Exhibit 10.1
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
BY AND BETWEEN
TTECH ACQUISITION CORP.
(PURCHASER)
FIND/SVP, INC.
(PURCHASER PARENT),
SOPHEON CORPORATION
(COMPANY)
AND
SOPHEON PLC
(COMPANY PARENT)
JUNE 25, 2003
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
ARTICLE 2
PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 Purchase of Assets and Assumption of Liabilities.....................11
2.2 Purchase Price.......................................................15
2.3 Closing and Closing Deliveries.......................................21
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization.........................................................25
3.2 Capitalization.......................................................25
3.3 Due Authorization....................................................25
3.4 No Breach............................................................25
3.5 Clear Title..........................................................26
3.6 Condition and Sufficiency of Assets..................................26
3.7 Litigation...........................................................26
3.8 Labor Matters........................................................26
3.9 Tax Matters..........................................................27
3.10 Employee Benefits....................................................27
3.11 No Guaranties........................................................28
3.12 Financial Statements.................................................28
3.13 Absence of Certain Developments......................................29
3.14 Intellectual Property................................................29
3.15 Compliance with Laws.................................................30
3.16 Operating Contracts..................................................30
3.17 Real Estate..........................................................31
3.18 Accounts Receivable..................................................31
3.19 Books and Records; Bank Accounts.....................................31
3.20 Employees and Employee Related Commitments...........................31
3.21 Permits..............................................................31
3.22 Other Material Contracts and Obligations.............................32
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3.23 Subsidiaries.........................................................32
3.24 Insurance............................................................32
3.25 Brokers..............................................................33
3.26 Relationship with Related Persons....................................33
3.27 Debt Instruments.....................................................33
3.28 Customers and Suppliers..............................................34
3.29 Affiliate Loans......................................................34
3.30 Absence of Certain Business Practices................................34
3.31 Insolvency...........................................................34
3.32 Representations and Warranties Regarding the Company Parent..........35
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE
PURCHASER PARENT
4.1 Organization.........................................................36
4.2 Due Authorization....................................................36
4.3 No Breach............................................................36
4.4 Brokers..............................................................37
4.5 Articles of Incorporation and Bylaws.................................37
4.6 Capitalization.......................................................37
4.7 SEC Reports..........................................................37
4.8 Stockholders' Consent................................................38
ARTICLE 5
PERFORMANCE AND COVENANTS PENDING CLOSING
5.1 Access to Information................................................38
5.2 Conduct of Business..................................................38
5.3 Encumbrances.........................................................39
5.4 Pay Increases........................................................39
5.5 Restrictions on New Contracts........................................39
5.6 Preservation of Business.............................................39
5.7 Payment and Performance of Obligations...............................39
5.8 Restrictions on Sale of Assets.......................................40
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5.9 Prompt Notice........................................................40
5.10 Consents.............................................................40
5.11 Copies of Documents..................................................40
5.12 No Solicitation of Other Offers......................................40
5.13 Accounts Receivable and Payable......................................41
5.14 Inventory............................................................41
5.15 Insurance............................................................41
5.16 Filing Reports and Making Payments...................................41
5.17 Capital Expenditures.................................................41
5.18 Lien Search..........................................................41
5.19 Transition Services Agreement........................................41
5.20 [THIS SECTION INTENTIONALLY OMITTED.]................................42
5.21 Commercial Agreement.................................................42
5.22 Employment Agreements................................................42
ARTICLE 6
MUTUAL CONDITIONS PRECEDENT TO THE PARTIES' OBLIGATIONS
6.1 Proceedings..........................................................42
6.2 Consents and Approvals...............................................42
ARTICLE 7
ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASER AND THE PURCHASER PARENT
7.1 Accuracy of Representations and Warranties...........................43
7.2 Compliance with Covenants and Agreements.............................43
7.3 No Material Adverse Change...........................................43
7.4 Legal Opinion........................................................43
7.5 Corporate Action.....................................................43
7.6 Employment Agreements................................................43
7.7 Confidentiality Agreements and Non-Competition.......................43
ARTICLE 8
ADDITIONAL CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
8.1 Accuracy of Representations and Warranties...........................44
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8.2 Compliance with Covenants and Agreements.............................44
8.3 Legal Opinion........................................................44
8.4 Delivery of Receipt for Purchase Price and the Shares................44
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification by the Company.......................................44
9.2 Indemnification by the Purchaser.....................................46
9.3 Procedure for Indemnification........................................47
9.4 Dispute Resolution...................................................49
9.5 Effect of Insurance..................................................50
ARTICLE 10
EMPLOYEE MATTERS
10.1 Information on Active Employees......................................51
10.2 Employment of Active Employees by the Purchaser......................51
10.3 Terms and Conditions of Offers of Employment.........................52
10.4 Salaries and Benefits Prior to Closing...............................52
10.5 Benefits and Benefit Plans...........................................52
10.6 Company's Retirement and Savings Plans...............................52
10.7 Further Actions......................................................53
10.8 Forms................................................................53
10.9 WARN Act.............................................................53
10.10 COBRA................................................................54
10.11 No Intended or Incidental Third Party Beneficiary...................54
ARTICLE 11
PERFORMANCE FOLLOWING THE CLOSING DATE
11.1 Further Acts and Assurances..........................................54
11.2 Confidential Information and Non-Competition Agreements..............54
11.3 Injunctive Relief....................................................58
11.4 Blue Pencil Doctrine.................................................58
11.5 Company Parent Indemnification Shares................................58
11.6 Consents.............................................................58
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11.7 Certain Tax Matters..................................................59
11.8 Covenant Regarding Active Hired Employee Non-Compete.................60
ARTICLE 12
TERMINATION
12.1 Termination..........................................................60
12.2 Return of Documents and Nondisclosure................................60
ARTICLE 13
MISCELLANEOUS
13.1 Survival of Representations and Warranties, Covenants and Agreements 61
13.2 Preservation of and Access to Records................................61
13.3 Cooperation..........................................................61
13.4 Public Announcements.................................................61
13.5 Notices..............................................................62
13.6 Entire Agreement.....................................................62
13.7 Remedies.............................................................63
13.8 Amendments...........................................................63
13.9 Successors and Assigns...............................................63
13.10 Fees and Expenses....................................................63
13.11 Governing Law and Jurisdiction.......................................63
13.12 Counterparts and Facsimile Signatures................................64
13.13 Headings.............................................................64
13.14 [THIS SECTION INTENTIONALLY OMITTED].................................64
13.15 Number and Gender....................................................64
13.16 Severability.........................................................64
13.17 Parties in Interest..................................................64
13.18 Waiver...............................................................65
13.19 Construction.........................................................65
13.20 Specific Performance.................................................65
13.21 Supplementation of Schedules.........................................65
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AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (this "AGREEMENT")
is made, entered into and effective as of the 25th day of June, 2003, by and
between TTECH ACQUISITION CORP., a Delaware corporation (the "PURCHASER"),
FIND/SVP, INC., a New York corporation (the "PURCHASER PARENT"), SOPHEON
CORPORATION, a Minnesota corporation (the "COMPANY") and SOPHEON PLC, a
registered corporation in the United Kingdom (the "COMPANY PARENT").
RECITALS
A. The Company is a knowledge services company that provides
information management services and management of client intellectual property,
through the use of the Company's proprietary software, methods and processes.
B. The Company operates two distinct business divisions: (i) the
IM Division, which provides research, services and tools that improve and
optimize corporate information delivery, analysis, application and use by
conducting primary and secondary research for information and knowledge
involving market factors that affect the success or failure of a client's
business, including competitive intelligence, market intelligence and technology
intelligence, which has, as its core, the aggregation, interpretation, and
assimilation capabilities conducted by human researchers (versus
machine-generated data and information) and does not offer or provide, other
than portal technology, software development, installation or integration
services (the "IM DIVISION"), and (ii) business process solutions improvement
and consultation focused on business processes, including innovation and product
development, through the use of, among other things, proprietary software
solutions that do not involve human-based primary and secondary research,
involving consultation with respect to business process improvement and which
includes reselling and enhancements made to best practices content in the
business process industry, reselling best practices content to the product
development process market (where content is sold alone or imbedded in
software), software development, installation and integrator services (the "BPS
DIVISION").
C. The Purchaser desires to purchase and assume, as applicable,
and the Company desires to sell, transfer, convey, assign and deliver, as
applicable, (i) substantially all of the assets of the IM Division pursuant to
this Agreement, and (ii) certain specified liabilities and obligations of the IM
Division in connection with the purchase of such assets.
D. It is the intention of the parties hereto that, upon
consummation of the transactions contemplated by and pursuant to this Agreement,
the Purchaser shall own substantially all of the assets of the IM Division other
than the Excluded Assets.
E. The Purchaser Parent and the Company Parent will materially
benefit from the transactions contemplated hereby.
F. The parties originally entered into that certain Asset
Purchase Agreement as the predecessor to this Agreement (the "ASSET PURCHASE
AGREEMENT"), on June 5, 2003. Pursuant to that certain First Amendment to Asset
Purchase Agreement dated concurrently herewith, the
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parties amended and restated the Asset Purchase Agreement in accordance with the
terms of such amendment.
AGREEMENT
In consideration of the foregoing Recitals and the mutual promises
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified:
"AAA RULES" has the meaning set forth in Section 9.4(b) of this
Agreement.
"ACTIVE EMPLOYEES" has the meaning set forth in Section 10.1 of this
Agreement.
"ACQUISITION PROPOSAL" means any proposal relating to the possible
acquisition of the Company whether by way of merger, purchase of capital stock
of the Company representing fifty percent (50%) or more of the voting power or
equity of the Company, purchase or license of all or substantially all of the
assets of the Business, or otherwise. The foregoing shall not apply to
transactions which affect only the BPS Division, or a sale or exchange (or
similar transaction) if the buyer will honor this Agreement.
"AFFILIATE" when used in reference to a specified Person, means any
Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with the specified
Person.
"AGREEMENT" has the meaning set forth in the introductory paragraph
hereof.
"ANCILLARY DOCUMENTS" means the documents, instruments and agreements
to be executed and/or delivered by the parties pursuant to this Agreement or any
Ancillary Document.
"APPLICABLE LAWS" means any and all laws, ordinances, constitutions,
regulations, statutes, treaties, rules, codes, and Injunctions adopted, enacted,
implemented, promulgated, issued, entered or deemed applicable by or under the
authority of any Governmental Body having jurisdiction over (i) a specified
Person or any of such Person's properties or assets, or (ii) any of such
Person's officers, directors, employees, consultants or agents in connection
with their activities on behalf of such Person. Applicable Laws include, without
limitation, Environmental Laws, state and local zoning laws and ordinances, land
use and building laws, laws respecting sale of services, laws respecting
employment and labor, and laws respecting bidding on certain contracts.
"ASSET PURCHASE AGREEMENT" has the meaning set forth in Recitals to
this Agreement.
"ASSETS" has the meaning set forth in Section 2.1(a)(i) of this
Agreement.
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"ASSUMED LIABILITIES" has the meaning set forth in Section 2.1(b)(i) of
this Agreement.
"AUDITOR" has the meaning set forth in Section 2.2(b)(i) of this
Agreement.
"AVERAGE CLOSING PRICE" has the meaning set forth in Section 2.2(a)(ii)
of this Agreement.
"BPS DIVISION" has the meaning set forth in the Recitals of this
Agreement.
"BALANCE SHEET" has the meaning set forth in Section 3.12 of this
Agreement.
"BALANCE SHEET DATE" has the meaning set forth in Section 3.12 of this
Agreement.
"BASKET AMOUNT" has the meaning set forth in Section 9.1 of this
Agreement.
"BENEFIT PLAN" means any and all bonus, deferred compensation,
incentive compensation, severance pay, pension, profit sharing, retirement,
group or individual insurance, welfare benefit, stock option, restricted stock,
stock purchase, stock appreciation, phantom stock, any other fringe benefit
plan, arrangement or practice, written or otherwise, whether formal or informal,
maintained, sponsored or participated in by the Company or any other "employee
benefit plan" (within the meaning of Section 3(3) of ERISA).
"BUSINESS" means the business of the Company's IM Division.
"BUSINESS INTELLECTUAL PROPERTY" has the meaning set forth in Section
3.14 of this Agreement.
"CAPITAL REORGANIZATION" has the meaning set forth in Section
11.2(b)(v) of this Agreement.
"CLOSING" has the meaning set forth in Section 2.3(a) of this
Agreement.
"CLOSING BALANCE SHEET" has the meaning set forth in Section
2.2(b)(i)(A) of this Agreement.
"CLOSING BALANCE SHEET DATE" has the meaning set forth in Section
2.2(b)(3) of this Agreement.
"CLOSING CASH PAYMENT" has the meaning set forth in Section 2.2(a)(i)
of this Agreement.
"CLOSING CERTIFICATE" has the meaning set forth in Section 2.2(b)(i) of
this Agreement.
"CLOSING DATE" has the meaning set forth in Section 2.3(a) of this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
"COMMERCIAL AGREEMENT" has the meaning set forth in Section 5.21 of
this Agreement.
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"COMPANY" has the meaning set forth in the introductory paragraph
hereof.
"COMPANY COMPETITIVE BUSINESS" has the meaning set forth in Section
11.2(b)(ii) of this Agreement.
"COMPANY INDEMNIFIED PARTIES" has the meaning set forth in Section 9.2
of this Agreement.
"COMPANY NON-COMPETE PARTIES" has the meaning set forth in Section
11.2(b)(ii) of this Agreement.
"COMPANY PARENT" has the meaning set forth in the introductory
paragraph hereof.
"COMPANY PARENT STOCK" has the meaning set forth in Section 11.5 of
this Agreement.
"COMPETING BUSINESS" has the meaning set forth in Section 3.26 of this
Agreement.
"CONFIDENTIAL INFORMATION" means any information or compilation of
information not generally known to the public or the industry or which the
Company has not disclosed to third parties without a written obligation of
confidentiality, which is proprietary to the Company, relating to the Company's
procedures, techniques, methods, concepts, ideas, affairs, products, processes
and services, including, but not limited to, information relating to marketing,
merchandising, selling, research, development, manufacturing, purchasing,
accounting, engineering, financing, costs, pricing and pricing methods,
customers, suppliers, creditors, employees, contractors, agents, consultants,
customers, plans, pricing, billing, needs of customers and products and services
used by customers, all lists of customers and their addresses, prospects, sales
calls, products, services, prices and the like as well as any specifications,
formulas, plans, drawings, accounts or sales records, sales brochures, code
books, manuals, trade secrets, knowledge, know-how, pricing strategies,
operating costs, sales margins, methods of operations, invoices or statements
and the like; PROVIDED, HOWEVER, that the term "Confidential Information" shall
not be deemed to include (i) information which becomes generally available to
the public without any fault of the Company, or (ii) becomes available to the
applicable party on a non-confidential basis and without any breach of an
agreement of confidentiality from a source other than the Company or the
Purchaser, or (iii) information that is disclosed to a Governmental Body
pursuant to Applicable Law, and therefore publicly available, which is not
granted, or otherwise subject to, a confidentiality and/or non-disclosure
order(s) or status.
"CONTRACT" means any agreement, lease of non-real estate, license
agreement (other than a license granted by a Governmental Body), contract,
consensual obligation, promise, commitment, arrangement, understanding or
undertaking, (whether written or oral and whether express or implied) of any
type, nature or description that is legally binding but excluding leases of
Leased Real Estate. As used herein, the word "Contract" shall be limited in
scope if modified by an adjective specifying the type of contract to which this
Agreement or a Section hereof refers.
"CONTROLLED GROUP" has the meaning set forth in Section 3.10(a) of this
Agreement.
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"CONTROLLED PERSON" when used in reference to a specified Person, means
any Person that is directly or indirectly, through one or more intermediaries,
controlled by a specified Person.
"DEBT INSTRUMENTS" has the meaning set forth in Section 3.27 of this
Agreement.
"DISCLOSE" means to reveal, deliver, divulge, disclose, publish,
communicate, show or otherwise make known or available to any other Person, or
in any way to copy, any of the Company's Confidential Information.
"EARN OUT" shall have the meaning set forth in Section 2.2(a)(iii) of
this Agreement.
"EARN OUT AMOUNT" or "EARN OUT AMOUNTS" respectively have the meanings
set forth in Section 2.2(a)(iii) of this Agreement.
"EMPLOYMENT AGREEMENTS" has the meaning set forth in Section 7.6 of
this Agreement.
"ENCUMBRANCE" means and includes:
(i) with respect to any personal property, any intangible
property or any property other than real property, any security or
other property interest or right, claim, lien, restriction, pledge,
option, charge, security interest, contingent or conditional sale, or
other title claim or retention agreement or lease or use agreement in
the nature thereof, whether voluntarily incurred or arising by
operation of law, and including any agreement to grant or submit to
any of the foregoing in the future; and
(ii) with respect to any real property, any mortgage, lien,
easement, interest, right-of-way, condemnation or eminent domain
proceeding, encroachment, any building, use or other form of
restriction, encumbrance or other claim (including adverse or
prescriptive) or right of third parties (including Governmental
Bodies), any lease or sublease, boundary dispute, and agreements with
respect to any real property including: purchase, sale, right of first
refusal, option, construction, building or property service,
maintenance, property management, conditional or contingent sale, use
or occupancy, franchise or concession, whether voluntarily incurred or
arising by operation of law, and including any agreement to grant or
submit to any of the foregoing in the future.
"ENVIRONMENTAL LAWS" means any and all Applicable Laws (i) regulating
the use, treatment, generation, transportation, storage, control or disposal of
any Hazardous Material, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C.ss.9601 ET
SEQ.) ("CERCLA"), the Resource Conservation and Recovery Act (42 U.S.C.ss.6901
ET SEQ.), the Hazardous Materials Transportation Act (49 U.S.C.ss.1801 ET SEQ.),
the Federal Water Pollution Control Act (33 U.S.C.ss.1251 et seq.), the Clean
Water Act (33 U.S.C.ss.1251 ET SEQ.), the Clean Air Act (42 X.X.X.xx. 7401 ET
SEQ.), the Toxic Substances Control Act (15 X.X.X.xx. 2601 ET SEQ.), and all
state laws corollary thereto, and/or (ii) relating to the protection of the
environment and public or worker health and safety, all as existing, defined or
interpreted as of the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ESCROW AGENT" has the meaning set forth in Section 2.2(a)(ii) of this
Agreement.
"ESCROW AGREEMENT" has the meaning set forth in Section 2.2(a)(ii)of
this Agreement.
"ESCROW FUND" has the meaning set forth in Section 2.2(a)(ii) of this
Agreement.
"ESTIMATED NET CURRENT LIABILITIES" has the meaning set forth in
Section 2.2(b) of this Agreement.
"ESTIMATED PURCHASE PRICE ADJUSTMENT" has the meaning set forth in
Section 2.2(b) of this Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute, and the rules and regulations of
the Commission promulgated thereunder.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.1(a)(ii) of
this Agreement.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2.1(b)(ii)
of this Agreement.
"EXPIRING CONTRACT REVENUE" has the meaning set forth in Section
2.2(a)(iii)(B) of this Agreement.
"EXPIRING SUBSCRIPTION CONTRACTS" has the meaning set forth in Section
2.2(a)(iii)(B) of this Agreement.
"FINAL ORDER" has the meaning set forth in Section 6.2 of this
Agreement.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.12 of
this Agreement.
"GAAP" means generally accepted accounting principles in the United
States.
"GOVERNMENTAL BODY" means any:
(i) nation, state, county, city, town, village, district or
other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign or other
government;
(iii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, board, commission,
department, instrumentality, office or other entity, and any court or
other tribunal);
(iv) multi-national organization or body; and/or
(v) body exercising, or entitled or purporting to exercise,
any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.
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"GUARANTEED NET CURRENT LIABILITIES" has the meaning set forth in
Section 2.2(b) of this Agreement.
"GUARANTY" means, as to any Person, all liabilities or obligations of
such Person, with respect to any indebtedness or other obligations of any other
Person, which have been guaranteed, directly or indirectly, in any manner by
such Person, through an agreement, contingent or otherwise, primarily for the
purpose of enabling the debtor to make payment of such indebtedness or
obligation or to guarantee the payment to the owner of such indebtedness or
obligation against loss, or to supply funds to or in any manner invest in the
debtor, or otherwise.
"HAZARDOUS MATERIALS" means any and all (i) toxic or hazardous
pollutants, contaminants, chemicals, wastes, materials or substances listed or
identified in, or regulated by, any Environmental Law, and (ii) any of the
following, whether or not included in the foregoing: polychlorinated biphenyls,
asbestos in any form or condition, urea-formaldehyde, petroleum, including crude
oil or any fraction thereof, natural gas, natural gas liquids, liquified natural
gas, synthetic gas usable for fuel or mixtures thereof, nuclear fuels or
materials, chemical wastes, radioactive materials and explosives.
"HIRED ACTIVE EMPLOYEES" has the meaning set forth in Section 10.2 of
this Agreement.
"HIT CAP" has the meaning set forth in Section 2.2(a)(iii)(A) of this
Agreement.
"IM DIVISION" has the meaning set forth in the Recitals of this
Agreement.
"IRS" means the United States Internal Revenue Service.
"INDEMNIFIED PARTY" has the meaning set forth in Section 9.3 of this
Agreement.
"INDEMNIFYING PARTY" has the meaning set forth in Section 9.3 of this
Agreement.
"INDEPENDENT ACCOUNTANTS" has the meaning set forth in Section
2.2(b)(v) of this Agreement.
"INJUNCTION" means any and all writs, rulings, awards, directives,
injunctions (whether temporary, preliminary or permanent), judgments, decrees or
orders (whether executive, judicial or otherwise) adopted, enacted, implemented,
promulgated, issued, entered or deemed applicable by or under the authority of
any Governmental Body.
