EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
ALTIRIS, INC.,
AND
PREVIO, INC.
AND
PREVIO ESTONIA OU
AS OF JULY 15, 2002
TABLE OF CONTENTS
PAGE
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Article 1 DEFINITIONS.................................................................................................1
1.1 Capitalized Terms...................................................................................1
1.2 Construction........................................................................................7
Article 2 PURCHASE AND SALE...........................................................................................8
2.1 Purchase and Sale of Assets.........................................................................8
2.2 Delivery of Acquired Assets.........................................................................9
2.3 Assignments; Stock Transfer.........................................................................9
2.4 Transfer of Product Software Copyrights.............................................................9
2.5 Transferred Contracts..............................................................................10
2.6 Further Assurances; Post-Closing Cooperation.......................................................10
2.7 Assumed Liabilities................................................................................11
2.8 Excluded Liabilities...............................................................................11
2.9 Excluded Assets....................................................................................12
2.10 Liabilities of Sub.................................................................................12
2.11 Support Related to Certain Customer Contracts......................................................12
Article 3 CLOSING AND PURCHASE PRICE.................................................................................12
3.1 Closing............................................................................................12
3.2 Purchase Price; Working Capital Reimbursement......................................................12
3.3 Allocation of Purchase Price.......................................................................13
3.4 Transfer Taxes.....................................................................................13
Article 4 REPRESENTATIONS AND WARRANTIES OF SELLER...................................................................13
4.1 Organization of Seller.............................................................................13
4.2 Authority..........................................................................................14
4.3 No Conflict........................................................................................14
4.4 Transferred Contracts..............................................................................14
4.5 Consents...........................................................................................15
4.6 Support Contracts..................................................................................15
4.7 Liabilities........................................................................................15
4.8 Restrictions on Business Activities................................................................16
4.9 Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment.....................16
4.10 Customers and Sales................................................................................16
4.11 Intellectual Property..............................................................................17
4.12 Litigation.........................................................................................20
4.13 Brokers' or Finders' Fees..........................................................................20
4.14 Tax Matters........................................................................................20
4.15 Power of Attorney..................................................................................21
4.16 Affiliated Transactions............................................................................21
4.17 Compliance with Laws...............................................................................22
4.18 Product Warranties.................................................................................22
4.19 Complete Copies of Materials.......................................................................22
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TABLE OF CONTENTS
(continued)
PAGE
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4.20 Bulk Transfer Laws.................................................................................22
4.21 Excluded Liabilities...............................................................................22
4.22 Acquired Assets....................................................................................22
4.23 WARN Act...........................................................................................22
4.24 SEC Filings; Seller Financial Statements...........................................................23
4.25 Representations Complete...........................................................................23
Article 5 REPRESENTATIONS AND WARRANTIES OF SELLER AND SUB...........................................................24
5.1 Organization.......................................................................................24
5.2 Authority..........................................................................................24
5.3 Capital Stock of Sub...............................................................................24
5.4 No Conflicts.......................................................................................25
5.5 Consents...........................................................................................25
5.6 Financial Statements...............................................................................25
5.7 No Adverse Changes.................................................................................25
5.8 Tax Returns and Audits.............................................................................26
5.9 Title to Assets....................................................................................27
5.10 Real Property......................................................................................27
5.11 Personal Property..................................................................................27
5.12 Contracts..........................................................................................28
5.13 Intellectual Property..............................................................................28
5.14 Insurance..........................................................................................32
5.15 Employee Matters...................................................................................32
5.16 Litigation; Compliance; Permits....................................................................33
5.17 Environmental Compliance...........................................................................34
5.18 Corporate Records..................................................................................34
5.19 Bank Accounts; Power of Attorney...................................................................34
5.20 Warranties.........................................................................................34
5.21 Foreign Corrupt Practices..........................................................................34
5.22 Complete Copies....................................................................................35
5.23 Disclosure.........................................................................................35
Article 6 REPRESENTATIONS AND WARRANTIES OF BUYER....................................................................35
6.1 Organization, Good Standing and Qualification......................................................35
6.2 Authority..........................................................................................35
6.3 No Conflict........................................................................................35
6.4 Consents...........................................................................................36
6.5 Brokers' and Finders' Fees.........................................................................36
6.6 Purchase Price.....................................................................................36
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Article 7 COVENANTS AND AGREEMENTS...................................................................................36
7.1 Access.............................................................................................36
7.2 Operation of the Businesses........................................................................37
7.3 Conduct Prior to Closing...........................................................................38
7.4 Confidentiality....................................................................................39
7.5 Collateral Agreements; Share Purchase Agreement....................................................39
7.6 Covenant not to Compete or Solicit.................................................................39
7.7 No Solicitation....................................................................................41
7.8 Notification of Certain Matters....................................................................41
7.9 Public Disclosure..................................................................................42
7.10 Use of Confidential Information....................................................................42
7.11 Consents...........................................................................................42
7.12 Benefits Liabilities...............................................................................42
7.13 Meeting of Stockholders............................................................................42
7.14 WARN Act...........................................................................................43
7.15 Reasonable Efforts.................................................................................43
7.16 Additional Documents and Further Assurances........................................................43
Article 8 CONDITIONS TO THE CLOSING..................................................................................44
8.1 Conditions to Obligations of Each Party............................................................44
8.2 Additional Conditions to the Obligations of Buyer..................................................44
8.3 Additional Conditions to Obligations of Seller.....................................................45
Article 9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.................................................................46
9.1 Survival of Representations, Warranties and Covenants..............................................46
Article 10 TERMINATION, AMENDMENT AND WAIVER.........................................................................46
10.1 Termination........................................................................................46
10.2 Effect of Termination; Notice of Termination.......................................................48
10.3 Amendment..........................................................................................48
10.4 Extension; Waiver..................................................................................48
Article 11 GENERAL...................................................................................................48
11.1 Notices............................................................................................48
11.2 Entire Agreement; Assignment.......................................................................49
11.3 Severability.......................................................................................50
11.4 Other Remedies.....................................................................................50
11.5 GOVERNING LAW......................................................................................50
11.6 Jurisdiction and Venue.............................................................................50
11.7 Rules of Construction..............................................................................50
11.8 WAIVER OF JURY TRIAL...............................................................................50
11.9 Fees and Expenses..................................................................................51
11.10 Counterparts.......................................................................................51
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EXHIBITS
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Exhibit A Form of General Assignment and Xxxx of Sale
Exhibit B Form of Transferred Intellectual Property Rights Assignments
Exhibit C Form of Share Purchase Agreement
Exhibit D Seller Disclosure Schedule
Exhibit E Sub Disclosure Schedule
SCHEDULES
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Schedule 1.1(gg) Licenses granted pursuant to inbound license agreements
Schedule 1.1(nn) Products
Schedule 1.1(mmm) Tangible Assets
Schedule 1.1(ppp) Third Party Technology
Schedule 1.1(qqq) Transferred Contracts
Schedule 1.1(rrr) Transferred Intellectual Property Rights
Schedule 1.1(sss) Transferred Technology
Schedule 1.1(ttt) Transferred Trademarks
Schedule 2.9 Excluded Assets
Schedule 4.10 Customers
Schedule 4.11(a) Registered Intellectual Property Rights
Schedule 4.11(g) Third Party Technology
Schedule 4.11(o) Form of Proprietary Rights and Confidentiality Agreement
Schedule 4.18 Copies of Standard Terms and Conditions of License for Seller
Schedule 4.22 Intellectual Property Rights or Technology Not Transferable without Consent
Schedule 5.3 Capitalization
Schedule 5.6 Financial Statements
Schedule 5.10 Leases
Schedule 5.11 Personal Property
Schedule 5.12 Contracts
Schedule 5.13 Intellectual Property
Schedule 5.14 Insurance
Schedule 5.15 Employees
Schedule 5.16 Litigation
Schedule 5.19 Bank Accounts
Schedule 5.20 Warranties
Schedule 8.2(b) Release of Liens
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), is made and entered
into as of July 15, 2002, by and among Altiris, Inc., a Delaware corporation
with a principal place of business at 000 Xxxx 000 Xxxxx, Xxxxxx, Xxxx
("Buyer"), and Previo, Inc., a Delaware corporation with a principal place of
business at 00000 Xxxx Xxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx ("Seller"), and Previo
Estonia OU, a commercial undertaking duly established and operating under the
laws of the Republic of Estonia and a wholly owned subsidiary of Seller with
registration number 10096567 and principal place of business at Xxxx 00x,
Xxxxxxx, Xxxxxxx ("Sub").
RECITALS
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, certain assets of Seller, in exchange for the assumption of
certain liabilities relating to such assets, cash and the other consideration
set forth below;
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, all of the outstanding capital stock of Sub consisting of one
share with par value 40'000 Estonian kroons, being the lawful currency of the
Republic of Estonia ("EEK"), for cash as set forth below; and
WHEREAS, Buyer and Seller desire to enter into certain other agreements
for their mutual benefit;
NOW, THEREFORE, in consideration of the covenants, representations,
warranties and mutual agreements hereinafter set forth, the parties hereto agree
as follows:
ARTICLE 1
DEFINITIONS
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1.1 CAPITALIZED TERMS. The following capitalized terms shall have the
meanings set forth below:
(a) "ACQUIRED ASSETS" shall have the meaning set forth in
Section 2.1.
(b) "ACTIONS OR PROCEEDINGS" means any and all actions, suits,
proceedings, arbitration, or governmental or regulatory investigations or
audits.
(c) "AFFILIATE" shall mean, with respect to any Person, any
Person directly or indirectly controlling, controlled by or under direct or
indirect common control with such other Person.
(d) "AGREEMENT" means this Asset Purchase Agreement and all
exhibits and schedules hereto.
(e) "ALLOCATION" shall have the meaning set forth in Section
3.3.
(f) "ASSET SALE" means (i) the sale by Seller to Buyer, and
the purchase by Buyer from Seller, of the Acquired Assets and (ii) the transfer
by Seller to Buyer, and the assumption by Buyer from Seller, of the Assumed
Liabilities.
(g) "ASSUMED LIABILITIES" shall have the meaning set forth in
Section 2.7.
(h) "BENEFITS LIABILITIES" means, with respect to any Employee
Plan, any and all claims, debts, liabilities, commitment and obligations,
whether fixed, contingent or absolute, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever or however
arising, including all costs and expenses relating thereto, and including those
debts, liabilities and obligations arising under law, rule, regulation, permits,
action or proceeding before any Governmental Entity, order or consent decree or
any award of any arbitrator of any kind, and those arising (i) under any
Contract between Seller and any of its employees and (ii) any Contract between
Seller or Sub and any of the employees of Sub.
(i) "BOARD RECOMMENDATION" shall have the meaning set forth in
Section 7.13(b).
(j) "CLOSING" shall have the meaning set forth in Section 3.1.
(k) "CLOSING DATE" shall have the meaning set forth in Section
3.1.
(l) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(m) "COLLATERAL AGREEMENTS" shall have the meaning set forth
in Section 2.3(a).
(n) "COMPETITIVE BUSINESS ACTIVITY" shall have the meaning set
forth in Section 7.6(a).
(o) "CONFLICT" shall have the meaning set forth in Section
4.3.
(p) "CONTRACT" means a mortgage, indenture, lease, contract,
covenant or other agreement, instrument or commitment, permit, concession,
franchise or license.
(q) "CUSTOMER AND SALES RECORDS" means the Customer
Information as contained in Seller's CRM database.
(r) "CUSTOMER INFORMATION" shall have the meaning set forth in
Section 4.9(e).
(s) "DISSOLUTION" means the dissolution or winding-up of
Seller's business after the Closing in a manner providing for full payment to or
adequate provision for creditors in advance of any distribution to Seller's
stockholders.
(t) "DISSOLUTION DATE" means the date on which the Seller
files its certificate of dissolution with the Delaware Secretary of State.
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(u) "EMPLOYEE CONTRACT" means each management, employment,
severance, consulting, relocation, repatriation, expatriation, visas, work
permit or other agreement, or contract between Seller or Sub and any employee of
Sub.
(v) "EMPLOYEE PLAN" means any plan, program, policy, practice,
contract, agreement or other material arrangement providing for compensation,
severance, termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written, unwritten or otherwise, funded or unfunded,
including, without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA, which is or has been maintained, contributed to, or
required to be contributed to, (i) by Seller for the benefit of any of its
employees or (ii) by Seller or Sub for the benefit of any of the employees of
Sub, or with respect to which (x) Seller has or may have any liability or
obligation to any of its employees or (y) Seller or Sub has or may have any
liability or obligation to any of the employees of Sub.
(w) "ERISA" means the Employment Retirement Income Security
Act of 1974, or any successor law, and regulations and rules issued pursuant to
such Act or any successor law.
(x) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(y) "EXCLUDED ASSETS" shall have the meaning set forth in
Section 2.9.
(z) "EXCLUDED LIABILITIES" shall have the meaning set forth in
Section 2.8.
(aa) "FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 5.6.
(bb) "GAAP" means United States generally accepted accounting
principles as of the date hereof.
(cc) "GENERAL ASSIGNMENT" shall have the meaning set forth in
Section 2.3(a).
(dd) "GOVERNMENTAL ENTITY" means any court, administrative
agency or commission or other federal, state, county, local or foreign
governmental authority, instrumentality, agency or commission.
(ee) "INTELLECTUAL PROPERTY RIGHTS" means any or all of the
following and all statutory or common law rights throughout the world in,
arising out of, or associated with: (i) all patents and applications (including
provisional applications) therefor and all reissues, divisions, renewals,
extensions, continuations and continuations in part thereof (collectively,
"Patents"); (ii) all inventions (whether patentable or not), invention
disclosures and improvements, all trade secrets, proprietary information, know
how and technology; (iii) all works of authorship, copyrights, derivative works,
mask works, copyright and mask work registrations and applications; (iv) all
trade names, logos, trademarks and service marks, and all trademark and service
xxxx registrations and applications (collectively, "Trademarks"); (v) all
databases and data collections (including, without limitation, knowledge
databases, customer lists and customer databases); (vi) all rights in Software;
(vii) rights to Uniform Resource Locators and Web site addresses, content and
domain names; (viii) any similar, corresponding or equivalent rights to any of
the foregoing; and (ix) all goodwill associated with any of the foregoing.
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(ff) "LIABILITY" means any debt, obligation, duty or liability
of any nature (including any unknown, undisclosed, unmatured, unaccrued,
unasserted, contingent, indirect, conditional, implied, vicarious, derivative,
joint, several or secondary liability), regardless of whether any such debt,
obligation, duty or liability would be required to be disclosed on a balance
sheet prepared in accordance with GAAP and regardless of whether such debt,
obligation, duty or liability is immediately due and payable.
(gg) "LIEN" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind whatsoever in
respect of such asset, not including liens for Taxes not yet due and payable;
PROVIDED, HOWEVER, that the term "Lien" shall not include: (i) statutory liens
for Taxes that are not yet due and payable or are being contested in good faith
by appropriate proceedings or that are otherwise not material; and (ii) licenses
granted pursuant to inbound license agreements listed on Schedule 1.1(gg) or
outbound license agreements entered into by Seller in the ordinary course and in
each case made available to Buyer.
