1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
by and between
CINCOM SYSTEMS, INC.
and
OBJECTSHARE, INC.
2
TABLE OF CONTENTS
Page
----
ARTICLE 1 - PURCHASE OF RIGHTS AND ASSETS............................... 1
1.1 Agreement to Purchase and Sell............................ 1
1.2 Excluded Assets........................................... 2
1.3 License Back of Computer Software
to Seller................................................. 2
1.4 Consideration and Payment................................. 2
1.5 Time and Place of Closing................................. 5
1.6 Allocation of Consideration............................... 5
1.7 Excluded Liabilities...................................... 5
1.8 Assumed Liabilities....................................... 4
1.9 Sales Tax................................................. 5
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF SELLER.................... 5
2.1 Organization, Authority and Capacity...................... 5
2.2 Authorization and Validity................................ 5
2.3 Absence of Conflicting Agreements or
Required Consents......................................... 5
2.4 Absence of Changes........................................ 6
2.5 No Undisclosed Liabilities................................ 6
2.6 Litigation, etc. ......................................... 6
2.7 Compliance with Laws...................................... 6
2.8 Personal Property......................................... 7
2.9 Intellectual Property..................................... 7
2.10 Contracts and Commitments................................. 8
2.11 Employment Matters........................................ 9
2.12 Taxes .................................................... 9
2.13 Transferred Software...................................... 9
2.14 Year 2000 Compliance...................................... 9
2.15 Statements True and Correct............................... 10
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF BUYER..................... 10
3.1 Organization, Authority and Capacity...................... 10
3.2 Authorization and Validity................................ 10
3.3 Absence of Conflicting Agreements or
Required Consents......................................... 10
3.4 Pending Litigation........................................ 10
ARTICLE 4 - ADDITIONAL AGREEMENTS....................................... 11
4.1 Access to Seller Information.............................. 11
4.2 Affirmative Covenants of Seller........................... 11
4.3 Negative Covenants of Seller.............................. 12
4.4 Public Announcements...................................... 12
i
3
4.5 Treatment of Accrued Vacation............................. 13
4.6 Confidentiality, Noncompetition and
Nonsolicitation........................................... 13
4.7 Nonsolicitation by Buyer.................................. 14
4.8 Liabilities............................................... 14
4.9 Conditions to Closing..................................... 15
4.10 Risk of Loss.............................................. 15
4.11 Title Search; Discharge of Liens.......................... 15
4.12 Consents to Assignment.................................... 15
4.13 Sublease/Lease of Santa Xxxxx Facilities.................. 16
4.14 Transfer of Employees..................................... 17
4.15 Third Party Software...................................... 17
ARTICLE 5 - CONDITIONS TO OBLIGATIONS OF BUYER.......................... 17
5.1 Representations and Warranties............................ 18
5.2 Performance; Covenants.................................... 18
5.3 Necessary Consents and Approvals.......................... 18
5.4 No Injunction, Etc........................................ 18
ARTICLE 6 - CONDITIONS TO OBLIGATIONS OF SELLER......................... 19
6.1 Representations and Warranties............................ 19
6.2 Performance; Covenants.................................... 19
6.3 Necessary Consents and Approvals.......................... 19
6.4 No Injunction, Etc........................................ 19
ARTICLE 7 - TERMINATION ................................................ 20
7.1 Right of Termination...................................... 20
7.2 Effect of Termination..................................... 20
ARTICLE 8 - INDEMNIFICATION............................................. 20
8.1 Indemnification by Seller................................. 20
8.2 Indemnification by Buyer.................................. 21
8.3 Notice and Opportunity to Defend.......................... 22
8.4 Survival and Exclusivity.................................. 22
ARTICLE 9 - CERTAIN DEFINITIONS......................................... 22
ARTICLE 10 - MISCELLANEOUS PROVISIONS................................... 25
10.1 Notices................................................... 25
10.2 Expenses.................................................. 26
10.3 Brokers and Finders....................................... 26
10.4 Further Assurances........................................ 26
10.5 Waiver.................................................... 26
10.6 Assignment................................................ 26
10.7 Binding Effect............................................ 26
10.8 Headings.................................................. 26
ii
4
10.9 Entire Agreement.......................................... 26
10.10 Governing Law; Severability............................... 27
10.11 Counterparts.............................................. 27
EXHIBITS
Exhibit 1.3(a) License
Exhibit 1.4(b) Letter Regarding Royalty Payments
Exhibit 1.8 Assumption Agreement
SCHEDULES
Schedule 1.1 Third Party Agreements
Schedule 1.2 Excluded Assets
Schedule 1.3(a) License Agreement
Schedule 1.8 Liabilities and Commitments
Schedule 2.1 Organization, Authority and Capacity
Schedule 2.3 Conflicting Agreements; Required Consents
Schedule 2.4 Absence of Changes
Schedule 2.5 Undisclosed Liabilities
Schedule 2.6 Litigation
Schedule 2.7(a) Compliance with Laws -- Permits
Schedule 2.7(b) Compliance with Laws -- Consents
Schedule 2.8(a) Personal Property
Schedule 2.9(a) Intellectual Property
Schedule 2.9(b) Proprietary Information
Schedule 2.10(a) Contracts and Commitments
Schedule 2.10(b) Validity of Contracts and Commitments; Default
Schedule 2.11(a) Employees
Schedule 2.11(b) Compliance with Employment Laws
Schedule 2.11(c) Employment Law Proceeding
Schedule 2.12 Taxes
Schedule 2.13 Transferred Software
Schedule 2.14 Year 2000 Compliance
Schedule 4.7 Protected Accounts
Schedule 4.13 Transfer of Employees
Schedule 4.15 Third Party Software
Schedule 5.2(b) Form of Assignment and Xxxx of Sale
iii
5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of August 27, 1999, by and among Cincom Systems, Inc., an Ohio corporation
("Buyer") and ObjectShare, Inc., a Delaware corporation ("Seller").
PREAMBLE
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller certain of Seller's assets on the terms and conditions set forth in
this Agreement (the "Acquisition"). Seller shall retain its training and
consulting business;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE 1
PURCHASE OF RIGHTS AND ASSETS
1.1 Agreement to Purchase and Sell. Subject to the terms and conditions
set forth herein, Seller agrees to sell, convey, transfer, assign and deliver to
Buyer, and Buyer agrees to purchase all of Seller's right, title and interest in
and to the following rights and assets owned by Seller (collectively, the
"Rights and Assets"), free and clear of all Liens (except Permitted Liens) so
that Buyer will have exclusive and perpetual worldwide rights for Seller's
Smalltalk Business, including, without limitation, the following:
(a) That computer software (including source and object code) listed
on Schedule 2.13 ("Transferred Software");
(b) All technology and other intellectual property of Seller related
to the Transferred Software, including, but not limited to, all discoveries,
inventions, improvements, patents, trademarks, service marks, products, trade
names, trade secrets and all work papers, reports, documentation, literature,
whitepapers, drawings, photographs, negatives, tapes and masters therefore,
prototypes and other materials and manifestations of any of the foregoing in any
form, and all contracts and other rights related thereto;
(c) All customer agreements and obligations including books, records
and support records and copies of training and educational material relating to
the Transferred Software. This also includes the entitlement to all future
licensing, maintenance and support revenues to be billed to all current
customers of the Transferred Software.
1
6
(d) All warranties and documentation, including books, records, and
training manuals, relating to the Transferred Software and other intellectual
property rights transferred to Buyer pursuant to this Agreement.
(e) The furniture, computer equipment, office furnishings,
equipment, supplies and all other personal property listed on Schedule 2.8.
(f) Assignment of certain third party agreements listed on Schedule
1.1.
(g) Permission by Seller for the transfer of up to 32 of Seller
"Employees" to the Buyer effective the day after the Closing pursuant to Section
4.14 below.
