EXHIBIT 10.1
SCANMANAGER PURCHASE AGREEMENT
THIS SCANMANAGER PURCHASE AGREEMENT (the "Agreement") is entered into
as of the 30th day of April, 1997 (the "Effective Date"), by and between
TechForce Corporation, a Georgia corporation ("TechForce"), and Ungermann-Bass
Networks, Inc., a Delaware corporation ("UB Networks") and a wholly-owned
subsidiary of Newbridge Networks, Inc., a Delaware Corporation, ("Newbridge").
BACKGROUND
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UB Networks has developed and possesses a capability in remote network
monitoring of customers' enterprise networks, marketed as the SCANmanager
service which is inclusive of UB Networks' FaultSCAN and PerformanceSCAN
components ("SCANmanager"). SCANmanager enables customers with local and wide
area communications and computer networks to "out-task" key computer network
management functions.
TechForce desires to purchase SCANmanager and its related assets and
service functions (the "SCANmanager Business") from UB Networks and UB Networks
desires to sell the SCANmanager Business to TechForce as provided herein.
NOW, THEREFORE, in consideration of the foregoing premises, and of the
respective covenants and commitments of the parties set forth herein, and other
sufficient and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows
ARTICLE 1
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PURCHASE AND SALE OF ASSETS
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1.1 Included Assets. UB Networks hereby sells, assigns and transfers
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to TechForce all of UB Networks' right, title and interest in and to the
following assets used or usable in connection with the SCANmanager Business (the
"Assets"):
(a) Equipment and other Tangible Property. All of the equipment,
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supplies, furniture, computers, telephone systems and other tangible
personal property owned by UB Networks listed on Schedule 1.1(a).
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(b) Real Estate and Personal Property Leases. All leasehold interests
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in and to the real property in Marietta, Georgia where the SCANmanager
Service Center is located (the "Real Property Lease") and all leasehold
interests in all leases of personal property, including equipment,
furniture, computers, telephone systems, and other tangible personal
property leased by UB Networks being used by UB Networks in the operation
of the SCANmanager Business (the "Personal Property Leases" and together
with the Real Property Lease, the "Leases") listed and described on
Schedule 1.1(b).
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(c) Customers and Customer Contracts. All right, title and interest
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in and to UB Networks' contracts, purchase orders and other agreements with
the customers listed on Schedule 1.1(c) (the "Customer Contracts").
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(d) Prospective Customers and Prospective Customer Assets. (i) All
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right, title and interest in and to UB Networks' potential contracts and
agreements with the prospective customers listed on Schedule 1.1(d) (the
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"Prospective Customers"); and (ii) any and all bid and proposal documents
for SCANmanager Business services related to the Prospective Customers (the
"Prospective Customer Assets").
(e) Suppliers and Supplier Contracts. All right, title and interest
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in and to UB Networks' contracts and agreements with the service and supply
providers (the "Suppliers") set forth on Schedule 1.1(e) (the "Supplier
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Contracts").
(f) Intangible Assets and Proprietary Rights. Those other intangible
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assets described on Schedule 1.1(f) (the "Intangible Assets").
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(g) Books and Records. All books, records and other documents and
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information relating to the Assets and the SCANmanager Business that are
material to the operation and understanding of the SCANmanager Business,
whether in hardcopy, electronic or other form.
(h) Goodwill. The goodwill of the SCANmanager Business as a going
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concern.
1.2 Excluded Assets. UB Networks is not selling to TechForce the assets,
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properties and rights described on Schedule 1.2 ("Excluded Assets"), and the
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Excluded Assets are hereby specifically excluded from the Assets.
ARTICLE 2
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PURCHASE PRICE
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2.1 Amount. The total purchase price (the "Purchase Price") for the
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Assets shall be the sum of (a) the Cash Payment (defined below) plus (b) the
aggregate amount of the Earnout Payments (defined below); provided, however,
that TechForce's obligation to pay Earnout Payments is limited and capped by an
amount equal to $375,000 subject to any adjustments effected to the Earnout
Payments pursuant to this Agreement.
2.2 Payments. TechForce shall make payment of the Purchase Price in the
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following manner:
(a) Cash Payment. TechForce shall pay the sum of $375,000 to UB
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Networks in cash or by company check on the Effective Date (the "Cash
Payment").
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(b) Earnout Payment Calculation. TechForce will make earnout payments
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(the "Earnout Payments") to UB Networks in amounts equal to the Earnout
Percentage of the revenues accrued and collected by TechForce for Accrual
Period Services; provided, however, that the Earnout Payments shall not
exceed Three Hundred Seventy-Five Thousand Dollars ($375,000) in the
aggregate. "Accrual Period Services" shall mean those SCANmanager Business
services rendered to Eligible Customers by TechForce ("SCANmanager
Services") during each three (3) month period beginning with the three (3)
month period ending July 31, 1997, and terminating with the three (3)
month period ending October 31, 1998 (each such period to be referred to
individually as an "Accrual Period" and all such periods to be referred to
collectively as the "Earnout Period"). The Earnout Percentage shall be
equal to twenty percent (20%) through the period ending April 30, 1998, and
shall be equal to fifteen percent (15%) through the remainder of the
Earnout Period. "Eligible Customers" shall mean the British House of
Parliament, the Prospective Customers and each customer that purchases
SCANmanager Services from TechForce as part of a package of services
offered by UB Networks, Newbridge Network, Inc., its parent Newbridge
Networks Corporation or any subsidiary of Newbridge Network Corporation, to
such customer.
