EXHIBIT 99.1
------------
October 16, 2001
Gensym Corporation
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X Xxxxxxxxx,
Chief Executive Officer
Ladies and Gentlemen:
This letter sets forth the terms upon which ROCKET SOFTWARE, INC. ("Buyer")
will purchase (the "Purchase") the NetCure product line (the "NetCure Product
Line") of GENSYM CORPORATION ("Seller").
1. PROPOSED TERMS
A Term Sheet (the "Term Sheet") summarizing the material terms of the Purchase
is attached as Exhibit A. It is the intent of the parties that the terms,
provisions and conditions contained in this letter and the Term Sheet shall
constitute a binding agreement with respect to the Purchase, but the obligations
of Buyer to consummate the Purchase shall be subject to (i) the negotiation,
execution and delivery of a definitive agreement, containing terms, conditions
and other provisions that are customary for transactions similar to the Purchase
and are not inconsistent with this letter and the Term Sheet, (ii) the
satisfaction of the conditions to be contained in the definitive agreement, and
(iii) the delivery to Buyer of a written opinion letter of Xxxx and Xxxx LLP
and/or Xxxxxxxx, Xxxxxx and Finger LLP, as counsel for Seller, dated the closing
date of the Purchase, which opinion shall be satisfactory to Buyer, as
determined by Buyer in good faith after consultation with its counsel, both in
form and substance in all respects. Your chief executive officer has
represented orally to us (and we are relying on such representation) that your
Board of Directors has approved the Purchase and other transactions contemplated
by this agreement (including the Term Sheet) substantially on the terms and
conditions set forth in the agreement (including the Term Sheet). The parties
agree to negotiate in good faith the terms, conditions and provisions of, and to
execute and deliver the definitive agreement. The obligations of Buyer and
Seller pursuant to (i) Section 3 below shall also be binding and (ii) Section 4
below shall also be binding and continue in force and effect from the date
hereof through October 16, 2002.
2. DEPOSIT
Upon the execution of this agreement, Buyer shall make an xxxxxxx money
deposit in the amount of $100,000. Such deposit will be refundable in full to
Buyer in the event that (a) Xxxxxx agrees to sell or
GENSYM CORPORATION
October 16, 2001
Page 2
consummates a sale of the NetCure Product Line to a third party, (b) Seller
breaches its obligations under Section 3 below, or (c) the termination of this
agreement pursuant to Section 5 below.
3. OTHER NEGOTIATIONS
Between the date of this letter and the closing of the Purchase, Seller shall
not, directly or indirectly, through any officer, director, employee, affiliate
or agent or otherwise, take any action to solicit, initiate, seek, entertain,
encourage or support any inquiry, proposal or offer from, furnish any
information to, or participate in any negotiations with, any third party
regarding any direct or indirect acquisition of the NetCure Product Line, or any
acquisition of any material portion of the assets of the NetCure Product Line,
including the grant of any license to any intellectual property of the NetCure
Product Line other than licenses in the ordinary course of business related to
the sale of the Seller's products. Xxxxxx agrees that any such negotiations
(other than negotiations with Xxxxx) in progress as of the date of this letter
will be suspended during such period and that Seller will not accept or enter
into any agreement, arrangement or understanding regarding any such third party
acquisition transaction during such period.
If Seller or any of its officers, directors, employees, affiliates or agents
receives any proposal for, or inquiry respecting, any third party acquisition
transaction involving, directly or indirectly, the NetCure Product Line, or any
request for nonpublic information in connection with any such proposal or
inquiry, Seller shall promptly notify Buyer, describing in detail the identity
of the person making such proposal or inquiry and the terms and conditions of
such proposal or inquiry.
4. PUBLIC ANNOUNCEMENTS
The parties shall not make any public announcement concerning this letter,
their discussions or any other documents or communications concerning the
Purchase without the prior written approval of the other party (which shall not
be unreasonably withheld, conditioned or delayed), unless advised by counsel
that such disclosure is required by law (in which case the party so advised
shall promptly notify the other party).
5. TERMINATION
Anything herein to the contrary notwithstanding, this agreement may be
terminated prior to the consummation of the Purchase and other transactions
contemplated hereby: (i) at any time by mutual written consent of Xxxxx and
Seller; or (ii) by Buyer by written notice to Seller at any time after November
2, 2001 so long as Buyer is not in material breach of its obligations hereunder
at the time of termination; or (iii) by Seller by written notice to Buyer at
any time after November 16, 2001 so long as Seller is not in material breach of
its obligations hereunder at the time of termination. In the event of
termination of this agreement by either Buyer or Seller pursuant to the
foregoing clause (ii) or (iii), this agreement shall terminate without further
action by any of the parties hereto and all obligations of the parties hereunder
shall terminate; provided that any such termination of this agreement shall not
limit or impair any remedies that either Buyer or Seller may have with respect
to a breach or default by the other of its representations, warranties,
covenants or agreements or obligations hereunder.
