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PSDI Purchase Agmt.DOC EXHIBIT 2.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BETWEEN
STRATEGIC DISTRIBUTION, INC.
AND
PROJECT SOFTWARE & DEVELOPMENT, INC.
DATED AS OF JANUARY 11, 2000
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS.......................................................1
1.1. Certain Definitions....................................................1
1.2. Accounting Terms and Determinations....................................6
ARTICLE II. SALE AND PURCHASE................................................7
2.1. Agreement to Sell and to Purchase......................................7
2.2. Purchase and Sale of Shares............................................7
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER........................7
3.1. Authority of Seller....................................................7
3.2. Organization of the Company............................................8
3.3. Capitalization of the Company; Title to the Shares.....................8
3.4. No Conflict or Violation...............................................8
3.5. Subsidiaries and Investments...........................................9
3.6. Financial Statements...................................................9
3.7. Undisclosed Liabilities...............................................10
3.8. Accounts Receivable...................................................10
3.9. Material Adverse Change...............................................10
3.10. Real Property.........................................................10
3.11. Condition of Property.................................................11
3.12. Compliance with Laws..................................................11
3.13. Affiliate Agreements..................................................12
3.14. Contracts.............................................................12
3.15. Intellectual Property.................................................13
3.16. Employee Benefit Plans................................................16
3.17. Insurance.............................................................19
3.18. Litigation............................................................20
3.19. Tax Matters...........................................................20
3.20. Interim Operations....................................................21
3.21. Brokers...............................................................22
3.22. Customers.............................................................22
3.23. Banking Facilities....................................................22
3.24. Support Services Provided by Seller...................................22
3.25. No Misrepresentation..................................................23
3.26. Disclaimer of Additional Representations and Warranties...............23
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................23
4.1. Authority of Purchaser................................................23
4.2. No Conflict or Violation..............................................24
4.3. Litigation............................................................24
4.4. Brokers...............................................................24
4.5. Investment Intent; Status.............................................24
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ARTICLE V. CERTAIN COVENANTS OF SELLER PENDING CLOSING......................25
5.1. Conduct of Business...................................................25
5.2. Information and Access................................................27
ARTICLE VI. CERTAIN COVENANTS AND AGREEMENTS................................27
6.1. Xxxx-Xxxxx-Xxxxxx and Other Filings...................................27
6.2. Transfer Taxes........................................................27
6.3. Certain Tax Matters...................................................28
6.4. Certain Provisions Relating to Consents...............................30
6.5. Noncompetition; Standstill............................................30
6.6. Nondisclosure.........................................................31
6.7. Efforts...............................................................31
6.8. Ongoing Cooperation...................................................32
ARTICLE VII. CONDITIONS TO SELLER'S OBLIGATIONS.............................32
7.1. Representations and Warranties........................................32
7.2. Compliance with Agreement.............................................33
7.3. No Adverse Proceeding.................................................33
7.4. Xxxx-Xxxxx-Xxxxxx.....................................................33
7.5. License and Services Agreement........................................33
7.6. TPNR Agreement........................................................33
7.7. Credit Facility Consents..............................................33
7.8. Legal Opinion.........................................................33
7.9. Escrow Agreement......................................................33
7.10. Corporate Documents...................................................34
ARTICLE VIII. CONDITIONS TO PURCHASER'S OBLIGATIONS.........................34
8.1. Representations and Warranties........................................34
8.2. Compliance with Agreement.............................................34
8.3. No Adverse Proceeding.................................................34
8.4. Xxxx-Xxxxx-Xxxxxx.....................................................35
8.5. TPNR Agreement........................................................35
8.6. Release of Certain Liabilities........................................35
8.7. Resignations..........................................................35
8.8. Credit Facility Consents..............................................35
8.9. Indemnification Agreement.............................................35
8.10. Escrow Agreement......................................................35
8.11. Legal Opinions........................................................35
8.12. Consents..............................................................35
8.13. Corporate Documents...................................................35
ARTICLE IX. THE CLOSING; TERMINATION........................................36
9.1. The Closing...........................................................36
9.2. Deliveries by Seller at the Closing...................................36
9.3. Deliveries by Purchaser at the Closing................................36
9.4. Termination...........................................................37
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ARTICLE X. INDEMNIFICATION..................................................37
10.1. Survival.............................................................37
10.2. Indemnification; Certain Limitations.................................37
10.3. Matters Involving Third Parties......................................39
10.4. Exclusive Remedy.....................................................41
10.5. Purchase Price Adjustment............................................41
ARTICLE XI. EMPLOYEE BENEFIT PLANS..........................................41
11.1. Welfare Plans........................................................41
ARTICLE XII. MISCELLANEOUS PROVISIONS.......................................42
12.1. Notices..............................................................42
12.2. Amendments...........................................................43
12.3. Binding Effect; Assignment and Parties in Interest...................43
12.4. Announcements........................................................43
12.5. Expenses.............................................................43
12.6. Entire Agreement.....................................................44
12.7. Descriptive Headings.................................................44
12.8. Counterparts.........................................................44
12.9. Governing Law........................................................44
12.10. Construction.........................................................44
12.11. Severability.........................................................44
12.12. Specific Performance.................................................45
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SCHEDULE
NUMBER SCHEDULE NAME
3.2 Certificate of Incorporation and By-Laws
3.3 Options, etc.
3.4 Conflicts or Violations; Consents
3.6(a) 1998 Financial Statements
3.6(b) Interim Financial Statements
3.7 Undisclosed Liabilities
3.8 Accounts Receivable
3.10(b) Leased Property
3.11 Personal Property; Liens
3.11(a) Leased Personal Property
3.12(a) Compliance with Laws
3.12(b) Permits
3.13 Affiliate Agreements
3.14 Contracts
3.15 Intellectual Property
3.16 Employee Benefit Plans
3.17 Insurance
3.18 Litigation
3.19 Tax Matters
3.20 Interim Operations
3.22 Customers
3.23 Banking Facilities
3.24 Support Services
5.1(m) Compensation
EXHIBIT EXHIBIT NAME
A Form of License and Services Agreement
B Form of Opinion of Counsel for Purchaser
C Form of Opinion of Counsel for Seller
D Form of Indemnification Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and entered
into as of January 11, 2000, between STRATEGIC DISTRIBUTION, INC., a Delaware
corporation ("SELLER"), and PROJECT SOFTWARE & DEVELOPMENT, INC., a
Massachusetts corporation ("PURCHASER").
PRELIMINARY STATEMENT
WHEREAS, Seller owns all of the shares of capital stock of INTERMAT,
Inc., a Delaware corporation (the "COMPANY"); and
WHEREAS, Purchaser desires to purchase the Shares (as defined herein)
from Seller, and Seller desires to sell the Shares to Purchaser, in each case
upon the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1. CERTAIN DEFINITIONS. For purposes of this Agreement the following
terms have the meanings set forth below:
"AFFILIATE" means "affiliate" as defined in Rule 405 promulgated under
the Securities Act of 1933, as amended.
"AGREEMENT" has the meaning set forth in the preamble hereto, and shall
include all Schedules and Exhibits hereto.
"BUSINESS DAY" refers to a day, other than a Saturday or a Sunday, on
which commercial banks are not required or authorized to close in the City of
New York.
"BUSINESS EMPLOYEES" means employees of the Company on the applicable
date, as set forth on SCHEDULE 3.16.
"CAP" has the meaning set forth in SECTION 10.2(B).
"CLOSING" has the meaning set forth in SECTION 9.1.
"CLOSING DATE" has the meaning set forth in SECTION 9.1.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMERCIAL SOFTWARE" has the meaning set forth in SECTION 3.15(a).
"COMPANY" has the meaning set forth in the preamble hereto.
"COMPANY PROPRIETARY RIGHTS" has the meaning set forth in SECTION
3.15(a).
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in SECTION 5.2.
"CONTRACTS" refers to, collectively, all contracts, agreements,
commitments, instruments and guaranties to which the Company is a party,
including those listed on SCHEDULE 3.14, all unfilled orders outstanding as of
the Closing Date for the purchase of goods or services by the Company, and all
unfilled orders outstanding as of the Closing Date for the sale of goods or
services by the Company.
"CONTROL" means "control" as defined in Rule 405 promulgated under the
Securities Act of 1933, as amended.
"CREDIT AGREEMENT" has the meaning set forth in SECTION 7.7.
"DAMAGES" refers to, in respect of any obligation to indemnify any
Person pursuant to the terms of this Agreement, any losses, amounts paid in
settlement, Taxes, claims, damages, liabilities, obligations, judgments,
settlements and reasonable out-of-pocket costs (including costs of investigation
or enforcement), expenses and attorneys' fees; PROVIDED, HOWEVER, that Damages
shall not include any special or punitive damages.
"EMPLOYEE BENEFIT PLAN" refers to an Employee Pension Benefit Plan or
an Employee Welfare Benefit Plan, where no distinction is required by the
context in which the term is used.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in Section
3(2) of ERISA.
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in Section
3(1) of ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ESCROW AGREEMENT" has the meaning set forth in the Indemnification
Agreement.