"INTELLECTUAL PROPERTY" means any and all (i) inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations, continuations in
part, revisions, extensions and reexaminations thereof; (ii) trademarks, service
marks, trade dress, logos, trade names, assumed names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith; (iii) copyrightable works,
all copyrights and all applications, registrations and renewals in connection
therewith; (iv) mask works and all applications, registrations and renewals in
connection therewith; (v) trade secrets and confidential business information
(including ideas,
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research and development, know-how, technology, formulas, compositions,
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information and business and
marketing plans and proposals); (vi) computer software (including data and
related software program documentation in computer-readable and hard-copy
forms); (vii) other intellectual property and proprietary rights of any kind,
nature or description, including web sites, web site domain names and other
e-commerce assets and resources of any kind or nature; and (viii) copies of
tangible embodiments thereof (in whatever form or medium).
"INVESTOR LETTER" has the meaning set forth in Section 4.2(b) of this
Agreement.
"KNOWLEDGE" means that an individual will be deemed to have "Knowledge"
or "knowledge" (whether or not capitalized) of a particular fact or other matter
if such individual (i) has or at any time had actual (and not constructive or
imputed) awareness of such fact or other matter, or (ii) should have reasonably
been expected to have had known in the Ordinary Course of Business; PROVIDED,
HOWEVER, that Knowledge by the Company of a particular fact or other matter
shall mean the actual (and not constructive or imputed) awareness at any time at
or prior to Closing of Xxxxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxx
Xxxxxxxx, and the specific employees of the Company who are assigned to such
particular fact or other matter.
"KNOWLEDGE INTENSIVE BUSINESS PROCESSES" are those which require access
to, and management of: (a) unstructured and dynamic knowledge and information,
in addition to static, structured data; and (b) tacit information sources, which
relate to unpublished information and knowledge such as that available only
through human-to-human interaction. Examples of Knowledge Intensive Business
Processes include those relating to innovation, product development, six-sigma,
clinical trials, and mergers and acquisitions.
"LEASED REAL ESTATE" has the meaning set forth in Section 3.17 of this
Agreement.
"LIABILITY" or "LIABILITIES" means any and all debts, liabilities
and/or obligations of any type, nature or description (whether known or unknown,
asserted or unasserted, secured or unsecured, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated and whether due or to become due).
"LOSS" or "LOSSES" has the meaning set forth in Section 9.1 of this
Agreement.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" means, in
connection with any Person, any event, change, condition or effect that is, or
could with reasonable certainty be expected to be, materially adverse,
individually or in the aggregate, to the condition (financial or otherwise),
properties, Assets, Liabilities, revenues, income, business, operations, or
results of operations of such Person, taken as a whole; PROVIDED, HOWEVER, the
foregoing shall not be deemed to include any event, change or effect which
arises with respect to (i) conditions of change that are primarily the result of
the national economy whereby the effect or change is generally universal upon
businesses as a whole or within an industry as a whole, or (ii) uniformly
applied legislative or judicial Applicable Laws or Final Orders that have
applicability to consulting businesses generally.
"MONTHLY EARN OUT REPORT(S)" has the meaning set forth in Section
2.2(a)(iii)(D) of this Agreement.
8
"NET CURRENT LIABILITIES" has the meaning set forth in Section 2.2(b)
of this Agreement.
"OPERATING CONTRACTS" has the meaning set forth in Section 3.16(b) of
this Agreement.
"ORDINARY COURSE OF BUSINESS" means an action taken by a Person only if
such action is consistent with the past practices of such Person and is taken in
the ordinary course of the normal day-to-day operations of such Person
(including with respect to quantity and frequency).
"PERMITS" means all right, title and interest in and to any permits,
licenses, certificates, filings, authorizations, approvals, or other indicia of
authority (and any pending applications for approval or renewal of a Permit), to
own, construct, operate, sell, inventory, disburse or maintain any asset or
conduct any business as issued by any Governmental Body.
"PERMITTED ENCUMBRANCES" means minor Encumbrances, charges and
imperfections which do not and would not reasonably be expected to, individually
or in the aggregate detract from or affect, in any material way, the value,
transfer or use of any Asset, or otherwise interfere with, in any material way,
the quiet enjoyment of any Asset under any lease or leasehold interest.
"PERSON" means any individual, corporation (including any non-profit
corporation), general, limited or limited liability partnership, limited
liability company, joint venture, estate, trust, association, organization, or
other entity or Governmental Body.
"PRE-CLOSING PERIOD" has the meaning set forth in Section 3.9(b) of
this Agreement.
"PROCEEDING" means any claim, suit, litigation, mediation, arbitration,
hearing, audit, investigation or other action (whether civil, criminal,
administrative or investigative) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"PURCHASE PRICE" has the meaning set forth in Section 2.2(a) of this
Agreement.
"PURCHASE PRICE ADJUSTMENT" has the meaning set forth in Section 2.2(b)
of this Agreement.
"PURCHASER" has the meaning set forth in the introductory paragraph
hereof.
"PURCHASER COMPETITIVE BUSINESS" has the meaning set forth in Section
11.2(b)(i) of this Agreement.
"PURCHASER INDEMNIFIED PARTIES" has the meaning set forth in Section
9.1 of this Agreement.
"PURCHASER NON-COMPETE PARTIES" has the meaning set forth in Section
11.2(b)(i) of this Agreement.
"PURCHASER PARENT" has the meaning set forth in the introductory
paragraph hereof.
9
"PURCHASER PARENT STOCK" has the meaning set forth in Section
2.2(a)(ii) of this Agreement.
"PURCHASER PARENT SEC REPORTS" has the meaning set forth in Section 4.7
of this Agreement.
"PURCHASER STOCK ASSIGNMENT" has the meaning set forth in Section 11.5
of this Agreement.
"REGISTRATION STATEMENT" means any registration statement of the
Purchaser that covers any registered or registrable securities and all
amendments and supplements to any such registration statement, including post
effective amendments, in each case including the prospectus, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
"RELATED PERSON" or "RELATED PERSONS" means, with respect to a
particular individual:
(i) each other member of such individual's Family (as
hereafter defined); and
(ii) any Controlled Person of one or more members of such
individual's Family.
With respect to a specified Person other than an individual:
(i) any Controlled Person of such specified Person (together
with the "Family" of such Person, if an individual); and
(ii) each Person that serves as a director, governor, officer,
manager, general partner, executor or trustee (together with the
"Family" of such Person, if an individual) of such specified Person
(or in a similar capacity). For purposes of this definition, the
"FAMILY" of an individual includes (A) such individual, (B) the
individual's spouse, (C) any lineal ancestor or lineal descendant of
the individual, or (D) a trust for the benefit of any of the
foregoing.
"RENEWAL PERCENTAGE" has the meaning set forth in Section
2.2(a)(iii)(B) of this Agreement.
"RENEWAL REVENUE" has the meaning set forth in Section 2.2(a)(iii)(B)
of this Agreement.
"RENEWAL SUBSCRIPTION CONTRACTS" has the meaning set forth in Section
2.2(a)(iii)(B) of this Agreement.
"RESPONSE PERIOD" has the meaning set forth in Section 2.2(b)(iv) of
this Agreement.
"SCHEDULES" has the meaning set forth in the introductory paragraph to
Article 3 of this Agreement.
10
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
"SUPPLEMENT" has the meaning set forth in Section 13.21 of this
Agreement.
"TAX" or "TAXES" means any and all net income, gross income, gross
revenue, gross receipts, net receipts, ad valorem, franchise, profits, transfer,
sales, use, social security, employment, unemployment, disability, license,
withholding, payroll, privilege, excise, value-added, severance, stamp,
occupation, property, customs, duties, real estate and/or other taxes,
assessments, levies, fees or charges of any kind whatsoever imposed by any
Governmental Body, together with any interest or penalty relating thereto.
"TAX RETURN" or "TAX RETURNS" means any return, declaration, report,
claim for refund or information return or statement relating to Taxes,
including, without limitation, any schedule or attachment thereto, any amendment
thereof, and any estimated report or statement.
"THIRD PARTY" means a person not a party to this Agreement, excluding
any Related Person.
"THREATENED" means that a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or statement has
been made in writing, or any notice has been given orally that would lead a
reasonably prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter will, with substantial certainty, be asserted,
commenced, taken or otherwise pursued in the future; PROVIDED, HOWEVER, that the
foregoing shall not include customer billing disputes in the Ordinary Course of
Business.
"TRANSACTIONAL EXPENSES" has the meaning set forth in Section 13.10 of
this Agreement.
"TRANSITION SERVICES AGREEMENT" has the meaning set forth in Section
5.19 of this Agreement.
"USE" means to appropriate any of the Company's Confidential
Information for the benefit of oneself or any other Person other than the
Company.
"WARN ACT" has the meaning set forth in Section 10.9 of this Agreement.
ARTICLE 2
PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES. In reliance upon the
representations, warranties and covenants contained in this Agreement as of the
date hereof and on the Closing Date, (i) the Purchaser agrees to purchase, and
the Company agrees to sell, the Assets (as defined below) of the IM Division
from the Company, and (ii) the Purchaser agrees to assume the Assumed
Liabilities of the IM Division (as defined below), in each case on the terms and
conditions set forth in this Agreement. The sale, transfer, conveyance,
assignment and delivery of the Assets by the Company shall convey (x) good and
valid title to the Assets that are tangible assets, (y) all of the Company's
interests in and to the Assets that are intangible assets,
11
and (z) good and valid title to the Assets that are, and all of the Company's
interests in and to the Assets that are, mixed assets, free and clear of any and
all Encumbrances, except for the Assumed Liabilities and the Permitted
Encumbrances.
(a) ASSETS.
(i) ASSETS. On the Closing Date, and subject to the provisions
of Section 2.1(c) below, the Purchaser will purchase or assume, as
applicable, all right, title and interest in and to all of the assets
of the Company, other than the Excluded Assets, which are related to,
used, necessary or useful in the conduct of the Business as the same
shall exist on the Closing Date, including but not limited to (A) the
accounts receivable set forth on SCHEDULE 2.1(a)(i)(A), (B) the prepaid
assets (excluding prepaid insurance) and expenses set forth on SCHEDULE
2.1(a)(i)(B), (C) the property, equipment and other tangible personal
property of the IM Division set forth on SCHEDULE 2.1(a)(i)(C), (D) the
Business Intellectual Property and other intangible assets necessary or
useful in the operation of the Business set forth on SCHEDULE
2.1(a)(i)(D) (which excludes the Intellectual Property of the BPS
Division), (E) the Permits relating to the Business to the extent
transferable set forth on SCHEDULE 2.1(a)(i)(E), (F) the rights and
benefits of and under all of the Company's Operating Contracts of or
for the IM Division, including work-in-process and sales pipeline, set
forth on SCHEDULE 2.1(a)(i)(F), (G) the documents, books and records
(financial or otherwise) which are not Excluded Assets and which relate
to the Business, whether in tangible or intangible form, including
ledgers, files, correspondence, lists, human resource policies,
procedures manuals and the like, creative materials, advertising and
promotional materials, studies, reports and other printed, written or
electronic materials, (H) all sales, promotion, advertising, and
marketing materials of whatever form or nature owned or licensed by the
Company relating to the Business or the Assets, (I) all goodwill
associated with the IM Division of the Company and all other rights,
properties, and assets of any kind or character whatsoever which are
owned by the Company which are not "Excluded Assets," (J) the corporate
names "Teltech," "Teltech Resources" or a similar interaction of the
use of the word "Teltech," (K) the internet names and addresses
"Xxxxxxx.xxx" and "Xxxxxx.xxx," and (L) employee records of the Hired
Active Employees, if such employees provide written consent for the
transfer of such records in accordance with Applicable Law
(collectively, the "ASSETS"), together with all of the Company's
rights, claims or causes of action of the Company of whatever nature,
contingent, or otherwise against Third Parties specifically and solely
relating to the Assets or the Business arising out of transactions
occurring prior to the Closing Date. The foregoing Schedules shall be
delivered as of the date of this Agreement and shall be updated (but
NOT subject to the Supplementation --- provisions of Section 13.21
hereof) to and delivered by the Company on the Closing Date.
(ii) EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in Section 2.1(a) of this Agreement, the following assets of
the Company are not part of the sale and purchase contemplated
hereunder, are
12
excluded from the Assets, shall remain the property of the Company
after the Closing and shall not be purchased or assumed by the
Purchaser (collectively, the "EXCLUDED ASSETS"): (A) cash and cash
equivalents, (B) all property and assets of the BPS Division that were
not historically used or required, in any material respect, for the
Business, including (aa) accounts receivable of the BPS Division and
accounts receivable of the Company not associated with the IM Division,
(bb) property, plant and equipment and other tangible personal
property, (cc) Intellectual Property and other intangible assets
necessary or useful in the operation of the Company or the BPS
Division, (dd) Permits of the Company, excluding those of the IM
Division, (ee) the rights and benefits of and under all Operating
Contracts, (ff) the documents, books and records of the Company and the
BPS Division in any form and which are not wholly associated with the
IM Division, (C) deferred income Taxes and credits of the Company, (D)
prepaid assets associated with the BPS Division, including insurance
and all rights in and ownership of insurance policies of the Company,
(E) any claims and actions by the Company against the officers and
directors of the Company, (F) any non-transferable Permits and Permits
associated with the BPS Division that were not historically used or
required (excluding general business licenses of the Company), in any
material respect, for the Business, (G) all Benefit Plans of the
Company, (H) the Company's Tax returns and financial statements, and
associated workpapers, and all claims for refunds of Taxes and other
fees and charges of a Governmental Body, (I) any shares of capital
stock of the Company, (J) the corporate charter and other similar
records of the Company, (K) the Company's qualifications to conduct
business, arrangements with registered agents, taxpayer and other
identification numbers, seals, minute books, stock transfer books, and
other documents relating to the organization, maintenance and existence
of the Company, (L) all corporate names of the Company (other than the
corporate names "Teltech," "Teltech Resources" or a similar iteration
of the use of the name "Teltech"), telephone, telex and telephone
facsimile numbers and other directory listings and internet and other
electronic addresses (other than "Xxxxxxx.xxx" and "Xxxxxx.xxx"), (M)
all sales, promotion, advertising, and marketing materials of whatever
form or nature owned or licensed by or to the Company relating to the
BPS Division or the Company generally, but excluding such that relates
to the Business, (N) all goodwill of the Company, including the BPS
Division, that is not the goodwill of the IM Division, (O) those other
assets listed on SCHEDULE 2.1(a)(ii), and (P) any rights of the Company
under this Agreement and the Ancillary Documents.
(b) LIABILITIES.
(i) ASSUMED LIABILITIES. On the Closing Date, subject to the
terms and conditions hereof, the Purchaser will assume, be obligated to
pay, perform and/or discharge only the following Liabilities of the IM
Division of the Company arising or accruing on or prior to the Closing
Date: (A) trade accounts payable incurred in the Ordinary Course of
Business and accrued and other current operating Liabilities reflected
on the Closing Balance Sheet, (B) the obligations of the Company
arising from the IM Division under the Operating Contracts in the
13
Ordinary Course of Business, except for any breach, defaults or
non-current amounts owing under or arising or occurring from, in
connection with, or pursuant to such Operating Contracts on or prior to
the Closing Date, (C) the obligations of the Company under any Permit
relating to the Business transferred to the Purchaser as set forth on
SCHEDULE 2.1(a)(i)(E), (D) obligations associated with the amount of
deferred revenue of the Business reflected on SCHEDULE 2.1(b)(i)(D)
that were incurred in the Ordinary Course of Business, and (E)
obligations associated with employees of the Company who will be hired
by the Purchaser, including vacation and personal time off accrued to
and through the date of Closing to the extent reflected on SCHEDULE
2.1(b)(i)(E) and the Closing Balance Sheet; PROVIDED, HOWEVER, that the
Assumed Liabilities shall not include the Excluded Liabilities
(collectively, the "ASSUMED LIABILITIES"). The Closing Balance Sheet
shall be prepared in accordance with Section 2.2(b) below.
(ii) EXCLUDED LIABILITIES. The Purchaser expressly does not,
and shall not, assume, be deemed to assume, or be obligated to pay,
perform or otherwise discharge any Liabilities of the Company other
than the Assumed Liabilities which shall be set forth on the Closing
Balance Sheet, including any Liability arising from, in connection with
or incident to (A) any Liability of the BPS Division, (B) any
Transactional Expenses paid by or relating to the Company or the
Company Parent, including those set forth in Section 13.10 hereof, (C)
any income Tax Liability of the Company or any former shareholder of
the Company, (D) any Tax Liability of or incurred by the Company, any
Related Person or Third Party, or the Assets which has as its basis any
event, act, occurrence or omission on or before the Closing Date unless
related to the IM Division and reflected on the Closing Balance Sheet,
(E) any Taxes, fees or penalties as described in Section 11.7(a) of
this Agreement, (F) any Liability arising from, incident to or in
connection with an Excluded Asset, (G) any Liability owed to any
Related Person or Affiliate of the Company, whether or not arising in
the Ordinary Course of Business, except for the amounts owed for goods
or services to Sopheon GmbH (which amounts shall for all purposes be
considered to be incurred in the Ordinary Course of Business) which
shall be reflected by the Auditor on the Closing Balance Sheet, (H) any
breach, defaults, or violations of Applicable Law which has as its
basis any event, act, occurrence or omission prior to the Closing Date
or non-current amounts owing under the Operating Contracts, (I) other
than salary, wages, vacation, personal time off and the associated
employment related Taxes thereto which shall be set forth on the
Closing Balance Sheet, claims by current or former employees of the
Company which arise prior to the Closing, (J) any Proceeding having as
its basis any event, act, occurrence or omission prior to the Closing
Date and which is not disclosed in SCHEDULE 3.7 of this Agreement, (K)
any Liability for any Benefit Plan contribution, including 401(k)
matching contributions, (L) bonus payments due to the Company employees
of the IM Division, and (M) final salary and wage payments, and
associated withholdings and Tax obligations to and through the date of
Closing (collectively, the "EXCLUDED LIABILITIES").
14
(c) EQUITABLE PRINCIPLES FOR ALLOCATION OF SHARED ASSETS AND
CORRESPONDING LICENSES. The parties acknowledge and agree that (i) each
will make a good faith effort to properly allocate the properties and
assets of the Company between the Company and the Business in order to
provide the benefits and conform to the intent of the transaction(s)
described in this Agreement, and (ii) there are certain properties and
assets of the Company that are utilized both by the IM Division and the
BPS Division which must be equitably allocated to the Purchaser or the
Company and licensed to the other non-owner party (either the Purchaser
or the Company). The basis of allocation of ownership shall be
determined primarily by the frequency, volume and necessity of use to
either the Company or the Business. Generally, the greater necessity of
ownership when considered in combination of these factors will
determine the ownership allocation of the asset, and therefore, also,
the party to be licensed.
2.2 PURCHASE PRICE.
(a) PURCHASE PRICE. The purchase price for the Assets (the
"PURCHASE PRICE") shall be a maximum of Three Million Four Hundred
Fifty Thousand Dollars ($3,450,000), which shall be remitted, or
payable in the case of the Earn Out, as follows:
(i) $3,000,000, less the amount of any advance
payment previously remitted to the Company by the Purchaser or
the Purchaser Parent, shall paid to the Company in cash by
wire transfer of immediately available funds at and upon the
Closing by the Purchaser (the "CLOSING CASH PAYMENT");
(ii) Duly authorized and non-assessable unregistered
shares of common stock of the Purchaser Parent (the "PURCHASER
PARENT STOCK") with a value of $50,000 (as determined in
accordance with the following paragraph) shall be delivered to
the escrow agent ("ESCROW AGENT") at and upon the Closing by
the Purchaser Parent and shall be held and distributed
pursuant to the provisions of the escrow agreement set forth
as EXHIBIT A to this Agreement (the "ESCROW AGREEMENT"). The
Purchaser Parent Stock held by the Escrow Agent, together with
the Company Parent Shares, described in Section 11.5 of this
Agreement, may be referred to herein as the "ESCROW FUND."
The Purchaser Parent Stock shall be delivered to the
Escrow Agent, and shall be held and distributed pursuant to
the provisions of the Escrow Agreement. The number of shares
of the Purchaser Parent Stock to be issued to the Company
shall be determined by the following formula: Dollar amount of
the Purchase Price to be paid in the Purchaser Parent Stock
DIVIDED by the "Average Closing Price." The "AVERAGE CLOSING
PRICE" shall be determined by the volume weighted average
reported closing price of the Purchaser Parent Stock for the
ten (10) trading days immediately preceding the third (3rd)
day prior to the Closing Date; and
(iii) an amount of up to a maximum of $400,000 may
become payable by the Purchaser to the Company if certain
customer subscription renewal goals, as set forth below, are
attained (the "EARN OUT" and, with respect to any amounts
15
to be paid under the Earn Out, collectively, the "EARN OUT
AMOUNTS" or individually an "EARN OUT AMOUNT"):
(A) The Earn Out, or a portion thereof, may
be earned in accordance with this Section 2.2(a)(iii)
by the Company in the event that (i) during the
period from July 1, 2003 through and including June
30, 2004, customers of the Company with subscription
contracts for the Company's services renew a
subscription contract that has an end date between
July 1, 2003, through and including December 31,
2003, provided that any subscription renewal
contracts to be considered as a renewal for purposes
of the Earn Out must have a subscription period start
date within ninety (90) days after the expiration
date of the applicable subscription contracts, and/or
(ii) subscription customers of the Company with a
subscription contract expiring at any time after
December 31, 2003, fully utilize or "HIT CAP" the
value of the services allowed under the subscription
contract before the expiration of such subscription
contract during the period between July 1, 2003, and
December 31, 2003, and renew such subscription
contract during the period between July 1, 2003, and
June 30, 2004; PROVIDED, HOWEVER, that the original
subscription value of such renewed "HIT CAP"
contracts (prior to renewal) is added to the
denominator for purposes of calculating the Renewal
Percentage described in Section 2.2(a)(iii)(B) below.