GENSYM CORPORATION
October 16, 2001
Page 3
* * *
This letter shall be governed by the laws of the Commonwealth of
Massachusetts.
Please indicate your agreement with the terms of this letter be executing it
in the space provided below and returning a copy to us.
Very truly yours,
ROCKET SOFTWARE, INC.
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------------
Xxxxx Xxxxxxxxx, Chief Operating Officer
Agreed and Accepted:
GENSYM CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxxxx, Chief Executive Officer
TERM SHEET
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the letter to which this Term Sheet is attached as Exhibit A.
TRANSACTION STRUCTURE The transaction will be structured as a purchase
and sale of the NetCure Product Assets (as defined
below) and the assumption of specified liabilities
associated with Seller's NetCure Product Line to
be identified in a schedule to the definitive
agreement.
CONSIDERATION The total amount of the purchase price will be
$2,500,000 payable in cash, of which (i) $100,000
shall be paid upon the signing of this agreement
to which this Term Sheet is attached as Exhibit A,
and (ii) the balance shall be paid at the closing.
ASSETS The assets of the NetCure Product Line (the
"NetCure Product Assets") shall include all
tangible and intangible assets used or associated
in a material way with the NetCure Product Line,
including in any event all related goodwill,
including without limitation NetCure, NetCure 2.0
and Xmap/BizCure and the following:
. Good and valid title, free and clear of
all liens and encumbrances, to the
source code and documentation for the
following components:
. NetCure, with on-line
documentation (NetCure v1.0r2
and baseline
. source tree, branches and
history of shipping products)
. NetSleuth with on-line
documentation Build/Make
scripts for NetCure and
NetSleuth
. Training materials for NetCure
and NetSleuth
. QA Test Plan and Procedures
for NetCure and NetSleuth
. BizCure (project name = X-map)
prototype (never released)
. Marketing and collateral
materials for NetCure and
NetSleuth, including CD liner
notes
. Slides / Presentations / Sales
kits for NetCure and NetSleuth
. Good and valid title, free and clear of
all liens and encumbrances, to all
patents and patent applications,
trademarks and trademark applications,
copyrights and other registered
intellectual property specific to the
NetCure Product Line, including the
patent relating to Auto-Discovery of
Network Nodes.
. A perpetual worldwide royalty-free
license (containing
A-1
GENSYM CORPORATION
October 16, 2001
Page 2
representations, warranties and other
provisions customary for a transaction
of this type and including a copy of all
related source code and documentation)
to use, distribute, sublicense and
modify the following code sets for use
in or relating to NetCure and BizCure:
. Java Common Utilities
(currently incorporated into
NetCure and BizCure
prototypes)
. SymCure Algorithm (currently
incorporated into NetCure and
BizCure prototypes)
. APIs of Seller's Java-based
neural net technology
(currently incorporated into
NetCure 2.0 prototype)
. Installer & Licensing (license
key generator and
build/install scripts
currently required to install
and execute NetCure and
BizCure prototypes)
. The following licenses, free and clear
of all liens and encumbrances, currently
held by Seller relating to the use of
the following development tools:
. HP/OV (2 run-time and SDK
licenses for integration and
testing)
. Optimize-It (1 license for NT)
. JBuilder (the number of
licenses to be determined
based on the number currently
held by Seller; the Seller
will transfer to Buyer one
half of the licenses (rounded
up to the nearest whole
license) held by it)
. Good and valid title, free and clear of
all liens and encumbrances, to all
tangible personal property, to be
identified in a schedule to the
definitive agreement, used principally
in the development, testing,
manufacture, support or maintenance of
the NetCure Product Line, including
without limitation:
. Engineer/Manager laptops,
workstations and servers
. QA and Development Lab and
Testing (including both
computers, networking gear, as
well as client stations and
servers)
. Various servers used for
Software Source Control, DHCP,
Web, routing, DNS and related
services required to continue
development of the NetCure
Product Line.
. Seller will use its best efforts to
cause the license held by Seller
relating to the use of Xxx Xxxxxx
----------
(presentation/mapping) to be transferred
to Buyer in accordance with the
provisions of the Xxx
---
A-2
GENSYM CORPORATION
October 16, 2001
Page 3
Xxxxxx license.
------
. Seller will provide Buyer with a report
from Seller's Trouble Ticketing System
(Helplink export) of all NetCure and
NetSleuth issues and bugs. The report
will be in a non-Seller specific schema
as determined by Xxxxxx and Xxxxx.
EXCLUDED ASSETS Excluded assets include:
. G2 and all G2 related software
. OEM licenses for Adventnet
. Licenses for Install Shield development
. Any and all property (personal, tangible
and intangible), products, equipment,
intellectual property, not related to
the NetCure Product Line.
