EXHIBIT 2.1
PURCHASE AGREEMENT
This PURCHASE AGREEMENT ("Agreement") is made and entered into as of this
30th day of January, 2002 (the "Effective Date"), by and between Roxio CI Ltd.,
a Cayman Islands limited corporation ("Buyer") and MGI Software Corp., an
Ontario corporation ("Seller"). Buyer and Seller may be referred to from time to
time in this Agreement, individually, as a "Party" and, collectively, as the
"Parties."
BACKGROUND
A. Seller is the sole owner of all rights, title and interest in and to
certain technology, assets and other rights as more fully described herein.
B. Seller desires to assign and transfer such technology, assets and
other rights as described herein pursuant to the plan of arrangement under
Ontario law among Seller, Buyer and other affiliates of Buyer, and Buyer desires
to receive such assignment.
NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the Parties agree as follows:
ARTICLE I
TECHNOLOGY TRANSFER
1.1 Assignment of Rights to the Company Technology. Subject to all the
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terms and conditions of this Agreement, and in reliance on the representations
and warranties in Article 3, Seller shall, at the Effective Date, sell,
transfer, convey and assign to Buyer, free and clear of any and all liens,
security interests, claims and encumbrances, all right, title and interest of
Seller in the intellectual property and other rights listed in Schedule A
attached to this Agreement (the "Company Technology").
1.2 Delivery by Seller. At the Effective Date, Seller shall deliver to
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Buyer the Company Technology and all tangible embodiments thereof in a form
reasonably satisfactory to Buyer.
1.3 Covenant Not to Bring Claims. Seller agrees and covenants not to
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bring any claim against Buyer for any infringement of Seller's intellectual
property rights for any use by Buyer of the Company Technology including,
without limitation, the processes, inventions, ideas used by Seller in
connection with its making, using or selling the Company Technology.
1.4 Purchase Price.
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(a) In exchange and as consideration for the transfer of the Company
Technology, at the Effective Date, Buyer shall deliver to Seller a promissory
note (the "Promissory Note") in the amount of $11,600,000 (the "Company
Technology Purchase
Price"), subject to the possible adjustment thereof under subsection (b) hereof.
The Promissory Note shall be payable on demand but in any case no sooner than
thirty days from the date thereof.
(b) The parties hereto confirm that the Company Technology Purchase
Price is the agreed aggregate fair market value of the Company Technology
immediately before the transfer thereof. If any taxing authority having
jurisdiction alleges that the Company Technology is not the fair market value
thereof at such time or proposes to make an assessment of tax on the basis of
any benefit or advantage that has been conferred on any person by reason of the
sale and purchase provided for herein, the parties hereto agree that, after
consultation with such taxing authority, and upon acceptance of any proposed
adjustment by the boards of directors of each of Buyer and Seller, the Company
Technology Purchase Price shall be adjusted. Thereafter, the Company Technology
Purchase Price will be deemed to be and always to have been the aggregate fair
market value of the Company Technology immediately before the transfer thereof,
as such fair market value is determined by the boards of directors of Buyer and
Seller after consultation with such taxing authority, and the parties shall make
any such further elections and take such other steps as may be necessary to
implement the provisions of this Section 1.4(b).
ARTICLE II
FURTHER OBLIGATIONS OF SELLER
2.1 Further Assurances.
(a) From time to time after the Effective Date of this Agreement,
Seller shall execute and deliver to Buyer such instruments of sale, transfer,
conveyance, assignment and delivery, consent, assurance, powers of attorney and
other instruments as may be reasonably requested by Buyer in order to vest in
Buyer good and marketable title in and to the Company Technology and otherwise
in order to carry out the purpose and intent of this Agreement.
(b) Seller shall assist Buyer, or its designee, at Buyer's expense, in
every proper way to assure Buyer's rights in and to the Company Technology in
any and all countries, including, without limitation, the disclosure to Buyer of
all pertinent information and data with respect to the Company Technology, the
execution of all applications, specifications, oaths, assignments and all other
instruments that Buyer shall deem necessary in order to apply for and obtain
such rights, title and interest in and to the Company Technology.