"GOVERNMENTAL AGENCY" means (a) any international, foreign, federal,
state, county, local or municipal government or administrative agency or
political subdivision thereof, (b) any governmental agency, authority, board,
bureau, commission, department or instrumentality, (c) any court or
administrative tribunal, (d) any non-governmental agency, tribunal or entity
that is vested by a governmental agency with applicable jurisdiction, or (e) any
arbitration tribunal or other non-governmental authority with applicable
jurisdiction.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
"INDEBTEDNESS" means any obligation, whether or not contingent, (i) in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments, (ii) representing the balance deferred and unpaid of the purchase
price of any property (including pursuant to capital leases), except any such
balance that constitutes an accrued expense or a trade payable, if and to the
extent any of the indebtedness referred to in (i) and (ii) would appear as a
liability upon a balance sheet of the Company prepared on a consolidated basis
in accordance with GAAP, (iii) to the extent not otherwise included, obligations
under interest rate exchange, currency exchange, swaps, futures or similar
agreements, and (iv) guaranties (other than endorsements for collection or
deposit in the ordinary course of business), direct or indirect, in any manner
(including, without limitation, reimbursement agreements in respect of letters
of credit), of all or any part of any Indebtedness of any third party.
"INDEMNIFICATION AGREEMENT" shall mean the Indemnification Agreement
among Purchaser, Seller and the Company substantially in the form of EXHIBIT D
hereto.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 10.2(a).
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 10.2(a).
"INTELLECTUAL PROPERTY" means any and all of the following: (i)
inventions (whether or not patentable), discoveries,
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improvements, ideas, trade secrets, know-how, industrial designs, formula
methodology, processes, algorithms, data, technology, computer programs,
software and databases, including all updates, enhancements, modifications,
revisions, additions, replacements and conversions thereof or thereto, and
applications and patents in any jurisdiction pertaining thereto; (ii)
trademarks, service marks and applications and registrations in any jurisdiction
pertaining thereto, trade dress, trade names and all goodwill associated with
the foregoing; (iii) copyrights in writings, designs, software programs and
software, mask works and other works, and applications and registrations in any
jurisdiction pertaining thereto; (iv) Internet Web sites, domain names and
applications and registrations pertaining thereto; and (iv) licenses and all
other rights in any of the foregoing.
"INTERIM BALANCE SHEET" has the meaning set forth in SECTION 3.6(B).
"INTERIM BALANCE SHEET DATE" means September 30, 1999.
"IRS" means the Internal Revenue Service of the Department of the
Treasury.
"KNOWLEDGE" as applied to a party refers to the actual knowledge of any
director or executive officer of such party. "KNOWLEDGE" as applied to
Seller shall also refer to the actual knowledge of Xxxxx Xxxxxx,
Xxxxxxx Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxx.
"LEASED PROPERTY" has the meaning set forth in SECTION 3.10(a).
"LEASES" has the meaning set forth in SECTION 3.10(a).
"LICENSE AND SERVICES AGREEMENT" shall mean the License and Services
Agreement between Seller and the Company substantially in the form of EXHIBIT A
hereto.
"LIEN" means any mortgage, pledge, security interest, charge or other
encumbrance of any kind whatsoever.
"MATERIAL ADVERSE EFFECT" means an adverse effect with respect to the
results of operations, properties, operations, or financial condition of the
Company, which has a material adverse effect on the Company taken as a whole.
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"PERMIT" means any permit, approval, authorization, license, variance,
or permission required by a Governmental Agency under any applicable laws.
"PERMITTED LIENS" means, with respect to any asset, (i) any minor
imperfection of title with respect to such asset which does not have a Material
Adverse Effect, (ii) such covenants, restrictions, easements, encroachments or
encumbrances that are not related to mortgages or other financial encumbrances,
and any other state of facts, which do not, individually or in the aggregate,
have a Material Adverse Effect, (iii) mechanic's, materialmen's and similar
liens with respect to amounts not yet due and payable or which are being
contested in good faith through appropriate proceedings, (iv) liens for Taxes
not yet delinquent or which are being contested in good faith through
appropriate proceedings, and (v) liens securing rental payments under capital
lease arrangements.
"PERSON" means any individual, partnership, corporation, trust,
association, limited liability company, Governmental Agency or any other entity.
"PURCHASE PRICE" has the meaning set forth in SECTION 2.2.
"PURCHASER" has the meaning set forth in the preamble hereto.
"RESTRICTED COMPANY BUSINESS" means the business of providing content
processing services, data transformation or services, data transformation
methodology, materials data management software and related consulting and
implementation services and any other business in which the Company was actively
engaged on the date of this Agreement (other than to the extent expressly
permitted by the License and Services Agreement).
"RESTRICTED SELLER BUSINESS" means the business of operating, at a
customer's site or remote site, In-Plant Store(R) programs or other facilities
at which Seller performs on behalf of its customers some or all of the functions
of purchasing, receiving, stocking, inventory management, internal logistics,
sourcing, issuing and delivering maintenance, repair and operations supplies and
other materials used by Seller's customers in the operation of their businesses.
"SCHEDULES" or "DISCLOSURE SCHEDULES" refers to, collectively, the
various Schedules referred to in this Agreement
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delivered separately to Purchaser on or before the date of this Agreement.
"SECTION 338(h)(10) ELECTION" has the meaning set forth in Section
6.3(a).
"SELLER" has the meaning set forth in the preamble hereto.
"SHARES" has the meaning set forth in SECTION 2.1.
"STRADDLE PERIOD" has the meaning set forth in SECTION 3.19(L).
"SUPPORT SERVICE" has the meaning set forth in SECTION 3.24.
"TAX CLAIM" has the meaning set forth in SECTION 10.3(a).
"TAX RETURN" means any report, return, information return or other
information required to be supplied to a taxing authority in connection with
Taxes.
"TAXES" means all federal, state, local and foreign taxes, including
income, gross receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, withholding, Social Security,
unemployment, real property, personal property, registration, alternative or
add-on minimum, estimated or other tax, including any interest, penalties or
additions thereto.
"THIRD PARTY PROPRIETARY RIGHTS" has the meaning set forth in SECTION
3.15(d).
"TPNR AGREEMENT" has the meaning set forth in SECTION 7.6.
"TRANSFER" has the meaning set forth in SECTION 5.1(c).
1.2. ACCOUNTING TERMS AND DETERMINATIONS. All references in this
Agreement to "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" shall mean
generally accepted accounting principles in effect in the United States of
America at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with generally accepted
accounting principles, applied on a consistent basis.
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ARTICLE II.
SALE AND PURCHASE
2.1. AGREEMENT TO SELL AND TO PURCHASE. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, Purchaser will purchase
from Seller, and Seller will sell, transfer, assign, convey and deliver to
Purchaser, one hundred (100) shares of common stock, par value $0.01 per share
(the "SHARES"), of the Company.
2.2. PURCHASE AND SALE OF SHARES. On the terms and subject to the
conditions set forth in this Agreement, at the Closing:
(a) Seller shall deliver to Purchaser or its designees stock
certificates representing the Shares, duly endorsed in blank or accompanied by
appropriate stock powers duly executed in blank, with all stock transfer taxes
paid or provided for; and
(b) Purchaser will deliver, or cause to be delivered, by wire transfer
of immediately available funds in an aggregate amount equal to $55,000,000 (the
"PURCHASE PRICE") to the following accounts: (i) $50,000,000 shall be
transferred to such account as Seller shall designate prior to the Closing Date
and (ii) $5,000,000 shall be placed in an escrow account pursuant to the terms
of the Escrow Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
3.1. AUTHORITY OF SELLER. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
Seller has full corporate power and authority to execute and deliver this
Agreement, the Indemnification Agreement and the Escrow Agreement, and the
execution and delivery by Seller of this Agreement, the Indemnification
Agreement and the Escrow Agreement 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 Seller, and this Agreement constitutes
the legal, valid and binding obligations of Seller enforceable in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium, or
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similar laws from time to time in effect which affect creditors' rights
generally, and by legal and equitable limitations on the enforceability of
specific remedies. Upon their execution and delivery at the Closing, the
Indemnification Agreement and the Escrow Agreement shall constitute the legal,
valid and binding obligations of Seller enforceable in accordance with their
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium, or similar laws from time to time in effect which affect
creditors' rights generally, and by legal and equitable limitations on the
enforceability of specific remedies.
3.2. ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. The Company is duly qualified to do business and is in good standing
in each jurisdiction in which the ownership of its properties or the conduct of
its business requires such qualification, except where the failure to so qualify
would not have a Material Adverse Effect. The Company has full corporate power
and authority to own its properties and to conduct its business as presently
conducted. SCHEDULE 3.2 includes true and correct copies of the Certificate of
Incorporation and By-Laws of the Company, and a list of the directors and
executive officers of the Company. The minute books of the Company heretofore
delivered to Purchaser are complete in all material respects and accurately
reflect all material actions taken by the stockholders, board of directors and
committees of the board of directors of the Company.
3.3. CAPITALIZATION OF THE COMPANY; TITLE TO THE SHARES. The authorized
capital stock of the Company consist of 1,000 shares of common stock, par value
$0.01 per share, of which 100 shares are outstanding. The Shares constitute all
of the issued and outstanding capital stock of the Company. The Shares have been
duly authorized and validly issued, are fully paid and nonassessable, and no
personal liability attaches to the ownership thereof. Except as set forth on
SCHEDULE 3.3 there are no outstanding options, warrants, agreements, conversion
rights, voting agreements, rights of first refusal, preemptive rights or other
rights to subscribe for, purchase or otherwise acquire any of the Shares or any
unissued or treasury shares of capital stock of the Company. Seller has and will
deliver to Purchaser at the Closing valid and marketable title to the Shares,
free and clear of any Liens.