(c) Earnout Payment Terms. Earnout Payments for each Accrual Period
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shall be due and payable within thirty (30) days after the end of the
Payment Period in which the underlying SCANmanager Services revenues for
such Earnout Payment were collected. "Payment Period" shall mean each of
the Accrual Periods and each successive three (3) month period thereafter
following the end of the Earnout Period until all such revenues have been
collected or are agreed by TechForce and UB Networks to be uncollectible.
(d) Certifications. Each Earnout Payment for an Accrual Period shall
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be accompanied by a statement certified by the Chief Financial Officer of
TechForce or his designee (each a "Certification"). Each Certification
shall contain a list of the Eligible Customers receiving SCANmanager
Services from TechForce during such Accrual Period and the SCANmanager
Service revenues accrued for each such Eligible Customer during such
Accrual Period and collected during the applicable Payment Period.
(e) Audit Rights. Upon the written request of UB Networks delivered
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within forty-five (45) days after the end of the Earnout Period, TechForce
shall allow an independent certified public accounting firm reasonably
acceptable to TechForce access to the TechForce records supporting the
calculation of the Earnout Payments for the purpose of reviewing the
Earnout Payment calculation; provided, however, that such audit firm shall
first agree to protect TechForce proprietary information disclosed during
such review. All expenses incurred by UB Networks in performing such
review shall be borne by UB Networks, unless such review discloses an error
of five percent (5%) or more in the calculation of any Earnout Payment. In
that case TechForce shall reimburse UB Networks for the reasonable amount
of such expenses.
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(f) Other Concerns. If UB Networks objects to the calculation of any
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Earnout Payment or the designation of Eligible Customers set forth in any
Certification, TechForce shall promptly meet with UB Networks and attempt
in good faith to reach a resolution of such disagreement upon written
request from UB Networks.
2.3 Allocation of Purchase Price. The Purchase Price shall be allocated
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among the Assets in the manner described on Schedule 2.3. Each of TechForce and
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UB Networks shall file, in accordance with the Internal Revenue Code of 1986, as
amended, an asset allocation statement on Form 8594 with its federal income tax
return for the current tax year and shall contemporaneously provide the other
party with a copy of the Form 8594 being filed.
2.4 Discontinuation of Earnout Payments.
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(a) Right to Discontinue. TechForce shall be entitled immediately to
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discontinue the Earnout Payments with no further obligation to make the
Earnout Payments upon any breach of Section 2 or 3 of the UB Networks
Noncompetition Agreement or the Newbridge Noncompetition Agreement
(collectively, the "Noncompetition Agreements"); provided, however, that
TechForce shall pay an amount equal to the Earnout Payments into an
interest bearing escrow account reasonably acceptable to UB Networks after
asserting such a breach. In the event that a court of final determination
issues a judgment that there has been such a breach prior to April 30,
2004, the escrowed amount, plus interest, shall be released to TechForce.
If no such judgment has been rendered by April 30, 2004, the escrowed
amount, plus interest, shall be distributed to UB Networks.
(b) Understandings. UB Networks hereby acknowledges and agrees that
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the obligations under the Noncompetition Agreements are an essential part
of the consideration to TechForce in consummating the acquisition of the
Assets and the SCANmanager Business, that TechForce would not consummate
such acquisition in the absence of such covenants, that the termination of
the Earnout Payments as provided in this Section 2.4 is a right agreed to
by UB Networks to cause TechForce to consummate the acquisition of the
Assets and the SCANmanager Business and that the discontinuation of the
Earnout Payments shall not be in full satisfaction of, constitute
liquidated damages for, or serve in lieu of any other remedies available
for any such breach of the Noncompetition Agreements.
ARTICLE 3
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ASSUMPTION OF LIABILITIES
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3.1 Executory Obligations to be Assumed by TechForce. In addition to the
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Purchase Price, TechForce agrees to assume and to pay and/or perform, in
accordance with their respective terms and from and after the Effective Date,
(a) property, sales and like taxes, utility and other period expenses for
periods from and after the Effective Date; and (b) the executory obligations or
commitments of UB Networks (but only to the extent such obligations or
commitments relate
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to a time after the Effective Date) under the Real Property Lease, the Personal
Property Leases, the Customer Contracts, the Supplier Contracts and the
agreements and contracts related to the Intangible Assets.
3.2 No Other Liabilities to be Assumed. Other than as set forth in
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Section 3.1, TechForce shall not assume, and nothing contained in this Agreement
shall be construed as an assumption by TechForce of, any liabilities,
obligations, expenses or undertakings of UB Networks of any nature whatsoever,
whether fixed or contingent, known or unknown. UB Networks shall be responsible
for all of the liabilities, obligations, expenses and undertakings relating to
the SCANmanager Business prior to the Effective Date and not specifically
assumed by TechForce.