(hh) "MATERIAL ADVERSE EFFECT ON THE ACQUIRED ASSETS" means
any circumstance, change or event that materially impairs Buyer's ability to (i)
make, have made, use, import, display, perform, produce and copy the Transferred
Technology, (ii) distribute, publish, license, market, offer to sell, sell and
otherwise commercialize the Transferred Technology, or (iii) modify and make
derivative works and improvements and otherwise exploit the Transferred
Technology and any part thereof and any derivative work, improvement or
successor thereof, in each case at least to the extent the Buyer enjoys such
rights under that certain Software License Agreement entered into by and among
the parties as of June 24, 2002; PROVIDED, HOWEVER, in the case of each of (i),
(ii) and (iii) above, (A) excluding any circumstance, change or event
attributable to conditions affecting the United States economy as a whole, (B)
with respect to breaches of representations and warranties in Section 4.11 and
Section 5.13, excluding any circumstance, change or event to the extent
attributable to Buyer using or exploiting the Transferred Technology in a manner
materially different than Seller or Sub's previous use or exploitation of that
Transferred Technology, and (C) with respect to all other representations and
warranties, excluding any circumstance, change or event unique to, and
proximately caused by, Buyer.
(ii) "NON-COMPETITION PERIOD" shall have the meaning set forth
in Section 7.6(a).
(jj) "NON-DISCLOSURE AGREEMENT" shall have the meaning set
forth in Section 7.4.
(kk) "OBJECT CODE" means computer software, substantially or
entirely in binary form, which is intended to be directly executable by a
computer after suitable processing and linking but without the intervening steps
of compilation or assembly.
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(ll) "PERSON" means any individual, partnership, firm,
corporation, association, trust, unincorporated organization or other entity, as
well as any syndicate or group of any of the foregoing.
(mm) "PRE-CLOSING PERIOD" shall have the meaning set forth in
Section 7.1.
(nn) "PRODUCTS" means any and all versions, releases, updates
or enhancements of the products listed on Schedule 1.1(nn), and any products or
Technology under development by or on the behalf of Seller relating to or
incorporating any of the products listed on Schedule 1.1(nn), and all
documentation, training or other tangible or intangible materials related to any
of the foregoing.
(oo) "PTO" means the United States Patent and Trademark
Office.
(pp) "PURCHASE PRICE" means (i) for the Acquired Assets other
than the Stock, that amount in cash equal to US$302,980.00, and (ii) for the
Stock, that amount in cash equal to US$197,020.00.
(qq) "REGISTERED INTELLECTUAL PROPERTY" means all United
States, international and foreign: (i) Patents and Patent applications
(including provisional applications); (ii) registered trademarks or service
marks, applications to register trademarks, intent-to-use applications, or other
registrations or applications related to trademarks or service marks; (iii)
registered copyrights and applications for copyright registration; (iv) domain
name registrations; and (v) any other Intellectual Property Rights that are the
subject of an application, certificate, filing, registration or other document
issued, filed with or recorded by any Governmental Entity.
(rr) "RESTRICTED TERRITORY" shall have the meaning set forth
in Section 7.6(a).
(ss) "RETURNS" shall have the meaning set forth in Section
4.14(b)(i).
(tt) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(uu) "SEC" means the United States Securities and Exchange
Commission.
(vv) "SELLER BALANCE SHEET" shall have the meaning set forth
in Section 4.24(b).
(ww) "SELLER DISCLOSURE SCHEDULE" shall have the meaning set
forth in ARTICLE 4.
(xx) "SELLER FINANCIALS" shall have the meaning set forth in
Section 4.24(b).
(yy) "SELLER PROXY STATEMENT" shall have the meaning set forth
in Section 7.13(b).
(zz) "SELLER SEC REPORTS" shall have the meaning set forth in
Section 4.24(a).
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(aaa) "SELLERS STOCKHOLDERS MEETING" shall have the meaning
set forth in Section 7.13(a).
(bbb) "SHARE PURCHASE AGREEMENT" shall have the meaning set
forth in Section 2.3(b).
(ccc) "SOFTWARE" means any and all computer software and code,
including assemblers, applets, compilers, Source Code, Object Code, data
(including image and sound data), design tools and user interfaces, in any form
or format, however fixed. Software shall include Source Code listings and
documentation, including any current or enhanced versions or updates thereto.
(ddd) "SOURCE CODE" means computer software code which may be
printed out or displayed in human readable form, including related programmer
comments and annotations, help text, data and data structures, instructions, and
procedural, object-oriented and other code which may be printed out or displayed
in human readable form.
(eee) "STOCK" means the sole issued and outstanding share with
par value of 40'000 EEK of Sub.
(fff) "STOCK SALE" means the sale by Seller to Buyer, and the
purchase by Buyer from Seller, of the Stock for the consideration and on the
terms set forth in this Agreement and the Share Purchase Agreement.
(ggg) "SUB CONTRACTS" shall have the meaning set forth in
Section 5.12.
(hhh) "SUB DISCLOSURE SCHEDULE" shall have the meaning set
forth in ARTICLE 5.
(iii) "SUB INTELLECTUAL PROPERTY RIGHTS" means any
Intellectual Property Rights, including Sub Registered Intellectual Property,
that is owned by, or exclusively licensed to, Sub.
(jjj) "SUB PRODUCTS" shall have the meaning set forth in
Section 5.13(a).
(kkk) "SUB REGISTERED INTELLECTUAL PROPERTY" shall have the
meaning set forth in Section 5.13(b).
(lll) "SUPPORT CONTRACTS" means those Contracts pursuant to
which Seller is obligated to provide support and maintenance to its customers,
which are identified and set forth on Schedule 1.1(qqq).
(mmm) "TANGIBLE ASSETS" means the tangible assets listed on
Schedule 1.1(mmm).
(nnn) "TAX" and "TAXES" shall have the meanings set forth in
Section 4.14(a).
(ooo) "TECHNOLOGY" means all information and Intellectual
Property Rights related to, constituting or disclosing, and all tangible or
intangible copies and embodiments in any media of, technology, including all
know-how, show-how, techniques, trade secrets, inventions (whether or not
patented or patentable), algorithms, routines, Software, files, databases, works
of authorship or processes.
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(ppp) "THIRD PARTY TECHNOLOGY" means any Technology of any
third party or in the public domain, including open source, public source or
freeware Technology or any modification or derivative thereof, including any
version of any Software licensed pursuant to any university agreement, GNU
general public license or limited general public license that was used in,
incorporated into, integrated or bundled with any Technology that is or was,
incorporated in, or used in the development or compilation of any Product, or
listed in Schedule 1.1(ppp). Third Party Technology shall also include
Technology of any third party developed using government or Federal funds.
(qqq) "TRANSFERRED CONTRACTS" means all Contracts listed on
Schedule 1.1(qqq).
(rrr) "TRANSFERRED INTELLECTUAL PROPERTY RIGHTS" means (i) all
Intellectual Property Rights embodied by, related to or which would be infringed
by the making, using, offering for sale, selling, importing, copying, modifying,
distributing or other exploitation of, the Products and the Transferred
Technology, but in each case excluding Third Party Technology, including all
Copyrights embodied by the Products; (ii) the Transferred Trademarks; (iii) all
Intellectual Property Rights listed or described in Schedule 1.1(rrr); and (iv)
all Intellectual Property Rights owned, legally transferable or otherwise
legally disposable by Seller embodied by, related to or which would be infringed
by the making, using, offering for sale, selling, importing, copying, modifying,
distributing or other exploitation of, Third Party Technology.
(sss) "TRANSFERRED TECHNOLOGY" means all Technology necessary
or useful to the development, use, distribution or other exploitation of the
Products, including the Technology constituting the Products and all Technology
listed on Schedule 1.1(sss), but excluding Third Party Technology. To the extent
that any Software constitutes Transferred Technology, all versions and releases
of such Software, and Software from which such Software was derived, in both
Source Code and Object Code form, shall be included as Transferred Technology.
(ttt) "TRANSFERRED TRADEMARKS" means all registered and common
law Trademarks of Seller in any jurisdiction in the world primarily associated
with the Products including the Product names and the Trademarks listed on
Schedule 1.1(ttt).
(uuu) "WARN ACT" means the Worker Adjustment and Retraining
Notification Act.
(vvv) "WORKING CAPITAL REIMBURSEMENT AMOUNT" shall have the
meaning set forth in Section 3.2(b).
(www) "YEAR 2000" shall have the meaning set forth in Section
4.11(u).
1.2 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number will include the plural, and vice versa; the
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masculine gender will include the feminine and neuter genders; the feminine
gender will include the masculine and neuter genders; and the neuter gender will
include the masculine and feminine genders.
(b) Any rule of construction to the effect that ambiguities
are to be resolved against the drafting party will not be applied in the
construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including" and variations thereof will not be deemed to be terms of limitation,
but rather will be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Articles," "Schedules," "Sections" and "Exhibits" are intended to
refer to Articles, Schedules, Sections and Exhibits to this Agreement.
(e) The headings in this Agreement are for convenience of
reference only, will not be deemed to be a part of this Agreement, and will not
be referred to in connection with the construction or interpretation of this
Agreement.
ARTICLE 2
PURCHASE AND SALE
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2.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
set forth in this Agreement, Seller hereby sells, conveys, transfers, assigns
and delivers to Buyer, and Buyer hereby purchases from Seller all of Seller's
right, title and interest in and to the following assets free and clear of any
and all Liens (collectively, the "Acquired Assets"):
(a) The Tangible Assets;
(b) The Transferred Intellectual Property Rights;
(c) The Transferred Technology;
(d) All Third Party Technology legally transferable by Seller
to Buyer;
(e) All rights (including, without limitation, rights to Third
Party Technology) of Seller under the Transferred Contracts; (f) The Customer
and Sales Records;
(g) All user manuals relating to the Products;
(h) All rights to recover past, present and future claims and
damages for the breach, infringement or misappropriation, as the case may be, of
any of the foregoing; and
(i) The Stock.
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2.2 DELIVERY OF ACQUIRED ASSETS.
(a) On the Closing, Seller shall, at Seller's sole cost, in
the manner and form reasonably specified by Buyer, deliver to Buyer or other
entity designated by Buyer, all of the Acquired Assets, or (i) in the case of
the Transferred Intellectual Property Rights or other intangible assets, such
instruments as are necessary or reasonably requested to document and to transfer
title to such assets from Seller to Buyer in accordance with Section 2.3(a)
below and (ii) in the case of the Stock, the Share Purchase Agreement in
accordance with Section 2.3(b) below. Without limiting the foregoing, all
Software included in the Transferred Technology or the Third Party Technology
legally transferable by Seller to Buyer shall, at Buyer's request, be delivered
to Buyer by electronic means.
(b) To the extent that Buyer cannot be granted possession by
Seller in respect of certain assets as of the Closing, those assets shall be
held by Seller for and on behalf of Buyer until such time as Buyer or its
designee is granted possession thereof and during such period Seller shall bear
all risk of loss with respect to such assets.
2.3 ASSIGNMENTS; STOCK TRANSFER.
(a) Without limiting the foregoing, at the Closing, Seller
shall deliver to Buyer, duly executed by Seller: (i) a General Assignment and
Xxxx of Sale substantially in the form of Exhibit A hereto (the "General
Assignment"); (ii) assignments of the Transferred Intellectual Property Rights
substantially in the form of the assignments set forth in Exhibit B hereto,
including the copyright registrations and assignments required pursuant to
Section 2.4; and (iii) such other good and sufficient instruments of conveyance,
assignment and transfer, in form and substance reasonably acceptable to Buyer's
counsel, as shall be effective to vest in Buyer good and valid title in and to
the Acquired Assets (the General Assignment and the other instruments referred
to in clauses (i), (ii) and (iii) being collectively referred to herein as the
"Collateral Agreements").
(b) Without limiting the foregoing, at the Closing, Seller
shall deliver to Buyer and Buyer shall deliver to Seller, a duly executed copy
of the Share Purchase Agreement in substantially the form set forth in Exhibit C
hereto, which has been duly attested by a registered notary in Tallinn, Estonia.
2.4 TRANSFER OF PRODUCT SOFTWARE COPYRIGHTS. For each of the Products
for which Seller has filed a copyright registration with the United States
Copyright Office, Seller shall deliver to Buyer at Closing an assignment in
substantially the form set forth in Exhibit B to record the transfer of such
copyright to Buyer in the United States Copyright Office.
2.5 TRANSFERRED CONTRACTS. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Transferred Contract or any claim or right or any benefit arising thereunder or
resulting therefrom IF an attempted assignment thereof, without the consent of a
party thereto, would constitute a breach or other contravention thereof,
noncompliance by Seller therewith or in any way adversely affect the rights of
Seller or Buyer thereunder. Seller shall cooperate with Buyer until the later of
the (i) Dissolution Date or (ii) the Closing Date to assist Buyer in obtaining
such required consents.
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2.6 FURTHER ASSURANCES; POST-CLOSING COOPERATION.
(a) At any time or from time to time after the Closing, at
Buyer's request and without further consideration, Seller and Sub shall: (i)
execute and deliver to Buyer such other instruments of sale, transfer,
conveyance, assignment and confirmation; (ii) provide such materials and
information; and (iii) take such other actions, as Buyer may reasonably deem
necessary or desirable in order more effectively to transfer, convey and assign
to Buyer, to confirm Buyer's title to, all of the Acquired Assets, and, to the
full extent permitted by law, to put Buyer in actual possession and operating
control of the Acquired Assets and to assist Buyer in exercising all rights with
respect thereto, and otherwise to cause Seller to fulfill its obligations under
this Agreement and the Collateral Agreements.
(b) Effective on the Closing Date, Seller hereby constitutes
and appoints Buyer the true and lawful attorney of Seller, with full power of
substitution, in the name of Seller or Buyer, but on behalf of and for the
benefit of Buyer: (i) to demand and receive from time to time any and all of the
Acquired Assets and to make endorsements and give receipts and releases for and
in respect of the same and any part thereof; (ii) to institute, prosecute,
compromise and settle any and all actions, suits, proceedings, arbitration, or
governmental or regulatory investigations or audits ("Actions or Proceedings")
that Buyer may deem proper in order to collect, assert or enforce any claim,
right or title of any kind in or to the Acquired Assets; (iii) to defend or
compromise any or all Actions or Proceedings in respect of any of the Acquired
Assets; and (iv) to do all such acts and things in relation to the matters set
forth in the preceding clauses (i) through (iii) as Buyer shall deem desirable.
Seller hereby acknowledges that the appointment hereby made and the powers
hereby granted are coupled with an interest and are not and shall not be
revocable by it in any manner or for any reason. Seller shall deliver to Buyer
at the Closing an acknowledged power of attorney to the foregoing effect
executed by Seller. Notwithstanding anything in this Section 2.6(b) to the
contrary, if and when Buyer decides to exercise the power of attorney or other
rights granted pursuant to this Section 2.6(b) (the "Special Rights"), Buyer
shall provide Seller with a written notice pursuant to Section 11.1 specifying
in reasonable detail the matters or circumstances which require the exercise of
the Special Rights, and Buyer shall not exercise the Special Rights if within
five (5) business days of receipt of any notice Seller implements measures to
resolve to Buyer's reasonable satisfaction the matters or circumstances which
required the exercise of the Special Rights by Buyer.