1.2 Excluded Assets. Notwithstanding the foregoing, the Rights and
Assets shall not include any non-assignable rights to third party software and
the other items listed in Schedule 1.2 (the "Excluded Assets").
1.3 License Back of Computer Software to Seller.
(a) Buyer shall grant Seller a license to use the Transferred
Software (including object code) on the terms and conditions set forth in the
License Agreement attached hereto as Exhibit 1.3(a) (the "License Agreement").
(b) Notwithstanding any other requirement of this Agreement,
including but not limited to the assignment of that certain Software License
Agreement, dated April 8, 1999, by and between Seagull Software Systems, Inc.
and Seller relating to the VisualSmalltalk software program (the "VSE License"),
Seller shall retain a non-exclusive, perpetual, world-wide, royalty-free license
to use the VisualSmalltalk software program ("VSE") for training and consulting
purposes. In accordance therewith, Buyer shall, at any time following Closing
and Seller's request, enter into a license-back agreement with Seller reflecting
the retention of such rights by Seller related to VSE.
1.4 Consideration and Payment.
(a) Total Consideration. The total consideration for the Rights
and Assets shall be
(i) cash payable by wire transfer at the Closing of $425,000;
(ii) the assumption and full performance by Buyer of the
Assumed Liabilities; and
2
7
(iii) guaranteed royalties of $500,000 (the "Aggregate Royalty
Amount") payable in accordance with Section 1.4(b) below (collectively the
"Purchase Price").
(b) Royalty. Buyer shall pay the guaranteed Aggregate Royalty Amount
in six equal installments of $83,333. The first of such installments shall be
paid on October 1, 1999 with subsequent installments being paid on the first day
of each of the following five months. Buyer agrees that failure to pay any such
installment when due, and after Buyer's failure to cure within 10 days from
written notice by Seller, shall be considered a breach. In Seller's sole
discretion, such breach shall result in all remaining unpaid installments
becoming immediately due and payable. Payment of the Aggregate Royalty Amount
shall be an absolute and unconditional obligation of Buyer and independently
guaranteed by Buyer pursuant for that certain letter attached hereto as Exhibit
1.4(b).
1.5 Time and Place of Closing. Subject to the satisfaction of the
conditions set forth in Articles 5 and 6, the closing of the sale hereunder (the
"Closing") will take place on or before August 30, 1999 (the "Closing Date").
The Closing shall be by telephone conference and faxed documents with original
documents exchanged by overnight mail. Promptly after the Closing Seller shall
ship those books and records being sold to Buyer hereunder and not located at
the Facilities (as defined herein) to a location reasonably requested by Buyer.
1.6 Allocation of Consideration. The consideration paid for the Rights and
Assets shall be allocated among the Rights and Assets by Buyer and Seller prior
to the Closing in a manner which the parties intend, in their reasonable
judgment, to be in accordance with the provisions contained in Treasury
Regulation Section 1.1060-1T(d). The parties agree to report the transaction
contemplated herein for federal income tax purposes in accordance with such
allocation. In furtherance of the foregoing, the parties hereto agree to execute
and deliver Internal Revenue Service Form 8594 reflecting such allocation.
1.7 Excluded Liabilities. Except as set forth in Sections 1.8 or 4.5,
Seller retains all liabilities directly or indirectly arising out of or related
to the Rights and Assets on and prior to the Closing Date, whether such
liabilities are known or unknown, disclosed or undisclosed, matured or
unmatured, accrued, absolute or contingent on and as of the Closing Date
(collectively, the "Excluded Liabilities"). Without limiting the generality of
the preceding sentence, Buyer shall not assume or become liable for any
obligations or liabilities of Seller, including without limitation, the
following:
(a) Any liability or obligation arising out of any employee benefit
plan maintained by or covering employees of Seller or to which Seller has made
any contribution or to which Seller could be subject to any liability;
(b) Any losses, costs, expenses, damages, claims, demands and
judgments of every kind and nature (including the defenses thereof and
reasonable
3
8
attorneys' and other professional fees) related to, arising out of, or in
connection with any application of the laws in California regarding bulk sales
and transfers or any similar statute as enacted in any jurisdiction, domestic or
foreign (if applicable);
(c) Any liability or obligation arising out of any breach by Seller
prior to the Closing of any provision of the Seller Agreements (as defined
herein) or any other contract to which Seller is a party;
(d) Any liability of Seller with respect to any claim or cause of
action, regardless of when made or asserted, which arises (i) out of or in
connection with the Rights and Assets prior to the Closing, (ii) out of or in
connection with any business or operations of Seller, (iii) with respect to any
goods or services provided by Seller prior to or after the Closing, including
without limitation, any liability or obligation (A) pursuant to any express or
implied representation, warranty, agreement, or guarantee made by Seller or (B)
imposed or asserted to be imposed by operation of law, in connection with any
service performed or product designed, manufactured, sold, or leased by or on
behalf of Seller, including without limitation, any claim related to any product
delivered in connection with the performance of such service and any claims
seeking to recover for consequential damage, lost revenue, or income, including
pursuant to any doctrine of product liability, or (iv) out of or in connection
with the Rights and Assets and operations of Seller prior to the Closing, or any
other business or operations of Seller at any time, under any federal, state, or
local law, rule, or regulation;
(e) Any liability or obligation, arising prior to or as a result of
the termination of the Employees at the Closing, or any other employee, agent,
or independent contractor of Seller, whether or not employed by Buyer after the
Closing, or under any benefit arrangement with respect thereto; or
(f) Any liability or obligation for Payroll Expenses, except for (i)
one-half of all of the Seller's total severance pay obligations related to the
Employees resulting from consummation of the transactions contemplated by this
Agreement and which arise within six months from the Closing Date and (ii)
certain accrued vacation obligations related to the Employees, as set forth in
Schedule 2.11(a).
1.8 Assumed Liabilities. Buyer shall, as of the Closing Date, expressly
assume pursuant to the terms of that certain Assumption Agreement, attached
hereto as Exhibit 1.8 (the "Assumption Agreement"), and agree to pay, perform or
otherwise discharge as the same shall become due in accordance with their
respective terms, all of the following liabilities, obligations and commitments
of Seller existing or arising on or after the Closing Date (the "Assumed
Liabilities"):
(a) All liabilities, obligations and commitments of Seller relating
to the Business as set forth on Schedule 1.8;
(b) All liabilities, obligations and commitments of Seller arising
out of the contracts, agreements and arrangements listed in Schedule 2.10;
4
9
(c) All liabilities and obligations arising from the possession and
operation of the Rights and Assets for the periods after the Closing Date; and
(d) Any liability or obligation arising out of any breach by Buyer
following the Closing of any provision of the Seller Agreements.
1.9 Sales Taxes. Buyer and Seller shall each be responsible for one-half
of all sales Taxes, if any arising out of the transfer of the Rights and Assets
(including, without limitation, the transfer of Intellectual Property). Buyer
covenants and agrees that it will deliver to Seller its portion of the sales
Taxes when requested by Seller.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
2.1 Organization, Authority and Capacity. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the full power and authority necessary to (i) execute, deliver
and perform its obligations under the Acquisition Documents and (ii) carry on
its business as it has been and is now being conducted and to own and lease the
properties and assets which it now owns or leases. Except as set forth in
Schedule 2.1, Seller is duly qualified to do business as a foreign corporation
and is in good standing in every jurisdiction in which the failure to be so
qualified or in good standing would have a material adverse effect on (i)
Seller's ability to perform its obligations under the Acquisition Documents or
(ii) the Rights and Assets.