ARTICLE 4
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REPRESENTATIONS AND WARRANTIES OF UB NETWORKS
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UB Networks makes the following representations and warranties to TechForce
and agrees that all such representations and warranties shall survive and remain
in full force and effect after the Effective Date until the expiration thereof
in accordance with Section 9.1 of this Agreement. Except as set forth in the
disclosure letter from UB Networks to TechForce in the form of Exhibit 4 to this
Agreement (the "Disclosure Letter"), UB Networks represents and warrants on the
Effective Date that:
4.1 Organization and Standing. UB Networks is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware, with full power and authority (corporate and otherwise) to own or
lease its property and carry on its business as such business is now conducted
and to permit the transactions contemplated by this Agreement.
4.2 Corporate Authorization and No Conflict. The execution and delivery
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of this Agreement and all other documents contemplated by this Agreement and the
Exhibits, Schedules, and certificates and the Disclosure Letter furnished in
connection herewith (the "Related Documents") by or on behalf of UB Networks and
Newbridge, as the case may be, and the consummation of the transactions
contemplated herein or therein, have been duly authorized by all necessary
corporate actions on the part of UB Networks and Newbridge, and to the best
knowledge of UB Networks, such execution, delivery and consummation of the
transactions contemplated hereunder and thereunder shall not result in any
violation or breach of any contract, trust, document or instrument to which UB
Networks is a party or by which any of its property is bound. This Agreement
and the Related Documents have been duly executed by UB Networks and are the
valid and legally binding obligations of UB Networks enforceable against it in
accordance with their respective terms, except as limited by the exercise of
judicial discretion, bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting generally the enforcement of creditors'
rights, and except as the remedy of specific performance may be unavailable in
certain cases.
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4.3 Approvals. No approval, authorization, order, license or consent of
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or registration, qualification or filing with any governmental authority and no
approval or consent by any other person or entity is required in connection with
the execution, delivery or performance by UB Networks of this Agreement and the
other agreements contemplated hereby.
4.4 No Liens or Encumbrances. UB Networks has good and marketable title
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to all of the Assets, free from any and all claims, liens, pledges, mortgages,
security interests, charges, options, defaults, restrictions or encumbrances of
any nature whatsoever; provided, however, that this sentence shall not
constitute a warranty against any matter included within the scope of Section
4.12(a). UB Networks has obtained all permissions and consents necessary for
the transfer and assignment of the Assets and the SCANmanager Business to
TechForce, and TechForce is not and shall not be become liable for any payment
to any third party as a result of any such transfer and assignment.
4.5 Expense Reports. Attached hereto as Schedule 4.5, is a true and
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correct copy of the department expense reports of the SCANmanager Business for
the period from the inception of the SCANmanager Business through MARCH 31,
1997, which fairly present the direct expenses of the SCANmanager Business other
than corporate support and sales services.
4.6 Contracts and Commitments. Except for the Customer Contracts,
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Supplier Contracts, the Leases and the Licenses (as defined below) (the
"Contracts"), UB Networks is not a party to any written or oral, express or
implied, agreement, or any other contract or commitment of any nature which
creates a material benefit or liability with respect to the Assets or the
SCANmanager Business or is material to TechForce's use, benefit or enjoyment
thereof. To the best knowledge of UB Networks, UB Networks is not in material
default, and there is no fact or event known to UB Networks which with the lapse
of time would constitute a material default, under any of the Contracts.
4.7 Lawsuits, Proceedings, etc. UB Networks has not been served with or
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notified of any action, suit or proceedings or, to the best knowledge of UB
Networks, has any action, suit or proceeding been threatened before any court,
commission, agency, arbitrator or other judicial or administrative authority
against or affecting the SCANmanager Business or the Assets.
4.8 Employees and Labor Matters. UB Networks is not a party to any
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collective bargaining or other labor agreement relating to the SCANmanager
Business other than the employment agreements with employees assigned to the
SCANmanager Business attached to this Agreement as Schedule 4.8. There is not
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pending or, to the best knowledge of UB Networks, threatened any labor dispute,
strike, work stoppage, union representation, election, negotiation of collective
bargaining agreement or similar labor matter relating to the SCANmanager
Business. UB Networks is not involved in any controversy with any of the
employees of the SCANmanager Business or any organization representing any
employees of the SCANmanager Business. UB Networks is in compliance with all
applicable federal and state laws and regulations applicable to the SCANmanager
Business concerning the employer/employee relationship and with all of its
agreements relating to the employment of the employees of the
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SCANmanager Business, including, without limitation, provisions thereof relating
to wages, bonuses, hours of work and the payment of Social Security,
unemployment or other payroll taxes or deductions, non-compliance with which
could have an adverse effect upon the Assets or the SCANmanager Business in an
amount exceeding $10,000.00 in the aggregate. UB Networks is not liable for any
unpaid wages, bonuses or commissions or any tax, penalty, assessment or
forfeiture for failure to comply with any of the foregoing.
4.9 Condition of Tangible Assets. Schedule 1.1(a) sets forth all tangible
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property that is a material Asset of the SCANmanager Business or material to the
operation of the SCANmanager Business. All of the tangible Assets listed on
Schedule 1.1(a) are currently in good order and repair, normal wear and tear
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excepted. The Assets and the Excluded Assets constitute all of the operating
assets and properties that have been used by UB Networks in the operation of the
SCANmanager Business since SCANmanager's inception and that are material to the
operation or understanding of the SCANmanager Business.