(c) From time to time after the Closing, Seller will afford
Buyer, its counsel and its accountants, upon reasonably advanced written notice,
during normal business hours, reasonable access to the books and records and
other data primarily relating to the Products in Seller's possession with
respect to periods prior to the Closing and the right to make copies and
extracts therefrom, to the extent that such access may be reasonably required by
Buyer in connection with: (i) the preparation of tax returns; (ii) the
determination or enforcement of rights and obligations under this Agreement;
(iii) compliance with the requirements of any Governmental Entity; or (iv) in
connection with any actual or threatened Action or Proceeding.
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2.7 ASSUMED LIABILITIES. As of the Closing, Buyer hereby agrees to
assume the following, and only the following, Liabilities of Seller
(collectively, the "Assumed Liabilities"):
(a) Transferred Contracts. Those executory obligations of
Seller under the Transferred Contracts (including the Support Contracts), in
each case solely on a going-forward basis from and after the Closing Date.
(b) Operation of Acquired Assets. Liabilities related to the
Buyer's operations or ownership of the Products and Acquired Assets after the
Closing Date, including the Buyer's performance of the Transferred Contracts
(including the Support Contracts) after the Closing Date.
2.8 EXCLUDED LIABILITIES. Except for the Assumed Liabilities
specifically set forth in Section 2.7 above, Buyer is not assuming, and the
Assumed Liabilities expressly exclude, any debt, liability, duty or obligation,
whether known or unknown, fixed or contingent, of Seller including, without
limitation, any liabilities or obligations related to the Products which are
outstanding or unpaid as of the date hereof or connected in any way with any
retirement, medical, life, disability or other Employee Plan of Seller or any
Benefits Liabilities of Seller (the "Excluded Liabilities"); it being expressly
understood that the foregoing does not preclude Buyer from assuming
responsibility for Employee Plan Liabilities or other Benefits Liabilities
pursuant to separate written agreements between Buyer and Seller. Without
limiting the foregoing, all liabilities, including any liabilities for Taxes,
arising from or related to: (i) Seller's operations, whenever arising or
incurred, or Seller's ownership of the Products and Acquired Assets through the
Closing Date; (ii) Seller's termination of any Contracts which are not
Transferred Contracts; (iii) any of Seller's employees hired by Buyer that
accrues or arises as of or prior to the Closing Date, or any of Seller's other
agents, consultants, independent contractors, employees or former employees,
whenever arising, in each case including workers' compensation, severance,
salary, bonuses or under any Employee Plan, whether or not any such employees
shall accept employment with Buyer in connection with the transactions
contemplated hereby; (iv) the Products and arising prior to the Closing Date; or
(v) any implied or explicit warranty obligations of Seller with respect to the
Products entered into prior to the Closing Date, shall be Excluded Liabilities
and shall remain the responsibility of Seller, except as otherwise specifically
included within the Assumed Liabilities.
2.9 EXCLUDED ASSETS. The parties expressly acknowledge and agree that
notwithstanding anything to the contrary in this Agreement, the Acquired Assets
do not include, and Seller does not have and shall be under no obligation to
sell, assign or otherwise transfer to Buyer any of Seller's fixed assets (other
than the Tangible Assets), cash and cash equivalents or receivables of Seller
whether or not related to the Products or the Acquired Assets, or any other
assets, claims, causes of action, contracts, licenses or agreements set forth on
Schedule 2.9 hereto (collectively, the "Excluded Assets"), which Excluded Assets
shall remain for all purposes the properties and assets of Seller, and Buyer
shall have no rights whatsoever thereto or thereunder.
2.10 LIABILITIES OF SUB. Notwithstanding anything to the contrary
contained in this ARTICLE 2, the parties to this Agreement acknowledge and agree
that all Liabilities of Sub outstanding as of, and arising after, the Closing
Date will be Liabilities of Sub after the Closing Date, and that neither Seller
nor its Affiliates shall have any responsibility for such Liabilities.
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2.11 SUPPORT RELATED TO CERTAIN CUSTOMER CONTRACTS. Seller and Buyer
agree that, from and after the Closing Date, Buyer shall provide Seller with
necessary support for Seller to perform any of its obligations under the
Executed Customer Contracts (as defined in the Seller Disclosure Schedule)
solely to the extent Seller is not able to perform such obligations due to the
sale of the Acquired Assets to Seller or due to the hiring by Buyer of the
employees of Sub.
ARTICLE 3
CLOSING AND PURCHASE PRICE
--------------------------
3.1 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, in Salt Lake City, Utah commencing
at 10:00 a.m., local time, two (2) business days following the satisfaction or
written waiver of the last of the conditions of Closing as set forth in Article
8 hereof, or on such other date as the parties may mutually determine (the
"Closing Date").
3.2 PURCHASE PRICE; WORKING CAPITAL REIMBURSEMENT.
(a) At the Closing, Buyer will pay the Purchase Price by wire
transfer to such account as Seller may reasonably direct by written notice
delivered to Buyer by Seller at least three (3) business days before the Closing
Date or by such other method of payment as Seller and Buyer may mutually agree.
(b) At the Closing, Buyer will also pay to Seller as a working
capital reimbursement an amount equal to US$36,754.00 (the "Working Capital
Reimbursement Amount") by wire transfer to such account as Seller may reasonably
direct by written notice delivered to Buyer by Seller at least three (3)
business days before the Closing Date or by such other method of payment as
Seller and Buyer may mutually agree.
3.3 ALLOCATION OF PURCHASE PRICE. Within 10 days after the date of this
Agreement, Buyer shall prepare and deliver to Seller a statement setting forth
Buyer's determination of the manner in which the Purchase Price for the Acquired
Assets is to be allocated among the Acquired Assets ("Allocation"). The
Allocation shall be consistent with the provisions of Section 1060 of the Code
and the Treasury Regulations thereunder. Buyer and Seller will agree in good
faith on the Allocation. The Allocation prescribed by such statement shall be
conclusive and binding upon Buyer and Seller for all purposes. The parties shall
report the Asset Sale for all Tax purposes as a sale of assets in a manner
consistent with the Allocation. The parties shall not file any Tax Return or
other document with, or make any statement or declaration to, or take any
position before, any Governmental Entity or in any judicial proceeding that is
inconsistent with such Allocation. Seller shall file a Form 8594 with the
Internal Revenue Service in accordance with the requirements of Section 1060 of
the Code. In the event that any Governmental Entity shall make or propose to
either Buyer or Seller an allocation of the Purchase Price that differs from the
Allocation, each of Buyer and Seller shall reasonably cooperate with the other
in contesting the determination of such Governmental Entity.
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3.4 TRANSFER TAXES. Except for Taxes that may be payable in Estonia in
connection with the transfer of the Stock from Seller to Buyer (which Taxes
shall be the responsibility of Buyer), Seller shall be solely responsible for
the payment of, and shall pay when due, any Taxes that may be payable in
connection with the Asset Sale and the Stock Sale, including any sales, use,
excise or similar transfer taxes, and shall indemnify Buyer against any such
Taxes.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Except as specifically disclosed in the disclosure schedule attached
hereto as Exhibit D (the "Seller Disclosure Schedule") (referencing the
appropriate section and paragraph numbers), Seller hereby represents and
warrants to Buyer as of the date of this Agreement and as of the Closing Date,
as though made as of the Closing Date, as follows:
4.1 ORGANIZATION OF SELLER. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Seller has all requisite corporate power and authority to own and use the
properties owned and used by it and to carry on its business as currently
conducted and as currently contemplated to be conducted. Seller is duly
qualified or licensed to do business and in good standing as a foreign
corporation in each jurisdiction in which it conducts business. Seller has
delivered a true and correct copy of its certificate of incorporation and
bylaws, each as amended to date and in full force and effect on the date hereof,
to Buyer.
4.2 AUTHORITY. Seller has all requisite power and authority to enter
into this Agreement , the Collateral Agreements and the Share Purchase Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement, the Collateral Agreements and the
Share Purchase Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Seller. No other corporate actions or proceedings on the part of
Seller are necessary to authorize this Agreement, the Collateral Agreements or
the Share Purchase Agreement or to consummate the transactions so contemplated
hereby or thereby, including approval by any creditors of Seller (other than,
with respect to the Asset Sale, the approval and adoption of this Agreement by
the holders of at least such minimum percentage of the outstanding shares of
Seller's capital stock as required by Delaware law and such stockholder approval
as shall be required by Seller's certificate of incorporation and bylaws). This
Agreement, the Collateral Agreements and the Share Purchase Agreement and the
transactions contemplated herein and therein have been unanimously approved by
the board of directors of Seller. This Agreement has been duly executed and
delivered by Seller and constitutes the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except as such
enforceability may be subject to the laws of general application relating to
bankruptcy, insolvency, and the relief of debtors and rules of law governing
specific performance, injunctive relief, or other equitable remedies.
4.3 NO CONFLICT. The execution and delivery by Seller of this
Agreement, the Collateral Agreements and the Share Purchase Agreement, and the
consummation by Seller of the transactions contemplated hereby and thereby, will
not conflict with or result in any violation of, or default under, or give rise
to a right of termination, cancellation, modification or acceleration of any
obligation or loss of any benefit under (any such event, a "Conflict") (i) any
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provision of the certificate of incorporation or bylaws of Seller, (ii) any
Contract to which Seller or any of the Acquired Assets is subject, or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Seller or any of the Acquired Assets. Seller is in compliance with and has
not breached, violated or defaulted under, or received notice that it has
breached, violated or defaulted under, any of the terms or conditions of any
Transferred Contract, nor is Seller aware of any event that would constitute
such a breach, violation or default (with or without notice or lapse of time, or
both).
4.4 TRANSFERRED CONTRACTS. True and complete copies of all Transferred
Contracts have been made available to Buyer. Each Transferred Contract is in
full force and effect and Seller is not subject to any default thereunder, nor
is any party obligated to Seller pursuant to any such Transferred Contract
subject to any default thereunder. Seller has neither breached, violated or
defaulted under, nor received notice that Seller has breached, violated or
defaulted under, any of the terms or conditions of any Transferred Contract.
Following the Closing, Buyer will be permitted to exercise all of the rights
Seller had under the Transferred Contracts without the payment of any additional
amounts or consideration other than ongoing fees, royalties or payments which
Seller would otherwise be required to pay pursuant to the terms of such
Transferred Contracts had the transactions contemplated by this Agreement not
occurred.
4.5 CONSENTS. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with any Governmental Entity or any third
party, including a party to any agreement with Seller (so as not to trigger any
Conflict), is required by or with respect to Seller in connection with the
execution and delivery by Seller of this Agreement, the Collateral Agreements or
the Share Purchase Agreements or the consummation of the transactions
contemplated hereby or thereby, except with respect to the assignment of any
third-party Transferred Contracts to Buyer.
4.6 SUPPORT CONTRACTS. Schedule 1.1(qqq) sets forth a true and complete
list of all Support Contracts pursuant to which Seller is obligated to provide
support and maintenance to its customers.
4.7 LIABILITIES.
(a) The Seller is not now insolvent, nor will Seller be
rendered insolvent by the consummation of the transactions contemplated by this
Agreement. As used in Section 4.7, the term "insolvent" means that the sum of
the present fair saleable value of the assets of a Person do not and will not
exceed its debts or other probable Liabilities; PROVIDED, HOWEVER, that the
valuation of such assets is to assume that the Closing occurs, but otherwise is
to be based on liquidation values of any assets not being sold to Buyer under
this Agreement (assuming a liquidation within 120 days following the Closing).
(b) Immediately after giving effect to the consummation of the
transactions contemplated by this Agreement, (i) Seller will be able to pay in
full all of its Liabilities, including, without limitation, any Taxes due and
other amounts owed as a result of the consummation of the transactions
contemplated by this Agreement, and to otherwise satisfy in full all actual or
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potential claims of Seller's creditors, (ii) Seller will have assets (calculated
at fair market value) that exceed their Liabilities, and (iii) taking into
account all pending and threatened litigation, final judgments against Seller in
actions for money damages are not reasonably anticipated to be rendered at a
time when, or in amounts such that, Seller will be unable to satisfy any such
judgments promptly in accordance with their terms as well as all other
obligations of Seller. The cash available to Seller immediately following the
Closing will be sufficient to pay all such debts and judgments promptly in
accordance with their terms.
(c) Except for the Dissolution, no order has been made or
petition presented, or resolution passed for the winding-up or liquidation of
Seller and there is not outstanding: (i) any petition or order for the
winding-up of Seller; (ii) any appointment of a receiver over the whole or part
of the undertaking of assets of Seller; (iii) any petition or order for
administration of Seller; any voluntary arrangement between Seller and any of
its creditors; (iv) any distress or execution or other process levied in respect
of Seller which remains undischarged; and (v) any unfulfilled or unsatisfied
judgment or court order against Seller.
(d) There are no circumstances which would entitle any Person
to present a petition for the winding-up or administration of Seller or to
appoint a receiver over the whole or any part of the undertaking or assets of
Seller.
4.8 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement (not to
compete or otherwise), commitment, judgment, injunction, order or decree to
which Seller is a party relating to the Products or the Acquired Assets or
otherwise binding upon Seller which has or may have the effect of prohibiting or
impairing the transactions contemplated by this Agreement or impairing the
Acquired Assets. Seller has not entered into any agreement under which its
operations are restricted or which places any restrictions upon Seller with
respect to selling, licensing or otherwise distributing any of the Products or
the Transferred Technology to or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or in any segment of the market.
4.9 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES; CONDITION
OF EQUIPMENT.
(a) Seller owns no real property in connection with its
business related to the Products or the Acquired Assets. (b) Seller has good and
valid title to or, in the case of leased properties and assets, valid leasehold
interests in, or, in the case of the Transferred Contracts, valid right and
interest in, all of the Acquired Assets, free and clear of any Liens.
(c) The Tangible Assets are owned by Seller and are in good
operating condition, regularly and properly maintained, subject to normal wear
and tear.
(d) Immediately after the Closing, Buyer shall be able to use
the Acquired Assets in substantially the same manner as Seller prior to the
Closing, without infringing the rights of any third party.
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(e) Seller has sole and exclusive ownership, free and clear of
any Liens, of all customer lists, customer contact information, customer
correspondence, customer licensing and purchasing histories, and customer
support and maintenance information relating to the former, current and
prospective customers of Seller (the "Customer Information"). No Person other
than Seller possesses any claims or rights with respect to use of the Customer
Information.
4.10 CUSTOMERS AND SALES. Schedule 4.10 contains a correct and current
list of all of the current customers of Seller solely with respect to Seller's
"eSupport Essentials" product. The Customer Information included in the Acquired
Assets is all of the Customer Information Seller has in Seller's possession and
control in its CRM database.
