Exhibit 2.6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of December ___, 2001, is made
and entered into by and among Calico Commerce, Inc., a Delaware corporation,
formerly known as Calico Technology, Inc. (the "Seller"), and PeopleSoft, Inc.,
a Delaware corporation ("Purchaser"), with reference to the following:
RECITALS
WHEREAS, subject to the terms and conditions set forth in this
Agreement, Purchaser desires to purchase from Seller, and Seller desires to sell
to Purchaser, certain of the assets and properties of Seller, and in exchange
therefor, Purchaser has agreed to pay the Purchase Price to Seller; and
WHEREAS, in order to effectuate the purchase and sale described in this
Agreement, Seller intends to commence a voluntary case (the "Bankruptcy Case")
under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code")
in the United States Bankruptcy Court for the Northern District of California,
San Xxxx Division (the "Bankruptcy Court") on a date occurring as soon as
practicable after execution of this Agreement (the "Petition Date");
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants, promises and agreements set forth
herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. For the purposes of this Agreement and the
schedules and exhibits attached to this Agreement, the following terms shall
have the meaning set forth below:
"Acquisition Agreements" means this Agreement, the Servicing Agreement,
the License Agreement, the Indemnity Escrow Agreement, and all of the other
agreements, documents and instruments by or between Purchaser and Seller or any
of its Affiliates contemplated by this Agreement.
"Action" means any action, cause of action, Claim, demand, suit,
litigation, proceeding (public or private), arbitration or investigation
initiated or undertaken by any Governmental Authority or any other Person.
"Affiliate" with respect to any specified Person, means any other Person
that directly or indirectly through one or more intermediaries owns a majority
of the outstanding voting securities of such specified Person.
"Agreement" means this Asset Purchase Agreement.
"Assignment and Assumption Agreement" means that certain Assignment and
Assumption Agreement dated as of the Closing Date, to be entered into by
Purchaser and Seller, in substantially the form attached hereto as Exhibit G.
"Assumed Contracts" means any Assumed Licenses and the other Contracts
set forth on Exhibit B to this Agreement, as such Exhibit B shall have been
modified, amended, or supplemented prior to Closing.
"Assumed Liabilities" has the meaning given to it in Section 2.02 of
this Agreement.
"Assumed Licenses" means any Inbound License Agreements and End User
License Agreements that are assumed by Seller and assigned by Seller to
Purchaser.
"Avoidance Actions" means any action, adversary proceeding or contested
matter, and the proceeds thereof, or right of Seller to bring any action,
adversary proceeding or contested matter, arising by virtue of the commencement
of the Bankruptcy Case, including, without limitation, any actions commenced
pursuant to Bankruptcy Code Sections 522, 541, 542, 543, 544, 545, 547, 548,
549, 552, 553, 554 or 724.
"Bankruptcy Case" has the meaning given to it in the recitals to this
Agreement.
"Bankruptcy Code" has the meaning given to it in the recitals to this
Agreement.
"Bankruptcy Court" has the meaning given to it in the recitals to this
Agreement.
"Benefit Plan" means any Employee Benefit Plan or any Employee Pension
Benefit Plan.
"Xxxx of Sale" means that certain Xxxx of Sale dated as of the Closing
Date, to be entered into by Seller, in substantially the form attached hereto as
Exhibit K.
"Books and Records" means with respect to any Person, all files,
documents, instruments, papers, books and records (including books and records
contained in any electronic, mechanical or photographic medium, whether
computerized or not) of such Person's operations, affairs, prospects, assets or
Liabilities, including pricing guidelines, ledgers, journals, title policies,
customer and marketing materials, marketing information, product data sheets,
customer account histories, correspondence, and profiles, sales training and
presentation materials, customer support materials, support bulletins, vendor
lists, Contracts, licenses, customer lists, permits, computer files and
programs, retrieval programs, operating data and plans.
"Business" means the business of Seller and its Affiliates, as operated
by them immediately prior to execution of this Agreement, including the
development, marketing and distribution of interactive selling solution
software.
"Business Day" means a day other than a Saturday, Sunday or any other
day on which commercial banks in the City of San Francisco are authorized or
required to close.
"Claim" means any (a) demand for or right to payment, whether or not
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed,
2
legal, equitable, secured or unsecured; or (b) demand for or right to an
equitable remedy for breach of performance if such breach gives rise to an
alleged right or right to payment, whether or not such an alleged right or right
to an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured; provided, however that
"Claim" shall not include Accounts within the meaning of the Servicing
Agreement.
"Closing" and "Closing Date" have the respective meanings given to them
in Section 2.07 of this Agreement.
"Closing Deadline" means February 15, 2002, or such later date mutually
agreed to by Purchaser and Seller pursuant to Section 8.01 of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consent" means any consent, approval, waiver, agreement, license, or
report or notice to, any Person.
"Contract" or "Contracts" means any agreement, contract, license,
legally binding commitment, instrument, understanding or arrangement, whether
written or oral, relating to the Purchased Assets, in each case, as amended,
supplemented, waived or otherwise modified, and includes Technology Distribution
Agreements, Employee Agreements with persons identified in Section 4.10(f)(ii),
and the agreements identified in Section 4.10(f)(vii) and Exhibit B.
"Copyright Assignment" means that certain Assignment of Copyrights dated
as of the Closing Date, to be executed by Seller in favor of Purchaser, in
substantially the form attached hereto as Exhibit J.
"Cure Payments" shall mean all payments required to be made by Seller in
order to satisfy the requirements of Section 365(b) of the Bankruptcy Code with
respect to the Assumed Contracts.
"Damages" means all Claims, Actions, assessments, losses, damages,
deficiencies, costs, expenses, Liabilities, judgments, settlements, awards,
fines, response costs, sanctions, Taxes, penalties, charges and amounts paid in
settlement (including costs, fees and expenses of attorneys, accountants and
auditors and other agents of, or other Persons retained by, such Person), but
shall not include punitive damages.
"Deposit" means the sum of Two Hundred Thousand Dollars ($200,000) to be
held in a third party escrow or trust account pending the Closing, which amount
shall be fully refundable to Purchaser upon termination of this Agreement for
any reason other than a breach by Purchaser of its representations, warranties,
covenants or agreements in the Acquisition Agreements.
"Development Environments" means any device, programming, documentation,
media and other objects, including compilers, "workbenches," tools, and
higher-level or "proprietary" languages, used by Seller or any of its Affiliates
for the development, maintenance and implementation of any Software.
3
"Disabling Code" means any known virus, Trojan horse, worm, software
lock, drop dead device or any other limiting routine or instructions that would
erase data or render the Software incapable of being used in accordance with the
documentation therefor or render the Software out of compliance with its
documentation.
"Disclosure Schedules" has the meaning given to it in Section 5.07 of
this Agreement.
"Employee Benefit Plan" means any employee benefit plan, as defined in
Section 3(3) of ERISA, that is sponsored or contributed to by Seller or any
ERISA Affiliate covering employees or former employees of Seller, or with
respect to which Seller or Purchaser or any ERISA Affiliate is a party or is
otherwise bound.
"Employee Pension Benefit Plan" means any employee pension benefit plan,
as defined in Section 3(2) of ERISA, that is regulated under Title IV of ERISA
or is subject to the funding requirements of Part III of Title I of ERISA, or
Section 412 of the Code, other than a Multiemployer Plan.
"Employee Price Adjustment" means zero dollars ($0) unless Seller fails
to retain sufficient of those employees identified as "Core Developers" or "Key
Employees" in Exhibit L to satisfy the thresholds set forth in Section 5.12(d),
in which case such term shall mean One Million Dollars ($1,000,000).
"Employment Agreements" has the meaning given to it in Section 4.11 of
this Agreement.
"Employment Offers" has the meaning given to it in Section 5.12(a) of
this Agreement.
"End User License Agreements" has the meaning given to it in Section
4.10(h) of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning given to it in Section 2.01(b) of this
Agreement.
"Final Order" shall mean an order, judgment or other decree, the
operation or effect of which has not been reversed, stayed, modified or amended,
and which is no longer subject to appeal, certiorari proceeding, or other
proceeding for review or rehearing and as to which no appeal, certiorari
proceeding or other proceeding for review or rehearing shall then be pending.
"GAAP" means generally accepted accounting principles in the United
States as in effect on the date hereof and applied on a consistent basis.
"Governmental Approval" means any Consent, approval, authorization,
waiver, permit, concession, franchise, agreement, license, exemption or order
of, declaration or filing with, or report or notice to, any Governmental
Authority.
4
"Governmental Authority" means any court, arbitrator or governmental
agency, branch, authority, instrumentality or regulatory body of the United
States, any other country, state, county, city or other political subdivision in
the United States or any other country.
"Inbound License Agreements" means all agreements granting to Seller or
any of its Affiliates any right to use, exploit or practice any Intellectual
Property or Licensed Software owned or controlled by Persons other than Seller
and its Affiliates.
"Indemnity Escrow Amount" has the meaning given in Section 2.06(c).
"Indemnity Escrow" has the meaning given in Section 2.06(a).
"Indemnity Escrow Agreement" means the Indemnity Escrow Agreement
referenced in Section 2.06(b) and substantially in the form of Exhibit F
attached to this Agreement.
"Indemnity Escrow Holder" has the meaning given in Section 2.06(a).
"Indemnity Escrow Termination Date" has the meaning given in Section
2.06(f).
"Indemnity Escrow Payment Instructions" has the meaning given in Section
2.06(e).
"Intellectual Property" means (i) trademarks, service marks, domain
names, logos, trade dress, fictional business names, brand names and trade names
and any intangibles of a like nature, together with the goodwill associated with
the foregoing, including any modifications thereof and all applications, whether
based on an intent to use or use, or any registrations or renewals thereof
(collectively "Marks"); (ii) patents, patent applications, patent disclosures,
industrial designs and inventions (whether or not patentable and whether or not
reduced to practice), including, without limitation, continuation, divisional,
continuation-in-part, or reissue patent applications and registrations issuing
thereon and renewals or extensions thereof (collectively "Patents") excluding
all tangible media relating thereto; (iii) all works of authorship and
copyrights thereon and registrations, applications therefor and renewals thereof
(collectively "Copyrights"); and (iv) information, including, without
limitation, computer software, data, databases (including without limitation
demo databases), works of authorship, mask works, technology, trade secrets and
other confidential information, know-how, proprietary processes, formulae,
algorithms, models, drawings, designs, refinements, extensions, improvements,
modifications, user interfaces, customer lists, inventions, discoveries,
concepts, ideas, techniques, research and development methods, source codes,
object codes, methodologies, any formula, pattern, compilation, program, device,
method, technique, or process, and, with respect to all of the foregoing,
related confidential data or information that (1) derives independent economic
value, actual or potential, from not being generally known to the public or to
other persons who can obtain economic value from its disclosure or use and (2)
is the subject of efforts to maintain its secrecy (collectively, "Trade
Secrets").
"Intellectual Property Assets" means all (i) Intellectual Property used
in the Business and owned by Seller or its Affiliates; (ii) Owned Software; and
(iii) Development Environments; provided, however, that Intellectual Property
Assets do not include any of the items set forth in Schedule 4.18.
5
"KK Assets" means the Intellectual Property Assets owned by the KK
Entity and Contracts of the KK Entity.
"KK Entity" means Calico Japan KK, a Japanese subsidiary of Seller.
"Laws" means any (i) statutes, laws, rules, regulations, ordinances,
codes or orders of any Governmental Authority, (ii) Governmental Approvals, and
(iii) orders, decisions, injunctions, judgments, awards and decrees of or
agreements with any Governmental Authority.
"Liabilities" means debts, liabilities, obligations, duties, whether
absolute or contingent, monetary or non-monetary, matured or unmatured.
"License Agreement" means that certain Interim Software License
Agreement dated as of the date hereof, between Seller and Purchaser, referenced
in Section 2.04 of this Agreement, the form of which is attached hereto as
Exhibit C.
"Licensed Software" has the meaning given to it in Section 4.10(f) of
this Agreement.
"Lien" means any mortgage, pledge, hypothecation, Claim, security
interest, encumbrance, lease, sublease, license, occupancy agreement, adverse
claim or interest, easement, covenant, encroachment, burden, title defect, title
retention agreement, charge or other restrictions or limitations of any nature
whatsoever, including but not limited to such as may arise under any Assumed
Contracts.
"Material Adverse Effect" means any (i) Action, event, occurrence, fact,
condition, change or effect that (individually or together with any other
events, facts, conditions, changes or effects) would reasonably be expected to
have a material adverse effect on (a) the value, transferability or condition of
the Purchased Assets or (b) the ability of Seller to perform its obligations
under, or to consummate any of the transactions contemplated by, any of the
Acquisition Agreements, or (ii) order entered by the Bankruptcy Court converting
the case to a case under Chapter 7 of the Bankruptcy Code.
"Multiemployer Plan" is as defined in Section 3(37) and Section
4001(a)(3) of ERISA.
"Owned Software" has the meaning given to it in Section 4.10(f) of this
Agreement.
"Patent Assignment" means that certain Assignment of Patent Applications
and Disclosures dated as of the Closing Date, to be executed by Seller in favor
of Purchaser, in substantially the form attached hereto as Exhibit I.
"Person" means any natural person, firm, partnership, association,
corporation, company, trust, business trust, Governmental Authority or other
entity.
"Petition Date" has the meaning given to it in the recitals to this
Agreement.
"Products" means Software and any other products that Seller distributes
or makes available to third parties, or that Seller uses in connection with the
performance of services for
6
any Person, at any time during the ninety (90) days prior to the execution of
this Agreement, except those that it distributes under reseller, OEM,
distributor or similar agreements.
"Purchase Price" has the meaning given to it in Section 2.03 of this
Agreement.
"Purchased Assets" means, assets, properties and rights (contractual or
otherwise) identified in Exhibit A.
"Purchaser" means PeopleSoft, Inc., a Delaware corporation, and its
successors and assigns, including any assignee pursuant to Section 9.08.
"Purchaser Indemnified Person" has the meaning given to it in Section
7.01 of this Agreement.
"Purchaser Losses" has the meaning given to it in Section 7.01 of this
Agreement.