4.10 Compliance with Laws. UB Networks owns and operates, and has owned
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and operated, the Assets and the SCANmanager Business in compliance with all
applicable laws, ordinances, rules and regulations except to the extent that
non-compliance with such laws, ordinances, rules and regulations would not have
an adverse effect on the Assets or the SCANmanager Business exceeding $10,000.00
in the aggregate. UB Networks has no knowledge of any past, present or future
events, conditions, circumstances, activities, practices, incidents, actions or
plans which may interfere with or prevent compliance or continued compliance
with any such law or regulation. There have been no material citations, adminis
trative proceedings or judicial proceedings under any applicable laws,
ordinances, rules or regulations against UB Networks relating to the Assets or
the SCANmanager Business. UB Networks has not received notice of and has no
knowledge of any violation, criminal, civil or administrative action, suit,
demand, claim, hearing, notice or demand letter, notice of violation,
investigation or proceeding that is now pending or threatened under any such
applicable law, ordinance, regulation, order or requirement relating to the
Assets or the SCANmanager Business.
4.11 Environmental Matters. To the best knowledge of UB Networks, UB
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Networks is not in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign, relating
to the use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, "environmental laws"), does not own or
operate any real property contaminated with any substance that is subject to any
environmental laws, is not liable for any off-site disposal or contamination
pursuant to any environmental laws and is not subject to any claim relating to
any environmental laws, which violation, contamination, liability or claim would
individually or in the aggregate have a material adverse effect in excess of
$10,000.00 on the Assets or the SCANmanager Business, and is not aware of any
pending investigation which might lead to such a claim.
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4.12 Intangible Property Rights.
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(a) In its operation of the SCANmanager Business, UB Networks has not
infringed, and the Assets do not infringe, any trade secret or copyright
or, to the best knowledge of UB Networks, any patent or other intellectual
property right of any third party; provided, however, that UB Networks
makes no representation regarding the validity of title held by any third
party to the subject matter of any license or lease included in the Assets
or the infringement of any such subject matter. The Assets include all
intellectual property, permits, licenses and other intangible property
required for the operation of the SCANmanager Business as it is presently
being conducted that are material to the operation or understanding of the
SCANmanager Business.
(b) Schedule 1.1(f) contains a true, correct and complete list of all
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patents, copyrights, trademarks, service marks, software, processes, trade
secrets, confidential information, know how, operating procedures,
marketing and sales materials and methods and all other intellectual
property (the "Proprietary Rights") owned by UB Networks or licensed from
another party by UB Networks that have been used by UB Networks at any time
in connection with, and that are of value to, the SCANmanager Business.
Such list identifies (i) UB Networks as either the owner or licensee of
each such Proprietary Right; and (ii) in the case where UB Networks is a
licensee, the attendant licensor(s) and license agreement(s) for such
Proprietary Right. Other than licenses identified in the Disclosure Letter
that can not be provided to TechForce without breaching confidentiality
comments to the applicable licensor, the Disclosure Letter sets forth a
true and correct copy of each license and other agreement with respect to
each Proprietary Right as such licenses and other agreements are currently
in effect (the "Licenses"). UB Networks owns all right, title and interest
in and to such Proprietary Rights, free and clear of adverse claims, liens,
mortgages, charges, security interests and encumbrances, including without
limitation any exclusive rights, however described, granted to parties
other than UB Networks; provided, however, that this sentence shall not
constitute a warranty against any matter included within the scope of
Section 4.12(a).
(c) Set forth in the Disclosure Letter is a list of all licenses
granted to third parties by UB Networks in connection with the SCANmanager
Business and/or the Assets. Such list identifies, as applicable, the
Proprietary Rights, other Assets or other items covered by each such
license.
(d) UB Networks pays no royalty to anyone for any Proprietary Right.
(e) UB Networks has taken all reasonable measures to protect its
rights in SCANmanager xxxx, the other Proprietary Rights and the other
Assets; provided, however, that no trademark, service xxxx, copyright or
patent has been applied for or registered. UB Networks has not sent nor
otherwise communicated to any other person any notice, charge, claim or
assertion of, and does not have any knowledge of, any
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present, impending or threatened infringement by such other person of any
Proprietary Right of UB Networks.
(f) UB Networks has entered into employee confidentiality and
invention assignment agreements with each of its present and past employees
who has worked on or in connection with SCANmanager or the SCANmanager
Business; and copies of each such agreement are set forth in the Disclosure
Letter. UB Networks has not received notice, orally or in writing, that
any other person or entity claims any interest in any Asset or any
component of the SCANmanager Business other than the Assets licensed to UB
Networks, and to the best knowledge of UB Networks, no other person or
entity has, or has made, such a claim, except the ownership and other
rights claimed by licensors under the licenses listed in the Disclosure
Letter. Neither the execution nor delivery of this Agreement or any other
document contemplated hereby, nor the carrying on of the SCANmanager
Business by TechForce, will, to the best knowledge of UB Networks, conflict
with or result in a breach of the terms, conditions, or provisions of, or
constitute a default under, any contract, covenant or instrument under
which any of such employees is obligated.
4.13 Changes in Customers or Suppliers. UB Networks' has not received
---------------------------------
notice that any Customer or Supplier intends to terminate, limit or reduce its
business relations with UB Networks.