3.4. NO CONFLICT OR VIOLATION. Except as set forth on SCHEDULE 3.4,
neither the execution and delivery of this
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Agreement, the Indemnification Agreement or the Escrow Agreement by Seller, nor
the consummation by Seller of the transactions contemplated hereby and thereby,
will (a) violate any provision of its Certificate of Incorporation or Bylaws (or
other comparable governing documents), (b) require any consent, waiver,
approval, license, authorization or permit of, or filing with or notification
to, any Person or Governmental Agency, (c) result in the creation of any Lien
upon the assets of the Company, (d) violate any order, writ, judgment,
injunction, decree, statute, ordinance, rule or regulation of any Governmental
Agency applicable to the Company or by which any of its properties or assets may
be bound, or (e) result in the termination of or loss of any material right (or
give others the right to cause such a termination or loss) under any Lease,
Permit or Contract to which the Company is a party or by which it may be bound.
3.5. SUBSIDIARIES AND INVESTMENTS. The Company does not own any stock
of, or any equity participation in, any Person.
3.6. FINANCIAL STATEMENTS.
(a) The unaudited balance sheet of the Company at December 31, 1998,
and related statement of income, retained earnings and cash flow for the period
then ended, (i) are included as SCHEDULE 3.6(a), (ii) were prepared in
accordance with GAAP, applied in a manner consistent with that utilized in the
preparation of the Company's financial statements for inclusion in Seller's
consolidated financial statements at December 31, 1998 as included in Seller's
Annual Report on Form 10-K for the fiscal year then ended, and (iii) present
fairly in all material respects the financial condition and the results of
operations of the Company as of the dates and for the periods indicated thereon.
(b) The unaudited balance sheet of the Company at September 30, 1999
(the "INTERIM BALANCE SHEET"), and the related income statement for the
nine-month period then ended, included as SCHEDULE 3.6(b), were prepared in
accordance with GAAP, applied in a manner consistent with that utilized in the
preparation of the Company's financial statements for inclusion in Seller's
consolidated financial statements at December 31, 1998 as included in Seller's
Annual Report on Form 10-K for the fiscal year then ended, and present fairly in
all material respects the financial condition and the results of operations of
the Company as of the dates and for the periods indicated thereon, subject to
normal year-end adjustments, which are not expected by Seller to be material
individually or in the aggregate.
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3.7. UNDISCLOSED LIABILITIES. The Company has no material liabilities,
except for (a) liabilities reflected or reserved for on the Interim Balance
Sheet, (b) liabilities that have arisen since the Interim Balance Sheet Date in
the ordinary course of the operations of the Company and not exceeding $25,000
individually, (c) obligations of the Company to perform after the date of this
Agreement under Leases and Contracts in accordance with the terms and conditions
thereof which are not required by GAAP to be reflected on the Closing Date
Balance Sheet, or (d) as expressly described on SCHEDULE 3.7 or any other
SCHEDULES to this Agreement.
3.8. ACCOUNTS RECEIVABLE. All accounts receivable reflected on the
Interim Balance Sheet, and all accounts receivable arising subsequent to the
Interim Balance Sheet Date, (a) have arisen in the ordinary course of business
of the Company and (b) have been collected in full or are reasonably believed by
Seller to be good and collectible in the ordinary course of business, subject
(in the case of accounts receivable that have arisen since September 30, 1999)
to an appropriate reserve determined in a manner consistent with the past
practices of the Company. No such account receivable is contingent upon the
performance by the Company after the date of this Agreement of any material
obligation. A true and correct aging of the Company's accounts receivable as of
September 30, 1999 is attached as SCHEDULE 3.8 hereto.
3.9. MATERIAL ADVERSE CHANGE. Other than changes resulting from general
economic conditions or conditions affecting the Company's industry, since the
Interim Balance Sheet Date, there has occurred no event or circumstance
affecting the business or operations of the Company that has had or that is
reasonably likely to have a Material Adverse Effect.
3.10. REAL PROPERTY.
(a) OWNED REAL PROPERTY. The Company owns no real property.
(b) LEASE OBLIGATIONS. SCHEDULE 3.10(b) contains a list of all leases,
licenses, permits, subleases and occupancy agreements, together with any
amendments thereto (the "LEASES"), with respect to all real property leased by
the Company (the "LEASED PROPERTY"). True, complete and accurate copies of the
Leases have been delivered to Purchaser, and except as identified on SCHEDULE
3.10(b), each of such Leases is in full force and
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effect without modification or amendment from the form delivered. No option has
been exercised under any of the Leases, except options whose exercise has been
evidenced by a written document, a true, complete and accurate copy of which has
been delivered to Purchaser with the corresponding Lease. Neither the Company
nor, to the Knowledge of Seller, any of the other parties to the Leases, is in
material default under any of the Leases, and no material amount due under the
Leases remains unpaid, no material controversy, claim, dispute or disagreement
exists between the parties to the Leases, and, to the Knowledge of Seller, no
event has occurred which with the giving of notice or with the passage of time,
or both, would constitute a material default thereunder.
3.11. CONDITION OF PROPERTY.
(a) SCHEDULE 3.11 contains a list of the Company's owned tangible
personal property with an initial purchase price in excess of $10,000. The
Company owns and has good and marketable title to all tangible personal
properties necessary or material to the conduct of its business (including,
without limitation, all such properties reflected on the Interim Balance Sheet,
subject to dispositions for fair value in the ordinary course of business)
subject to no Liens except Permitted Liens and Liens set forth on SCHEDULE
3.11(a). Except as set forth on SCHEDULE 3.11(a), the Company holds good and
transferable leaseholds in all of the material personal property shown on
SCHEDULE 3.11(a) as leased by the Company, in each case under valid and
enforceable leases. The Company is not, and to the Knowledge of Seller no other
party to such personal property lease is, in material breach of or default (and
no event has occurred which, with due notice or lapse of time or both, may
constitute such a breach or default) under any lease of any item of personal
property listed on SCHEDULE 3.11(a).
(b) The assets of the Company in the aggregate are adequate to conduct
the operations of the Company in substantially the manner currently conducted.
The material tangible personal properties of the Company are in good operating
condition and repair, ordinary wear and tear excepted.
3.12. COMPLIANCE WITH LAWS.
(a) Except as set forth on SCHEDULE 3.12(a), the Company has complied
in all respects with all laws, ordinances, rules, regulations, orders,
judgments, injunctions, awards or decrees of Governmental Agencies applicable to
the Company and its property,
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except for any failure to so comply which would not have a Material Adverse
Effect.
(b) SCHEDULE 3.12(b) sets forth a list of each Permit that is necessary
for the operations of the Company as currently conducted, the lack of which
would have a Material Adverse Effect. All such Permits, except as noted therein,
are in full force and effect and no proceeding is pending or, to the Knowledge
of Seller, threatened, to revoke or limit any such Permit.
3.13. AFFILIATE AGREEMENTS. Except for employment agreements with the
Company's officers identified on SCHEDULE 3.16 or as set forth on SCHEDULE 3.13,
there are no material written or oral Contracts between the Company and its
Affiliates, including, without limitation, any such Contracts relating to the
provision of any services by the Company to any such Affiliate, or by any such
Affiliate to the Company. Except as set forth on SCHEDULE 3.13, since the
Interim Balance Sheet Date there have been no transactions, agreements or
arrangements between the Company and (i) any Affiliate of Seller, (ii) any
director or officer of Seller or any Affiliate of Seller or (iii) any member of
the immediate family of any individual described in clause (i) or (ii) of this
sentence.
3.14. CONTRACTS. Except as set forth on SCHEDULE 3.14 and on SCHEDULE
3.16, the Company is not a party to or bound by any: (i) mortgage, indenture,
note, or installment obligation, or other instrument for or relating to
Indebtedness; (ii) contract of indemnity or guaranty of any obligation for
borrowings or performance, or guaranty or warranty of products or services,
excluding endorsements or guaranties of instruments made in the ordinary course
of business in connection with the deposit of items for collection and express
product and statutory warranties; (iii) agreement or arrangement for the sale or
lease of any amount of its assets in excess of $25,000 other than in the usual,
regular and ordinary course of business; (iv) agreement or other arrangement for
the purchase of any real estate, equipment or other capital assets in excess of
$25,000; (v) contracts pursuant to which it is or may be obligated to make
payments, contingent or otherwise, on account of or arising out of prior
acquisitions or sales of businesses, assets or stock of other companies; (vi)
lease or other agreement for the use of personal property with rent in excess of
$25,000 per year; (vii) agreement imposing non-competition or exclusive dealing
obligations on the Company; (viii) contract for the future purchase of
materials, supplies, services, merchandise, parts or
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equipment in excess of $25,000; (ix) distributor, dealer, value added reseller,
original equipment manufacturer, franchise, manufacturer's representative, sales
agency or other similar agreement; (x) license agreement or other agreement,
other than licenses of Commercial Software, under which the Company is entitled
to use, sublicense to others or otherwise exploit in any manner any Intellectual
Property owned by a Person other than the Company; (xi) license or other
agreement, other than standard object-code licenses entered into between the
Company and its customers in the ordinary course of the Company's business,
under which any other Person has the right to use, sublicense to others or
otherwise exploit in any manner any Intellectual Property owned by or licensed
exclusively to the Company; (xii) source code escrow agreement to which the
Company is a party; (xiii) agreement with any third party to develop any
Intellectual Property; or (xiv) any other contract, commitment, arrangement or
understanding that is material to the conduct and operations of the Company.
Each Contract set forth on SCHEDULE 3.14 and on SCHEDULE 3.16 is valid, binding
and enforceable against the Company and to the Knowledge of Seller the other
parties thereto in accordance with its terms, and is in full force and effect.
Except as set forth on SCHEDULE 3.14, neither the Company nor, to the Knowledge
of Seller, any other party thereto is in material default under any Contract to
which the Company is a party or by which it is bound or to which its assets are
subject. Seller has delivered to Purchaser a copy of each Contract or other
written evidence of the obligations, and all amendments thereto, listed on
SCHEDULE 3.14, or, in the case of any oral Contract referred to above, a written
summary of the material terms thereof, except to the extent otherwise noted on
SCHEDULE 3.14.