4.11 INTELLECTUAL PROPERTY.
(a) Schedule 4.11(a) lists all Transferred Intellectual
Property Rights that are Registered Intellectual Property Rights. All such
Registered Intellectual Property Rights are currently in compliance with all
legal requirements (including payment of filing, examination and maintenance
fees and proofs of use), are valid and enforceable, and are not subject to any
unpaid maintenance fees or taxes or actions falling due within ninety (90) days
after the Closing Date. There are no proceedings or actions before any court,
tribunal (including the PTO or equivalent authority anywhere in the world)
related to any such Registered Intellectual Property Rights. Seller has not
claimed any status in the application for or registration of any Registered
Intellectual Property Rights, including "small business status," that would not
be applicable to Buyer.
(b) Each item of Transferred Intellectual Property Rights,
Transferred Technology and Third Party Technology embodied in the Products is
free and clear of any Liens. Seller owns exclusively, and has good and
marketable title to all works of authorship and all associated copyrights that
are used or embodied in, the Transferred Technology, and no other Person has any
other rights thereto. All Transferred Intellectual Property Rights and
Transferred Technology will be fully transferable, alienable or licensable by
Buyer without restriction and without payment or royalty of any kind to any
third party, except with respect to third-party development tools.
(c) To the extent that any Transferred Intellectual Property
Rights or item of Transferred Technology was originally owned or created by or
for any third party, including any predecessor of Seller: (i) Seller has a
written agreement with such third party or parties with respect thereto,
pursuant to which Seller has obtained complete, unencumbered and unrestricted
ownership and is the exclusive owner of, all such Transferred Technology and
Transferred Intellectual Property Rights by valid assignment or otherwise; (ii)
the transfers from Seller to Buyer hereunder do not violate such third party
agreements; (iii) such third parties have not retained and do not have any
rights or licenses with respect to the Transferred Intellectual Property Rights
or Transferred Technology; and (iv) no basis exists for such third party to
challenge or object to this Agreement.
(d) Seller has not transferred ownership of, or granted any
license of or right to use, or authorized the retention of any rights to use,
any Intellectual Property Right that is a Transferred Intellectual Property
Right to any other Person (other than Buyer), except for non-exclusive, end-user
licenses granted to customers in the ordinary course of business.
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(e) No government funding, facilities of a university,
college, other educational institution or research center or funding from third
parties was used in the development of the Transferred Technology. No current or
former employee, consultant or independent contractor of Seller, who was
involved in, or who contributed to, the creation or development of any
Transferred Technology, has performed services for the government, a university,
college, or other educational institution, or a research center, during a period
of time during which such employee, consultant or independent contractor was
also performing services for Seller.
(f) Seller has, and as a result of the transactions
contemplated hereby, Buyer will have, the right to use, pursuant to valid
licenses, all Software development tools, library functions, compilers and all
other third-party Software that are used to create, modify, compile, operate or
support any Software (including the Products) that is Transferred Technology or
is Third Party Technology that is legally transferable, except any of the
foregoing that are generally commercially available.
(g) Schedule 4.11(g) contains a true and correct list of
Technology of any third party or in the public domain, including open source,
public source or freeware Technology or any modification or derivative thereof,
including any version of any Software licensed pursuant to any university
agreement, GNU general public license or limited general public license that was
used in, incorporated into, integrated or bundled with any Technology that is or
was, incorporated in, or used in the development or compilation of any Product.
(h) Neither (x) the making, using, selling, licensing and
distribution of the Products, by either Seller or, following the Closing, by
Buyer, nor (y) the Acquired Assets (including the Transferred Technology), did,
do, or will: (i) infringe or misappropriate the Intellectual Property Rights of
any Person; (ii) violate the rights of any Person (including rights to privacy
or publicity); or (iii) constitute unfair competition or trade practices under
the laws of any jurisdiction. Seller has not received notice from any Person
claiming that the Acquired Assets infringe or misappropriate the Intellectual
Property Rights of any Person or constitute unfair competition or trade
practices under the laws of any jurisdiction (nor does Seller have knowledge of
any basis therefor).
(i) Other than with respect to the Transferred Contracts, no
licenses or other consents are required from any third party to permit Buyer to
fully exploit the Acquired Assets.
(j) There are no contracts, licenses or agreements between
Seller and any other Person with respect to the Acquired Assets, including the
Transferred Intellectual Property, under which there is any dispute or any
threatened dispute regarding the scope of such agreement or performance under
such agreement.
(k) To the knowledge of Seller, no Person is infringing or
misappropriating the Transferred Intellectual Property.
(l) Seller has taken all reasonable steps that are required to
protect Seller's rights in confidential information and trade secrets of Seller
associated with or related to the Acquired Assets.
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(m) No third party possesses any copy of, or has any rights to
(contingent or otherwise), any Source Code to any Software that is Transferred
Technology (including any Product) and Seller shall have delivered to Buyer all
copies, and Seller shall not have retained any copy, of any Source Code to any
Software that is Transferred Technology or Third Party Technology.
(n) None of the Software constituting the Products has been
incorporated into, or is otherwise a substantial part of, any other Software of
Seller, including Software previously owned by Seller.
(o) Seller has and enforces a policy requiring each employee
and consultant of Seller to execute a proprietary rights and confidentiality
agreement substantially in the form set forth in Schedule 4.11(o) and all
current and former employees and consultants of Seller who have created or
modified any of the Transferred Technology or Third Party Technology have
executed such an agreement assigning all of such employees' and consultants'
rights in and to the Transferred Technology, the Transferred Intellectual
Property and the Third Party Technology.
(p) No Acquired Asset is subject to any proceeding or
outstanding decree, order, judgment, agreement or stipulation that restricts in
any manner the use, transfer or licensing thereof or may affect the validity,
use or enforceability of the Acquired Assets.
(q) Seller is not required to make or accrue any royalty
payment to any third party in connection with any of the Acquired Assets or the
Transferred Intellectual Property.
(r) To the extent that Seller has distributed or licensed any
Product to an end user pursuant to any form of encryption key: (i) Seller has a
written agreement with each such end user requiring such end user to protect the
confidentiality of such key; (ii) Seller has delivered to Buyer a true and
complete list of all third parties who have had access to any such keys; (iii)
no third party has had access to any such keys, except pursuant to clause (i)
above; and (iv) at the Closing, Seller will deliver to Buyer any such keys and
the Technology to generate such keys and has not retained any such keys or such
Technology.
(s) Neither this Agreement nor the transactions contemplated
hereby, including the assignment to Buyer, by operation of law or otherwise, of
any Contracts to which Seller is a party, will result in: (i) Buyer granting to
any third party any right to or with respect to any Technology or Intellectual
Property Right transferred or licensed to Buyer hereunder; (ii) Buyer being
bound by, or subject to, any non-compete or other restriction on the operation
or scope of its businesses; or (iii) only with respect to the Acquired Assets
actually transferred to Buyer, Buyer being obligated to pay any royalties or
other obligations to pay any amounts to any third party in excess of those
payable by Seller prior to the Closing.
(t) Seller has disclosed in writing to Buyer all information
relating to any problem or issue with respect to any of the Products which does,
or may reasonably be expected to, adversely affect the value, functionality or
fitness for the intended purpose of such Product in the good faith judgment of
Seller.
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(u) All of the Products (including products currently under
development by Seller) record, store, process, calculate and present calendar
dates falling on and after (and if applicable, spans of time including) January
1, 2000, and calculate any information dependent on or relating to such dates in
the same manner, and with the same functionality, data integrity and
performance, as the products recorded, stored, processed, calculated and
presented calendar dates on or before December 31, 1999, or calculated any
information dependent on or relating to such dates (collectively, "Year 2000
Compliant"). None of the Products lost functionality with respect to the
introduction of records containing dates falling on or after January 1, 2000.
All of Seller's Information Technology (as defined below) is Year 2000
Compliant, and Seller experienced no interruption in its operations as a result
of the introduction of records containing dates falling on or after January 1,
2000. For purposes of this Agreement, the term "Information Technology" shall
mean and include all software, hardware, firmware, telecommunications systems,
network systems, embedded systems and other systems, components or services
(other than general utility services including gas, electric, telephone and
postal) that are owned or used by Seller in the conduct of its business, or
purchased by Seller from third party suppliers in the conduct of its business.
4.12 LITIGATION. There is no action, suit, claim, proceeding or
investigation of any nature pending or threatened relating to the Products, the
Acquired Assets or, to Seller's knowledge, any of Seller's employees, nor is
there any valid basis therefor. There is no investigation or other proceeding
pending or threatened relating to the Products, the Acquired Assets or, to
Seller's knowledge, any of Seller's employees by or before any Governmental
Entity, nor is there any valid basis therefor. No Governmental Entity has at any
time challenged or questioned the legal right of Seller to conduct its business
related to the Acquired Assets as presently or previously conducted. There are
no judgments, orders, decrees, citations, fines or penalties heretofore assessed
against Seller affecting the Products, the Acquired Assets or, to Seller's
knowledge, any of Seller's employees under any foreign, federal, state or local
law.
4.13 BROKERS' OR FINDERS' FEES. Seller has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby which will become a Liability of Buyer or
any of its Affiliates.
4.14 TAX MATTERS.
(a) DEFINITION OF TAXES. For the purposes of this Agreement,
the term "Tax" or, collectively, "Taxes" shall mean any and all federal, state,
local and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes as well as public imposts, fees and social security
charges (including but not limited to health, unemployment and pension
insurance), together with all interest, penalties and additions imposed with
respect to such amounts and any obligation under any agreement or arrangement
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
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(b) TAX RETURNS AND AUDITS.
(i) To the extent relevant to the Acquired Assets, as
of the Closing Date, Seller will have prepared and timely filed all required
federal, state, local and foreign returns, estimates, information statements and
reports ("Returns") relating to any and all Taxes concerning or attributable to
Seller or its operations and such Returns are or will be true and correct and
have been or will be completed in accordance with applicable law.
(ii) To the extent failure to do so would adversely
impact Buyer, the Acquired Assets or Buyer's use of the Acquired Assets, as of
the Closing Date, Seller (A) will have paid all Taxes it is required to pay and
(B) will have withheld with respect to its employees all federal, state and
foreign income taxes and social security charges and similar fees, Federal
Insurance Contribution Act, Federal Unemployment Tax Act and other Taxes
required to be withheld.
(iii) To the extent failure to do so would adversely
impact Buyer, the Acquired Assets or Buyer's use of the Acquired Assets, Seller
has not been delinquent in the payment of any Tax, nor is there any Tax
deficiency outstanding, assessed or proposed against Seller, nor has Seller
executed any waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
(iv) To the extent relevant to the Acquired Assets,
no audit or other examination of any Return of Seller is presently in progress,
nor has Seller been notified of any request for such an audit or other
examination.
(v) Seller does not have and knows of no basis for
the assertion of any claim for any liabilities for unpaid Taxes (other than
sales or transfer taxes related to the Asset Sale) for which Buyer would become
liable as a result of the transactions contemplated by this Agreement.
(vi) There are (and immediately following the Closing
there will be) no Liens on the Acquired Assets relating to or attributable to
Taxes (other than sales or transfer taxes related to the Asset Sale). (vii)
Seller knows of no basis for the assertion of any claim relating or attributable
to Taxes which, if adversely determined, would result in any Lien on the
Acquired Assets.
4.15 POWER OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of Seller in respect of the Products or the Acquired Assets
except as granted to Buyer hereunder.
4.16 AFFILIATED TRANSACTIONS. No Affiliates of Seller, including,
without limitation, any subsidiaries of Seller, own any of the Acquired Assets.
4.17 COMPLIANCE WITH LAWS. Seller has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
foreign, federal, state or local statute, law or regulation applicable to the
Products, the Acquired Assets or respecting employment, employment practices,
terms and conditions of employment and wages and hours.
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4.18 PRODUCT WARRANTIES. Each Product manufactured, sold, leased,
licensed or delivered by Seller has been done so in conformity with all
applicable contractual commitments and all express and implied warranties, and
Seller has no liability (and there is no basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand
against Seller giving rise to any liability) for replacement or repair thereof
or other damages in connection therewith. No product manufactured, sold, leased,
distributed, licensed or delivered by Seller is subject to any guaranty,
warranty, or other indemnity beyond Seller's applicable standard terms and
conditions of sale or lease or beyond that implied or imposed by applicable law.
Schedule 4.18 includes copies of the standard terms and conditions of license
for Seller.
4.19 COMPLETE COPIES OF MATERIALS. Seller has delivered or made
available true and complete copies of each existing document related to the
Products and the Acquired Assets (or summaries of the same) that has been
requested by Buyer or its counsel.
4.20 BULK TRANSFER LAWS. Seller represents that there are no current or
past creditors of Seller to whom any law, rule or regulation requires the
delivery of notice or from whom any form of consent is required in conjunction
with undertaking the transactions contemplated by this Agreement.
4.21 EXCLUDED LIABILITIES. Buyer shall not be liable to any Person for
any of the Excluded Liabilities hereunder.
4.22 ACQUIRED ASSETS. The Transferred Intellectual Property Rights, the
Transferred Technology and Third Party Technology together constitute all
Intellectual Property Rights and Technology used by Seller in the development,
licensing, distribution and commercialization of the Products and the Acquired
Assets, except for Intellectual Property Rights or Technology set forth on
Schedule 4.22 which is not legally transferred to Buyer without the consent of
the Person who owns such Intellectual Property or Technology.
4.23 WARN ACT. To the extent applicable, Seller has complied with the
WARN Act and all other applicable laws in connection with any reductions in
force or other terminations of its employees.
4.24 SEC FILINGS; SELLER FINANCIAL STATEMENTS.
(a) Seller has filed with the SEC all forms, reports and
documents required to be filed by Seller with the SEC since September 30, 2000,
and Seller has made available to Buyer such forms, reports and documents in the
form filed with the SEC. All such required forms, reports and documents
(including those that Seller may file subsequent to the date hereof) are
referred to herein as the "Seller SEC Reports." As of their respective dates,
the Seller SEC Reports (i) were prepared in accordance and complied in all
material respects with the requirements of the Securities Act, or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Seller SEC Reports and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
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material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Seller's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Seller SEC Reports
(the "Seller Financials"), including each Seller SEC Report filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act) and (iii) fairly presented the consolidated
financial position of Seller and its subsidiaries as at the respective dates
thereof and the consolidated results of Seller's operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
may not contain footnotes and were or are subject to normal and recurring
year-end adjustments. The balance sheet of Seller contained in Seller's Annual
Report on Form 10-K for the fiscal year ended September 30, 2001, is hereinafter
referred to as the "Seller Balance Sheet." Except as disclosed in the Seller
Financials, since the date of the Seller Balance Sheet neither Seller nor any of
its subsidiaries has any liabilities required under GAAP to be set forth on a
balance sheet (absolute, accrued, contingent or otherwise) which are,
individually or in the aggregate, material to the Acquired Assets of Seller
taken as a whole, except for liabilities incurred since the date of the Seller
Balance Sheet in the ordinary course of business consistent with past practices.