(B) SCHEDULE 2.2(a)(iii)(B) sets forth a
complete and accurate a list of customer subscription
contracts that are due to expire during the period
commencing on July 1, 2003, and ending at the close
of business on December 31, 2003, (the "EXPIRING
SUBSCRIPTION CONTRACTS") and the aggregate dollar
amount of the services under the Expiring
Subscription Contract(s) (the "EXPIRING CONTRACT
REVENUE"). The Expiring Subscription Contracts
exclude contracts that were originally due to expire
between July 1, 2003 and December 31, 2003, but which
Hit-Cap prior to June 30, 2003 and were therefore
considered part of renewals for prior periods. The
denominator used to determine the "RENEWAL REVENUE"
(as defined below) as a percentage of revenue arising
from renewed Expiring Subscription Contracts and
renewed Hit-Cap subscription contracts (the "RENEWAL
PERCENTAGE") shall be the Expiring Contract Revenue
plus the original subscription value of any contracts
originally scheduled to expire subsequent to December
31, 2003, that Hit-Cap and are renewed between July
1, 2003 and December 31, 2003. The numerator used to
determine the Renewal Percentage shall be the
aggregate of the face amounts of the contract values
set forth in all such renewed customer subscription
contracts (whether such renewal arises from an
Expiring Subscription Contract or from a "Hit Cap"
subscription contract), (collectively, the "RENEWAL
SUBSCRIPTION CONTRACTS", and the aggregate revenue
therefrom the "RENEWAL REVENUE").
16
(C) All Renewal Subscription Contracts shall
be valued hereunder by the dollar amount set forth in
the applicable Renewal Subscription Contract. In the
event that as of, or at any time after, December 31,
2003, the Renewal Percentage reaches the required
Renewal Percentage, in the aggregate, as set forth
below, all or a portion of the Earn Out will be owed
by the Purchaser and remitted to the Company in
accordance with Section 2.2(a)(iii)(E) below:
-----------------------------------------------------
Renewal Percentage Cumulative Earn Out
Amount
-----------------------------------------------------
80% or more, but less than 90% $200,000
-----------------------------------------------------
90% or more, but less than 100% $300,000
-----------------------------------------------------
100% or more $400,000
-----------------------------------------------------
(D) Within thirty (30) days after the end of
each month after the Closing, through June 30, 2004,
commencing with July 31, 2003, the Purchaser shall
provide to the Company a monthly report (the "MONTHLY
EARN OUT REPORT(S)") of Renewal Subscription
Contracts which shall, at a minimum, contain (i) the
customer identity of each Expiring Subscription
Contract and the date of expiration, (ii) the dollar
value of each Expiring Subscription Contract, and a
total amount of the dollar values of the Expiring
Subscription Contracts, (iii) a corresponding dollar
value of each Renewal Subscription Contract and the
date, or if not yet renewed the anticipated date, of
such renewal, if any, (iv) the dollar value of each
renewal of any "Hit Cap" subscription contract
together with the original subscription value of that
contract, (v) an aggregate running total of the
dollar value of the Renewal Revenue, and (vi) a
calculation of the Renewal Percentage for each
subject month and, cumulatively, for all months to
date.
(E) In the event that as of, or at any time
after, December 31, 2003 the aggregate Renewal
Percentage equals or exceeds (i) 80% but less than
90%, the Purchaser shall concurrently remit with the
delivery of that month's monthly report an amount of
$200,000, (ii) 90% but less than 100%, the Purchaser
shall concurrently remit with the delivery of that
month's monthly report an amount of $300,000, less
any Earn Out Amount(s) previously paid to the
Company, or (iii) 100% or more, the Purchaser shall
concurrently remit with the delivery of that month's
monthly report an amount of $400,000, less any Earn
Out Amount(s) previously paid to the Company.
(F) Upon and after receipt of any Monthly
Earn Out Report by the Company, the Company shall
have the right to review the Purchaser's books and
records that it reasonably deems necessary to (x)
document and
17
prove the accuracy, completeness and proper
calculation of the Monthly Earn Out Report(s) on both
a monthly and cumulative basis, and/or (y) dispute
the accuracy of any Monthly Earn Out Report and the
data underlying such report (including cumulative
figures).
(G) The Purchaser shall make good faith
efforts to renew the customer subscription contracts
as "subscription" arrangements, as opposed to
"transactional" arrangements. In the event, however,
that some of the customer subscription contracts are
converted to transactional arrangements, the parties
shall equitably determine how such continuing
business with the subject customer will be accounted
for in calculation of the Earn Out. In addition, the
Purchaser shall not be obligated to renew any
customer subscription contract if the Purchaser, in
good faith, determines such customer represents a
material credit risk. In such cases, if any, such
customer subscription contracts shall be removed from
both the numerator and denominator for purposes of
determining the Renewal Percentage.
(b) PURCHASE PRICE ADJUSTMENT. The Purchase Price will be
adjusted (the "PURCHASE PRICE ADJUSTMENT"), if at all, for the amount
by which the Net Current Liabilities (as defined below) of the Business
are not equal to $2.125 million (the "GUARANTEED NET CURRENT
LIABILITIES"). For example, if (x) the Net Current Liabilities are $2.5
million, then the Net Current Liabilities are deemed greater than the
Guaranteed Net Current Liabilities, and (y) conversely, if the Net
Current Liabilities are $1.5 million, then the Net Current Liabilities
are less than the Guaranteed Net Current Liabilities.
An estimated amount of the Purchase Price Adjustment (the
"ESTIMATED PURCHASE PRICE ADJUSTMENT") will be determined by the mutual
agreement of the parties on the Closing Date and shall be a Closing
document to this transaction. If the Estimated Purchase Price
Adjustment shows a calculation that the estimated Net Current
Liabilities of the Business (the "ESTIMATED NET CURRENT LIABILITIES")
on the Closing Date to be greater than the Guaranteed Net Current
Liabilities, then the Closing Cash Payment and the Purchase Price will
be reduced by the amount of the difference. The Estimated Purchase
Price Adjustment will be reconciled to the Purchase Price Adjustment
after the Closing Date in accordance with the further provisions of
this Section 2.2(b).
"NET CURRENT LIABILITIES" shall mean the difference between
the current Assets of the Business and the current Assumed Liabilities
of the Business computed in accordance with GAAP consistently applied
by the Company in the Financial Statements.
(i) Promptly following the Closing Date, but in any
event not later than the one-hundred five (105) days after the
Closing Date, the Company shall cause to be prepared and
delivered to the Purchaser a certification (the "CLOSING
CERTIFICATE") prepared by Ernst & Young, LLP or such other
independent certified public accountant selected by the
Company (the "AUDITOR"). The Closing Certificate shall
include:
18
(A) A closing balance sheet of the Business
on the Closing Date (the "CLOSING BALANCE SHEET")
prepared in accordance with Section 2.2(b)(iii);
(B) A calculation and comparison of the (x)
the Estimated Purchase Price Adjustment, and (y) the
Purchase Price Adjustment. In the event that:
(x) the Estimated Purchase Price
Adjustment is a greater number than the
Purchase Price Adjustment, the Purchaser
shall pay the difference to the Company; and
(y) the Estimated Purchase Price
Adjustment is of a smaller magnitude than
the Purchase Price Adjustment, the
difference shall be paid by the Company to
the Purchaser; PROVIDED, HOWEVER, that the
Purchaser shall first make a claim against
the Escrow Fund for the amount due to the
Purchaser to the extent of fifty percent
(50%) of the original amount of the Escrow
Fund and, if that amount is not sufficient
to satisfy the Purchaser's claim, the
Purchaser shall have the right to have the
remainder paid directly by the Company and
the Company Parent or through a claim by the
Purchaser against the remainder of the
Escrow Fund.
In illustration of the foregoing, in the event the
Estimated Purchase Price Adjustment reduced the
Purchase Price paid at the Closing in the amount of
$100,000, and the Purchase Price Adjustment shows Net
Current Liabilities of less than the Guaranteed Net
Current Liabilities in the amount of $200,000, then
the Company would be paid an additional $300,000
($100,000 deducted plus $200,000 for the savings of
Net Current Liabilities).
The amount referenced in Section 2.2(b)(i)(B)(x)
above, if any, shall be summarized and computed as an
amount due to the Company, with interest thereon. The
amount referenced in Section 2.2(b)(i)(B)(y) above,
if any, shall be summarized and computed as an amount
due to the Purchaser, with interest thereon. Interest
shall be computed in accordance with Section
2.2(b)(vi) below.
(C) Copies of all supplementary documents,
work papers, and other data relating to the Closing
Certificate; and
(D) Such other supplementary evidence as the
Purchaser may require either prior to or after
delivery of the Closing Certificate.
(ii) In connection with the preparation of the
Closing Balance Sheet and all other matters arising under the
Closing Certificate, each of the Purchaser and the Company
shall afford the other and their respective representatives
complete access to the books, records, personnel and
facilities of or pertaining to
19
the Business to permit the Auditor to review such information
as is necessary or desirable to prepare the Closing Balance
Sheet and all other statements and documentation arising under
the Closing Certificate.
(iii) The Closing Balance Sheet shall consist of a
special procedures report of the Auditor, based on the balance
sheet of the Business as of the close of business on the
Closing Date (the "CLOSING BALANCE SHEET DATE") in accordance
with the accounting principles and methods consistently
applied by the Company in connection with the Business
(including any change in accounting methods or principles
disclosed in any Schedule or Supplement) as set forth in the
Financial Statements, whether or not such accounting
principles are in conformity with GAAP, and without giving
effect to the consummation of the transactions contemplated
hereby; PROVIDED, HOWEVER, that the Closing Balance Sheet
shall be subject to and prepared in strict conformity with
year-end accrual and estimation practices of the Company used
for the Financial Statements, such that all pro-rata
adjustments, accruals, reserves, allowances and similar
year-end adjustments are prepared for and included in the
Closing Balance Sheet, treating the Closing Balance Sheet as
the Company's year-end statement for the Business. The expense
of the preparation of the Closing Balance Sheet by the Auditor
shall be borne by the Company. The parties hereby acknowledge
and agree, and the Auditor is directed to act in accordance
with the parties' agreement, that regardless of whether it is
otherwise required by GAAP, or whether it is inconsistent with
the past accounting practices of the Company, the Closing
Balance Sheet shall not contain payments or accruals for (i)
the fees, costs and/or expenses associated with any
Transactional Expenses arising from, incident to or in
connection with the transactions contemplated by this
Agreement, (ii) any Excluded Assets, and/or (iii) any Excluded
Liabilities.
(iv) If the Purchaser concludes that any matter
reported in the Closing Certificate is not accurate, the
Purchaser shall, within forty (40) days after its receipt of
the Closing Certificate (the "RESPONSE PERIOD"), deliver to
the Company a written statement setting forth a specific
description of each of its objections and each of any
discrepancies believed to exist. The Company shall deliver any
further supplemental documentation upon written request by the
Purchaser within five (5) business days of receipt of the
Purchaser's written request. If no notice of any objections or
discrepancies is given within the Response Period, then the
calculations set forth in the Closing Certificate shall be
controlling for all purposes of this Agreement, and the
Purchaser shall remit the amount to be paid in accordance with
the Closing Certificate and pursuant to Section 2.2(vi) below.
(v) The Purchaser and the Company shall use good
faith efforts to jointly resolve the properly noticed
objections and discrepancies within fifteen (15) days of the
receipt of the written statement of objections and
discrepancies, which resolution, if achieved, shall be fully
and completely binding upon all parties to this Agreement and
not subject to further review, appeal or dispute. If the
Purchaser and the Company are unable to resolve the objections
and
20
discrepancies to their mutual satisfaction within such fifteen
(15) day period, then the matter shall be submitted to a
mutually acceptable accounting firm of national reputation
(the "INDEPENDENT ACCOUNTANTS"). In submitting a dispute to
the Independent Accountants, each of the parties shall
concurrently furnish, at its own expense to the Independent
Accountants and the other party such documents and information
as the Independent Accountants may request. Each party may
also furnish to the Independent Accountants such other
information and documents as it deems relevant, with the
appropriate copies and notification being concurrently given
to the other party. Neither party shall have or conduct any
communication, either written or oral, with the Independent
Accountants without the other party either being present or
receiving a concurrent copy of any written communication. The
Independent Accountants may conduct a conference concerning
the objections and discrepancies between the Company and the
Purchaser, at which conference each party shall have the right
to (i) present its documents, materials and other evidence
(previously provided to the Independent Accountants and the
other party), and (ii) to have present its or their advisors,
accountants and/or counsel. The Independent Accountants shall
promptly (but no later than thirty (30) days from the date of
engagement of the Independent Accountants) render a decision
on the issues presented, which decision shall be final and
binding on the parties.
(vi) Within five (5) days of the earlier to occur of
(i) any failure to object to the Closing Certificate within
the Response Period, or (ii) receipt of the Independent
Accountants' decision with respect to such dispute, if the
Purchaser is determined to owe an amount to the Company, the
Purchaser shall pay such amount to the Company, and if the
Company is determined to owe an amount to the Purchaser, such
amount shall be paid to the Purchaser. All amounts owed by the
Purchaser or the Company to the other in accordance with this
Section 2.2(b) shall be paid by certified or bank cashier's
check or by wire transfer of immediately available funds with
interest computed thereon from the Closing Date at the prime
rate charged on the date the payment becomes due by U.S. Bank
National Association, Minneapolis, Minnesota.
2.3 CLOSING AND CLOSING DELIVERIES.
(a) CLOSING AND CLOSING DATE. Subject to the satisfaction or
waiver of the conditions precedent contained in Articles 6, 7 and 8
hereof, the closing of the transactions contemplated by this Agreement
(the "CLOSING") shall be simultaneously held via facsimile transmission
of the document signature pages at 10:00 a.m. on July 1, 2003 at the
offices of Xxxxxx and Xxxxxx, Professional Association, Minneapolis,
Minnesota, and counsel to the Purchaser and the Purchaser Parent, Kane,
Kessler, P.C. or such other date, location or time as is mutually
agreeable to the parties. The Closing will be effective as of the close
of business on such day. Such date is referred to in this Agreement as
the "CLOSING DATE."
21
(b) DOCUMENTS TO BE DELIVERED BY THE COMPANY. At the Closing,
the Company shall execute, where necessary or appropriate, and deliver
to the Purchaser each and all of the following:
(i) A certificate in the form of EXHIBIT B hereto
signed by the Company and the Company Parent dated as of the
Closing Date, to the effect that the representations and
warranties made by the Company and the Company Parent in this
Agreement (as modified by the Schedules and any Supplement(s))
and in any document, instrument and/or agreement to be
executed and delivered by the Company or the Company Parent
pursuant to this Agreement or the Ancillary Documents are true
and correct at and as of the Closing and each of the Company
and the Company Parent has respectively performed and complied
with all of its respective covenants, agreements and
obligations under this Agreement or the Ancillary Documents
which are to be performed and complied with by the Company or
the Company Parent at or prior to the Closing;
(ii) An Assignment and Assumption Agreement in the
form of EXHIBIT C hereto executed by the Company;
(iii) A Xxxx of Sale in the form of EXHIBIT D hereto
executed by the Company;
(iv) Assignments for the transfer of the Business
Intellectual Property, including recordable trademark
assignments suitable for filing with the United States Patent
and Trademark Office;
(v) A copy of the duly adopted resolutions of the
Board of Directors of the Company certified by an officer of
the Company approving this Agreement and authorizing the
execution and delivery of this Agreement by the Company,
including the documents, instruments and agreements to be
executed and/or delivered by the Company pursuant hereto, and
the consummation of the transactions contemplated hereby and
thereby;
(vi) A certificate of an officer of the Company
Parent that the transactions contemplated hereby have been
duly authorized for execution and delivery by the Company
Parent by all appropriate corporate or other actions;
(vii) Delivery and assignment of any and all
documents relating to Permits of the Business which by their
terms are assignable;
(viii) A duly executed written opinion letter by
counsel for the Company dated as of the Closing Date,
addressed to the Purchaser, as contemplated by Section 7.4 of
this Agreement;
(ix) The Company shall execute and deliver to the
Purchaser in blank (without completing the buyer insert) the
assignment provision of all vehicle, equipment and other
personal property title certificates (or reasonably acceptable
transfer documentation which will be accepted by applicable
Governmental
22
Bodies and Third Parties, where applicable) with a detailed
list thereto (organized by the Company site location)
describing (A) the vehicle, equipment or personal property,
(B) the vehicle, equipment or personal property identification
number, and (C) the state issuing the title certificate;
(x) Certificate of good standing for the Company
dated within five (5) days prior to the Closing Date issued by
the Secretary of State of Minnesota and foreign qualification
good standing certificates for the Company in each state set
forth in SCHEDULE 3.1;
(xi) All consents approving the transfer of any Asset
or the assumption of any Assumed Liability set forth on
SCHEDULE 5.10 (without charge to the Purchaser or material
change to the terms of the Contract or Permit);
(xii) An Investor Letter in the form of EXHIBIT E
relating to the Purchaser Parent Stock;
(xiii) The Escrow Agreement;
(xiv) The Transition Services Agreement;
(xv) The Commercial Agreement;
(xvi) UCC-3 partial releases executed by (i) Silicon
Valley Bank, the Company's secured lender, and (ii) the
Company Parent, releasing the Assets from the blanket security
agreements covering the assets of the Company;
(xvii) The Estimated Purchase Price Adjustment (to be
agreed upon by the parties hereto pursuant to Section 2.2(b));
and
(xviii) Such other documents and items as are
reasonably necessary or appropriate to effect the consummation
of the transactions contemplated hereby or which may be
customary under local law.
(c) DOCUMENTS TO BE DELIVERED BY THE PURCHASER. At the
Closing, the Purchaser shall execute, where necessary or appropriate,
and deliver each and all of the following:
(i) Remittance of the Purchase Price (excluding the
Earn Out Amounts) pursuant to Section 2.2 hereof;
(ii) A certificate in the form of EXHIBIT F hereto
signed by duly authorized officers of the Purchaser and the
Purchaser Parent, dated as of the Closing Date, to the effect
that (x) the representations and warranties made by the
Purchaser and the Purchaser Parent in this Agreement and in
the Ancillary Documents to be executed and delivered by the
Purchaser and the Purchaser Parent pursuant to this Agreement
and the Ancillary Documents are true and correct at and as of
the Closing, and (y) each of the Purchaser and the Purchaser
23
Parent has respectively performed and complied, in all
material respects, with all of its covenants, agreements and
obligations under this Agreement and the Ancillary Documents
which are to be performed and complied with by the Purchaser
or the Purchaser Parent on or prior to the Closing;
(iii) A copy of the duly adopted resolutions of the
Board of Directors of the Purchaser certified by an officer of
the Purchaser approving this Agreement and the Ancillary
Documents and authorizing the execution and delivery of this
Agreement and the Ancillary Documents to be executed and/or
delivered by the Purchaser pursuant hereto, and the
consummation of the transactions contemplated hereby and
thereby;
(iv) A certificate of an officer of the Purchaser
Parent that the transactions contemplated hereby have been
duly authorized for execution and delivery by the Purchaser
Parent by all appropriate corporate and other actions.
(v) The Assignment and Assumption Agreement executed
by the Purchaser;
(vi) A duly executed written opinion letter by
counsel for the Purchaser, dated as of the Closing Date,
addressed to the Company, as contemplated by Section 8.3 of
this Agreement;
(vii) The Escrow Agreement;
(viii) The Transition Services Agreement;
(ix) The Commercial Agreement;
(x) Estimated Purchase Price Adjustment (to be agreed
upon by the parties hereto pursuant to Section 2.2(b)); and
(xi) Such other documents and items as are reasonably
necessary or appropriate to effect the consummation of the
transactions contemplated hereby or which may be customary
under local law.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to the Purchaser and the Purchaser Parent to enter
into this Agreement and to consummate the transactions contemplated hereby, the
Company hereby represents and warrants to the Purchaser and the Purchaser Parent
that each and all of the following representations and warranties (as modified
by the Schedules to this Agreement (the "SCHEDULES") and any Supplement
delivered by the Company or the Company Parent pursuant to Section 13.21 of this
Agreement) are true and correct as of the date of this Agreement and will be
true and correct as of the Closing Date. The Schedules are arranged in numbered
paragraphs generally corresponding to the sections and subsections contained in
this Article 3. Any
24
disclosure as to one schedule, section or subsection shall not be deemed to be a
disclosure on any other schedule, section or subsection unless such disclosure
specifically cross-references such other schedule, section or subsection.
3.1 ORGANIZATION. The Company is a corporation duly organized, legally existing
and in good standing under the laws of the state of Minnesota. The Company has
all requisite power and authority, corporate and otherwise, to own, operate and
lease its properties and assets and to conduct the Business as it is now being
conducted. As set forth in SCHEDULE 3.1, the Company is duly qualified to
transact business as a foreign corporation and is in good standing under the
laws of every state or jurisdiction in which the nature of their activities or
of their properties owned, leased or operated makes such qualification necessary
and in which the failure to be so qualified could reasonably be expected to have
a Material Adverse Effect on the Company.
3.2 CAPITALIZATION. The authorized capital stock of the Company consists solely
of ten thousand (10,000) shares of common voting stock, par value $0.0001, of
which one (1) share is issued and outstanding on the date hereof and owned
beneficially and of record by the Company Parent.
3.3 DUE AUTHORIZATION. The execution, delivery and performance of this Agreement
and the Ancillary Documents to be executed and/or delivered by the Company
pursuant to this Agreement, and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary action, corporate or otherwise, including, without limit, the approval
of the Company Parent. This Agreement and the Ancillary Documents to be executed
and/or delivered by the Company pursuant to this Agreement have been or will be
on or before the Closing Date duly and validly authorized, executed and
delivered by such party and the obligations of such party hereunder and
thereunder are or will be upon such execution and delivery valid, legally
binding and enforceable against such party in accordance with their respective
terms.
