date hereof.
1.30 "UPI Product" shall mean the universal portable interface
(also known as "UPI") and such other related components, together with all
related documentation as more particularly described in Exhibit B.
1.31 "UPI Related Contracts" has the meaning assigned to it in
Section 4.9.
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1.32 "Work-in-Progress" has the meaning assigned to it in
Section 2.1(a).
1.33 "Work Product" has the meaning assigned to it in Section
2.5.
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PURCHASE AND SALE OF ACQUIRED ASSETS
2.1 Purchase and Sale of Acquired Assets. Subject to and upon
the terms and conditions set forth in this Agreement, the Seller agrees to sell,
transfer, convey, assign and deliver to the Buyer, free and clear of all Liens,
and the Buyer agrees to purchase and accept from the Seller on the Closing Date,
all of the Seller's right, title and interest in and to the following assets,
except to the extent otherwise excluded by reason of being part of the Excluded
Assets (the "Acquired Assets"):
(a) Purchased Contracts. All of the Seller's rights, claims
and interests under the Purchased Contracts listed or described in
Schedule 2.1(a) and all related work-in-progress reflected on the books
and records of the Seller as of the Closing Date ("Work-in-Progress")
and all related Work Product;
(b) Proprietary Rights. All of the Seller's right, title and
interest in and to the (i) UPI Product, (ii) trade and service names and
abbreviations and variations thereof, trademarks, brand names, brand
marks, labels, service marks, patents, patent applications and
Copyrights included in or which constitute all or a portion of the
products or services offered by the UPI Business ("Registered IP") which
Registered IP is identified on Schedule 2.1(b)(ii); (iii) databases,
research techniques, analytical tools, historical information and data,
past reports and information resources ("Resources") used in connection
with engagements of the UPI Business, including without limitation those
Resources identified on Schedule 2.1(b)(ii); (iv) trade secrets,
inventions, know-how, manuals, methodologies and computer software owned
by the Seller, including any associated computer programming code
(including all source code and object code related thereto),
documentation (including user manuals and other written materials that
relate to particular code or databases), logic manuals, flow charts,
statements of principles of operation and schematics for the UPI
Product, in each case used or derived in connection with engagements of
the UPI Business, including without limitation those identified on
Schedule 2.1(b)(ii); and (v) (subject to Section 2.11) sales and
marketing materials relating to the UPI Business (collectively,
"Intellectual Property");
(c) Purchased Equipment. All of the equipment listed on
Schedule 2.1(c); and
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(d) Records and Documentation. All books, records, files,
working papers, correspondence, memoranda and other documentation
(including sales information and customer records relating to any
Purchased Contract or Identified Prospect) related to the assets
referred to in clauses (a) through (c) of this Section or the UPI
Business.
On the Closing Date, the Seller shall deliver to the Buyer the Xxxx of Sale and
such other deeds, endorsements, assignments and other good and sufficient
instruments of conveyance and transfer, as the Buyer may reasonably request to
vest in the Buyer all the right, title and interest of the Seller, in, to or
under any or all of the Acquired Assets, free and clear of all Liens (except for
Permitted Liens).
2.2 Excluded Assets. The purchase of the Acquired Assets by
the Buyer and sale of the Acquired Assets by the Seller contemplated by this
Agreement shall not include:
(a) any cash or cash equivalents of the Seller as of the
Closing Date;
(b) any accounts receivable of the UPI Business as of the
Closing Date;
(c) any intercompany accounts and other obligations owed to
the UPI Business by any Affiliate of the Seller; and
(d) (subject to Section 2.11) any right to the Seller's name
or any formative or variant thereof or any use of any thereof.
Such assets shall be referred to as the "Excluded Assets" and shall not
constitute part of the Acquired Assets for any purpose.
2.3 Liabilities. The Acquired Assets shall be conveyed to the
Buyer free and clear of all debts, Taxes, claims, options, liabilities (whether
absolute, accrued, contingent or otherwise), obligations and Liens (whether
matured or unmatured) other than the Assumed Liabilities and Permitted Liens.
Effective upon the Closing, the Buyer will assume all of the Assumed
Liabilities. All of the Excluded Liabilities shall be retained by and remain
obligations of the Seller.
2.4 Transfer of Clients and Identified Prospects. From the
Closing Date through the [**] anniversary of the date of this Agreement, to the
extent not inconsistent with applicable professional standards and obligations,
[**] the Buyer in obtaining the Identified Prospects or other Persons as clients
of the Buyer, which efforts shall include [**] to assist and facilitate the sale
by the Buyer of the UPI Product. Without limiting the generality of the
foregoing, the parties agree that, at the Buyer's request, the Seller shall
promptly after the Closing [**] in a form reasonably satisfactory to the Buyer.
Except as provided in Section 3.4, the Buyer shall not have any obligation to
accept as clients any Identified Prospects or other Persons or to retain as
clients any such accepted Identified Prospects or other Persons. From the
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Closing Date through the [**] anniversary of this Agreement, the Seller will not
[**] or to the extent not inconsistent with applicable professional standards
and obligations, [**] or [**]. Consistent with such applicable professional
standards and obligations, the Seller will (i) [**], and will use its best
efforts to [**], the UPI Product as an application integration tool and (ii)
[**], on a basis consistent with past practice, [**]. The Seller agrees to (i)
include, on a [**] in the [**] through the [**] anniversary hereof or, if
earlier, the termination of the Seller's [**], and (ii) provide the Buyer,
during the [**] after the Closing, with an opportunity to [**] at each [**].
2.5 Delivery of Work Product. The Seller shall promptly
request each of the Clients to give its written consent to permit the Seller to
deliver to the Buyer possession of any final work product or Work-in-Progress
generated by the UPI Business for such Client (the "Work Product"). The Seller
shall assist Buyer in obtaining consent of Clients that do not initially consent
to delivery of the Work Product to Buyer. The Seller shall permit the Buyer to
have access to any or all of such Work Product and to make such copies of the
Work Product at the Buyer's expense as the Buyer shall request in its sole
discretion, which Work Product shall be made available during normal business
hours upon reasonable advance notice.
2.6 Facility Lease. The Seller will make available to the
Buyer for a period of 3 months beginning the date of the Closing, for an
aggregate gross fee of [**] per month due and payable at the beginning of each
month, the existing office facilities used by the UPI Business, including the
use of all hardware, software, equipment and fixtures currently used in the UPI
Business, on the same basis as it provides similar facilities to its own
employees (the "Sublease Arrangement"). Notwithstanding the foregoing, the
Seller shall use its reasonable efforts not to relocate the facilities provided
to the Buyer pursuant to the preceding sentence, and, in the event of a
relocation, to ensure that the alternative space it provides is in a single
facility. The Buyer and the Seller acknowledge and agree that the Seller may
cease to be able to provide office facilities pursuant to the Sublease
Arrangement prior to the expiration of such 3 months, and that in such event,
the Seller and the Buyer will negotiate in good faith a credit against the [**]
monthly fee for the remainder of the period, which credit shall be the Buyer's
sole remedy for such failure. During the initial term of the Sublease
Arrangement, the Buyer shall exert its best efforts to arrange alternative space
to which to relocate upon the expiration of such three month period and the
Seller will exert its reasonable efforts to assist the Buyer in so doing. In the
event that such efforts are unsuccessful, the Buyer may request in writing no
less than seven days prior to the expiration of the Sublease Arrangement a one
month extension of the Sublease Arrangement, to which request the Seller shall
not unreasonably withhold its consent.
2.7 Data Center Lease. The Seller and the Buyer agree to
negotiate in good faith to enter into an agreement during the three months
following the Closing Date pursuant to which the Seller will maintain its Data
Center at its current location, including all equipment, hardware and software
currently used by the UPI Business and allow the Buyer to use the Data Center
and equipment in the same capacity and manner as the UPI Business used the Data
Center and equipment prior to the date of this Agreement at [**] for a period of
[**] (the "Data Center Arrangement"). The Seller and the Buyer shall negotiate
in good faith the basis for
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computing the [**] and such other terms as are to be included in the Data Center
Arrangement. Such computation shall only include [**] relating to the UPI
Business and shall exclude [**].
2.8 Termination of Automobile Leases. Except pursuant to any
agreement between the Seller and any employee of the UPI Business, the Seller
shall be solely responsible for any expenses associated with the termination or
assignment of any automobile leases currently provided by the Seller to any
employee of the UPI Business.
2.9 Purchase of Equipment. For the three month period,
following the Closing, at the Buyer's request the Seller shall exert its
reasonable commercial efforts to acquire any desktop and laptop computer systems
currently leased by the Seller for use in the UPI Business. Any desktop or
laptop computer systems so acquired, shall be transferred by the Seller to the
Buyer promptly after the Seller acquires title thereto and the Buyer shall,
promptly after receipt of such transfer, pay to the Seller an amount in cash
equal to the cost incurred by the Seller in repurchasing such systems.