2.2 Authorization and Validity. The execution, delivery and performance of
the Acquisition Documents have been duly authorized by all necessary corporate
action on the part of Seller. The Acquisition Documents to be executed and
delivered by Seller have been or will be, as the case may be, duly executed and
delivered by Seller and constitute or will constitute the legal, valid and
binding obligations of Seller, enforceable in accordance with their respective
terms, except as such enforcement may be limited by bankruptcy, insolvency or
other Laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
2.3 Absence of Conflicting Agreements or Required Consents. Except as set
forth on Schedule 2.3, the execution, delivery and performance by Seller of the
Acquisition Documents to be executed and delivered by Seller: (i) do not require
the consent of or notice to any governmental or regulatory authority or any
other third party concerning any material contract; (ii) will not conflict with
any provision of Seller's organizational documents (including certificate or
articles of incorporation and bylaws); (iii) will not conflict with or result in
a violation of any law, ordinance, regulation, ruling, judgment, order or
injunction of any court or governmental instrumentality to which
5
10
Seller is subject or by which Seller or any of the Rights and its Assets are
bound; (iv) will not conflict with, constitute grounds for termination of,
result in a breach of, constitute a default under, require any notice under, or
accelerate or permit the acceleration of any performance required by the terms
of any material agreement, instrument, license or permit to which Seller is a
party or by which Seller or any of its properties are bound; and (v) will not
create any Lien upon any of the Rights and Assets.
2.4 Absence of Changes. Except as set forth on Schedule 2.4, and except as
contemplated by this Agreement, since June 30, 1999, Seller has not:
(i) sold, assigned or transferred any tangible asset or any
patents, trademarks, trade names, copyrights or other intangible assets related
to the Rights and Assets other than in the ordinary course of business;
(ii) subjected any of the Rights and Assets, to any lien,
encumbrance or restriction of any nature whatsoever;
(iii) increased any salaries, wages or employee benefits or
made any arrangement for payment of any bonus or special compensation for any
Employee other than in the ordinary course of business and except as set forth
in Schedule 2.11(a);
(iv) terminated or amended any material contract, license or
other instrument to which Seller is a party and which is related to the Rights
and Assets or suffered any loss or termination or threatened loss or termination
of any existing material business arrangement or supplier related to the Rights
and Assets; or
(v) agreed, whether in writing or otherwise, to take any
action described in this Section 2.4.
2.5 No Undisclosed Liabilities. Except as listed on Schedule 2.5 hereto,
Seller has no material Excluded Liabilities or obligations related to the Rights
and Assets, whether accrued, absolute, contingent or otherwise, except for
Excluded Liabilities and obligations incurred in the ordinary course of its
business since June 30, 1999.
2.6 Litigation, etc. Except as listed on Schedule 2.6 hereto, there are no
claims, lawsuits, actions, arbitrations, administrative or other proceedings
pending against Seller relating to the Rights and Assets. Except as listed on
Schedule 2.6, to the knowledge of Seller (i) no such matter described in the
previous sentence is threatened and there is no reasonable basis for any such
action, and (ii) there are no governmental or administrative investigations or
inquiries pending related to the Rights and Assets. Except as listed on Schedule
2.6 there are no judgments against or consent decrees binding on Seller and
related to the Rights and Assets.
2.7 Compliance with Laws.
6
11
(a) Except as set forth on Schedule 2.7(a), Seller has in effect all
material Permits necessary for it to own, lease or operate the Rights and
Assets. To the knowledge of Seller, Seller is not in violation of any material
Laws, Orders or Permits applicable to the Rights and Assets or the Employees. No
notice or warning from any regulatory authority with respect to any failure or
alleged failure of Seller to comply with any Law has been received, nor, to
Seller's knowledge, is any such notice or warning proposed or threatened.
(b) Except as set forth on Schedule 2.3 or Schedule 2.7(b) or
otherwise contemplated by this Agreement, no consent or approval of, prior
filing with or notice to, or other action by, any Regulatory Authority or any
other third party is required in connection with the execution and delivery of
this Agreement or any assignment, agreement or other instrument to be executed
and delivered pursuant to this Agreement by Seller or the consummation of the
transactions provided for herein or therein except for such consents and
approvals that have been obtained and filings, notices and other actions that
have been taken or made, except where all such actions would not have a material
adverse effect on the Assets and Rights.
2.8 Personal Property.
(a) Schedule 2.8(a) sets forth a list of all items of personal
tangible property owned by Seller and used by the Employees, including all
furniture, computer equipment, office furnishings and equipment (the "Personal
Property"). Except as set forth on Schedule 2.8(a), Seller (i) has good and
valid title to the Personal Property, (ii) owns the Personal Property free and
clear of all Liens; and (iii) will, upon the Closing, convey good and valid
title to the Personal Property to Buyer free and clear of any and all Liens,
except liens for taxes not yet due and payable and such other liens,
imperfections in title, charges, easements and encumbrances which are immaterial
and which in the aggregate do not exceed $1,000 ("Permitted Liens").
(b) The Personal Property is being transferred and conveyed to Buyer
on an "as is, where is" basis.
2.9 Intellectual Property.
(a) Schedule 2.9(a) contains a true and complete list of all
material Intellectual Property related to and a part of the Rights and Assets
(the "Transferred Intellectual Property") owned by, registered in the name of,
or used by Seller in the Business on the date hereof, or for which application
has been made. Except as set forth in Schedule 2.9(a), all the Transferred
Intellectual Property rights are in full force and effect and constitute legal,
valid and binding obligations of Seller and to Seller's knowledge, of the other
party thereto; and to the knowledge of Seller there have not been, and there
currently are not any defaults thereunder by any party. Seller owns or has a
valid license for the copyrights which are part of the Transferred Intellectual
Property, and such copyrights are free and clear of all Liens (except Liens
disclosed on Schedule 2.8(a)) or, to the knowledge of Seller, claims for
copyright infringement. To
7
12
Seller's knowledge, Seller owns or is a valid licensee of all the Transferred
Intellectual Property rights free and clear of all Liens or claims of
infringement (except Liens disclosed on Schedule 2.8(a) and the rights of
licensors). No proceedings have been instituted, or are pending or, to the
knowledge of Seller, threatened, which challenge the rights of Seller with
respect to the Transferred Intellectual Property. To the knowledge of Seller,
Seller has not infringed the Intellectual Property rights of others and none of
the Transferred Intellectual Property rights infringe upon or otherwise violate
the rights of others, nor has any person asserted a claim of such infringement.
Seller is not obligated to pay any royalties to any person or entity with
respect to the Transferred Intellectual Property, except pursuant to licenses
and agreements disclosed on Schedule 2.9(a). To the knowledge of Seller, Seller
owns or has the valid right to use all of the Intellectual Property rights which
it is presently using, or in connection with the performance of any material
contract or proposal to which it is a party.
(b) Except as described on Schedule 2.9(b), to the knowledge of
Seller, every current officer, director, employee and consultant of Seller has
entered into a contract which requires such officer, director, employee or
consultant to assign any interest in the Transferred Intellectual Property and
to keep confidential any trade secrets, proprietary data, customer lists or
other business information of the Seller, and to the knowledge of Seller no such
officer, director, employee or consultant is party to any contract with any
Person which requires such officer, director, employee or consultant to assign
any interest in the Transferred Intellectual Property to any Person other than
the Seller.
2.10 Contracts and Commitments.
(a) Schedule 2.10(a) contains a complete and accurate list of all
material contracts, agreements, commitments, instruments and obligations
(whether written or oral, contingent or otherwise) of Seller of or concerning
the following matters (the "Seller Agreements"):
(i) the employment or engagement of any Employee;
(ii) any arrangement that could reasonably be anticipated to
have a material adverse effect on the Rights and Assets; and
(iii) any material arrangement related to the Rights and
Assets not entered into by Seller in the ordinary course of business;
(b) Seller has delivered or otherwise made available to Buyer true
and complete copies of all of its Seller Agreements. Except as indicated on
Schedule 2.10(b), the Seller Agreements are valid and effective in accordance
with their terms, and there is not under any of such Seller Agreements (i) any
existing or claimed default by Seller or event which, with the notice or lapse
of time, or both, would constitute a material default by Seller or (ii) to the
knowledge of Seller, any existing or claimed default by any other party or event
which with notice or lapse of time, or both, would constitute a material default
by any such party. Except as indicated on Schedule 2.10(b), the continuation,
8
13
validity and effectiveness of the Seller Agreements will not be affected by the
Acquisition and the Acquisition will not result in a breach of or default under,
or require the consent of any other party to, any of the Seller Agreements.