4.25 REPRESENTATIONS COMPLETE. None of the representations or
warranties made by Seller (as modified by the Seller Disclosure Schedule), nor
any statement made in any Schedule or certificate furnished by Seller pursuant
to this Agreement contains or will contain at the Closing, any untrue statement
of a material fact, or knowingly omits or knowingly will omit at the Closing to
state any material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances under which made, not
misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER AND SUB
------------------------------------------------
Except as specifically disclosed in the disclosure schedule attached
hereto as Exhibit E (the "Sub Disclosure Schedule"), Seller and Sub, jointly and
severally, represent and warrant to Buyer as of the date of this Agreement and
as of the Closing Date, as though made as of the Closing Date, as follows:
5.1 ORGANIZATION. Sub is a corporation duly organized, validly existing
and in good standing under the laws of the Republic of Estonia. Sub has all
requisite power and authority (corporate and governmental) to own, operate and
lease its properties and to carry on its business currently conducted. Sub is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which Sub is required to be so licensed or qualified. Seller has
delivered a true and correct copy of its certificate of incorporation and
bylaws, each as amended to date and in full force and effect on the date hereof,
to Buyer.
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5.2 AUTHORITY. Sub has all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Sub. No other corporate actions or proceedings
on the part of Sub are necessary to authorize this Agreement or to consummate
the transactions so contemplated hereby. This Agreement has been duly executed
and delivered by Sub and constitutes the valid and binding obligation of Sub,
enforceable against Sub in accordance with its terms, except as such
enforceability may be subject to the laws of general application relating to
bankruptcy, insolvency, and the relief of debtors and rules of law governing
specific performance, injunctive relief, or other equitable remedies.
5.3 CAPITAL STOCK OF SUB. Seller owns the sole share of the issued and
outstanding capital stock of Sub free and clear of any security interest, claim,
lien, pledge, option or encumbrance whatsoever. The authorized, issued and
outstanding capital stock of all classes of Sub are set forth on Schedule 5.3.
All of the outstanding capital stock of Sub has been duly authorized and is
validly issued, fully paid and nonassessable. All outstanding shares of capital
stock of Sub were issued in compliance with applicable laws. Seller has, and on
the Closing Date will, pursuant to the Share Purchase Agreement convey to Buyer,
good title to the Stock, free and clear of any security interest, claim, lien,
pledge, option, or encumbrance whatsoever or any restrictions except for
restrictions under applicable securities laws. There are no rights,
subscriptions, warrants, options, conversion rights, commitments or agreements
of any kind authorized or outstanding to purchase or otherwise acquire from
Seller or Sub (or any other person), any shares of stock, or securities or
obligations of any kind convertible into or exchangeable for any shares of
stock, of any class of Sub or any other equity interest in Sub. There is no
proxy, or any agreement, arrangement or understanding of any kind authorized or
outstanding which restricts, limits or otherwise affects the right to vote any
share of Stock or any share of capital stock issued by Sub.
5.4 NO CONFLICTS. The execution and delivery by Sub of this Agreement
and any other agreement or document contemplated herein and the consummation by
Sub of the transactions contemplated hereby will not conflict with, or result in
any violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a Conflict under (i) any provision of Sub's certificate
of incorporation and bylaws, (ii) any Contract to which Sub is subject, or (iii)
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Sub.
5.5 CONSENTS. Except for the filing of a copy of the Share Purchase
Agreement with the Commercial Register of Tallinn, Estonia, no consent, waiver,
approval, order or authorization of, or registration, declaration or filing with
any Governmental Entity or any third party, including a party to any agreement
with Sub (so as not to trigger any Conflict), is required by or with respect to
Sub in connection with the execution and delivery by Sub of this Agreement or
the consummation of the transactions contemplated hereby.
5.6 FINANCIAL STATEMENTS. Schedule 5.6 sets forth the audited financial
statements (balance sheet, income statement and statement of cash flows,
including all notes thereto) of Sub as of and for the period ended December 31,
2001 (the "Financial Statements"). The Financial Statements: (i) are complete
and correct in all material respects; (ii) present fairly the financial
condition and operating results of Sub as of such dates, and for the periods,
indicated therein; and (iii) are prepared in accordance with the books and
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records maintained by Seller and Sub in all material respects. Except as set
forth in the Financial Statements, Sub has no liabilities, commitments or
obligations of any nature, other than such liabilities, commitments and
obligations which have arisen in the ordinary course of Sub's business and are
consistent with past practices, whether absolute, accrued, contingent or
otherwise, which are not shown and adequately provided for in the Financial
Statements. Neither Seller nor Sub is a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation with respect to Sub. Sub
maintains a standard system of accounting policies and records.
5.7 NO ADVERSE CHANGES. Since December 31, 2001, the business of Sub
has been conducted only in the ordinary course, except for the transactions
contemplated by this Agreement. Since December 31, 2001, and that certain
Services Agreement, dated as of June 24, 2002, between Seller and Buyer, there
has not been: (i) any change in the assets, liabilities or business operations
of Sub from that reflected in the Financial Statements, except changes in the
ordinary course of business, none of which singly and no combination of which,
in the aggregate, has been materially adverse to the assets or business
operations of Sub; (ii) any damage, destruction or loss or other occurrence or
development, whether or not insured against, which, either singly or in the
aggregate, materially adversely affects, and to the best of each of Seller's and
Sub's knowledge, there is not any threatened occurrence or development which
would materially adversely affect, the assets, liabilities or business
operations of Sub; (iii) any waiver or compromise by Seller or Sub of any debt
owed to Sub; (iv) any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind whatsoever with respect to any assets or properties of
Sub, except for liens for Taxes not yet due or payable by Sub; (v) any
satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by Sub, except in the ordinary course of business, none of which
singly and no combination of which, in the aggregate, has been materially
adverse to the assets, liabilities or business operations of Sub; (vi) any
material change to a material contract or arrangement by which Sub or any of its
assets is bound or subject; (vii) any material change in any compensation
arrangement or agreement with any employee, officer, director or stockholder of
Sub; (viii) any sale, assignment, or transfer of any Intellectual Property
Rights of Sub; (ix) any resignation or termination of any executive officers of
Sub; (x) any loans or guarantees made by Seller or Sub to or for the benefit of
any of Sub's employees, officers, directors or stockholders, or any members of
their immediate families, other than travel advances made in the ordinary
course; (xi) any declaration or payment of any dividend or other distribution of
Sub's assets in respect of any of Sub's capital stock, or any direct or indirect
redemption, purchase or other acquisition of any such stock by Sub; (xii) to the
best of each of Seller's and Sub's knowledge, any other event or condition of
any character that would materially and adversely affect the assets, liabilities
or business operations of Sub; (xiii) any change of Seller or Sub's accounting
methods or principles used in preparing the Financial Statements; or (xiv)
entered into any contract or commitment to do any of the foregoing.
5.8 TAX RETURNS AND AUDITS.
(a) As of the Closing Date, Seller and Sub will have prepared
and timely filed all required Returns relating to any and all Taxes concerning
or attributable to Sub. Sub's Returns have been completed and filed when due in
accordance with all applicable law, and all Taxes shown due on such Returns have
been paid in full.
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(b) As of the Closing Date, Seller or Sub (i) will have paid
all required Taxes with respect to Sub and (ii) will have withheld with respect
to its employees all income taxes and charges and similar fees, and other Taxes
required to be withheld by applicable law.
(c) Neither Seller nor Sub has been delinquent in the payment
of any Tax with respect to Sub, nor is there any Tax deficiency outstanding,
assessed or proposed against Sub, nor has Seller or Sub executed any waiver of
any statute of limitations on or extending the period for the assessment or
collection of any Tax with respect to Sub.
(d) No audit or other examination of any Return of Sub is
presently in progress, nor has Seller or Sub been notified of any request for
such an audit or other examination.
(e) Neither Seller nor Sub has or knows of any basis for the
assertion of any claim for any liabilities for unpaid Taxes with respect to Sub
for which Buyer would become liable as a result of the transactions contemplated
by this Agreement.
(f) There are (and immediately following the Closing there
will be) no Liens on any of Sub's assets relating to or attributable to Taxes,
and neither Seller nor Sub knows of any basis for the assertion of any claim
relating or attributable to Taxes which, if adversely determined, would result
in any Lien on the assets of Sub.
5.9 TITLE TO ASSETS. Sub has valid title to all of its personal
property and valid leasehold interests in all real and personal property leased
by it, free and clear of all claims, liens, charges, mortgages, pledges,
security interests, restrictions and other encumbrances of any kind whatsoever,
excluding: (i) any such liens relating to carriers, warehousemen, real property
lessors, mechanics, materialmen, and similar persons, affecting leased real
property, or arising as a matter of law; (ii) defects, zoning restrictions,
restrictions on use, irregularities, encumbrances or clouds on title of real
property, which do not materially impair the property affected thereby for the
purpose for which it was acquired or leased; and (iii) any mortgages, pledges,
security interests, restrictions and other encumbrances caused by parties other
than Seller or Sub relating to any leased real property, which, in the
aggregate, do not materially affect the use and enjoyment of such leased real
property by Sub. No instrument, easement, license or grant of record, applicable
zoning or building law, ordinance or administrative regulation or other
impediment of any kind prohibits or interferes with, limits or impairs, or
would, if not permitted by any prior nonconforming use, prohibit or interfere
with or limit or impair, the use, operation, maintenance of, or access to, or
the value of, the real or personal property owned or leased by Sub as presently
used, operated, maintained and accessed by Sub to carry on its business as
presently conducted. All of the assets and properties owned or leased by Sub are
(i) sufficient and adequate to carry on their business as presently conducted;
(ii) are in as good condition and repair as necessary to carry on their business
as presently conducted, normal wear and tear excepted, and are in a state of
maintenance, repair and operating condition required for the proper operation
and use thereof as necessary to carry on their business as presently conducted;
and (iii) comply with all applicable laws, ordinances, rules and regulations and
with the terms and conditions of all leases and other agreements affecting or
relating to any such property.
5.10 REAL PROPERTY. Sub owns no real property. Schedule 5.10 sets forth
a true and complete list of all leases of real property to which Sub is a party.
Sub enjoys quiet possession under all of its leases of real property, each of
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which is enforceable in accordance with its terms against the lessor thereunder
and Sub is not in default under the terms of any of such leases; and no
condition exists and no event has occurred which, with or without the passage of
time or the giving of notice or both, could constitute such a default.
5.11 PERSONAL PROPERTY. Schedule 5.11 sets forth a true and complete
list of all items of personal property, owned or leased by Sub and the location
of each such item.
5.12 CONTRACTS.
(a) Except as disclosed in Schedule 5.12, Sub is not a party
to or bound by any oral or written contracts, obligations or commitments with
respect to Sub (the "Sub Contracts").
(b) Seller and Sub have made available to Buyer correct and
complete copies of all of the Sub Contracts and all amendments thereto and any
waivers granted thereunder. The Stock Sale and the consummation of the other
transactions contemplated by this Agreement are not a violation of or grounds
for the modification or cancellation of any of the Sub Contracts or for the
imposition of any penalty or security interests thereunder. No unresolved
disputes are pending or threatened under or in respect of any of the Sub
Contracts.
(c) All of the Sub Contracts are valid and enforceable in
accordance with their respective terms, except as the enforcement thereof may be
subject to or limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally now or
hereafter in effect and subject to the application of equitable principles and
the availability of equitable remedies; and there is not, under any of such
documents or agreements or any obligation, or covenant or condition contained
therein, any existing default by Seller or Sub, or to Seller or Sub's knowledge
by any other party, or any event which with notice, lapse of time, or both,
would constitute a default.
5.13 INTELLECTUAL PROPERTY.
(a) Schedule 5.13 contains a complete and accurate list (by
name and version number) of all products, Software or service offerings of Sub,
other than the Products (collectively, "Sub Products").
(b) Schedule 5.13 lists all Registered Intellectual Property
Rights owned by, filed in the name of, or applied for, by Sub (the "Sub
Registered Intellectual Property") and lists any proceedings or actions before
any court, tribunal (including the PTO) or equivalent authority anywhere in the
world) related to any of the Sub Registered Intellectual Property or Sub
Intellectual Property Rights.
(c) All Sub Registered Intellectual Property is currently in
compliance with all legal requirements (including payment of filing, examination
and maintenance fees and proofs of use), are valid and enforceable, and not
subject to any unpaid maintenance fees or taxes or actions falling due within
ninety (90) days after the Closing Date. There are no proceedings or actions
before any court, tribunal (including the PTO or equivalent authority anywhere
in the world) related to any such Sub Registered Intellectual Property. Sub has
not claimed any status in the any status in the application for or registration
of any Sub Registered Intellectual Property, including "small business status,"
that would not be applicable to Buyer
-26-
(d) In each case in which Sub has acquired ownership of any
Intellectual Property from any Person, Sub has obtained a valid and enforceable
assignment sufficient to irrevocably transfer all rights in and to such
Intellectual Property (including the right to seek past and future damages with
respect thereto) to Sub. To the maximum extent provided for by, and in
accordance with, applicable laws and regulations, Sub has recorded each such
assignment of a Sub Registered Intellectual Property Right assigned to Sub with
the relevant governmental entity.
(e) Sub has no knowledge of any facts or circumstances that
would render any Sub Intellectual Property invalid or unenforceable.
(f) All Sub Intellectual Property will be fully transferable,
alienable or licensable by Buyer without restriction and without payment of any
kind to any third party.
(g) Each item of Sub Intellectual Property is free and clear
of any liens or encumbrances, except for non-exclusive licenses granted to
end-user customers in the ordinary course of business. Sub is the exclusive
owner or exclusive licensee of all Sub Intellectual Property. Without limiting
the generality of the foregoing, (i) Sub is the exclusive owner of all
trademarks and trade names used in connection with the operation or conduct of
the business of Sub and its subsidiaries, including the sale, distribution or
provision of any Sub Products by Sub or any of its subsidiaries, (ii) Sub owns
exclusively, and has good title to, all copyrighted works that are included or
incorporated into Sub Products or which Sub or any of its subsidiaries otherwise
purports to own, and (iii) to the extent that any Patents would be infringed by
any Sub Products, Sub is the exclusive owner of such Patents.
(h) Sub has not (i) transferred ownership of, or granted any
exclusive license of or right to use, or authorized the retention of any
exclusive rights to use or joint ownership of, any Intellectual Property that is
Sub Intellectual Property, to any other Person (other than Buyer), or (ii)
permitted Sub's rights in such Sub Intellectual Property to lapse or enter the
public domain.
(i) All Intellectual Property used in or necessary to the
conduct of Sub's business as presently conducted or currently contemplated to be
conducted by Sub was written and created solely by either (i) employees of Sub
acting within the scope of their employment who have validly and irrevocably
assigned all of their rights, including all Intellectual Property rights
therein, to Sub or Seller or (ii) by third parties who have validly and
irrevocably assigned all of their rights, including all Intellectual Property
rights therein, to Sub or Seller, and no third party owns or has any rights to
any Sub Intellectual Property.