4.14 No Brokers or Finders. No person, firm or corporation has any right
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or other claim against TechForce, the Assets or the SCANmanager Business for any
commission, fee or other compensation as a finder or broker in connection with
the transactions contemplated by this Agreement.
4.15 Taxes. UB Networks has filed all income, excise, corporate,
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franchise, property, payroll and other tax returns or reports required to be
filed by it relating to the SCANmanager Business, by any foreign country, the
United States of America and any state or other political subdivision thereof
and has paid all taxes and assessments relating to the time periods covered by
such returns or reports. There are no present disputes as to taxes of any
nature payable by UB Networks relating to the SCAN Manager Business.
4.16 Absence of Undisclosed Liabilities. To the best knowledge of UB
----------------------------------
Networks, there are no liabilities (secured or unsecured and whether accrued,
absolute, direct, indirect, contingent or otherwise, and whether due or to
become due), or facts or circumstances which might lead to liabilities, arising
from any fact, circumstance, condition or omission occurring or existing prior
to the Effective Date which could (individually or in the aggregate) adversely
affect the Assets, the SCANmanager Business or TechForce's use, benefit,
operation or enjoyment thereof.
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4.17 Bulk Sales. The transfer of the Assets pursuant to this Agreement are
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not subject to the provisions of the Uniform Commercial Code - Bulk Transfers,
as adopted by the State of California.
4.18 Disclosure. Attached as Schedule 4.18 is a true and correct copy of
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that certain "UB Networks SCANmanager Remote Monitoring Service - Descriptive
Memorandum" delivered by UB Networks to, and relied on by, TechForce in making
its decision to acquire SCANmanager and the Assets (the "Memorandum"). To the
best knowledge of UB Networks, no representation or warranty made by UB Networks
in this Agreement or in any Related Document or disclosure made in the
Memorandum is false or misleading or omits to state any fact necessary to make
any such representation, statement or disclosure not misleading in any way that
would materially and adversely affect the Assets or the SCANmanager Business.
To the best knowledge of UB Networks, there is no event, fact or condition that
materially and adversely affects, or that reasonably could be expected to
materially and adversely affect, the value of the Assets or the SCANmanager
Business, taken as a whole, that has not been set forth herein, in a Related
Document or in the Memorandum.
ARTICLE 5
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REPRESENTATIONS AND WARRANTIES OF TECHFORCE
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TechForce makes the following representations and warranties to UB Networks
and agrees that all such representations and warranties shall survive and remain
in full force and effect after the Effective Date until the expiration thereof
in accordance with Section 9.2 of this Agreement. TechForce hereby represents
and warrants to UB Networks on the Effective Date as follows:
5.1 Organization and Standing. TechForce is a corporation duly organized,
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validly existing and in good standing under the laws of the State of Georgia,
and has all requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement.
5.2 Corporate Authorization and No Conflict. The execution and delivery
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of this Agreement on behalf of TechForce, and the consummation of the
transactions contemplated hereunder have been duly authorized by all necessary
corporate action on the part of the TechForce, and, to the best of TechForce's
knowledge, such execution, delivery and consummation of the transactions
contemplated hereunder and thereunder will not result in a violation or breach
of any document or instrument to which TechForce is a party or by which any of
its property is bound. This Agreement has been duly executed by TechForce and
is the valid and legally binding obligation of TechForce enforceable against it
in accordance with its terms, except as limited by the exercise of judicial
discretion, bankruptcy, insolvency, reorganization, moratorium or similar law
relating to or affecting generally the enforcement of creditors' rights, and
except as the remedy of specific performance may be unavailable in certain
cases.
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5.3 No Brokers or Finders. No person, firm or corporation engaged by
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TechForce has any right or other claim against UB Networks for any commission,
fee or other compensation as a finder or broker in connection with the
transactions contemplated by this Agreement.
5.4 Approvals. No approval, authorization, order, license or consent of
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or registration, qualification or filing with any governmental authority and no
approval or consent by any other person or entity is required in connection with
the execution, delivery or performance by TechForce of this Agreement and the
agreements contemplated hereby.
ARTICLE 6
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ADDITIONAL COVENANTS
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6.1 Use of Names. UB Networks acknowledges and agrees that TechForce is
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acquiring the names "SCANmanager," "FaultSCAN," and "PerformanceSCAN" and the
goodwill associated therewith and that UB Networks and its affiliates will not
use, and will not attempt to grant to any third party the right to use, such
names subsequent to the Effective Date.
6.2 Marketing and Non-competition Covenants.
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(a) Marketing. UB Networks agrees that TechForce's success in
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selling the SCANmanager service to the Prospective Customers and others is
critical to TechForce's ability to make the SCANmanager Business an
economically viable segment of TechForce's overall business. Therefore, UB
Networks agrees to provide at no charge the transition support services
described on Exhibit A to this Agreement.
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(b) Non-competition Covenants. UB Networks and Newbridge each agree
-------------------------
to abide by and comply with the non-competition covenants (the "Non-
Competition Covenants") set forth on Exhibit B to this Agreement as a
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"Selling Group Party" under such covenants.
6.3 Prorations. All personal property taxes on the Assets, all payments
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in lieu of taxes on the Assets and other taxes applicable thereto, if any, and
payments under leases and licenses included in the Assets and all utility and
other period charges shall be pro rated between UB Networks and TechForce as of
the Effective Date.