There is no actual or, to the knowledge of Seller, threatened termination,
cancellation or limitation of any Seller Agreements that would have a material
adverse effect on the Rights and Assets. To the knowledge of Seller, there is no
pending or threatened bankruptcy, insolvency or similar proceeding with respect
the Seller or the Seller Agreements.
2.11 Employment Matters.
(a) Schedule 2.11(a) sets forth the name of all Employees, the date
on which each was hired, the amount of each Employee's salary,
commissions/bonuses, contract severance provisions, as the case may be, and any
accrued vacation due each Employee not yet taken.
(b) Except as disclosed on Schedule 2.11(b), to the knowledge of
Seller, with regard to the Employees, Seller is in compliance in all material
respects with all material applicable laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, occupational
safety and health, including laws concerning unfair labor practices within the
meaning of Section 8 of the National Labor Relations Act, and the employment of
non-residents under the Immigration Reform and Control Act of 1986, to the
extent that any such noncompliance would materially adversely effect Seller or
any of the Rights and Assets.
(c) Except as disclosed on Schedule 2.11(c), with regard to the
Employees, to the knowledge of Seller there are no charges, governmental audits,
investigations, administrative proceedings or complaints concerning any Seller's
employment practices pending or threatened before any federal, state or local
agency or court, and, to the knowledge of Seller no basis for any such matter
exists.
2.12 Taxes. Except as listed on Schedule 2.12, there does not exist any
material liability for any taxes which may be asserted by any taxing authority
against, and no lien or other encumbrance for taxes will attach to any of the
Rights and Assets. Buyer shall not be responsible for any sales tax related to
sales of product by Seller prior to the Closing Date.
2.13 Transferred Software. Schedule 2.13 sets forth a list of the Software
owned by Seller that will be transferred to Buyer at closing and which is
referred to in this Agreement as Transferred Software, subject to the exceptions
and limitations contained in Schedule 2.13.
2.14 Year 2000 Compliance. The products listed in Seller's published Year
2000 policy attached as Schedule 2.14 are Year 2000 compliant as set forth in
the policy. Seller has not expanded its representations and warranties
concerning Year 2000 compliance in any product warranty or customer agreement
beyond what is stated in Seller's published Year 2000 policy.
9
14
2.15 Statements True and Correct. To the knowledge of Seller, no
representation or warranty made herein by Seller, nor in any statement,
certificate or instrument to be furnished to Buyer by Seller pursuant to any
Acquisition Document, contains or will contain any untrue statement of material
fact or omits or will omit to state a material fact necessary to make these
statements contained herein and therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
3.1 Organization, Authority and Capacity. Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Buyer has the full power and authority necessary to (i) execute, deliver
and perform its obligations under the Acquisition Documents, and (ii) carry on
its business as it has been and is now being conducted and to own and lease the
properties and assets which it now owns or leases. Buyer is duly qualified to do
business and is in good standing in each jurisdiction in which a failure to be
so qualified or in good standing would have a material adverse effect on its
ability to perform its obligations under the Acquisition Documents.
3.2 Authorization and Validity. The execution, delivery and performance of
the Acquisition Documents to be executed and delivered by Buyer have been duly
authorized by all necessary action by Buyer. The Acquisition Documents to be
executed and delivered by Buyer have been or will be, as the case may be, duly
executed and delivered by Buyer and constitute or will constitute the legal,
valid and binding obligations of Buyer, enforceable in accordance with their
respective terms.
3.3 Absence of Conflicting Agreements or Required Consents. The execution,
delivery and performance by Buyer of the Acquisition Documents to be executed
and delivered by it: (i) do not require the consent of or notice to any
governmental or regulatory authority or any other third party except Foothill
Capital Corporation; (ii) will not conflict with any provision of Buyer's
Articles of Incorporation or bylaws; or (iii) will not conflict with or result
in a violation of any law, ordinance, regulation, ruling, judgment, order or
injunction of any court or governmental instrumentality to which Buyer is a
party or by which Buyer or any of its properties are bound.
3.4 Pending Litigation. There is no pending or, to the knowledge of Buyer,
threatened Action, whether private or public affecting Buyer which could affect
the enforceability of this Agreement or which could adversely affect any assets
or properties of Buyer or the ability of Buyer to consummate this purchase of
the Rights and Assets contemplated by, or perform its obligations under, this
Agreement.
10
15
ARTICLE 4
ADDITIONAL AGREEMENTS
4.1 Access to Seller Information. At reasonable times prior to the
Closing, Seller will afford the officers and authorized representatives of Buyer
access upon reasonable notice to all of the Seller's properties, books and
records that may relate to or concern the Rights and Assets and will furnish
such parties with such additional financial, operating and other information as
to the business and properties as such parties may from time to time reasonably
request. Such parties shall also be allowed access, upon reasonable notice, to
consult with the officers, employees, accountants, counsel and agents of the
other in connection with such investigation of the properties and business of
the Seller. No such investigation shall diminish or otherwise affect any of the
representations, warranties, covenants or agreements of any party under this
Agreement. At all times following the Closing, the parties will afford the
officers and authorized representatives of each party access upon reasonable
notice to each party's books and records that may relate to the Rights and
Assets as such parties may from time to time reasonably request. Notwithstanding
the foregoing, Seller's access afforded under the prior sentence shall be
limited to the books and records delivered to Buyer pursuant to this Agreement.
4.2 Affirmative Covenants of Seller. From the date hereof until the
earlier of the Closing Date or the termination of this Agreement, unless the
prior written consent of Buyer shall have been obtained, and except as otherwise
expressly contemplated herein, Seller shall:
(a) use reasonable commercial efforts to preserve intact the Rights
and Assets;
(b) confer on a regular and frequent basis with one or more
designated representatives of Buyer to report material matters relating to the
Rights and Assets;
(c) perform in all material respects all obligations under
agreements relating to or affecting the Rights and Assets; and
(d) notify Buyer of any event or circumstance which is reasonably
likely to have a material adverse effect on the Rights and Assets or would cause
or constitute a breach of any of Seller's representations, warranties or
covenants contained herein.
11
16
4.3 Negative Covenants of Seller.
(a) From the date hereof until the earlier of the Closing Date or
the termination of this Agreement, Seller will not do any of the following
without the prior written consent of Buyer:
(i) take any action which would (a) adversely affect the
ability of any party to the Acquisition Documents to obtain any consents
required for the transactions contemplated thereby, or (b) adversely affect the
ability of any party hereto to perform its covenants and agreements under the
Acquisition Documents;
(ii) amend any of its organizational or governing documents,
except as provided herein or for the purpose of accomplishing the transactions
contemplated by this Agreement;
(iii) impose, or suffer the imposition, of any Lien or permit
any Lien to exist with respect to the Rights and Assets;
(iv) other than pursuant to the Acquisition Documents, sell,
pledge or encumber, or enter into any contract to sell, pledge or encumber, any
interest in the Rights and Assets;
(v) grant any increase in compensation or benefits to the
Employees;
(vi) enter into or amend any employment contract between
Seller and any Employee (unless such amendment is required by law);
(vii) commence any litigation or settle any litigation
involving any liability related to the Rights and Assets;
(viii) except in the ordinary course of business and which is
not material, modify, amend or terminate any material contract or waive,
release, compromise or assign any material rights or claims related to the
Rights and Assets; or
(ix) take any action, or omit to take any action, which would
cause any of the representations and warranties contained in Article 2 to be
untrue or incorrect.