(j) To the extent that any Intellectual Property has been
developed or created by a third party for Sub or any of its subsidiaries or is
incorporated into any of Sub Products, Sub has a written agreement with such
third party with respect thereto and Sub thereby either (i) has obtained
ownership of, and is the exclusive owner of, or (ii) has obtained a perpetual,
non-terminable license (sufficient for the conduct of its business as currently
conducted) to all such third party's Intellectual Property in, such work,
material or invention by operation of law or by valid assignment, to the fullest
extent it is legally possible to do so.
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(k) Sub Intellectual Property and the Acquired Assets
constitutes all the Intellectual Property used in or necessary to the conduct of
the business of Sub as it currently is conducted, including, without limitation,
the design, development, manufacture, use, import and sale of Sub Products.
(l) No Person who has licensed any Intellectual Property to
Sub has ownership rights or license rights to improvements made by or for Sub in
such Intellectual Property.
(m) Sub has the right to use, pursuant to valid licenses, all
Software development tools, library functions, compilers and all other
third-party Software that are used in the operation of Sub or that are required
to create, modify, compile, operate or support any Software that is Sub
Intellectual Property or is incorporated into any Sub Product, except any of the
foregoing that are generally commercially available. Without limiting the
foregoing, no open source or public library Software, including any version of
any Software licensed pursuant to any GNU public license, was used in the
development or modification of any Software that is or was Sub Intellectual
Property or is incorporated into any Sub Product.
(n) No government funding, facilities of a university,
college, other educational institution or research center or funding from third
parties was used in the development of any Sub Intellectual Property. No current
or former employee, consultant or independent contractor of Company, who was
involved in, or who contributed to, the creation or development of any Sub
Intellectual Property, has performed services for the government, university,
college, or other educational institution or research center during a period of
time during which such employee, consultant or independent contractor was also
performing services for Company.
(o) The making, using, selling, licensing and distribution of
the Sub Products, by either Sub or, following the Closing, by Buyer, did not,
does not, or will not: (i) infringe or misappropriate the Intellectual Property
Rights of any Person; (ii) violate the rights of any Person (including rights to
privacy or publicity); or (iii) constitute unfair competition or trade practices
under the laws of any jurisdiction. Sub has not received notice from any Person
claiming that the Sub Products infringe or misappropriate the Intellectual
Property Rights of any Person or constitute unfair competition or trade
practices under the laws of any jurisdiction (nor does Sub have knowledge of any
basis therefor).
(p) No Sub Intellectual Property, Sub Product or service of
Sub is subject to any proceeding or outstanding decree, order, judgment or
settlement agreement or stipulation that restricts in any manner the use,
transfer or licensing thereof by Sub or may affect the validity, use or
enforceability of such Sub Intellectual Property.
(q) Other than inbound "shrink-wrap" and similar publicly
available commercial binary code end-user licenses and outbound "shrink-wrap"
licenses in the form set forth on Schedule 5.13, the contracts, licenses and
agreements listed in Schedule 5.13 lists all contracts, licenses and agreements
to which Sub is a party with respect to any Intellectual Property. All such
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contracts are in full force and effect. Sub is not in breach of nor has Sub
failed to perform under, any of the foregoing contracts, licenses or agreements
and, to Sub's knowledge, no other party to any such contract, license or
agreement is in breach thereof or has failed to perform thereunder. The
consummation of the transactions contemplated by this Agreement will neither
violate nor result in the breach, modification, cancellation, termination or
suspension of such contracts, licenses and agreements. Following the Closing
Date, Buyer will be permitted to exercise all of Sub's rights under such
contracts, licenses and agreements to the same extent Seller would have been
able to had the transactions contemplated by this Agreement not occurred and
without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which Sub would otherwise be required to
pay, except to the extent in each case the consent of any third party is
required for the transfer of such contracts, licenses and agreements to Buyer as
a result of the transfer of the Stock from Seller to Buyer.
(r) Schedule 5.13 lists all material contracts, licenses and
agreements between Sub and any other Person wherein or whereby Sub has agreed
to, or assumed, any obligation or duty to warrant, indemnify, reimburse, hold
harmless, guaranty or otherwise assume or incur any obligation or liability or
provide a right of rescission with respect to the infringement or
misappropriation by Sub or such other person of the Intellectual Property Rights
of any Person other than Sub.
(s) To the knowledge of Sub, there are no contracts, licenses
or agreements between Sub and any other Person with respect to Sub Intellectual
Property under which there is any dispute regarding the scope of such agreement,
or performance under such agreement, including with respect to any payments to
be made or received by Sub thereunder.
(t) To Sub's knowledge, no Person is infringing or
misappropriating any Sub Intellectual Property.
(u) Sub has taken all steps that are reasonably required to
protect Sub's rights in confidential information and trade secrets of Sub or
provided by any other person to Sub. Without limiting the foregoing, Sub has and
enforces a policy requiring each employee and consultant of Sub to execute a
proprietary rights and confidentiality agreement substantially in the form set
forth in Schedule 5.13 and all current and former employees and consultants of
Sub who have created or modified any of Sub Intellectual Property have executed
such an agreement assigning all of such employees' and consultants' rights in
and to Sub Intellectual Property to the Seller.
(v) Neither this Agreement nor the transactions contemplated
by this Agreement, will result in (i) Sub's granting to any third party any
right to or with respect to any Intellectual Property owned by, or licensed to,
Sub, (ii) Sub's being bound by, or subject to, any non-compete or other
restriction on the operation or scope of their respective businesses, or (iii)
Sub's being obligated to pay any royalties or other amounts to any third party
in excess of those payable by Sub prior to the Closing.
(w) All of Sub's Products (including products currently under
development): (i) are Year 2000 Compliant; and (ii) will lose no functionality
with respect to the introduction of records containing dates falling on or after
January 1, 2000.
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5.14 INSURANCE. Schedule 5.14 contains a complete and correct list of
all insurance policies maintained by Seller and Sub with respect to Sub,
together with a schedule of required premiums, premium payment dates and any
prepaid premiums under each such policy. Seller and Sub have made available to
Buyer complete and correct copies of all such policies together with all riders
and amendments thereto. Such policies are in full force and effect, and all
premiums due thereon have been paid. Seller and Sub have complied in all
material respects with the provisions of such policies. No notice has been
received canceling or threatening to cancel or refusing to renew any of such
insurance. The rights of the insured under such policies will not be terminated
or adversely affected by the Closing or the consummation of the other
transactions contemplated hereby. There is currently no basis for any insurance
claim by Seller or Sub.
5.15 EMPLOYEE MATTERS.
(a) Schedule 5.15 contains (i) a list of all employees of Sub
and (ii) a true and complete list of all remuneration payable and other benefits
provided which Seller or Sub is bound to provide (whether at present or in the
future) to each such employee, or any person connected with any such employee,
and includes, if any, particulars of all profit sharing, incentive and bonus
arrangements to which Seller is a party, whether legally binding or not.
(b) Schedule 5.15 contains an accurate and complete list of
each Employee Plan and each Employee Contract under each Employee Plan or
Employee Contract of Sub. Sub has made available to Buyer correct and complete
copies of all documents embodying each Employee Plan and each Employee Contract
of Sub including, without limitation, all amendments thereto and all related
trust documents.
(c) Sub has never maintained, established, sponsored,
participated in, or contributed to, any (i) "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA subject to Part 3 of Subtitle B of
Title I of ERISA, Title IV of ERISA or Section 412 of the Code, or (ii)
"multiemployer plan" within the meaning of Section (3)(37) of ERISA, in either
case for the benefit of any employees of Sub.
(d) None of Sub's employees has received a pension grant or
any other kind of voluntary pension benefit.
(e) None of Sub's employees has given or received notice of
termination and Sub has not given notice of any reduction to any employee of Sub
or Governmental Entity or started consultations with any trade union pursuant to
any statute or regulation.
(f) No collective bargaining agreement exists that is binding
on Sub with respect to its employees, and to Sub's knowledge, no petition has
been filed or proceeding instituted, or any action taken in contemplation of any
such filing or institution, by an employee or group of employees of Sub, with
the National Labor Relations Board seeking recognition of a bargaining
representative.
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(g) There is no labor strike, dispute, slow down or stoppage
pending or threatened against Sub by its employees, and Sub has received no
demand letters, civil rights charges, suits or drafts of suits with respect to
claims made by any of its employees.
(h) All individuals who are or were performing consulting or
other services for Sub are or were correctly classified by Sub as either
"independent contractors" or "employees," as the case may be, and, at the
Closing Date, will qualify for such classification.
(i) With respect to each of its employees, Sub has provided
Buyer with true and correct information concerning the annual salary or wages,
as well as any incentives or bonus arrangement, with respect to such person.
Except as contemplated by this Agreement, to the knowledge of Seller and Sub, no
such person will or may cease to be engaged by Sub for any reason, including
because of the consummation of the transactions contemplated by this Agreement.
(j) Sub is in compliance with all applicable material laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to its
employees.
(k) Sub has withheld and reported all amounts required by law
or by agreement to be withheld and reported with respect to wages, salaries and
other payments to its employees.
(l) There are no pending or, to the knowledge of Sub,
threatened claims or actions by any employee of Sub against Seller under any
worker's compensation policy or long-term disability policy.
(m) To the knowledge of Sub, none of its employees is
obligated under any Contract or subject to any judgment, decree or order of any
court or administrative agency that would interfere with such employee's efforts
to promote the interests of Sub or that would interfere with Sub's business or
operations. To the knowledge of Sub, neither the execution nor delivery of this
Agreement, nor the carrying on of the business of Sub as presently conducted nor
any activity of Sub's employees in connection with the carrying on of such
business as presently conducted, will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any Contract
under which any of such employees is now bound.
5.16 LITIGATION; COMPLIANCE; PERMITS.
(a) Except as disclosed in Schedule 5.16, there are no
actions, suits, proceedings, arbitrations or governmental investigations pending
or threatened against, by or affecting Sub, or which will prevent, hinder or
delay the execution and performance of this Agreement or any of the transactions
contemplated hereby, or could declare this Agreement unlawful or cause the
rescission of any of the transactions hereunder, or require Buyer to divest
itself of the Stock; nor has any such suit been pending within the two (2) years
prior to the date hereof. Sub has not been charged with or received notice of
any violation of any applicable law, rule, regulation, ordinance, order or
decree relating to it, or the operation of its business, nor is there any
threatened claim of such violation (including any investigation) or any basis
therefor.
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(b) Sub has complied and is in compliance with, all laws,
rules, regulations, ordinances, orders, judgments, decrees, writs, injunctions,
building codes, safety, fire and health approvals, certificates of occupancy or
other governmental restrictions applicable to Sub, its assets, employees and
employment practices.
(c) Sub has all material governmental licenses, permits,
approvals or other authorizations required for the conduct of their business as
now conducted, all of which are in full force and effect; there is no action
pending or threatened, to terminate any rights under any such governmental
licenses, permits or authorizations; none of such licenses, permits, approvals
and authorizations will be materially adversely affected by the Stock Sale or
the consummation of the other transactions contemplated by this Agreement.
5.17 ENVIRONMENTAL COMPLIANCE. Sub is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety and no material expenditures are required to
comply with any such existing statute, law or regulation.
5.18 CORPORATE RECORDS. An extract from the Commercial Register of
Tallinn, Estonia, certified by the registry secretary of the Commercial Register
of Tallinn, Estonia and a copy of the bylaws of Sub, as amended to date,
certified by the registry secretary of the Commercial Register of Tallinn,
Estonia, all under a date not more than five (5) days prior to the Closing Date
which have been delivered to Buyer are complete and correct, and the minute
books of Sub correctly reflect all material corporate actions taken at all
meetings of directors (including committees thereof) and stockholders, and
correctly record all resolutions certified copies of which have been delivered
to Buyer. The stock ledger is complete and correct and correctly reflect all
issuances and transfers of the capital stock of Sub.
5.19 BANK ACCOUNTS; POWER OF ATTORNEY. Schedule 5.19 correctly sets
forth: (i) a list of all banks in which Sub has an account or safety deposit
box, account number, purpose of such account or safety deposit box and the names
of all persons authorized to draw thereon or have access thereto; and (ii) the
names of all persons holding powers of attorney from Sub and a description of
the power of attorney.
5.20 WARRANTIES. During the past three (3) years Sub has not given any
written warranties with respect to any of their respective products or services.
Schedule 5.20 sets forth a description of all claims concerning product
liability or arising from services provided which have been made against Sub
during the past three (3) years.
5.21 FOREIGN CORRUPT PRACTICES. To the knowledge of Seller and Sub,
neither Seller nor Sub has made, offered or agreed to offer anything of value to
any government official, political party or candidate for government office nor
has it taken any action which would cause the Seller or Sub to be in violation
of any law of any foreign jurisdiction or the United States, including the
Foreign Corrupt Practices Act of 1977.
5.22 COMPLETE COPIES. Seller or Sub has delivered or made available
true and complete copies of each existing document of Sub that Buyer, or its
counsel, has requested in writing.
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5.23 DISCLOSURE. None of the representations or warranties made by
Seller or Sub in this ARTICLE 5 (as modified by the Sub Disclosure Schedule),
nor any written statement or certificate furnished or to be furnished at or
before the Closing by or on behalf of Seller or Sub with respect to Sub to Buyer
or its agents pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which made, not misleading.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller as of the date of this
Agreement and as of the Closing Date, as though made as of the Closing Date, as
follows:
6.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of Delaware.
6.2 AUTHORITY. Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitute the valid and binding obligations of Buyer,
enforceable in accordance with their terms, except as such enforceability may be
limited by principles of public policy and subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
6.3 NO CONFLICT. Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will not conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a Conflict under (i) any provision of
the certificate of incorporation, as amended, and bylaws of Buyer, (ii) any
Contract to which Buyer or any of its respective properties or assets are
subject and which has been filed as an exhibit to Buyer's filings under the
Securities Act or the Exchange Act, or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Buyer or its
properties or assets, except in each case where such Conflict will not have a
material adverse effect on Buyer or will not affect the legality, validity or
enforceability of this Agreement or the ability of Buyer to perform its
obligations hereunder.
6.4 CONSENTS. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity, or any
third party is required by or with respect to Buyer in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby and thereby, except for such consents, waivers, approvals,
orders, authorizations, registrations, declarations and filings which, if not
obtained or made, would not have a material adverse effect on Buyer.
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6.5 BROKERS' AND FINDERS' FEES. Buyer has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
6.6 PURCHASE PRICE. Buyer has, and at the Closing will have, adequate
immediately available funds to pay the Purchase Price on the Closing Date.