2.10 Certain Customer Support.
(a) The Seller shall continue to provide [**] for Clients of
the UPI Business under maintenance contracts for which revenue has been
collected or billed prior to the Closing Date, other than those in the United
States and Canada, for the period provided under such contracts, at [**] Buyer.
Until the earlier of six months from the date of the Closing or such time as a
transition reasonably satisfactory to the Buyer can be arranged (the "Support
Period"), the Seller shall also provide [**] following the Closing Date, other
than those in the United States and Canada, at [**] the Buyer of [**] by the
Buyer to such Clients, in respect of such service. Upon expiration during the
Support Period of any contract providing for such support the Seller shall, at
the Buyer's reasonable request, [**] of such contract. Any such new, renewed or
extended contract shall treat front-line international customer support in
accordance with the then-current business understandings between the Seller and
the Buyer.
(b) The Seller and the Buyer agree to negotiate in good faith
an [**] agreement, including, without limitation, (i) the basis on which such
[**] will be provided, (ii) to the extent not inconsistent with applicable
professional standards and obligations, provision for the [**] and [**] that do
not [**] of the Seller and its affiliates, and (iii) ordinary and customary
provisions, consistent in geographic and organizational scope with the other
provisions of the [**] agreement, prohibiting the solicitation by either of the
other's employees.
2.11 Marketing Documentation. Notwithstanding Section 2.2(d),
the Buyer may use any marketing materials that [**] to the extent that such
materials were used prior to the Closing Date and affect the terms,
interpretation or enforcement of any Purchased Contract or any contract entered
into by the Buyer with an Identified Prospect, but it may not otherwise use any
such marketing materials unless the [**] (and any formative or variant thereof)
[**].
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3
THE PURCHASE PRICE
3.1 Purchase Price.
3.1.1 The Purchase Price for the purchase and sale of
the Acquired Assets shall be as follows:
(a) $3,000,000, less (i) $225,650, which is the amount of the
unearned maintenance or other revenues (including consulting fees and training
fees) under those Purchased Contracts with Clients in the United States or
Canada as of the Closing Date, and (ii) $202,500, which is the amount for
employee bonuses payable after the Closing Date, in cash; and
(b) (i) delivery, on a date which is five business days after
delivery by the Seller to the Buyer on or before April 15, 1998 of written
notice of the resolution to the mutual satisfaction of the Buyer and the Seller
of certain issues outstanding as of the date hereof together with a Lock-up and
Registration Rights Agreement (the "Registration Rights Agreement") in the form
attached as Schedule 3.1.1(b) hereof executed by the Seller (together a
"Resolution Notice"), of 1,000,000 shares (the "Shares") of the Buyer's common
stock, par value $.001 per share ("Common Stock") and a Registration Rights
Agreement executed by the Buyer; or
(ii) if the Buyer has not received a Resolution Notice from the
Seller on or before April 15, 1998, $2,000,000 payable on the first anniversary
of the Closing Date and $2,000,000 payable on the second anniversary of the
Closing Date, in each case payable in cash or Common Stock, at the option of the
Buyer. If the Buyer elects to pay with Common Stock, the shares issued to the
Seller shall be valued at 95% of the average closing price of Buyer's Common
Stock on the Nasdaq Stock Market for the 20 trading days prior to the date of
issuance, and, when issued, such shares shall have been registered for resale
pursuant to the Securities Act of 1933, as amended, which registration shall be
kept effective by the Buyer for no less than 270 days following such issuance.
The Seller agrees that any sales of such shares shall be subject to a right of
first refusal of the Buyer governed by the procedures and the terms set forth in
Section 1(c) and 1(d), as the case may be, of the Registration Rights Agreement,
which procedures and terms are incorporated by reference as if set forth in full
herein.
3.1.2 All payments of cash in respect of the Purchase
Price shall be made by wire transfer in immediately available funds to such
account of the Seller as it may specify by written notice to the Buyer.
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3.1.3 If the Seller after the Closing Date receives from
any client in respect of any Purchased Contract assigned to the Buyer payments
for unearned maintenance or other revenues not deducted from the Purchase Price
pursuant to Section 3.1, the Seller shall promptly pay to the Buyer the amount
so received.
3.2 Payments and Deliveries upon Closing. On the Closing Date
(a) the Buyer shall pay to the Seller the cash portion of the Purchase Price due
and payable upon the Closing Date, and (b) the Seller shall deliver to the Buyer
(i) the Xxxx of Sale, (ii) employment agreements satisfying the obligation set
forth in Section 9.2.4 hereof, (iii) all third party consents and (iv) all other
documents, agreements and instruments then required to be delivered by the
Seller pursuant to Section 2.1.
3.3 Closing. The consummation of the purchase and sale of the
Acquired Assets (the "Closing") shall be held at the offices of the Seller,
Chadds Ford Business Campus, Brandywine 0 Xxxxxxxx, Xxxxx 000, Xxxxxx Xxxx, XX
on the second business day after the conditions set forth in Article IX have
been satisfied, or at such other time as may be agreed upon by the Buyer and the
Seller.
3.4 Special Contract Payments. At the Closing, the Seller
shall provide to the Purchaser a Schedule listing [**] contracts selected by the
Seller (the "Designated Contracts") substantially negotiated by the Seller prior
to the date thereof, which shall have been reviewed by the Buyer and are
reasonably acceptable to the Buyer. The Buyer shall use its reasonable
commercial efforts to enter into such contracts within [**] after the Closing.
The Buyer shall pay to the Seller within 30 days of the Buyer's receipt [**] of
any license fees received by the Buyer (i) pursuant to any Designated Contract
entered into within [**] of the date of the Closing and (ii) within [**] from
the date of this Agreement.
3.5 Allocation. The parties agree that the allocation of the
Purchase Price (taking into account the Assumed Liabilities) for purposes of
Section 1060 of the Code will be agreed to by them within a reasonable period
after the Closing and will comply with the applicable provisions of the Sale.
For purposes of filing Federal tax form 8594, the Seller's Federal tax
identification number is 00-0000000.
3.6 Financial Statements. Upon the written request of the
Buyer, the Seller shall provide the Buyer with audited financial statements for
the UPI Business to the extent that the same are reasonably required in order
for the Buyer to comply with its reporting requirements pursuant to the
Securities and Exchange Act of 1934, as amended. The Buyer shall pay the cost of
the third-party auditor preparing such audited financial statements up to a
maximum of $20,000. The Buyer acknowledges that the Seller and its Affiliates
compete with the business conducted by the Buyer's independent public
accountants and that nothing in this Agreement shall require the Seller or any
such Affiliate to grant to such accountants access to the books and records of
the Seller or any such Affiliate (including, without limitation, to any books
and records not constituting Acquired Assets).
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3.7 Further Assurances. At and from time to time following the
Closing, the Seller shall (i) deliver to the Buyer such other instruments of
conveyance and transfer as the Buyer may reasonably request or as may be
otherwise necessary to more effectively convey and transfer to, and vest in the
Buyer and put the Buyer in possession of, the Acquired Assets free and clear of
all debts, Taxes, claims, options, liabilities, obligations and Liens whether
matured or unmatured, and (ii) in the case of licenses, certificates, approvals,
authorizations and Purchased Contracts included in the Acquired Assets (a) which
cannot be transferred or assigned effectively without the consent of another
Person which consents have not been obtained prior to the Closing, cooperate
with the Buyer at its request in endeavoring to obtain such consents promptly,
and if any such consent is not obtained, use its reasonable efforts to secure to
the Buyer the benefits thereof in some other manner reasonably acceptable to the
Buyer, or (b) which are otherwise not transferable or assignable, use its
reasonable efforts jointly with the Buyer to secure to the Buyer the benefits
thereof in some other manner reasonably acceptable to the Buyer.
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REPRESENTATIONS AND WARRANTIES
OF THE SELLER
The Seller represents and warrants to the Buyer, unless
otherwise provided, on the date hereof and on the Closing Date as follows:
4.1 Organization and Qualification. The Seller is a limited
liability company duly organized, validly existing and in good standing under
the Laws of its jurisdiction of organization and has all requisite limited
liability company power and authority to conduct the UPI Business as presently
conducted and to own and lease the property and assets utilized in such
business. The Seller is qualified to conduct business in every jurisdiction
where such qualification is required for its conduct of the UPI Business as
currently conducted, except where the failure to so qualify would not have a
material adverse effect on the UPI Business.
4.2 Authorization. The Seller has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and, as of the date of execution of the Registration Rights Agreement
if such execution occurs ("Seller's Execution Date"), under the Registration
Rights Agreement. The Seller has duly authorized the execution, delivery and
performance of this Agreement and, as of the Seller's Execution Date, the
Registration Rights Agreement. Each of this Agreement and, as of the Seller's
Execution Date, the Registration Rights Agreement has been or shall have been
duly executed and delivered by the Seller and (assuming that such agreements
have been duly authorized, executed and delivered by the Buyer) constitutes or,
in the case of the Registration Rights Agreement, shall as of the
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Seller's Execution Date constitute, a legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium or
other laws of general applicability affecting the rights of creditors and to
general equitable principles.