3.15. INTELLECTUAL PROPERTY.
(a) The Company owns or has the right to use all the Intellectual
Property used in its business as currently conducted or proposed to be conducted
by the Company. Except as set forth on SCHEDULE 3.15 and other than Intellectual
Property of any third party licensed by the Company and listed on SCHEDULE 3.15
pursuant to SECTION 3.15(d) below, and other than commercially available,
off-the-shelf applications software packages licensed by the Company in object
code form pursuant to perpetual licenses in respect of which no additional
royalty or license fee is due from the Company ("COMMERCIAL SOFTWARE"), the
Company owns all the Intellectual Property used in its business as currently
conducted or proposed to be conducted by the Company (the "COMPANY PROPRIETARY
RIGHTS"), free and clear of any Liens or claims of third parties. Except as set
forth on SCHEDULE 3.15,
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the Company's rights in and to the Company Proprietary Rights are freely
assignable, including the right to create derivative works, and the Company is
under no obligation to obtain any approval or consent for use of any of the
Company Proprietary Rights.
(b) Set forth on SCHEDULE 3.15 is a complete list of all patents and
patent applications, and all registered trademarks, trade names, service marks,
copyrights, and any applications therefor, included in the Company Proprietary
Rights, specifying the jurisdictions in which each such Company Proprietary
Right has been issued or registered or in which an application for such issuance
and registration has been filed, including the respective registration or
application numbers and the names of all registered owners. Except as set forth
on SCHEDULE 3.15, none of the Company's currently marketed software products has
been registered for copyright protection with the United States Patent and
Trademark Office or Register of Copyrights or any other foreign offices nor has
the Company received any written request to make any such registration.
(c) Except as set forth on SCHEDULE 3.15, the Company is not obligated
to pay any royalties or other compensation to any third party in respect of its
ownership, use or license of any of the Company Proprietary Rights.
(d) Set forth on SCHEDULE 3.15 is a complete list of all material
licenses, sublicenses and other agreements as to which the Company is a party
and pursuant to which the Company or any other Person is authorized to use any
Intellectual Property of any third party other than Commercial Software (the
"THIRD PARTY PROPRIETARY RIGHTS"), which includes the identity of all parties
thereto and a description of the nature, term and subject matter thereof. The
Company is not in violation of any license, sublicense or agreement described on
such list except such violations as do not materially impair the Company's
rights under such license, sublicense or agreement. Such licenses, sublicenses
and agreements are in full force and effect and, to the Knowledge of Seller,
with respect to parties other than the Company, are binding and enforceable
against each of the parties thereto in accordance with their respective terms.
Except as set forth on SCHEDULE 3.15, the execution and delivery of this
Agreement by the Company, and the consummation by the Company of the
transactions contemplated hereby, will not cause the Company to be in violation
or default under any license, sublicense or agreement relating to Third Party
Proprietary Rights, nor entitle
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any other party to any such license, sublicense or agreement to terminate or
modify such license, sublicense or agreement.
(e) The Company has taken reasonable precautions (i) to protect the
Company Proprietary Rights and (ii) to maintain the confidentiality of its trade
secrets, pending patent applications, know-how and other confidential Company
Proprietary Rights, and there have been no acts or omissions by the executive
officers and directors of the Company or, to the Knowledge of Seller, any other
employee of the Company, the result of which would be to compromise the rights
of the Company to apply for or enforce appropriate legal protection of such
Company Proprietary Rights. Without limiting the generality of the foregoing,
the Company's products, packaging and documentation contain copyright notices
sufficient to notify others of the Company's copyright protection on the
copyrighted portions of the Company Proprietary Rights.
(f) Except as set forth on SCHEDULE 3.15, no claim has been asserted
or, to the Knowledge of Seller, is threatened by any Person, to the effect that
the development, sale, licensing or use of any of the products of the Company
infringes on any copyright, patent, trademark, service xxxx or trade secret or
other intellectual property right of any third party. To the Knowledge of
Seller, there is no unauthorized use, infringement or misappropriation of any of
the Company Proprietary Rights or Third Party Proprietary Rights by any third
party, including any employee or former employee of the Company.
(g) Each current or former employee, officer and consultant of the
Company that contributed materially to the creation or invention of any of the
Company Proprietary Rights executed a confidentiality or similar agreement prior
to the time of any such creation or invention, agreeing to maintain the
confidentiality of and assign to the Company all his or her rights in the
Company Proprietary Rights. To the Knowledge of Seller, no employee, officer or
consultant of the Company incorporated anything into the Company Proprietary
Rights in violation or in breach of any term or provision of any employment or
consulting contract, proprietary information and inventions agreement,
non-competition agreement or any other contract or agreement between such
employee, officer or consultant and another party. To the Knowledge of Seller,
no employee, officer or consultant of the Company is in violation of any term of
any employment or consulting contract, proprietary information and inventions
agreement, non-competition agreement or any other contract or agreement relating
to the relationship of any such
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employee, officer or consultant with the Company or any previous employer.
(h) The Company has in its possession copies of source code for all
computer programs that are material to the business of the Company and that form
part of the Company Proprietary Rights. Such source code is fully documented in
a manner that a reasonably skilled programmer could understand, modify, compile
and otherwise utilize all aspects of the related computer programs without
reference to other sources of information. The Company does not use, nor do the
Company Proprietary Rights contain or utilize, any encryption, enciphering or
other similar technology. Except as set forth on SCHEDULE 3.15, the computer
programs of the Company containing the Company Proprietary Rights that have been
made available generally to the public do not contain any viruses, time locks,
trojan horses, back doors or other means by which they may be disabled or
remotely accessed. All copies of any computer programs forming part of the
Company Proprietary Rights have been distributed solely in object code form with
notices containing the notations "(C)" or "(c)" and "copyright [year of
publication] [company]"; there has been no disclosure of such programs other
than through licensing of object code versions; and each copy so distributed is
the subject of the valid, existing and enforceable license agreement in
substantially the form provided to Purchaser. The Company has existing back-ups
of, and regularly back up, all computer programs and data which form part of the
Company Proprietary Rights in a secure location to which it has immediate
unrestricted access. The computer programs included within the Company
Proprietary Rights, and all material computer systems used by the Company,
operate in all material respects within their specifications, and contain no
data dependency which might reasonably be expected to render them inoperable,
erratic or incorrectly operating (for example, dates involving the years 1999 or
2000). Other than customer support requests in the ordinary course of business,
the Company has not received any complaints from licensees about the incorrect
operation of its products, or any material warranty claims or product liability
claims.
3.16. EMPLOYEE BENEFIT PLANS
(a) EMPLOYEE BENEFIT PLANS. SCHEDULE 3.16 lists all Employee Benefit
Plans and all executive compensation arrangements, change in control agreements,
employment agreements, consulting agreements and severance plans to which the
Company is a party or that the Company or Seller maintains or
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to which the Company or Seller contributes for the benefit of any current or
former Business Employee. The Company has no current actual or contingent
liability with respect to any Employee Benefit Plan which is subject to Section
412 of the Code or Title IV of ERISA.
(b) DOCUMENTS. Seller has delivered to Purchaser complete and accurate
copies of all plans or summary descriptions for each Employee Benefit Plan,
agreement and arrangement listed on SCHEDULE 3.16. With respect to each Employee
Benefit Pension Plan listed on SCHEDULE 3.16 (where applicable), Seller has
delivered to Purchaser complete and accurate copies of the most recent (i) plan
document; (ii) summary plan description; (iii) annual report; (iv) actuarial
valuation; and (v) determination letter received from the IRS.
(c) Included in SCHEDULE 3.16 is a list of the Business Employees as of
September 30, 1999, together with the title and rate of compensation of each.
(d) There are no grievances, disputes or controversies pending or, to
the Knowledge of Seller, threatened between the Company and any of its present
or former employees or independent contractors or any Person representing any
such employee or independent contractor. The Company is not currently subject to
any claims by present or former employees or independent contractors of the
Company, including, without limitation, claims for wages, salaries, commissions
or benefits, other than claims made in the ordinary course of business of the
Company consistent with past practice.
(e) The Company has paid or provided for all amounts currently due and
payable to all of its present or former employees and independent contractors,
including, without limitation, straight time and overtime pay, vacation pay,
fringe benefits, severance pay, and disability payments and has paid, and will
pay, at or before the Closing, over to the appropriate Governmental Agencies or
other appropriate Persons, all accrued Taxes, social security and other payments
required to be withheld and payable with respect to such present and former
employees and independent contractors through the Closing including, without
limitation, income taxes, employment insurance premiums and employer health
taxes. The Company has no current liability for unfunded worker's compensation
claims.
(f) The Company does not maintain a formal or informal severance pay
plan or policy for its employees; nor, except as
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set forth in the plans or policies listed on SCHEDULE 3.16, does the Company
provide to its employees severance pay.
(g) Each Employee Benefit Plan has been administered in all material
respects in accordance with its terms and has been established, invested and
administered in all material respects in compliance with all United States
federal, state, local and foreign laws, regulations, orders or other
legislative, administrative or judicial promulgations applicable to it and in
accordance with all understandings, written or oral, between the Company and the
employees of the Company, and all reports required by any Governmental Agency
with respect thereto have been or as of the Closing will have been timely filed,
except where any such noncompliance could not reasonably be expected to have a
Material Adverse Effect.
(h) None of the Employee Benefit Plans is subject to Section 412 of the
Code or Title IV of ERISA.