"Purchaser's Expenses" has the meaning given to it in Section 8.02 of
this Agreement.
"Return" means any return, report, declaration, form, Claim for refund
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Required Consents" has the meaning given to it in Section 5.03 of this
Agreement.
"Sale Procedures Motion" shall mean the motion filed with the Bankruptcy
Court by Seller seeking approval of the Sale Procedures Order.
"Sale Procedures Order" shall mean an order of the Bankruptcy Court
substantially in the form as set forth in Exhibit M, or in such other form and
substance satisfactory to Purchaser in its sole reasonable discretion, (A)
approving the bidding procedures which shall include the following: (i) the
initial overbid amount will be not less than $300,000 more than the Purchase
Price, (ii) subsequent overbids will be in increments of not less than $50,000,
and (iii) Purchaser shall be entitled to apply Purchaser's Expenses and the
Termination Fee to its overbid and (B) authorizing and directing Seller to pay
Purchaser's Expenses and the Termination Fee to Purchaser from the overbidder's
deposit in the event the conditions set forth in the Agreement for payment of
Purchaser's Expenses and the Termination Fee have been satisfied.
"Sale Motion" has the meaning given to it in Section 6.02(k) of this
Agreement.
"Sale Order" has the meaning given to it in Section 6.02(k)(iv) of this
Agreement.
"Seller" means Calico Commerce, Inc., a Delaware corporation, and its
successors and assigns.
"Seller's Copyrights" has the meaning given to it in Section 4.10(d) of
this Agreement.
"Seller Liabilities" means all of the Claims, Liabilities, and
responsibilities of Seller and its Affiliates, whether absolute or contingent,
payable or accrued, monetary or non-monetary,
7
known or unknown or matured or unmatured (including, without limitation, all
liabilities arising under, in connection with, or with respect to the Business,
the Purchased Assets, any Contracts to which Seller or any of its Affiliates is
a party (other than Assumed Contracts), or the Assumed Contracts at any time on
or prior to the Closing Date, and any Cure Payments made in connection
therewith, but not any relicensing or other fees charged by parties to Assumed
Contracts in exchange for their consent to assumption and assignment of such
Assumed Contracts).
"Seller's Marks" has the meaning given to it in Section 4.10(b) of this
Agreement.
"Seller's Patents" has the meaning given to it in Section 4.10(c) of
this Agreement.
"Seller's Products" has the meaning given to it in Section 4.10(j) of
this Agreement.
"Seller's Trade Secrets" has the meaning given to it in Section 4.10(e)
of this Agreement.
"Servicing Agreement" means that certain Servicing Agreement between
Seller and Purchaser referred to in Section 5.13(b) and in substantially the
form attached hereto as Exhibit E.
"Software" means any and all (a) computer programs, including any and
all software implementations of algorithms, models and methodologies, whether in
source code or object code, (b) databases and compilations, whether machine
readable or otherwise, (c) descriptions, flow-charts and other work product used
to design, plan, organize and develop any of the foregoing, and (d) all
documentation, including user manuals and training documentation, relating to
any of the foregoing, in each case developed by or for, or licensed or made
available to, Seller and used in the Business.
"Software Support Period" means the period indicated in Exhibit O with
reference to each Supported Software.
"Supported Software" means Advisor 3.5 and 3.1.1-J for Japan and CAIT
2.7.
"Systems" has the meaning given to it in Section 4.10(n) of this
Agreement.
"Taxes" means (A) all federal, state, local, foreign and other net
income, gross income, gross receipts, sales, use, ad valorem, value added,
intangible, unitary, capital gain, transfer, franchise, profits, license, lease,
service, service use, withholding, backup withholding, payroll, employment,
estimated, alternative minimum, excise, severance, stamp, occupation, premium,
property, environmental, self-dealing, prohibited transactions, windfall
profits, customs, duties or other taxes, fees, assessments or charges of any
kind whatsoever, whether disputed or not, together with any interest and any
penalties, additions to tax or additional amounts with respect thereto, (B) any
liability for payment of amounts described in clause (A) whether as a result of
transferee liability, of being a member of an affiliated, consolidated, combined
or unitary group for any period, or otherwise through operation of law, and (C)
any liability for the payment of amounts described in clauses (A) or (B) as a
result of any tax sharing, tax indemnity or tax allocation agreement or any
other express or implied agreement to indemnify any other person.
8
"Technology Distribution Agreements" has the meaning given to it in
Section 4.10(i) of this Agreement.
"Termination Fee" has the meaning given to it in Section 8.02 of this
Agreement.
"Third Party Consent" means a consent substantially in such form as may
be agreed to between Seller and Purchaser, consenting to the assignment of an
Assumed Contract.
"Tort Claim" means any Claim, on any grounds or basis, under any statute
or common law, for personal injury, wrongful death, defamation, property damage,
product liability, wrongful interference with economic interests or other
tortious conduct of a Person (whether or not Liability is predicated on
negligence, intentional or reckless conduct, breach of contract or strict
liability).
"Trademark Assignment" means that certain Assignment of Trademarks dated
as of the Closing Date, to be executed by Seller in favor of Purchaser, in
substantially the form attached hereto as Exhibit H.
ARTICLE II
SALE AND PURCHASE OF THE ASSETS AND LICENSING
SECTION 2.01. Purchased Assets.
(a) Subject to the terms and conditions set forth in this Agreement, and
in consideration of the Purchase Price, at the Closing, Seller shall transfer,
convey, assign and deliver to Purchaser (or its designee(s)), and shall cause to
be transferred, conveyed, assigned or delivered to Purchaser (or its
designee(s)), free and clear of all Liens and interests, all of the right, title
and interest of Seller and its Affiliates in, to and under all of the assets,
properties and rights (contractual or otherwise) identified under Exhibit A.
Upon giving notice to Seller under this Agreement, Purchaser may add items of
tangible personal property to Exhibit A or remove any asset from Exhibit A at
any time prior to Closing, subject only to its obligation to adjust the Purchase
Price as set forth in Section 2.03, and provided, however, that no removal of
any asset from Exhibit A shall result in a decrease in the Purchase Price.
(b) All property of Seller not listed on Exhibit A is expressly excluded
from the transactions contemplated by this Agreement (collectively, the
"Excluded Assets"), including, without limitation, all of Seller's cash,
accounts receivable, Avoidance Actions, Seller's corporate entity, subsidiaries,
inventory, equipment, equity holdings, fixed assets, tangible personal property,
all Software media, prepayments or refunds, deposits on rental properties, if
any, the right to refunds of prepaid insurance including workmen's compensation
and general liability insurance, inventory, equipment and leasehold
improvements, Inbound License Agreements, End User License Agreements and
Technology Distribution Agreements. All of the Excluded Assets shall remain the
property of Seller and shall be excluded from, and shall not constitute, the
Purchased Assets, and Purchaser shall have no rights, Liabilities or obligations
with respect to the Excluded Assets.
SECTION 2.02. Seller's Liabilities and Assumed Liabilities. Except as
expressly set forth in this Agreement or any of the Acquisition Agreements,
Purchaser shall not assume, or
9
have any obligation or responsibility for, any Liabilities of Seller, or
Liabilities relating to the Purchased Assets arising on or before the Closing
Date, or Liabilities arising at any time in connection with the Business, other
than the Assumed Liabilities. At the Closing, Purchaser shall assume all
Liabilities of Seller that accrue on or after the Closing Date under any Assumed
Contracts (such Liabilities assumed by Purchaser, the "Assumed Liabilities").
Except as expressly set forth in this Agreement or any of the Acquisition
Agreements, Seller and its Affiliates shall remain solely responsible for the
payment in full of all Seller Liabilities as and when such liabilities become
due and payable, including, without limitation, all (i) Liabilities that accrued
under, or with respect to, each Assumed Contract prior to the Closing Date, (ii)
Liabilities for which Seller has agreed to indemnify Purchaser regardless of
when such Liabilities accrue; and (iii) Liabilities for Cure Payments.
SECTION 2.03. Purchase Price. The aggregate purchase price for the
Purchased Assets shall be equal to $5,000,000 (Five Million Dollars), subject to
adjustment as follows: (i) the price shall be increased by the fair market value
of any tangible personal property on a stand-alone basis and without reference
to going concern value or goodwill associated with the use of such personal
property as agreed by Seller and Purchaser, that Purchaser identifies as a
Purchased Asset prior to the Closing pursuant to Section 2.01(a), and (ii) the
price shall be decreased by the Employee Price Adjustment or adjusted as
provided in Section 2.05 (as so adjusted, the "Purchase Price"). Within two (2)
business days after execution of this Agreement and in accordance with Seller's
written instructions, Purchaser shall make the Deposit; and at Closing Purchaser
shall pay the Indemnity Escrow Amount into the Indemnity Escrow, and shall pay
the balance of the Purchase Price (i.e., the Purchase Price less the Deposit and
the Indemnity Escrow Amount) to Seller in same day funds.
SECTION 2.04. Licensing. Simultaneously with the execution and delivery
of this Agreement Seller and Purchaser shall execute and deliver the License
Agreement, under which Purchaser shall be granted a non-exclusive object code
license to the Software.
SECTION 2.05. Calico Japan KK.
(a) Except as otherwise provided in Section 2.05(b) below, the Purchased
Assets shall include the KK Assets. The Contracts of the KK Entity to be
included within the KK Assets shall be determined as set forth in a written
notice by Purchaser to Seller given no later than twenty (20) days before the
hearing of the Bankruptcy Court at which the Sale Motion is considered. If such
notice is not delivered on or before such time, Purchaser shall be deemed to
have elected to include all of the KK Assets within the Purchased Assets,
including all Contracts of the KK Entity. No adjustment of the Purchase Price
shall be made in the event Purchaser acquires the KK Assets.
(b) At any time on or before twenty (20) days before the hearing before
the Bankruptcy Court at which the Sale Motion is considered, the Purchaser may
elect by written notice to Seller to acquire the KK Entity in lieu of the KK
Assets. Upon the giving of such notice, Purchaser and Seller shall forthwith
enter into good faith negotiations to determine an adjustment to the Purchase
Price. The adjustment to the Purchase Price shall expressly exclude (i) any
value for goodwill and (ii) any amount in excess of the book value of the assets
of the KK Entity. In the event Purchaser and Seller are unable to agree to such
adjustment within fifteen
10
(15) days of receipt of such notice, at the Closing the Purchaser shall acquire
the KK Assets rather than the KK Entity.
(c) If Purchaser acquires the KK Assets at the Closing, Seller shall
transfer and assign to Purchaser or its nominee at the Closing such of the KK
Assets (including Contracts) of KK as Purchaser has not elected to remove from
the Purchased Assets, by means of such instruments of assignment as may be
reasonably required, under Japanese law or otherwise, to effectuate such
transfer and sale, which shall be free and clear of Liens. If Purchaser acquires
the KK Entity at the Closing, Seller shall transfer and assign all of the
outstanding shares of capital stock of KK to Purchaser or its nominee at the
Closing, by means of such stock powers, endorsements or other instruments of
assignment as may be reasonably required, under Japanese law or otherwise, to
effectuate such transfer and sale, which shall be free and clear of Liens.
SECTION 2.06. Indemnity Escrow.
(a) On or before the Closing, the parties shall open an escrow for the
purpose of ensuring the availability of cash to satisfy any Claim by Purchaser
pursuant to Article VII of this Agreement (the "Indemnity Escrow"). The
Indemnity Escrow shall be opened at Xxxxx Fargo Corporate Trust or such other
institutional escrow holder in San Francisco, California as is mutually
acceptable to the parties (the "Indemnity Escrow Holder").
(b) The parties shall open the Indemnity Escrow by executing and
delivering, together with the Indemnity Escrow Holder, the Indemnity Escrow
Agreement. The terms and conditions of the Indemnity Escrow Agreement shall be
consistent with this Agreement unless the parties otherwise agree.
(c) On or before the Closing, Purchaser shall pay to Seller, by way of
deposit into the Indemnity Escrow, in cash, an amount equal to ten percent (10%)
of the Purchase Price (inclusive of interest accruing thereon, the "Indemnity
Escrow Amount"). The Indemnity Escrow Amount may be invested by the Indemnity
Escrow Holder in certificates of deposit, U.S. governmental obligations, or
interest-bearing accounts as reasonably requested by Seller. For applicable
income tax purposes, Seller shall be treated as the owner of the funds in the
Indemnity Escrow, and all earnings on such amounts shall be treated as earnings
of Seller. Seller shall provide to the Indemnity Escrow Holder, immediately upon
request, a completed and executed Form W-9 and such other forms as may be
requested by the Indemnity Escrow Holder in connection with its tax reporting
and withholding obligations.
(d) The Indemnity Escrow Amount, and any interest thereon, shall be
retained in the Indemnity Escrow until termination of the Indemnity Escrow or
the earlier disbursement of all or any portion of the Indemnity Escrow Amount in
satisfaction of any Claim by Purchaser pursuant to Article VII.
(e) Promptly following the determination of the amount of any Claim for
which Purchaser is entitled to indemnity pursuant to Article VII, Purchaser and
Seller shall execute and deliver joint written instructions to the Indemnity
Escrow Holder regarding the disbursement of the Indemnity Escrow Amount in
accordance with such Article (the "Indemnity Escrow Payment Instructions"). Upon
delivery of the Indemnity Escrow Payment Instructions to the Indemnity
11
Escrow Holder, the Indemnity Escrow Holder shall promptly disburse the amounts
to the Persons specified in such Indemnity Escrow Payment Instructions.
(f) The Indemnity Escrow shall remain open until the earlier of (a) the
date on which all of the Indemnity Escrow Amount has been disbursed pursuant to
the Indemnity Escrow Payment Instructions, (b) the last day of the sixth
calendar month following the calendar month in which the Closing Date takes
place, unless the Indemnity Escrow Holder has theretofore received written
notice from Purchaser to the effect that there is a Claim of indemnity to which
Purchaser believes it is entitled under Article VII, which is unpaid, and which
is the subject of pending litigation, arbitration or other dispute resolution
proceeding not anticipated to be completed on or before such sixth-month
expiration, or (c) the date of termination set forth in any joint written
instructions from Purchaser and Seller or any judgment or order of the court
delivered to the Indemnity Escrow Holder, in either case to the effect that the
Indemnity Escrow has been or shall be terminated (any such date, a "Indemnity
Escrow Termination Date").
