ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (the "Agreement") dated as of November 10, 1997 by
and among SofTech, Inc., a Massachusetts corporation ("SofTech"), Information
Decisions, Inc. ("IDI"), a wholly-owned subsidiary of SofTech (collectively, the
"Buyer"), CIMLINC Incorporated, a Delaware corporation ("CIMLINC"), CIMLINC Ltd.
and CIMLINC GmbH (collectively with CIMLINC, the "Seller").
WITNESSETH
WHEREAS, subject to the terms and conditions hereof, Seller desires to sell
substantially all of the properties and assets of the Advanced Manufacturing
Technology group ("AMT") of CIMLINC; and
WHEREAS, subject to the terms and conditions hereof, Buyer desires to
purchase said properties and assets of Seller for the consideration specified
herein and the assumption by Buyer of certain liabilities and obligations of
Seller specified herein;
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
Section 1
PURCHASE AND SALE OF ASSETS
1.1 Sale of Assets. Subject to the provisions of this Agreement, on the date
this Agreement is signed (the "Closing"), at such time and place as shall be
determined by mutual agreement of the parties, Seller agrees to sell and Buyer
agrees to purchase, all of the Seller's right, title and interest in and to the
properties, assets and business of the Seller's AMT group (the "Business") of
every kind and description, tangible and intangible, real, personal or mixed,
and wherever located, including, without limitation, all assets shown or
reflected on the Base Balance Sheet (as defined in Section 2.7 hereof) and
listed on Schedule 1.1, and all of the Proprietary Rights (as defined in Section
2.22 below); provided, however, that the following property shall be excluded
from such purchase and sale:
(a) Seller's corporate seals, corporate franchise, organizing or
governing documents, By-laws, stock record books, corporate record books
containing minutes of meetings of directors and stockholders and such other
records as have to do
exclusively with Seller's organization or stock capitalization
(collectively, the "Corporate Records");
(b) Seller's tax and accounting records; provided, however, that
Seller shall provide Buyer with access to these documents in accordance
with Section 2.15 hereof;
(c) All cash on hand or cash overdraft positions as of the Closing
date; and
(d) All billed accounts receivable for revenue recorded prior to the
Closing date by the Seller in accordance with its revenue recognition
policies. Such receivables shall be composed only of xxxxxxxx for (1)
software or hardware shipped on or before the Closing date, (2) services
performed on or before the Closing date other than services related to a
maintenance agreement, and (3) maintenance with a start date on or before
the Closing date.
The assets, property and business of Seller to be sold to and purchased by Buyer
under this Agreement are hereinafter sometimes referred to as the "Subject
Assets", and the assets, property and business of Seller to be excluded from the
sale to Buyer are hereinafter sometimes referred to as the "Excluded Assets" and
are detailed at Schedule 1.1(a).
1.2 Limited Assumption of Liabilities. Upon the sale and purchase of the Subject
Assets, Buyer shall assume and agree to pay or discharge when due in accordance
with their respective terms, those liabilities listed on Schedule 1.2. Buyer
shall not assume or be liable for any liabilities or obligations of Seller
arising at or prior to the Closing unless specifically identified on Schedule
1.2. Without limiting the foregoing, Buyer shall not assume and shall not pay
any of the following liabilities or obligations:
(a) liabilities incurred by Seller in connection with this Agreement,
and the transactions provided for herein, including, without limitation,
counsel and accountant's fees, salary continuation arrangements extended to
all AMT employees, severance arrangements and expenses pertaining to the
performance by Seller of its obligations hereunder;
(b) Taxes (as defined in Section 2.8 hereof) of Seller, whether
relating to periods before or after the transaction contemplated in this
Agreement or incurred by Seller in connection with this Agreement and the
transactions provided for herein.
(c) liabilities of Seller with respect to any options, warrants,
agreements or convertible or other rights to acquire any shares of its
capital stock of any class; and
(d) liabilities in connection with or relating to any actions, suits,
claims, proceedings, demands, assessments and judgments, costs, losses,
liabilities, damages,
deficiencies and expenses (whether or not arising out of third-party
claims), including, without limitation, interest, penalties, attorneys' and
accountants' fees and all amounts paid in investigation, defense or
settlement of any of the foregoing.
The liabilities to be assumed by the Buyer under this Agreement are hereinafter
sometimes referred to as the "Liabilities" and the liabilities which are not
assumed by Buyer under this Agreement are hereinafter sometimes referred to as
the "Excluded Liabilities". The assumption of said Liabilities by Buyer
hereunder shall not enlarge any rights of third parties under contracts or
arrangements with Buyer or Seller, and nothing herein shall prevent Buyer from
contesting in any manner any of said Liabilities.
1.3 Base Purchase Price and Payment. In reliance upon the representations and
warranties of the Seller herein contained and made at the Closing and in full
consideration of the terms and conditions hereof and the sale by Seller to Buyer
of the Subject Assets, SofTech shall deliver (the "Purchase Price") to the
Seller at the Closing the following:
(a) the sum of $1,750,000 by wire transfer of immediately available
federal funds to such account(s) as Seller shall designate; and
(b) 200,000 shares of SofTech, Inc. common stock (the "Shares"), par
value $.10 per share.