ASSUMED LIABILITIES Buyer shall assume Seller's obligations relating
to maintenance contracts for existing NetSleuth
and NetCure customers. At closing, Seller will pay
to Buyer (or, at Buyer's option the purchase price
for the NetCure Product Assets will be reduced in
an amount equal to) a pro-rata portion of the
maintenance fees received by Seller for existing
NetSleuth and NetCure customers based on the
period remaining on such contracts assumed by
Buyer.
DESIGNATED EMPLOYEES Xxxxx will offer at-will employment (at any time
after the date of this agreement but prior to the
closing of the Purchase) to all of the following
employees of Seller (the "Designated Employees"),
with respective benefits and compensation which,
taken as a whole, are not less favorable than the
respective benefits and compensation presently
enjoyed by them as employees of Seller:
. Xxx Xxxxxx (Director, Chief Architect)
. Xxxxxx Xxxxx (Director and Team Lead)
. Xxxxx Xxxxxx (Principle Engineer and Team
Lead)
. Xxxx Xxx (Software Engineer)
. Xxxxx Xxxxx (UK) (Software Engineer)
. Xxxxxxxx Xxxx (UK) (Software Engineer)
. Xxxxxx Xxxxx (Test Engineer)
. Xxxxxx Xxxxxxxxx (Software Engineer)
. Xxx Xxxxxx (VP of Engineering)
Seller will consent to the hiring of the
Designated Employees.
Seller will provide personnel records,
salary/performance, immigration status and similar
information relating to the Designated Employees
to Buyer.
A-3
GENSYM CORPORATION
October 16, 2001
Page 4
FUTURE SELLER / BUYER Buyer will grant Seller a non-exclusive right to
RELATIONSHIP distribute the NetCure products at a discount of
40% from Buyer's list price for the NetCure
products from time to time in effect. Buyer and
Seller will negotiate the terms and conditions of
such grant in good faith; provided such right
shall not extend to Buyer's existing customers,
shall extend to Seller's but with terms for
resolution of overlap, and shall be for an initial
term of one year, subject to customary renewal and
termination provisions. Seller will provide Buyer
with reports detailing existing NetCure, non G2
based leads.
ANTICIPATED CLOSING DATE The parties shall use their reasonable best
efforts to execute a definitive agreement relating
to the Purchase by October 26, 2001.
CLOSING CONDITIONS AND The definitive purchase agreement relating to the
CERTAIN OTHER PROVISIONS Purchase shall contain customary closing
conditions, including without limitation the
following conditions precedent to the obligations
of (i) Buyer to consummate the transactions
contemplated hereby: (a) an opinion letter of
counsel acceptable to Seller on the basis provided
above in the letter to which this Term Sheet is
attached; (b) at least five of the Designated
Employees shall have accepted employment with
Buyer on the terms contemplated above in this Term
Sheet; and (c) at least three of Messrs. Xxxxxx,
Xxxxx, Xxxxxx, Xxxxx and Xxxxxx shall have
accepted employment with Buyer on the terms
contemplated above in this Term Sheet.
There shall be no "fiduciary out" or similar
ability in favor of Seller to terminate the
definitive agreement for a higher or better bid.
CHOICE OF LAW The definitive purchase agreement relating to the
Purchase shall be governed by Massachusetts law.
REPRESENTATIONS AND The definitive purchase agreement relating to the
WARRANTIES; COVENANTS AND Purchase shall contain customary representations,
INDEMNIFICATION warranties, covenants and other provisions by
Buyer and Seller; the representations and
warranties of Seller and Buyer shall terminate at
closing except for representations and warranties
relating to corporate existence and good standing,
authorization, execution, delivery and performance
of the definitive agreement and related
agreements, conflicts, material agreements related
to the NetCure Product Assets, title to the
NetCure Product Assets, litigation and
intellectual property.
Seller will indemnify Buyer and its affiliates for
any breach of any
A-4
GENSYM CORPORATION
October 16, 2001
Page 5
representations or warranties (with Seller's
indemnification obligation in respect of its
representations and warranties being capped at
$2.5 million) or covenants made by Seller in the
definitive agreement and any liabilities not
expressly assumed by Xxxxx, and will agree to
defend at its expense claims made by third
parties. Buyer will indemnify Seller and its
affiliates for any breach of any representations
or warranties (with Xxxxx's indemnification
obligation in respect of its representations and
warranties being capped at $1 million) or
covenants made by Buyer in the definitive
agreement and any liabilities expressly assumed by
Buyer.
Buyer will represent that it has conducted its own
due diligence with respect to the NetCure Product
Assets and assessed for itself the market
potential of the NetCure Product Assets.
FEES AND EXPENSES Each party will pay its own fees and
expenses incurred in connection with the Purchase,
including, without limitation, all legal,
accounting, financial, advisory, consulting,
travel and all other fees and expenses of third
parties incurred by a party in connection with the
negotiation of the terms and conditions of the
Purchase and consummation of the transactions
contemplated thereby.
A-5