3.4 NO BREACH. Except as set forth on SCHEDULE 3.4, the Company has full power
and authority to sell, assign, transfer, convey and deliver to the Purchaser the
Assets and the Company has full power and authority to otherwise perform its
obligations under this Agreement and the Ancillary Documents. Except as set
forth on SCHEDULE 3.4, the execution and delivery of this Agreement and the
Ancillary Documents to be executed and delivered by the Company pursuant to this
Agreement, and the consummation of the transactions contemplated hereby and
thereby will not: (i) violate any provision of the Articles of Incorporation or
Bylaws of the Company, (ii) violate any Applicable Laws or Injunction applicable
to the Company, (iii) other than any filing with, Permit from, authorization,
consent or approval of, or the giving of any notice to, any Person, (iv) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give another party any rights of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, franchise, Permit (including,
but not limited to, any Permits, approvals or authorizations of any Governmental
Body), Benefit Plan or other Contract to which the Company is a party, or by
which it or any of its properties or assets may be bound, or (v) result in the
creation or imposition of any Encumbrance on any of the Assets.
25
3.5 CLEAR TITLE. Except as otherwise set forth on SCHEDULE 3.5 hereto, (i) the
Company holds good and valid title to all of the Assets set forth on SCHEDULE
2.1(a)(i)(C), (ii) all of the Company's interests in and to the Assets that are
intangible assets set forth on SCHEDULES 2.1(a)(i)(A), 2.1(a)(i)(B),
2.1(a)(i)(D), 2.1(a)(i)(F), 3.14 and 3.16(b) are valid and enforceable, (iii)
the Company holds valid and enforceable interests in the leased personal
property Assets set forth on SCHEDULES 3.16(a)(19), 3.16(b)(7), and 3.17(1), and
(iv) except for Permitted Encumbrances and the Assumed Liabilities, the Assets
are free and clear of any and all Encumbrances of any kind, nature and
description whatsoever. Upon the sale, assignment, transfer and delivery of the
Assets to the Purchaser hereunder, all right, title and interest, as applicable,
thereto shall be vested in the Purchaser, free and clear of all Encumbrances,
except for Permitted Encumbrances and the Assumed Liabilities, including the
obligations (excluding the Excluded Liabilities) under the Operating Contracts.
3.6 CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth in SCHEDULE 3.6
hereto, the Assets constituting property, plant, equipment and other personal
property (i) have in all material respects been properly maintained, and (ii)
are in all material respects in good operating condition and repair, subject
only to ordinary wear and tear. Except as set forth in SCHEDULES 3.6 OR 3.16,
upon transfer of the Assets to the Purchaser, there will be no other assets
owned by any Third Party which are used in the operation of the Business as
presently conducted or proposed to be conducted by the Company.
3.7 LITIGATION. Except as described in SCHEDULE 3.7 hereto, there is no pending
Proceeding, and there has not been a Proceeding with respect to the Company
since January 1, 1998:
(a) that has been commenced by or served upon the Company, or
of which the Company has Knowledge (other than any Proceeding which
generally affects the business of all Persons conducting business
similar to the Company and in which the Company is not a named
defendant) in each case relating to the Business; or
(b) to the Company's Knowledge, that, as of the date of
execution of this Agreement and the Closing Date, challenges, or that
will have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the transactions contemplated
hereby.
To the Knowledge of the Company, no such Proceeding has been Threatened and no
circumstances are known by the Company that would reasonably be expected to
result in a Proceeding against the Company relating to the Business. Except as
provided in SCHEDULE 3.7 hereto, to the Knowledge of the Company, the Company is
not a party to or subject to the provisions of any Injunction which could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the transactions contemplated hereby. The foregoing shall not
include disputed claims between the Company and account vendors for amounts due
to such vendors arising from goods and/or services arising prior to or on the
Closing Date if and to the extent such Liability is included in the Closing
Balance Sheet.
3.8 LABOR MATTERS. Except as set forth on SCHEDULE 3.8, the Company has never
been a party to any collective bargaining agreement or other labor Contract.
There has never
26
been, and there is not presently pending or existing, and to the Knowledge of
the Company there is not Threatened, (i) any strike, slowdown, walkout,
picketing, work stoppage, labor arbitration or other Proceeding in respect of
the grievance of any Company employee, (ii) any application or complaint filed
by any Company employee or union with the National Labor Relations Board, or any
comparable Governmental Body, (iii) any organizational activity or other labor
dispute against or affecting the Company, and no application for certification
of a collective bargaining agreement is pending or, to the Knowledge of the
Company, is Threatened. There is no lockout of any employees by the Company and
no such action is contemplated by the Company. Except as set forth in SCHEDULE
3.8 hereto, there is no allegation, charge, complaint or Proceeding pending or,
to the Knowledge of the Company, Threatened by any Person against the Company or
any of its current or former officers, directors or employees relating to
employment, equal employment opportunity, discrimination, harassment, wrongful
discharge, unfair labor practices, immigration, wages, hours, benefits,
collective bargaining, the payment of social security or similar Taxes,
occupational safety and health or plant closing.
3.9 TAX MATTERS.
(a) TAX RETURNS. The Company has timely filed or caused to be
timely filed or will timely file or cause to be timely filed with the
appropriate taxing authorities all Tax Returns that are required to be
filed by, or with respect to, the Company on or prior to the Closing
Date. The Returns have accurately reflected and will, to the Company's
Knowledge, accurately reflect all Liability for Taxes of the Company
for the periods covered thereby. SCHEDULE 3.9(a) lists all income Tax
Returns filed with any Governmental Body with respect to the Company
for the taxable periods ended on or after December 31, 1998. Except as
set forth on SCHEDULE 3.9(a), no claim has ever been made by an
authority in a jurisdiction where the Company does not file Tax Returns
that it is or may be subject to taxation.
(b) PAYMENT OF TAXES. All Taxes and Tax Liabilities of the
Company for all taxable years or periods that end on or before the
Closing Date and, with respect to any taxable year or period beginning
before and ending after the Closing Date, the portion of such taxable
year or period ending on the day immediately preceding the Closing Date
("PRE-CLOSING PERIOD") have been timely paid or accrued and adequately
disclosed and fully provided for on the books and records of the
Company in accordance with GAAP. The Company has withheld and paid all
Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor, independent contractor
or other Third Party. There is not now and there will not be, any
Liability for Taxes, assessments, fees, charges or additions to Tax
arising out of, or attributable to, or affecting the Assets or the
conduct of the Business through the Closing Date for which the
Purchaser will have any Liability, except to the extent such Liability
is an Assumed Liability.
3.10 EMPLOYEE BENEFITS.
(a) BENEFIT PLANS. Except as described in SCHEDULE 3.10
hereto, the Company does not maintain or contribute to any Benefit
Plans. Without limiting the generality of the foregoing provision of
this Section, except as described in SCHEDULE 3.10(a) hereto,
27
there are no pension plans, welfare plans or employee benefit plans
qualified under Section 401(a) of the Code to which the Company is
required to contribute. Except as described in SCHEDULE 3.10(a) hereto,
the Company does not and will not have any unfunded Liability for
services rendered prior to the Closing Date under any Benefit Plans.
The Company is not in any material default under any Benefit Plan.
Except as set forth in SCHEDULE 3.10(a), neither the Company, nor any
Person now or formerly part of a controlled group with the Company,
within the meaning of Section 412(c)(11)(b)(ii) of the Code (the
"CONTROLLED GROUP"), maintains or has ever maintained a "defined
benefit plan," as defined in Section 3(35) of ERISA, that is subject to
Section 412 of the Code and Section 302 of ERISA. Except as set forth
in SCHEDULE 3.10(a) hereto, neither the Company nor any other member of
its Controlled Group contributes to or has, or could reasonably be
expected to have, any Liability (including but not limited to
withdrawal Liability) with respect to any multi-employer plan (as
defined in Section 4064(a) of ERISA or Section 4001(a)(3) of ERISA).
Other than claims for benefits in the Ordinary Course of Business
(which are set forth on SCHEDULE 3.10(a)), there are no actions, suits,
disputes, arbitrations or other material claims pending or, to the
Knowledge of the Company, Threatened with respect to any Benefit Plan.
(b) OTHER PLANS. None of the Benefit Plans maintained by the
Company provides health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required
by part six of subtitle B of title I of ERISA).
(c) COBRA. The Company has complied with the coverage
continuation requirements of all Applicable Laws, including Sections
601 through 609 of ERISA, Section 4980B of the Code, and the
requirements of any similar state law regarding continued insurance
coverage, and the Company has incurred no material Liability with
respect to its failure to offer or provide continued coverage in
accordance with the foregoing requirements, nor is there any suit
pending, or to the Knowledge of the Company, Threatened, with respect
to such requirements.
3.11 NO GUARANTIES. Except as set forth on SCHEDULE 3.11, (i) the
Company is not a party to any Guaranty and is not otherwise liable for any
Liability or obligation (including indebtedness) of any other Person, and (ii)
no Person is a party to a Guaranty that benefits the Business.
3.12 FINANCIAL STATEMENTS. The Company has furnished true and correct
copies of the financial statements of the Business dated December 31, 2002, and
March 31, 2003, as identified in SCHEDULE 3.12 hereto (the "FINANCIAL
STATEMENTS"), to the Purchaser. All Financial Statements, including any notes
thereto, fairly present the financial position and condition of the Business as
of their respective dates and the results of its operations for the periods
covered in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and on a basis consistent with that of prior years and
periods; PROVIDED, HOWEVER, that any interim Financial Statements listed on such
Schedule lack footnotes and other required presentation items. Except for
Liabilities (i) reflected or reserved against in the balance sheet (the "BALANCE
SHEET") of the Business as of March 31, 2003 (the "BALANCE SHEET DATE") or in
the notes thereto, (ii) incurred in the Ordinary Course of Business since the
Balance Sheet Date (none of which
28
resulted from, arose out of, is related to, or was caused by any breach of
Contract, breach of warranty, tort, infringement or violation of Applicable
Laws), (iii) arising under Contracts to which the Company is a party, and/or
(iv) described on SCHEDULE 3.12 hereto, the Company does not have any
Liabilities which, individually or in the aggregate, would have a Material
Adverse Effect on the Business. The reserves reflected in the Balance Sheet are
adequate.
3.13 ABSENCE OF CERTAIN DEVELOPMENTS. Except for the transactions
contemplated by this Agreement or as otherwise set forth on SCHEDULE 3.13
hereto, since March 31, 2003, the Company has conducted the Business only in the
Ordinary Course of Business and has not:
(a) Sold, leased, assigned or otherwise transferred any
material properties or assets, or disposed of or permitted to lapse any
rights in any Permit or Intellectual Property owned by the Company and
used by the Business, other than in the usual and Ordinary Course of
Business, or organized any new business entity or acquired any equity
securities, assets, properties, or business of any Person or any equity
or ownership interest in any business or merged with or into or
consolidated with any other Person;
(b) Suffered, sustained or incurred any material Loss or
waived or released any material right or claim, whether or not (i) in
the Ordinary Course of Business, and (ii) covered by insurance.
(c) Suffered, sustained or incurred any material damage,
destruction or casualty loss to any material Assets, whether or not
covered by insurance;
(d) Subjected any of the Assets to any Encumbrance, whether or
not in the Ordinary Course of Business;
(e) Increased the salary, wage or other compensation or level
of benefits payable or to become payable by the Company to any of its
officers, directors, employees or agents other than as set forth on
SCHEDULE 3.13;
(f) Except as described in the Schedules hereto, amended or
terminated any of the Operating Contracts of the Business (as
hereinafter defined);
(g) Changed accounting methods or practices;
(h) Suffered a Material Adverse Change, other than (i)
recognizing the current state of the economics of the Company, and such
being the primary reason for entering into this transaction which
condition will not materially deteriorate between the date hereof and
the Closing, and (ii) the fact that the subscription renewal peak cycle
of the Business occurred on or about March, 2003 and, due to the
seasonable fluctuation of cash flow, will decline in subsequent months
of the fiscal year; or
(i) Entered into any Contract to do any of the foregoing.
3.14 INTELLECTUAL PROPERTY. SCHEDULE 3.14 hereto contains a list and
description of all Intellectual Property owned or used by the Company in the
operation of the Business. Except as set forth in SCHEDULE 3.14, (i) the Company
owns or has the valid, enforceable and exclusive
29
right to use all Intellectual Property used or necessary to be used in the
operation of the Business ("BUSINESS INTELLECTUAL PROPERTY"), free and clear of
all liens or other Encumbrances, (ii) there are no pending or, to the Company's
Knowledge, Threatened, claims, suits, oppositions, cancellation proceedings,
invalidity proceedings, arbitrations, interference proceedings or re-examination
proceedings with respect to the Business Intellectual Property, (iii) the
operation of the Business or the possession or use in the Business of any of the
Intellectual Property listed and described on SCHEDULE 3.14 hereto does not,
infringe, misappropriate or dilute the Intellectual Property rights of any other
Person, (iv) all of the Intellectual Property listed and described on SCHEDULE
3.14 is valid, subsisting and has not been abandoned, and the Company is not
obligated under any Contract or otherwise to pay royalties, fees or other
payments with respect to any of the Intellectual Property listed and described
on SCHEDULE 3.14 hereto, (v) the consummation of the transactions contemplated
by this Agreement will not adversely affect the use by the Company of any of the
Intellectual Property owned or used by the Company in the operation of its
Business or require the consent of any Person or Governmental Body, (vi) the
Company has not granted any Person the right, license or permission to use any
of the Business Intellectual Property or agreed that the Company will not use
any Intellectual Property and there are no settlements, Injunctions,
forbearances to xxx, consents, judgments, orders or similar obligations which
restrict the right to use any of the Business Intellectual Property, (vii) to
the Knowledge of the Company, no Person is infringing, misappropriating or
diluting any of the Business Intellectual Property, (viii) no trade secret of
the Company used in the Business has been disclosed to any Person in any manner
that would be reasonably likely to result in a forfeiture of that trade secret,
(ix) no unlicensed copies of any mass market software are installed on any
Company computer or computer system used in the operation of the Business, and
(x) subject to the terms of the Commercial Agreement, after the Closing, neither
the Company nor any other Person other than the Purchaser will retain any of the
Company's rights of ownership or use, respectively (based on whether owned or
licensed), with respect to the Business Intellectual Property. Notwithstanding
the foregoing, subject to the terms of the Commercial Agreement, the Purchaser
and the Purchaser Parent acknowledge and agree that no Intellectual Property
needed to conduct the business operations of the BPS Division is a part of the
Assets and Business Intellectual Property conveyed hereunder.
3.15 COMPLIANCE WITH LAWS. The Business has been operated, and the
Company is in compliance in all material respects with the requirements of all
Applicable Laws to which the Company is subject. The Company has not received
any notice of, and the Company has no Knowledge of any violation of a material
nature of any Applicable Laws respecting the Business and, to the Knowledge of
the Company, no investigation, inspection, audit, or other Proceeding by any
Governmental Body is in process or Threatened.
3.16 OPERATING CONTRACTS. Except as disclosed in SCHEDULE 3.16(a), and
except with respect to Contracts that have been fully performed as of the date
hereof and have no further force or effect, the Company is not a party to any
oral or written Contract in connection with the Business. All of the Contracts
of the Business are listed on SCHEDULE 3.16(b) hereto are referred to in this
Agreement as the "OPERATING CONTRACTS." All of the Operating Contracts were made
in the Ordinary Course of Business, and, to the Knowledge of the Company, are
valid, binding and currently in full force and effect. The Company is not in
default under any of the Operating Contracts, and, to the Knowledge of the
Company, no event has occurred which, through the passage of time or the giving
of notice, or both, would constitute a default by the Company or
30
give rise to a right of termination or cancellation by another party under any
of the Operating Contracts, or cause the acceleration of any Liability, or
result in the creation of any Encumbrance upon any of the Assets. To the
Knowledge of the Company, no other party is in default under any of the
Operating Contracts. Except as described on SCHEDULE 3.16(b) hereto, none of the
Operating Contracts have been canceled, terminated, amended or modified. Except
as provided in SCHEDULE 3.4 hereto, the consummation of the transactions
contemplated hereby will not require the consent or approval of any Person under
any of the Operating Contracts.
3.17 REAL ESTATE. The Company owns no real property other than the
leasehold interests described in SCHEDULE 3.17 attached hereto with respect to
the real estate leased by the Company (the "LEASED REAL ESTATE"). The Leased
Real Estate will not be assumed by the Purchaser and the Purchaser shall not
acquire any rights therein under this Agreement.
3.18 ACCOUNTS RECEIVABLE. The accounts receivable of the Business and
other rights of the Business to the payment of money represent, and on the
Closing Date will represent, valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business and, subject
to the reserves set forth in the Financial Statements or as disclosed in
SCHEDULE 3.18, such receivables are collectible.
3.19 BOOKS AND RECORDS; BANK ACCOUNTS. All of the books of account of
the Business and other financial and corporate records relating to the Business
have been made available to the Purchaser and its representatives. Such books of
account and records are complete in all material respects. All such books and
records are consistent with the Financial Statements listed on SCHEDULE 3.12
hereto.
3.20 EMPLOYEES AND EMPLOYEE RELATED COMMITMENTS.
(a) SCHEDULE 3.20 hereto contains a list of the names,
positions, annual salary rates, hourly wage rates, severance benefits
and accrued vacation and sick leave, as of May 31, 2003, of all present
employees of the Business (including those on furlough, leave,
disability (short- or long-term) or layoff of any kind). Except as set
forth in SCHEDULE 3.20, none of the employees has informed the Company
that he/she intends to terminate employment with the Business. SCHEDULE
3.20 also sets forth a description of any written Contract, other than
the Benefit Plans described on SCHEDULE 3.10(a) hereto, with respect to
the conditions of employment of any of the employees of the Business.
All employees are employed on an "at-will" basis.
(b) Except for the claims set forth in SCHEDULE 3.20, the
consummation of the transactions described in this Agreement, in and of
themselves, will not entitle any current or former employee of the
Company to severance pay, unemployment compensation or any other
payment, or accelerate the time of payment or vesting, or increase the
amount of compensation due to any such employee or former employee.
3.21 PERMITS. Except as set forth in SCHEDULE 3.21, the Company has
obtained and possesses all Permits of each and every Governmental Body having
jurisdiction over the Company, the Business, or any of the Assets to operate and
carry on the Business as it is now
31
being conducted. All such Permits are listed on SCHEDULE 3.21 hereto. The
Company is presently conducting the Business so as to comply in all material
respects with all Permits.
3.22 OTHER MATERIAL CONTRACTS AND OBLIGATIONS. Except for the Operating
Contracts and the Contracts disclosed on SCHEDULE 3.16(a) hereto, the Business
is not a party to or bound by any:
(a) Distributorship or sales agency agreements, excluding
purchase orders with respect to the purchase or sale of products or
services in the Ordinary Course of Business;
(b) Advertising Contracts;
(c) Contracts for capital expenditures having an aggregate
remaining balance in excess of $10,000;
(d) Leases with respect to any property, real or personal,
whether as lessor or lessee, except for any leases having a term of one
year or less or aggregate rents payable over their lives of $10,000 or
less;
(e) Contract containing covenants by the Company or any
officer, director, employee or Affiliate of the Company not to compete
in any lines of the Business or with any Person;
(f) Franchise or license agreements;
(g) Except as disclosed in SCHEDULE 3.13, and accounts payable
and obligations arising under the Operating Contracts, loan or credit
agreements, promissory notes or other evidences of indebtedness,
including all agreements or commitments for future loans, extensions of
credit or financing, excluding credit extended by the Company to its
customers;
(h) Contract or purchase order for the purchase of any
services, supplies or equipment involving payments of more than $5,000
per annum or an aggregate of more than $10,000; or
(i) Contract for the sale of any properties, assets or
services involving a value estimated at more than $10,000.
3.23 SUBSIDIARIES. The Company has no subsidiaries. Except as set forth
on SCHEDULE 3.23 hereto, the Business, through the Company, does not own any
shares of stock or other securities or equity interests, directly or indirectly,
in any other Person. Except as disclosed or described in this Agreement or as
set forth on SCHEDULE 3.23 hereto, the Business, through the Company, is not
subject to any obligation or requirement to provide funds to, or invest in, any
Person.
3.24 INSURANCE. The Company has maintained and will continue to
maintain until the Closing Date the insurance described in SCHEDULE 3.24, which
insurance covers the Assets,
32
whether owned or leased, against loss or damage by fire or other casualty. All
such insurance is in full force on the date of this Agreement and is carried
with insurers licensed in the states affected by such policies. The Company has
promptly and adequately notified the Company's insurance carriers of any and all
claims known to the Company with respect to the operations, products or services
of the Company for which the Company is insured and the Company has complied
with all terms and conditions of such policies, except where such noncompliance
would not provide grounds for termination. All such insurance provides adequate
coverage for compliance by the Company with all requirements of Applicable Law
and all Operating Contracts to which the Company is a party or by which any of
the Assets are bound. Except as set forth in SCHEDULE 3.24, none of the
insurance carriers has indicated to the Company an intention to cancel, or alter
the coverage under, any of the Company's current policies. All applications for
the insurance policies are accurate in all material respects. The Company has
not been refused any insurance coverage by any insurance carrier to which it has
applied for insurance during the past three (3) years. The Purchaser and the
Purchaser Parent acknowledge and agree that all insurance policies, and all
interests therein, are Excluded Assets under this Agreement.
3.25 BROKERS. Other than the engagement of Innovation Advisors, the
Company has not employed or engaged any broker, finder, agent, banker or Third
Party, nor has it otherwise dealt with anyone purporting to act in the capacity
of a finder or broker in connection with the transactions contemplated hereby.
No other commissions, finder's fees or like charges have been or will be
incurred by the Company in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby. Any such
commissions, finders' fees or like charges shall be directly chargeable to the
Company as contemplated by the terms of this Agreement and not assumed by the
Purchaser.
3.26 RELATIONSHIP WITH RELATED PERSONS. Except as set forth in SCHEDULE
3.26 hereto, the present and former shareholders, directors, officers, and
employees of the Company, and their Related Persons do not have any interest in
any of the Assets and do not own, of record or as a beneficial owner, an equity
interest or any other financial or profit interest in any Person that (i) has
had business dealings or a material financial interest in any transaction with
the Company related to the Business or, (ii) has engaged or is engaged in
competition with the Company with respect to any line of Business of the Company
in any market served or anticipated to be served by the Company (a "COMPETING
BUSINESS") (except for less than three percent (3%) of the outstanding capital
stock of any Competing Business that is publicly traded on any recognized
exchange or in the over-the-counter market). To the Knowledge of the Company,
and except as set forth on SCHEDULE 3.26 hereto, neither the Company, the
Company Parent nor any of their respective Related Persons is a party to any
Contract with, or has any claim or right against, the Assets or the Business.