1.4 Additional Purchase Price. In addition to the cash and Shares paid to Seller
by Buyer at the Closing, Seller will receive a royalty of 5% of the revenue from
the sale of the Prospector software offering for a period of three years
following the Closing. Such royalty shall be paid on a quarterly basis within 30
days of the end of each of Buyer's fiscal quarters following the Closing. No
royalty payments shall be due on the first $2.0 million of Prospector software
sales.
1.5 Guarantee Value of Shares. Buyer hereby provides Seller with a guarantee
that the Shares received at the Closing will have a value of at least $1.0
million within two years of the Closing or an additional payment will be due
from Buyer to Seller for the difference. The payment for the difference, if
required, shall be made in cash or SofTech stock or any combination thereof at
the discretion of Buyer within 30 days subsequent to the end of the two year
period. If the payment is made, in whole or part, in SofTech stock the average
closing price for the last thirty trading days of the two year period shall be
used to derive the per share value and any such stock will be included within
the definition of Shares. Such guarantee of value shall only apply to that
portion of the Shares held by Seller at time payment is due. Sale of Shares in
whole or in part shall negate the guarantee for the portion of the Shares sold.
However, in no event shall the issuance of SofTech stock in payment of such
guarantee cause the total shares issued to complete this transaction to exceed
19.9% of shares outstanding prior to the transaction, approximately 1,041,500
shares. Seller agrees that the Buyer has not made any representations regarding
the present or projected value of its shares and the $1.0 million does not
constitute such a representation.
The Seller may pledge the Shares to lenders in order to secure financing. In the
event of default under such pledging arrangements whereby the ownership of such
Shares is transferred to the lender, the guarantee as detailed in this section
1.5 shall transfer to the lender. The lender shall inherit the same rights under
the guarantee as was extended to Seller in this section 1.5 as it relates to the
guarantee of Share value.
If during the guarantee period the per share value of the SofTech stock shall
close at or above a per share value which equates to an aggregate value of at
least $1.4 million for the Shares for at least 10 trading days during any 30
trading day period, no additional payments shall be due from Buyer. This
provision only applies, however, if the registration document filed by the Buyer
as required under section 5.1 is effective or the Shares are tradable without
such effective registration document.
1.6 Allocation of Purchase Price. Both parties agree that the purchase price of
approximately $4.4 million ($1,750,000 in cash, $2.3 million in assumed
liabilities and $350,000 of stock) will be allocated as follows:
Prospector Software $3.0 million
CAD Software 1.0 million
Fixed assets .2 million
Goodwill .2 million
The parties agree that the amounts so allocated are fair measures of the market
value of the software and fixed assets based on assumptions regarding current
market information, replacement value, projected cash flow from expected revenue
and experience from marketing such assets to other interested parties, and the
parties agree to file all required reports with the Internal Revenue Service
consistent with the foregoing.
1.7 Transfer of Subject Assets. At the Closing, Seller shall deliver or cause to
be delivered to Buyer good and sufficient instruments of transfer transferring
to Buyer title to all Subject Assets. Such instruments of transfer (a) shall be
in the form (not inconsistent with the provisions hereof) which are usual and
customary for transferring the type of property involved under the laws of the
jurisdictions applicable to such transfers, (b) shall be in form and substance
reasonably satisfactory to Buyer and its counsel, and (c) shall effectively vest
in Buyer good and marketable title to all the Subject Assets free and clear of
all liens, restrictions and encumbrances not shown or reflected on the Base
Balance Sheet except anything arising from actions of Buyer (except that all
contract consents may not have obtained).
1.8 Delivery of Records and Contracts. At the Closing, Seller shall deliver or
cause to be delivered to Buyer all of Seller's leases, contracts, commitments,
agreements applicable to the AMT business(including without limitation
non-competition agreements) and rights, with such assignments thereof and
consents to assignments as are necessary (except that all contract consents may
not have obtained) to assure Buyer of the full benefit of the
same. Seller shall also deliver to Buyer at the Closing all of Seller's business
records, tax returns, books and other data, in each case relating to the
Business (except corporate records and other property of seller excluded under
Section 1.1 as to which only copies need to be delivered in accordance with such
Section), and Seller shall take all requisite steps to put Buyer in actual
possession and operating control of the AMT assets and business.
1.9 Further Assurances. Seller from time to time after the Closing at the
request of Buyer and without further consideration shall execute and deliver
further instruments of transfer and assignment and take such other action as
Buyer may reasonably require to more effectively transfer and assign to, and
vest in, Buyer each of the Subject Assets. Seller shall cooperate with Buyer to
permit Buyer to enjoy Seller's rating and benefits under the xxxxxxx'x
compensation laws and unemployment compensation laws of the applicable
jurisdictions, to the extent permitted by such laws. Nothing herein shall be
deemed a waiver by Buyer of its rights to receive at the Closing an effective
assignment of each of the leases, contracts, commitments or rights of Seller as
otherwise set forth in this Agreement.