6.4 Additional Documentation and Assistance. UB Networks shall from time
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to time, subsequent to the Effective Date, at TechForce's request and without
further consideration, take such further action and execute and deliver to
TechForce such other instruments of conveyance, assignment or transfer and take
such other action as TechForce reasonably may require in order to more
effectively convey, transfer to and vest in TechForce, and put TechForce in
possession of, the Assets.
6.5 UB Networks Trademarks. TechForce acknowledges that it is acquiring
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no rights to use any trademark or tradename of UB Networks other than the names
listed in Schedule 1.1(f).
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TechForce agrees that it shall have no right to use, and shall remove, all other
trademarks and tradenames of UB Networks from any materials used by TechForce in
marketing, selling and providing the SCANmanager Business services, including
any such materials transferred to TechForce pursuant to this Agreement.
6.6 Request for Consent to Assignments. UB Networks agrees to request
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that each party to a Customer Contract, Supplier Contract, Lease or License
consent to the assignment of the right, title and interest of UB Networks under
such agreement to TechForce. TechForce agrees that the receipt of such consents
is not a condition to its obligations under this Agreement, that the failure to
obtain such consents is not a breach of any representation, warranty or
obligation of UB Networks under this Agreement and that TechForce may have to
negotiate new agreements with any such parties at the discretion of such
parties.
ARTICLE 7
---------
EMPLOYEES OF THE SCANMANAGER BUSINESS
-------------------------------------
TechForce shall offer employment to certain current employees of UB
Networks set forth on Schedule 7 on terms and conditions as are comparable to
----------
TechForce's general employment and hiring policies and procedures. UB Networks
shall remain solely responsible for all salaries, wages, benefits, severance
arrangements and all other terms of employment for each such person who may
become an employee of TechForce accruing prior to the Effective Date.
ARTICLE 8
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CLOSING CONDITIONS
------------------
8.1 Secretary's Certificate. UB Networks shall have delivered a
-----------------------
certificate of its secretary certifying a copy of the resolutions of the board
of directors of UB Networks authorizing this Agreement, and the transactions
contemplated hereby, and certifying the good standing of UB Networks as of the
Effective Date.
8.2 Opinion. UB Networks shall have caused to be delivered to TechForce
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an opinion of counsel in the form of Exhibit C to this Agreement.
---------
ARTICLE 9
---------
INDEMNIFICATION
---------------
9.1 Indemnification by UB Networks. The representations and warranties of
------------------------------
UB Networks contained in this Agreement shall survive the Effective Date and
shall expire on the second anniversary of the Effective Date, except that there
shall be no such limitation on any claim for or resulting from fraud other than
applicable statutes of limitation. Subject to the limitations set forth in
Sections 9.3 and 9.7 of this Agreement, UB Networks agrees to indemnify
TechForce with respect to, and hold TechForce harmless from, any loss,
liability, obligations, fines, penalties, settlements, damages, claims,
interest, awards and judgments, costs and expenses (including, but not limited
to, reasonable legal fees and other reasonable costs and expenses of
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investigations or contesting any of the foregoing) which TechForce may directly
or indirectly incur or suffer by reason of, or which result, arise out of, are
based upon or are related to (a) the inaccuracy of any representation or
warranty made by UB Networks in this Agreement or in any Related Document, (b)
the failure of UB Networks to comply with any covenants or other commitments
made in this Agreement, (c) the failure of UB Networks or Newbridge to comply
with the terms of the respective Noncompetition Agreement, (d) any liability
relating to or arising out of the conduct of the SCANmanager Business on or
prior to the Effective Date which is not specifically assumed by TechForce
pursuant to Section 3.1 of this Agreement, or (e) the application of any bulk
sales or similar law of any jurisdiction (collectively, "TechForce Claims").
9.2 Indemnification by TechForce. The representations and warranties of
----------------------------
TechForce contained in this Agreement shall survive the Effective Date and shall
expire on the second anniversary of the Effective Date, except that there shall
be no such limitation on any claim for or resulting from fraud other than
applicable statutes of limitation. Subject to the limitations set forth in
Sections 9.3 and 9.7 of this Agreement, TechForce agrees to indemnify UB
Networks with respect to, and hold UB Networks harmless from, any loss,
liability, obligations, fines, penalties, settlements, damages, claims,
interest, awards and judgments, costs and expenses (including, but not limited
to, reasonable legal fees and other reasonable costs and expenses of
investigations or contesting any of the foregoing) which UB Networks may
directly or indirectly incur or suffer by reason of, or which result, arise out
of, are based upon or are related to (a) the inaccuracy of any representation or
warranty made by TechForce in this Agreement or in any Related Document, or,
during the period that UB Networks provides TechForce with access to the UB
Networks' network during the transition period described in Schedule A, the
----------
breach of UB Networks' network security resulting from the negligence or willful
misconduct of TechForce, its employees or its agents in maintaining TechForce's
own network security, (b) the failure of TechForce to comply with any covenants
or other commitments made in this Agreement, or (c) any liability relating to or
arising out of the conduct of the SCANmanager Business following the Effective
Date and those liabilities assumed by TechForce pursuant to Section 3.1 (the "UB
Networks Claims" and collectively with the TechForce Claims, the "Indemnifiable
Claims").