ARTICLE 7
COVENANTS AND AGREEMENTS
------------------------
7.1 ACCESS. During the period commencing on the date of this Agreement
and continuing through the Closing Date (the "Pre-Closing Period"), Seller and
Sub will (i) afford Buyer, its counsel and its accountants at all reasonable
times during normal business hours (A) full and free access to Sub's personnel,
properties, Contracts, books and records, and other documents and data and (B)
the right to make copies and extracts therefrom, and (ii) furnish Buyer, its
counsel and its accountants with such additional financial, operating, and other
data and information with respect to Sub as Buyer may reasonably request in
writing. During the Pre-Closing Period, Seller, upon reasonable prior written
notice from Buyer to Seller, will (a) afford to Buyer and its representatives,
at all reasonable times during normal business hours, full and complete access
to Seller's personnel, professional advisors, properties, the Transferred
Contracts, Customer and Sales Records, and other documents and data (including
access to all source code related to the Products), (b) furnish Buyer and its
representatives with copies of all such Contracts, Customer and Sales Records,
and other existing documents and data as Buyer may reasonably request in
writing, and (c) furnish Buyer and its representatives with such additional
financial (including Tax Returns and supporting documentation), operating, and
other data and information as Buyer may reasonably request in writing, in the
case of (a) through (c) above primarily relating to the Products and the
Acquired Assets. No information or knowledge obtained in any investigation
pursuant to this Section 7.1 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties hereto to consummate the transactions contemplated hereby.
7.2 OPERATION OF THE BUSINESSES.
(a) During the Pre-Closing Period, except as set forth in
Section 7.2(a) of the Seller Disclosure Schedule, unless otherwise agreed in
writing by Buyer, Seller will:
(i) pay the debts and Taxes related to the Acquired
Assets when due;
(ii) pay or perform other obligations related to the
Acquired Assets when due;
(iii) confer with Buyer concerning any matters, other
than matters related to the Dissolution, relating to the Products and Acquired
Assets of a significant nature; and
(iv) use commercially reasonable, good faith efforts
to maintain all of the Acquired Assets in their current condition, ordinary wear
and tear excepted and, in the event of any damage to or destruction of any of
the Acquired Assets prior to the Closing Date, promptly replace, repair or
restore such Acquired Assets.
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(b) During the Pre-Closing Period, except as set forth in
Section 7.2(b) of the Seller Disclosure Schedule, unless otherwise agreed in
writing by Buyer, Seller and Sub will:
(i) except as otherwise allowed or required pursuant
to the terms of this Agreement, conduct the business of Sub in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted;
(ii) pay the debts and Taxes of Sub when due;
(iii) pay or perform other obligations of Sub when
due;
(iv) use commercially reasonable, good faith efforts
to preserve intact the current business organization of Sub, keep available the
services of the current employees and agents of Sub, and maintain the relations
and goodwill with the suppliers, customers, landlords, creditors, employees,
agents, and others having business relationships with Sub, with the goal of
preserving unimpaired the goodwill and ongoing business of Sub as of the
Closing;
(v) confer with Buyer concerning business or
operational matters relating to Sub of a significant nature;
(vi) use commercially reasonable, good faith efforts
to maintain all of the assets of Sub in their current condition, ordinary wear
and tear excepted and, in the event of any damage to or destruction of any of
such assets prior to the Closing Date, promptly replace, repair or restore such
assets;
(vii) maintain the books and records of Sub in the
usual, regular and ordinary manner, on a basis consistent with prior years; and
(viii) report periodically to Buyer concerning the
status and operation of Sub's business.
7.3 CONDUCT PRIOR TO CLOSING.
(a) Except as otherwise expressly permitted by this Agreement
or set forth in Section 7.3(a) of the Seller Disclosure Schedule, during the
Pre-Closing Period, Seller will not, without the prior written consent of Buyer
(which consent may not be unreasonably withheld or delayed):
(i) buy, or enter into any inbound license agreement
with respect to, the Intellectual Property Rights of any third party to be
incorporated in or used in connection with the Products or sell, lease or
otherwise transfer or dispose of, or enter into any outbound license agreement
with respect to, any of the Acquired Assets with any third party;
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(ii) propose or enter into a Contract with any
person, other than Buyer, providing for the possible acquisition, transfer or
disposition (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise) of any of the Acquired Assets or a material portion of the
capital stock of Seller;
(iii) enter into any Contract relating to (i) the
sale or distribution of any Product, (ii) the provision of any services, or
(iii) any of the Acquired Assets;
(iv) change pricing or royalties charged to customers
or licensees with respect to the Products;
(v) enter into any strategic arrangement or
relationship or joint marketing arrangement or agreement with respect to the
Products and the Acquired Assets;
(vi) amend or modify, or violate the terms of, any of
the Transferred Contracts;
(vii) make or change any election in respect of
Taxes, adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes, in each case relating to the Products
and the Acquired Assets;
(viii) commence or settle any Actions or Proceedings
or obtain any releases of threatened Actions or Proceedings involving or
relating to the Products or the Acquired Assets;
(ix) take any action, or fail to take any action,
which would result in the condition set forth in Section 8.2(a)(i) not being
true and correct on and as of the Closing Date; or
(x) make any sales of the Products; or
(xi) take, or agree in writing or otherwise to take,
any of the actions described in Section 7.3(a)(i) through Section 7.3(a)(x)
above, or any other action that would prevent Seller from performing or cause
Seller not to perform its covenants hereunder.
(b) Except as otherwise expressly permitted by this Agreement
or set forth in Section 7.3(b) of the Seller Disclosure Schedule, during the
Pre-Closing Period, neither Seller nor Sub will, without the prior written
consent of Buyer, take any affirmative action, or fail to take any reasonable
action within its control, as a result of which any of the changes or events
listed in Section 5.7 would be reasonably expected to occur.
7.4 CONFIDENTIALITY. Each of the parties hereto hereby agrees that the
information obtained pursuant to Section 7.1 hereof, or pursuant to the
negotiation and execution of this Agreement or the effectuation of the
transactions contemplated hereby, shall be governed by the terms of the Mutual
Non-Disclosure Agreement, dated effective March 5, 2002, between Buyer and
Seller (the "Non-Disclosure Agreement").
7.5 COLLATERAL AGREEMENTS; SHARE PURCHASE AGREEMENT. The parties hereto
shall enter into the Collateral Agreements and the Share Purchase Agreement.
7.6 COVENANT NOT TO COMPETE OR SOLICIT.
(a) Beginning on the Closing Date and ending on the third
(3rd) anniversary of the Closing Date (the "Non-Competition Period"), Seller
shall not directly or indirectly (other than on behalf of Buyer), without the
prior written consent of Buyer, engage in a Competitive Business Activity (as
defined below) anywhere in the Restricted Territory (as defined below). For
purposes of Section 7.6, the term "Competitive Business Activity" shall mean:
(i) engaging in, managing or directing persons engaged in any business related
to Seller's current business with respect to the Products; (ii) acquiring or
having an ownership interest in any entity which derives revenues from any
business related to Seller's business with respect to the Products (except for
ownership of one percent (1%) or less of any entity whose securities have been
registered under the Securities Act of 1933, as amended, or Section 12 of the
Securities Exchange Act of 1934, as amended); or (iii) participating in the
financing, operation, management or control of any firm, partnership,
corporation, entity or business described in clause (ii) of this sentence. For
purposes of Section 7.6, the term "Restricted Territory" shall mean each and
every country, province, state, city or other political subdivision of the world
including those in which Seller is currently engaged in business with respect to
the Products or otherwise distributes, licenses or sells the Products.
(b) Beginning on the Closing Date and ending on the second
(2nd) anniversary of the Closing Date, Seller shall not directly or indirectly
solicit, encourage or take any other action which is intended to induce or
encourage, or has the effect of inducing of encouraging, any employee or former
employee of Seller who has accepted employment with Buyer to terminate his or
her employment with Buyer.
(c) The covenants contained in Section 7.6(a) shall be
construed as a series of separate covenants, one for each country, province,
state, city or other political subdivision of the Restricted Territory. Except
for geographic coverage, each such separate covenant shall be deemed identical
in terms to the covenant contained in Section 7.6(a). If, in any judicial
proceeding, a court refuses to enforce any of such separate covenants (or any
part thereof), then such unenforceable covenant (or such part) shall be
eliminated from this Agreement to the extent necessary to permit the remaining
separate covenants (or portions thereof) to be enforced. In the event that the
provisions of this Section 7.6(a) are deemed to exceed the time, geographic or
scope limitations permitted by applicable law, then such provisions shall be
reformed to the maximum time, geographic or scope limitations, as the case may
be, permitted by applicable laws.
(d) Seller acknowledges that (i) the goodwill associated with
the existing business, customers, the Products and the Acquired Assets prior to
the Closing are an integral component of the value of the Acquired Assets to
Buyer and is reflected in the value of the Purchase Price to be received by
Seller, and (ii) Seller's agreement as set forth in Sections 7.6(a) and 7.6(b)
is necessary to preserve the value of the Products and the Acquired Assets for
Buyer following the Closing. Seller also acknowledges that the limitations of
time, geography and scope of activity agreed to in Section 7.6(a) are reasonable
because, among other things, (A) Buyer and Seller are engaged in a highly
competitive industry, (B) Seller has had unique access to the trade secrets and
know-how including, without limitation, the plans and strategy (and, in
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particular, the competitive strategy) related to the Products and the Acquired
Assets, and (C) Seller is receiving significant consideration in connection with
the consummation of the transactions contemplated by this Agreement.
(e) The parties agree that in the event of a breach or
threatened breach by Seller of any of the covenants set forth in Sections 7.6(a)
and 7.6(b), monetary damages alone would be inadequate to fully protect Buyer
from, and compensate Buyer for, the harm caused by such breach or threatened
breach. Accordingly, Seller agrees that if it breaches or threatens breach of
any provision of Sections 7.6(a) and 7.6(b), Buyer shall be entitled to, in
addition to any other right or remedy otherwise available, the right to
injunctive relief restraining such breach or threatened breach and to specific
performance of any such provision of Sections 7.6(a) and 7.6(b), and Buyer shall
not be required to post a bond in connection with, or as a condition to,
obtaining such relief before a court of competent jurisdiction.
7.7 NO SOLICITATION.
(a) Subject to the fiduciary duties of the board of directors
of Seller under applicable laws, until the earlier of (i) the Closing Date and
(ii) the Termination Date, Seller shall not (nor will Seller permit any of
Seller's or Sub's current officers, directors, employees, agents,
representatives or affiliates to), directly or indirectly, take any of the
following actions with any party other than Buyer and its designees: (i)
solicit, encourage, initiate or participate in any negotiations or discussions
with respect to, any offer or proposal for an Acquisition Transaction, (ii)
disclose any information not customarily disclosed to any Person concerning the
business of Seller if such information is reasonably likely to result in an
offer or proposal for an Acquisition Transaction, (iii) assist or cooperate with
any Person to make any proposal for an Acquisition Transaction, or (iv) enter
into any agreement with any Person contemplating an Acquisition Transaction. In
the event Seller or any of its officers, directors, employees, agents,
representatives or affiliates shall receive any BONA FIDE offer or proposal,
directly or indirectly, of the type referred to in clause (i) or (iii) above, or
any request for disclosure or access pursuant to clause (ii) above, it shall
promptly inform Buyer as to any such offer or proposal and, subject to the
fiduciary duties of the board of directors of Seller under applicable laws and
subject to then existing contractual obligation of the Seller, will cooperate
with Buyer by furnishing information regarding such third-party offer or
proposal that Buyer may reasonably request in writing. The parties hereto agree
that irreparable damage would occur in the event that the provisions of this
Section 7.7 were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed by Seller that Buyer is entitled to
seek an injunction or injunctions to prevent breaches of the provisions of this
Section 7.7 and to enforce specifically the terms and provisions hereof in any
court of the United States having jurisdiction, this being in addition to any
other remedy to which Buyer may be entitled at law or in equity.
(b) For purposes of Section 7.7, "Acquisition Transaction"
shall mean any transaction or series of related transactions involving the
acquisition by any Person (other than the Buyer) of (i) any of the Acquired
Assets, (ii) all or a majority of Seller's capital stock whether by merger,
purchase of assets, tender offer or otherwise, or effect any such transaction to
the extent such transaction (A) would be consummated prior to the earlier of the
consummation of the transactions contemplated hereby or the termination of this
Agreement and (B) does not expressly provide that the Acquiring Person will
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perform, and will cause the Seller to perform, all of Seller's obligations under
this Agreement as in existence on the date hereof, or (iii) Sub or the Stock. In
addition, for purposes of Section 7.7, an "Acquiring Person" shall mean any
Person acquiring all or a majority of the Seller's capital stock whether by
merger, purchase of assets, tender offer or otherwise.
7.8 NOTIFICATION OF CERTAIN MATTERS. During the Pre-Closing Period, the
parties hereto shall give prompt notice to each other of (i) the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which is likely
to cause any failure to comply with or satisfy any of the closing conditions set
forth in Article 8 to be satisfied on or prior to the Termination Date;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section 7.8
shall not limit or otherwise affect any remedies available to the party
receiving such notice.
7.9 PUBLIC DISCLOSURE. Unless otherwise required by applicable laws or
by obligations pursuant to any listing agreement with or rules of the National
Association of Securities Dealers, Inc. or The Nasdaq Stock Market, neither
Buyer nor Seller shall issue any statement or communication to any third party
(other than their respective agents) regarding the subject matter of this
Agreement or the transactions contemplated hereby, including, if applicable, the
termination of this Agreement and the reasons therefor, without the consent of
the other party, which consent shall not be unreasonably withheld. Each of Buyer
and Seller shall use commercially reasonable efforts to consult with, and use
commercially reasonable efforts to accommodate, the comments of the other before
issuing any press release or otherwise making any public statement with respect
to this Agreement and the transactions contemplated hereby.
7.10 USE OF CONFIDENTIAL INFORMATION. Notwithstanding anything the
contrary contained herein or in any other agreement of Seller, including any
agreement between Seller and any employee of Seller, Buyer shall have the
unrestricted, sublicensable and transferable right, and Seller hereby consents
to such rights of Buyer, to use, disclose and exploit in any manner and without
restriction any and all confidential information disclosed to, or learned by,
Buyer exclusively in connection with the Asset Sale. To the extent that any of
Seller's employees may be bound by any agreement or policy of Seller that would
in any way limit or restrict the rights of Buyer to confidential information
under this Section 7.10, Seller shall not assert, enforce or otherwise exercise
its rights under such agreement or policy against any such employee or Buyer.
7.11 CONSENTS. During the Pre-Closing Period, each of Seller and Sub
shall exercise its commercially reasonable efforts to obtain the consents,
waivers and approvals under any of the Transferred Contracts as may be required
in connection with this Agreement and the transactions contemplated hereby so as
to assign all rights of, and benefits to, Buyer thereunder.
7.12 Benefits Liabilities. From and after the Closing Date, except as
otherwise agreed to by Buyer and Seller pursuant to a written agreement, Seller
shall be solely responsible for all Benefits Liabilities relating to its
employees and former employees arising under, resulting from or relating to any
Employee Plans whether incurred before, on or after the Closing Date.
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7.13 MEETING OF STOCKHOLDERS.