1.10 Sales and Transfer Taxes. All sales and transfer taxes, fees and duties
under applicable law (including all transfer taxes, fees, duties, if any)
incurred in connection with this Agreement or the transactions contemplated
thereby will be shared equally by Buyer and Seller.
Section 2
REPRESENTATIONS AND WARRANTIES OF SELLER
2.1 Making of Representations and Warranties. As a material inducement to Buyer
to enter into this Agreement and consummate the transactions contemplated
hereby, Seller, jointly and severally, hereby make to Buyer the representations
and warranties contained in this Section 2.
2.2 Organization and Qualification of CIMLINC. CIMLINC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with full corporate power and authority to own or lease its properties
and to conduct its business in the manner and in the places where such
properties are owned or leased or such business is currently conducted. The
copies of CIMLINC's Certificate of Incorporation and bylaws, as amended to date,
certified by the Secretary of State of the State of Delaware are complete and
correct, and no amendments are pending or contemplated. CIMLINC is not required
to be licensed or qualified to conduct its business or own its property in any
other jurisdiction in which it is not qualified.
2.3 Subsidiaries. CIMLINC has no subsidiaries and does not own any securities
issued by, and has not loaned any funds to, any other business organization or
governmental authority other than those listed on Schedule 2.3.
2.5 Authority. Seller has full right, authority and power to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered by Seller pursuant to this Agreement and to carry out the transactions
contemplated hereby. The execution delivery and performance by Seller of this
Agreement and each such agreement, document and instrument have been fully
authorized by all necessary action of Seller and no other action on the part of
Seller is required in connection therewith. The execution, delivery and
performance of this Agreement by Seller does not and will not: (a) violate any
provision of the Certificate of Incorporation or bylaws; (b) violate any laws of
the United States, or any state or other jurisdiction applicable to Seller or
require Seller to obtain any approval, consent or waiver of, or make any filing
with, any person or entity that has not been obtained or made; and (c) result in
a breach of, constitute a default under, accelerate any obligation under, or
give rise to a right of termination of any contract, agreement, or lease to
which Seller is a party except as set forth on Schedule 2.5.
2.6 Status of Tangible Property.
(a) No Real Property Owned. - Seller does not currently, nor has Seller ever in
the past, owned any real property.
(b) Leased Real Property. All real property leased by Seller as tenant or lessee
and used in the AMT business is listed on Schedule 2.6(b). Copies of all the
leases have been provided to Buyer and are complete, accurate, true and correct.
Each of the Leases is in full force and effect on the terms set forth therein
and have not been modified, amended or altered, in writing or otherwise.
(c) Personal Property. A complete list of machinery, equipment, furniture,
fixtures, leasehold improvements and all other tangible personal property owned
or leased by Seller and used in the AMT business is listed on Schedule 2.6(c).
Seller has good and valid, legal title to all of the personal property owned by
it and used in the Business, free and clear of all claims, liens and
encumbrances other than the liens of TransAmerica Business Credit Corporation
which are being released at the Closing, and all of its equipment leases are
valid and no default exists under any such lease. All such personal property is
in good repair and working order and has been well maintained.
2.7 Financial Statements.
(a) Buyer has received the following financial statements related to the actual
performance and the financial position of the AMT business, copies of which are
attached hereto as part of Schedule 2.7: balance sheets as of March 31, 1997,
June 30, 1997, and September 30, 1997 and statements of income for the twelve
months ended March 31, 1997, 1996, and 1995, and for the three months ended June
30, 1997 and September 30, 1997. Said financial statements are complete, true,
accurate and correct, have been prepared in accordance with generally accepted
accounting principles applied consistently during the periods covered thereby,
and present fairly the financial condition of the AMT business at the dates of
said statements and the results of its operations for the periods covered
thereby. The balance sheet of AMT as of March 31, 1997 is hereafter referred to
as the "Base Balance Sheet". The indirect overhead expenses for such services as
facility rent, maintenance and repair, all accounting functions, shared research
and development expenditures and general management have been allocated to AMT
based on management's best estimates of benefits of such efforts and amounted to
$786,000, $1,369,000, and $1,220,000 for the twelve months ended March 31, 1997,
1996 and 1995, respectively. Such allocation is a fair allocation based on the
services provided to AMT by the corporate group.
(b) As of the date of the Base Balance Sheet, AMT had no liabilities of any
nature that would be required to be disclosed in accordance with generally
accepted accounting principles, whether accrued, absolute, contingent or
otherwise, asserted or unasserted except liabilities (i) stated or adequately
reserved against on the Base Balance Sheet, or (ii) specifically reflected on
the Schedules furnished to Buyer hereunder as of the date hereof.
(c) As of the date hereof, AMT has no liabilities of any nature which would be
required to be disclosed in accordance with generally accepted accounting
principles, whether accrued, absolute, contingent or otherwise, asserted or
unasserted, except liabilities specifically reflected in Base Balance Sheet or
specifically reflected on the Schedules furnished to Buyer hereunder on the date
hereof or incurred in the ordinary course of business since the date of the Base
Balance Sheet.