4.3 No Violations or Conflicts. Neither the execution and
delivery by the Seller of this Agreement nor, as of the Seller's Execution Date,
the Registration Rights Agreement, by the Seller nor the consummation by the
Seller of the transactions contemplated hereby or, as of Seller's Execution
Date, thereby, and the performance by the Seller of its obligations hereunder
and, as of the Seller's Execution Date, thereunder (with the giving of notice or
the passage of time or both) (a) violates or with respect to the Registration
Rights Agreement shall, as of the Seller's Execution Date violate, any provision
of the Seller's governing documents, (b) results or with respect to the
Registration Rights Agreement shall, as of the Seller's Execution Date result,
in a violation or breach of, or constitutes a default or an event of default
under, any material indenture, mortgage, bond or other material contract,
license, agreement, permit, instrument or other obligation to which the Seller
or by which any of the Acquired Assets is bound, (c) violates or with respect to
the Registration Rights Agreement shall, as of the Seller's Execution Date
violate, any material Law, writ, judgment, injunction or court decree to which
the Seller or any of the Acquired Assets is subject or the Purchased Contracts,
or (d) otherwise results or with respect to the Registration Rights Agreement
shall, as of the Seller's Execution Date result, in the creation of any material
Lien on the Acquired Assets (other than Permitted Liens).
4.4 Consents and Approvals. No consent, approval or
authorization of, or declaration, filing or registration with, any foreign,
United States, state or local governmental or regulatory agency or authority or
any other Person is required to be made or obtained by the Seller in connection
with the execution, delivery and performance by the Seller of this Agreement or,
as of the Seller's Execution Date, the Registration Rights Agreement, the
failure of which to obtain could reasonably be expected to have a material
adverse effect upon the UPI Business.
4.5 Assets. The Seller has good and marketable title to all of
the Acquired Assets, including, without limitation, the UPI Product, free and
clear of any Lien (except Permitted Liens) and except for leased assets, as to
which the Seller has good and marketable title to the leasehold interest
therein.
4.6 Work-in-Progress. Set forth on Schedule 4.6 is in all
material respects a complete and correct list of all Work-in-Progress,
indicating, with respect to the engagements for which such Work-in-Progress has
been prepared, the Seller's good faith estimates of its reimbursable but
unreimbursed expenses through the Closing Date, the hours spent by the Seller
through the Closing Date, its hourly rates for such hours, and any amounts
previously billed with respect to the such engagement.
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4.7 Conduct of Business. Since January 1, 1997 the Seller has
conducted the UPI Business materially in accordance with its ordinary and usual
course of business, consistent with past practice. No part of the UPI Business
is operated by any Person other than the Seller.
4.8 Clients; Identified Prospects; Client Relations. Schedules
4.8(a) and (b), respectively, contain a complete and correct (a) listing of all
Persons for whom the UPI Business has performed services since January 1, 1996
(the "Clients") and a complete and correct copy of all their respective written
contracts with the UPI Business, and (b) listing of all Persons who to the best
knowledge of the Seller have since January 1, 1997 expressed to the Seller an
interest in retaining the UPI Business or have since January 1, 1997 been
solicited (otherwise than by general advertising or general solicitations) by
the Seller with respect to the UPI Business (the "Identified Prospects"). Except
for maintenance fees billed in the ordinary course of business consistent with
past practice, the Seller has not pre-billed any fees for which it has not yet
performed the billed work.
4.9 Contracts and Commitments. Schedule 4.9 sets forth a true,
complete and correct list and description of the following agreements, oral or
written, relating to the UPI Business, to which, as of the Closing Date, the
Seller is a party or by which the Seller is bound (other than any such agreement
that relates solely to an Excluded Asset): (a) all commitments, contracts,
agreements, notes, loans, mortgages, indentures, pledges and other instruments
involving an obligation on the part of the Seller of more than $10,000
individually or more than $25,000 in the aggregate, (b) all purchase orders and
all agreements pursuant to which other Persons provide goods or services to the
Seller, (c) all agreements with Clients under which the Seller may be obligated
to perform services or expects to receive fees or other compensation, (d) all
personal property leases involving annual payments in excess of $5,000
individually or more than $25,000 in the aggregate, (e) all employment contracts
with employees of the Seller and all independent contractor agreements, (f) all
guarantees of the obligations of any other Person, and (g) all other agreements
(including, without limitation, all agreements restricting the ability of the
Seller or any other Person to compete or solicit clients) (the agreements
identified in clauses (a) through (g) of this Section 4.9 being collectively
referred to as the "UPI Related Contracts"). The Seller has delivered to the
Buyer a true, complete and correct copy of each Purchased Contract. The Seller
has not assigned, delegated or otherwise transferred any of its rights or
obligations with respect to any Purchased Contract or any Acquired Asset. The
Purchased Contracts constitute all of the UPI Related Contracts of the Seller
which are necessary to conduct the UPI Business as it is being conducted on the
date hereof.
4.10 Litigation. The Seller is not a party to any pending or,
to the best of the Seller's knowledge, threatened action, suit, proceeding or
investigation, at law or in equity or otherwise in, for or by any court or other
governmental body which could reasonably be expected to have a material adverse
effect on the condition of the
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Acquired Assets or the transactions contemplated by this Agreement or the
Registration Rights Agreement. The Seller is not subject to any decree,
judgment, order, law or regulation of any court or other governmental body which
could reasonably be expected to have a material adverse effect on the condition
of the Acquired Assets or which could prevent the transactions contemplated by
this Agreement or the Registration Rights Agreement. There is no material civil,
criminal or administrative action, suit, claim, hearing, investigation or
proceeding pending, or to the best knowledge of the Seller threatened, against
the UPI Business in any court, by any governmental entity or before any
arbitrator or other tribunal. The Seller is not subject to any outstanding
action, order, writ, judgment, injunction or decree of any court or governmental
entity related to the UPI Business, individually or in the aggregate.
4.11 Intellectual Property. No Person other than the Seller has
a Copyright interest in the UPI Product. The Seller has not received notice of
any judicial, administrative or arbitration proceeding instituted against the
Seller, or of any claim or threatened claim by any Person (including, without
limitation, [**] or [**]) against the Seller, alleging that the conduct of the
UPI Business or the use by the Seller of the Intellectual Property infringes any
patent, trademark, tradename, service xxxx, copyright, trade secret or other
proprietary right of any other Person and, to the knowledge of the Seller, there
is no basis for any such proceeding or claim. To the knowledge of the Seller,
there is no unauthorized use, infringement or misappropriation of any of the
Intellectual Property by any third party including any employee or former
employee or independent contractor or former independent contractor of the
Seller. There is no third party technology on which the current product and
service offerings of the UPI Business are based and which the Seller does not
have appropriate legal rights to use. Except for the intellectual property
listed on Schedule 4.11 hereto, the Intellectual Property constitutes all
trademarks, tradenames, Copyrights, processes, designs, formulas, inventions,
trade secrets, know-how or technology which are materially necessary to conduct
the UPI Business as it is being conducted on the date hereof. The Intellectual
Property is fully transferable or assignable to the Buyer and upon delivery to
the Buyer of the Xxxx of Sale and other instruments of conveyance with respect
to the Intellectual Property on the Closing Date and upon the filing of any
necessary trademark assignments in the appropriate governmental agencies, the
Buyer will acquire good and valid title to the Intellectual Property free and
clear of all Liens except for Permitted Liens.
4.12 Compliance with Laws. The UPI Business has been operated
in compliance with all applicable Laws, except where the failure to so comply
will not have a material adverse effect on the UPI Business.
4.13 Employees and Independent Contractors. Schedule 4.13 sets
forth a true, complete and correct list of all employees and independent
contractors employed in the UPI Business (other than administrative personnel
not engaged solely in the UPI Business) and, with respect to each such employee
and independent contractor, the total compensation (including, without
limitation, salary, bonuses and incentive compensation) received by such
employee and independent contractor in the immediately preceding fiscal year of
the Seller and such employee's and independent contractor's current compensation
including bonuses and executive compensation.
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IV.65 Disclosure. No representation or warranty by the Seller
contained in this Agreement nor any of the financial or other statements or
certificates furnished by the Seller to the Buyer or its representatives in
connection herewith or pursuant hereto contains any untrue statement of a
material fact, or omits to state any material fact required to make the
statements herein or therein contained not misleading in the context in which
made or presented or necessary in order to provide the Buyer or a prospective
purchaser of the Acquired Assets with adequate information as to the UPI
Business and its properties, assets, liabilities, business and prospects.
4.15 Brokers and Finders. No broker or finder has acted for the
Seller in connection with this Agreement or the Registration Rights Agreement or
the transactions contemplated by this Agreement and no broker or finder retained
by the Seller is entitled to any brokerage or finder's fee with respect to this
Agreement, the Registration Rights Agreement or such transactions.