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9.3 Limitations on Indemnification.
------------------------------
(a) Except for indemnification obligations arising out of fraud, the
indemnification obligation of UB Networks under this Article 9 for the
TechForce Claims arising under Section 9.1(a) or as a result of any breach
of the Noncompetition Covenants shall be limited to and shall not exceed in
the aggregate (i) Purchase Price including Earnout Payments paid or payable
by TechForce less $200,000 for any breach by UB Networks of the warranties
set forth in Section 4.12(a); and (ii) for all other TechForce Claims
arising under Section 9.1(a) above or as a result of any breach of the
Noncompetition Covenants, the Purchase Price (including, without
limitation, all Earnout Payments paid or payable by TechForce under this
Agreement) less (A) any amounts payable by UB Networks for any breach by UB
Networks of the warranties set forth in Section 4.12(a) and (B) any Earnout
Payments payable by TechForce under this Agreement that are not ultimately
paid by TechForce as a result of an exercise by TechForce of its setoff
rights under Section 2.4 above or Section 9.8 below for TechForce Claims
arising under Section 9.1(a).
(b) Except for indemnification obligations arising out of fraud, the
indemnification obligation of TechForce under this Article 9 for the UB
Networks Claims arising under Section 9.2(a) above shall be limited to and
shall not exceed in the aggregate the Purchase Price (including, without
limitation, all Earnout Payments paid or payable by TechForce under this
Agreement).
9.4 Third-Party Claims. Within ten (10) days after receipt of written
------------------
notice of the commencement of any action or the assertion of any claim,
liability or obligation by a third party (whether by legal process or
otherwise), against which claim, liability or obligation a party is, or may be,
required under this Article 9 to indemnify the other party, the indemnified
party will notify the indemnifying party in writing of the commencement or
assertion thereof (the "Claim Notice") and give the indemnifying party a copy of
such claim, process and all legal pleadings relating thereto. The indemnifying
party shall have the right to contest and conduct the defense of such action
with counsel of reputable standing reasonably acceptable to the indemnified
party by giving written notice to the indemnified party of its election to do so
within ten (10) days of the receipt of the Claim Notice, and the indemnified
party may participate in such defense by counsel of its own choosing at its own
expense. If the indemnified party shall be required by final judgment not
subject to appeal or by a settlement agreement to pay any amount in respect of
any obligation or liability against which the indemnifying party has agreed to
indemnify the indemnified party under this Agreement, such amount plus all
reasonable expenses incurred by the indemnified party in accordance with such
obligation or liability (including, without limitation, reasonable attorneys'
fees (other than fees incurred by counsel to the indemnified party employed
pursuant to the immediately preceding sentence) and costs of investigations)
shall be promptly paid by the indemnifying party to the indemnified party,
subject to reasonable documentation and cost substantiation of all such amounts.
The indemnifying party shall not settle or compromise any claim, action or
proceeding without the prior written consent of the
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indemnified party, which shall not be unreasonably withheld. The indemnified
party shall use reasonable efforts to mitigate any damage, loss, cost, expense,
liability or obligation with respect to which it shall be entitled to
indemnification hereunder. Subject to the limitations set forth in Sections 9.3
and 9.7 of this Agreement, failure of the indemnified party to give the Claim
Notice to the indemnifying party within the ten-day period required hereunder
shall not affect the indemnified party's rights to indemnification hereunder,
except if (and then only to the extent that) the indemnifying party incurs
additional expenses or the indemnifying party' defense of such claim is actually
prejudiced by reason of such failure to give timely notice.
9.5 Direct Claims. Subject to the limitations set forth in Section 9.3,
-------------
with respect to claims other than third-party claims, the indemnified party
shall use reasonable efforts promptly to notify the indemnifying party of such
claims, but failure of the indemnified party so to give notice to the
indemnifying party shall not affect the rights of the indemnified party to
indemnification hereunder, except if (and then only to the extent that) incurs
additional expenses or the indemnifying party is actually prejudiced by reason
of such failure to give timely notice.
9.6 Indemnification Claims - Interest. Interest on any claim for
---------------------------------
indemnification pursuant to this Article 9 shall accrue at a rate equal to the
"prime rate" as published in the Wall Street Journal from time to time.
-------------------
Interest on third party claims described in Section 9.3 shall begin to accrue
from the date that payment of any amount in respect of such claim is made, and
interest on all other claims shall begin to accrue from the date the claim
arose. In each case, interest shall continue to accrue until the claim is
satisfied by payment.
9.7 Baskets. Each party's obligation to indemnify pursuant to Section
-------
9.1(a) or 9.2(a) above shall become operative only after the aggregate amount of
all claims to indemnification made by the other party exceed the sum of Ten
Thousand Dollars ($10,000.00); provided, however, that the entire amount of the
-------- -------
indemnified claims shall be paid once such limitation is exceeded.
Notwithstanding anything to the contrary set forth in this Agreement, no claim
for indemnification pursuant to Section 9.1(a) or 9.2(a) of this Agreement shall
be valid unless the indemnified party shall have given the indemnifying party
written notice of such claim on or before ninety (90) days after the second
anniversary date of the Effective Date.