2.8 Taxes.
(a) CIMLINC has paid or caused to be paid all federal, state, local, foreign and
other taxes, including, without limitation, income taxes, estimated taxes,
alternative taxes, excise taxes, sales taxes, use taxes, value-added taxes,
gross receipts taxes, capital stock taxes, franchise taxes, employment and
payroll related taxes, withholding taxes, property taxes, whether or not
measured in whole or part by net income, and all deficiencies, or other
additions to tax, interest, fines and penalties owed by it (collectively,
"Taxes") required to be paid by it through the date hereof whether disputed or
not.
(b) CIMLINC has, in accordance with applicable law, filed all federal, state,
local and foreign tax returns required to be filed by it through the date
hereof, and all such returns correctly and accurately set forth the amount of
any Taxes relating to the applicable
period. Schedule 2.8(b) lists all federal, state, local and foreign income tax
returns filed by CIMLINC for the fiscal year ended March 31, 1996 and 1997 with
notation as to those returns that have been audited or are currently being
audited. CIMLINC has delivered to Buyer a complete and correct copy of each of
those returns listed and all examination reports and statements of deficiencies
assessed against or agreed to by CIMLINC with respect to such returns.
2.9 Accounts Receivable. The software product xxxxxxxx making up the accounts
receivable balance as of the transaction date which will be retained by CIMLINC
and collected by them subsequent to the transaction have been recorded in
compliance with the CIMLINC revenue recognition policy as stated in the audited
financial statements. Schedule 2.9 attached hereto is a complete listing of
these xxxxxxxx. There are no obligations to provide additional services in order
to collect these balances other than those obligations listed on Schedule 2.9.
2.10 Absence of Certain Changes. Since the date of the Base Balance Sheet there
has not been, relating to the Business:
(a) any material adverse change in the financial condition, properties,
assets, liabilities, business or operations of the Business;
(b) any contingent liability incurred by the business as guarantor or
otherwise with respect to the obligations of others or any cancellation of
any debt or claim owing to, or waiver of any right of Seller;
(c) any obligation or liability of any nature incurred by Seller, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, other
than obligations and liabilities incurred in the ordinary course of
business consistent with the terms of this Agreement;
(d) any purchase, sale or other disposition, or any agreement or other
arrangement for the purchase, sale or other disposition, of any assets of
Seller other than in the ordinary course of business;
(e) any labor trouble or claim of unfair labor practices involving Seller;
any change in compensation by Seller to any officers, employees, agents or
independent contractors other than normal merit increases in accordance
with its usual practices, or any bonus payment or arrangement made to or
with any of such officers, employees, agents or independent contractors;
(f) any payment or discharge of a lien or liability of Seller which was not
shown on the Base Balance Sheet or incurred in the ordinary course of
business thereafter;
(g) any change in accounting methods or practices, credit practices or
collection policies used by Seller;
(h) any agreement or understanding, whether in writing or otherwise, for
Seller to take any of the actions specified in paragraphs (a) through (h)
above; or
(i) any material change in relations with customers, suppliers, employees,
consultants, distributors, or independent contractors.
2.11 Contracts. Schedule 2.11 is a complete list of all written and oral
contracts, commitments, plans, agreements and licenses to which Seller is a
party relating to AMT. Seller is not a party to any other contract, commitment,
plan, agreement or license relating to the Business that is not described on
Schedule 2.11.
Seller is not in default under any such contracts, commitments, plans,
agreements or licenses described on Schedule 2.11 and has no knowledge of
conditions or facts which with notice or passage of time, or both, would
constitute default. To the knowledge of Seller, no other party to any such
contract, commitment, plan, agreement or license is in default thereunder, and
Seller as no knowledge of conditions or facts which with the notice or passage
of time, or both, would constitute a default.
2.12 Litigation. There is no litigation or governmental or administrative
proceeding or investigation pending against Seller or threatened against Seller
which are reasonably likely to have an adverse effect on Seller's assets,
prospects, financial condition or business or which would prevent or hinder the
consummation of the transactions contemplated by this Agreement.
2.13 Compliance with Laws. Seller is in compliance in all material respects with
all applicable statutes, ordinances, orders, rules and regulations promulgated
by any federal, state, municipal or governmental authority which apply to the
conduct of its business, and Seller has not received notice of a violation or
alleged violation of any such statute, ordinance, order, rule or regulation.
2.15 Corporate Records. The corporate record books of CIMLINC record all
material corporate action taken by its stockholders and board of directors and
committees thereof. The copies of the CIMLINC's corporate records delivered to
Buyer are true and complete copies of the originals of such documents. Seller
has provided Buyer with access to all tax and accounting records in order to
perform its due diligence procedures. Seller represents that such tax and
accounting records are true and complete.
2.16 Employee Benefit Plans. Schedule 2.16 lists and describes all employee
benefit plans that have been offered to employees of the AMT business since
inception through the Closing Date. Seller has provided Buyer with true and
complete copies of all documents embodying or governing such Plans.