4.16 Investment Representation. The Common Stock acquired by
the Seller pursuant hereto is being acquired for its own account for investment,
not as a nominee or agent, and not with a view to the sale or distribution of
any part thereof, and the Seller has no present intention of selling, granting
any participation in, or otherwise distributing the same to any party [**]. The
Seller further represents that the Seller has no contract, undertaking,
agreement or arrangement with any person to sell, transfer, or grant
participations to such person or to any third person, with respect to any of the
Common Stock acquired hereby [**]. The Seller will not sell or otherwise dispose
of such Common Stock except in compliance with the Securities Act of 1933, as
amended (the "Act") and the rules and regulations of the SEC thereunder. The
Seller understands and acknowledges that the offering of the Common Stock of the
Buyer pursuant to this Agreement will not be registered under the Act on the
grounds that the offering and sale of securities contemplated by this Agreement
are exempt from registration pursuant to Section 4(2) of the Act, and that the
Buyer's reliance upon such exemption is predicated upon the Seller's
representations set forth in this Section 4.17.
5
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller, unless otherwise
provided, on the date hereof and on the Closing Date as follows:
5.1 Organization and Qualification. The Buyer is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware and has all requisite power and authority to conduct its
business as presently conducted and to own and lease its property and assets.
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5.2 Authorization. The Buyer has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and, as of the date of the execution of the Registration Rights
Agreement if such execution occurs (the "Buyer's Execution Date"), under the
Registration Rights Agreement. The Buyer has duly authorized the execution,
delivery and performance of this Agreement and, as of the Buyer's Execution
Date, under the Registration Rights Agreement. This Agreement and, as of the
Buyer's Execution Date, the Registration Rights Agreement have been or shall has
been duly executed and delivered by the Buyer and (assuming that such agreements
have been duly authorized, executed and delivered by the Seller) constitutes or,
in the case of the Registration Rights Agreement, shall as of the Buyer's
Execution Date constitute, the legal, valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy, insolvency, moratorium or
other laws of general applicability affecting the rights of creditors and to
general equitable principles.
5.3 No Violations or Conflicts. Neither the execution and
delivery of this Agreement or, as of the Buyer's Execution Date, the
Registration Rights Agreement, by the Buyer nor the consummation by the Buyer of
the transactions contemplated hereby or, as of the Buyer's Execution Date,
thereby, and the performance by the Buyer of its obligations hereunder, and as
of the Buyer's Execution Date, thereunder (i) violates or with respect to the
Registration Rights Agreement shall, as of the Buyer's Execution Date violate,
any provision of its governing documents, (ii) results or with respect to the
Registration Rights Agreement shall as of the Buyer's Execution Date result, in
a violation or breach of, or constitutes a default or an event of default under,
any indenture, mortgage, bond or other material contract, license, agreement,
permit, instrument or other obligation to which it is a party or by which any of
its assets is bound or (iii) violates or with respect to the Registration Rights
Agreement shall as of the Buyer's Execution Date violate, any Law, writ,
judgment, injunction or court decree to which the Buyer is subject.
5.4 Consents and Approvals. No consent, approval or
authorization of, or declaration, filing or registration with, any United
States, foreign or state or local governmental or regulatory agency or authority
is required to be made or obtained by the Buyer in connection with its
execution, delivery and performance of this Agreement or, as of the Buyer's
Execution Date, the Registration Rights Agreement, except in connection with the
registration of the Common Stock under applicable Federal Securities laws and
state blue-sky laws as contemplated by the Registration Rights Agreement.
5.5 Common Stock. As of December 31, 1997 the authorized
capital stock of the Company consisted of 50,000,000 shares of Common Stock and
2,000,000 shares of preferred stock, of which 13,529,262 shares of Common Stock
were outstanding and 585,645 shares of preferred stock were outstanding. As of
such date, the Buyer has reserved for issuance 2,987,482 shares of Common Stock
issuable upon exercise of outstanding stock options and 5,413,548 shares of
Common Stock issuable upon exercise of outstanding convertible securities
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or warrants. The Common Stock issued to the Seller pursuant hereto is validly
authorized and, when issued and delivered in accordance with this Agreement,
will be validly issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, and will not be issued in
violation of any preemptive rights of stockholders. The Seller will receive good
title to such Common Stock, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and voting trusts.
5.6 Disclosure. No representation or warranty by the Buyer
contained in this Agreement nor any statement or certificate furnished by the
Buyer to the Seller or its representatives in connection herewith or pursuant
hereto, nor in any of the Buyer's periodic reports or other filings pursuant to
the Securities Exchange Act of 1934, as amended, contains any untrue statement
of a material fact, or omits to state a material fact required to make the
statements herein or therein contained not misleading or necessary in order to
provide a prospective purchaser of the Common Stock being acquired by the Seller
pursuant hereto with adequate information as to the Seller and its properties,
assets, liabilities, business and prospects.
5.7 Brokers and Finders. No broker or finder has acted for the
Buyer in connection with this Agreement, the Registration Rights Agreement or
the transactions contemplated by this Agreement or the Registration Rights
Agreement and no broker or finder retained by the Buyer is entitled to any
brokerage or finder's fee with respect to this Agreement, the Registration
Rights Agreement or such transactions.
6
COVENANTS
6.1 Property Relating to Acquired Assets Received by the
Seller or Related Persons. If the Seller or any of its respective officers,
directors, employees, independent contractors, agents or representatives or any
Affiliate of any of the foregoing Persons, or any other Person acting for or in
concert with any of the foregoing Persons, shall receive any money, check, note,
draft, instrument, payment or other property relating to or as proceeds of the
Acquired Assets or any part thereof, each such Person shall receive all such
items in trust for, and as the sole and exclusive property of, the Buyer and,
immediately upon receipt thereof, shall notify the Buyer in writing of such
receipt and shall remit the same (or cause the same to be remitted) in kind to
the Buyer in the manner specified by the Buyer.
6.2 Certain Employees. (a) The Seller shall cooperate with the
Buyer (at no net cost to the Seller) to develop a mutually acceptable method of
providing to the Buyer the services of those employees of the UPI Business as of
the date of Closing who desire to be employed by the Buyer and whose immigration
status may require them to remain employees of the Seller following the Closing,
which individuals are identified in Schedule 6.2 hereto. The
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Seller shall exert its reasonable efforts to provide to the Buyer the services
of [**] during the [**] following the Closing Date to the extent reasonably
necessary to facilitate the transition necessitated by the transactions
contemplated hereby, up to the full time of [**] employment during such period.
[**] salary and benefits during such period shall be paid by the [**]. The [**]
may at [**] extend to [**] a bonus or incentive payments and shall [**] in
connection with his services to the Buyer.
(b) The Seller shall exert its reasonable efforts to provide
the Buyer the full-time services of [**] during the [**] following the Closing
Date, and of [**] and [**] during the [**] following the Closing Date, to the
extent reasonably necessary to facilitate the transition necessitated by the
transactions contemplated hereby. [**] and [**] salary and benefits during their
[**] of service to the Buyer, and [**] salary and benefits during the [**] of
his service to the Buyer, shall be paid by the [**]. The [**] shall promptly
[**] the [**] for [**] salary and benefits for the remainder of the period of
his service to the Buyer. The [**] shall also [**] such employees' expenses in
connection with their service to the Buyer.
6.3 Non-Solicitation. For two years following the Closing, (i)
the Seller shall not solicit for employment any personnel employed by the UPI
Business immediately prior to the Closing and by the Buyer immediately
thereafter without the prior consent of the Buyer.
6.4 Work-in-Progress. Within three weeks of the Closing Date
the Seller shall provide to the Buyer a final schedule setting forth in all
material respects a complete and correct list, as of the Closing, of all
Work-in-Progress, indicating with respect to the engagements for which such
Work-in-Progress has been prepared, the Seller's reimbursable but unreimbursed
expenses through the Closing Date, the hours spent by the Seller through the
Closing Date, its hourly rates for such hours, and any amounts previously billed
with respect to such engagement.
7
COVENANTS OF THE SELLER PRIOR TO CLOSING
7.1 Maintenance and Operation of Business. From and after the
date of this Agreement until the earlier of (i) the termination of this
Agreement in accordance with Article X or (ii) the Closing Date, the Seller
shall conduct the UPI Business materially in accordance with its ordinary and
usual course of business consistent with past practice, and shall use its
reasonable best efforts to maintain and preserve the UPI Business, as conducted
on the date of this Agreement, for the benefit of the Buyer.
7.2 Access to Information. From and after the date of this
Agreement until the earlier of (i) the termination of this Agreement in
accordance with Article X or (ii) the Closing Date, the Seller shall, during
reasonable business hours and upon reasonable notice, allow the
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Buyer and the Buyer's authorized representatives (subject to Section 3.6) to
make such investigation of the business, properties, books and records of the
UPI Business, and to conduct such examinations and to confer with the officers
and employees of the UPI Business, as shall be reasonably necessary for purposes
of consummating the transactions contemplated by this Agreement. Any and all
information provided to the Buyer under the terms of this Agreement shall be
held in confidence in accordance with [identify confidentiality letter].