(g) As soon as practicable following the Indemnity Escrow Termination
Date, the Indemnity Escrow Holder shall do the following:
(i) close the Indemnity Escrow;
(ii) pay all Indemnity Escrow fees and costs;
(iii) disburse to Purchaser, out of the Indemnity Escrow Amount,
any amounts to which Purchaser shall be entitled pursuant
to Section 2.06(e) above but that remain undisbursed as of
the Termination Date;
(iv) unless otherwise instructed by Seller, distribute to
Seller all of the Indemnity Escrow Amount remaining after
any required disbursement; and
(v) deliver to Purchaser and Seller an accounting of the
receipt, investment, and all disbursements of the
Indemnity Escrow Amount and all Indemnity Escrow fees and
costs.
SECTION 2.07. Closing.
(a) The closing of the purchase and sale of the Purchased Assets
hereunder (the "Closing" or the "Closing Date") shall take place at the offices
of Xxxx Xxxx Xxxx & Freidenrich LLP, 000 Xxxxxxxx Xxxxxx, Xxxx Xxxx, XX
00000-0000, as soon as practicable, but in any event within three (3) Business
Days, following the satisfaction of all conditions set forth in Article VI.
(b) At the Closing, Seller shall deliver or cause to be delivered to the
Purchaser the following: (i) the Xxxx of Sale, executed by Seller; (ii) the
Patent Assignment, executed and acknowledged by Seller; (iii) the Copyright
Assignment, executed and acknowledged by Seller; (iv) the Trademark Assignment,
executed and acknowledged by Seller; (v) the Assignment and Assumption
Agreement, executed by Seller; (vi) the Escrow Agreement, executed by Seller;
(vii) the Servicing Agreement, executed by Seller; (vii) any Disclosure
Schedules, updated as required by Section 5.07, if not previously delivered;
(ix) the amendment to the certificate of
12
incorporation of Seller required by Section 5.04; (x) all Required Consents
required by Section 6.02(d) duly executed as required; (xi) the officer's
certificate described in Section 6.02(f) of this Agreement, duly executed; (xii)
the certificate of incorporation of Seller required by Section 6.02(h); (xiii)
the good standing certificates for Seller required by Section 6.02(i); and (xiv)
the Purchased Assets, by such method as Purchaser and Seller shall agree;
provided, that the delivery of all Purchased Assets that are capable of delivery
by way of remote communication shall be effected by remote communication from
Seller's place of business to or through Purchaser's computer, without
transferring title to, or possession of, any tangible Personal property, such as
storage media or other physical embodiment of such Purchased Assets, to
Purchaser (it being understood that no such storage media is included in the
Purchased Assets).
(c) At the Closing, Purchaser shall deliver or cause to be delivered to
Seller the following: (i) the Assignment and Assumption Agreement, executed by
Purchaser; (ii) the Escrow Agreement, executed by Purchaser and the Indemnity
Escrow Holder; (iii) the Servicing Agreement, executed by Purchaser; (iv) the
officer's certificate described in Section 6.01(g) of this Agreement, duly
executed; (v) the good standing certificates for Purchaser required by Section
6.01(h); (vi) by deposit into the Indemnity Escrow, cash in an amount equal to
the Indemnity Escrow Amount; and (vii) the balance of the Purchase Price after
application of the Deposit and the Indemnity Escrow Amount.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
SECTION 3.01. Authorization. Purchaser has full power and authority to
(i) execute, deliver and perform the Acquisition Agreements to which it is, or
shall become, a party, and (ii) consummate all of the transactions contemplated
by the Acquisition Agreements to which it is, or shall become, a party. All
action on the part of Purchaser, its directors and officers and shareholders
necessary for the authorization, execution, delivery and performance of the
Acquisition Agreements to which Purchaser is, or shall become, a party, and the
consummation of all of the transactions contemplated by Acquisition Agreements
has been taken. Purchaser has duly executed and delivered all of the Acquisition
Agreements to which Purchaser is, or shall become, a party. The Acquisition
Agreements to which Purchaser is, or shall become, a party, constitute, or shall
constitute, the legal, valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their terms, subject, as to the enforcement
of remedies, to applicable bankruptcy, insolvency, moratorium, reorganization
and similar laws affecting creditors' rights generally and to general equitable
principles.
SECTION 3.02. Status of Purchaser. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with the requisite power and authority to operate its business and own
or lease its properties as presently conducted, owned or leased. Purchaser is
duly qualified or licensed to do business and is in good standing in each of the
jurisdictions in which such qualification or licensing is required other than
those jurisdictions in which the failure to be qualified does not constitute a
Material Adverse Effect. Purchaser is not in violation of any of the provisions
of its certificate of incorporation or by-laws or any of its other
organizational documents.
13
SECTION 3.03. No Conflicts. The execution, delivery and performance of
the Acquisition Agreements to which Purchaser is, or shall become, a party, and
the consummation of the transactions contemplated by the Acquisition Agreements,
do not and will not conflict with or result in a violation of or a default under
or give rise to a right of acceleration, termination, vesting, decreased right
or increased obligation under (in each case with or without the giving of notice
or the lapse of time or both) or require approval under (i) to the best of
Purchaser's knowledge, any Laws applicable to Purchaser, (ii) the certificate of
incorporation, bylaws or other organizational documents of Purchaser, or (iii)
or any other material Contract to which Purchaser is a party.
SECTION 3.04. Brokers. Purchaser has not entered into any agreement or
arrangement that will result in any commission, fee, bonus or other compensation
becoming payable by Seller or any of its Affiliates to any finder, broker or any
other Person as a result of the execution, delivery and performance of the
Acquisition Agreements.
SECTION 3.05. Litigation. There are no actions, suits, proceedings or
investigations against Purchaser pending, or to the best of Purchaser's
knowledge, threatened, that question the validity of this Agreement or any of
the other Acquisition Agreements or the consummation by Purchaser of the
transactions contemplated thereby.
SECTION 3.06. Approvals. All Consents and orders (corporate,
governmental or otherwise) necessary on the part of Purchaser for the due
authorization, execution and delivery by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby have been
obtained or will be obtained prior to the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to such exceptions as may be set forth on the Disclosure
Schedules, Seller hereby represents and warrants to Purchaser, on behalf of
itself and its Affiliates, as follows:
SECTION 4.01. Authorization. Subject to Section 6.02(k)(ii) and (iii)
below, Seller has full power and authority to (i) execute, deliver and perform
all of the Acquisition Agreements to which it is, or shall become, a party,
including, without limitation, the Assignment and Assumption Agreement, the
Patent Assignment, and Trademark Assignment, and the Copyright Assignment and
(ii) consummate all of the transactions contemplated by the Acquisition
Agreements to which it is, or shall become, a party. All action on the part of
Seller and its directors, officers and stockholders necessary for the
authorization, execution, delivery and performance of the Acquisition Agreements
to which Seller is, or shall become, a party, and the consummation of all of the
transactions contemplated by the Acquisition Agreements has been taken. Seller
has duly executed and delivered, or shall have, duly executed and delivered all
of the Acquisition Agreements to which it is, or shall become, a party. The
Acquisition Agreements to which Seller is, or shall become, a party, constitute,
or shall constitute, the legal, valid and binding obligations of Seller,
enforceable against it in accordance with their terms, subject as to the
enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar law affecting creditors' rights generally and to
general equitable principles.
14
SECTION 4.02. Corporate Status. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with the requisite power and authority to operate its business and own or lease
its properties as presently conducted, owned or leased. Seller is duly qualified
or licensed to do business and is in good standing in each of the jurisdictions
in which such qualification or licensing is required other than those
jurisdictions in which the failure to be qualified does not constitute a
Material Adverse Effect. Each jurisdiction in which Seller conducts business is
set forth on Schedule 4.02 to this Agreement. Seller has delivered to Purchaser
complete and correct copies of its articles of incorporation and by-laws, each
as amended to the date of this Agreement, and has made available to Purchaser
copies of Seller's minute books and other organizational records. Seller is not
in violation of any of the provisions of its certificate of incorporation or
by-laws or any of its other organizational documents.
SECTION 4.03. No Conflicts. The execution, delivery and performance of
the Acquisition Agreements to which Seller is, or shall become, a party, and the
consummation of the transactions contemplated by the Acquisition Agreements, do
not and will not conflict with or result in a violation of or a default under or
give rise to a right of acceleration, termination, vesting, decreased right or
increased obligation under (in each case with or without the giving of notice or
the lapse of time or both) or require approval under (i) to the best of Seller's
knowledge, any Laws applicable to Seller or the Purchased Assets, (ii) the
certificate of incorporation, bylaws or other organizational documents of
Seller, or (iii) except as set forth on Schedule 4.03 to this Agreement, any of
the Assumed Contracts or any other material Contract to which Seller is a party
and which affect the Purchased Assets.
SECTION 4.04. No Consents. Other than the Consents set forth on Schedule
4.04 to this Agreement, no Governmental Approval or other third party's Consent
is required to be obtained or made by Seller or any of its Affiliates in
connection with (i) the execution, delivery or performance of any of the
Acquisition Agreements to which Seller is, or shall become, a party, or (ii) the
consummation of the transactions contemplated by the Acquisition Agreements.
SECTION 4.05. Taxes. Except as set forth on Schedule 4.05 to this
Agreement, (i) all of the Returns required to be filed by Seller and its
Affiliates have been filed and all such Returns are true, complete and correct
in all material respects, (ii) all Taxes required to be paid by Seller and its
Affiliates have been paid in full, (iii) all Taxes payable by Seller and its
Affiliates for any taxable period (or a portion thereof) ending on or prior to
the Closing Date have been and will be properly reserved for in books and
records of Seller and its Affiliates, (iv) all Taxes required to be withheld by
Seller and Affiliates in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, have been
duly and timely withheld, and such withheld Taxes have been either duly and
timely paid to the proper Governmental Authority or properly set aside in
accounts for such purpose and will be duly and timely paid to the proper
Governmental Authority, and (v) there are no outstanding Tax Liens that have
been filed by any Tax authority against the Purchased Assets and no claims are
being asserted with respect to any Taxes related to the Purchased Assets or the
Business for which Purchaser could be held liable under a successor liability
(or similar) statute by reason of its acquisition of the Purchased Assets. There
is no material dispute or Claim concerning any liability for Taxes of Seller or
any of its Affiliates claimed or raised by any Governmental Authority in
writing.
15
SECTION 4.06. Litigation. Except as set forth on Schedule 4.06 to this
Agreement, there is no Action pending or, to the best of Seller's knowledge,
threatened against Seller, its employees, its directors or officers, or any of
its Affiliates with respect to, or in connection with, or relating to, the
Purchased Assets or that question the validity of the Agreement or any of the
Acquisition Agreements or the consummation by Seller of the transactions
contemplated thereby.
SECTION 4.07. Compliance with Laws. Seller and its Affiliates have
complied in all material respects with all applicable Laws in the operation of
the Business and ownership and use of the Purchased Assets. Neither Seller nor
any of its Affiliates has received any notice alleging any conflict, violation,
breach or default under any Laws applicable to the operation of the Business or
the ownership or use of the Purchased Assets that has not been cured or waived.
SECTION 4.08. Purchased Assets. As of the date of the Closing, Seller
shall own, and have good and marketable title to, all Purchased Assets free and
clear of all Liens and interests. Upon transfer of the Purchased Assets to
Purchaser, Purchaser shall own, and have good and marketable title to, such
Purchased Assets transferred to Purchaser on such date free and clear of any and
all Liens.
SECTION 4.09. Contracts.
(a) Schedule 4.09(a) to this Agreement lists the following of Seller's
Contracts: (i) outstanding purchase orders relating to the Purchased Assets,
(ii) outstanding capital leases relating to the Purchased Assets, (iii)
outstanding financing leases to which Seller or any of its Affiliates is a party
as of the date of this Agreement, (iv) all such other Contracts relating to the
Purchased Assets or Assumed Contracts (x) for which Seller or any of its
Affiliates has made prepayments or deposits (and the amount of the prepayment
and deposit, if any, made with respect to each Contract is set forth next to
such Contract on Schedule 4.09(a)), or (y) to which Seller or any of its
Affiliates is entitled to a refund (and the amount of refund, if any, made with
respect to each Contract is set forth next to such Contract on Schedule
4.09(a)), (v) all outstanding Contracts and evidences of indebtedness for
borrowed money or the deferred purchase price of the property (if guaranteed or
secured by any of the Purchased Assets), (vi) all partnership, joint venture or
other similar Contracts, arrangements or agreements, relating to the Purchased
Assets, and (vii) each sales Contract relating to the Purchased Assets pursuant
to which the dollar volume of sales by Seller exceeded twenty thousand US
dollars ($20,000) in the first nine (9) months of 2001. A true and complete copy
of each written Contract listed on Schedule 4.09(a) to this Agreement has been
made available to Purchaser. Each of the Contracts listed in Schedule 4.09 is in
full force and effect and no event of default or event or condition exists that,
after notice or lapse of time or both, would constitute a Material Adverse
Change.
(b) Schedule 4.09(b) sets forth a list of the ten (10) largest suppliers
of the Business for the 12-month period ended March 31, 2001 and the six (6)
months ended September 30, 2001, together with the dollar amount of sales during
said period.
SECTION 4.10. Intellectual Property.