9.8 Indemnification Claims - Right of Offset. In the event that TechForce
----------------------------------------
has a claim for indemnification against UB Networks, TechForce shall be entitled
to offset the amount of such claim against remaining Earnout Payments. This
offset right is in addition to TechForce's right to seek indemnification
directly from UB Networks and shall not be deemed to limit TechForce's
indemnification rights in any respect other than as provided in Section 9.3(a).
.
9.9 Subrogation. In the event of any indemnification payment under this
-----------
Article 9, the indemnifying party shall be subrogated to the extent of such
payment to rights of recovery the indemnified party may have against any other
person with respect to the indemnified claim, liability, or obligation, and the
indemnified party shall execute such documents and take such steps as may be
reasonably requested by the indemnifying party to secure such rights.
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9.10 Sole and Exclusive Remedy for Breach of Representations. Except for
-------------------------------------------------------
indemnification obligations arising out of fraud, the sole and exclusive remedy
of either party hereto against the other for any Indemnifiable Claim arising
under Section 9.1(a) or 9.2(a) shall be the indemnification rights set forth in
this Article 9.
ARTICLE 10
----------
MISCELLANEOUS
-------------
10.1 Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of and be enforceable against the parties hereto and their respective
successors and permitted assigns.
10.2 Governing Law; Forum. This Agreement (and any and all disputes,
--------------------
controversies and other claims, losses and liabilities among the parties arising
out of, or in connection with, the transactions contemplated hereby) shall be
governed by and construed in accordance with the laws of the State of New York
(without regard to its rules of conflicts of laws).
10.3 Notices. All notices, consents, requests, demands, instructions or
-------
other communications provided for herein shall be in writing and shall be deemed
validly given, made and served when delivered personally or sent by certified or
registered mail, postage prepaid, or by fax upon receipt by the sender of
written confirmation of the recipients' receipt thereof (mailed notices shall be
deemed given five (5) calendar days after deposit in the United States mail)
and, pending the designation of another address or fax number, addressed or
faxed as follows:
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If to UB Networks: Ungermann - Bass Networks, Inc.
c/o Newbridge Networks, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Fax No.: (000) 000-0000
With a copy to: Xxxxxxxxx & Xxxxx, LLP
0000 Xxxxxx Xxxxxxx Xxxxxxx, Xxxxx X
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
If to TechForce: Xxxxxx X. Xxx
TechForce Corporation
00000 Xxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
With a copy to: Xxxxxx & Xxxxxxxx
Xxxxx 0000, XxxxxxxXxxx Xxxxx
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Xx., Esq.
Fax No.: (000) 000-0000
10.4 Entire Agreement. This Agreement and the Related Documents,
----------------
constitute the entire agreement between the parties relating to the purchase and
sale of the Assets and the SCANmanager Business and supersede in all respects
any and all prior oral or written agreements or understandings. This Agreement
shall be amended or modified only by written instrument signed by both parties.
10.5 Expenses. Except to the extent otherwise provided in this Agreement,
--------
each party shall pay for its own legal, accounting and other similar expenses
incurred in connection with the transactions contemplated by this Agreement,
whether or not such transactions are consummated.
10.6 Taxes. Any sales, transfer, use or excise taxes payable in connection
-----
with the transactions contemplated by this Agreement shall be paid by UB
Networks.
10.7 Publicity. The timing and content of all public announcements
---------
relating to the execution of this Agreement shall be approved by both TechForce
and UB Networks prior to the release of such public announcement, and each party
agrees to cooperate with the other party as appropriate to comply with all
applicable laws.
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10.8 Severability and Waivers. Each and every provision of this Agreement
------------------------
shall be deemed valid, legal and enforceable in all jurisdictions to the fullest
extent possible. Any provision of this Agreement that is determined to be
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be adjusted and reformed rather than voided, if possible, in order
to achieve the intent of the parties, and otherwise shall be voided. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
continuing waiver, and no waiver shall be binding unless executed in writing by
the party making the waiver.
10.9 Assignment. This Agreement may not be assigned by either party hereto
----------
without the prior written consent of the other party other than to any
suscessors, subsidiary parent corporation of a party; provided, however, that
the assignor shall remain bound under all of its obligations under this
Agreement; provided, further, however, that the parties acknowledge that it is
the intention of UB Networks to merge into Newbridge and that thereupon the
separate corporate existence of UB Networks shall cease, and agree that in such
event all the rights, privileges and obligations of UB Networks shall inure to
the benefit of and be binding on Newbridge. The rights, privileges and
obligations of each party hereto shall inure to the benefit of and be binding on
the permitted assigns of such party.
10.10 "Knowledge." Any reference to the "knowledge" or the "best
---------
knowledge" of UB Networks shall refer to the knowledge of Xxx Xxxxxxxx and any
UB Networks employee assigned to the SCANmanager Business and working full-time
at the Marietta premises. .
10.11 Counterparts; Execution. To facilitate execution, this Agreement
-----------------------
may be executed in as many counterparts as may be required, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but a single agreement. This Agreement
shall be deemed to have been executed at the time when the last signature of any
of the parties is affixed hereto or to any counterpart hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized representatives as of the date set forth in
the first paragraph.
UNGERMANN-BASS NETWORKS, INC.
By:
-------------------------------
Title:
----------------------------
TECHFORCE CORPORATION
By:
-------------------------------
Title:
----------------------------
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