(c) Seller shall assist Buyer in any and all efforts to prosecute or
maintain any patent or patent application associated with any aspect of the
Company Technology, and in the prosecution of any infringers or alleged
infringers upon any copyright, trademark, trade secret, patent or patent
application right associated with any aspect of the Company Technology.
(d) Seller agrees that its obligation under this Section 2.1 to
execute or cause to be executed, when it is in its power to do so, any such
instruments or papers shall continue after the termination of this Agreement. If
Buyer is unable because of Seller's mental
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or physical incapacity or for any other reason to secure Seller's signature to
apply for or to pursue any application for any patents or copyright
registrations covering the Company Technology, then Seller hereby irrevocably
designates and appoints Buyer and its duly authorized officers and agents as
Seller's agent and attorney in fact, to act for and on Seller's behalf and stead
to execute and file any such applications and to do all other lawfully permitted
acts to further the production and issuance of letters patent or copyright
registrations with the same legal force and effect as if executed by Seller.
(e) Upon the request of Buyer, Seller will document and describe any
trade secrets in or related to the Company Technology specified by Buyer, in
form and content reasonably satisfactory to Buyer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Seller represents and warrants to, and agrees with, Buyer that the
representations and warranties contained in section 3.1 of that certain
combination agreement dated December 3, 2001 by and between Seller and Roxio,
Inc. shall apply for the purposes of this agreement mutates mutandis subject to
the limitations thereof as provided therein.
3.2 Buyer represents and warrants to, and agrees with, Seller as follows:
(a) Rights, Power and Authority. Buyer has full rights, power and
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authority to enter into this Agreement and to perform all of its obligations
under this Agreement.
(b) Agreement Not in Breach of Other Agreements. This Agreement and
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the obligations of Buyer under this Agreement will not conflict with, or
constitute a breach or default of any other agreement, instrument or arrangement
to which Buyer is a party or by which it is bound.
ARTICLE IV
INDEMNITY
4.1 Intellectual Property Indemnity. Seller shall indemnify and hold
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harmless Buyer, its affiliates, and their respective directors, officers, agents
and employees (the "Indemnitees") from any and all losses, claims, damages,
liabilities (or actions or proceedings with respect to any thereof) arising from
any action or claims by any third party or expenses related thereto (including,
but not limited to, all legal expenses incurred in investigating, preparing,
serving as a witness in, or defending against, any such claim, action, or
proceeding, commenced or threatened) to which any of the Indemnitees may be
subject, whether or not Buyer is a party to any pending or threatened
litigation, which arise out of or are related to:
(1) the incorrectness or breach of any of the representations,
warranties, covenants or agreements of Seller contained in this Agreement; or
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(2) any copyright, patent, or trademark infringement by Buyer's
license, use, modification, reproduction, distribution, sale, or public display
of the Company Technology, or any other type of infringement claim arising from
or related to the development, modification, use, manufacture or sale of the
Company Technology.
ARTICLE V
CONFIDENTIALITY
5.1 Use of Information. Except as required by law, unless Seller shall
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have received prior written consent from Buyer, Seller shall not, directly or
indirectly, disclose, discuss, modify, release, transfer or otherwise make known
in any way any aspect of the Company Technology ("Confidential Information") to
any other person or entity at any time. Seller shall not, directly or
indirectly, design, develop, materialize, manufacture or distribute a product or
Company Technology that incorporates, implements, or in any way uses any part of
the Confidential Information.