(i) With respect to the Strategic Distribution, Inc. Retirement Savings
Plan, a favorable determination letter has been received from the IRS and, to
the Knowledge of Seller, no event has occurred and no condition exists which
could reasonably be expected to result in the revocation of such determination.
There has been no "prohibited transaction" (as such term is defined in Section
4975 of the Code or in Part 4 of Subtitle B of Title I of ERISA) with respect to
any Employee Benefit Plan for which the Company could be liable. No penalty or
tax under Section 502(i) of ERISA or Section 4975 of the Code has been imposed
upon the Company with respect to its ownership or operation of any of the
Company's assets. The transactions contemplated by this Agreement will not
result in any vesting or accrual under any Employee Benefit Plan.
(j) The Company has delivered to Purchaser a true and complete copy of
all employee handbooks and all employment policies currently used in connection
with the Company's businesses and operations.
(k) The Company does not currently maintain any Employee Benefit Plan
under which the Company has any present or future liability to Persons other
than current employees of the Company or former employees of the Company and
their beneficiaries.
(l) No amendments have been made to any Employee Benefit Plan and no
improvements to any Employee Benefit Plan have been promised and no amendments
or improvements to a Employee Benefit
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Plan will be made or promised prior to Closing other than in the ordinary course
of the Company's business or consistent with past practice. None of the Company
nor any of its agents has been in breach of any fiduciary obligation with
respect to the administration of any Benefit Plan or the trusts or other funding
media relating thereto.
(m) All obligations that are currently due and owing with respect to
the Business employees under the Employee Benefit Plans have been satisfied. All
contributions to and premiums with respect to the Employee Benefit Plans
required to be paid prior to Closing will have been paid.
(n) There are no pending or, to the Knowledge of Seller, threatened
investigations, litigation, proceedings or enforcement actions concerning the
Benefit Plans or against the Company (or beneficiaries) with respect to any of
the Benefit Plans nor any insurance policy, trust agreement or other contract
relating thereto.
(o) There are no actions, suits or claims pending or to the Knowledge
of Seller, threatened by former or present employees of the Company (or their
beneficiaries) with respect to the Benefit Plans or any insurance policy or
other contract relating thereto (other than routine claims for benefits).
(p) All employee data necessary to administer each Employee Benefit
Plan maintained by the Company has been provided to Purchaser and is true and
correct in all material respects as of the date hereof and the Company will
notify Purchaser of any changes thereto occurring prior to the Closing.
(q) None of the Benefit Plans provides health coverage or life
insurance to retired employees or to the beneficiaries or dependents of retired
employees, except as required under Sections 10001 through 10003 of the
Consolidated Omnibus Budget Reconciliation Act of 1985 and other federal and
state laws.
3.17. INSURANCE. SCHEDULE 3.17 sets forth a list of all material
insurance policies providing coverage for the properties or operations of the
Company, the type and amount of coverage, and the expiration dates of the
policies. Such policies are valid and enforceable in accordance with their
terms, are in full force and effect and insure against risk and liabilities to
the extent and in a manner reasonably believed by the Company to be adequate and
customary in its industry. The Company has not received notice from any
insurance carrier: (i) threatening a
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suspension, revocation, modification or cancellation of any insurance policy or
a material increase in any premium in connection therewith, or (ii) informing
the Company that any coverage listed on SCHEDULE 3.17 will or may not be
available in the future on substantially the same terms as now in effect. No
such policy will be subject to suspension, revocation, modification or
cancellation by reason of the consummation of the transactions contemplated
hereby.
3.18. LITIGATION. Except as set forth on SCHEDULE 3.18, there are no
actions, causes of action, claims, suits, or proceedings pending or, to the
Knowledge of Seller, threatened against the Company or affecting the operation
of the Company at law, in equity, or admiralty, or before or by any Governmental
Agency. Except as set forth on SCHEDULE 3.18, the Company is not subject to, or
in default with respect to, any order, writ, injunction or decree of any
Governmental Agency.
3.19. TAX MATTERS. Except as set forth on SCHEDULE 3.19.
(a) The Company has never been a member of an affiliated group of
corporations filing a consolidated federal income tax return, other than a group
the common parent of which is Seller.
(b) The affiliated group of corporations of which Seller is the common
parent has filed all income Tax Returns that it was required to file for each
taxable period during which the Company was a member of the group. All such Tax
Returns were correct and complete in all respects, and all income Taxes owed by
such affiliated group have been paid for each taxable period during which the
Company was a member of the group.
(c) Neither Seller nor the Company expects any authority to assess any
additional income Taxes against the affiliated group of which Seller is the
common parent for any taxable period during which the Company was a member of
the group. There exists no dispute or claim concerning any income Tax liability
of such affiliated group for any taxable period during which the Company was a
member of the group either (i) claimed or raised by any taxing authority in
writing or (ii) as to which either of Seller or the Company has Knowledge. Such
affiliated group has not waived any statute of limitations in respect of any
income Taxes or agreed to any extension of time with respect to any income Tax
assessment or deficiency for any taxable period during which the Company was a
member of the group.
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(d) The Company has no liability for the Taxes of any Person other than
the Company (i) under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local or foreign law); (ii) as a transferee or successor; (iii) by
contract; or (iv) otherwise.
(e) The Company has filed or will file all Tax Returns required to be
filed prior to the Closing Date; all such Tax Returns were or will be correct
and complete; and all Taxes owed by the Company have been or will be paid.
(f) The Company has not requested any extension of time within which to
file any Tax Return, which Tax Return has not since been filed.
(g) No deficiency for any Taxes has been proposed or assessed against
the Company that has not been adequately provided for on the Company's financial
statements.
(h) The Company has not granted any extension of the limitation period
applicable to any Tax claim.
(i) The Company is not and never has been a party to any tax-sharing
agreement with any Person other than a corporation which, as of the Closing
Date, is a member of the affiliated group of which the Company is a member.
(j) The Company has not filed a consent under Section 341(f) of the
Code.
(k) The Company has not made, and is not obligated to make, any
payments that will not be deductible under Section 280G of the Code.
(l) The unpaid Taxes of the Company, including without limitation Taxes
payable for periods that end on or before the Closing Date for which no Tax
Returns have yet been filed, as well as Taxes for periods that begin before the
Closing Date and end after the Closing Date (a "STRADDLE PERIOD")to the extent
such Taxes are attributable to the portion of any such period ending at the
Closing Date, will not exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) shown on the Closing Date Balance Sheet.
3.20. INTERIM OPERATIONS. Since the Interim Balance Sheet Date, the
Company has operated in the ordinary course, consistent
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with past practices, and except as set forth on SCHEDULE 3.20 and except in the
ordinary course of business, the Company has not: (i) incurred or become subject
to, or agreed to incur or become subject to, any obligation or liability or
delayed payment of any account receivable or other liability beyond its due date
or when such liability would have been paid in the ordinary course of business
consistent with past practice; (ii) mortgaged or pledged any portion of its
assets, tangible or intangible; (iii) sold or transferred or agreed to sell or
transfer any portion of its assets, or canceled or agreed to cancel any debts or
claims; (iv) suffered any extraordinary losses or waived any material rights;
(v) increased in any material respect the rate of compensation or benefits
payable by it to any of its officers, employees or agents over the rate being
paid or accrued to them as of the Interim Balance Sheet Date, except in
accordance with its prior practices or collective bargaining agreements; or (vi)
terminated any material contract, agreement, license, or other instrument to
which it is a party.
3.21. BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller without the
intervention of any other Person acting on its behalf in such manner as to give
rise to any valid claim by any such Person against the Company or Purchaser for
a finder's fee, brokerage commission or other similar payment based on an
arrangement with Seller.
3.22. CUSTOMERS. SCHEDULE 3.22 sets forth a list of the top ten (by
revenue) customers of the Company for the 1997 and 1998 years and the 1999 year
through September 30, 1999. Except as set forth on SCHEDULE 3.22, there is no
unresolved dispute with any customer which if adversely determined would have a
Material Adverse Effect. Seller has not received written notice from any
customer that it intends to terminate a Contract prior to the scheduled
termination date.
3.23. BANKING FACILITIES. SCHEDULE 3.23 sets forth a complete list of
the names and locations of all banks or other depository institutions in which
the Company has any account or safe deposit box, together with the number of
each such account or box and the names of all Persons authorized to draw thereon
or have access thereto.
3.24. SUPPORT SERVICES PROVIDED BY SELLER. SCHEDULE 3.24 sets forth a
summary description of all material management, accounting or administrative
services and other significant functions, support services or facilities
currently provided by
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Seller to the Company (each, a "SUPPORT SERVICE"), and, if Seller has been
compensated for any such Support Service, the amount and basis of determination
of the amount of all such compensation since January 1, 1998.
3.25. NO MISREPRESENTATION. This Agreement and the exhibits and
schedules hereto do not contain any untrue statement of material fact or omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
3.26. DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND WARRANTIES. Except
as expressly set forth in this Agreement, the SCHEDULES and EXHIBITS hereto, and
any other document, certificate, agreement or instrument delivered pursuant to
the terms hereof or thereof, Seller makes no representation or warranty with
respect to the Company, or its operations, assets, liabilities or conditions.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
4.1. AUTHORITY OF PURCHASER. Purchaser is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation. Purchaser has full corporate power and authority to execute and
deliver this Agreement, the Indemnification Agreement and the Escrow Agreement,
and the execution and delivery by Purchaser of this Agreement, the
Indemnification Agreement and the Escrow Agreement and the consummation by
Purchaser of the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action on the part of Purchaser,
and this Agreement constitutes the legal, valid and binding obligations of
Purchaser enforceable in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, moratorium, or similar laws
from time to time in effect which affect creditors' rights generally, and by
legal and equitable limitations on the enforceability of specific remedies. Upon
their execution and delivery at the Closing, (i) the Indemnification Agreement
and the Escrow Agreement shall constitute the legal, valid and binding
obligations of Purchaser and (ii) the License and Services Agreement shall
constitute the legal, valid and binding obligation of the Company, in each case
enforceable in accordance with their terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, or similar laws
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from time to time in effect which affect creditors' rights generally, and by
legal and equitable limitations on the enforceability of specific remedies.