(a) Intellectual Property Generally. Except as disclosed on Schedules
4.10(a):
16
(i) Seller or its Affiliates own or have licenses to, or otherwise
possess legally enforceable rights to use, all Intellectual Property Assets to
be conveyed to Purchaser hereunder;
(ii) Subject to the terms of any applicable agreement with a
licensor, Seller has the right to use all of the Intellectual Property Assets;
(iii) None of the Intellectual Property Assets owned by Seller is
subject to any Liens and neither Seller nor its Affiliates have received any
notice or Claim (whether written or oral) challenging Seller's right to use any
of the Intellectual Property Assets or suggesting that any other Person has any
Claim of any kind with respect thereto, except for rights specifically granted
in the End User License Agreements, the Inbound License Agreements and the
Technology Distribution Agreements;
(iv) Neither Seller nor any of its Affiliates is, nor has been
during the three (3) year period prior to the date hereof, a party to any
Action, nor are there, or during the one (1) year period prior to the date
hereof have there been, any Actions, or to the best of Seller's knowledge,
threatened, alleging infringement, misappropriation or other wrongful use or
exploitation by Seller or challenging Seller's ownership, use, validity, or
enforceability, of any Intellectual Property Assets, nor, to the best of
Seller's knowledge, is there any reasonable basis therefor;
(v) Seller has taken commercially reasonable steps to protect
Seller's rights in and to the Intellectual Property Assets;
(vi) Seller has not granted to any Person any right, license or
permission to use, exploit or exercise any rights to any of the Intellectual
Property Assets, except pursuant to the End User License Agreements, the Inbound
License Agreements or the Technology Distribution Agreements, copies of which
have been provided or made available to Purchaser;
(vii) No Intellectual Property Assets owned by Seller are subject to
any outstanding order, judgment, decree, stipulation or agreement restricting
the use, sale, transfer, assignment or licensing thereof by Seller or any of its
Affiliates to any person;
(viii) Seller has the exclusive right to take Action against any
Person that is infringing any Intellectual Property Assets owned by Seller and
to retain for itself any Damages recovered in any such Action.
(b) Marks. Schedule 4.10(b) sets forth an accurate and complete list of
all Marks (x) owned by Seller or any of its Affiliates, (y) used by Seller or
any of its Affiliates in the Business during the past six (6) months, or (z)
registered or pending applications for registration of any Marks described in
(x) or (y) in any jurisdiction (collectively "Seller's Marks"). Except as may be
set forth in Schedule 4.10(b):
17
(i) The use of any of Seller's Marks in the manner used by Seller
will not create a likelihood of confusion with any Marks of any other Person
used prior to Seller's use of Seller's Marks;
(ii) To the best of Seller's knowledge, there has been no use of any
of Seller's Marks by any third party that might confer upon said third party any
rights in any such Xxxx;
(iii) All of Seller's Marks which are registered in the United
States have been in continuous use by Seller or its Affiliates;
(iv) None of Seller's Marks is the subject of any current opposition
or cancellation proceeding in a trademark office in any jurisdiction;
(v) Seller and its Affiliates have undertaken commercially
reasonable efforts to police and enforce their rights in Seller's Marks against
third Persons;
(vi) To the best of Seller's knowledge, (a) each Seller's Xxxx is
available for use by Purchaser in foreign countries where such Marks are not
currently registered or in use, and (b) such use in each such foreign country
would not infringe any rights of any other Person in such foreign country.
(c) Patents. Schedule 4.10(c) sets forth an accurate and complete list
of all Patents (x) owned by Seller or any of its Affiliates, (y) licensed to
Seller or any of its Affiliates in the Business, or (z) registered or pending
applications for any Patents described in (x) or (y) in any jurisdiction
(collectively "Seller's Patents"). Except as may be set forth on Schedule
4.10(c)
(i) Seller has not taken any action or failed to take any action
(including a failure to disclose material prior art) in connection with the
prosecution of any Patent, conducted the Business, or used or enforced (or
failed to use or enforce) any of Seller's Patents in a manner that would result
in the abandonment or unenforceability of any of the Patents;
(ii) to the best of Seller's knowledge, Seller's Patents for which
letters patent have been issued are valid and enforceable;
(iii) all of Seller's Patents are currently in compliance with legal
requirements including proofs of working or use;
(iv) all maintenance, filing, examination, annuities, and the like
due in relation to Seller's Patents have been timely paid and complied with;
(v) none of Seller's Patents has been or is now involved in any
interference, reissue, reexamination or opposition, litigation or Action of any
kind;
(vi) to the best of Seller's knowledge, there is no patent or patent
application issued to or filed by any other Person, which patent or patent
application interferes with any of Seller's Patents;
18
(d) Copyrights. Schedule 4.10(d) of this Agreement sets forth a complete
and accurate list of all registered Copyrights owned by Seller or any of its
Affiliates, unregistered copyrights owned by Seller or any of its Affiliates,
the absence of which could reasonably be expected to have a Material Adverse
Effect, and any pending applications for registration of any Copyrights listed
on Schedule 4.10(d) in any jurisdiction (collectively "Seller's Copyrights").
Except as may be set forth on Schedule 4.10(d):
(i) Each of Seller's registered Copyrights are valid, enforceable
and subsisting, and are not subject to any maintenance fees or Actions;
(ii) Seller has not taken any action or, to the best of Seller's
knowledge, failed to take any action (including a failure to disclose required
information to the United States Copyright Office) in connection with any
registration of a registered copyright therewith, or used or enforced (or failed
to use or enforce) any of Seller's Copyrights, in each case in a manner that
would result in the unenforceability of any of Seller's Copyrights or the
invalidity of the registration of any of Seller's Copyrights.
(e) Trade Secrets. Except as may be set forth in Schedule 4.10(e):
(i) Seller has taken reasonable precautions in accordance with
standard industry practice to protect the secrecy, confidentiality and value of
all trade secrets used by Seller or any of its Affiliates in the Business
(collectively "Seller's Trade Secrets");
(ii) except under appropriate confidentiality obligations that, to
the best of Seller's knowledge, have been fully observed and performed, there
has been no disclosure by Seller of material confidential information or
Seller's Trade Secrets to any other Person;
(iii) Seller has taken reasonable steps to protect the respective
rights in the confidential information and the Trade Secrets of Persons in
accordance with the terms of any agreements to which Seller is bound relating to
such confidential information or Trade Secrets.
(f) Software. Schedule 4.10(f) sets forth a complete and accurate list
of all of the Software (x) that is owned or purported to be owned by Seller or
any of its Affiliates ("Owned Software"), and (y) that is used by Seller or its
Affiliates in the conduct of the Business that is not owned by Seller, excluding
off-the-shelf desktop applications available on reasonable terms through
commercial distributors or in consumer retail stores for a license fee of no
more than Five Thousand Dollars ($5,000) per application ( "Licensed Software").
Except as may be set forth in Schedule 4.10(f):
(i) no source code of any Owned Software has been licensed or
otherwise made available to any Person other than Purchaser, Seller has treated
the source code of the Owned Software, and the data associated therewith, as
confidential and proprietary business information, and has taken reasonable
steps to protect the same as Trade Secrets;
19
(ii) any Person identified in Schedule 4.10(f) as having received
any such source code or data is bound by an appropriate confidentiality and
nondisclosure agreement with respect thereto, and Seller is not aware of any
material breach of any such agreement or any threatened disputes or
disagreements with respect thereto;
(iii) none of the Owned Software contains any programming code,
documentation, or other materials or any Development Environments that embody
Intellectual Property of any Person other than Seller, except for such materials
or Development Environments obtained by Seller from Persons that make such
materials or Development Environments generally available or that have expressly
licensed Seller to utilize such materials or Development Environments in the
manner they have been utilized;
(iv) Seller has lawfully acquired the right to use the Licensed
Software pursuant to valid, enforceable written agreements executed by all
parties thereto; the rights to such Licensed Software are consistent with the
way and to the extent it is used in the conduct of the Business; and Seller has
not exercised any rights in respect of any Licensed Software, including any
reproduction, distribution or creation of derivative works, outside the scope of
any license expressly granted by the Person from whom the right to use such
Licensed Software was obtained;
(v) no royalties, fees, honoraria or other payments are payable by
Seller to any Person by reason of the ownership, use, sale, licensing,
distribution or other exploitation of any Software, other than pursuant to the
Inbound License Agreements;
(vi) none of the Products contain any lines of code or derivative
works thereof licensed to Seller subject to the condition that Seller not charge
a fee or otherwise seek any compensation in connection with redistributing or
otherwise exploiting such code;
(vii) the Owned Software was (a) developed by employees of Seller in
the course of their employment, (b) developed by independent contractors that
have assigned in writing to Seller all such contractors' respective rights in
the Owned Software, or (c) otherwise acquired by Seller from Persons pursuant to
written agreements containing an express assignment of all rights of such
Persons to Seller; and
(viii) To the best of Seller's knowledge, no party is in breach of
or has failed to perform under any agreement pursuant to which Seller has
received any right to Licensed Software.
(g) Software Documentation. Except as may be set forth in Schedule
4.10(g), each of Seller and its Affiliates has taken all actions customary in
the United States software industry for a company of a size and type similar to
Seller's and in a market in which Seller competes, to document the Software and
its operation, such that the materials comprising the Software,
20
including the source code and documentation, have been written in a clear and
professional manner so that they may be understood, modified and maintained in
an efficient manner by reasonably competent programmers.
(h) Agreements in Respect of Licensed Technology. Schedule 4.10(h) sets
forth a complete and accurate list of all Inbound License Agreements, indicating
for each the title and the parties thereto. Schedule 4.10(h) of this Agreement
sets forth a complete and accurate list of all license agreements under which
Seller has granted rights in or to any Intellectual Property Assets
(collectively, the "End User License Agreements"), indicating for each the title
and the parties thereto, other than license agreements for Intellectual Property
Assets that are not included within the Purchased Assets. Except as may be set
forth in Schedule 4.10(h):
(i) all Inbound License Agreements and End User License Agreements
are in full force and effect, and Seller is not in breach thereof, nor is it
aware of any Claim or information to the contrary;
(ii) there are no outstanding, pending or threatened Actions,
Claims, disputes or disagreements with respect to any Inbound License Agreement
or End User License Agreement;
(iii) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will conflict with or
result in a material breach of any of the terms, conditions or provisions of, or
constitute a material default under or result in the impairment of any material
rights under, any Inbound License Agreement or End User License Agreement.
(i) Agreements Involving Distribution or Other Rights Granted to Third
Parties. Schedule 4.10(i) contains a complete and accurate list of all
agreements and arrangements involving the grant by Seller or any of its
Affiliates to any Person of any right to distribute, develop, prepare derivative
works based on, support or maintain or otherwise commercially exploit any
Software or Products including any value-added reseller agreements, joint
development or marketing agreements or strategic alliance agreements
(collectively, "Technology Distribution Agreements"). Except as may be set forth
in Schedule 4.10(i):
(i) all Technology Distribution Agreements are in full force and
effect, and Seller is not in breach thereof, nor is it aware of any Claim or
information to the contrary;
(ii) there are no outstanding, pending or threatened Actions, Claims
disputes threatened disputes or disagreements with respect to any Technology
Distribution Agreement; and
(iii) neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will conflict with or
result in a material breach of any of the terms, conditions or provisions of, or
constitute a material default under any Technology Distribution Agreement.
21
(j) Sufficiency of Owned and Licensed Intellectual Property. Set forth
on Schedule 4.10(j) is a list of all of the (i) current versions of the Seller's
Products, (ii) Seller's Products currently under development, and (iii) Licensed
Software that is (x) embedded within the Seller's Products (both in their
current versions and currently under development) and/or (y) either distributed
along with the current versions of the Seller's Products or planned for
distribution along with the Seller's Products currently under development. The
Seller represents and warrants that, to the best of Seller's knowledge, the
foregoing constitutes a complete list of all computer programs that are or would
be required for Purchaser to install, execute and distribute the (a) current
versions of the Seller's Products, and (b) Seller's Products currently under
development, in substantially the same manner that Seller has, or has expended
substantial efforts in preparing to, commercially license such computer programs
to Seller's customers in the normal course of Seller's business. For purposes of
this Section 4.10(j), "Seller's Products" means those computer programs that
Seller has commercially licensed, or has expended substantial efforts in
preparing to commercially license, to Seller's customers in the normal course of
Seller's business.
(k) Performance of Products. The Products perform (a) free of Disabling
Codes, and (b) consistent with representations and warranties expressly made by
Seller to users of the Software when licensing such Software. Except as set
forth in Schedule 4.10(k), no Person has been allowed to access, use, copy or
distribute any Products except pursuant to a valid, enforceable End User License
Agreement or Technology Distribution Agreement.
(l) Employee Confidentiality Agreements. Except for those employees and
consultants set forth in Schedule 4.10(l)(A), from whom Seller will use its best
efforts to locate and produce to Purchaser prior to Closing any agreements
described below, all current and former employees and consultants of Seller
whose duties or responsibilities relate to development of the Intellectual
Property Assets have entered into confidentiality, invention assignment and
proprietary information agreements with Seller in substantially the form
provided to Purchaser. To the best of Seller's knowledge, at no time during the
conception of or reduction to practice of any Intellectual Property Asset
included in the Purchased Assets owned by Seller, was any developer, inventor or
other contributor to such Intellectual Property Asset operating under any grants
from any governmental entity or agency or private source, performing research
sponsored by any governmental entity or agency or private source or subject to
any employment agreement or invention assignment or nondisclosure agreement or
other obligation with any third party that could adversely affect Seller's
rights in such Intellectual Property Assets.
(m) Export Restrictions. Seller has not exported or transmitted Software
or Products to any country to which such export or transmission is restricted by
any applicable United States regulation or statute, without first having
obtained all necessary and appropriate United States or foreign government
licenses or permits and complying with all other requirements in relation
thereto.
(n) Disabling Codes. The Software is free of any Disabling Codes that
may be used to access, modify, delete, damage or disable any Systems or that may
result in impaired usage thereof or damage thereto. Seller has taken reasonable
steps and implemented reasonable procedures to ensure that its internal computer
systems used in connection with the Business
22
(consisting of hardware, software, databases or embedded control systems,
"Systems") are free from Disabling Codes. The Systems' components used in
connection with the Business obtained by Seller from third party suppliers are,
to the best of Seller's knowledge, free of any Disabling Codes that may, or may
be used to, access, modify, delete, damage or disable any of the Systems or that
might result in damage thereto. Except as may be set forth in Schedule 4.10(n),
Seller has in place appropriate disaster recovery plans and procedures and has
taken reasonable steps to safeguard its Systems and restrict unauthorized access
thereto.