(a) Seller shall as promptly as reasonably practicable after
the date hereof take all action necessary in accordance with Delaware law and
its certificate of incorporation, bylaws and agreements to convene a special
meeting of its stockholders for the purpose of considering and voting upon the
Asset Sale (the "Seller Stockholders Meeting"). Seller shall use its
commercially reasonable efforts to solicit from stockholders of Seller proxies
in favor of the Asset Sale to take all other action necessary or advisable to
secure the vote or consent of stockholders required by Delaware law and its
certificate of incorporation, bylaws and agreements to effect the transactions
contemplated hereby. Seller shall ensure that all proxies solicited in
connection with such stockholders' meeting are solicited in compliance with
applicable law.
(b) Seller will prepare and distribute to its stockholders in
connection with the Seller Stockholders Meeting a proxy statement (the "Seller
Proxy Statement") in compliance with all applicable law. The Seller Proxy
Statement shall include a statement to the effect that the board of directors of
Seller unanimously recommends that Seller's stockholders vote in favor of and
otherwise approve the Asset Sale (the "Board Recommendation"). In each case,
subject to the fiduciary duties of the board of directors of Seller under
applicable laws, (i) the Board Recommendation shall not be withdrawn or modified
in a manner adverse to Buyer, and (ii) no resolution by the board of directors
of Seller or any committee thereof to withdraw or modify the Board
Recommendation in a manner adverse to Buyer shall be adopted or proposed.
7.14 WARN ACT. Seller shall be solely responsible for ensuring
compliance with the WARN Act and all other applicable laws and payment of
accrued vacation or paid time off in connection with any reductions in force or
other terminations of its employees.
7.15 REASONABLE EFFORTS. Subject to the terms and conditions provided
in this Agreement, after the Closing, each of the parties hereto shall use
commercially reasonable efforts to take promptly, or cause to be taken, all
actions, and to do promptly, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, to obtain all necessary waivers,
consents and approvals and to effect all necessary registrations and filings and
to remove any injunctions or other impediments or delays, legal or otherwise, in
order to consummate and make effective the transactions contemplated by this
Agreement for the purpose of securing to the parties hereto the benefits
contemplated by this Agreement; PROVIDED THAT no party to this Agreement shall
be required to agree to any divestiture of shares of capital stock or of any
business, assets or property of Buyer or its subsidiaries or affiliates or of
Seller, as the case may be, or the imposition of any material limitation on the
ability of any of them to conduct their businesses or to own or exercise control
of such assets, properties and stock.
7.16 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. After the Closing,
each party hereto, at the request of another party hereto, shall execute and
deliver such other instruments and do and perform such other acts and things as
may be necessary or reasonably desirable for effecting completely the
consummation of this Agreement and the transactions contemplated hereby.
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ARTICLE 8
CONDITIONS TO THE CLOSING
-------------------------
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of each party to effect the transactions contemplated hereby shall be subject to
the satisfaction, at or prior to the Closing, of the following conditions:
(a) NO ORDER. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the transactions contemplated hereby illegal or otherwise prohibiting the
consummation of the transactions contemplated hereby.
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect, nor shall any proceeding brought by a Governmental Entity be seeking any
of the foregoing be pending.
(c) SELLER STOCKHOLDER APPROVAL. At the Seller Stockholder
Meeting, the Asset Sale shall have been approved by the required vote of the
stockholders of Seller.
(d) GOVERNMENTAL APPROVAL. Any governmental or regulatory
notices, approvals or other requirements necessary to consummate the
transactions contemplated hereby shall have been given, obtained or complied
with, as applicable.
8.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligation
of Buyer to effect the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions, any
of which may be waived, in writing, exclusively by Buyer:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties of Seller in this Agreement (A) were true and
correct on the date of this Agreement and (B) shall be true and correct on and
as of the Closing Date as though such representations and warranties were made
on and as of such time, except in the case of each of (A) and (B) for any
inaccuracy of such representations and warranties which would not be reasonably
expected to have a Material Adverse Effect on the Acquired Assets as of the
Closing Date, and (ii) Seller shall have performed and complied in all material
respects with all covenants and obligations under this Agreement required to be
performed and complied with by Seller as of the Closing.
(b) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties of Sub in this Agreement (A) were true and
correct on the date of this Agreement and (B) shall be true and correct on and
as of the Closing Date as though such representations and warranties were made
on and as of such time, except in the case of each of (A) and (B) for any
inaccuracy of such representations and warranties which would not be reasonably
expected to have a Material Adverse Effect on the Acquired Assets as of the
Closing Date, and (ii) Sub shall have performed and complied in all material
respects with all covenants and obligations under this Agreement required to be
performed and complied with by Sub as of the Closing.
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(c) RELEASE OF LIENS. Buyer shall have received from Seller a
duly and validly executed copy of all agreements, instruments, certificates and
other documents, in form and substance reasonably satisfactory to Buyer, that
are necessary or appropriate to evidence the release of all Liens set forth in
Schedule 8.2(b) to this Agreement.
(d) CERTIFICATE OF SELLER. Buyer shall have received a
certificate, validly executed by the Chief Executive Officer of Seller for and
on its behalf, to the effect that, as of the Closing the conditions set forth in
Section 8.2(a)(i) and Section 8.2(a)(ii) have been satisfied.
(e) CERTIFICATE OF SUB. Buyer shall have received a
certificate, validly executed by a member of the Management Board of Sub for and
on its behalf, certifying (i) that, as of the Closing, the conditions set forth
in Section 8.2(b)(i) and Section 8.2(b)(ii) have been satisfied and (ii) as to
the terms and effectiveness of the charter documents of Sub.
(f) CERTIFICATE OF SECRETARY OF SELLER. Buyer shall have
received a certificate, validly executed by the Secretary of Seller, certifying
as to (i) the terms and effectiveness of the certificate of incorporation and
the bylaws of Seller, and (ii) the valid adoption of resolutions of the Board of
Directors of Seller approving this Agreement and the consummation of the
transactions contemplated hereby.
(g) DELIVERIES. Each of Seller and Sub shall have delivered to
Buyer executed copies of the Collateral Agreements and the Share Purchase
Agreement.
(h) TERMINATION OF AGREEMENT ON INTELLECTUAL PROPERTY RIGHTS.
Seller and Sub shall have terminated that certain Agreement on Transfer of
Intellectual Property Rights, dated January 10, 2002, between Seller and Sub,
and any other agreement relating to the transfer of intellectual property rights
from Sub to Seller to be effective as of the Closing, and shall have delivered
to Buyer executed copies of all such terminations.
(i) RESIGNATIONS OF MEMBERS OF MANAGEMENT BOARD OF SUB. Seller
or Sub shall have delivered written resignations of each member of the
Management Board of Sub, whereby each of them resign, from the Management Board
of Sub as of the date of the Share Purchase Agreement. All actions necessary
under the laws of the Republic of Estonia and the charter documents of Sub to
effect such resignations shall be taken on or prior to the Closing Date. Each
resignation letter shall confirm that the board member has no claims against
Sub.
8.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of
Seller to consummate and effect the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions, any of which may be waived, in writing, exclusively by Seller:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Buyer in this Agreement were true and correct
when made, and (ii) Buyer shall have performed and complied in all material
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respects with all covenants and obligations under this Agreement required to be
performed and complied with by Buyer as of the Closing.
(b) CERTIFICATE OF BUYER. Seller shall have received a
certificate of the Buyer validly executed by the Chief Executive Officer of
Buyer for and on its behalf, to the effect that, as of the Closing the
conditions set forth in Section 8.3(a)(i) and 8.3(a)(ii) have been satisfied.
(c) DELIVERIES. The Buyer shall have paid to Seller the
Purchase Price and the Working Capital Reimbursement Amount in immediately
available funds in United States dollars. Buyer shall have delivered to Seller
executed copies of the Collateral Agreements and the Share Purchase Agreement.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of each of Seller and Sub contained in this
Agreement, or in any certificate or other instrument delivered pursuant to this
Agreement, shall terminate on the Closing Date. The representations and
warranties of Buyer contained in this Agreement, or in any certificate or other
instrument delivered pursuant to this Agreement, shall terminate on the Closing
Date.
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
10.1 TERMINATION. Except as provided in Section 10.2, this Agreement
may be terminated and the transactions contemplated hereby abandoned at any time
prior to the Closing:
(a) by mutual written consent of Buyer and Seller;
(b) by Buyer or Seller if the Closing Date shall not have
occurred by November 15, 2002 (the "Termination Date"); PROVIDED, HOWEVER, that
the right to terminate this Agreement under this Section 10.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Closing to occur on or before the
Termination Date and such action or failure to act constitutes breach of this
Agreement;
(c) by Buyer or Seller if: (i) there shall be a final
non-appealable order of a federal or state court in effect preventing the
Closing, or (ii) there shall be any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the Closing by any Governmental
Entity that would make consummation of the Closing illegal;
(d) by Buyer if there shall be any action taken by a
Governmental Entity, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the transactions contemplated by
this Agreement by any Governmental Entity, which would: (i) prohibit Buyer's
ownership or operation of any material portion of the Acquired Assets or (ii)
compel Buyer or Seller to dispose of or hold separate all or any portion of the
business or assets of Buyer or Seller as a result of the Closing;
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(e) by any party if (i) the Seller Stockholders Meeting
(including any adjournments and postponements thereof) shall not have been held
and completed prior to the Termination Date or shall have been held and
completed and the stockholders of Seller shall have taken a final vote on a
proposal to approve the Asset Sale; and (ii) the Asset Sale shall not have been
approved at the Seller Stockholders Meeting (and shall not have been approved at
any adjournment or postponement thereof) by the required approval of the
stockholders of Seller; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 10.1(e) shall not be available to Seller where the
failure to hold the Seller Stockholders Meeting and to obtain Seller stockholder
approval shall have been caused by the action or failure to act of Seller and
such action or failure to act constitutes a breach by Seller of this Agreement;
PROVIDED FURTHER, HOWEVER, that the right to terminate this Agreement under this
Section 10.1(e) shall not be available to Buyer where the failure to hold the
Seller Stockholders Meeting and to obtain Seller stockholder approval shall have
been caused by the action or failure to act of Buyer and such action or failure
to act constitutes a breach by Buyer of this Agreement.
(f) by Buyer (at any time prior to the approval of the Asset
Sale by the required vote of the stockholders of Seller) if (i) Seller's board
of directors or any committee thereof shall have withdrawn or modified in a
manner adverse to Buyer the Board Recommendation or (ii) Seller's board of
directors failed to reconfirm the Board Recommendation within five (5) business
days upon a written request by the Buyer after an Acquisition Transaction has
been publicly announced.
(g) by Buyer if it is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement of Seller contained in this
Agreement such that the conditions set forth in Section 8.2 would not be
satisfied and such breach has not been cured within ten (10) calendar days after
written notice thereof to Seller; PROVIDED, HOWEVER, that no cure period shall
be required for a breach which by its nature cannot be cured; or
(h) by Seller if is not in material breach of their respective
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement of Buyer contained in this
Agreement such that the conditions set forth in Section 8.3 would not be
satisfied and such breach has not been cured within ten (10) calendar days after
written notice thereof to Buyer; PROVIDED, HOWEVER, that no cure period shall be
required for a breach which by its nature cannot be cured.
10.2 EFFECT OF TERMINATION; NOTICE OF TERMINATION. In the event of
termination of this Agreement as provided in Section 10.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of any party hereto, or its affiliates, officers, directors or stockholders,
provided that each party shall remain liable for any breaches of this Agreement
prior to its termination; and PROVIDED FURTHER THAT, the provisions of Section
7.4, Article 11, and this Section 10.2 shall remain in full force and effect and
survive any termination of this Agreement. Notwithstanding the foregoing,
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nothing contained herein shall relieve any party from liability for any breach
hereof prior to such termination. Any termination of this Agreement under
Section 10.1 will be effective immediately upon the delivery of written notice
thereof by the terminating party to the other party hereto (or, in the case of
termination pursuant to Section 10.1(g) or Section 10.1(h), on the date
specified therein).
10.3 AMENDMENT. This Agreement may be amended by the parties hereto at
any time by execution of an instrument in writing signed on behalf of each of
the parties hereto.
10.4 EXTENSION; WAIVER. At any time prior to the Closing, Buyer, on the
one hand, and Seller, on the other hand, may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations of the other party
hereto, (ii) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto, and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE 11
GENERAL
-------
11.1 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
messenger or courier service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice); PROVIDED, HOWEVER,
that notices sent by mail will not be deemed given until received:
(a) if to Buyer, to:
Altiris, Inc.
000 Xxxx 000 Xxxxx
Xxxxxx, Xxxx 00000
ATTENTION: GENERAL COUNSEL
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with a copy to (which copy shall not constitute notice):
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
0000 X. Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
ATTENTION: XXXXXX X. X'XXXXXX
Telephone No.: 000.000.0000
Facsimile No.: 801.993-6499
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(b) if to Seller, to:
Previo, Inc.
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
ATTENTION: CHIEF FINANCIAL OFFICER
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with a copy to (which copy shall not constitute notice):
Cooley Godward LLP
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
ATTENTION: XXXX X. XXXXXXX, ESQ.
XXXXX X. XXXXXXXXXX, ESQ.
Telephone No.: 000.000.0000
Facsimile No.: 858.550.6420
11.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, the Exhibits hereto,
the Seller Disclosure Schedule, the Sub Disclosure Schedule, the Non-Disclosure
Agreement, and the documents and instruments and other agreements among the
parties hereto referenced herein: (i) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings both written and oral, among the parties with
respect to the subject matter hereof; (ii) are not intended to confer upon any
other person any rights or remedies hereunder; and (iii) shall not be assigned
by operation of law or otherwise, except that Buyer may assign its rights and
delegate its obligations hereunder to its affiliates as long as Buyer remains
ultimately liable for all of Buyer's obligations hereunder.
11.3 SEVERABILITY. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
11.4 OTHER REMEDIES. Any and all remedies herein expressly conferred
upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by law or equity upon such party, and the exercise
by a party of any one remedy will not preclude the exercise of any other remedy.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS
THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
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11.6 JURISDICTION AND VENUE. Each of the parties hereto irrevocably
consents to the exclusive jurisdiction and venue of any court within Salt Lake
City, State of Utah, in connection with any claims brought after the Closing
Date based upon or arising out of this Agreement or the matters contemplated
herein, agrees that process may be served upon them in any manner authorized by
the laws of the State of Utah for such persons and waives and covenants not to
assert or plead any objection which they might otherwise have to such
jurisdiction, venue and such process.
11.7 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefor, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
11.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
11.9 FEES AND EXPENSES. Whether or not the transactions contemplated
herein are consummated, all expenses, including without limitation all legal,
accounting, financial advisory, consulting and other fees, incurred in
connection with the negotiation or effectuation of this Agreement or
consummation of such transactions, shall be the obligation of the respective
party incurring such expenses.
11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
"BUYER"
ALTIRIS, INC.
By: /s/ Xxx Xxxxxx
-----------------------------------
Name: Xxx Xxxxxx
---------------------------------
Title: V.P. of Business Development
--------------------------------
"SELLER"
PREVIO, INC.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
---------------------------------
Title: CFO
--------------------------------
"SUB"
PREVIO ESTONIA OU
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
---------------------------------
Title: Attorney-in-Fact
--------------------------------