Purchaser has full corporate power and authority to own its properties and to
carry on the business presently being conducted by it.
4.2. NO CONFLICT OR VIOLATION. None of (a) the execution and delivery
of this Agreement, the Indemnification Agreement or the Escrow Agreement by
Purchaser, (b) the execution and delivery of the License and Services Agreement
by the Company, (c) the consummation by Purchaser of the transactions
contemplated by this Agreement, the Indemnification Agreement and the Escrow
Agreement and the consummation by the Company of the transactions contemplated
by the Licenses and Services Agreement, or (d) the fulfillment of the terms and
compliance with the provisions of this Agreement, the Indemnification Agreement
or the License and Services Agreement will conflict with or result in a material
breach of or a material default (or in an occurrence which with the lapse of
time or action by a third party, or both, could result in a material default)
with respect to any of the terms, conditions or provisions of any applicable
order, writ or decree of any court or of any Governmental Agency, applicable to
Purchaser, or of the Articles of Organization or By-Laws of Purchaser, or of any
indenture, contract, agreement, lease, or other instrument to which Purchaser is
a party or subject or by which Purchaser or any of its properties or assets are
bound, or of any applicable statute, rule, or regulation to which Purchaser or
its businesses are subject.
4.3. LITIGATION. There are no actions, causes of action, claims, suits,
proceedings, orders, writs, injunctions, or decrees pending or, to the Knowledge
of Purchaser, threatened against Purchaser at law, in equity, or admiralty, or
before or by any Governmental Agency, which seeks to restrain or enjoin the
consummation of the transactions contemplated hereby.
4.4. BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Purchaser without the
intervention of any other Person acting on its behalf in such manner as to give
rise to any valid claim by any such Person against Seller or its Affiliates for
a finder's fee, brokerage commission or other similar payment based on an
arrangement with Purchaser.
4.5. INVESTMENT INTENT; STATUS. The Shares will be acquired hereunder
solely for the account of Purchaser and its specified designees, for investment,
and not with a view to the
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resale or distribution thereof, subject to the right of Purchaser and any such
designees to sell, assign, transfer or distribute any or all of the Shares to
any corporation which is an Affiliate of Purchaser.
ARTICLE V.
CERTAIN COVENANTS OF SELLER PENDING CLOSING
Seller covenants with Purchaser that from and after the date hereof
through the Closing Date (except as consented to or approved by Purchaser in
writing):
5.1. CONDUCT OF BUSINESS. Seller shall cause the Company:
(a) to operate in the ordinary course, in accordance with past
practice, and not take any action inconsistent therewith or with the
consummation of the transactions contemplated by this Agreement;
(b) to use commercially reasonable efforts, consistent with past
practice, to preserve generally the present relationships with its officers, key
employees, customers and other Persons having business dealings with the
Company;
(c) to not make any sale, assignment, transfer, abandonment or other
conveyance of any of its assets or any part thereof ("TRANSFER"), except for any
such Transfer made in the ordinary course of business consistent with past
practice;
(d) to keep in full force and effect insurance comparable in amount and
scope to coverage maintained by it (or on behalf of it) on the date hereof;
(e) to not settle, release or forgive any material claim or litigation,
except where the Company is the plaintiff, or waive any material right;
(f) to perform in all material respects its material obligations under
all Contracts and Leases to which it is a party or by which it is bound;
(g) not to issue, sell or pledge, or authorize or propose the issuance,
sale or pledge, of any shares of capital stock of any class of the Company or
securities convertible into any such shares, or any rights, warrants or options
to acquire any such shares or convertible securities;
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(h) not to purchase or redeem or otherwise acquire, or propose to
purchase or redeem or otherwise acquire, any outstanding shares of capital stock
of any class, or securities convertible into any such shares, or any rights,
warrants or options to acquire any such shares or convertible securities;
(i) not to declare or pay any dividend or distribution on any shares of
its capital stock;
(j) except as may expressly be contemplated herein, not to take any
action which would make any representation or warranty in this Agreement (other
than any representation or warranty that speaks as of a particular date) untrue
or incorrect;
(k) not to enter into any agreement, contract or commitment (other than
in the ordinary course of business and other than agreements, contracts or
commitments which were under negotiation on the date hereof and which are
disclosed on SCHEDULE 3.14) which involves a payment, obligation or commitment
in excess of $25,000;
(l) not to enter into any contract, agreement, license or commitment
which would be breached or violated by the Company's execution, delivery and
performance of this Agreement and the transactions contemplated hereby;
(m) except as set forth on SCHEDULE 5.1(m), not to (i) increase or
agree to increase the compensation payable or to become payable to its officers
or employees, (ii) grant any severance or termination pay to, or enter into any
employment or severance agreement with, any employee, (iii) enter into any
collective bargaining agreement, (iv) establish, adopt, enter into or amend in
any material respect any bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(n) not to agree in writing or otherwise to take any of the foregoing
actions; and
(o) not to authorize, recommend, propose, enter into any discussions or
negotiations with respect to, or announce an intention to authorize, recommend
or propose, or enter into a letter of intent (whether or not binding), an
agreement in principle or an agreement with respect to any merger,
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consolidation or business combination involving the Company, any acquisition by
the Company of assets or securities of any Person, any disposition of assets or
securities of the Company other than in the ordinary course of business or any
change in the Company's capitalization, in each case except as contemplated by
this Agreement (nor shall Seller do any of the foregoing).
5.2. INFORMATION AND ACCESS. Seller shall cause the Company to permit
representatives of Purchaser to have reasonable access during normal business
hours, and in a manner so as not to interfere with the normal operations of the
Company, to all premises, properties, personnel, accountants, books, records,
contracts and documents of the Company. Purchaser and each of its
representatives will treat and hold as confidential such information in
accordance with the terms and provisions of that certain Confidentiality
Agreement, entered into as of October 22, 1999, as amended by the Technical
Information Confidentiality Agreement dated November 5, 1999, between Purchaser
and Seller (the "CONFIDENTIALITY AGREEMENT"), which shall remain in full force
and effect.
ARTICLE VI.
CERTAIN COVENANTS AND AGREEMENTS
6.1. XXXX-XXXXX-XXXXXX AND OTHER FILINGS. As promptly as practicable,
and in any event within fifteen (15) Business Days following the date of this
Agreement, Seller and Purchaser shall each prepare and file, or shall cause its
"ultimate parent" (as defined in the HSR Act) to prepare and file, any required
notification and report form under the HSR Act, in connection with the
transactions contemplated hereby, the filing fees for which shall be borne by
Purchaser; Seller and Purchaser shall, or shall cause their ultimate parents to,
request early termination of the waiting period thereunder; and Seller and
Purchaser shall, or shall cause their ultimate parents to, respond with
reasonable diligence to any request for additional information made in response
to such filings. As promptly as practicable after the date of this Agreement,
Seller and Purchaser shall prepare and file any other application, report or
other filing required to be submitted to any other Governmental Agency in
connection with the transactions contemplated hereby.
6.2. TRANSFER TAXES. Any sales, recording, transfer, use or other
similar Taxes or fees (other than stock transfer, capital gains and income
Taxes) imposed as a result of the sale
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of the Shares to Purchaser pursuant to this Agreement shall be borne by Seller.
6.3. CERTAIN TAX MATTERS.
(a) SECTION 338(h)(10) ELECTION. At Purchaser's option, Seller will
join with Purchaser in making an election under Section 338(h)(10) of the Code
(and any corresponding elections under state, local or foreign tax law) (a
"SECTION 338(H)(10) ELECTION") with respect to the purchase and sale of the
Shares to Purchaser pursuant to this Agreement. Seller will pay any Tax
attributable to the making of the Section 338(h)(10) Election and shall
indemnify Purchaser and the Company against any adverse consequences arising out
of the failure to pay any such Tax. In the event such an election is made,
Purchaser and Seller agree that the Purchase Price and the liabilities of the
Company (in addition to other relevant items) will be allocated to the assets of
the Company for all purposes (including Tax and financial accounting purposes)
in a manner consistent with an allocation to be prepared by Purchaser after
Closing. Purchaser shall prepare such allocation schedule in accordance with
Temporary Treasury Regulation section 1.338(b)-2T(b) (T.D. 8711, January 9,
1997), subject to review and approval of Seller, which approval shall not be
unreasonably withheld.
(b) TAX RETURNS.
(i) SELLER'S CONSOLIDATED FEDERAL INCOME TAX RETURN. Seller
will include the income of the Company on Seller's consolidated federal income
Tax Return for all periods through the Closing Date and will pay any federal
income Taxes attributable to such income. The Company will furnish Tax
information to Seller for inclusion in Seller's federal income Tax Return for
the period that includes the Closing Date in accordance with the Company's past
custom and practice. If a Section 338 Election is not made, Seller will allow
Purchaser an opportunity to review and comment upon such Tax Returns to the
extent they relate to the Company, and will take no position on such Tax Returns
that relate to the Company that would adversely affect the Company after the
Closing Date, other than positions taken in accordance with the Company's past
custom and practice. The income of the Company will be apportioned to the period
up to and including the Closing Date and the period after the Closing Date by
closing the books of the Company as of the end of the Closing Date.