(o) Assignment; Change of Control. Except as set forth in Schedule
4.10(o) of this Agreement, the execution, delivery and performance by Seller of
this Agreement and each of the other Acquisition Agreements to which it is a
party, and the consummation of the transactions contemplated hereby and thereby,
will not result in any Lien upon, or the loss or impairment of, or give rise to
any right of any third party to terminate, any of Seller's or any of its
Affiliate's rights to own any of its Intellectual Property or any of its rights
under any Inbound License Agreement or End User License Agreement, nor require
the consent of any other party to any such Inbound License Agreement or End User
License Agreement.
SECTION 4.11. Employees and Labor Matters.
(a) Schedule 4.11(a) sets forth all nondisclosure agreements,
non-competition agreements or similar agreements (collectively "Employment
Agreements") between Seller and any of its current or former officer, director,
employee or Affiliate or any consultant or agent of Seller, that are currently
in effect and that relate to the Intellectual Property Assets.
(b) Neither Seller nor any of its Affiliates is a party to or bound by
any collective bargaining agreement, and there is no labor union or other
organization representing or purporting or attempting to represent any of the
employees of Seller or any of its Affiliates. Seller does not currently
participate in, contribute to or have any Liability with respect to any
Multiemployer Plan or Employee Pension Benefit Plan nor has Seller had any such
participation, contributions or obligations within the six (6) year period
preceding the date hereof.
(c) No Liability will be incurred by Purchaser (either directly or
indirectly, including as a result of an indemnification obligation or any joint
and several Liability obligations) under or pursuant to Title I or IV of ERISA
or the penalty, excise tax or joint and several Liability provisions of the Code
relating to any Benefit Plans of Seller or any of its Affiliates or any of their
Affiliates.
(d) Except as set forth on Schedule 4.11, there are no Employment
Agreements or any other similar agreements to which Seller is a party under
which the transactions contemplated by this Agreement or any other Acquisition
Agreement will require any payment by Purchaser.
SECTION 4.12. Brokers. Neither Seller nor any of its Affiliates has
entered into any agreement or arrangement that will result in any commission,
fee, bonus or other compensation becoming payable by Purchaser or any of its
Affiliates to any finder, broker or any other Person as a result of the
execution, delivery and performance of this Agreement or any of the other
Acquisition Agreements.
23
SECTION 4.13. Books and Records. All of the Books and Records of Seller
relating to the Business have been made available to Purchaser prior to the
execution of this Agreement and contain a true and complete record, in all
material respects, of the business, operations, financial condition, results of
operations, assets and Liabilities relating to the Business. Seller has no Books
and Records recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) that are not under the
exclusive ownership and direct control of Seller.
SECTION 4.14. Absence of Certain Changes. Except as set forth on
Schedule 4.14, since March 31, 2001, the ownership and use of the Purchased
Assets by Seller has been conducted in the ordinary course consistent with past
practice, and there has not been:
(a) any waiver, amendment, termination or cancellation of any Assumed
Contract or any relinquishment of any material rights thereunder by Seller,
other than, in each such case, actions taken in the ordinary course of business
consistent with past practice that are not material with respect to any such
Assumed Contract;
(b) any representation of Seller to any employee or former employee of
the Business that Purchaser would assume, continue to maintain or implement any
Benefit Plan after the Closing Date;
(c) any (i) single capital expenditure commitment in excess of Five
Thousand Dollars ($5,000) or aggregate capital expenditure commitments in excess
of Ten Thousand Dollars ($10,000) for additions to intangible capital assets
comprising Purchased Assets that is likely to occur, in whole or in part, after
the Closing Date or (ii) sale, assignment, transfer, lease or other disposition
of or agreement to sell, assign, transfer, lease or otherwise dispose of, any of
the Purchased Assets, other than the license thereof in the ordinary course; or
(d) any material damage, destruction or other casualty loss with respect
to any Purchased Asset, whether or not covered by insurance.
SECTION 4.15. Sufficiency of and Title to the Purchased Assets. Upon
consummation of the transactions contemplated by this Agreement, Seller will
have assigned, transferred and conveyed to Purchaser all of the Seller's rights,
title and interest in and to the Purchased Assets. Seller has not received any
notice of a Claim in relation to the Purchased Assets or any Claim that limits
the transferability of the Purchased Assets.
SECTION 4.16. Product Warranties. No Tort Claims or other Claims with
respect to warranties or guarantees on Products or services exist relating to
any of the Purchased Assets.
SECTION 4.17. Public Codes. The Software does not contain any public
code required to remain available to the public without cost.
SECTION 4.18. Digital River IP Assets. Attached as Schedule 4.18 is a
true and correct list of all Intellectual Property of Seller and its Affiliates
that has been sold to Digital River.
24
ARTICLE V
COVENANTS
SECTION 5.01. Conduct of Business. Unless otherwise contemplated hereby
or consented to by Purchaser in writing, or required under the Bankruptcy Code
or pursuant to applicable Laws, from the date of this Agreement until the
Closing, Seller shall, and shall cause each of its Affiliates to:
(a) conduct the Business to the extent possible in the ordinary course
of business;
(b) use its reasonable efforts to: (i) maintain satisfactory
relationships with its and its Affiliates' clients, customers, licensors,
licensees and suppliers that are parties to any Assumed Contract; (ii) subject
to Section 5.01(a), preserve and maintain the tangible Purchased Assets in good
order and repair, ordinary wear and tear excepted; (iii) perform its obligations
under each of the Assumed Contracts, and keep each such Assumed Contract in full
force and effect, free from any right of cancellation, forfeiture or termination
(except in accordance with its terms); (iv) prevent any additional Lien from
attaching to any of the Purchased Assets; and (v) promptly notify Purchaser of
any change in the Purchased Assets which would result in a Material Adverse
Effect;
(c) not sell, transfer, convey, destroy, alter, modify or make any
distribution of the Purchased Assets, other than licenses in the ordinary course
of business or in accordance with this Agreement;
(d) not settle or compromise any pending or threatened Claim or Action
(i) that relates to the transactions contemplated hereby or in the other
Acquisition Agreements or (ii) the settlement or compromise of which shall
affect in any manner the Purchased Assets;
(e) not make any promises, representations or guarantees to employees of
the Business that would in any way bind or obligate Purchaser (or any Affiliate
of Purchaser) to hire any such employees;
(f) not make any representation or commitment to employees of Seller
performing duties in connection with the Business with respect to Purchaser's
intention (or that of any Affiliate of Purchaser) to offer employment to any
such employee, or in relation to the continuation of any Benefit Plan by
Purchaser after the Closing;
(g) not increase, except pursuant to a severance and/or retention plan
approved by the Bankruptcy Court, any benefits or amounts payable pursuant to
termination policies or employment agreements applicable to any employee of
Seller engaged in performing duties directly in connection with the Business;
and
(h) pay all Taxes and all amounts required to be paid or contributed
under any Benefit Plan.
SECTION 5.02. Tax Matters.
25
(a) Seller shall retain responsibility for, and shall defend, indemnify
and hold harmless Purchaser from and against, and shall pay all Taxes that
become due and payable with respect to the Business and, with respect to the
Purchased Assets, that are attributable to, arise from or relate to any taxable
period (or a portion thereof) ending on or before the Closing Date. If the
Purchased Assets include an interest in any entity, Seller shall retain
responsibility for, and shall defend, indemnify and hold harmless Purchaser from
and against, and shall pay, (i) all Taxes of such entity attributable to any
taxable periods ending on or before the Closing Date, and (ii) all Taxes of such
entity attributable to any taxable period that includes and ends after the
Closing Date, to the extent attributable to the portion of such taxable period
ending on the Closing Date. The Taxes attributable to the portion of such
taxable period ending on the Closing Date shall be determined by assuming that
the taxable period in question consisted of two taxable years or periods, one
which ended at the close of the Closing Date and the other which began at the
beginning of the day following the Closing Date, and items of income, gain,
deduction, loss or credit, and state and local apportionment factors of the
entity for such taxable period shall be allocated between such two taxable years
or periods on a "closing of the books" basis by assuming that the books of such
entity were closed at the close of the Closing Date; provided, however, that (i)
exemptions, allowances or deductions that are calculated on an annual basis,
such as the deduction for depreciation and (ii) periodic taxes such as real and
personal property taxes shall be apportioned ratably between such periods on a
daily basis.
(b) Seller and Purchaser shall (i) provide the other with such
assistance as may be reasonably requested in connection with the preparation of
any Return, audit or other examination by any Governmental Authority or judicial
or administrative proceeding relating to Taxes with respect to Seller or
Purchaser; and (ii) retain (and provide the other with access to) all records or
information which may be relevant to such Return, audit, examination or
proceeding until the applicable statutes of limitations (including any
extensions) have expired.
(c) All transfer, documentary, sales, use, stamp, registration and other
such Taxes incurred in connection with this Agreement and the consummation
hereof shall be paid by Seller when due, including all transfer, documentary,
sales, use, stamp, registration and other such Taxes incurred in connection with
transferring the stock or assets of Seller's foreign subsidiaries and Purchaser
and Seller will each, at its own expense, file all necessary Returns and other
documentation with respect to all of such Taxes. Purchaser will cooperate with
Seller to allow Seller to obtain any available reduction or exemption from such
transaction Taxes, including by way of example, assistance with regard to
production of any applicable resale certificate or other certificate or document
of exemption required or appropriate to reduce or eliminate the transaction
Taxes and assistance with regard to transferring the Purchased Assets in a
manner to reduce or eliminate the transaction Taxes.
(d) Seller and Purchaser agree that for all federal and state tax
purposes the consideration received by Seller for the Assets shall be allocated
for purposes of Section 1060 of the Code in a manner to be determined by
Purchaser subject to the approval of Seller, which approval shall not be
unreasonably withheld, and pursuant to Section 1060 of the Code and the
regulations thereunder. Tax filings will be prepared and filed in a manner
consistent with such allocation and no party hereto will take any position
inconsistent with such allocation in any subsequent returns or proceedings.
Purchaser and Seller each agree to file IRS Form 8594, and any corresponding
state tax forms, on a timely basis. Promptly following receipt of the proposed
26
allocation, Seller may review the same and, within 30 days after the date of
such receipt, may deliver to Purchaser a certificate executed by the Seller
setting forth objections to the proposed allocation (an "Objection Notice"),
together with a summary of the reasons therefore and calculations which, in
their view, are necessary to eliminate such objections. If the Seller does not
deliver an Objection Notice within such 30-day period, the proposed allocation
shall be the final allocation of the purchase price and other relevant items
among the Purchased Assets (the "Final Allocation"). If the Seller delivers an
Objection Notice within such 30-day period, Purchaser and Seller shall use their
reasonable attempts to resolve by written agreement any differences identified
in the Objection Notice within the succeeding 30 days and, if they are able to
resolve all such differences, the allocation agreed to shall be the Final
Allocation. If any objections raised by the Seller in the Objection Notice are
not resolved within the 30-day period next following such 30-day period, then
Purchaser and Seller shall submit the objections that are then unresolved
(together with any agreed adjustments) to an independent accountant, who shall
be directed by Purchaser and Seller to resolve the unresolved objections within
the next 30 days and to deliver written notice to each of Purchaser and Seller
setting forth its resolution of the disputed matters. The allocation resulting
from the decision of the independent accountant shall be the Final Allocation.
Any allocation that becomes the Final Allocation pursuant to the preceding
provisions of this Section 5.02(d) shall be final and binding as between the
Seller and Purchaser and their respective affiliates and neither the Seller,
Purchaser nor any affiliate of any thereof shall take any position on any Tax
Return that is inconsistent with the Final Allocation.
SECTION 5.03. Consents; Assignment of Permits, Consents and Governmental
Approvals. Seller shall use its best efforts to obtain in writing (and to cause
its Affiliates to obtain in writing), as soon as practicable, all of the
Consents and Governmental Approvals that are listed under Schedule 5.03 to this
Agreement (the "Required Consents"). Purchaser shall pay the costs of any and
all fees and other costs charged by any party whose Assumed Contract is
renegotiated by Purchaser.
SECTION 5.04. Use of Name. On and after the Closing Date, unless
otherwise consented to in writing by an officer of Purchaser, Seller shall
change its corporate name and cease to use the name "Calico" or any name which
uses any words contained in any of Seller's Marks for any reason or purpose
other than as a former name for legal and noticing purposes in the Bankruptcy
Case, and shall execute and deliver all such documents as Purchaser may
reasonably request for the purpose of enabling Purchaser to use the name
"Calico" in any and all jurisdictions in which Purchaser now or may in the
future desire to conduct business.
SECTION 5.05. Best Efforts. Except as may otherwise be required under
the Bankruptcy Code or pursuant to applicable Laws, each of Seller and Purchaser
shall use reasonable efforts to consummate the transactions contemplated hereby,
and to execute and deliver such documents and take such further actions as the
other party may reasonably request for the purpose of evidencing such
transactions as set forth in, or contemplated by, this Agreement; provided,
however, that nothing herein contained shall be construed to obligate any party
to this Agreement to commence or maintain litigation or pursue the appeal of any
administrative ruling unless funded in advance by the other party.
SECTION 5.06. Public Announcements. Prior to the earlier of the Closing
Date and the termination of this Agreement, each party to this Agreement agrees
that it will (i) consult with
27
the other party before issuing any press releases or otherwise making any public
statements with respect to this Agreement or the transactions contemplated by
this Agreement, and (ii) not issue any press release or make any public
statement with respect to this Agreement or the transactions contemplated by
this Agreement without the prior consent of the other party, except as (x)
appropriate in the Bankruptcy Case, and (y) otherwise required by applicable
Law. From and after the Closing Date, except as necessary for Seller to fulfill
its obligations in the Bankruptcy Case, or as otherwise required by applicable
Law, neither party hereto, and each party shall cause its Affiliates not to,
issue any press release or make any public statement with respect to this
Agreement or the transactions contemplated by this Agreement outside of the
Bankruptcy Case without the prior written consent of the other party hereto.