4.4 Public Announcements. Each party hereto agrees (i) not to disclose any
aspect of the discussions, negotiations, terms, status or conditions relating to
the transactions contemplated herein to any third party other than their
respective officers, directors, authorized employees and authorized
representatives and then only on a need to know basis and shall cause and
require all such persons to whom such information is disclosed to abide by the
provisions of this Section 4.4, and (ii) not to issue any press release or other
general public announcement (including in any trade journal or other
publication) of the transactions, in either case, without the prior written
consent of each
12
17
of the parties hereto, except to the extent that disclosure may be required by
law, in which case the party required to made such disclosure will give the
other party prior written notice. Notwithstanding the foregoing, Buyer
acknowledges that Seller is a public company and, as a result, will issue a
press release with regard to the transactions contemplated by this Agreement and
will provide Buyer with a copy of its proposed press release for Buyer's review
and comment prior to public release. Buyer also acknowledges that Seller will
make filings with the Securities and Exchange Commission regarding the
transactions, which filings will include a copy of this Agreement as an exhibit.
4.5 Treatment of Accrued Vacation. Buyer agrees to assume the liability
for and give the Employees full credit for the accrued and unpaid vacation as of
the Closing, up to Seller's current vacation policy. Seller shall retain
liability for any accrued and unpaid vacation in excess of Seller's current
vacation policy.
4.6 Confidentiality, Noncompetition and Nonsolicitation.
(a) Seller agrees that, for a period of four (4) years after the
Closing Date, it will not in any manner, directly or indirectly, by itself or in
conjunction with any other person, (i) conduct activities that are competitive
with the Business or (ii) acquire, establish or own any financial, beneficial or
other interest in (other than an interest consisting of less than five percent
(5%) of a class of publicly traded security), make any loan to or for the
benefit of, or render any managerial, marketing or other business advice, to any
entity that is then conducting activities that are competitive with the
Business.
(b) Seller further agrees that, for a period of four (4) years after
the Closing Date, Seller and its officers will keep confidential and not
directly or indirectly divulge to anyone or use or otherwise appropriate for its
own benefit or for the benefit of others, any knowledge or information of a
confidential nature with respect to the Rights and Assets, including all trade
secrets, pricing information or technical information (hereinafter referred to
as the "Confidential Data"), except for (i) a disclosure that is required by
law; (ii) information that becomes generally available to the public through no
fault of Seller, or (iii) information that is reasonably necessary for Seller to
disclose in connection with its permitted use of certain of the Transferred
Software pursuant to the License Agreement. Seller hereby acknowledges and
agrees that the prohibitions against disclosure of Confidential Data recited
herein are in addition to, and not in lieu of, any rights or remedies which
Buyer may have available pursuant to the laws of any jurisdiction or at common
law to prevent the disclosure of confidential information, and the enforcement
by Buyer of any other rights or available remedies which Buyer may possess in
law or equity. Seller acknowledges that Buyer has taken reasonable and
appropriate steps to ensure the confidentiality and non-disclosure of all such
Confidential Data.
(c) Seller also agrees that, for a period of four (4) years after
the Closing Date, Seller will not, for its own benefit or the benefit of others,
solicit any
13
18
person or entity that has had, or disrupt or attempt to disrupt, any
relationship, contractual or otherwise with Buyer or any of its affiliates
(including Seller, prior to the Closing), for the purpose of providing services
that are competitive with the Business.
(d) Seller further agrees that, for a period of two (2) years after
the Closing Date, Seller shall not induce, nor attempt to induce, any Employee,
to terminate his or her association with Buyer and Seller will not hire,
contract with or attempt to hire any Employee while such individual is an
Employee of Buyer or at any time within six months following termination of such
Employee. This covenant shall not apply to any general advertisement or
solicitation by Seller for employees. Buyer and Seller agree that if Seller
hires any Employee in violation of this Section 4.6(d) Seller shall pay to Buyer
as a penalty the amount of $50,000.
(e) The covenants contained in this Section 4.6 are considered by
the parties hereto to be fair, reasonable and necessary for the protection of
Buyer. The parties mutually agree that if a violation of any covenant contained
in this Section 4.6 occurs, such violation or threatened violation will cause
irreparable injury to Buyer and the remedy at law for any such violation or
threatened violation will be inadequate. Seller therefore agrees that Buyer
shall be entitled to appropriate equitable relief, including but not limited to
a temporary restraining order or a preliminary injunction, in addition to any
other remedy that might be available at law or in equity.
4.7 Nonsolicitation by Buyer.
(a) Nonsolicitation by Buyer. Buyer agrees that for a period of two
(2) years following the Closing Date, Buyer will not induce, nor attempt to
induce, any employee of Seller, other than a Employee, to terminate his or her
association with Seller.
(b) Protected Accounts. Notwithstanding anything in this Agreement
to the contrary, Buyer and its affiliates shall not, provide consulting and
training services to any of the "A" accounts (which are accounts that Seller
currently services or bills) listed on Schedule 4.7(b) for a period of one year
from the Closing Date and to any of the "B" accounts (which are accounts that
Seller currently has outstanding proposals) listed on Schedule 4.7(b) for a
period of 120 days from the Closing Date. In the event one or more of the "A"
accounts or "B" accounts subsequently desires to have its account managed by
Buyer, Seller shall continue to receive 85% of derived revenues (provided Seller
continues to provide consulting and training services to the account) with Buyer
receiving 15% of derived revenues. In the event the parties agree that Buyer
should provide the consulting and training services to such an Account, then
Seller shall receive 15% of derived revenues for managing the account with Buyer
receiving 85% of such derived revenues for providing the consulting and training
services.
4.8 Liabilities. Seller agrees to pay all Excluded Liabilities, as and
when due, except to the extent Seller has a valid defense against such payment
or except to the extent non-payment would not adversely effect the Assets and
Rights.
14
19
4.9 Conditions to Closing. Seller and Buyer agree to use their
commercially reasonable efforts to satisfy the closing conditions set forth in
Articles 5 and 6 of this Agreement by August 30, 1999, and if not by such time,
as soon thereafter as possible, provided that the foregoing shall not be deemed
to require the waiver of any condition that is not satisfied. Seller agrees, on
or prior to the Closing Date, to execute those documents listed in Article 5
hereof to which it is a party. Buyer agrees, on or prior to the Closing Date, to
execute those documents listed in Article 6 hereof to which they are a party.
4.10 Risk of Loss. Seller shall maintain all risk of condemnation,
destruction, loss or damage due to fire or other casualty from the date of this
Agreement until the Closing. If the condemnation, destruction, loss or damage is
such that the Rights and Assets are materially affected, then Buyer shall have
the right to terminate this Agreement. If Buyer nonetheless elects to close,
Seller shall remit all net condemnation proceeds or third party insurance
proceeds to Buyer and the Purchase Price shall be adjusted at Closing to reflect
such condemnation, destruction, loss or damage to the extent that insurance or
condemnation proceeds are not sufficient to cover such destruction, loss or
damage.
4.11 Title Search; Discharge of Liens. As soon as practicable after the
date hereof, Buyer shall ascertain all Liens, if any, to which any of the Rights
and Assets are subject and notify Seller in writing of the nature and extent
thereof, providing Seller with copies of Uniform Commercial Code searches made
pursuant to Article 9 thereof in all jurisdictions where there are any Rights
and Assets. As soon as practicable thereafter, but in no event later than two
months after the Closing, Seller shall discharge all such Liens.
4.12 Consents to Assignment. Nothing contained in the Agreement shall be
construed as an attempt to assign any contract or agreement that is not
assignable without the consent of the other party thereto unless such consent
shall have been obtained. If any such consent is not obtained prior to Closing,
Seller agrees to offer reasonable assistance to obtain such consents after the
Closing. Seller agrees to take all reasonable actions necessary, within 90 days
of Closing, to obtain consents to assignment of each of the agreements listed at
Schedule 4.12. Each of the agreements listed at Schedule 4.12, as assigned,
shall contain no guaranteed royalty provisions based on a minimum threshold. To
the extent Seller is unable to effect the assignment of the agreements listed on
Schedule 4.12 and Buyer is required to expend funds to effect such assignment,
Seller shall be responsible for such reasonable costs. Schedule 4.12 also shows
the amount of royalties paid by Seller under certain third party agreements.