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(ii) OTHER TAX RETURNS. Purchaser shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns of the Company that are
required to be filed after the Closing Date (other than income Tax Returns in
respect of periods for which a consolidated, unitary or combined income Tax
Return of Seller will include the operations of the Company), and shall pay or
cause to be paid all Taxes shown as due thereon. Seller shall reimburse
Purchaser, within thirty (30) days after Purchaser notifies Seller in writing
that such Taxes have been paid, an amount equal to the portion of such Taxes
that relates to the portion of such taxable period ending on the Closing Date,
determined as if such taxable period had ended on the Closing Date. If a Section
338 Election is not made, Purchaser will prepare such Tax Returns in accordance
with the Company's past custom and practice and will allow Seller an opportunity
to review and comment upon such Tax Returns, and to consent to the filing of
such Tax Returns as prepared, such consent not to be unreasonably withheld.
(c) TAX SHARING AGREEMENTS. All tax sharing agreements or similar
agreements with respect to or involving the Company shall be terminated as of
the Closing Date, and after the Closing Date the Company shall not be bound
thereby or have any liability thereunder.
(d) AUDITS. If a Section 338 Election is not made, Seller will allow
the Company to participate, at its own expense, in any audits of Seller's
consolidated federal income Tax Returns to the extent that any such audit
relates relate to the Company, and will not settle any such audit in a manner
that would adversely affect the Company after the Closing Date without the prior
written consent of Purchaser, which consent shall not be unreasonably withheld.
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6.4. CERTAIN PROVISIONS RELATING TO CONSENTS.
(a) Seller shall use commercially reasonable efforts prior to and after
the Closing Date to obtain all third party consents that are required in
connection with the transactions contemplated by this Agreement. Seller shall
not obtain any consent that will affect Purchaser to its material economic
detriment, including any modification of any Contract, Lease or Permit, unless
Purchaser expressly approves the obtaining of such consent. Purchaser shall
cooperate as reasonably necessary or desirable to secure the third party
consents, including, without limitation, providing to such third party
information, including financial information.
(b) In the event that any such consent is not obtained on or prior to
the Closing Date, and notwithstanding any waiver by Purchaser of the condition
set forth in SECTION 8.12 hereof, Seller will use its commercially reasonable
efforts to (i) cooperate in any reasonable and lawful arrangement designed to
provide such benefits to Purchaser and (ii) enforce at the request of Purchaser
and for the account of Purchaser any rights of Seller arising from any Contract
or Lease that is the subject of such consent.
6.5. NONCOMPETITION; STANDSTILL.
(a) Purchaser agrees that neither Purchaser nor any of its Affiliates
which it Controls will, for a period of five (5) years from the Closing Date,
compete directly with Seller in the Restricted Seller Business; PROVIDED,
HOWEVER, in no event shall this SECTION 6.5 in any way prohibit Purchaser or its
Affiliates from conducting the business currently conducted by them or the
Company on the date of this Agreement (including the Restricted Company
Business) nor from providing asset management software and related services or
business-to-business electronic commerce software and services to any Person.
(b) Purchaser agrees that neither Purchaser nor any of its Affiliates
which it Controls will, for a period of three (3) years from the Closing Date,
without the prior written consent of Seller, acquire any voting securities of
Seller, other than such number of securities as is less than 1% of the aggregate
voting securities of Seller outstanding at any time.
(c) Purchaser agrees and acknowledges that money damages would not be
sufficient remedy for any breach by it of the provisions of subsections (a) or
(b) of this SECTION 6.5 and that
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in addition to all other remedies Seller shall be entitled to specific
performance and injunctive and other equitable relief as a remedy for any such
breach, and Purchaser further agrees to waive any requirement for the securing
or posting of any bond in connection with such remedy.
(d) Seller agrees that neither Seller nor any of its Affiliates which
it Controls will, for a period of five (5) years from the Closing Date, engage,
either directly or indirectly, as a principal or for its own account or solely
or jointly with others, including as stockholder or equity holder in any Person,
in the Restricted Company Business; PROVIDED, HOWEVER, in no event shall this
SECTION 6.5 in any way prohibit Seller or such Affiliates from (i) conducting
the business currently conducted by them (other than the Restricted Company
Business) and (ii) from using the Licensed Products and Licensed Marks, as
defined in and to the extent permitted by the License and Services Agreement
referred to in SECTION 7.5.
(e) Seller agrees and acknowledges that money damages would not be
sufficient remedy for any breach by it of the provisions of subsection (d) of
this SECTION 6.5 and that in addition to all other remedies Purchaser shall be
entitled to specific performance and injunctive and other equitable relief as a
remedy for any such breach, and Seller further agrees to waive any requirement
for the securing or posting of any bond in connection with such remedy.
6.6. NONDISCLOSURE. From and after the Closing Date, Seller will not
use, divulge, furnish or make accessible to anyone any proprietary, material
non-public, confidential or secret information of or regarding the Company
(including, without limitation, customer lists, supplier lists and pricing and
marketing arrangements with customers or suppliers and any Company Proprietary
Material), and Seller will cooperate reasonably with Purchaser in preserving
such proprietary, confidential or secret aspects of the Company.
6.7. EFFORTS. Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto will use commercially reasonable efforts
to take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable consistent with applicable law to
consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
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6.8. ONGOING COOPERATION. Seller and Purchaser shall cooperate fully
with each other and make available or cause to be made available to each other
in a timely fashion such Tax data, prior Tax Returns and filings of the Company
and other information relating to the Company as may be reasonably required for
the preparation by Purchaser or Seller of any Tax Returns, elections, consents
or certificates required to be prepared and filed by Purchaser or Seller and any
audit or other examination by any taxing authority, or judicial or
administrative proceeding relating to liability for Taxes including, without
limitation, sales Taxes and sales Tax audits. Purchaser and Seller will each
retain and provide to the other party all records and other information which
may be relevant to any such Tax Return, audit or examination, proceeding or
determination, and will each provide the other party with any final
determination of any such audit or examination, proceeding or determination that
affects any amount required to be shown on any Tax Return of the other party for
any period. Without limiting the generality of the foregoing, each of Purchaser
and Seller will retain copies of all Tax Returns, supporting work schedules and
other records relating to tax periods or portions thereof ending prior to or on
the Closing Date. Purchaser will provide Seller with any necessary payroll
records of the Company attributable to the period prior to the Closing Date.
Purchaser shall cooperate with Seller to the extent reasonably necessary for
Seller's preparation of its financial statements and Tax Returns and in the
sharing of financial and accounting information of the Company with respect
thereto or with respect to any audit, examination or other proceeding with
respect thereto.
ARTICLE VII.
CONDITIONS TO SELLER'S OBLIGATIONS
The obligation of Seller to consummate the transactions contemplated by
this Agreement is subject to the satisfaction (unless waived in writing by
Seller) of each of the following conditions as of the Closing Date:
7.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Purchaser contained in this Agreement shall have been true and correct on and
as of the date of this Agreement and shall be true and correct on and as of the
Closing Date, as though such representations and warranties are made on and as
of the Closing Date (except that any representation or warranty made as of a
specified date shall be true and correct on and as of such specified date).
Purchaser shall have delivered
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to Seller a certificate of its President or a Vice President, dated the Closing
Date, to the foregoing effect.
7.2. COMPLIANCE WITH AGREEMENT. Purchaser shall have performed and
complied in all material respects with all covenants and conditions to be
performed or complied with by it on or prior to the Closing Date. Purchaser
shall have delivered to Seller a certificate of its President or a Vice
President, dated the Closing Date, to the foregoing effect.
7.3. NO ADVERSE PROCEEDING. There shall not have been instituted or be
pending any suit, action or other proceeding by any Governmental Agency or any
other Person in which it is sought to restrain or prohibit or question the
validity or legality of the transactions contemplated by this Agreement.
7.4. XXXX-XXXXX-XXXXXX. All applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise been
terminated without objection of any of the relevant federal authorities.
7.5. LICENSE AND SERVICES AGREEMENT. The Company shall have duly
executed and delivered to Seller the License and Services Agreement.
7.6. TPNR AGREEMENT. If then applicable or still in effect, the waiting
period required by Section 10.10 of that certain Agreement (the "TPNR
AGREEMENT"), dated as of March 11, 1999, between the Company and TPN Register,
LLC ("TPNR"), shall have expired or otherwise been waived by TPNR.
7.7. CREDIT FACILITY CONSENTS. The requisite consent to the
consummation of the transactions contemplated hereby shall have been received
from the lenders under that certain Loan and Security Agreement, dated as of May
8, 1998, among the Company, Industrial Systems Associates, Inc., Bank of
America, National Association, and the other lenders party thereto (the "CREDIT
AGREEMENT").
7.8. LEGAL OPINION. Seller shall have received an opinion dated the
Closing Date from Xxxxx, Xxxx & Xxxxx LLP, special counsel for Purchaser,
substantially in the form of EXHIBIT B hereto.
7.9. ESCROW AGREEMENT. Purchaser shall have duly executed and delivered
to Seller the Escrow Agreement.
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7.10. CORPORATE DOCUMENTS. Seller shall have received from Purchaser
certified copies of the resolutions duly adopted by the board of directors of
Purchaser approving the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and such resolutions shall
be in full force and effect.
ARTICLE VIII.
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions contemplated
by this Agreement is subject to the satisfaction (unless waived in writing by
Purchaser) of each of the following conditions as of the Closing Date:
8.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller contained in this Agreement shall have been true and correct on and as
of the date of this Agreement and shall be true and correct on and as of the
Closing Date, as though such representations and warranties are made on and as
of the Closing Date (except that any representation or warranty made as of a
specified date shall be true and correct on and as of such specified date).