SECTION 5.07. Supplemental Disclosure and Notices. Each party to this
Agreement agrees that it shall promptly notify the other party in writing with
respect to any matter arising or discovered by such party that (i) if existing
or known at the date of this Agreement, would have been required to be set forth
or described in a schedule to this Agreement by such party, or that constitutes
a breach or prospective breach of any material term of any Acquisition Agreement
by such party, or (ii) constitutes a Material Adverse Effect. Notwithstanding
the foregoing, the delivery of any such supplemental disclosures or notices
shall not be deemed to be a cure or waiver of any breach or prospective breach
of any Acquisition Agreement, nor shall the failure to include a matter in a
schedule that is not material represent a breach of one of the conditions to
close. Seller will deliver to Purchaser at least seven (7) Business Days prior
to the Closing an updated set of the schedules referenced in this Agreement (the
"Disclosure Schedules"). Purchaser shall have the right to disapprove these
updated Disclosures Schedules if they contain any change that constitutes a
Material Adverse Effect. Such right shall be exercised by Purchaser by giving
notice to Seller in accordance with Section 9.02 within three (3) Business Days
following the delivery of the updated Disclosure Schedules by Seller. In the
event that Purchaser does not exercise such right within such period, the
updated Disclosure Schedules shall be deemed to have been approved by Purchaser.
SECTION 5.08. Confidentiality.
(a) From and after the date of this Agreement until the earlier of the
Petition Date or the termination of this Agreement, or as otherwise agreed by
the parties, neither Seller nor Purchaser nor any of their respective
Affiliates, nor any of their employees, officers, members, managers,
stockholders, directors, partners, advisors, agents or other representatives
shall disclose any information regarding this Agreement (including the terms
thereof and hereof); provided, however, that each party acknowledges and agrees
that such information may be disclosed by the other party if required by Law,
including applicable securities laws, or to its lenders and legal and financial
advisors, or to third parties in order to obtain any consents or releases as
required or advisable in connection with this Agreement. It is understood and
acknowledged by the parties that on the Petition Date this Agreement may become
part of the public record.
(b) On and after the Closing, except as necessary or advisable to
administer the Bankruptcy Case, permit due diligence review for sale of Excluded
Assets or a sale of the outstanding capital stock of Seller or a merger of
Seller with or into another entity (provided that any person will be subject to
normal and customary confidentiality restrictions prior to
28
undertaking such a review), or collect accounts receivable, or except as
required by the Bankruptcy Code and applicable Laws, Seller shall, and shall use
its best efforts to cause all of its Affiliates to, keep confidential all
aspects of the Business, including, without limitation, (i) any marketing,
advertising or other business strategies of Seller or any of its Affiliates,
(ii) any of Seller's Trade Secrets, (iii) customer lists, customer accounts,
customer histories, customer Contracts and their terms, customer correspondence,
and customer profiles, and (iv) any other confidential or non-public information
relating to the Purchased Assets.
SECTION 5.09. Non-Competition. On and after the Closing Date, Seller,
its Affiliates, and their successors shall not (i) engage in any new business,
or assist in any unrelated business, that competes with Purchaser or any of its
Affiliates; or (ii) interfere with any of the contractual relationships of
Purchaser or its Affiliates or any Persons with whom Purchaser has a contractual
relationship including, without limitation, customers, prospective customers,
licensors, licensees or suppliers; provided, however, that actions reasonably
necessary to wind up and liquidate Seller (including administration of Seller's
estate in the Bankruptcy Case and collection of accounts receivable) shall not
constitute interference pursuant to this Section.
SECTION 5.10. Additional Agreements. On or before the Closing Date,
Seller shall cause each of its subsidiaries holding any interest in the
Purchased Assets either to merge with and into Seller or otherwise convey such
interest to Seller. Seller and Purchaser shall enter, and cause their respective
Affiliates to enter, into such other agreements, documents, xxxx of sale and
instruments as requested by the other to effectuate the transactions
contemplated by this Agreement, all of which shall be in form and substance
mutually satisfactory to Seller and Purchaser.
SECTION 5.11. Information and Inspection Rights. From the date of this
Agreement to the Closing Date, Seller shall, as promptly as practicable, deliver
or cause its Affiliates to deliver, all information reasonably requested by
Purchaser reasonably related to the Purchased Assets, other than the Seller's
source code. Seller shall also permit Purchaser and its agents and advisors, at
its own expense, on reasonable advance notice to Seller, and without
unreasonably disrupting the ongoing business and operations of Seller, to visit
and inspect Seller's or its Affiliates' properties, assets and Business, to
examine its Books and Records, and to discuss items related to the Purchased
Assets with its officers and directors, all at such reasonable times as may be
mutually agreed by Purchaser and Seller.
SECTION 5.12. Employees.
(a) Purchaser may in its full and absolute discretion make employment
offers (the "Employment Offers") to Seller's employees and negotiate such
employment terms independently with the prospective employees; provided that any
such offer shall remain open until a date not earlier than two (2) Business Days
after the Sale Order is entered. Nothing in this Agreement shall constitute an
obligation or an undertaking of Purchaser to make any Employment Offers to any
employees of Seller. Purchaser may in its full and absolute discretion condition
continued employment on the occurrence of the Closing.
(b) Prior to the Closing, Seller may reduce its work force; provided
that in no event will Seller terminate or cause the termination of employment of
up to forty (40) employees
29
identified by Purchaser in writing. Seller shall use its reasonable efforts to
retain those employees listed as "Core Developers" or "Key Employees" on Exhibit
L hereto.
(c) Purchaser has advised Seller that it intends to offer certain of
Seller's employees options to purchase up to a total of 200,000 shares of
PeopleSoft common stock consistent with PeopleSoft's guidelines for stock grants
to newly hired employees at similar levels, with an exercise price equal to the
fair market value of PeopleSoft common stock on the grant date (i.e., the later
of the date such employee commences work as an employee of Purchaser or the date
Purchaser's board of directors approves the grant). Any such consideration would
be provided solely as a prospective incentive to those employees remaining in
Purchaser's employ and not as consideration to Seller.
(d) If Purchaser makes an offer to each of the employees identified on
Exhibit L to employ such employee in a job at a similar capacity and salary as
such employee is currently receiving at Seller, and more than half of the
employees identified on Exhibit L as "Core Developers" or at least four (4) of
those employees identified as "Key Employees" do not accept in writing such
offer by Purchaser on or before the end of the second business day prior to the
Closing Date, the Employee Purchase Adjustment shall be imposed on the Purchase
Price; provided, however, that should Purchaser employ any of such employees
identified on Exhibit L within the two months following the Closing, such that
had such employee accepted the offer at Closing, the Employee Purchase
Adjustment would not have been imposed, then Purchaser shall promptly refund the
Employee Purchase Adjustment to Seller.
SECTION 5.13. Customer Relationships and Accounts Receivable.
(a) Except as otherwise permitted under this Section 5.13 and the
Servicing Agreement, after Closing Seller shall cease all attempts to collect
outstanding accounts receivable.
(b) At the Closing, the parties shall enter into, and shall cause the KK
Entity to enter into, the Servicing Agreement pursuant to which Purchaser will
agree to collect accounts identified by Purchaser from and after the Closing
Date.
(c) During the applicable Software Support Period and for the products
and customers identified in Exhibit O, Purchaser shall (a) use commercially
reasonable efforts to promptly correct errors in the Supported Software, (b)
provide technical support and assistance during normal business hours (6:00 AM
to 6:00 PM Pacific Time M-F excluding holidays) with respect to the Supported
Software, and (c) provide to each customer bug fixes, new releases, and updates
that may be made available during the Software Support Period. Purchaser
warrants that any support services provided will be of a professional quality,
conforming to generally accepted industry standards and practices for similar
services.
(d) Purchaser may, by written notice to Seller given before the
twentieth (20th) day before the hearing at which the Bankruptcy Court considers
the Sales Motion, identify additional Contracts of Seller that shall be included
as Assumed Contracts under this Agreement, and Exhibit B shall be amended to
reflect the inclusion of such additional Contracts. To the extent that any
additional Contracts are identified after such date, Seller shall only be
required to use
30
commercially reasonable best efforts to obtain Bankruptcy Court approval of the
assignment by Seller to Purchaser and the assumption by Purchaser of any such
Contracts. Seller shall be responsible for payment of any amounts necessary to
pay Cure Payments on such additional Contracts but shall not be responsible for
relicensing or other fees charged by the parties to the Assumed Contracts in
exchange for their consent to assumption and assignment of such Assumed
Contracts or any and all obligations on such Assumed Contracts that accrue after
the date of such assignment and assumption.
SECTION 5.14. Assets Discovered Post-Closing and Further Assurances.
(a) If requested by Purchaser, Seller agrees for a period of six months
after the Closing to use its reasonable best efforts, at Seller's cost and
expense, to obtain the entry of a Final Order of the Bankruptcy Court
authorizing Seller to sell to Purchaser any and all additional assets that are
not the subject of the Sale Order, to the extent that such assets (i) have not
been included in Exhibit A and were discovered or disclosed by Seller or
Purchaser after the date hereof, and (ii) relate to or are required for the full
use and enjoyment of the Purchased Assets. To the extent that the inclusion of
such assets would have caused an increase in the Purchase Price if included on
Exhibit A at the Closing, Seller and Purchaser shall agree an addition to the
Purchase Price. Notwithstanding the provisions of this Section 5.14(a),
Purchaser shall not be deemed to be entitled to any option to purchase, or to
any right of first refusal on, any specific assets of Seller, and Seller shall
be under no restriction under this Section 5.14(b) with respect to the sale and
liquidation of its assets.
(b) If requested by Purchaser, Seller agrees for a period of six months
after the Closing to use its reasonable best efforts, at Seller's cost and
expense, to obtain the entry of a Final Order of the Bankruptcy Court
authorizing Seller to assume and assign to Purchaser any and all additional
Contracts of Seller, which are not the subject of the Sale Order, to the extent
that such Contracts (i) have not been included in Exhibit B and were discovered
or disclosed by Seller or Purchaser after the date hereof, and (ii) relate to or
are required for the full use and enjoyment of the Purchased Assets. Seller
shall be responsible for payment of any amounts necessary to pay Cure Payments
on such additional Contracts but shall not be responsible for relicensing or
other fees charged by the parties to Assumed Contracts in exchange for their
consent to assumption and assignment of such Assumed Contracts or any and all
obligations on such Assumed Contracts that accrue after the date of such
assignment and assumption. such assignment and assumption. Notwithstanding the
provisions of this Section 5.14(a), Purchaser shall not be deemed to be entitled
to any option to take assignment of, or to any right of first refusal on, any
specific Contract of Seller, and Seller shall be under no restriction under this
Section 5.14(b) with respect to the assumption or rejection of such Contracts.
(c) The parties agree from and after the Closing to cooperate with each
other to give full effect to the terms and provisions of this Agreement. The
parties further agree to supply each other with such information, documents,
authorizations and the like as may be reasonably necessary or appropriate to
further effectuate the terms and provisions of this Agreement; provided that the
provision of such items may be conditioned upon assurances of receiving
appropriate reimbursement of reasonable attorneys' fees and other expenses
incurred in providing such items.
31
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Seller's Obligations to Sell the Purchased
Assets at the Closing. The obligations of Seller to sell, assign, transfer and
convey all of its rights, title and interest in, to and under the Purchased
Assets to Purchaser at the Closing are subject to satisfaction (or, in the sole
and absolute discretion of Seller, waiver by Seller) of the conditions set forth
below:
(a) Covenants and Agreements. Purchaser shall have complied in all
material respects with each of the covenants and agreements to be performed by
it pursuant to the Acquisition Agreements to which it is, or shall have become,
a party.
(b) Representations and Warranties. The representations and warranties
of Purchaser in this Agreement shall be true and correct in all material
respects (without giving effect to any materiality or Material Adverse Effect
qualifiers therein) as of the date of this Agreement and on and as of the
Closing Date as though such representations and warranties were made on and as
of the Closing Date (except that any representation or warranty made as of a
specified date shall be true and correct as of such date).
(c) No Legal Proceedings. No Action shall have been instituted and be
pending to restrain or prohibit the transactions contemplated by this Agreement.
(d) Bankruptcy Court Authorization. The Sale Order shall each have been
entered as provided in Section 6.02(k) below.
(e) Consents. Seller shall have used its best efforts to obtain all the
Required Consents listed in Schedule 5.03 to this Agreement in the form of the
Third Party Consent.
(f) Other Acquisition Agreements. As of the Closing Date, Purchaser and
Seller shall enter into the other Acquisition Agreements, all of which shall be
in form and substance reasonably satisfactory to Seller and Purchaser.
(g) Officer's Certificate. Seller shall have received a certificate,
dated the Closing Date, executed by the chief executive officer and the chief
financial officer of Purchaser, on behalf of Purchaser, certifying that the
conditions to the obligations of Seller set forth in this Section 6.01(a) -- (h)
of this Agreement have been satisfied.
(h) Good Standing. Purchaser shall have obtained a domestic corporation
"good standing" certificate from the Delaware Secretary of State regarding
Purchaser's corporate status in Delaware and a foreign corporation "good
standing" certificate from the California Secretary of State regarding
Purchaser's corporate status in California, in each case dated as of a date not
earlier than five (5) Business Days before the Closing Date.
SECTION 6.02. Conditions to Purchaser's Obligations to Purchase the
Purchased Assets at the Closing. The obligations of Purchaser to purchase the
Purchased Assets at the Closing are subject to the satisfaction (or, in the sole
and absolute discretion of Purchaser, waiver by Purchaser) of the conditions set
forth below:
32
(a) Covenants and Agreements. Seller shall have complied in all material
respects with each of the covenants and agreements to be performed by it
pursuant to the Acquisition Agreements to which it is, or shall have become, a
party.
(b) Representations and Warranties. Except as disclosed in the
Disclosure Schedules (exclusive of any items therein to be changed on or before
the Closing in accordance with this Agreement), the representations and
warranties of Seller in this Agreement shall be true and correct in all material
respects (without giving effect to any materiality or Material Adverse Effect
qualifiers therein) as of the date of this Agreement and on and as of the
Closing Date as though such representations and warranties were made on and as
of the Closing Date (except that any representation or warranty made as of a
specified date shall be true and correct as of such date).