7.3 Acquisition Proposals. From and after the date of this
Agreement until the earlier of (i) the termination of this Agreement in
accordance with Article X or (ii) the Closing Date, none of the Seller or any of
its representatives, affiliates or agents shall, directly or indirectly, solicit
or initiate proposals from or provide any confidential information to or engage
in negotiations with any Person (other than the Buyer or the Buyer's
representatives) regarding the sale of the UPI Business.
8
COVENANTS OF THE SELLER AND THE BUYER
8.1 Notification of Certain Matters. Each party hereto shall
give prompt notice to the other party hereto of (a) the occurrence or failure to
occur of any event, which occurrence or failure such party believes would be
reasonably likely to cause any representation or warranty contained herein to be
untrue or inaccurate in any material respect at any time, (b) any material
failure of such party to comply with or satisfy any covenant, condition or
agreement to be complied or satisfied by it hereunder, and (c) any newly
discovered fact or circumstance that might reasonably be expected to have a
material effect on the accuracy of any representation or warranty contained
herein.
8.2 Additional Agreements. Subject to the terms and conditions
set forth in this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement and to cooperate with each other in
connection with the foregoing, including using their reasonable best efforts to
obtain all necessary consents, approvals and authorizations, if any, as are
required to be obtained by any party under any laws, to defend all lawsuits or
other legal proceedings challenging this Agreement and, if the Seller shall have
received the Shares pursuant to Section 3.1.1(b)(i) hereof, the Registration
Rights Agreement or the consummation of the transactions contemplated hereby or
thereby, to cause to be lifted or rescinded any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby and to effect all necessary registrations and
other filings, if any, required in connection with the transactions contemplated
hereby.
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9
CONDITIONS TO THE CLOSING
9.1 Conditions to Obligations of Each Party to the Closing.
The respective obligations of each party hereto to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or prior to
the Closing Date, of the following conditions:
9.1.1 Rulings. No injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency shall be in effect which prevents the
consummation of the transactions contemplated by this Agreement.
9.1.2 Deadline. The Closing shall not have occurred by
5:00 p.m., New York City time, on February 28, 1998.
9.2 Conditions to Obligations of the Buyer. In addition to the
conditions set forth in Section 9.1, the obligation of the Buyer to consummate
the transactions contemplated by this Agreement is subject to the satisfaction,
on or prior to the Closing Date, of the following conditions:
9.2.1 Performance of Agreements. The Seller shall have
duly performed, in all material respects, all agreements required to be
performed prior to Closing pursuant to the terms of this Agreement.
9.2.2 Representations and Warranties; Certificates. The
representations and warranties of the Seller contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date as if
made on the Closing Date, and a duly authorized officer of the Seller shall have
delivered a certificate to the Buyer certifying as to the foregoing.
9.2.3 Xxxx of Sale and Other Transfer Documents. The
Xxxx of Sale, the Assignment of Trademarks and the Assignment of Copyrights and
such other instruments as may be requested by the Buyer pursuant to Section 3.1,
shall have been duly executed and delivered by the Seller on the Closing Date.
9.2.4 Employment Agreements. All employees identified in
Schedule 9.2.4 hereto and at least 75% of the remaining employees of the UPI
Business shall have entered into employment agreements on terms reasonably
acceptable to the Buyer agreeing to be employed by the Buyer following the
Closing.
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9.2.5 Material Changes in UPI Business. Between January
1, 1998 and the Closing Date there shall have been no material adverse change in
the UPI Business.
9.2.6 Delivery of Completed Schedules. The Seller shall
have delivered to the Buyer at least five business days prior to Closing, all
Schedules to this Agreement, current as of the date delivered.
9.3 Conditions to Obligations of the Seller. In addition to
the conditions set forth in Section 9.1, the obligation of the Seller to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
9.3.1 Performance of Agreements. The Buyer shall have
duly performed, in all material respects, all agreements required to be
performed prior to Closing pursuant to the terms of this Agreement.
9.3.2 Representations and Warranties; Certificates. The
representations and warranties of the Buyer contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date as if
made on the Closing Date, and a duly authorized officer of the Buyer shall have
delivered a certificate to the Seller certifying as to the foregoing.
10
TERMINATION
10.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date:
10.1.1 By mutual written agreement of the Buyer and the
Seller; or
10.1.2 By either the Buyer of the Seller, (i) if any
court of competent jurisdiction in the United States or other United States
governmental body shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the purchase and
sale of the Acquired Assets or the assumption of the Assumed Liabilities
contemplated hereby (which the party seeking to terminate this Agreement shall
have used its reasonable best efforts to have lifted or reversed) and such
order, decree, ruling or other action shall have become final and nonappealable
or (ii) if the Closing Date shall not have occurred by 5:00 p.m., New York City
time, on February 28, 1998, or such later date as may be mutually agreed;
provided, however, that the right to terminate this Agreement under this
subsection shall not be available (a) to any party whose breach, in any material
respect, of any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing Date to occur on
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or before such date or (b) to any party that by its action or inaction has
rendered the satisfaction of any condition to the obligations of the other
impossible and such condition has not been waived by the party so affected; or
10.1.3 By the Seller, if the Buyer shall have failed to
comply in any material respect with any of its covenants or agreements contained
in this Agreement; or
10.1.4 By the Buyer, if the Seller has failed to comply
in any material respect with any of its covenants or agreements contained in
this Agreement.
10.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 10.1, (i) this Agreement shall forthwith
become void and there shall be no further obligation on the part of the Buyer or
the Seller hereunder and (ii) each party will, and will cause its respective
advisors, agents and representatives to, redeliver all documents, work papers
and other material of any other party relating to the transactions contemplated
hereby to the party furnishing the same.
11
INDEMNIFICATION
11.1 Survival. The representations and warranties of the
parties contained herein or in any signed writing delivered pursuant hereto or
in connection herewith shall survive the Closing until the second anniversary of
the date hereof; provided, however, that the Seller's representation and
warranty set forth in Section 4.11 shall survive until the fifth anniversary of
the Closing.
11.2 Indemnification by the Seller. The Seller shall indemnify
the Buyer and its principals, officers, directors, employees, independent
contractors, agents and representatives, in their capacities as such, and the
successors, heirs and personal representatives of any of them (collectively,
"Buyer Indemnified Parties") against and hold them harmless from any and all
damage, claim, loss, liability and expense (including, without limitation,
reasonable expenses of investigation and attorneys' fees and expenses)
(collectively, "Loss") incurred or suffered by any Buyer Indemnified Party
arising out of or relating to (a) any breach of any representation, warranty,
covenant or other agreement of the Seller contained herein, (b) any alleged,
claimed or established professional negligence or malpractice of the Seller with
respect to the performance of professional services in the UPI Business on or
prior to the Closing Date, (c) any debt, Tax, claim, option, liability,
obligation or Lien of the Seller other than the Assumed Liabilities, or (d) that
certain Computer Technology Agreement between International Consulting
Solutions, Inc. and Xxxx Corporation, dated as of November 4, 1994.
Notwithstanding the foregoing, the Seller shall have no liability under this
Section 11.2 unless and until the aggregate amount of all claims
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by the Buyer Indemnified Parties arising out of one or more breaches of
representations, warranties, covenants or agreements by the Seller exceeds
$150,000 in the aggregate, in which case the Seller shall be liable for the
aggregate amount of all such claims up to a total maximum liability of value of
the Shares at Closing (the "Share Value"), which shall be based upon a value per
share equal to the last closing sale price (the "Closing Date Sale Price") of
the Common Stock on the Nasdaq Over the Counter Market on the Closing Date, or
if there be no sale on such date, the most recent prior such sale. The Buyer
may, at its option, offset against any payments due the Seller pursuant to this
Agreement any amounts owed by the Seller to the Buyer pursuant to this Section
11.2. The Seller may pay any amount due the Buyer pursuant to this Section 11.2
in cash or by return of shares of Common Stock received by it from the Buyer
pursuant to Section 3.1.1 hereof, at a valuation per share equal to the Closing
Date Sale Price.
11.3 Indemnification by the Buyer. The Buyer shall indemnify
the Seller and its members, officers, directors, employees, independent
consultants, agents and representatives, in their respective capacities as such,
and the successors, heirs and personal representatives of any of them
(collectively, the "Seller Indemnified Parties") against and hold them harmless
from any and all Loss incurred or suffered by any Seller Indemnified Party
arising out of or relating to (a) any breach of any representation, warranty,
covenant or other agreement of the Buyer contained herein, (b) any Assumed
Liability arising after the Closing Date or (c) the ownership of the Acquired
Assets or the performance of professional services in the UPI Business after the
Closing Date. Notwithstanding the foregoing, the Buyer shall have no liability
under this Section 11.3 unless and until the aggregate amount of all claims by
Seller Indemnified Parties arising out of one or more breaches of
representations, warranties, covenants or agreements by the Buyer exceeds
$150,000 in which case the Buyer shall be liable for the aggregate amount of all
such claims up to a total maximum liability equal to the Share Value. The Seller
may, at its option, offset any payments due the Buyer pursuant to this Agreement
against any amounts owed by the Buyer to the Seller pursuant to this Section
11.3.