2.17 Environmental Matters. AMT has never generated, transported, used, stored,
treated, disposed of or managed any Hazardous Waste. No Hazardous Material has
ever been or is threatened to be spilled, released or disposed of by or on
behalf of AMT at any site presently or formerly owned, operated, leased or used
by AMT, or has ever
come to be located in the soil or groundwater at any such site. AMT has no
liability under, nor has it ever violated, any Environmental Law. For the
purposes of this Section 2.17, (i) "Hazardous Material" shall mean and include
any hazardous waste, hazardous material, hazardous substance, petroleum product,
oil, toxic substance, pollutant, contaminant, or other substance which may pose
a threat to the environment or to human health or safety, as defined or
regulated under any Environmental Law; (ii) `Hazardous Waste" shall mean and
include any hazardous waste as defined or regulated under any Environmental Law;
(iii) "Environmental Law" shall mean any environmental or health and
safety-related law, regulation, rule, ordinance, or by-law at the foreign,
federal, state, or local level, whether existing as of the date hereof,
previously enforced, or subsequently enacted; and (iv) "Seller" shall mean and
include Seller and all other entities for whose conduct Seller is or may be held
responsible under any Environmental Law.
2.18 Directors, Officers, and Suppliers.
(a) Schedule 2.18(a) is a true and complete list of all current directors and
officers of CIMLINC. Neither the Seller nor any other director or officer of
Seller, owns, directly or indirectly, on an individual or joint basis, any
material interest in, or serves as an officer, director, employee of or
consultant to, any customer, competitor or supplier of AMT or any organization
that has a material contract or arrangement with or lease of real or personal
property to the Business.
(b) Schedule 2.18(b) is a true and complete list of the suppliers of AMT to whom
AMT has made a payment, of $5,000 or more during or with respect to the fiscal
year ended March 31, 1997 showing with respect to each, the name, address and
dollar volume involved.
2.19 Disclosure. To the knowledge of Seller, the representations, warranties and
statements contained in this Agreement and in the certificates, exhibits and
schedules delivered by CIMLINC to Buyer pursuant to this transaction do not
contain any untrue statement of a material fact, and, when taken together, do
not omit to state a material fact required to be stated therein or necessary in
order to make such representations, warranties or statements not misleading in
light of the circumstances in which they were made. There are no facts
pertaining to past actions or past or current agreements of Seller that could
reasonably be expected to have a material adverse effect on the business,
assets, prospects, operations or condition of AMT that have not been
specifically disclosed herein or in a Schedule furnished herewith, other than
general economic conditions affecting AMT's business.
2.20 Employees and Labor Matters.
(a) As of the date hereof, Seller employs 31 full-time employees and 3 part-time
employees in the AMT business and generally enjoys a good employer-employee
relationship. Schedule 2.20(a) sets forth the name, position, pay rate,
full-time or part-time status, date of hire, annual review date and exempt or
non-exempt status of each of AMT's employees. Seller has no knowledge that a key
employee of the Business does not plan to accept employment with Buyer.
(b) Schedule 2.20(b) is a list of all employees that have terminated employment,
for any reason, voluntarily or otherwise, with AMT over the last 24 months with
a brief description of the circumstances of such termination. Also included on
said Schedule is a description of the former position held by the former
employee and the pay rate of said former employee.
Seller is not delinquent in payments to any of its employees, past or
present, for any wages, salaries, commissions, bonuses or other direct
compensation for any services provided or amounts required to be reimbursed,
relating to the Business. There are no workers' compensation or other similar
claims filed against Seller, and the Seller does not know of any injury or other
event that may give rise to any such claim, relating to the Business. There are
no charges of employment discrimination or unfair labor practices that have been
filed against or involving Seller, relating to the Business. There are no
grievances, complaints, or charges that have been filed against Seller, relating
to the Business. Seller is, and has been at all times since its effective date,
in compliance with the requirements of the Immigration Reform Control Act of
1986, relating to the Business. Seller's payroll systems and classification of
employees is and for 18 months prior to the Closing has been consistent with and
in compliance with the requirements of the Fair Labor Standards Act, as amended,
and any and all applicable state minimum wage and overtime laws, relating to the
Business.
2.21 Customers and Distributors.
(a) As of the date hereof, Schedule 2.21(a) sets forth any representative,
distributor or direct customer who accounted for more than $10,000 of revenue to
the Business in any of the fiscal years ended March 31, 1997 and 1996 or for the
six month period ended September 30, 1997. The Schedule shall include customer
name and dollar amount purchased.
(b) As of the date hereof, Schedule 2.21(b) sets forth the direct customers that
have purchased Prospector software and includes number of units sold and date of
sale.
(c) Schedule 2.21(c) sets forth the sales of Prospector software to distributors
and identifies the number of units of software that remain unsold to end users
as of the date hereof.