5.2 Equitable Remedies Available. The Parties agree that any disclosure in
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violation of Section 5.1 shall constitute and be treated as a breach of this
Agreement. Seller acknowledges and agrees that in the event of any breach of
this Article 5, although the certainty of Buyer's damages would be clear, the
amount of such damages would be difficult to quantify. The Parties agree that
money damages would not be a sufficient remedy for breach of the confidentiality
and other obligations of this Agreement. Accordingly, in addition to all other
remedies available at law, in equity or hereunder, Buyer shall be entitled to a
decree of specific performance and injunctive or other equitable relief as a
remedy for any breach of Section 5.1 without the necessity of demonstrating
actual damages or that monetary damages would not afford an adequate remedy.
Seller agrees to waive any requirement for a bond in connection with any such
injunctive or other equitable relief.
ARTICLE VI
MISCELLANEOUS
6.1 Titles and Headings. Titles and headings in this Agreement are for
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convenience only and shall not be deemed to alter or affect the construction of
any provision of this Agreement.
6.2 No Partnership or Agency. Nothing in this Agreement shall be deemed to
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create or establish a joint venture, partnership, employment or agency
relationship between the Parties, and neither Party shall have the power to
obligate or bind the other Party in any manner whatsoever.
6.3 Entire Agreement. This Agreement constitutes and contains the entire
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agreement and understanding between the Parties concerning the subject matters
hereof. This Agreement supersedes and replaces any and all prior agreements,
understandings, negotiations, discussions or commitments, whether written or
oral, concerning the subject matters hereof. This is a fully integrated
agreement.
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6.4 No Oral Modification. This Agreement may be amended only by a further
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writing signed by all Parties. No oral modification of any term of this
Agreement shall be effective for any purpose.
6.5 Waiver. No waiver of any breach of any term or provision of this
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Agreement shall be construed to be, or shall be, a waiver of any other breach of
this Agreement. No waiver shall be binding unless in writing and signed by the
Party waiving the breach.
6.6 Further Assurances. The Parties agree to cooperate fully and to
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execute any and all supplementary documents and to take any and all additional
actions that may be necessary or appropriate to give full force and effect to
the terms, provisions and intentions of this Agreement, including any license
agreements which may be required to reflect the transactions contemplated
herein.
6.7 Assignment. Neither this Agreement nor any of the rights, interests or
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obligations under this Agreement shall be assigned by either of the Parties to
this Agreement without the prior written consent of the other Party; provided,
however, that Buyer shall have the right to assign its rights, interests and
obligations under this Agreement to any parent, subsidiary or affiliated
company, and shall have the further right to assign its rights, interests and
obligations under this Agreement in connection with any corporate merger,
acquisition or similar transaction. This agreement shall be binding on, and
shall inure to the benefit of, the Parties hereto, and their respective
successors and permitted assigns.
6.8 Severability. If any portion, part or provision of this Agreement or
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the application thereof is held invalid, illegal or unenforceable in any
jurisdiction, the invalidity shall not affect other portions, parts, provisions
or applications of this Agreement which can be given effect without the invalid
portions, parts, provisions or applications, and to this end the provisions of
this Agreement are declared to be severable.
6.9 Governing Law. This Agreement shall be deemed to have been executed
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and delivered within the State of New York, and the rights and obligations of
the Parties hereunder shall be construed and enforced in accordance with, and
governed by, the laws of the State of New York without regard to principles of
conflict of laws.
6.10 Cooperative Drafting. Each Party has cooperated in the drafting and
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preparation of this Agreement and been represented by counsel in such drafting
and preparation. Accordingly, any rule of law or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
party that drafted it has no application and is expressly waived.
6.11 Enforcement. The parties agree that irreparable damage would occur in
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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 an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the States of New York or California, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself
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to the personal jurisdiction of any federal or state court located in the State
of New York or California in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement in any court other than a court sitting in the
State of New York or California.
6.12 Attorneys' Fees in Subsequent Proceedings. In the event of any
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arbitration or other proceeding in connection with or concerning any of the
subject matters of this Agreement, the Party in whose favor any award or
judgment shall be rendered therein shall be entitled to recover from the other
Party all expenses incurred by said prevailing Party in the proceeding,
including costs and reasonable attorneys' fees.