(c) No Legal Proceeding. No Action shall have been instituted and be
pending to restrain or prohibit the transactions contemplated by this Agreement
or that could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
(d) Consents. Seller shall have used its best efforts to obtain all the
Required Consents listed in Schedule 5.03 to this Agreement in the form of the
Third Party Consent.
(e) Other Acquisition Agreements. As of the Closing Date, Purchaser and
Seller shall enter into the other Acquisition Agreements to which either is a
party, all of which shall be in form and substance reasonably satisfactory to
Seller and Purchaser.
(f) Officer's Certificate. Purchaser shall have received a certificate,
dated the Closing Date, executed by the chief executive officer and the chief
financial officer of Seller, on behalf of Seller, certifying that the conditions
to the obligations of Purchaser set forth in this Section 6.02(a) -- (k) of this
Agreement have been satisfied.
(g) Delivery of the Purchased Assets. As of the Closing Date, Seller
shall have taken all steps necessary to deliver all of the Purchased Assets free
and clear of all Liens and interests.
(h) Certificate of Incorporation. Seller shall have furnished to
Purchaser a copy of Seller's certificate of incorporation and all amendments
thereto, certified by the Delaware Secretary of State as of a date not earlier
than five (5) Business Days before the Closing Date.
(i) Good Standing. Seller shall have obtained a domestic corporation
"good standing" certificate from the Delaware Secretary of State regarding
Seller's corporate status in Delaware and a foreign corporation "good standing"
certificate from the California Secretary of State regarding Seller's corporate
status in California, in each case dated as of a date not earlier than five (5)
Business Days before the Closing Date.
(j) Updated Disclosure Schedules. Purchaser shall not have exercised its
right of disapproval of the updated Disclosure Schedules in accordance with the
provisions of Section 5.07.
(k) Sale Procedures Order and Sale Order.
33
(i) Seller shall have obtained entry of the Sale Procedures Order on
or before January 31, 2002, and such Sale Procedures Order shall have become a
Final Order;
(ii) On or before February 15, 2002, Seller shall have obtained
entry of a Final Order of the Bankruptcy Court in form and substance
satisfactory to Purchaser in its sole discretion approving the sale of the
Purchased Assets on the terms and conditions set forth in this Agreement and the
Acquisition Agreements, which order shall provide, among other things, that (i)
Seller is authorized and directed to enter into the transactions contemplated by
this Agreement and the Acquisition Agreements and to execute and deliver all
documents and perform all acts necessary or appropriate to effectuate the sale
of the Purchased Assets to Purchaser; (ii) the transfer of the Purchased Assets
by Seller to Purchaser will be a legal, valid and effective transfer of the
Purchased Assets; (iii) the transfer of the Purchased Assets to Purchaser will
vest Purchaser with good and marketable title to the Purchased Assets and shall
be free and clear of all Liens and interests, with all such Liens and interests
to attach to the Purchase Price; (iv) the Purchase Price to be paid for the
Purchased Assets constitutes the highest and best offer for the Purchased
Assets; (v) the Bankruptcy Court shall retain jurisdiction to enforce the
provisions of this Agreement in all respects, including retaining jurisdiction
to protect Purchaser against any of Seller's Liabilities or otherwise in
accordance with the provisions of this Agreement; (vi) the provisions of the
order are non-severable and mutually dependent; (vii) the transactions
contemplated by this Agreement are undertaken by Purchaser in good faith, as
that term is used in Section 363(m) of the Bankruptcy Code, and Purchaser shall
have all of the benefits of such section; (viii) any obligations of Seller under
this Agreement or any of the Acquisition Agreements which would, by their terms,
survive confirmation of any plan of reorganization which may be proposed by any
party in the Bankruptcy Case shall so survive; and (ix) unless Seller agrees to
pay such Taxes, pursuant to Section 1146(c) of the Bankruptcy Code, no transfer,
stamp or similar Taxes exclusive of sales and use Taxes, if any, shall apply to
the sale of the Purchased Assets.
(iii) On or before February 15, 2002, Seller shall have obtained
entry of a Final Order or Final Orders in form and substance satisfactory to
Purchaser, which order or orders shall provide, among other things, that (x) the
assumption by Seller and assignment by it to Purchaser of all Assumed Contracts
that are required to be assigned to Purchaser pursuant to the terms and
conditions of this Agreement, is approved, (y) Seller has paid or made adequate
provision for the payment of all Cure Payments, and (z) Seller has complied with
all of the other provisions of Sections 365(b) and (f) of the Bankruptcy Code
with respect to the assumption by Seller and assignment to Purchaser of the
Assumed Contracts. The order or orders shall also provide that the Assumed
Contracts will be transferred to, and remain in full force and effect for the
benefit of, Purchaser notwithstanding any provisions in such Assumed Contracts
(including those described in Sections 365(b)(2) and (f) of the Bankruptcy Code)
that prohibit such assignment or transfer.
34
(iv) The orders described in Section 6.02(k)(ii) and Section
6.02(k)(iii) may be in the form of a single order and are referred to
collectively as the "Sale Order." The form of Sale Order attached as Exhibit N
has been approved by Purchaser.
(v) Nothing in this Agreement shall preclude Seller or Purchaser
from consummating the transactions contemplated herein prior to the Sale Order
or any other orders becoming Final Orders if Purchaser, in its sole discretion,
waives such requirement. No notice of such waiver of this or any other condition
to Closing need be given except to Seller or Purchaser, as explicitly required
in this Agreement, it being the intention of the parties hereto that Purchaser
shall be entitled to, and shall not waive thereby, the protection of Section
363(m) of the Bankruptcy Code, the mootness doctrine and any similar statute or
body of law if the Closing occurs prior to the time that any such order has
become a Final Order.
(vi) Seller will promptly deliver to Purchaser copies of the Sale
Motion, the Sale Procedures Motion, and all other pleadings, motions, notices,
statements, schedules, applications, reports and other papers filed in the
Bankruptcy Case relating to the sale of the Purchased Assets or this Agreement
(including without limitation motions which, if granted, might create a Material
Adverse Effect, and papers related thereto).
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. Indemnification by Seller. Seller hereby covenants and
agrees to defend, indemnify and save and hold harmless Purchaser and all of its
Affiliates, and each of their respective officers, employees, Affiliates, agents
and representatives (each, a "Purchaser Indemnified Person") from and against
any and all losses, costs, expenses, liabilities, Claims or Damages (including,
without limitation, reasonable fees and disbursements of counsel and
accountants) and other costs and expenses (collectively, "Purchaser Losses") in
connection with, arising out of or based on, or resulting from, (i) any
inaccuracy in or breach of any representation, warranty, covenant or agreement
made by Seller in any of the Acquisition Agreements; (ii) the failure of Seller
to perform or observe any covenant, agreement or provision to be performed or
observed by it pursuant to any of the Acquisition Agreements; and (iii) Seller
Liabilities (excluding Assumed Liabilities). If and to the extent that this
Section 7.01 is unenforceable with respect to any Purchaser Losses for any
reason, Seller shall make the maximum contribution to the payment and
satisfaction of such Purchaser Losses that is permissible under applicable Laws.
All Purchaser Losses incurred or suffered by any Purchaser Indemnified Person
that is entitled to indemnification under this Agreement shall be paid (or, if
and to the extent that such losses have been paid by such Purchaser Indemnified
Person, reimbursed) by Seller from the Indemnity Escrow, pursuant to the
procedures set forth therein.
SECTION 7.02. Procedures for Indemnification. If any Action is asserted,
commenced or threatened against any Purchaser Indemnified Person and such
Purchaser Indemnified Person intends to seek indemnification for any Purchaser
Losses arising from such Action, such Purchaser Indemnified Person shall give
notice of such Action to Seller promptly after such Purchaser Indemnified Person
has obtained actual knowledge of such Action; provided, however,
35
that the failure to deliver written notice of any Action to Seller shall not
relieve Seller of any liability to Purchaser Indemnified Person under this
Article VII with respect to such Action unless Seller's ability to defend such
Action has been adversely affected as a result of such failure. Seller shall
have the right to participate in and, if desired by Seller, to assume the
defense of such Action with counsel satisfactory to Purchaser Indemnified
Person; provided, however, that an Purchaser Indemnified Person (together with
all other Purchaser Indemnified Persons that may be represented without conflict
by one counsel) shall have the right to retain one separate counsel if
representation of such Purchaser Indemnified Person by the counsel retained by
Seller would be inappropriate (in the good faith opinion of Purchaser
Indemnified Person) because of (i) one or more defenses or counterclaims being
available to Purchaser Indemnified Person that are not available to, or are
inconsistent with those available to, Seller, or (ii) actual or potential
differing interests between such Purchaser Indemnified Person and any other
party represented by the counsel retained by Seller in such Action (and the
reasonable fees and expenses of any such separate counsel for an Purchaser
Indemnified Person shall be paid by Seller). If Seller does not accept the
defense of any Action, a Purchaser Indemnified Person shall have the full right
to defend against any such Action and shall be entitled to settle or agree to
pay in full such Action. Notwithstanding the foregoing, under no circumstances
shall an Action be settled or compromised by any Purchaser Indemnified Person,
nor shall any Purchaser Indemnified Person consent to the entry of any judgment,
unless the prior written consent of Seller for such settlement, compromise or
judgment has been obtained, which consent shall not be unreasonably withheld. In
addition, Seller shall not enter into any settlement or compromise, or consent
to the entry of any judgment, with respect to any Action against a Purchaser
Indemnified Person without obtaining the prior written consent of such Purchaser
Indemnified Person if such settlement, compromise or judgment (x) provides for
any injunctive or non-monetary relief against such Purchaser Indemnified Person,
or (y) does not release such Purchaser Indemnified Person from all Liability
arising, or that may arise, from such Action. In all events and circumstances,
Seller and each Purchaser Indemnified Person shall cooperate in the defense of
any Action subject to this Article VII and the records of each such Person shall
be made reasonably available to each other such Person with respect to any such
defense.
SECTION 7.03. Indemnity Escrow Not Exclusive Remedy. Purchaser's rights
and remedies under Section 2.06 and Article VII of this Agreement, and the
Indemnity Escrow Agreement, shall not be construed as Purchaser's exclusive
rights or remedies against the Seller, and Purchaser's recourse against Seller
for indemnification hereunder shall not be limited to the Indemnity Escrow
Amount. The maximum Liability of Seller for indemnification hereunder, except
for acts constituting fraud, intentional misrepresentation or other willful
misconduct, shall be the sum equal to the Purchase Price, and in no event shall
the Seller or any of its Affiliates have any Liability to Purchaser for any
amount in excess of the Purchase Price in respect of any claim for indemnity or
breach of this Agreement or any representation, warranty or covenant hereunder
or any Acquisition Agreement by the Seller or any of its Affiliates.
SECTION 7.04. Survival. The representations and warranties of Seller
contained in this Agreement are made as of the date of this Agreement and as of
the Closing Date. Such representations and warranties shall survive the
execution, delivery and performance of this Agreement, and the completion of the
transactions contemplated by the Acquisition Agreements, for a period of six
months after the Closing Date and thereafter shall be of no further force and
effect.
36
ARTICLE VIII
TERMINATION
SECTION 8.01. Termination. This Agreement may be terminated at any time
prior to the Closing Date by (i) mutual written agreement of Purchaser and
Seller; (ii) by Purchaser (x) if the Closing has not occurred on or prior to the
Closing Deadline for any reason other than a breach by Purchaser of its
representations, warranties, covenants and agreements in the Acquisition
Agreements, or (y) if any of the conditions to Purchaser's obligations to
purchase the Purchased Assets cannot reasonably be expected to be satisfied on
or prior to the Closing Deadline for any reason other than a breach by Purchaser
of its representations, warranties, covenants and agreements in the Acquisition
Agreements; or (iii) by Seller (x) to accept a higher and better bid that is in
conformance with the provisions of the Sale Procedures Order, (y) if the Closing
has not occurred on or prior to the Closing Deadline, for any reason other than
a breach by Seller of its representations, warranties, covenants and agreements
in the Acquisition Agreements, or (z) if any of the conditions to Seller's
obligations to sell the Purchased Assets cannot reasonably be expected to be
satisfied on or prior to the Closing Deadline for any reason other than a breach
by Seller of its representations, warranties, covenants and agreements in the
Acquisition Agreements. Notwithstanding the foregoing, Purchaser and Seller may
mutually agree to extend the Closing Date by thirty (30) additional days (which
date as extended shall become the Closing Date), unless this Agreement has been
earlier terminated by either party hereto.
SECTION 8.02. Purchaser's Expenses and Termination Fee. In the event
that Seller terminates this Agreement to accept an overbid as provided in
Section 8.01(iii)(x), Purchaser's Expenses and the Termination Fee shall be
payable to Purchaser immediately out of the overbidder's deposit as an
administrative expense in the Bankruptcy Case and, if not so paid, shall be
payable as a first priority claim of administration pursuant to Sections
503(b)(1) and 507(a)(1) of the Bankruptcy Code. As used herein, "Purchaser's
Expenses" means all Purchaser's expenses not to exceed One Hundred Seventy-Five
Thousand Dollars ($175,000), including attorney's fees, incurred through the
termination date in connection with the transactions contemplated hereby, and
"Termination Fee" means Two Hundred Thousand Dollars ($200,000); provided that
in no event shall the aggregate of Purchaser's Expenses and the Termination Fee
exceed five percent (5.0%) of the Purchase Price.
SECTION 8.03. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.01 of this Agreement, this Agreement shall
become void and have no effect, without any Liability to any party to this
Agreement or any other Person with respect to, or under, this Agreement or in
connection with the transactions contemplated by this Agreement, provided,
however, that no such termination shall (i) relieve any party to this Agreement
or other Person from any Liability for breach of this Agreement, or (ii)
terminate any obligation to refund the Deposit and the Indemnity Escrow Amount
or any obligation arising under Section 5.08, Section 8.02, or Section 9.13 of
this Agreement.
ARTICLE IX
MISCELLANEOUS
37
SECTION 9.01. Severability. If any provision of this Agreement is
determined to be inoperative or unenforceable under any circumstance by a final
order of any court, such determination shall not have the effect of (i)
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or (ii) rendering any other provision or provisions in
this Agreement invalid, inoperative, or unenforceable to any extent whatsoever.