2.22 Proprietary Rights.
(a) "Proprietary Rights" means all of the following owned by, issued to or
licensed to Seller and used exclusively in the Business, and any and all
corresponding rights that, now
or hereafter, may be secured throughout the world: patents, patent applications,
patent disclosures and inventions (whether or not patentable and whether or not
reduced to practice) and any reissues, continuations, continuations-in-part,
revisions, extensions, or reexaminations thereof; trade marks, service marks,
trade dress, logos, trade names, corporate names, together with all goodwill
associated therewith; copyrights and copyrightable works; and registrations,
applications and renewals for any of the foregoing; trade secrets and
confidential information (including, without limitation, ideas, formulae,
compositions, know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, financial and accounting data, business and marketing
plans, and customer and supplier lists and related information); computer
software (including, without limitation, data, data bases and documentation);
other intellectual property rights; and all copies and tangible embodiments of
the foregoing (in whatever form or medium), in each case including, without
limitation, the items set forth in Schedule 2.22 attached hereto.
(b) Schedule 2.22 sets forth a complete list of all: (i) patented or registered
Proprietary Rights and pending patent applications or other applications for
registrations of Proprietary Rights owned or filed by or on behalf of CIMLINC;
(ii) all material trade names and material unregistered trademarks and service
marks owned by CIMLINC and used exclusively in the Business; (iii) all material
software owned by CIMLINC and licensed to third parties exclusively through the
Business ("Material Software"); and (iv) all licenses or similar agreements
under which CIMLINC is the licensee of any Proprietary Rights.
(c) Except as set forth in Schedule 2.22: (i) CIMLINC owns and possesses all
right, title and interest in and to, or has a valid and enforceable license to
use, the Proprietary Rights reasonably necessary for the operation of the
Business as currently conducted, free and clear of all liens, licenses, security
interests, encumbrances and other restrictions, (ii) no claim by any third party
contesting the validity, enforceability, use or ownership of any of the
Proprietary Rights has been made, is currently outstanding or is threatened,
(iii) the conduct of the Business has not infringed, misappropriated or
otherwise conflicted with any intellectual property rights of any third parties,
and CIMLINC has not received any notices of, and is not aware of any facts which
indicate a likelihood of, any infringement or misappropriation by, or conflict
with, any third party with respect to the Proprietary Rights (including any
demands by third parties that CIMLINC take a license of any intellectual
property for use in the Business); (iv) no independent contractor developed or
assisted in the development of the Prospector software; and (v) no independent
contractor developed or assisted in the development of any other Material
Software, except in accordance with a written agreement assigning to CIMLINC
such independent contractor's right, title and interest in such Material
Software.
(d) CIMLINC has taken all steps required to maintain and protect the Proprietary
Rights. Such steps have included, but are not limited to: (i) the affixation of
all copyright notices required by applicable law to all copies of Material
Software and the documentation related thereto; (ii) distribution of Material
Software and its related
documentation (A) to employees, consultants, contractors and potential
investors, only subject to appropriate confidentiality agreements or (B) to
customers of the Business, only subject to license agreements restricting the
use and disclosure thereof; and (iii) disclosure of material confidential
information of the Business (including but not limited to source code and
systems documentation for Material Software) only to persons who require access
to such information for the Business, and only subject to written
confidentiality agreements.
2.23 and 2.24 (Intentionally omitted)
2.25 Investment Representations and Warranties. The Seller hereby represents and
warrants to Buyer that with respect to the Shares received at the Closing:
Seller is acquiring the Shares for its own account, for investment, and not with
a view to any distribution thereof within the meaning of the Securities Act.
Seller has been granted the opportunity to investigate the affairs of Buyer and
to ask questions of its officers and employees and has availed itself of such
opportunity either directly or through its authorized representative.
Seller understands that because the Shares have not been registered under the
Securities Act or securities or "blue sky" laws of any jurisdiction, the Shares
can not be disposed of unless subsequently registered under the Securities Act
or exemptions from such registration are available. The Seller acknowledges and
understands that except for the registration rights granted in this Agreement,
no other registration rights to require Buyer to register the Shares exists. The
Seller understands that each certificate representing the Shares will bear a
legend in substantially the same form provided below (in addition to any legend
required under applicable state securities laws).
THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE
HOLDER NAMED HEREON FOR HIS OWN ACCOUNT FOR INVESTMENT; AND
SUCH SECURITIES MAY NOT BE PLEDGED, SOLD OR IN ANY OTHER WAY
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS IN EFFECT AT THAT TIME, OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT.
Upon the request of Seller, the Buyer shall remove the foregoing legend from the
certificate if, with such request, the Buyer receives a legal opinion from
counsel reasonably satisfactory to it or a "no action" letter, in either case,
to the effect that the
proposed transfer of the Shares may be effected without registration under the
Securities Act and applicable state securities laws.
Section 3
REPRESENTATIONS AND WARRANTIES OF SOFTECH AND IDI
3.1 Making of Representations and Warranties. As a material inducement to
Sellers to enter into and to consummate the transactions contemplated by this
Agreement, Buyer hereby represents and warrants the following:
(a) SofTech is duly organized, validly existing and in good standing under
the Laws of the State of Massachusetts with full corporate power and
authority to own or lease its properties and to conduct its business in the
manner and in the places where such properties are owned or leased or such
business is conducted by them.