6.13 Parties to Bear Costs. Each Party shall bear its own costs and
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attorneys' fees incurred in connection with the Agreement, including all costs
and attorneys' fees incurred in connection with the negotiation and drafting of
this Agreement.
6.14 Publicity. Neither Party shall make or issue any oral announcement or
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written statement concerning this Agreement or the transactions contemplated by
this Agreement for dissemination to the general public without the prior written
consent of the other Party. This provision shall not apply, however, to any oral
announcement or written statement required to be made by law or regulations of
any federal or state governmental agency.
6.15 Notices. Unless otherwise specifically provided herein, any notice or
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other communication herein required or permitted to be given shall be in writing
and may be personally served or sent by United States mail or courier service
and shall be deemed to have been given when delivered in person or by courier
service, or three business days after depositing it in the United States mail
with postage prepaid and properly addressed. For the purposes hereof, any notice
or other communication herein required or permitted to be given shall be
addressed as follows or to such other address as may from time to time be
designated in writing by any of the parties:
If to Buyer, addressed to:
Roxio CI Ltd.
c/o Roxio, Inc.
000 X. Xxxxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxx Xxxxxxx, Esq.
With a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx
Xxxxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
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If to Seller, addressed to:
MGI Software Corp.
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxx X0X 0X0
Facsimile Number: (000) 000-0000
Attention: Xxxxxxx XxXxxxxxxxxx
With a copy to:
XxXxxxx Xxxxxxxxx
00 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxx X0X 0X0
Facsimile Number: (000) 000-0000
Attention: Xxxxx Xxxxx
6.17 Independent Advice. Each of the Parties represents and warrants that:
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(a) in entering into this Agreement, they have had the benefit and
advice of their own counsel in connection with this Agreement, and that the
terms of this Agreement have been completely read and explained to them;
(b) this Agreement is executed without reliance upon any statement,
representation, promise, inducement, understanding or agreement by or on behalf
of any Party or by or on behalf of any employee, representative, agent or
attorney employed by any Party, other than the matters expressly set forth
herein; and
(c) no promise, inducement, understanding or agreement not expressed
herein has been made to it/him/her.
6.18 Survival. The confidentiality obligations set forth in Article 5 of
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this Agreement shall continue after the Effective Date of this Agreement and
shall survive any termination of this Agreement.
6.19 Execution in Counterparts. This Agreement may be executed in any
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number of counterparts, each of which when so executed shall be deemed an
original and all of which shall constitute together one and the same instrument,
and shall be effective upon execution by all of the Parties.
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Each of the Parties signing below have read the foregoing Agreement and
accept and agree to the provisions it contains and hereby execute it voluntarily
with full understanding of its consequences.
BUYER
Roxio CI Ltd.,
a limited company organized under the laws of
the Cayman Islands
By: /s/ R. Xxxxxx Xxxxxxxxx
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R. Xxxxxx Xxxxxxxxx
Its: Treasurer
SELLER
MGI Software Corp.,
a corporation established under the laws of
Ontario
By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
Its: President & COO
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SCHEDULE A
The "Company Technology" means the exclusive, perpetual right to exploit,
operate, market and sell, in all geographic regions outside the United States
and Canada, all substantial rights (including the right to transfer all such
rights) of Seller in all technology, assets and other rights of the business of
Seller referred to in the Combination Agreement between Buyer and Seller, dated
as of December 3, 2001 (the "Combination Agreement") (including all technology,
assets and other rights of the Seller as may be identified as "Company
Technology" pursuant to Section 1.3(a) of the Combination Agreement), including,
without limitation, the right to use all trademarks, registrations, copyrights,
copyright applications, patents, and patent applications (whether or not
registered or to be registered in the United States or elsewhere) and all
know-how, trade secrets and proprietary information associated with the Company
Technology or their development, use, exploitation, marketing or sale, licensing
or other disposition, and including but not limited to goodwill, customer
relations, and other intangible property associated with the business of Seller.
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