All money owed by the Company related to the Business to its shareholders,
directors or officers, or their Related Persons, (other than for salary) are for
bona fide debts and are set forth in SCHEDULE 3.26 hereto.
3.27 DEBT INSTRUMENTS. SCHEDULE 3.27 is a true, correct and complete
list showing the names of the parties and outstanding indebtedness as of the
respective dates set forth on SCHEDULE 3.27 under all mortgages, indentures,
notes, guarantees and other obligations for or relating to borrowed money,
purchase money debt (including conditional sales contract and capital leases) or
covenants not to compete (the "DEBT INSTRUMENTS") for which the Business,
33
through the Company, is primarily or secondarily obligated. The Company has
previously delivered to the Purchaser true, complete and correct copies of each
of the Debt Instruments. Except as described in SCHEDULE 3.27, the Company has
performed all of the material obligations required to be performed by it, is not
in material default under any of the provisions of any of the Debt Instruments,
and there has not occurred any event which, (with or without notice, lapse of
time or the happening or occurrence of any other event) would constitute such a
default.
3.28 CUSTOMERS AND SUPPLIERS. Except as set forth on SCHEDULE 3.28, to
the Knowledge of the Company, (i) no present material customer or a group of
customers of the Business intends to terminate, cancel, limit or modify the
customer's business relationship with the Business in any material respect, (ii)
no present vendor, supplier, dealer, representative or consultant of the
Business which is material to the Business intends to terminate, cancel, limit
or modify its business relationship with the Company in any material respect,
and (iii) no major customer or supplier has experienced a work stoppage or other
material adverse circumstances that would be likely to materially and adversely
affect their business relationship with the Business. The foregoing shall
include Contracts that will expire in accordance with their terms at the end of
the service/consulting relationship and, to the Knowledge of the Company, will
not be renewed.
3.29 AFFILIATE LOANS. Except as set forth in SCHEDULE 3.29, there are
no loans, advances or other obligations for borrowed money owing by the Company
to its Affiliates with respect to the Business as of the date hereof, and no
amount shall be owing for such obligations at and upon the Closing. Except as
set forth in SCHEDULE 3.29, no Affiliate has any claim of any kind against the
Business, and no amount shall be owing for such obligations at and upon the
Closing.
3.30 ABSENCE OF CERTAIN BUSINESS PRACTICES. Except as set forth in
SCHEDULE 3.30, none of the Company, its Related Parties or any Affiliates or any
other Person acting on behalf of or associated with the Company or any
individual related to any of the foregoing Persons, acting alone or together,
has with respect to the Business: (a) received, directly or indirectly, any
rebates, payments, commissions, promotional allowances or any other economic
benefits, regardless of their nature or type, from any customer, supplier,
trading company, shipping company, governmental employee or other Person with
whom the Company has done business directly or indirectly, or (b) directly or
indirectly, given or agreed to give any gift or similar benefit of any customer,
supplier, trading company, shipping company, governmental employee or other
Person who is or may be in a position to help or hinder the Business (or assist
the Company in connection with any actual or proposed transaction with respect
to the Business) which (i) may subject the Company to any damage or any penalty
in any civil, criminal or governmental litigation or Proceeding, (ii) if not
given in the past, may have had a Material Adverse Effect with respect to the
Business, or (iii) if not continued in the future, may materially adversely
affect the Assets and/or the Business.
3.31 INSOLVENCY. Except as set forth in SCHEDULE 3.31, the Company is
able to pay its debts as they mature and the transfer of the Assets by the
Company to the Purchaser in accordance with the terms of this Agreement shall
not constitute a voidable preference or transfer in fraud of any creditor under
applicable federal or state insolvency law.
34
3.32 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY PARENT. As an
inducement to the Purchaser and the Purchaser Parent to enter into this
Agreement and to consummate the transactions contemplated hereby, the Company
Parent hereby represents and warrants to the Purchaser and the Purchaser Parent
that each and all of the following representations and warranties are true and
correct as of the date of this Agreement and will be true and correct as of the
Closing Date.
(a) ORGANIZATION. The Company Parent is a corporation duly
organized, legally existing and in good standing under the laws of the
United Kingdom. The Company Parent has all requisite power and
authority, corporate and otherwise, to own, operate and lease its
properties and assets and to conduct its business as it is now being
conducted.
(b) DUE AUTHORIZATION. The execution, delivery and performance
of this Agreement and the Ancillary Documents to be executed and
delivered by the Company Parent pursuant to this Agreement, and the
consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary action, corporate or
otherwise. This Agreement has been, and the Ancillary Documents to be
executed and/or delivered by the Company Parent pursuant to this
Agreement have been or will be on or before the Closing Date, duly and
validly authorized, executed and delivered by such party and the
obligations of such party hereunder and thereunder are or will be upon
such execution and delivery valid, legally binding and enforceable
against such party in accordance with their respective terms.
(c) NO BREACH. The Company Parent has full power and authority
to perform its obligations under this Agreement and the Ancillary
Documents. Except as set forth on SCHEDULE 3.32(c), the execution and
delivery of this Agreement and the Ancillary Documents to be executed
and/or delivered by the Company Parent pursuant to this Agreement, and
the consummation of the transactions contemplated hereby and thereby
will not: (i) violate any provision of the governing documents of the
Company Parent, (ii) violate any Applicable Laws or Injunction
applicable to the Company Parent, (iii) other than any filing with,
Permit from, authorization, consent or approval of, or the giving of
any notice to, any Person, (iv) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default or give another party any rights of termination, cancellation
or acceleration under any of the terms, conditions or provisions of any
material Contract to which the Company Parent is a party or by which it
or any of its properties or assets may be bound.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE
PURCHASER PARENT
As an inducement for the Company and the Company Parent to enter into
this Agreement and consummate the transactions contemplated hereby, the
Purchaser and the Purchaser Parent hereby jointly and severally represent and
warrant to the Company and the Company Parent that each and all of the following
representations and warranties (as modified by the Schedules and
35
any Supplement delivered by the Purchaser and/or the Purchaser Parent pursuant
to Section 13.21 of this Agreement) are true and correct as of the date of this
Agreement and will be true and correct as of the Closing Date. The Schedules are
arranged in numbered paragraphs generally corresponding to the sections and
subsections contained in this Article 4. Any disclosure as to one schedule,
section or subsection shall not be deemed to be a disclosure on any other
schedule, section or subsection unless such disclosure specifically
cross-references such other schedule, section or subsection.
4.1 ORGANIZATION. Each of the Purchaser and the Purchaser Parent are
corporations duly organized, legally existing and in good standing under the
laws of the States of Delaware and New York, respectively, and have all
requisite power and authority, corporate and otherwise, to own, operate and
lease their respective properties and assets and to conduct their respective
businesses as now being conducted. Each of the Purchaser and the Purchaser
Parent are duly qualified to transact business as a foreign corporation and is
in good standing under the laws of every state or jurisdiction in which the
nature of their activities or of its properties owned, leased or operated makes
such qualification necessary and in which the failure to be so qualified could
reasonably be expected to have a Material Adverse Effect on the Purchaser or the
Purchaser Parent, as applicable.
4.2 DUE AUTHORIZATION
(a) GENERAL TRANSACTION. The execution, delivery and
performance of this Agreement and the Ancillary Documents to be
executed and delivered by the Purchaser and the Purchaser Parent
pursuant to this Agreement and the Ancillary Documents, and the
consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on
the part of the Purchaser and the Purchaser Parent. This Agreement and
the Ancillary Documents to be executed and delivered by the Purchaser
and the Purchaser Parent pursuant to this Agreement have been, or will
be on or before the Closing Date, duly and validly authorized, executed
and delivered by each of the Purchaser and the Purchaser Parent and the
obligations of the Purchaser and the Purchaser Parent hereunder and
thereunder are or will be valid, legally binding and enforceable
against each of the Purchaser and the Purchaser Parent in accordance
with their respective terms.
(b) RESERVATION OF SHARES. The Purchaser Parent Stock that is
to be issued pursuant to this Agreement has been duly reserved and
authorized for issuance, and such Purchaser Parent Stock shall be
validly issued, fully paid and non-assessable and, assuming the
accuracy of the representations and warranties of the Company in the
investor letter annexed hereto as EXHIBIT E (the "INVESTOR LETTER"),
issued in compliance with applicable federal and state securities laws.
4.3 NO BREACH. The Purchaser and the Purchaser Parent each have full
power and authority, corporate and otherwise, to perform its obligations under
this Agreement and the Ancillary Documents to be executed and delivered by the
Purchaser and the Purchaser Parent pursuant hereto. The execution and delivery
of this Agreement, including the documents, instruments and agreements to be
executed by the Purchaser pursuant to this Agreement, and the consummation of
the transactions contemplated hereby and thereby will not: (i) violate any
36
provision of the Articles of Incorporation or Bylaws (or comparable governing
documents or instruments) of the Purchaser, (ii) violate any Applicable Laws or
Injunction applicable to the Purchaser, (iii) other than applicable requirements
of the Securities Act, the Exchange Act and state securities "blue sky" laws,
require any filing with, Permit from, authorization, consent or approval of, or
the giving of any notice to, any Person, (iv) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give another party any rights of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, franchise, Permit (including, but not
limited to, any Permits, appeals or authorizations of any Governmental Body),
lease or other Contract to which the Purchaser is a party, or by which it or any
of its assets or properties.
4.4 BROKERS. Neither the Purchaser nor the Purchaser Parent has
employed or engaged any broker, finder, agent, investment banker or Third Party
nor has the Purchaser otherwise dealt with anyone purporting to act in the
capacity of a finder or broker, in connection with the transactions contemplated
hereby.
4.5 ARTICLES OF INCORPORATION AND BYLAWS. The Purchaser has previously
delivered to the Company a true, complete and correct copy of the Articles of
Incorporation, the Bylaws or equivalent organizational documents, each as
amended to date, of the Purchaser. Such Articles of Incorporation, Bylaws and
equivalent organizational documents are in full force and effect. The Purchaser
is not in violation of any provision of its Articles of Incorporation, By-laws
or equivalent organizational documents.
4.6 CAPITALIZATION. The authorized capital stock of the Purchaser
Parent consists of 100,000,000 shares of the Purchaser's common stock, $.0001
par value, and 2,000,000 shares of preferred stock, $.0001 par value per share,
of which 500,000 shares have been designated as Series A Preferred Stock. As of
May 12, 2003, 10,791,464 shares of the Purchaser's common stock were issued and
outstanding.
4.7 SEC REPORTS. The Purchaser Parent has filed all forms, reports and
documents required to be filed by it with the SEC since January 1, 2000 and has
heretofore made available to the Company, in the form filed with the SEC
(excluding any exhibits thereto), (i) its Annual Report on Form 10-K for the
fiscal year ended December 31, 2002, and (ii) all other forms, reports,
Registration Statements and other documents filed by the Purchaser Parent with
the SEC since January 1, 2000 (the forms, reports, Registration Statements and
other documents referred to in clauses (i) and (ii) above being referred to
herein, collectively, as the "PURCHASER PARENT SEC REPORTS"). The Purchaser
Parent SEC Reports and any other forms, reports and other documents filed by the
Purchaser Parent with the SEC before or after the date of this Agreement to the
Closing Date (i) were or will be prepared in all material respects in accordance
with the requirements of the Securities Act and the Exchange Act, as the case
may be, and the rules and regulations thereunder, and (ii) did not at the time
they were filed, or will not at the time they are filed, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were or are made, not misleading.
Except as set forth in the Purchaser Parent SEC Reports, since December 31, 2002
there has not been any Material Adverse Change in the business, results of
operations, condition (financial or otherwise),
37
properties, Assets, Liabilities or obligations of the Purchaser Parent that
would be required to be disclosed.
4.8 STOCKHOLDERS' CONSENT. No consent or approval of the stockholders
of the Purchaser or the Purchaser Parent is required (i) to enter into this
Agreement and the Ancillary Documents to which it is a party or to consummate
the transactions contemplated hereby and thereby, or (ii) to issue the Purchaser
Parent Stock.
ARTICLE 5
PERFORMANCE AND COVENANTS PENDING CLOSING
The Company covenants and agrees that from and after the date of this
Agreement and until the earlier of the Closing Date or the termination of this
Agreement in accordance with Article 12 hereof:
5.1 ACCESS TO INFORMATION. At the request of the Purchaser, the Company
shall give or cause to be given to the Purchaser, its officers, employees,
counsel, accountants and other representatives, upon reasonable notice to the
Company, complete access to the properties and assets and all of the books,
minute books, title papers, records, files, Contracts, insurance policies,
licenses and documents of every character of or relating to the Business, and
the Company shall furnish or cause to be furnished to the Purchaser, its
officers, employees, counsel, accountants and other representatives all of the
information with respect to the Business and/or properties or assets of the
Business as any of them may request (in the reasonable judgment of the
Purchaser). The Purchaser may, subject to the conditions stated above, at its
sole cost and expense, at any time prior to the Closing Date, through its
officers, employees, counsel, accountants and other representatives, conduct
such investigations and examinations of the properties and assets of the
Business as it deems necessary or advisable, and the Company will provide
reasonable cooperation to such Persons in such investigations.
5.2 CONDUCT OF BUSINESS. The Company shall carry on the Business only
in the Ordinary Course of Business and substantially in the same manner as
heretofore conducted and will keep and maintain the properties and assets of the
Business in good condition consistent with past practices. Except for the
filings described on SCHEDULE 5.2 or except as contemplated by Section 5.16, the
Company from the date of this Agreement to the Closing Date shall not (i) make
any regulatory filings with any Governmental Body with respect to the Business,
except in the Ordinary Course of Business or with the prior written consent of
the Purchaser, which consent shall not be unreasonably withheld, delayed or
conditioned, or (ii) do any of the following (unless otherwise expressly
contemplated by this Agreement or approved in writing by the Purchaser):
(a) create, incur or assume any Liability or indebtedness in
connection with the Business, except trade indebtedness in the Ordinary
Course of Business or borrowings with the Company's lender, Silicon
Valley Bank, in accord with the Debt Instruments with such bank, in all
such cases consistent with past practices;
38
(b) alter the manner of keeping the books, accounts or records
of the Business, or change in any manner the accounting practices
therein reflected;
(c) do any act, or omit to do any act, or permit to the extent
within the Company's control, any act or omission to act which would
cause a material violation or breach of any of the representations,
warranties or covenants of the Company or the Company Parent set forth
in this Agreement or cause any representation or warranty set forth
herein, or in any certificate or other document delivered in connection
herewith, to be untrue in any material respect on the Closing Date;
(d) take any action which has or could have a Material Adverse
Effect with respect to the Business; or
(e) agree, whether in writing or otherwise, to do any of the
foregoing.
In the event that the Company intends to (i) amend its Articles of
Incorporation or Bylaws, (ii) offer any of the Company's securities or other
equity interests for issuance or sale, or (iii) redeem or otherwise acquire,
directly or indirectly, any shares of its securities or other equity interests,
then the Company shall promptly and in advance (within not less than three (3)
business days) notify the Purchaser and the Purchaser Parent of such event(s).
5.3 ENCUMBRANCES. The Company shall not, directly or indirectly,
perform or fail to perform any act which would, with substantial certainty, in
the creation or imposition of any Encumbrance on any of the properties or assets
of the Company or otherwise adversely affect the marketability of the Company's
title to any of its properties or assets, outside of the Ordinary Course of
Business.
5.4 PAY INCREASES. The Company shall not, without the prior written
consent of the Purchaser, grant any increase in the salaries or rate of pay to
any employees of the Business, grant any increase in any benefits or establish,
adopt, enter into, make any new grants or awards under, or amend any collective
bargaining agreement, employment agreement or Benefit Plan for the benefit of
any of the employees of the Business.
5.5 RESTRICTIONS ON NEW CONTRACTS. Except with the prior written
consent of the Purchaser, or as specifically contemplated by this Agreement,
which consent shall not be unreasonably withheld, the Company shall not enter
into any Contract for the Business, or waive any right or enter into any other
transaction, in each case (i) with respect to the Business, and (ii) other than
in the Ordinary Course of Business and consistent with the Company's normal
business practices.
5.6 PRESERVATION OF BUSINESS. The Company shall use reasonable best
efforts to preserve the Business and its internal organization intact, to keep
available to the Purchaser the present employees of the Business and to preserve
for the Purchaser the present goodwill and relationship of the Business with its
vendors, suppliers, customers and others having business relationships with the
IM Division of the Company.
5.7 PAYMENT AND PERFORMANCE OF OBLIGATIONS. The Company shall make
reasonable commercial efforts to timely pay and discharge all invoices, bills
and other monetary
39
Liabilities of the Business, consistent with its present financial condition and
its present payment practices.
5.8 RESTRICTIONS ON SALE OF ASSETS. The Company shall not sell, assign,
transfer, lease, sublease, pledge or otherwise encumber or dispose of any of the
Assets, except as specifically contemplated by this Agreement.
5.9 PROMPT NOTICE. The Company and the Purchaser shall promptly notify
the other in writing upon becoming aware of any of the following: (i) any claim,
demand or other Proceeding that may be brought, Threatened or commenced against
the Company or the Purchaser, and their respective officers or directors, (ii)
any changes in the accuracy of the representations and warranties made by the
Company in this Agreement, (iii) any Injunction or any complaint praying for an
Injunction restraining or enjoining the consummation of the transactions
contemplated hereby, or (iv) any notice from any Person of its intention to
institute an investigation into, or institute a Proceeding to restrain or enjoin
the consummation of the transactions contemplated hereby or to nullify or render
ineffective this Agreement or such transactions if consummated.
5.10 CONSENTS. As soon as reasonably practicable, the Company and the
Purchaser will use commercially reasonable efforts to obtain or cause to be
obtained all of the consents and approvals of all Persons deemed necessary by
the parties hereto to consummate the transactions contemplated hereby, which are
limited by the parties to the consents and approvals listed on SCHEDULE 5.10
hereto. After the Closing the provisions of Section 11.6 of this Agreement shall
apply.
5.11 COPIES OF DOCUMENTS. The Company agrees that as soon as reasonably
possible following the execution hereof, to the extent not already provided to
the Purchaser, it shall furnish or make available to the Purchaser a copy of
each Operating Contract on SCHEDULE 3.16.
5.12 NO SOLICITATION OF OTHER OFFERS.
(a) NO-SHOP. From the date hereof through the end of the
business day on July 15, 2003, subject to Section 5.12(b) below, the
Company will not, and will not permit its representatives, investment
bankers, agents and Affiliates to, directly or indirectly, (i) solicit
or encourage submission of or any inquiries, proposals or offers by,
(ii) participate in any negotiations with, (iii) afford any access to
the properties, books or records of the Company to, (iv) accept or
approve, or (v) otherwise assist, facilitate or encourage, or enter
into any Contract with, any Person or group (other than the Purchaser
and its Affiliates, agents and representatives), in connection with any
Acquisition Proposal. In addition, the Company will not, and will not
permit its respective representatives, investment bankers, agents and
Affiliates to, directly or indirectly, make or authorize any statement,
recommendation or solicitation in support of any Acquisition Proposal
made by any Person or group (other than the Purchaser). In addition,
the Company will immediately cease any and all existing activities,
discussions or negotiations with any parties with respect to any of the
foregoing.
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(b) EXCEPTION TO NO-SHOP. Notwithstanding the provisions of
Section 5.12(a) above, the provisions of such Section 5.12 shall not
apply to the Company's ongoing discussions with its Affiliates or the
one Third Party that has been disclosed to the Purchaser relating to
the potential sale of the Business (or all or substantially all of the
Assets) or the Company.
(c) NOTICE. The Company and the Company Parent shall promptly
notify the Purchaser and the Purchaser Parent in writing of the receipt
of any Third Party's Acquisition Proposal, or communication in
connection with any potential Acquisition Proposal and a consummation
of a transaction; PROVIDED, HOWEVER, neither the Company nor the
Company Parent shall be obligated to disclose to the Purchaser and/or
the Purchaser Parent the terms and conditions thereof.
5.13 ACCOUNTS RECEIVABLE AND PAYABLE. The Company shall not accelerate
the collection of its accounts receivable or delay the payments of its accounts
payable or other Liabilities, in each case solely arising out of the operation
of the Business in a manner which would be inconsistent with past practice.
5.14 INVENTORY. The Company shall maintain the levels of inventory,
materials and supplies used in the Business consistent with past practice.
5.15 INSURANCE. The Company shall maintain in full force and effect all
insurance coverages for the Assets substantially comparable to coverages
existing on the date hereof.
5.16 FILING REPORTS AND MAKING PAYMENTS. The Company shall timely file
all required reports and notices relating to the Business with each and every
applicable Governmental Body and timely make all payments due and owing to each
such Governmental Body, including, but not by way of limitation, any filings,
notices and/or payments required by reason of the transactions contemplated by
this Agreement.
5.17 CAPITAL EXPENDITURES. The Company shall not make any capital
expenditures relating solely to the Business in excess of $5,000 individually or
$25,000 in the aggregate without the Purchaser's prior written consent, which
consent shall not be unreasonably withheld, delayed or conditioned.
5.18 LIEN SEARCH. Within seven (7) days prior to the Closing Date, the
Company shall deliver an Encumbrance search report to the Purchaser which
discloses any and all UCC-1 filings, Tax liens, and litigation filed with
respect to the Business in all state jurisdictions in which the Company has a
business location.
5.19 TRANSITION SERVICES AGREEMENT. For a period of approximately three
(3) months following the Closing, the Purchaser shall occupy and lease certain
space and services from the Company, and shall share in an allocable amount of
operating expenses related to the Leased Real Estate and the operation of the
shared office arrangement of the parties, pursuant to a transition services
agreement to be entered into between the parties on the Closing Date (the
"TRANSITION SERVICES AGREEMENT"). Any terms set forth in the Transition Services
Agreement shall, if inconsistent in any way with this Agreement, be deemed to
amend this Agreement to the extent, and only to the extent, of such
inconsistency.