11.4 Indemnification; Notice and Settlements. A Person seeking
indemnification pursuant to Sections 11.2 or 11.3 (an "Indemnified Party") with
respect to a claim, action or proceeding by a Person who is not a Buyer
Indemnified Party or a Seller Indemnified Party shall give prompt written notice
to the party from whom such indemnification is sought (the "Indemnifying Party")
of the assertion of any claim, or the commencement of any action or proceeding,
in respect of which indemnity may be sought hereunder; provided that the failure
to give such notice shall not affect the Indemnified Party's rights to
indemnification hereunder, unless such failure shall prejudice in any material
respect the Indemnifying Party's ability to defend such claim, action or
proceeding. The Indemnifying Party shall have the right to assume the defense of
any such action or proceeding at its expense, provided that (x) in the
reasonable judgment of the Indemnified Party, the Indemnifying Party has
adequate resources to undertake such defense and satisfy any indemnifiable Loss
arising from such action or proceeding and (y) the selection of counsel is
approved by the Indemnified Party (which approval will not be unreasonably
withheld). If the Indemnified Party so determines that the Indemnifying Party
does not have adequate resources, or the Indemnifying Party shall elect not to
assume the defense of
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any such action or proceeding, or fails to make such an election within 20 days
after it receives such notice pursuant to the first sentence of this Section
11.4, the Indemnified Party may assume such defense at the expense of the
Indemnifying Party. The Indemnified Party shall have the right to participate in
(but not control) the defense of an action or proceeding defended by the
Indemnifying Party hereunder and to retain its own counsel in connection with
such action or proceeding, but the fees and expenses of such counsel shall be at
the Indemnified Party's expense unless (i) the Indemnifying Party and the
Indemnified Party have mutually agreed in writing to the retention of such
counsel or (ii) the named parties in any such action or proceeding (included
impleaded parties) include the Indemnifying Party and the Indemnified Party, and
representation of the Indemnifying Party and the Indemnified Party by the same
counsel would create a conflict, provided that, unless otherwise agreed by the
Indemnifying Party, if the Indemnifying Party is obligated to pay the fees and
expenses of such counsel, the Indemnifying Party shall be obligated to pay only
the fees and expenses associated with one attorney or law firm, as applicable,
for the Indemnified Party. An Indemnifying Party shall not be liable under
Section 11.2 or 11.3 for any settlement effected without its written consent,
which consent will not be unreasonably withheld, of any claim, action or
proceeding in respect of which indemnity may be sought hereunder.
11.5 Cumulative Remedies. The remedies provided for in this
Agreement are not exclusive, but are in addition to all other remedies at law,
in equity or otherwise.
11.6 Limitation on Indemnification. Neither party shall have a
right to assert any claim for indemnification under this Agreement more than two
years after the Closing. Notwithstanding the foregoing, the Seller's
indemnification of the Buyer against (i) any of the Seller's Tax liabilities
shall survive for the applicable statutory periods of limitations, and (ii) a
breach of the representation and warranty contained in Section 4.11 shall
survive until the fifth anniversary of the Closing.
12
GENERAL PROVISIONS
12.1 Notices. All notices and other communications given or
made pursuant to this Agreement shall be in writing and shall be (i) sent by
registered or certified mail, return receipt requested, (ii) hand delivered or
(iii) sent by prepaid overnight carrier, with a record of receipt, to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
(a) if to the Buyer:
IntelliCorp, Inc.
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0000 Xx Xxxxxx Xxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Chief Financial Officer
with a copy to:
Xxxxxx Xxxxxx White & XxXxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Peers
(b) if to the Seller:
ICS Deloitte Management LLC
Chadds Ford Business Campus,
Brandywine 0 Xxxxxxxx,
Xxxxx 000
Xxxxxx Xxxx, XX.
Attn: Xxxxxx Xxxxxxxx
with copies to:
Deloitte & Touche Consulting Group LLC
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: General Counsel
and
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Each notice or communication shall be deemed to have been given on the date
received.
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12.2 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.3 Miscellaneous. This Agreement (i) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof, (ii) shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns and, except
as provided in Article XI hereof, is not intended to confer upon any other
Person (including, without limitation, any directors, officers, employees,
independent contractors, agents or representatives of the Seller), any rights or
remedies hereunder, (iii) shall be governed, including, without limitation, as
to validity, interpretation and effect, by the internal Laws of the State of New
York, without regard to the principles of conflicts of laws, and (iv) may be
executed in two or more counterparts, each of which shall be an original and all
of which together shall constitute a single agreement.
12.4 Assignment. 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. No party shall be
relieved of any liability arising hereunder in respect of any assignment
pursuant to this Section, unless such assignor has received a written release
expressly excepting such assignor from any liability that may arise hereunder.
12.5 Waiver; Amendment. No waiver of any term, condition or
obligation of this Agreement shall be valid unless in writing and signed by the
waiving party. No failure or delay by any party hereto at any time to require
the other parties hereto to perform strictly in accordance with the terms hereof
shall preclude any party from requiring performance by the other parties hereto
at any later time. No waiver of any one or several of the terms, conditions or
obligations of this Agreement, and no partial waiver thereof, shall be construed
as a waiver of any of the other terms, conditions or obligations of this
Agreement. This Agreement may not be amended, changed or modified in any fashion
except by written instrument signed by each of the parties hereto.
12.6 Fees and Expenses. All fees, costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such fees, costs or expenses. The Seller shall
bear and pay all U.S. Federal, state, local and foreign Taxes that arise out of
or as a result of the consummation of this Agreement (other than any tax based
on the net income or revenues of the Buyer).
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IN WITNESS WHEREOF, each party hereto has duly executed this
Agreement as of the date first above written.
INTELLICORP, INC.
By: /s/ Xxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
ICS DELOITTE MANAGEMENT LLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman
27
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS................................................................................ 1
ARTICLE II
PURCHASE AND SALE OF ACQUIRED ASSETS....................................................... 4
2.1 Purchase and Sale of Acquired Assets........................................ 4
(a) Purchased Contracts.................................................. 4
(b) Proprietary Rights................................................... 4
(c) Purchased Equipment.................................................. 4
(d) Records and Documentation............................................ 4
2.2 Excluded Assets...............................................................5
2.3 Liabilities................................................................. 5
2.4 Transfer of Clients and Identified Prospects................................ 5
2.5 Delivery of Work Product.................................................... 6
2.6 Facility Lease.............................................................. 6
2.7 Date Center Lease.......................................................... 6
2.8 Termination of Automobile Leases............................................ 6
2.9 Purchase of Equipment....................................................... 6
ARTICLE III
THE PURCHASE PRICE......................................................................... 7
3.1 Purchase Price.............................................................. 7
3.2 Payments and Deliveries upon Closing........................................ 8
3.3 Closing..................................................................... 9
3.4 Special Contract Payments................................................... 9
3.5 Allocation.................................................................. 9
3.6 Financial Statements........................................................ 9
3.7 Further Assurances.......................................................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER.............................................. 10
4.1 Organization and Qualification............................................. 10
4.2 Authorization.............................................................. 10
4.3 No Violations or Conflicts................................................. 11
4.4 Consents and Approvals..................................................... 11
4.5 Assets..................................................................... 11
4.6 Work-in-Progress........................................................... 11
4.7 Conduct of Business......................................................... 11
4.8 Clients; Identified Prospects; Client Relations............................. 11
4.9 Contracts and Commitments................................................... 12
4.10 Litigation.................................................................. 12
28
Page
----
4.11 Intellectual Property....................................................... 12
4.12 Compliance with Laws........................................................ 13
4.13 Employees and Independent Contractors....................................... 13
4.14 Disclosure.................................................................. 13
4.15 Brokers and Finders......................................................... 13
4.16 Investment Representation................................................... 13
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER ............................................... 14
5.1 Organization and Qualification.............................................. 14
5.2 Authorization............................................................... 14
5.3 No Violations or Conflicts.................................................. 15
5.4 Consents and Approvals...................................................... 15
5.5 Common Stock................................................................ 15
5.6 Disclosure.................................................................. 15
5.7 Brokers and Finders......................................................... 16
ARTICLE VI
COVENANTS.................................................................................. 16
6.1 Property Relating to Acquired Assets Received by
the Seller or Related Persons............................................... 16
6.2 Certain Employees........................................................... 16
6.3 Non-Solicitation............................................................ 17
ARTICLE VII
COVENANTS OF THE SELLER PRIOR TO CLOSING................................................... 17
7.1 Maintenance and Operation of Business....................................... 17
7.2 Access to Information....................................................... 17
7.3 Acquisition Proposals....................................................... 17
ARTICLE VIII
COVENANTS OF THE SELLER AND THE BUYER...................................................... 18
8.1 Notification of Certain Matters............................................. 18
8.2 Additional Agreements....................................................... 18
ARTICLE IX
CONDITIONS TO THE CLOSING.................................................................. 18
29
Page
----
9.1 Conditions to Obligations of Each Party to the Closing...................... 18
9.2 Conditions to Obligations of the Buyer...................................... 19
9.3 Conditions to Obligations of the Seller..................................... 19
ARTICLE X
TERMINATION................................................................................ 20
10.1 Termination................................................................. 20
10.2 Effect of Termination....................................................... 20
ARTICLE XI
INDEMNIFICATION............................................................................ 21
11.1 Survival.................................................................... 21
11.2 Indemnification by the Seller............................................... 21
11.3 Indemnification by the Buyer................................................ 21
11.4 Indemnification; Notice and Settlements..................................... 22
11.5 Cumulative Remedies......................................................... 23
11.6 Limitation on Indemnification............................................... 23
ARTICLE XII
GENERAL PROVISIONS......................................................................... 23
12.1 Notices..................................................................... 23
12.2 Headings.................................................................... 24
12.3 Miscellaneous............................................................... 24
12.4 Assignment.................................................................. 25
12.5 Waiver; Amendment............................................................25
12.6 Fees and Expenses........................................................... 25
30
LOCK-UP AND REGISTRATION RIGHTS AGREEMENT
LOCK-UP AND REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of ________, 1998, by and between IntelliCorp, Inc., a Delaware
corporation (the "Corporation"), and ICS Deloitte Management LLC, a Delaware
limited liability company (the "Holder"). Capitalized terms used herein without
definition shall have the meanings ascribed thereto in the Asset Purchase
Agreement, dated _______, 1998, between the Corporation and the Holder.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties hereto hereby agree as follows:
1 . Lock-Up of Shares. (a) The Holder will not, without the
Corporation's prior written consent, except as set forth in Sections 1(b), 1(c)
and 1(d) below, offer, pledge, sell, contract to sell, grant any option for the
sale of, or otherwise dispose of, directly or indirectly, the Shares (each such
transaction, a "Sale").