Further, in order that the full value of every contract or agreement, if any,
included in the Rights and Assets may be realized, at Buyer's request, Seller
agrees to take all actions reasonably necessary to preserve for the benefit of
Buyer the rights and obligations of Seller under all such contracts and
agreements and to facilitate the collection of monies due and payable or to
become due and payable to Seller pursuant to such contracts or agreements and
promptly to remit the same to Buyer. Accordingly, Buyer shall be entitled to the
rights and benefits occurring after the Closing under such contracts and
agreements and shall, at its expense,
15
20
perform the Seller's obligations due to be performed under such contracts and
agreements.
4.13 Sublease/Lease of Santa Xxxxx Facilities. Beginning with the day
following the Closing, Buyer shall sublease Seller's facilities located at 0000
Xxxxx Xxxx., #00, Xxxxx Xxxxx, Xxxxxxxxxx 00000 (the "Facilities") on the terms
described herein and in a manner comparable to Seller's prior use. Buyer shall
pay Seller a monthly amount equal to all costs for the Facilities, including
rent, (as determined under the lease for the Facilities, including without
limitation any applicable prorations and miscellaneous charges required by the
terms of the lease), tenant improvement amortization (i.e. monthly payments
under the "Note" (as defined herein)), association fees, utilities and other
related costs for the Facilities in advance of the first day of each month for
which Buyer subleases the Facilities. The first such payment for the partial
month commencing immediately following the Closing, and only the first such
payment, shall be prorated to accommodate a partial month's usage. The first
such payment shall be paid within three business days of the Closing. Buyer
shall be allowed to sublease the Facilities until the earlier of (i) the date
the lease between Seller and Emkay Associates, dated November 2, 1998 (the
"Lease") is assigned to Buyer, (ii) the end of the term under the Lease, or
(iii) the date Emkay Associates as lessor terminates the Lease.
(a) Lease Assignment. Buyer acknowledges that Seller has not
obtained the consent of Emkay Associates ("Lessor") regarding the assignment of
the Lease from Seller to Buyer. Buyer covenants and agrees that it will use its
best efforts to facilitate the assignment of the Lease and all obligations
thereunder to Buyer as soon as practicable following Closing. If, as a result of
assigning or sub-letting the Lease to Buyer, Lessor elects to (i) treat such
assigning or sub-letting as a non-curable breach of the Lease, and (ii) raise
the rent under the Lease, then Seller and Buyer agree to equally share any
increase in rent up to and including an increase of 10 percent (10%). Seller
shall be solely responsible for any increase in rent beyond 10 percent (10%).
(b) Note Assignment/Security Deposit. Buyer acknowledges that
certain tenant improvements, for which Buyer will be receiving the benefit of,
were effected pursuant to a promissory note, in the favor of Emkay Associates,
in the original principal balance of $40,326 and dated March 1, 1999 (the
"Note"). The Note obligation shall be assumed by Buyer at the time Buyer is
assigned the Lease. At the time Buyer is assigned the Lease, Buyer shall provide
Lessor with a letter of credit or a similar instrument which will allow for the
release of Seller's letter of credit which is currently used as a security
deposit under the Lease.
(c) Compliance. During the time of possession by Buyer, the
Facilities shall be occupied and used solely in accordance with the terms and
conditions of the Lease, all valid laws, applicable building codes, zoning
ordinances and regulations, including all rules and regulations governing the
Facilities. Buyer agrees that it shall not permit occupancy of the Facilities by
any parties other than Buyer and its affiliates. Buyer shall be required to
carry its own insurance insuring all items at the Facilities. Buyer will comply
in all respects with the lease for the Facilities.
16
21
(d) Return of Facilities. Upon vacating the Facilities, Buyer shall
deliver the Facilities clean and free of all debris. Buyer shall repair at
Buyer's expense any damage caused by Buyer, and shall maintain the order,
condition, and repair, all improvements, structures, walls, doors, windows,
plumbing, lighting, air conditioning, heating, electrical and lighting
facilities and equipment at the Facilities.
(e) Indemnity. Buyer hereby indemnifies and shall forever hold
Seller harmless from and against any "Losses" (as defined in Section 8.1 below)
incurred by Seller as a result of the possession of the Facilities by Buyer. The
indemnity provided in this Section 4.13(e) shall not be subject to any offsets,
thresholds or other minimums.
4.14 Transfer of Employees. The next business day after the Closing Date,
Buyer shall offer employment to the salaried and non-salaried employees of
Seller who work in connection with the Business who are identified on Schedule
2.11(a). All such employees accepting Buyer's offer of employment are
hereinafter referred to as the "Employees." Buyer's offer of employment to the
Employees shall be for "at-will" employment and will be on terms (including
salary, title and position) which are generally comparable (in the aggregate) to
the terms Seller employs such individuals. Buyer will offer benefits to
Employees which are comparable to those made available to Buyer's employees of
similar salary, title and position. Buyer shall recognize prior service with
Seller or any of its affiliates under Seller's or any of its affiliates
corresponding plans for such Employees prior to the Closing Date as service with
Buyer in connection with (i) any welfare benefit plan for purposes of any
waiting period and eligibility purposes to the extent permitted by the terms of
the plans, and (ii) any pension plan or other benefit plan for purposes of
eligibility and vesting to the extent such Employees elect to participate in
such plans. Accrued and unpaid vacation for the Employees shall be handled in
accordance with Section 4.5.
4.15 Third Party Software. Schedule 4.15 lists all material third party
software used in the Business as it relates to the Rights and Assets. Seller
shall use commercial reasonable efforts to assign such third party software to
Buyer to the extent assignable. Any increase in licensing fees related to such
assignments experienced by Buyer, assuming like terms and no increase in the
number of authorized users or machines, shall be shared equally by Seller and
Buyer up to and including an increase of 10 percent (10%). Seller shall be
solely responsible for any increase in licensing fees beyond 10 percent (10%)
(assuming like terms and no increase in the number of authorized users or
machines).
17
22
ARTICLE 5
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to consummate the Acquisition is subject to the
satisfaction or waiver, at or prior to Closing, of each of the following
conditions:
5.1 Representations and Warranties. The representations and warranties of
Seller set forth in this Agreement, or any document or instrument delivered to
Buyer hereunder, shall be true and correct as of the Closing Date with the same
force and effect as if such representations and warranties had been made at and
as of the Closing Date, except with respect to any of such representations and
warranties referring to a state of facts existing on a specified date prior to
the Closing Date, it shall be sufficient if at the Closing Date such
representation and warranty continues to describe accurately the state of facts
existing on the date so specified.
5.2 Performance; Covenants. All of the terms, covenants and conditions of
the Acquisition Documents to be complied with or performed by Seller at or prior
to Closing shall have been complied with and performed in all material respects
including, but not limited to, the delivery of the following documents:
(a) A certificate of good standing regarding Seller certified by the
Secretary of State of the State of Delaware dated within ten (10) business days
of the Closing;
(b) An Assignment and Xxxx of Sale executed by Seller in
substantially the form included in Exhibit 5.2(b) hereof;
(c) A certificate dated as of the Closing Date signed by the duly
authorized officers of Seller certifying the satisfaction of the condition in
Section 5.1 and that Seller has fulfilled all of the conditions of this Article
5;
(d) Resolutions of Seller's Board of Directors (and shareholders, if
necessary) in form and substance reasonably satisfactory to Buyer approving the
execution, delivery and performance of this Agreement and the consummation of
the Acquisition, certified by an appropriate officer of Seller; and
(e) Incumbency certificates certifying the identity of the officers
of Seller.