In addition, if any provision of this Agreement is determined to be inoperative
or ineffective by any court, it is the intention of Seller and Purchaser that
such provision be modified by such court to the minimal extent required by law
and that such provision, as so modified, be enforced against the parties. The
invalidity of any one or more phrases, sentences, clauses, sections or
subsections of this Agreement shall not affect the remaining portions of this
Agreement.
SECTION 9.02. Notices. All notices or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be considered as properly given or made (i) upon the date of personal delivery
(if notice is delivered by personal delivery), (ii) on the date of delivery, as
confirmed by electronic answerback (if notice is delivered by facsimile
transmission), (iii) on the day one (1) Business Day after deposit with a
nationally recognized overnight courier service (if notice is delivered by
nationally recognized overnight courier service), or (iv) on the tenth (10th)
Business Day following mailing from within the United States by first class
United States mail, postage prepaid, registered mail return receipt requested
(if notice is given in such manner), and in any case addressed to the parties at
the addresses set forth below (or to such other addresses as the parties may
specify by due notice to the other):
If to Seller: Calico Commerce, Inc.
000 Xxxx Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx Xxxx, CEO
with a copy to (which shall not constitute notice):
Xxxx Xxxx Xxxx & Freidenrich
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxx, Esq.
If to Purchaser: PeopleSoft, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Senior Vice President of Business Development
38
with a copy to (which shall not constitute notice):
General Counsel
PeopleSoft, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx, Esq.
or, in each case, at such other address as may be specified in writing to the
other parties to this Agreement.
SECTION 9.03. Entire Agreement. The Acquisition Agreements (i)
constitute the entire agreement and understanding between the parties to this
Agreement with respect to the subject matter of the Acquisition Agreements, and
(ii) supersede all prior agreements and understandings, both written and oral,
between the parties to this Agreement with respect to the subject matter of the
Acquisition Agreements.
SECTION 9.04. Captions and Headings. The captions and headings used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
SECTION 9.05. Governing Law. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the internal
laws of the State of California without giving effect to the conflict of laws
rules thereof.
SECTION 9.06. Jurisdiction.
(a) UNTIL THE ENTRY OF AN ORDER EITHER CLOSING OR DISMISSING THE
BANKRUPTCY CASE, THE PARTIES HERETO IRREVOCABLY ELECT AS THE SOLE JUDICIAL FORUM
FOR THE ADJUDICATION OF ANY MATTERS ARISING UNDER OR IN CONNECTION WITH THE
AGREEMENT, AND CONSENT TO THE EXCLUSIVE JURISDICTION OF, THE BANKRUPTCY COURT.
(b) AFTER THE ENTRY OF AN ORDER EITHER CLOSING OR DISMISSING THE
BANKRUPTCY CASE, UNLESS THE CASE IS REOPENED, EACH PARTY TO THIS AGREEMENT
HEREBY IRREVOCABLY SUBMITS EXCLUSIVELY TO THE JURISDICTION OF THE COURTS OF THE
STATE OF CALIFORNIA LOCATED IN THE COUNTY OF ALAMEDA CALIFORNIA AND THE FEDERAL
COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE NORTHERN DISTRICT OF THE
STATE OF CALIFORNIA IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE
PROVISIONS OF THE ACQUISITION AGREEMENTS AND IN RESPECT OF THE NEGOTIATION OR
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THE ACQUISITION AGREEMENTS.
EACH PARTY TO THIS AGREEMENT HEREBY WAIVES AND AGREES NOT TO ASSERT, AS A
DEFENSE IN ANY SUCH ACTION, SUIT OR PROCEEDING THAT SUCH ACTION, SUIT OR
PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SUCH COURTS OR THAT THE
VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THE ACQUISITION AGREEMENTS
39
MAY NOT BE ENFORCED IN OR BY SUCH COURTS. EACH PARTY TO THIS AGREEMENT HEREBY
CONSENTS TO AND GRANTS ANY SUCH COURT JURISDICTION OVER SUCH PARTY AND OVER THE
SUBJECT MATTER OF ANY SUCH DISPUTE AND AGREES THAT THE MAILING OF PROCESS OR
OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER
PROVIDED IN SECTION 9.02 OF THIS AGREEMENT OR IN SUCH OTHER MANNER AS MAY BE
PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.
(c) EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY THAT MAY ARISE UNDER THE ACQUISITION AGREEMENTS IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH PARTY HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THE ACQUISITION AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. EACH PARTY
TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THE
ACQUISITION AGREEMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
REPRESENTATIONS IN THIS SECTION 9.06.
SECTION 9.07. Binding Effect; No Third Party Beneficiaries. This
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their successors and assigns. Except as provided in Article VII of
this Agreement with respect to the indemnification rights granted to Purchaser
Indemnified Persons, nothing in this Agreement shall confer any rights upon any
Person other than the parties to this Agreement and their successors and
assigns.
SECTION 9.08. Assignment. This Agreement shall not be assigned,
transferred or otherwise conveyed by Seller without the prior written consent of
Purchaser. This Agreement shall not be assigned, transferred or otherwise
conveyed by Purchaser without the prior written consent of Seller (which consent
shall not to be unreasonably withheld or delayed); provided, however, that
Purchaser shall be entitled to assign, transfer or convey any of its rights
under this Agreement at any time to any of Purchaser's Affiliate(s) without the
prior written consent of Seller.
SECTION 9.09. Amendment. No amendment, modification or discharge of this
Agreement, and no waiver under this Agreement, shall be valid or binding unless
set forth in writing and duly executed and delivered by the party to this
Agreement against whom enforcement of the amendment, modification, discharge or
waiver is sought and is consented to by such party in writing. Any waiver
granted by a party to this Agreement shall only constitute a waiver with respect
to the specific matter described in such waiver and shall in no way impair the
rights of such party in any other respect or at any other time. The failure of
any party to this
40
Agreement to enforce any provision of this Agreement or to exercise any right or
privilege under this Agreement on one or more occasions shall not be construed
as a waiver of any breach or default, or as a waiver of any rights or
privileges, under this Agreement.
SECTION 9.10. Specific Performance.
(a) The parties to this Agreement acknowledge that the transactions
contemplated by this Agreement are unique and that Damages may be an inadequate
remedy for any failure to consummate such transactions as a result of any breach
of this Agreement by any party to this Agreement and, therefore, any party to
this Agreement to whom performance is owed under any provision of this Agreement
(in addition to any other rights and remedies available under this Agreement,
applicable law or otherwise) shall be entitled to an injunction to be issued, or
specific enforcement to be required, to prevent any other party to this
Agreement from breaching, or continuing to breach, any provision of this
Agreement.
(b) The rights and remedies of any party to this Agreement that are
based upon, arising out of or otherwise in respect of any inaccuracy or breach
of any representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any Action or Claim of any such
inaccuracy or breach is based may also be the subject of any other
representation, warranty, covenant or agreement as to which there is no
inaccuracy or breach.
SECTION 9.11. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
SECTION 9.12. Gender; Plural and Singular Terms. Any reference in this
Agreement to any one gender (masculine, feminine or neuter) includes the other
two, and the singular includes the plural, and vice versa, unless the context
requires otherwise.
SECTION 9.13. Expenses. Except as may be otherwise expressly set forth
in the Acquisition Agreements, all fees and expenses incurred in connection with
such instruments and agreements and the transactions contemplated thereby shall
be paid by the party incurring such costs or expenses, including, without
limitation, the fees and expenses of their respective counsel, financial
advisors and accountants.
[SIGNATURES ON FOLLOWING PAGE]
41
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the date first above written.
PEOPLESOFT, INC.
By:
-------------------------------------
Xxxxxxx Xxxx
Senior Vice President
CALICO COMMERCE, INC.
By:
-------------------------------------
Xxxxx X. Xxxx
President and Chief Executive Officer
42
EXHIBITS AND SCHEDULES TO ASSET PURCHASE AGREEMENT
Description of Purchased Assets Exhibit A
List of Assumed Contracts Exhibit B
License Agreement Exhibit C
Reserved Exhibit D
Servicing Agreement Exhibit E
Indemnity Escrow Agreement Exhibit F
Form of Assignment and Assumption Agreement Exhibit G
Form of Assignment of Trademarks Exhibit H
Form of Assignment of Patent Applications and Disclosures Exhibit I
Form of Assignment of Copyrights Exhibit J
Form of Xxxx of Sale Exhibit K
List of Critical Employees Exhibit L
Sale Procedures Order Exhibit M
Sale Order Exhibit N
Software Support Exhibit O
Disclosure Schedules
Jurisdictions in Which Seller Conducts Business Schedule 4.02
Breach or Violation of Material Contracts Schedule 4.03
Required Third Party Consents Schedule 4.04
Taxes Schedule 4.05
Pending or Threatened Litigation Schedule 4.06
Materials Contracts of Purchased Assets Schedule 4.09(a)
Ten Largest Suppliers of Business (Purchased Assets) Schedule 4.09(b)
Liens and Other Disclosures re Intellectual Property Schedule 4.10(a)
Marks Owned, Used, Registered or Pending Registration Schedule 4.10(b)
Patents Owned, Used, Registered or Pending Registration Schedule 4.10(c)
Copyrights Owned, Used, Registered or Pending Registration Schedule 4.10(d)
Exceptions to Protection of Trade Secrets Schedule 4.10(e)
Software Owned or Used; Distribution of Source Code; Use of
Others IP; Royalties Schedule 4.10(f)
Improperly Documented or Incomprehensible Software Schedule 4.10(g)
Inbound License, Royalty, and End User License Agreements Schedule 4.10(h)
Distribution Rights Granted to Third Parties Schedule 4.10(i)
Exceptions to Sufficiency of Owned and Licensed IP Schedule 4.10(j)
Exceptions to Performance of Existing Software Schedule 4.10(k)
Employee Exceptions: Confidentiality, Invention. and Proprietary
Information Agreements Sched 4.10(l)(A)
Employee Exceptions: Prior Intellectual Property Sched 4.10(l)(B)
Employee Exceptions: Material Contributors to Software Sched 4.10(l)(C)
Patent Inventors Sched 4.10(l)(D)
Exceptions to Sufficiency of Disaster Plan Schedule 4.10(n)
Non-Assignment or Change in Control Clauses of Agreements
Affecting Intellectual Property Schedule 4.10(o)
Non-Disclosure and Non-Competition Agreements Schedule 4.11
Exceptions to Absence of Certain Changes Schedule 4.14
Copies of Written Warranties and Guaranties Schedule 4.16
Intellectual Property Assets Sold to Digital River Schedule 4.18
43
EXHIBIT A
PURCHASED ASSETS
The Purchased Assets shall include all the right, title and interest of
Seller and its Affiliates in, to and under:
(a) all (i) Intellectual Property Assets and (ii) all other intangible
property of Seller relating to the Intellectual Property Assets (including all
of Seller's rights, Claims, credits, causes of action or rights of set-off
against third Persons relating to the Intellectual Property), including all
right, title and interest in the intellectual property rights listed on
Schedules 4.10(b)-(d) and Schedule 4.10(f), and including, without limitation,
Employment Agreements, Owned Software, and any other Development Environments
and any other Software tools used in connection with the Business;
(b) all information and assets, whether tangible or intangible, relating
to technical or engineering support of the Business and the Products;
(c) all Assumed Contracts;
(d) all goodwill associated with the Purchased Assets;
(e) all of Seller's marketing, advertising, design and other business
strategies of Seller;
(f) all of Seller's customer, potential customer, licensee, potential
licensee and supplier lists, and product price lists, but not the rights to
Inbound License Agreements, End User License Agreements or Technology
Distribution Agreements;
(g) all of Seller's internet domain names and other computer user
identifiers and any rights in and to sites on the worldwide web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites;
(h) all of Seller's licenses, permits, Consents, authorizations and
approvals obtained by Seller from Governmental Authorities to the extent the
same may be transferred by Seller to Purchaser under applicable law;
(i) all designs and works-in-progress relating to the Products
(including all designs still in development), and all software related to such
designs and works-in-progress;
(j) the KK Assets or, if the Purchaser elects to acquire the KK Entity
in accordance with Section 2.05, the KK Entity and all Claims Seller may assert
against the KK Entity and the KK Assets;
(k) all of Seller's Claims, causes of action, litigation and other
rights against any Person arising out of, appurtenant or relating to, or in
connection with actions for infringement against third parties arising out of
the Intellectual Property Assets and defenses, offsets, and counterclaims
against actions by third parties arising out of the Assumed Contracts; and
(l) all Books and Records relating to the foregoing.
Upon receiving notice of additional Claims, Actions, causes of action,
litigation and other rights against any Person in connection with the Purchased
Assets, Seller shall notify Purchaser promptly of such Claims and Purchaser
shall have the right to assume the defense of such Claim by notifying Seller of
such election in writing within ten (10) Business Days. If Purchaser does not
elect to assume such defense, Seller will be responsible for such defense and
any related Liabilities, unless they are Assumed Liabilities or Liabilities that
arise or are related to actions taken by Purchaser relating to the Purchased
Assets after the Closing Date, or accruing after the Closing Date.
2
EXHIBIT L
LIST OF CERTAIN EMPLOYEES
Core Developers
---------------
Xxxx Xxxxxxxxx
Xxxx Xxxx
Xxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxxx Xxxxxxxxx
Xxxx Xxxxx
Xxxxxx Rolls
Xxxxxxx Xxxxxx
Xxxxx Silky
Xxxx Xx Xxxxxx
Xxxxx Xxxxx
Xxxx Xxxxxxxxx
Xxxxxxxxxxx Xxx Xxxxx
Xxxxxx Want
Xxxxxx XxXxxx
Xxxx Xxxxxxxx
Xxxxxx Xxxx
Xxxxx XxXxxxxx
Xxxxxx Xxxxxxxx
Key Employees
-------------
Xxxxxxx Xxxxx
Xxxx Xxxxx
Xxxxxx Rolls
Xxxxx Silky
Xxxxxxxxxxx Xxx Xxxxx
Xxxxxx Want
3