(b) SofTech has the full right, authority and power to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered pursuant to this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance by SofTech of
this Agreement has been duly authorized by all necessary action of SofTech,
and no other action on the part of SofTech is required in connection
therewith.
3.2 SofTech Reports. SofTech's Annual Report on Form 10-K for the fiscal year
ended May 31, 1997 and its Quarterly Report of Form 10-Q for the fiscal quarter
ended August 31, 1997 do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made in
light of the circumstances under which they were made, not misleading.
3.3 Stock. The Shares issued to Sellers pursuant to this Agreement will be, when
issued, duly authorized, validly issued, fully paid, non-assessable.
3.4 Disclosure. To the knowledge of Buyer, the representations, warranties and
statements contained in this Agreement and in the certificates, exhibits and
schedules delivered by Buyer to Seller pursuant to this transaction do not
contain any untrue statement of a material fact, and, when taken together, do
not omit to state a material fact required to be stated therein or necessary in
order to make such representations, warranties or statements not misleading in
light of the circumstances in which they were made.
Section 4
INDEMNIFICATION
4.1 Indemnification by the Sellers. Each Seller, jointly and severally, agrees
to indemnify and hold Buyer and their respective subsidiaries, officers,
directors, partners or employees harmless from and against any damages,
diminution in value, liabilities, losses, claims, taxes or expenditures of any
kind or nature whatsoever which may be sustained or suffered by any of them
arising out of or based upon any other breach of any representation, warranty or
covenant under this Agreement or in any agreement, certificate, schedule or
exhibit delivered pursuant hereto, or by reason of any claim, action or
proceeding asserted or instituted growing out of any matter or thing
constituting a breach of such representation, warranty, covenant or agreement.
4.2 Indemnification by SofTech . SofTech agrees to indemnify and hold Seller
harmless from and against any damages, liabilities, losses, taxes for
expenditures of any kind or nature whatsoever which may be sustained or suffered
by any of them arising out of or based upon any breach of any representation,
warranty, covenant or agreement under this Agreement or in any agreement,
certificate, schedule or exhibit delivered pursuant hereto, or by reason of any
claim, action or proceeding asserted or instituted growing out of any matter or
thing constituting a breach of such representation, warranty, covenant or
agreement.
4.3 Notice and Defense of Claims. In the event of a claim arising under the
indemnification provisions detailed above, the party making the claim shall do
so in writing to the person or persons responsible for the indemnification. The
party receiving such claim has 30 days to review the written notification and
either agree the claim is valid or dispute such claim in writing to the other
party. In the event of agreement with the validity of such claim, payment shall
be made within 45 days of receipt of notification. If the dispute can not be
settled by negotiation between the parties within 90 days of receipt of
notification, upon election of either party, the dispute shall be referred to
the American Arbitration Association to be settled in Indianapolis, Indiana on
an expedited basis in accordance with the commercial arbitration rules of said
organization. Fees and expenses of such arbitration shall be shared equally.
4.4 Exclusive Remedy. The parties agree that the remedies provided in Section 4
shall be the exclusive remedies with respect to any alleged breach of any
representation or warranty made in this Agreement.
4.5 Limitation on Indemnification by Sellers. The right of the Buyer to
indemnification from the Seller shall be subject to the following provisions:
(a) The Seller shall be provided with a $200,000 deductible for all claims
for indemnification under Section 4.1 by the Buyer. No payments of such
claims shall be made by the Seller to the Buyer until such time as such
claims exceed $200,000 and only to the extent that such claims exceed that
amount; and
(b) No indemnification shall be payable to the Buyer from the Seller
pursuant to Section 4.1 for claims
in excess of $1.0 million in the aggregate exclusive of claims relating to
the Excluded Liabilities as to which there shall be no such limitation and
which shall not be counted toward such limitation.
4.6 Survival. The representations and warranties of each party contained in this
Agreement shall survive the Closing date until October 31, 1998. Any claim for
indemnity shall be asserted on or before October 31, 1998 except that any claim
relating to Taxes may be asserted until the 60th day after the running of the
applicable statute of limitations with respect to the taxable period to which
the particular claim relates. Notwithstanding anything to the contrary contained
in this Agreement, no time or other limitation applies to losses relating to
breaches of covenants contained in this Agreement or to Assumed Liabilities or
Excluded Liabilities.
Section 5
POST CLOSING OBLIGATIONS
5.1 Registration on Form S-3. Following the issuance of the Shares pursuant to
this Agreement, SofTech shall cause a registration statement under the
Securities Act of 1933, as amended, to be filed with the Securities and Exchange
Commission on Form S-3 (or a substantially equivalent successor form) with
respect to such Shares. SofTech shall bear the expenses associated with
registering such Shares. This registration document shall be filed within 120
days of the closing date of this transaction and SofTech will use its best
efforts to get and keep the document effective until such time as the
restrictive legend may be removed.
5.2 Collection of Billed Accounts Receivable by CIMLINC. Cash collected after
the Closing from customers by either CIMLINC or SofTech that have an accounts
receivable balance retained by CIMLINC in the transaction shall be first applied
against the oldest outstanding invoice until all such invoices are paid.