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5.20 [THIS SECTION INTENTIONALLY OMITTED.]
5.21 COMMERCIAL AGREEMENT. The parties hereto intend to enter into a
mutually agreeable five (5) year strategic commercial relationship pursuant to
which the parties will (i) provide, among other things, access to technology and
proprietary content and Xxxxxxx.xxx service, (ii) establish a business and
marketing relationship, and (iii) covenants with respect to mutual
confidentiality, non-competition and non-solicitation (the "COMMERCIAL
AGREEMENT"). Any terms set forth in the Commercial Agreement shall, if
inconsistent in any way with this Agreement, be deemed to amend this Agreement
to the extent, and only to the extent, of such inconsistency.
5.22 EMPLOYMENT AGREEMENTS. The Purchaser and the Company will
cooperate and make reasonable commercial efforts to negotiate and complete the
employment agreements described in Section 7.6.
ARTICLE 6
MUTUAL CONDITIONS PRECEDENT TO THE PARTIES' OBLIGATIONS
Unless waived in writing by each of the parties hereto, each and every
obligation of the Purchaser and the Purchaser Parent, on the one hand, and the
Company and the Company Parent, on the other hand, to be performed at or upon
the Closing shall be subject to the satisfaction at or prior thereto of each and
all of the following conditions precedent:
6.1 PROCEEDINGS. There being no (i) Proceedings which have been
brought, asserted, commenced or Threatened against the Purchaser or the Company
by any Person involving or affecting in any way the Purchaser's or the Company's
consummation of the transactions contemplated hereby, or (ii) Applicable Laws
restraining or enjoining, or which may reasonably be expected to nullify or
render ineffective, this Agreement or the consummation of the transactions
contemplated hereby or which otherwise could reasonably be expected to have a
Material Adverse Effect on the Assets or the Business.
6.2 CONSENTS AND APPROVALS. The Purchaser and the Company shall have
received evidence, in form and substance reasonably satisfactory to the
Purchaser and the Company, that all consents, waivers, releases, authorizations,
approvals, licenses, certificates, Permits and franchises of all Persons
(including each and every Governmental Body) set forth on SCHEDULE 5.10 of this
Agreement. All consents of a Governmental Body shall be by Final Order;
PROVIDED, HOWEVER, that if the Purchaser and the Company waive the condition of
Governmental Body consent by Final Order, the parties shall consider the
Governmental Body consent without Final Order sufficient to proceed to Closing
according to the other terms of this Agreement. "FINAL ORDER" means an action or
decision of the Governmental Body as to which (i) no request for a stay is
pending, no stay is in effect, and any deadline for filing such request that may
be designated by statute or regulation has passed, (ii) no petition for
rehearing or reconsideration or application for review is pending and the time
for the filing of such petition or application has passed, (iii) the
Governmental Body does not have the action or decision under reconsideration on
its own motion and the time within which it may effect such reconsideration has
passed, and
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(iv) no judicial appeal is pending or in effect and any deadline for filing any
such appeal that may be designated by statute or rule has passed.
ARTICLE 7
ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASER AND THE PURCHASER PARENT
Unless waived by the Purchaser and the Purchaser Parent in writing,
each and every obligation of the Purchaser and the Purchaser Parent to be
performed at the Closing shall be subject to the satisfaction at or prior
thereto of each and all of the following conditions precedent:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties (as modified by the Schedules and any Supplement(s)) made by the
Company and the Company Parent in this Agreement and in the Ancillary Documents,
shall be true and correct at and as of the Closing with the same force and
effect as though such representations and warranties had been made or given at
and as of the Closing.
7.2 COMPLIANCE WITH COVENANTS AND AGREEMENTS. The Company and the
Company Parent shall have performed and complied with all of their respective
covenants, agreements and obligations under this Agreement which are to be
performed or complied with by them at or prior to the Closing, including the
execution and delivery of the Ancillary Documents specified in Section 2.3(b)
hereof or in such other documents, instruments and agreements, all of which
shall be reasonably satisfactory in form and substance to the Purchaser and the
Purchaser Parent.
7.3 NO MATERIAL ADVERSE CHANGE. As of the Closing Date, nothing shall
have occurred which had, or which would with reasonable certainty be likely to
have, individually or in the aggregate, a Material Adverse Effect on the
Business.
7.4 LEGAL OPINION. The Purchaser shall have received an opinion from
the counsel for the Company, dated as of the Closing Date, in form and substance
satisfactory to the Purchaser and the Purchaser Parent in their reasonable
commercial discretion.
7.5 CORPORATE ACTION. The Purchaser and the Purchaser Parent shall have
received (a) a certificate of the Secretary of the Company as to the incumbency
and signatures of the officers and directors, and (b) a legal existence
certificate of existence from (i) the State of Minnesota for the Company, and
(ii) foreign qualification good standing certificates from each jurisdiction set
forth on SCHEDULE 3.1.
7.6 EMPLOYMENT AGREEMENTS. Employment agreements with and executed by
those Persons listed on SCHEDULE 7.6, who are each executive employees of the
Company (the "EMPLOYMENT AGREEMENTS") shall be delivered to the Purchaser and
the Company.
7.7 CONFIDENTIALITY AGREEMENTS AND NON-COMPETITION. Each of the Hired
Active Employees shall execute and deliver at or prior to the Closing to the
Purchaser confidentiality and non-competition agreements acceptable to the
Purchaser.
43
ARTICLE 8
ADDITIONAL CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
Unless waived by the Company and the Company Parent in writing, each
and every obligation of the Company and the Company Parent to be performed at
the Closing shall be subject to the satisfaction at or prior thereto of each and
all of the following conditions precedent:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties (as modified by the Schedules and any Supplement(s)) made by the
Purchaser and the Purchaser Parent in this Agreement, including the documents,
instruments and agreements to be executed and delivered by the Purchaser and the
Purchaser Parent pursuant to this Agreement, shall be true and correct at and as
of the Closing with the same force and effect as though such representations and
warranties had been made or given at and as of the Closing.
8.2 COMPLIANCE WITH COVENANTS AND AGREEMENTS. The Purchaser and the
Purchaser Parent shall have performed and complied in all material respects with
all of their respective covenants, agreements and obligations under this
Agreement which are to be performed or complied with by them at or prior to the
Closing, including the execution and delivery of the documents, instruments and
agreements specified in Section 2.3(c) hereof or in such documents, instruments
and agreements, all of which shall be reasonably satisfactory in form and
substance to the Company and the Company Parent.
8.3 LEGAL OPINION. The Company shall have received an opinion from the
counsel for the Purchaser and the Purchaser Parent, dated as of the Closing
Date, in form and substance satisfactory to the Company and the Company Parent
in their reasonable commercial discretion.
8.4 DELIVERY OF RECEIPT FOR PURCHASE PRICE AND THE SHARES. The
Purchaser shall have delivered to the Company, against receipt of the executed
Xxxx of Sale, Assignment and Assumption Agreement and the other documents and
instruments to be delivered by the Purchaser pursuant to this Agreement for the
Assets, the Purchase Price to be paid on the Closing Date determined in
accordance with Section 2.2.
ARTICLE 9
INDEMNIFICATION
9.1 INDEMNIFICATION BY THE COMPANY. The Company and the Company Parent
hereby covenant and agree to jointly and severally indemnify and hold the
Purchaser, the Purchaser Parent, and its respective officers, directors,
employees, Affiliates, shareholders and agents, and each of its respective
heirs, personal representatives, successors and permitted assigns (the
"PURCHASER INDEMNIFIED PARTIES"), harmless from, against and in respect of any
and all losses, costs, expenses (including without limitation, reasonable
attorneys' and independent accountants' fees and disbursements), Liabilities,
damages (excluding incidental, consequential or punitive damages), fines,
penalties, charges, assessments, judgments, settlements, claims, causes of
action and other obligations of any nature whatsoever
44
(individually, a "LOSS" and collectively, "LOSSES") that the Purchaser or the
Purchaser Parent may at any time, directly or indirectly, suffer, sustain, incur
or become subject to, to the extent arising out of, based upon or resulting from
or on account of each of the following:
(a) the breach or falsity of any representation or warranty
made by the Company or the Company Parent in this Agreement (as amended
by any Supplement), including the Ancillary Documents to be executed
and delivered by the Company and the Company Parent pursuant hereto and
thereto; or
(b) the breach of any covenant or agreement made by the
Company or the Company Parent in this Agreement, including the
Ancillary Documents to be executed and delivered by the Company or the
Company Parent;
(c) any and all Excluded Liabilities;
(d) any (i) Contract of the Company that is not part of the
Assets, or (ii) any breach by the Company at or prior to the Closing of
a Contract of the Company that is part of the Assets, or any failure by
the Company to have performed any obligation or satisfied any Liability
thereunder to the extent required to be performed or satisfied by the
Company at or prior to the Closing, to the extent not adequately
reserved for on the Closing Balance Sheet as set forth in Section
2.2(b);
(e) any claim by a Third Party arising out of, relating to,
resulting from or caused (whether in whole or in part) by any
transaction, event, condition, occurrence or situation in any way
relating to the Company or the operation of the Business and the
ownership or use of the Assets at any time on or prior to Closing
without regard to whether such claim is first asserted at or prior to
Closing or is first asserted at any time thereafter, to the extent it
is not an Assumed Liability or is not adequately reserved for on the
Closing Balance Sheet;
(f) any obligation or Liability of the Company or the Company
Parent for the conduct of any business by the Company or the Company
Parent or any Taxes attributable to or arising from the ownership or
sale or use of the Assets prior to and on the Closing Date, to the
extent not adequately reserved for on the Closing Balance Sheet; and
(g) any Liability resulting from any current or future
Proceeding (whether Threatened or unthreatened) involving the Company,
the Company Parent, the Business or the Assets to the extent that such
cause of action arose on or prior to the Closing Date, regardless of
whether or not such Proceeding or Threatened Proceeding was commenced
on or prior to the Closing Date or disclosed by the Company on SCHEDULE
3.7, to the extent not adequately reserved for on the Closing Balance
Sheet.
PROVIDED, HOWEVER, that the Company and the Company Parent shall not be
required to provide such indemnification for a Loss or Losses resulting from (x)
a breach or falsity of any representation and warranty in this Agreement or any
Ancillary Document, or (y) the breach of a covenant of this Agreement or any
Ancillary Document, unless and until the Purchaser Indemnified Parties shall
have sustained aggregate Losses as a result of one or more such
45
breaches or falsities of Thirty-Five Thousand Dollars ($35,000) (the "BASKET
AMOUNT") (and then only for claims which in the aggregate, when combined with
all other claims for Losses result in Losses which exceed the Basket Amount),
EXCEPT that the Basket Amount for purposes of this Section 9.1 shall not apply
to any Loss or Losses arising from, in connection with or incident to any
Liability resulting from (i) the fraudulent actions or intentional
misrepresentations by the Company or the Company Parent, (ii) Excluded
Liabilities, or (iii) Transactional Expenses of the Company or the Company
Parent incurred in connection with the consummation of the transactions
contemplated hereby, including those set forth in Section 13.10 hereof.
Notwithstanding the foregoing, any Loss or aggregate Losses to be
indemnified in excess of the Basket Amount by the Company and/or the Company
Parent under this Agreement shall not exceed the Purchase Price paid by the
Purchaser, except that the indemnity limit shall not apply to any Loss or Losses
arising from, in connection with or incident to any Liability resulting from the
fraudulent actions or intentional misrepresentations of the Company or the
Company Parent. Rescission shall not be a remedy available to the parties. The
parties shall compute damages for a Loss or Losses based on the reasonable
estimation of actual economic loss; PROVIDED, HOWEVER, it is acknowledged and
agreed that the Company and the Company Parent shall not be responsible for the
conduct of the Business by the Purchaser after the Closing Date.
Notwithstanding any contrary provision or direction set forth in this
Agreement, in the event that any claims are made with respect to specific
balance sheet items set forth on the Financial Statements or Closing Balance
Sheet accounts, such as accounts receivable, accrued expenses or accounts
payable, any such claim shall be analyzed in relation to whether the amount of
the claim when compared to the Net Current Liabilities would have resulted in
any Purchase Price Adjustment. For example, in the event that accounts payable
are understated in the Closing Balance Sheet, but the Net Current Liabilities as
computed in accordance with this Section 2.2(b) are more than (in absolute value
terms), there shall be no claim for such item unless the amount, when added to
the Guaranteed Net Current Liabilities computed in the Closing Balance Sheet
would have resulted in a payment to the Purchaser by the Company. In addition,
any claim of an excess current Liability may be offset by the Company for any
current Asset which is in excess of the Asset amount as set forth in the Closing
Balance Sheet.
In the event the Company and the Company Parent become obligated to the
Purchaser and/or the Purchaser Parent for a Loss or Losses, the Company shall
remit to the Purchaser and/or the Purchaser Parent (i) first, the Purchaser
Parent Stock in escrow and, if necessary, (ii) second, the Company Parent Stock
in escrow, in full or partial payment of the Loss or Losses (with reissuance of
a new certificate if the Loss is, or Losses are, less than the value of the
Purchaser Parent Stock and/or the Company Parent Stock, as applicable). The
Purchaser Parent Stock and the Company Parent Stock in escrow for the purpose of
such payment(s) will be valued at the volume weighted average reported closing
price of the Purchaser Parent Stock or the Company Parent Stock, as applicable,
for the ten (10) trading days immediately preceding the third (3rd) day prior to
the date such stock is tendered.
9.2 INDEMNIFICATION BY THE PURCHASER. The Purchaser hereby agrees to defend,
indemnify and hold the Company and its respective Affiliates, officers,
trustees, beneficiaries, heirs, personal representatives, successors and assigns
(the "COMPANY INDEMNIFIED PARTIES"),
46
harmless from, against and in respect of any and all Losses that the Company may
at any time, directly or indirectly, suffer, sustain, incur or become subject
to, to the extent arising out of, based upon or resulting from or on account of
each or all of the following:
(a) the breach or falsity of any representation or warranty
made by the Purchaser in this Agreement (as amended by any Supplement
properly provided), including the documents, instruments and agreements
to be executed and/or delivered by the Purchaser pursuant hereto and
thereto; or
(b) the breach of any covenant or agreement made by the
Purchaser in this Agreement, including the documents, instruments and
agreements to be executed and/or delivered by the Purchaser pursuant
hereto or thereto; or
(c) any Assumed Liabilities.
PROVIDED, HOWEVER, that the Purchaser and the Purchaser Parent shall
not be required to provide such indemnification for a Loss or Losses resulting
from (x) breach or falsity of any representation or warranty in this Agreement
or any Ancillary Document, or (y) breach of a covenant of this Agreement or any
Ancillary Document, unless and until the Company Indemnified Parties shall have
sustained Losses as a result of one or more such breaches or falsities of the
Basket Amount (and then only for claims which in the aggregate when combined
with all other claims for Losses result in Losses which exceed the Basket
Amount), except that the Basket Amount for purposes of this Section 9.2 shall
not apply to any claims of, or Loss or Losses incurred by, the Company or the
Company Parent arising from, in connection with or incident to (i) the payment
of the Purchase Price to the Company, (ii) any Taxes, fees or penalties payable
by the Purchaser or the Purchaser Parent, (iii) the payment and performance of
any Contract assumed by the Purchaser and/or the Purchaser Parent, or (iv) any
Assumed Liability or Liability resulting from fraudulent actions or intentional
misrepresentations by the Purchaser or the Purchaser Parent.
9.3 PROCEDURE FOR INDEMNIFICATION. In the event any of the Purchaser
Indemnified Parties or the Company Indemnified Parties intends to seek
indemnification pursuant to the provisions of Sections 9.1 or 9.2 hereof (the
"INDEMNIFIED PARTY"), the Indemnified Party shall promptly give notice hereunder
to the other party (the "INDEMNIFYING PARTY") after obtaining written notice of
any claim, investigation, or the service of a summons or other initial or
continuing legal or administrative process or Proceeding in any action
instituted against the Indemnified Party as to which recovery or other action
may be sought against the Indemnified Party because of the indemnification
provided for in Section 9.1 or 9.2 hereof, and, if such indemnity shall arise
from the claim of a Third Party, the Indemnified Party shall permit the
Indemnifying Party to assume the defense of any such claim and any litigation
resulting from such claim; PROVIDED, HOWEVER, that the Indemnified Party shall
not be required to permit such an assumption of the defense of any claim or
Proceeding which, if not first paid, discharged or otherwise complied with,
would result in a material interruption or disruption of the business of the
Indemnified Party, or any material part thereof. Notwithstanding the foregoing,
the right to indemnification hereunder shall not be affected by any failure of
the Indemnified Party to give such notice (or by delay by the Indemnified Party
in giving such notice) unless, and then only to the extent that, the rights and
remedies of the Indemnifying Party shall have been prejudiced as a
47
result of the failure to give, or delay in giving, such notice. Failure by the
Indemnifying Party to notify the Indemnified Party of its election to defend any
such claim or action by a Third Party within twenty (20) days after notice
thereof shall have been given to the Indemnifying Party shall be deemed a waiver
by the Indemnifying Party of its right to defend such claim or action.
If the Indemnifying Party assumes the defense of such claim,
investigation or Proceeding resulting therefrom, the obligations of the
Indemnifying Party hereunder as to such claim, investigation or Proceeding shall
include taking all steps necessary in the defense or settlement of such claim,
investigation or Proceeding and holding the Indemnified Party harmless from and
against any and all Losses arising from, in connection with or incident to any
settlement approved by the Indemnifying Party or any judgment entered in
connection with such claim, investigation or Proceeding (subject to the
remaining Basket Amount, if any, and indemnification limits set forth in this
Agreement), except where, and only to the extent that, the Indemnifying Party
has been prejudiced by the actions or omissions of the Indemnified Party. The
Indemnifying Party shall not, in the defense of such claim or any Proceeding
resulting therefrom, consent to entry of any judgment (other than a judgment of
dismissal on the merits without costs) except with the written consent of the
Indemnified Party (which consent shall not be unreasonably withheld, delayed or
conditioned) or enter into any settlement (except with the written consent of
the Indemnified Party, which consent shall not be unreasonably withheld, delayed
or conditioned) unless (i) there is no finding or admission of any violation of
Applicable Law and no material effect on any claims that could reasonably be
expected to be made against the Indemnified Party, (ii) the sole relief provided
is monetary damages that are paid in full for Losses (subject to the remaining
Basket Amount (which will be paid by the Purchaser), if any, but which payment
does not exceed the indemnification limits set forth in this Agreement), and
(iii) the settlement shall include the giving by the claimant or the plaintiff
to the Indemnified Party a release from all Liability in respect to such claim
or litigation.
If the Indemnifying Party assumes the defense of such claim,
investigation or Proceeding resulting therefrom, the Indemnified Party shall be
entitled to participate in the defense of the claim, but solely by observation
and comment to the Indemnifying Party, and the counsel selected by the
Indemnified Party shall not appear on its behalf in any Proceeding arising
hereunder. The Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it to participate in its defense unless any of
the following shall apply: (i) the employment of such counsel shall have been
authorized in writing by the Indemnifying Party, or (ii) the Indemnifying
Party's legal counsel shall advise the Indemnifying Party in writing, with a
copy to the Indemnified Party, that there is a conflict of interest that would
make it inappropriate under applicable standards of professional conduct to have
common counsel. If clause (i) or (ii) in the immediately preceding sentence is
applicable, then the Indemnified Party may employ separate counsel at the
expense of the Indemnifying Party to represent the Indemnified Party, but in no
event shall the Indemnifying Party be obligated to pay the costs and expenses of
more than one such separate counsel for any one complaint, claim, action or
Proceeding in any one jurisdiction.
If the Indemnifying Party does not assume the defense of any such claim
by a Third Party or litigation resulting therefrom after receipt of notice from
the Indemnified Party, the Indemnified Party may defend against such claim or
litigation in such manner as it reasonably deems appropriate, and unless the
Indemnifying Party shall deposit with the Indemnified Party a
48
sum equivalent to the total amount demanded in such claim or litigation plus the
Indemnified Party's estimate of the cost (including attorneys' fees) of
defending the same, the Indemnified Party may settle such claim or Proceeding on
such terms as it may reasonably deem appropriate and the Indemnifying Party
shall, subject to its defenses and the applicability of any remaining threshold
loss amount provided for in Section 9.1 hereof, promptly reimburse the
Indemnified Party for the amount of such settlement and for all reasonable costs
(including attorneys' fees), expenses and damages incurred by the Indemnified
Party in connection with the defense against or settlement of such claim,
investigation or litigation, or if any such claim or litigation is not so
settled, the Indemnifying Party shall, subject to its defenses and the
applicability of any remaining Basket Amount provided for in Section 9.1 hereof,
promptly reimburse the Indemnified Party for the amount of any final
non-appealable judgment rendered with respect to any claim by a Third Party in
such litigation and for all costs (including attorneys' fees), expenses and
damage incurred by the Indemnified Party in connection with the defense against
such claim or litigation, whether or not resulting from, arising out of, or
incurred with respect to, the act of a Third Party.
Each party shall cooperate in good faith and in all respects with each
Indemnifying Party and its representatives (including without limitation its
counsel) in the investigation, negotiation, settlement, trial and/or defense of
any Proceedings (and any appeal arising therefrom) or any claim. The parties
shall cooperate with each other in any notifications to and information requests
of any insurers. No individual representative of any Person, or their respective
Affiliates shall be personally liable for any Loss or Losses under this
Agreement, except as specifically agreed to by said individual representative.
9.4 DISPUTE RESOLUTION. In the event a dispute arises under this
Agreement, except with respect to the Purchase Price Adjustment under Section
2.2(b) and equitable remedies pursued under this Agreement (including Section
11.3), such disputes shall be resolved in the manner set forth in this Section
9.4.