(b) The foregoing restrictions shall not apply to Sales of the
Shares to Affiliates of the Holder provided, however, that the Holder shall
provide to the Corporation such purchaser's binding written consent to be bound
by the terms of this Agreement as if it were the Holder. For purposes of this
Section 1, "Affiliate" shall mean [**].
(c) If, at any time after one year from the date of the Asset
Purchase Agreement, the Holder or any Affiliate of the Holder who is a permitted
transferee pursuant to Section 1(b) hereof (a "Transferor") proposes to transfer
Shares to any 5% Holder (as hereinafter defined) other than pursuant to a tender
offer made pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), such Transferor shall give written notice (the "Sale Notice")
to the Corporation of the proposed transfer and its price and other terms. "5%
Holder" means any person, entity or "group" (as defined pursuant to Regulation
13D of the Commission) (x) that has filed and not terminated a Schedule 13D or
Schedule 13G with the Commission that discloses that such filer beneficially
owns 5% or more of the Corporation's outstanding common stock or (y) which the
Corporation's most recently filed proxy statement discloses beneficially owns 5%
or more of such outstanding common stock. For 30 days after receipt of such
notice, the Corporation shall have the right to purchase from the Transferor the
Shares proposed to be transferred, at the same price and terms set forth in the
Sale Notice. The Corporation or its assignee may exercise such right, in whole
but not in part, by delivering within such 30 day period to the Transferor a
written notice (the "Purchase Notice"), the delivery of which shall constitute
the legally binding commitment of the Purchaser to purchase from the Transferor,
and the legally binding commitment of the Transferor to sell to the Purchaser,
the Shares identified in the Sale Notice on the terms and conditions set forth
in the Sale Notice. Such purchase and sale
31
shall be consummated by the Purchaser and the Transferor within 5 business days
of the date the Purchase Notice is delivered. If no Purchase Notice is delivered
within such 30 day period the Transferor shall be free to effect a Sale of such
Shares; provided, however, that if a Sale is proposed to be made on terms
materially different than those set forth in the Sale Notice such proposed Sale
of the Shares shall again be subject to the restrictions of this Section 1. The
Corporation may assign its right to purchase Shares pursuant to this Section
1(c) to any person; provided, however, that the Corporation shall remain liable
to the Transferor hereunder for any breaches by any such assignee. The Holder
agrees that each Sale Notice will, unless the Corporation otherwise agrees,
state only a cash purchase price for Shares (which price may be stated as a
fixed price or at a specified percentage of a specified market price).
Notwithstanding the foregoing, a Transferor may sell Shares after the first
anniversary of the date of the Asset Purchase Agreement without restriction
under Section 1(a) pursuant to (x) ordinary brokerage transactions effected on
any securities market on which the Corporation's common stock is traded or (y)
an underwritten offering of the Shares.
(d) If, at any time during the first year from the date of the
Asset Purchase Agreement, a Transferor proposes to tender the Shares
beneficially owned by it pursuant to any tender offer made pursuant to the
Exchange Act, or at any time thereafter a Transferor proposes to tender the
Shares beneficially owned by it pursuant to a tender offer made by a 5% Holder
pursuant to the Exchange Act, such Transferor shall a give written notice (the
"Tender Notice") to the Corporation of the proposed transfer and its price (or,
if such tender offer includes consideration other than cash, such Transferor's
good faith estimate of the value of its price) and other terms. For 10 days
after receipt of such notice, the Corporation shall have the right to purchase
from the Transferor the Shares proposed to be transferred, at a price equal to
the cash value of the consideration set forth in the Tender Notice on the same
terms as set forth in the Tender Notice. The Corporation or its assignee may
exercise such right, in whole but not in part, by delivering within such 10 day
period to the Transferor a Purchase Notice, the delivery of which shall
constitute the legally binding commitment of the Purchaser to purchase from the
Transferor, and the legally binding commitment of the Transferor to sell to the
Purchaser, the Shares identified in the Tender Notice on the terms and
conditions set forth in the Tender Notice. Such purchase and sale shall be
consummated by the Purchaser and the Transferor within 5 business days of the
date the Purchase Notice is delivered. If no Purchase Notice is delivered within
such 10 day period the Transferor shall be free to effect a Sale of such Shares
pursuant to such tender offer or a competing tender offer; provided, however,
that if a Sale is proposed to be made on terms materially worse for such
Transferor than those set forth in the Sale Notice such proposed Sale of the
Shares shall again be subject to the restrictions of this Section 1. If the
Corporation purchases any Shares pursuant to this Section 1(d) and at any time
during the six month period immediately following the closing of such purchase
shares of the Corporation's Common Stock are purchased in accordance with the
terms of a tender offer made pursuant to the Exchange Act at a price per share
higher than that paid by the Corporation for such Shares, the Corporation shall
promptly pay to the Transferor of such Shares cash in an amount equal to the
difference between such higher price and the price paid by the Corporation times
the number of Shares purchased by the Corporation. The Corporation may assign
its right to purchase Shares pursuant to this Section 1(d) to any person;
provided, however, that the Corporation shall remain liable to the Transferor
hereunder for any breaches by any such assignee. The Holder agrees that
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each Sale Notice will, unless the Corporation otherwise agrees, state only a
cash purchase price for Shares (which price may be stated as a fixed price or at
a specified percentage of a specified market price). After the first anniversary
of date of the Asset Purchase Agreement a Transferor may tender the Shares
beneficially owned by it pursuant to any tender offer made pursuant to the
Exchange Act by any party other than a 5% Holder without restriction under
Section 1(a).
2. Registration. The Corporation shall prepare and file with
the Commission, and cause to be declared effective by the first anniversary of
the date of the Asset Purchase Agreement, a registration statement under the
Securities Act of 1933, as amended (the "Act"), sufficient to permit the public
offering and resale of the Shares through the facilities of all securities
exchanges and the over-the-counter markets on which the Corporation's securities
are traded. The Corporation shall use its best efforts to cause the Shares so
registered to be registered or qualified for sale under the securities or blue
sky laws of such jurisdictions as the holder of any Shares included in such
registration statement may reasonably request; provided, however, that (i) the
Corporation shall not by reason of this provision be required to qualify to do
business in any state in which it is not otherwise required to qualify to do
business or to file a general consent to service of process, and (ii)
notwithstanding anything in this Agreement or the Asset Purchase Agreement to
the contrary, in the event any jurisdiction in which the securities shall be
qualified imposes a non-waivable requirement that expenses incurred in
connection with the qualification of the securities be borne by selling
shareholders, such expenses shall be payable pro rata by selling shareholders.