5.3 Necessary Consents and Approvals. Buyer and Seller shall have obtained
all licenses, consents or permits from, or provided all required notices to
applicable Regulatory Authority, and all waiting periods required by Law shall
have expired, which are necessary in order for Buyer and Seller to consummate
the Acquisition.
5.4 No Injunction, Etc. No action, proceeding, investigation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency,
18
23
or legislative body to enjoin, restrain, prohibit or obtain substantial damages
in respect of, or which is related to, or arises out of, this Agreement or the
consummation of the Acquisition, or which is related to or arises out of the
business or operations of Seller, if such action, proceeding, investigation or
legislation, in the reasonable judgment of Buyer or its counsel, would make it
inadvisable to consummate such transactions.
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to close the Acquisition are subject to the
satisfaction or waiver, at or prior to Closing, of each of the following
conditions:
6.1 Representations and Warranties. The representations and warranties of
Buyer set forth in this Agreement, or any document or instrument delivered to
any party hereunder, shall be true and correct as of the Closing Date with the
same force and effect as if such representations and warranties had been made at
and as of the Closing Date, except with respect to any of such representations
and warranties referring to a state of facts existing at a specified date prior
to the Closing Date, it shall be sufficient if at the Closing Date such
representation and warranty continues to describe accurately the state of facts
existing on the date so specified.
6.2 Performance; Covenants. All of the terms, covenants and conditions of
this Agreement to be complied with or performed by Buyer at or prior to the
Closing shall have been complied with and performed in all material respects,
including, but not limited to delivery of the following documents:
(a) The License Agreement;
(b) A certificate dated as of the Closing Date signed by a duly
authorized officer of Buyer certifying the satisfaction of the condition in
Section 6.1 and that Buyer has fulfilled all of the conditions of this Article
6;
(c) Resolutions adopted by the Buyer's Board of Directors in form
and substance reasonably satisfactory to Seller approving the execution,
delivery and performance of this Agreement and the consummation of the
Acquisition, certified by the Secretary of Buyer; and
(d) Incumbency Certificate certifying the identity of the officers
of Buyer; and
(e) The Assumption Agreement.
6.3 Necessary Consents and Approvals. Buyer and Seller shall have obtained
all licenses, consents and permits, provided all notices, and all waiting
periods required by Law shall have expired, necessary in order for Buyer and
Seller to consummate the
19
24
Acquisitions and for the continued operation of the business of Seller after the
Closing Date consistent with their operation prior to the Closing Date,
including all consents and approvals listed on the Schedules hereto.
6.4 No Injunction, Etc. No action, proceeding, investigation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency, or legislative body to enjoin, restrain, prohibit or obtain
substantial damages in respect of, or which is related to, or arises out of,
this Agreement or the consummation of the Acquisition, if such action,
proceeding, investigation or legislation, in the reasonable judgment of Seller
or its counsel, would make it inadvisable to consummate such transactions.
ARTICLE 7
TERMINATION
7.1 Right of Termination. This Agreement and the Acquisition may be
terminated at any time prior to the Closing Date:
(a) By the mutual written consent of Buyer and Seller.
(b) By Buyer in the event that the conditions set forth in Article 6
of this Agreement shall not have been satisfied or waived by August 30, 1999,
unless such satisfaction shall have been frustrated or made impossible by any
act or failure to act of Buyer.
(c) By Seller in the event that the conditions set forth in Article
6 of this Agreement shall not have been satisfied or waived by August 30, 1999,
unless such satisfaction shall have been frustrated or made impossible by any
act or failure to act of Seller.
(d) By Seller or Buyer if the Closing shall not have occurred by
August 30, 1999.
7.2 Effect of Termination. In the event of termination in accordance with
Section 7.1, this Agreement shall become void and of no further force or effect,
without any liability on the part of any of the parties hereto or their
respective shareholders, directors, officers or employees, except the
obligations of each party to preserve the confidentiality of documents,
certificates and information furnished to such party pursuant thereto and for
any obligation or liability of any party based on or arising from any breach or
default by such party with respect to its representations, warranties, covenants
or agreements contained in the Acquisition Documents.
20
25
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by Seller .
(a) Seller shall indemnify and hold harmless Buyer and its officers,
directors, members, agents and affiliates, from and against any and all demands,
claims, actions or causes of action, assessments, losses, diminution in value,
damages liabilities, costs and expenses, including but not limited to reasonable
attorneys' fees ("Losses"), suffered or incurred by any such party by reason of
or arising out of any of the following:
(i) the Excluded Liabilities;
(ii) the breach of any representation or warranty contained in
Article 2 hereof or in any Acquisition Document, Schedule, Exhibit or
certificate delivered by Seller in connection therewith; and
(iii) the non-fulfillment of any covenant or agreement of
Seller contained in the Acquisition Documents or in any Schedule, Exhibit or
certificate delivered by Seller in connection therewith.
(b) No claim for indemnification with respect to any alleged
misrepresentation or breach of warranty may be made after two (2) years
following the Closing Date; provided, however, that the right to indemnification
shall extend to four (4) years following the Closing Date such period with
respect to any claim brought for a misrepresentation or breach of Section 2.9(a)
of this Agreement.
(c) Buyer shall be entitled to seek indemnification hereunder only
when the aggregate amount of all such Losses exceeds $50,000, in such case,
Buyer may recover all of its Losses from Seller, provided, however, that the
maximum liability of Seller to Buyer for all Losses subject to indemnification
hereunder shall be equal to the Purchase Price.
8.2 Indemnification by Buyer.
(a) Buyer shall indemnify and hold harmless Seller, any of Seller's
officers, directors, agents and affiliates, from and against any and all Losses
suffered or incurred by any such party by reason of, or arising out of any of
the following:
(i) the Assumed Liabilities;
(ii) the breach of any representation or warranty contained in
Article 3 hereof or in any Acquisition Document, Schedule, Exhibit or
certificate delivered by Buyer in connection therewith; or
21
26
(iii) the non-fulfillment of any covenant or agreement of
Buyer contained in the Acquisition Documents, Schedule, Exhibit or
certificate delivered by Buyer in connection therewith.
(b) No claim for indemnification with respect to any alleged
misrepresentation or breach of warranty may be made after two (2) years
following the Closing Date.
(c) The maximum liability of Buyer to Seller for all Losses subject
to indemnification hereunder shall be equal to the Purchase Price.
8.3 Notice and Opportunity to Defend. Any party entitled to be indemnified
under this Article 8 (the "Indemnified Party") shall promptly notify in writing
the indemnifying party (the "Indemnifying Party") of any matter giving rise to
an obligation to indemnify and the Indemnifying Party shall defend such claim at
its expense with counsel of its choice reasonably acceptable to the Indemnified
Party, provided that the Indemnifying Party may not settle any such claim
without the consent of the Indemnified Party. The Indemnified Party agrees to
cooperate with the Indemnifying Party and to make reasonably available to the
Indemnifying Party any necessary records or documents in the possession of the
Indemnified Party which are necessary to defend such claim. If the Indemnifying
Party does not defend or settle such claim, the Indemnified Party may do so
without the Indemnifying Party's participation, in which case the Indemnifying
Party shall pay the expenses of such defense, and the Indemnified Party may
settle or compromise such claim without the Indemnifying Party's consent. The
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations hereunder except to the extent
that the Indemnifying Party is actually prejudiced by such failure to give
notice.