(a) If a dispute arises under this Agreement, including any
question regarding the existence, validity, interpretation or
termination hereof, which is not described as an exception in this
Section 9.4, the Purchaser and the Company may invoke the dispute
resolution procedure set forth in this Section 9.4 by giving written
notice to the other party. The parties shall enter into discussions
concerning this dispute. If the dispute is not resolved as a result of
such discussion in ten (10) days.
(b) The matter shall be submitted for, subject to and decided
by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association currently in effect as of the date
of this Agreement ("AAA RULES"), except to the extent those rules are
inconsistent with this Section 9.4. Any arbitration must be held in New
York by a single arbitrator mutually selected by the parties hereto or,
if the parties hereto cannot agree on the appointment of such
arbitrator within ten (10) days following the date notice of the
dispute is given by a party to the adverse party, an arbitrator
selected according to the AAA Rules. The arbitrator's award shall be
final, conclusive and binding upon all parties to this Agreement, and
judgment may be entered upon it in accordance with the Federal
Arbitration Act in any court of general jurisdiction in New York, or in
any United States District Court for the Southern District of New
49
York. The arbitrator shall be required to provide in writing to the
parties the basis for the award or order of such arbitrator, and a
court reporter shall record all hearings (unless otherwise agreed to by
the parties), with such record constituting the official transcript of
such Proceedings. The Company and the Purchaser specifically desire
this arbitration clause to be governed by the United States Federal
Arbitration Act, and not by the arbitration laws of any state.
(c) The parties hereto agree and consent that any legal
action, suit or Proceeding seeking to enforce this Section 9.4 or to
confirm or contest any arbitration award shall be instituted and
adjudicated solely and exclusively in any court of general jurisdiction
in New York, or in the United States District Court for the Southern
District of New York and the parties hereto agree that venue will be
proper in such courts and waive any objection which they may have now
or hereafter to the venue of any such suit, action or Proceeding in
such courts, and irrevocably consent and agree to the jurisdiction of
said courts in any such suit, action or Proceeding. Each of the parties
hereto further agree to accept and acknowledge service of any and all
process which may be served in any such suit, action or Proceeding in
said courts, and also agree that service of process or notice upon them
shall be deemed in every respect effective service of process or notice
upon them, in any suit, action, Proceeding or arbitration demand, if
given or made: (i) according to Applicable Law, (ii) according to the
AAA Rules, (iii) by a Person over the age of eighteen who personally
serves such notice or service of process on the applicable party(ies)
hereto, or (iv) by certified mail, return receipt requested, mailed to
the applicable party(ies) hereto, at their respective addresses set
forth in this Agreement.
(d) In the event of arbitration filed or instituted between or
among the parties pursuant to this Section 9.4, the prevailing party
will be entitled to receive from the adverse party all costs, damages
and expenses, including reasonable attorney's fees, incurred by the
prevailing party in connection with that action or Proceeding, whether
or not the controversy is reduced to judgment or award. The prevailing
party will be that party who is determined by the arbitrator to have
prevailed on the major disputed issues.
9.5 EFFECT OF INSURANCE. An Indemnified Party who has a right to make a
claim under any policy of insurance with respect to an indemnified claim made by
the Indemnified Party shall use commercially reasonable efforts to make such
claim on a prompt and competent basis in the manner required by the insurance
carrier. The Indemnified Party shall use commercially reasonable efforts to
promptly and diligently pursue such claim and shall cooperate fully with the
insurance carrier and the Indemnifying Party in the prosecution of the claim or
claims. In the event an Indemnified Party receives insurance proceeds with
respect to Losses for which the Indemnified Party has made an indemnification
claim prior to the date on which the Indemnifying Party is required pursuant to
this Article 9 to pay such indemnification claim, the indemnification claim
shall be reduced by an amount equal to such insurance proceeds received by the
Indemnified Party less all reasonable out-of-pocket costs incurred by the
Indemnified Party in its pursuit of such insurance proceeds. If such insurance
proceeds are received by the Indemnified Party after the date on which the
Indemnifying Party is required pursuant to this Article 9 to pay such
indemnification claim, the Indemnified Party shall, no later than five (5) days
after the receipt of such insurance proceeds, reimburse the Indemnifying Party
in an amount equal to such insurance proceeds (but in no event in an amount
greater than the
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Losses theretofore paid to the Indemnified Party by the Indemnifying Party) less
all reasonable out-of-pocket costs incurred by the Indemnified Party in
obtaining such insurance proceeds. In either case, the Indemnifying Party shall
compensate the Indemnified Party for all costs incurred by the Indemnified Party
subsequent to either the reduction of any indemnification claim as provided
above, or the delivery of any such insurance proceeds to the Indemnifying Party
as provided above, as the case may be, as a result of any such insurance,
including, but not limited to, retrospective premium adjustments,
experience-based premium adjustments (whether retroactive or prospective) and
indemnification or surety obligations of the Indemnified Party to any insurer. A
claim for such costs shall be made by an Indemnified Party by delivery of a
written notice to the Indemnifying Party requesting compensation and specifying
this Section 9.5 as the basis on which compensation for such costs is sought,
and the Indemnifying Party shall pay such costs no later than thirty (30) days
after receiving the written notice requesting such compensation. Notwithstanding
the foregoing, except to the extent set forth in the first two sentences of this
Section 9.5, the Indemnified Party is not required to pursue a recovery from an
insurer as a precondition to the Indemnifying Party's obligation to pay any
indemnification claim as required by this Article 9, and the Indemnifying Party
shall not be entitled to delay any payment beyond the respective payment dates
for any indemnification claims referred to in this Article 9 for the purpose of
awaiting receipt of insurance proceeds or credits therefor as provided herein.
ARTICLE 10
EMPLOYEE MATTERS
10.1 INFORMATION ON ACTIVE EMPLOYEES. For the purpose of this
Agreement, the term "ACTIVE EMPLOYEES" shall mean all employees employed by the
Company on the Closing Date that are principally engaged in the performance of
services in connection with the Business as currently being performed, including
employees on temporary leave of absence, including family medical leave,
military leave, temporary disability or sick leave, but excluding employees on
long-term disability leave. The names, titles and salaries of all Active
Employees are set forth in SCHEDULE 10.1 of this Agreement.
10.2 EMPLOYMENT OF ACTIVE EMPLOYEES BY THE PURCHASER. The Purchaser is
not obligated to hire any Active Employee but intends to hire all or
substantially all such employees upon the Closing. The Purchaser may interview
all Active Employees. Within ten (10) days prior to the Closing Date, the
Purchaser will provide the Company with a list of Active Employees to whom the
Purchaser will make an offer of employment which will become effective on the
Closing Date. Such list will be annexed hereto as SCHEDULE 10.2. Provided that
the Active Employees set forth on SCHEDULE 10.2 commence work with the
Purchaser, each such Active Employee shall be known herein as a "HIRED ACTIVE
EMPLOYEE," and collectively, the "HIRED ACTIVE EMPLOYEES." Effective upon the
Closing, the Company shall have terminated the employment of all of its
employees set forth on SCHEDULE 10.2, and the Company shall not solicit the
continued employment of (or employ) any Hired Active Employee for a period of
one year after the Closing, unless such employee has been (i) terminated for any
reason by the Company, or (ii) separated from employment by the Company for a
period of three (3) months or more.
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10.3 TERMS AND CONDITIONS OF OFFERS OF EMPLOYMENT. It is understood and
agreed that (i) the Purchaser's expressed intention to extend offers of
employment as set forth in this Article shall not constitute any commitment,
contract or understanding (express or implied) or any obligation on the part of
the Purchaser to an employment relationship of any fixed term or duration after
Closing or upon any terms or conditions other than those that the Purchaser may
establish pursuant to individual offers of employment, and (ii) employment
offered by the Purchaser is "at will" and may be terminated by the Purchaser or
an employee at any time for any reason (subject to any written commitments to
the contrary made by the Purchaser or an employee and Applicable Law and
regulation). Nothing in this Agreement shall be deemed to prevent or restrict in
any way the right of the Purchaser to terminate, reassign, promote or demote any
of the Hired Active Employees after the Closing or to change adversely or
favorably the title, powers, duties, responsibilities, functions, locations,
salaries, other compensation or terms or conditions of employment of such
employees. The Purchaser will set its own initial terms and conditions of
employment for the Hired Active Employees and others it may hire, including work
rules, benefits and salary and wage structure, all as permitted by law. The
Purchaser is not assuming any collective bargaining agreements under this
Agreement. The Company shall be solely liable for any severance payment required
to be made to its employees due to the consummation of the transactions
contemplated by this Agreement.
10.4 SALARIES AND BENEFITS PRIOR TO CLOSING. The Company shall be
responsible for (i) the payment of all wages and other remuneration due to
Active Employees with respect to their services as employees of the Company
through the Closing, including incentive payments, (ii) payment of 401(k) match
contributions and other payments with respect to Benefit Plans, (iii) employee
bonus payments, (iv) the payment of any termination or severance payments for
Active Employees, and the provision of health plan continuation coverage in
accordance with the requirements of COBRA and Sections 601 through 608 of ERISA,
and (v) any and all payments to Active Employees required under the WARN Act,
similar state law, COBRA, and any other Applicable Law. To the extent accrued on
the Closing Balance Sheet, the Purchaser shall be obligated to pay or allow as
credit all accrued vacation pay and personal time off earned prior to the
Closing Date.
10.5 BENEFITS AND BENEFIT PLANS. Effective as of the Closing Date, the
Purchaser shall offer to all Hired Active Employees the opportunity to
participate in the Purchaser's Benefit Plans. The Purchaser shall use
commercially reasonable efforts to not treat any Hired Active Employee as "new"
employee for purposes of any exclusion under any health plan or dental plan of
the Purchaser or any of its Affiliates for a pre-existing medical condition and
shall attempt to make appropriate arrangements with its insurance carrier(s) to
achieve such result. Nothing herein shall require the Purchaser to maintain in
effect any plan, plan benefit or similar provisions with respect to any of its
employees including but not limited to Hired Active Employees. Notwithstanding
any contrary provision of this Article 10, all Hired Active Employees, to the
extent the decision is within the discretion of the Purchaser or the Purchaser
Parent, will be credited as of the Closing Date with all past service time with
the Company for purposes of vacation, sick time and personal time off.
10.6 COMPANY'S RETIREMENT AND SAVINGS PLANS. The Company covenants that
all Hired Active Employees who are participants in the Company's retirement and
savings plans, if any, shall retain their vested benefits thereunder as of the
Closing Date in accordance with the
52
terms thereof and the Company (or the Company's retirement or savings plans)
shall retain sole Liability for the payment for such benefits as and when such
Hired Active Employees become eligible therefor under such plans. The parties
hereto acknowledge that the Purchaser shall not assume, maintain, or contribute
to any employee pension plan or employee welfare benefit plan of the Company.
The Company will not make or cause any transfer of, and the Purchaser shall not
under any circumstances be deemed to have assumed or accrued, any Liability with
respect to pension or other employee benefit plans or assets of the Company.
10.7 FURTHER ACTIONS. The Company shall give any notices required by
Applicable Law and take whatever other actions with respect to the plans,
programs and policies described in this Article 10 as may be necessary to carry
out the arrangements described in this Article 10. The Company and the Purchaser
shall provide each other with such plan documents and summary plan descriptions,
employee data or other information to the extent reasonably required to carry
out the arrangements described in this Article 10. If any of the arrangements
described in this Article 10 are determined by the IRS or other Governmental
Body to be prohibited by law, the Company and the Purchaser shall modify such
arrangements to as closely as possible reflect their expressed intent and retain
the allocation of economic benefits and burdens to the parties contemplated
herein in a manner that is not prohibited by law. Other than as reserved for on
the Closing Balance Sheet, the Purchaser shall not have any responsibility,
Liability or obligation, whether to Active Employees, former employees, their
beneficiaries or to any other Person, with respect to any employee benefit
plans, practices, programs or arrangements (including the establishment,
maintenance, operation, sponsorship or termination thereof and the notification
and provision of COBRA coverage extension) maintained by the Company.
10.8 FORMS. To the extent allowed by Applicable Law, the Company shall
provide the Purchaser with completed I-9 forms and attachments with respect to
all Hired Active Employees, except for such employees as the Company certifies
in writing to the Purchaser are exempt from such requirement.
10.9 WARN ACT. Should any Liability occur as a result of the failure to
comply with or give any required notice to employees under the Workers
Adjustment and Retraining Notification Act of 1988, as amended (the "WARN ACT")
and any other Applicable Law, the Company assumes all responsibility and
Liability for any wages and benefits for employees of the Company who did not
receive any such required notice and for civil penalties by local governments
which may be imposed for failure to give such required notice, including without
limitation fines and attorneys' fees. In the context of any situation in which
the WARN Act applies, (i) the Company has not effectuated a "plant closing" (as
defined in the WARN Act) affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of the
Company, and (ii) there has not occurred a "mass layoff" (as defined in the WARN
Act) affecting any site of employment or facility of the Company. The Company
has not been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar state,
local or foreign "plant closing" Law or regulation. The Company assumes
responsibility for any notice which may be required by the WARN Act as a result
of the transactions contemplated by this Agreement. The Company has not taken
any action prior to the Closing Date to cause any employees to be included in an
"employment loss" for purposes of the WARN Act.
53
10.10 COBRA. The Company agrees that the Company shall be solely liable
and responsible for providing COBRA coverage with respect to employees and their
eligible spouses and dependents who are terminated at the time of the Closing or
prior to the Closing and in connection with the transaction covered by this
Agreement and who have previously elected or are eligible to elect COBRA.
Accordingly, the Company shall maintain in effect its group health insurance
plan for the longest required COBRA coverage period applicable to any terminated
employee or dependents that may be required under the preceding sentence. Other
than as reserved for on the Closing Balance Sheet of the Business as provided in
Section 2.2(b), the Company agrees that the Company shall discharge, in
accordance with their terms, all obligations and Liabilities of the Company or
the Company's Affiliates with respect to costs of termination of any employees
including: (a) any severance claim made by any employee (i) that is not offered
employment by the Purchaser, or (ii) to whom employment is offered by the
Purchaser, but not accepted by such employee, or (b) any claim for accrued but
unused vacation, personal, or sick days.
10.11 NO INTENDED OR INCIDENTAL THIRD PARTY BENEFICIARY. The employees
of the Company are not and shall not be deemed to be intended or incidental
Third Party beneficiaries of this Agreement and shall not have standing to bring
a Proceeding to enforce the covenants set forth in this Agreement. Only the
Parties hereto shall have such standing.
ARTICLE 11
PERFORMANCE FOLLOWING THE CLOSING DATE
The following covenants and agreements are to be performed after the
Closing by the parties and shall continue in effect for the periods respectively
indicated or, where no indication is made, until performed:
11.1 FURTHER ACTS AND ASSURANCES. The parties agree that, at any time
and from time to time, on and after the Closing Date, upon the reasonable
request of the other party, they will do or cause to be done all such further
acts and things and execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered any and all papers, documents, instruments,
agreements, assignments, transfers, assurances and conveyances as may be
necessary or desirable to carry out and give effect to the provisions and intent
of this Agreement. In addition, from and after the Closing Date, the Purchaser
and the Company will afford to the other and their respective attorneys,
accountants and other representatives access, during normal business hours, to
such personnel, books and records relating to the Company or the Business as may
reasonably be required in connection with the preparation of financial
information, the filing of Tax Returns and the operation of the Business, and
will cooperate in all reasonable respects in connection with claims and
Proceeding asserted by or against third parties, relating to or arising from the
transactions contemplated hereby.
11.2 CONFIDENTIAL INFORMATION AND NON-COMPETITION AGREEMENTS.
(a) CONFIDENTIAL INFORMATION. The Company understands and
agrees that the Business and the Purchaser understands that the
business of the BPS Division and the Company, each is based upon
specialized work and that it has, along with their respective
54
shareholders, Related Persons and/or Controlled Persons, received, had
access to and/or contributed to Confidential Information. Except as may
be necessary or desirable (i) for defense of a Loss or conducting or
participating in a Proceeding in accordance with Sections 9.1, 9.3 or
9.4 hereof, (ii) in enforcing a Party's rights under this Agreement or
any Ancillary Document, (iii) for the purpose of filing any report
required to be filed with any Governmental Body, or (iv) in connection
with advice sought from an attorney, accountant or similar
professional, each party hereto agrees that at all times from and after
the Closing Date, each party hereto and its trustees, officers,
directors, shareholders, Related Persons and Controlled Persons, shall
keep secret all such Confidential Information of the other (assuming
the transfer of the Assets) and will not directly or indirectly Use or
Disclose the other party's Confidential Information to any Person
without first obtaining the written consent of the other party, which
consent may be withheld or given in the other party's sole discretion.
At any time the affected party may so request, the other party and its
trustees, officers, directors, shareholders, Related Persons and
Controlled Persons, shall turn over to the other party all Confidential
Information of such requesting party compiled by or delivered to such
Persons, including copies thereof, in its possession, it being agreed
that the same and all information contained therein are at all times
the exclusive property of the requesting party.
(b) COVENANT NOT TO COMPETE.
(i) COMPANY AND COMPANY PARENT. The Company and the
Company Parent acknowledge that in order to assure the
Purchaser, the Purchaser Parent and their respective
Affiliates (the "PURCHASER NON-COMPETE PARTIES") that the
Purchaser will retain the value of the Assets, the Company and
the Company Parent agree, for a period of four (4) years
following the Closing Date on the terms set forth in this
Section 11.2(b)(i), not to compete with the Purchaser
Non-Compete Parties solely in the provision of primary and
secondary research for information and knowledge which has, at
its core, the aggregation, interpretation and assimilation
capabilities conducted by human researchers (versus
machine-generated data and information) (the "PURCHASER
COMPETITIVE BUSINESS"), subject to the terms hereafter set
forth.
For a period of four (4) years beginning on the
Closing Date, each of the Company and the Company Parent and
their respective Affiliates, other than Sopheon GmbH as it
relates to the European market, at the time of determination,
shall not engage or have an interest, anywhere in the United
States of America or any other geographic area where the
Purchaser Non-Compete Parties do business at the date hereof
or in which their respective products or services are marketed
at the date hereof (in each case after giving effect to the
purchase of the Assets), alone or in association with others,
as principal, officer, agent, employee, director, member,
partner, lender or stockholder (except as an employee or
consultant of the Purchaser Non-Compete Parties or as an owner
of five percent (5%) or less of the stock of any company
listed on a national securities exchange or traded in the
over-the-counter market), or through the investment of
capital, lending of money or property, provision of capital,
or otherwise, in any business involving a Purchaser
Competitive Business. The foregoing shall specifically not
apply to the
55
business, business practices and activities described in the
definition of the BPS Division set forth in Recital B to this
Agreement.
Notwithstanding and in clarification of the forgoing:
(A) the restrictions contained in this
clause (i) shall not in any manner prohibit or
restrict any sale of the Company Non-Compete Parties
(or all or substantially all of the Company
Non-Compete Party's assets) to a Person that is not a
Related Party that has revenues that are derived,
directly or indirectly, from a Purchaser Competitive
Business which are less than twenty-five percent
(25%) of total revenues of such Person or the
Affiliate in interest of such Person or the continued
business operations of such Person, nor shall such
Purchaser Competitive Business be subject to the
obligations of the Company and the Company Parent
under this Section 11.2.
(ii) PURCHASER NON-COMPETE PARTIES. The Purchaser and
the Purchaser Parent acknowledge that in order to assure the
Company, the Company Parent and their respective Affiliates
(the "COMPANY NON-COMPETE PARTIES") that the Company and the
Company Parent will retain the value of the respective
remaining businesses of the BPS Division and the Company
Parent, the Purchaser and the Purchaser Parent agree, for a
period of four (4) years following the Closing Date on the
terms set forth in this Section 11.2(b)(ii), not to compete
with the Company Non-Compete Parties solely in the sale or
marketing, other than portal technology used for access to and
distribution of IM Division services, of software for the
management and automation of Knowledge Intensive Business
Processes, and related installation and integration services
(the "COMPANY COMPETITIVE BUSINESS"), subject to the terms
hereafter set forth.
For a period of four (4) years beginning on the
Closing Date, each of the Company and the Company Parent and
their respective Affiliates at the time of determination,
shall not engage or have an interest, anywhere in the United
States of America or any other geographic area where the
Purchaser Non-Compete Parties do business at the date hereof
or in which their respective products or services are marketed
at the date hereof (in each case after giving effect to the
purchase of the Assets), alone or in association with others,
as principal, officer, agent, employee, director, member,
partner, lender or stockholder (except as an employee or
consultant of the Company Non-Compete Parties or as an owner
of five percent (5%) or less of the stock of any company
listed on a national securities exchange or traded in the
over-the-counter market), or through the investment of
capital, lending of money or property, provision of capital,
or otherwise, in any business involving a Company Competitive
Business. The foregoing shall specifically not apply to the IM
Division Business.
Notwithstanding and in clarification of the foregoing:
56
(A) no Hired Active Employee shall at any
time while an employee of Purchaser or Purchaser
Parent during such four (4) year period engage in any
Company Competitive Business, whether or not such
activity may be allowed as an exception to the
covenant of the Purchaser Non-Compete Parties
hereunder;
(B) subject to (A) above, the restrictions
contained in this clause (ii) shall lapse and no
longer be effective or enforceable in connection with
and upon the sale of the Purchaser or the Purchaser
Parent to a Third Party that was not a Related Person
prior to such sale, whether or not such Third Party
is primarily engaged in a software business
competitive with the Company Non-Compete Parties in a
transaction that transfers the Business to such Third
Party; or
(C) the restrictions contained in this
clause (ii) shall not in any manner prohibit or
restrict any acquisition by the Purchaser Non-Compete
Parties of a Person that has revenues that are
derived, directly or indirectly, from a Company
Competitive Business which are less than twenty-five
percent (25%) of total revenues of such Person or the
Affiliate in interest of such Person or the continued
business operations of such Person.
(iii) NON-SOLICITATION. During the same period,
neither the Purchaser Non-Compete Parties nor the Company
Non-Compete Parties will recruit or otherwise solicit or
induce any Person who is an employee of, or otherwise engaged
by, the other or any of their respective Affiliates to
terminate his or her employment or other relationship with
such party, or hire any Person who has left the employ of such
party during the preceding four (4) months.