3. Obligation to Maintain Effectiveness. The Corporation
shall keep effective any registration or qualification contemplated hereunder
and shall from time to time amend or supplement each applicable registration
statement, preliminary prospectus, final prospectus, application, document, and
communication for a period of 270 days beginning on the first anniversary of the
date of the Asset Purchase Agreement; provided, however, that, if the
Corporation is required to keep any such registration or qualification in effect
with respect to securities other than the Shares beyond such period, the
Corporation shall keep such registration or qualification in effect as it
relates to the Shares for so long as such registration or qualification remains
or is required to remain in effect in respect of such other securities.
4. Provision of Registration Statement. The Corporation shall
furnish to each holder of Shares such reasonable number of copies of any
registration statement filed pursuant to this Agreement and of each amendment
and supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement and
each supplement or amendment thereto (including each preliminary prospectus),
all of which shall conform to the requirements of the Act and the rules and
regulations thereunder, and such other documents, as such holder may reasonably
request to facilitate the disposition of the Shares held by such holder.
5. Opinion of Counsel. The Corporation shall furnish the
holders of the Shares with an opinion of its counsel, subject to ordinary and
customary qualifications and (reasonably acceptable to such holders) to the
effect that (i) the registration statement has become effective under the Act
and no order suspending the effectiveness of the registration statement,
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33
preventing or suspending the use of the registration statement, any preliminary
prospectus, any final prospectus, or any amendment or supplement thereto has
been issued, nor to the best knowledge of such counsel has the Commission or any
securities or blue sky authority of any jurisdiction instituted or threatened to
institute any proceedings with respect to such an order, (ii) each document, if
any, incorporated by reference in the registration statement and the prospectus
included therein (except for financial statements and related schedules, as to
which such counsel need express no opinion) complied as to form when filed with
the Commission in all material respects with the Exchange Act, and the rules and
regulations of the Commission thereunder, and (iii) the registration statement
and the prospectus included therein and any supplements or amendments thereto
(except for financial statements and related schedules, as to which such counsel
need express no opinion) comply as to form in all material respects with the Act
and the rules and regulations of the Commission thereunder. In addition, such
counsel shall state that it has participated in conferences with officers and
other representatives of the Corporation, and representatives of independent
accountants for the Corporation, at which conferences such counsel made
inquiries of such officers, representatives and accountants; discussed the
contents of the preliminary prospectus; the registration statement; and the
prospectus and related matters were discussed and, although such counsel is not
passing and does not assume any responsibility for the accuracy, completeness or
fairness, the statements contained in the preliminary prospectus, the
registration statement and the prospectus, on the basis of the foregoing, no
facts have come to the attention of such counsel which lead it to believe that
either the registration statement or on any amendment thereto, at the time such
registration statement or amendment became effective or the preliminary
prospectus or prospectus or amendment or any supplement thereto as of the date
of such opinion contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and schedules and
other financial and statistical data included in the preliminary prospectus, the
registration statement, or prospectus). The Corporation shall also furnish to
the holders of the Shares a cold comfort letter from the independent certified
public accountants of the Corporation in customary form and substance.
6. Indemnity and Contribution. In the event of a sale of the
shares pursuant to an underwritten public offering, the Corporation and the
holders of the Shares shall enter into an underwriting agreement containing
conventional representations, warranties, allocation of expenses, indemnity and
contribution provisions and customary closing conditions, including, without
limitation, opinions of counsel and accountants' cold comfort letters, with any
underwriter who acquires any Shares.
7. Rule 144 Requirements. The Corporation agrees that, from
the date hereof and until all the Shares have been sold under a registration
statement or are eligible for sale pursuant to Rule 144(k) under the Act, except
as shall have been otherwise agreed by the Holder and its permitted transferees,
the Corporation shall keep current in filing all reports, statements and other
materials required to be filed with the Commission to permit holders of the
Shares to sell such securities under Rule 144.
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8. Indemnification by the Corporation. Subject to the
conditions set forth below, the Corporation agrees to indemnify and hold
harmless any holder of Shares, its officers, directors, partners, employees,
agents, and counsel, and each person, if any, who controls any such person
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, from and against any and all loss, liability, charge, claim, damage, and
expense whatsoever (which shall include, for all purposes of this Agreement,
without limitation, reasonable attorneys' fees and any and all expense
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), as and when incurred,
arising out of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, relating to
the sale of any of the Shares or (B) in any application or other document or
communication (in this Agreement collectively called an "application") executed
by or on behalf of the Corporation or based upon written information furnished
by or on behalf of the Corporation filed in any jurisdiction in order to
register or qualify any of the Shares under the securities or blue sky laws
thereof or filed with the Commission or any securities exchange; or any omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Corporation with respect to such holder of Shares included in
any registration statement by or on behalf of such person expressly for
inclusion in any registration statement, preliminary prospectus, or final
prospectus, or any amendment or supplement thereto, or in any application, as
the case may be, or (ii) any breach of any representation, warranty, covenant,
or agreement of the Corporation contained in this Agreement. The foregoing
agreement to indemnify shall be in addition to any liability the Corporation may
otherwise have, including liabilities arising pursuant to this Agreement.
If any action is brought against a holder of Shares included in
any registration statement or any of its officers, directors, partners,
employees, agents, or counsel, or any controlling persons of such person (an
"indemnified party") in respect of which indemnity may be sought against the
Corporation pursuant to the foregoing paragraph, such claim for indemnification
be subject to the procedures set forth in Section 11.4 of the Asset Purchase
Agreement, with the same effect as if such procedures had been set forth herein
in full. The Corporation agrees promptly to notify each holder of Shares of the
commencement of any litigation or proceedings against the Corporation or any of
its officers or directors in connection with the sale of any Shares or any
preliminary prospectus, prospectus, registration statement, or amendment or
supplement thereto, or any application relating to any sale of any Shares.
9. Indemnification by the Holder. Each holder of Shares
agrees to indemnify and hold harmless the Corporation, each director of the
Corporation, each officer of the Corporation who shall have signed any
registration statement covering Shares held by such holder, each other person,
if any, who controls the Corporation within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, and its or their respective counsel,
severally but not jointly, to the same extent as the foregoing indemnity from
the Corporation to such holder in Section 9, but only with respect to statements
or omissions, if any, made in any registration
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statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written information
furnished to the Corporation with respect to such holder of Shares by or on
behalf of such holder thereof expressly for inclusion in any such registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, as the case may be. If any action
shall be brought against the Corporation or any other person so indemnified
based on any such registration statement, preliminary prospectus, or final
prospectus, or any amendment or supplement thereto, or in any application, and
in respect of which indemnity may be sought against any holder of Shares
pursuant to this Section 9, the holder shall have the rights and duties given to
the Corporation, and the Corporation and each other person so indemnified shall
have the rights and duties given to the indemnified parties, by the provisions
of Section 8.
10. Contribution. To provide for just and equitable
contribution, if (i) an indemnified party makes a claim for indemnification
pursuant to Section 8 or 9 (subject to the limitations thereof) but it is found
in a final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this Certificate
of Designation expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the Act, the Exchange
Act or otherwise, then the Corporation (including for this purpose any
contribution made by or on behalf of any director of the Corporation, any
officer of the Corporation who signed any such registration statement, any
controlling person of the Corporation, and its or their respective counsel), as
one entity, and the holders of the Shares in the aggregate (including for this
purpose any contribution by or on behalf of an indemnified party), as a second
entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Corporation
and the holders in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses. The relative fault, in the case of
an untrue statement, alleged untrue statement, omission, or alleged omission,
shall be determined by, among other things, whether such statement, alleged
statement, omission, or alleged omission relates to information supplied by the
Corporation or by the holders, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement,
alleged statement, omission, or alleged omission. The Corporation and the Holder
agree that it would be unjust and inequitable if the respective obligations of
the Corporation and the holders for contribution were determined by pro rata or
per capita allocation of the aggregate losses, liabilities, claims, damages, and
expenses (even if the holder and the other indemnified parties were treated as
one entity for such purpose) or by any other method of allocation that does not
reflect the equitable considerations referred to in this Section 10. No person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who is not guilty of
such fraudulent representation. For purposes of this Section 10, each person, if
any, who controls the holder within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer, director, partner, employee,
agent, and counsel of the holder or control person shall have the same rights to
contribution as the holder or control person and each person, if any, who
controls the Corporation within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, each officer of the Corporation who shall have signed
any such registration
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statement, each director of the Corporation, and its or their respective counsel
shall have the same rights to contribution as the Corporation, subject in each
case to the provisions of this Section 10. Anything in this Section 10 to the
contrary notwithstanding, no party shall be liable for contribution with respect
to the settlement of any claim or action effected without its written consent.
This Section 10 is intended to supersede any right to contribution under the
Act, the Exchange Act or otherwise.
11. General Provisions. This Agreement shall be subject to,
and incorporates by reference as if set forth in full herein, the provisions of
Article 8 of the Asset Purchase Agreement.
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IN WITNESS WHEREOF, each party hereto has duly executed this
Agreement as of the date first above written.
INTELLICORP, INC.
By: ____________________________________
Name:
Title:
ICS DELOITTE MANAGEMENT LLC
By: ____________________________________
Name:
Title:
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