8.4 Survival and Exclusivity. The representations and warranties of the
parties contained in the Acquisition Documents or in any, Schedule, Exhibit or
certificate delivered in connection therewith shall survive the Closing and
shall not be extinguished thereby notwithstanding any investigation or other
examination by any party, provided that from and after the Closing the remedies
set forth in this Article 8 shall constitute the sole and exclusive remedy for
any inaccuracy or breach of any such representation or warranty. Any indemnified
Loss that is not covered by insurance maintained by the Indemnifying Party shall
be reduced by the amount of any insurance proceeds actually received from
insurance maintained by the Indemnified Party. No indemnified Loss shall be
deemed to have been sustained by an Indemnified Party to the extent of any tax
savings realized by such Indemnified Party with respect thereto. The limitations
contained in this Article 8 shall not apply to fraud or intentional
misrepresentation. All provisions of this Agreement to be performed after the
Closing shall survive the Closing.
22
27
ARTICLE 9
CERTAIN DEFINITIONS
9.1 Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
"Acquisition Documents" shall mean this Agreement and the Schedules,
Exhibits and certificates to be delivered pursuant to this Agreement.
"Agreement" shall mean this Asset Purchase Agreement, including the
Exhibits and Schedules delivered pursuant hereto and incorporated herein by
reference.
"Business" shall mean the development, marketing and selling of object
oriented application development tools and related products based on the
Transferred Software, as set forth on Schedule 2.13 hereto, and the providing of
support and maintenance services in connection therewith (the "Business"). The
parties hereto agree that the definition of the term "Business" does not include
the consulting and training business (including as it applies to Smalltalk).
"Employees" shall mean the employees set forth in Schedule 2.11(a).
"Exhibits" shall mean the Exhibits so marked, copies of which are attached
to this Agreement. Such Exhibits are hereby incorporated by reference herein and
made a part hereof, and may be referred to in this Agreement and any other
related instrument or document without being attached hereto.
"Intellectual Property" shall mean the copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor, material
technology rights and licenses, material computer software (including, without
limitation, any source or object codes therefor or documentation relating
thereto), trade secrets, franchises, know-how, inventions, and other
intellectual property rights, excluding third party software.
"Known," "to the knowledge," "to the best knowledge of," "aware" and words
of similar import or effect with respect to a person or entity shall mean the
actual knowledge of such person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a person or its assets,
Liabilities or business, including those promulgated, interpreted or enforced by
any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
23
28
"Liens" shall mean any and all liens, charges, claims or encumbrances
of any nature whatsoever.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority.
"Payroll Expenses" shall mean all wages, commissions, vacation, holiday,
workers' compensation and sick pay obligations of Seller with respect to the
Employees accrued through the Closing Date.
"Permit" shall mean any of the following with respect to federal, state,
local, and foreign government: approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets or business, but shall not include copyrights, trademarks
and patents.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business, group acting in concert, or any person acting in a
representative capacity.
"Regulatory Authorities" shall mean, collectively, all federal and state
regulatory agencies having jurisdiction over the parties.
"Tax" or "Taxes" shall mean any federal, state, county, local, foreign or
other tax, charge, imposition or other levy, whether or not disputed (including
interest or penalties thereon) including without limitation, income taxes,
estimated taxes, excise taxes, sales taxes, use taxes, gross receipts taxes,
franchise taxes, taxes on earnings and profits, employment and payroll related
taxes, withholding taxes, property taxes, real property transfer taxes, Federal
Insurance Contributions Act taxes, taxes on value added and import duties, and
any Liabilities related to unclaimed property or other escheat-natured
Liability, whether or not measured in whole or in part by net income, imposed by
the United States or any political subdivision thereof or by any jurisdiction
other than the United States or any political subdivision thereof.
"Transferred Software" shall mean the software list on Schedule 2.13.
9.2 In addition to the terms defined in Section 9.1 above, the terms set
forth below shall have the meanings ascribed thereto in the referenced sections:
Acquisition - Preamble
Buyer - Intro
Closing - Section 1.7
24
29
Closing Date - Section 1.7
Confidential Data - Section 4.6
Facilities - Section 1.5
Indemnified Party - Section 8.3
Indemnifying Party - Section 8.3
Liabilities - Section 1.9
License Agreements - Sections 1.3 and 1.4
Losses - Section 8.1
Purchase Price - Section 1.6
Rights and Assets - Section 1.1
Seller - Intro
Seller Agreements - Section 2.10
9.3 Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Notices.
(a) Any notice sent in accordance with the provisions of this
Section 10.1 shall be deemed to have been received (even if delivery is refused
or unclaimed) on the date which is: (i) the date of proper posting, if sent by
certified U.S. mail or by Express U.S. mail or private overnight courier; or
(ii) the date on which sent, if sent by facsimile transmission, with
confirmation and with the original to be sent by certified U.S. mail, addressed
as follows:
If to Seller: ObjectShare, Inc.
00000 Xxxx Xxxxxx
Xxxxx X
Xxxxxx, Xxxxxxxxxx 00000
Attention:
Telecopy Number: (000) 000-0000
Copy to Counsel: Xxxx Xxxxxxxx Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy Number: (000) 000-0000
If to Buyer: Cincom Systems, Inc.
00 Xxxxxxxx Xxxxxx
00
00
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxx
Telecopy Number: (000) 000-0000
Copy to Counsel: Cincom Systems, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: General Counsel
Telecopy Number: (000) 000-0000
(b) Any party hereto may change its address specified for notices
herein by designating a new address by notice in accordance with this Section
10.1.
10.2 Expenses. Except as provided in Article 8, each of the parties hereto
shall bear and pay all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder.
10.3 Brokers and Finders. In the event of a claim by any broker or finder
based upon his or its representing or being retained by or allegedly
representing or being retained by Seller or Buyer, each of Seller and Buyer, as
the case may be, agrees to indemnify and hold the other Party harmless of and
from any Liability in respect of any such claim without regard to the
limitations contained in Section 8.1.
10.4 Further Assurances. Each party covenants that at any time, and from
time to time, after the Closing, it will execute such additional instruments and
take such actions as may be reasonably requested by the other parties to confirm
or perfect or otherwise to carry out the intent and purposes of this Agreement.
10.5 Waiver. Any failure on the part of any party to comply with any of
its obligations, agreements or conditions hereunder may be waived by any other
party to whom such compliance is owed. No waiver of any provision of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver.
10.6 Assignment. This Agreement shall not be assignable by any of the
parties hereto without the written consent of the other parties, provided that
each party may assign its rights and obligations under this Agreement without
the consent of the other party to any direct or indirect wholly-owned subsidiary
of such assigning party or to (i) any party that acquires substantially all of
the assets or stock of the assigning party or (ii) any successor entity
resulting from a merger or consolidation of or with the assigning party. No such
assignment shall relieve the assigning party of its obligations hereunder.
10.7 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
executors,
26
31
administrators, successors and assigns. This Agreement shall survive the Closing
and not be merged therein.
10.8 Headings. The section and other headings in this Agreement are
inserted solely as a matter of convenience and for reference, and are not a part
of this Agreement.
10.9 Entire Agreement. All Schedules and Exhibits attached to this
Agreement are by reference made a part hereof. This Agreement and the Exhibits,
Schedules and certificates and other documents delivered pursuant hereto or
incorporated herein by reference, contain and constitute the entire agreement
among the parties and supersede and cancel any prior agreements,
representations, warranties, or communications, whether oral or written, among
the parties relating to the transactions contemplated by this Agreement. Neither
this Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an agreement in writing signed by the party
against whom or which the enforcement of such change, waiver, discharge or
termination is sought.
10.10 Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the Laws of the State of California, without regard
to any applicable conflicts of Laws. The provisions of this Agreement are
severable and the invalidity of one or more of the provisions herein shall not
have any effect upon the validity or enforceability of any other provision.
10.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(Signature Page Follows)
27
32
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as of the day and year first above written.
CINCOM SYSTEMS, INC.
By: /s/ XXXXXX X. XXXX
___________________________________
Xxxxxx X. Xxxx, President
OBJECTSHARE, INC.
By: /s/ XXXXXX X. XXXX
___________________________________
Xxxxxx X. Xxxx, Chairman, President
and Chief Executive Officer
28