(iv) REASONABLE RESTRICTIONS. The parties hereto
acknowledge that compliance with the restrictions set forth in
this Section 11.2(b) are reasonable and will not prevent them
from earning a livelihood. The parties hereto acknowledge that
this Section 11.2(b) and the parties' respective obligations
hereunder are reasonable in light of the consideration of this
Agreement and were a material inducement and condition to the
parties entering into this Agreement and performing the
transactions contemplated hereby, and are necessary to protect
the respective goodwill and legitimate business interests of
the parties.
(v) ASSIGNMENT AND ASSUMPTION. If there shall be any
consolidation, merger or amalgamation of the Company or the
Company Parent with another Person or any acquisition of
capital stock of the Company or the Company Parent by means of
a share exchange (other than a consolidation, merger or share
exchange in which the Company or the Company Parent is the
continuing corporation) or any sale or conveyance of all or a
portion of the BPS Division (any such event being called a
"CAPITAL REORGANIZATION"), as a condition to effecting any
Capital Reorganization, the Company or the Company Parent or
the successor or surviving corporation or the acquirer of the
BPS Division, as the case
57
may be, shall assume the obligations of the Company and the
Company Parent under this Section 11.2.
11.3 INJUNCTIVE RELIEF. The parties agree that the remedy of damages at
law for the breach by any party of any of the covenants contained in Sections
11.1 or 11.2 is an inadequate remedy. In recognition of the irreparable harm
that a violation by (i) the Company of any of the covenants, agreements or
obligations arising under Sections 11.1 or 11.2 would cause the Purchaser, and
(ii) the Purchaser of any of the covenants, agreements or obligations arising
under Section 11.1, would cause the Company, (x) the Company, and (y) the
Purchaser, each agree on behalf of themselves and their trustees, officers,
directors, shareholders, Related Persons and Affiliates, that in addition to any
other remedies or relief afforded by law, an Injunction against an actual or
Threatened violation or violations may be issued against it and/or them and
every other Person concerned thereby, it being the understanding of the parties
that both damages and Injunction shall be proper modes of relief and are not to
be considered alternative remedies.
11.4 BLUE PENCIL DOCTRINE. In the event that any of the restrictive
covenants contained in this Article shall be found by a court of competent
jurisdiction to be unreasonable by reason of its extending for too great a
period of time or over too great a geographic area or by reason of its being too
extensive in any other respect, then such restrictive covenant shall be deemed
modified to the minimum extent necessary to make it reasonable and enforceable
under the circumstances.
11.5 COMPANY PARENT INDEMNIFICATION SHARES. In connection with the
indemnification obligations of the Company Parent under this Agreement, the
Company Parent shall deliver the number of shares of Company Parent common stock
("COMPANY PARENT STOCK") calculated in accordance with this Section 11.5, to the
Escrow Agent in the name of the Purchaser within five (5) business days after
the Closing. In connection with this transmittal, the Purchaser shall
concurrently deliver an assignment separate from certificate (the "PURCHASER
STOCK ASSIGNMENT") for the Company Parent Stock to the Escrow Agent to enable
the Company Parent Stock to be redelivered to the Company Parent or such other
nominee as the Company Parent shall advise the Escrow Agent in the event that
all or a portion of the Company Parent Stock is not claimed and used to
indemnify the Purchaser Indemnified Parties pursuant to this Agreement. The
Purchaser Stock Assignment will be signed by the Purchaser, but the transferee
and the number of shares to be transferred will be left blank for completion by
the Escrow Agent. The number of shares of Company Parent Stock required will be
determined by dividing $100,000 by the average closing price for the Company
Parent Stock which shall be calculated as the volume weighted average on the AIM
market of the London Stock Exchange of the Company Parent Stock ten (10)
consecutive trading days immediately preceding the third (3rd) day prior to the
date on which the payment/remittance is to be tendered, and shall be converted
to United States dollars from United Kingdom pounds pursuant to the average
exchange rate (between such dollars and pounds) during such ten (10) day
consecutive trading period, unless the number of shares of common stock
determined to be required is more than 500,000, in which case the amount of
Company Parent Stock shall be restricted to 500,000 shares. The disposition of
the Company Parent Stock once delivered to the Escrow Agent shall be determined
by the terms of the Escrow Agreement.
11.6 CONSENTS. After the Closing Date, the Company and the Purchaser
will cooperate and will each use commercially reasonable efforts to obtain any
consents listed on SCHEDULE 3.4
58
that are not obtained prior to the Closing Date. Anything to the contrary
notwithstanding, this Agreement shall not operate to assign any Contract, or any
claim, right or benefit arising thereunder or resulting therefrom, if an
attempted assignment thereof, without the consent of a Third Party thereto,
would constitute a breach, default or other contravention thereof or in any way
adversely affect the rights of the Company or the Purchaser thereunder. In the
event that a consent required to assign any Contract or Permit is not obtained
on or prior to the Closing Date, then, subject always to the terms of the
applicable Contract or Permit and to the extent permitted by Applicable Law, the
parties will use commercially reasonable efforts to (i) provide to the Purchaser
the benefits of the applicable Contract to the extent related to the Business,
(ii) relieve the Company to the extent possible, of the performance obligations
of the applicable Contracts and Permits, (iii) cooperate in any reasonable and
lawful arrangement designed to provide the benefits to the Purchaser, including
entering into subcontracts for performance, and (iv) enforce at the request of
the Purchaser and for the account of the Purchaser any rights of the Company
arising from any such Contract or Permit (including the right to elect to
terminate such Contract in accordance with the terms thereof upon the request of
the Purchaser).
11.7 CERTAIN TAX MATTERS.
(a) INCOME AND TRANSFER TAXES. All income, transfer,
registration, sales and use, excise, franchise and similar Taxes and
fees of any kind (including all penalties and interest) which arise
from, in connection with or are imposed incident to the sale of the
Assets or any other transaction that occurs pursuant to this Agreement
shall be borne and timely paid (without penalty or distraint) solely by
the Company.
(b) ALLOCATION OF PURCHASE PRICE. Within one hundred
thirty-five (135) days following the Closing Date, the Purchaser shall,
in a reasonable manner after appropriate consultation, determine the
fair market value of the Assets, and the Purchaser and the Company
shall allocate in writing the Purchase Price among the Assets as
required by Section 1060 of the Code and the Treasury Regulations
thereunder in connection with the transactions contemplated by this
Agreement. Such allocation and fair market values shall be set forth on
SCHEDULE 11.7(b) hereto. The Purchaser and the Company, as appropriate,
shall file an Asset Acquisition Statement on Form 8594 (which conforms
with the parties' allocation) with their federal income Tax Returns for
the Tax year in which the Closing occurs and shall contemporaneously
provide the other party with a copy of the Form 8594 being filed. Each
party agrees not to assert, in connection with any Tax Return, claim,
audit or similar Proceeding, any allocation of the Purchase Price which
contradicts the allocation and fair market values determined by the
parties hereunder.
(c) POST-CLOSING ACCESS AND COOPERATION. From and after the
Closing Date, each of the parties hereto agrees to permit the other
parties hereto to have reasonable access, during normal business hours,
to the books and records of the Business, to the extent that such books
and records relate to a Pre-Closing Period, and personnel, for the
purpose of enabling the parties hereto to: (i) prepare Tax Returns or
financial statements, (ii) investigate or contest any Tax matter, and
(iii) evaluate any claim for indemnification made by a party hereto.
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11.8 COVENANT REGARDING ACTIVE HIRED EMPLOYEE NON-COMPETE. The Company
shall not enforce the non-competition and confidentiality provisions of its
agreements with Hired Active Employees with respect to the work that will be
performed by such employees on behalf of the Purchaser or its Affiliates.
ARTICLE 12
TERMINATION
12.1 TERMINATION. This Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time after the date of this
Agreement, but not later than the Closing:
(a) by mutual written consent of all parties hereto;
(b) by the Purchaser or the Company if any of the conditions
provided for in Article 6 of this Agreement have not been met and have
not been waived in writing by the party seeking to terminate on or
before the Closing Date;
(c) by the Purchaser if any of the conditions provided for in
Article 7 of this Agreement have not been met (other than through the
failure of the Purchaser to comply with their obligations under this
Agreement) and have not been waived or deemed waived in accordance with
the provisions of this Agreement in writing by the Purchaser on or
before the Closing Date;
(d) by the Company if any of the conditions provided for in
Article 8 of this Agreement have not been met (other than through the
failure of the Company to comply with its obligations under this
Agreement) and have not been waived in writing by the Company on or
before the Closing Date;
(e) by either the Purchaser or the Company if the Closing
shall not have occurred on or before July 15, 2003, at which time this
Agreement may be terminated upon written notice to the other parties
hereto; and
(f) by a party who objects to a Supplement pursuant to Section
13.21.
In the event of termination or abandonment by any party as provided in this
Section 12.1, written notice shall forthwith be given to the other party and,
except as otherwise provided herein, each party shall pay its own expenses
incident to preparation or consummation of this Agreement and the transactions
contemplated hereunder and no party shall have any Liability to any other party
hereunder except such Liability as may arise as a result of a breach hereof.
12.2 RETURN OF DOCUMENTS AND NONDISCLOSURE. If this Agreement is
terminated for any reason pursuant to Section 12.1 hereto, each party and its
counsel shall return all documents and materials which shall have been furnished
by or on behalf of the other party, and all copies thereof, and each party
hereby covenants that it will not Use or Disclose to any Person any Confidential
Information about the other party or any information about the transactions
60
contemplated hereby, except insofar as may be necessary to comply with the
requirements of any Governmental Body or Final Order or to assert its rights
hereunder.
ARTICLE 13
MISCELLANEOUS
13.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, COVENANTS AND
AGREEMENTS. Each of the representations and warranties of the parties contained
in this Agreement and in any Exhibit, Schedule, certificate, instrument or
document delivered by or on behalf of any of the parties hereto pursuant to this
Agreement and the transactions contemplated hereby shall survive the Closing of
the transactions contemplated hereby and any investigation made by the parties
or their agents for a period of twenty-one (21) months after the Closing, after
which no claim for indemnification for any misrepresentation, or for the breach
or falsity of any representation or warranty under this Agreement or any
Ancillary Document, may be brought, and no action with respect thereto may be
commenced, and no party shall have any Liability or obligation with respect
thereto, unless (i) the Indemnified Party gave written notice to the
Indemnifying Party specifying with particularity the misrepresentation or a
breach of representation or warranty claimed on or before the expiration of such
period, (ii) the claim relates to a breach of any representations or warranties
contained in Sections 3.10 or 3.25, or 3.1, 3.2, 3.3, 3.7, 3.9, 3.10 in which
case the right to indemnification shall survive until the expiration of the
applicable statute of limitations, or (iii) the claim relates to any
representation or warranty in Section 3.5, in which case the representation or
warranty shall indefinitely survive the Closing. The covenants and agreements
arising from, incident to or in connection with this Agreement shall survive the
Closing indefinitely, until such covenants and agreements are fully satisfied
and require no performance or forbearance, or the rights of a party hereto
expire on a specific date by the terms hereof.
13.2 PRESERVATION OF AND ACCESS TO RECORDS. The Purchaser shall
preserve all books and records of the Company transferred as part of the Assets
for a period of six (6) years after the Closing Date; PROVIDED, HOWEVER, the
Purchaser may (i) destroy any part or parts of such records upon obtaining
written consent of the Company for such destruction, which consent shall not be
unreasonably withheld, delayed or conditioned, or (ii) return to the Company or
the Company Parent such records in lieu of such preservation. Such records shall
be made available to the Company and its representatives at all reasonable times
during normal business hours of the Purchaser during said six-year period with
the right at its expense to make abstracts from and copies thereof.
13.3 COOPERATION. The parties hereto shall cooperate with each other in
all respects, including using commercially reasonable efforts to assist each
other in satisfying the conditions precedent to their respective obligations
under this Agreement and any Ancillary Document, to the end that the
transactions contemplated hereby will be consummated.
13.4 PUBLIC ANNOUNCEMENTS. The timing and content of all public
announcements relating to the execution of this Agreement and the Ancillary
Documents, and the consummation of the transactions contemplated hereby shall be
approved by both the Purchaser and the Company prior to the release of such
public announcements, and each party agrees to cooperate
61
with the other party as appropriate to comply with all Applicable Laws and stock
exchange rules. Notwithstanding any provision of this Section 13.4, any Party
may file all required filings pursuant to Applicable Law on the last day
required under such Applicable Law without taking into effect late filing
extensions.
13.5 NOTICES. All notices, demands and other communications provided
for hereunder shall be in writing and shall be given by personal delivery, via
facsimile transmission (receipt telephonically confirmed), by nationally
recognized overnight courier (prepaid), or by certified or registered first
class mail, postage prepaid, return receipt requested, sent to each party, at
its/his address as set forth below or at such other address or in such other
manner as may be designated by such party in written notice to each of the other
parties. All such notices, demands and communications shall be effective when
personally delivered, one (1) business day after delivery to the overnight
courier, upon telephone confirmation of facsimile transmission or upon receipt
after dispatch by mail to the party to whom the same is so given or made:
If to Company: Sopheon PLC
or Company Parent Stirling House
Stirling Road
Surrey Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxx XX0 0XX
XXXXXXX
Attention: Xxxxx Xxxxx
Xxxx Xxxxxxxx
With a copy to: Xxxxxx and Xxxxxx, Professional Association
2400 IDS Center
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
If to the Purchaser Find/SVP, Inc.
or Purchaser Parent: 000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Chief Executive Officer
With a copy to: Xxxx Xxxxxxx, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
13.6 ENTIRE AGREEMENT. Other than the Non-Disclosure Agreement executed
by the parties on or about July 24, 2002, this Agreement and the Ancillary
Documents to be executed and/or delivered by the parties pursuant hereto,
contains the entire agreement of the parties hereto and supersedes all prior or
contemporaneous agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. By execution of this
Agreement, the Letter of Intent dated April 2, 2003 is hereby terminated, void
and of no further force or effect.
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13.7 REMEDIES. The respective indemnification obligations of the
parties set forth in Article 9 of this Agreement are the exclusive remedies of
the parties and their successors, assigns, heirs, beneficiaries or others
seeking to claim by, through, or on behalf of a party, under this Agreement or
any Ancillary Document, and no other remedy or remedies, whether arising under
any Applicable Law, common law or otherwise, may be used, asserted or prosecuted
in connection with this Agreement or any Ancillary Document and any transaction,
occurrence, or omission arising from, in connection with or otherwise based upon
this Agreement or any Ancillary Document; PROVIDED, HOWEVER, that all equitable
remedies and assertions of fraud and/or intentional misrepresentation shall
remain available and shall not require an election of remedies.
13.8 AMENDMENTS. No purported amendment, modification or waiver of any
provision of this Agreement or any Ancillary Document to be executed and
delivered by the parties pursuant hereto shall be effective unless in a writing
specifically referring to this Agreement and signed by all of the parties
hereto.
13.9 SUCCESSORS AND ASSIGNS. This Agreement and the Ancillary Documents
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but except as hereinafter provided
in this Section, nothing in this Agreement is to be construed as an
authorization or right of any party to assign its rights or delegate its duties
under this Agreement without the prior written consent of the other parties
hereto. Notwithstanding the foregoing, in its sole discretion, any party hereto
may assign its respective rights in and/or delegate its respective duties under
this Agreement to an Affiliate. In the event of such an assignment of rights
and/or delegation of duties, all references to such party, as applicable to the
assignment, in this Agreement shall also be deemed to be references to the
Person to which this Agreement is assigned; provided that no such assignment
and/or delegation shall relieve the assignor of any of its duties or obligations
hereunder or under any Ancillary Document.
13.10 FEES AND EXPENSES. Each party hereto shall pay their own fees and
expenses incurred in connection with negotiating and preparing this Agreement
and consummating the transactions contemplated hereby, including but not limited
to fees and disbursements of their respective attorneys, accountants and
investment bankers. If the transaction is consummated, all fees and expenses,
including legal, accounting, investment banking, broker's and finder's fees and
expenses incurred by the Company or the Company Parent in connection with this
transaction (the "TRANSACTIONAL EXPENSES") shall be deemed expenses of the
Company and shall be borne by the Company.
13.11 GOVERNING LAW AND JURISDICTION. This Agreement and the Ancillary
Documents to be executed and/or delivered by the parties pursuant hereto, shall
be construed, governed by and enforced in accordance with the internal laws of
the State of Delaware, without giving effect to the principles of comity or
conflicts of laws thereof. The Company and the Purchaser agree and consent that
any legal action, suit or Proceeding seeking to enforce any provision of this
Agreement with the exception of Section 9.4 (which is governed by Section
9.4(c)) shall be instituted and adjudicated solely and exclusively in any court
of general jurisdiction in New York, or in the United States District Court
having jurisdiction in New York and the Company and the Purchaser agree that
venue will be proper in such courts and waive any
63
objection which they may have now or hereafter to the venue of any such suit,
action or Proceeding in such courts, and each hereby irrevocably consents and
agrees to the jurisdiction of said courts in any such suit, action or
Proceeding. The Company and the Purchaser further agree to accept and
acknowledge service of any and all process which may be served in any such suit,
action or Proceeding in said courts, and also agree that service of process or
notice upon them shall be deemed in every respect effective service of process
or notice upon them, in any suit, action, Proceeding, if given or made (i)
according to Applicable Law, (ii) by a Person over the age of 18 who personally
served such notice or service of process on the Company or the Purchaser, as the
case may be, or (iii) by certified mail, return receipt requested, mailed to the
Company or the Purchaser, as the case may be, at their respective addresses set
forth in this Agreement.
13.12 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement and the
Ancillary Documents may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument. The counterparts of this Agreement and the Ancillary
Documents may be executed and delivered by facsimile signature by any of the
parties to any other party and the receiving party may rely on the receipt of
such document so executed and delivered by facsimile as if the original had been
received.
13.13 HEADINGS. The headings of the articles, sections and subsections
of this Agreement are intended for the convenience of the parties only and shall
in no way be held to explain, modify, construe, limit, amplify or aid in the
interpretation of the provisions hereof. The terms "this Agreement," "hereof,"
"herein," "hereunder," "hereto" and similar expressions refer to this Agreement
as a whole and not to any particular article, section, subsection or other
portion hereof and include the Schedules and Exhibits hereto and any document,
instrument or agreement executed and/or delivered by the parties pursuant
hereto.
13.14 [THIS SECTION INTENTIONALLY OMITTED]
13.15 NUMBER AND GENDER. Unless the context otherwise requires, words
importing the singular number shall include the plural and vice versa and words
importing the use of any gender shall include all genders.
13.16 SEVERABILITY. In the event that any provision of this Agreement
or any Ancillary Document is declared or held by any court of competent
jurisdiction to be invalid or unenforceable, such provision shall be severable
from, and such invalidity or unenforceability shall not be construed to have any
effect on, the remaining provisions of this Agreement or the applicable
Ancillary Document, unless such invalid or unenforceable provision goes to the
essence of this Agreement, in which case the entire Agreement may be declared
invalid and not binding upon any of the parties.
13.17 PARTIES IN INTEREST. Nothing expressed or implied in this
Agreement, specifically including the provisions of Article 10 hereof, is
intended or shall be construed to confer any rights or remedies under or by
reason of this Agreement upon any Person other than the Parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement is
intended to relieve or discharge the Liabilities of any third Person to the
Purchaser or the Company.
64
13.18 WAIVER. The terms, conditions, warranties, representations and
indemnities contained in this Agreement, including the documents, instruments
and agreements executed and/or delivered by the parties pursuant hereto, may be
waived only by a written instrument executed by the party waiving compliance.
Any such waiver shall only be effective in the specific instance and for the
specific purpose for which it was given and shall not be deemed a waiver of any
other provision hereof or of the same breach or default upon any recurrence
thereof. No failure on the part of a party hereto to exercise and no delay in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
13.19 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The words "including," "include" or "includes"
shall mean including without limitation. The parties intend that each
representation, warranty and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty or covenant.
13.20 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to
injunctive relief to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
13.21 SUPPLEMENTATION OF SCHEDULES. The Company or the Purchaser may
elect to deliver a supplement ("SUPPLEMENT") to one or more of the Schedules
previously delivered to the other in accordance with the procedures set forth in
this Section 13.21 as follows:
(a) Prior to the Closing Date, any and all Supplements must be
in writing and must be delivered to the other party before the date
that is five (5) business days prior to the scheduled Closing Date. The
other party shall be given the opportunity during the five (5) business
days following the delivery of the proposed Supplement to consider that
Supplement. If the recipient does not object to the contents of the
Supplement within such period, the Schedule in question shall be deemed
amended by the Supplement. If the recipient objects to a proposed
Supplement, the sole remedy of such objecting party shall be
termination of this Agreement in accordance Section 12.1(f) of this
Agreement;
(b) Any and all Supplements within five (5) business days
prior to the scheduled Closing Date must be in writing and delivered to
the other party pursuant to Section 13.5 of this Agreement, and will
only be deemed to amend a Schedule with the written consent of the
recipient of the Supplement; and
65
(c) Any and all Supplements provided pursuant to this Section
13.21 shall only address or update items, events and changes in
circumstances first occurring or arising after the date of this
Agreement and prior to the Closing, and such items, events or changes
in circumstances may not have arisen in connection with a direct or
indirect breach of the terms of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by duly authorized representations as of the day, month and year first
above written.
PURCHASER: COMPANY:
TTECH ACQUISITION CORP. SOPHEON CORPORATION
By /s/ Xxxxx Xxxxx By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------- ---------------------------------
Its Treasurer Its Vice President
----------------------------- -----------------------------
PURCHASER PARENT: COMPANY PARENT:
FIND/SVP, INC. SOPHEON PLC
By /s/ Xxxxx Xxxxx By /s/ Xxxx Xxxxxxxx
--------------------------------- ---------------------------------
Its Chief Financial Officer Its Secretary
----------------------------- -----------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED ASSET PURCHASE AGREEMENT]