However, with regard to the Proper Mold account, it is agreed that all future
cash receipts from Proper Mold over the two year period following completion of
this transaction will be split evenly until the receivable retained by CIMLINC
in this transaction in the amount of $169,820 is paid in full.
5.3 Cross-Licensing of Embedded Technology. After the Closing the parties shall
enter into a license agreement (the "Cross-License") allowing the use of each
other's technology as embedded in software products existing as of the Closing.
The Cross-License shall provide, among other terms and conditions, that: (i)
SofTech shall have a perpetual, nonexclusive, fully-paid, royalty-free license
to distribute CIMLINC's LINKAGETM software as it exists in current software
products licensed through the Business, in object code form only, as part of
current and future products of the Business, provided that SofTech may not
market any such CIMLINC software as a separate or
stand-alone product; (ii) CIMLINC shall have a perpetual, non-exclusive,
fully-paid, royalty-free license to distribute the two-dimensional and
three-dimensional CAD software of the Business, in object code form only, as
part of current and future products of CIMLINC, provided that CIMLINC may not
market any such Business software as a separate or stand-alone product; and
(iii) each parties license to the third parties of its software products that
contain embedded software of the other party shall prohibit third party
licensees from marketing or distributing the other party's embedded software as
a separate or stand-alone product. If the parties are unable to agree on the
terms of, or otherwise fail to execute, the Cross-License, then the terms set
forth in clauses (i) through (iii) of this Section 5.3 shall be deemed to be the
terms and restrictions under which each party shall be permitted to use the
embedded software of the other.
5.4 Required Audits of AMT. Seller agrees to cooperate fully following the
transaction in allowing Buyer's Independent Auditors to complete the required
audits of prior fiscal year AMT financial statements on a stand-alone basis for
inclusion in Buyer's Form 8-K. Such audited financial statements must be filed
with the Securities and Exchange Commission on or before the 75th day following
the close date of the transaction.
5.5 Nonsolicitation. Each of the Buyer and Seller agree that, for a period of
one year from the transaction date, without the prior written consent of the
other party, which consent shall not be unreasonably withheld, they shall not,
directly or indirectly, solicit for employment, hire as an employee, consultant
or contractor, or otherwise engage any employee who was employed by the other
party as of the transaction date. For the purpose of this section 5.5 only, all
employees of the Business that are offered employment by the Buyer shall be
deemed employees of Buyer at the transaction date regardless of their ultimate
acceptance of such offer of employment with Buyer.
5.6 Account Reconciliation. Seller agrees to close the October 31, 1997 AMT
books and records in the normal course and to provide Buyer with such final
records by November 15, 1997. Seller agrees to assist Buyer in accomplishing the
transfer of all licensing and distributor agreements as summarized on Schedule
2.11.
5.7 Assignment of Registered Trademarks. Seller agrees to enter into an
assignment agreement with Buyer subsequent to the Closing to assign all of the
registered trademarks listed of the Business as listed on Schedule 2.22A to
Buyer. Such assignment agreement shall be in a form suitable for filing with the
Patent and Trademark Office.
Section 6
OTHER INFORMATION
6.1 Governing Law. This Agreement shall be construed under and governed by the
internal laws of the Commonwealth of Massachusetts.
6.2 Notices. Any notice or communication required hereunder shall be in writing
and shall be deemed to have been given if sent by facsimile transmission (with
confirming copy by mail) upon receipt. All notices will be sent to the addresses
set forth below:
To SofTech:
SofTech, Inc.
0000 Xxxxx Xxxx Xxxxx, X.X.
Xxxxx Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
To the Sellers:
CIMLINC Incorporated
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
To Seller's Legal Counsel:
Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, P.C.
6.3 Entire Agreement. This Agreement, including the Schedules and Exhibits
referred to herein and the other writings specifically identified herein or
contemplated hereby, is complete, reflects the entire agreement of the parties
with respect to its subject matter, and supersedes all previous written or oral
negotiations, commitments and writings. All inducements to the making of this
Agreement relied upon by either party have been expressed herein.
6.4 Assignability. This Agreement may not be assigned by the Buyer or the Seller
without the prior written consent of the other party. This Agreement shall be
binding upon and enforceable by, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns. No right hereunder
shall be created in any person or entity not a party to this Agreement, it being
the express intention of the parties hereto that no third party beneficiary
rights shall be created or implied by virtue of this Agreement.
ASSET PURCHASE AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF the parties hereto have executed or caused this
Agreement to be executed by their duly authorized representatives as of the date
set forth above.
SOFTECH, INC.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------
Xxxx X. Xxxxxxxxx
President and CEO
INFORMATION DECISIONS, INC.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------
Xxxx X. Xxxxxxxxx
President and CEO
CIMLINC INCORPORATED
By: /s/ Xxxx X. Xxxx
------------------------------
Xxxx X. Xxxx
CIMLINC Ltd.
By: /s/ Xxxx X. Xxxx
------------------------------
Xxxx X. Xxxx
CIMLINC GmbH
By: Xxxx X. Xxxx
------------------------------
Xxxx X. Xxxx