Seller shall have delivered to Purchaser a certificate of its President or a
Vice President, dated the Closing Date, to the foregoing effect.
8.2. COMPLIANCE WITH AGREEMENT. Seller shall have performed and
complied in all material respects with all covenants and conditions to be
performed or complied with by it on or prior to the Closing Date. Seller shall
have delivered to Purchaser a certificate of its President or a Vice President,
dated the Closing Date, to the foregoing effect.
8.3. NO ADVERSE PROCEEDING. There shall not have been instituted or be
pending any suit, action or other proceeding by any Governmental Agency or any
other Person in which it is sought to restrain, prohibit or question the
validity or legality of the transactions contemplated by this Agreement.
8.4. XXXX-XXXXX-XXXXXX. All applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise been
terminated without objection of any of the relevant federal authorities.
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8.5. TPNR AGREEMENT. If then applicable or still in effect, the waiting
period required by Section 10.10 of the TPNR Agreement shall have expired or
otherwise been waived by TPNR.
8.6. RELEASE OF CERTAIN LIABILITIES: AFFILIATE AGREEMENTS. Purchaser
shall have received evidence satisfactory to it of the satisfaction, release or
discharge in full (without adverse tax consequences to the Company) of (a) any
intercompany charge, account payable or other Indebtedness of the Company to
Seller or any Affiliate of Seller and (b) any liability of the Company under the
Promissory Note, dated January 28, 1997, issued by the Company to Xxxxxxx X.
Xxxxxxxxx.
8.7. RESIGNATIONS. Purchaser shall have received the written
resignation of each director and officer of the Company, to take effect
immediately upon acceptance thereof by the Company after the Closing.
8.8. CREDIT FACILITY CONSENTS. The requisite consent to the
consummation of the transactions contemplated hereby shall have been received
from the lenders under the Credit Agreement and the Company (and any Company
collateral) shall have been released by the Lenders.
8.9. INDEMNIFICATION AGREEMENT. Seller shall have duly executed and
delivered to Purchaser the Indemnification Agreement.
8.10. ESCROW AGREEMENT. Seller shall have duly executed and delivered
to Purchaser the Escrow Agreement.
8.11. LEGAL OPINIONS. Purchaser shall have received opinions dated the
Closing Date from (a) Xxxxxxx Xxxx & Xxxxxxxxx, special counsel for Seller, (b)
Prickett, Jones, Xxxxxxx, Xxxxxxx & Xxxxxx, special Delaware counsel for Seller,
and (c) Xxxxx Xxxxxx, Esq., Vice President, Law, of Seller, substantially in the
form of EXHIBIT C hereto.
8.12. CONSENTS. All consents, Permits, authorizations, approvals and
waivers which are listed on SCHEDULE 3.4 shall have been obtained.
8.13. CORPORATE DOCUMENTS. Purchaser shall have received from Seller
certified copies of the resolutions duly adopted by the board of directors of
Seller approving the execution and delivery of this Agreement and the
consummation of the
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transactions contemplated hereby, and such resolutions shall be in full force
and effect.
ARTICLE IX.
THE CLOSING; TERMINATION
9.1. THE CLOSING. The Closing of the transactions contemplated hereby
(the "CLOSING") shall be held within five Business Days after each of the
conditions precedent set forth in ARTICLES VII AND VIII have been satisfied or
waived (the "CLOSING DATE"). The Closing shall be held at the offices of Xxxxxxx
Xxxx & Xxxxxxxxx, 787 Seventh Avenue, New York, New York, or such other location
as the parties shall mutually select. At the Closing, all of the transactions
provided for in ARTICLE II hereof shall be consummated on a substantially
concurrent basis.
9.2. DELIVERIES BY SELLER AT THE CLOSING. At the Closing, Seller shall
deliver, or cause to be delivered, to Purchaser, the following items:
(a) The duly executed officer's certificates and certified resolutions
referred to in SECTIONS 8.1, 8.2 and 8.13;
(b) The consents listed on SCHEDULE 3.4;
(c) The legal opinions referred to in SECTION 8.11; and
(d) all other previously undelivered documents that Seller is required
to deliver to Purchaser pursuant to this Agreement.
9.3. DELIVERIES BY PURCHASER AT THE CLOSING. At the Closing, Purchaser
shall deliver, or cause to be delivered, to Seller, the following items:
(a) The duly executed officer's certificates and certified resolutions
referred to in SECTIONS 7.1, 7.2 and 7.10;
(b) The legal opinion referred to in SECTION 7.8;
(c) The Purchase Price; and
(d) all other previously undelivered documents that Purchaser is
required to deliver to Seller pursuant to this Agreement.
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9.4. TERMINATION. Anything in this Agreement to the contrary
notwithstanding, this Agreement and the transactions contemplated hereby may be
terminated in any of the following ways at any time before the Closing and in no
other manner:
(a) By mutual written consent of Purchaser and Seller; or
(b) By Purchaser or Seller if a final, non-appealable order of a
federal or state court preventing consummation of the transactions contemplated
hereby shall be in effect; or
(c) By Purchaser or Seller (if such terminating party is not then in
default of any obligation hereunder), if the Closing has not occurred on or
before March 8, 2000.
In the event this Agreement is terminated pursuant to this SECTION 9.4,
all further obligations of the parties hereunder shall terminate, except for the
obligations set forth in SECTIONS 5.2, 12.4 and 12.5, and except that nothing in
this SECTION 9.4 shall relieve either party hereto of any liability for breach
of this Agreement.
ARTICLE X.
INDEMNIFICATION
10.1. SURVIVAL. All of the representations and warranties of Seller
contained in Article III of this Agreement or in any certificate delivered by
Seller pursuant to this Agreement will survive the Closing and continue in full
force and effect: (a) in the case of the representations and warranties of
Seller contained in SECTION 3.3 and 3.19, until 30 days after the expiration of
the statute of limitations with respect to the matter to which the claim
relates, and (b) in the case of any other representation or warranty of Seller
contained in this Agreement and in the case of the last sentence of SECTION
10.2(a), until the date which is eighteen (18) months following the Closing
Date. All of the representations and warranties of Purchaser contained in
Article IV of this Agreement or in any certificate delivered by Purchaser
pursuant to this Agreement will survive the Closing and continue in full force
and effect until the date which is eighteen months following the Closing Date.
All of the covenants of Seller and Purchaser contained in this Agreement will
survive the Closing and continue in full force and effect forever thereafter.
10.2. INDEMNIFICATION; CERTAIN LIMITATIONS.
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(a) In the event either party (the "INDEMNIFYING PARTY") breaches any
of its representations, warranties or covenants contained in this Agreement or
in any certificate delivered by it pursuant to this Agreement and provided that
the other party (the "INDEMNIFIED PARTY") makes a written claim for
indemnification against the Indemnifying Party within the applicable survival
period, then the Indemnifying Party agrees to indemnify the Indemnified Party
and its Affiliates from and against all Damages the Indemnified Party and any of
its Affiliates suffers resulting from such event; PROVIDED, HOWEVER, the
Indemnifying Party shall not have any obligation to indemnify the Indemnified
Party or any such Affiliate from and against any Damages resulting from the
breach of any representation or warranty contained in ARTICLE III OR IV, as the
case may be, of this Agreement until the Indemnified Party has suffered
aggregate Damages, by reason of all such breaches, in excess of $100,000 (after
which point the Indemnifying Party will be obligated only to indemnify the
Indemnified Party from and against further Damages in excess of $100,000). In
addition, subject to the limitations set forth in the preceding sentence and
SECTION 10.1 and SECTION 10.2(b), Seller will indemnify Purchaser and its
Affiliates from and against any Damages that may be incurred by Purchaser or its
Affiliates arising out of the Company's performance or alleged failure to
perform under any contract for the provision by the Company of products or
services to any third party, which performance or alleged failure to perform
took place at any time prior to the Closing Date; PROVIDED, HOWEVER, that any
such performance or alleged failure to perform that could be the subject of a
claim for indemnification under the Indemnification Agreement (irrespective of
whether the Indemnification Agreement is then in effect) shall not be subject to
this sentence.
(b) To the extent the aggregate Damages Purchaser and its Affiliates
have suffered exceeds fifty percent (50%) of the Purchase Price (the "CAP") by
reason of (i) all breaches of representations and warranties of Seller contained
in ARTICLE III of this Agreement and (ii) the provisions of the last sentence of
SECTION 10.2(a), Seller will have no obligation to indemnify Purchaser or its
Affiliates from and against further Damages in excess of the Cap; PROVIDED,
HOWEVER, that Seller shall be obligated to indemnify Purchaser and its
Affiliates from and against Damages resulting from a breach of the
representations and warranties set forth in Section 3.15 in a maximum amount
equal to one hundred percent (100%) of the Purchase Price; PROVIDED, FURTHER,
HOWEVER, that except as set forth in the last sentence of this Section 10.2(b),
Seller shall not be obligated
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to indemnify Purchaser or its Affiliates under this Agreement in an amount which
shall exceed one hundred percent of the Purchase Price. Notwithstanding the
foregoing, nothing in this Agreement shall be deemed to limit the amount of
Damages (i) for which Seller shall indemnify Purchaser and its Affiliates
arising out of any fraudulent misrepresentations by Seller or for the breach by
Seller of the representations and warranties set forth in SECTION 3.3 or SECTION
3.19 of this Agreement or (ii) for which Purchaser shall indemnify Seller and
its Affiliates arising out of any fraudulent misrepresentations by Purchaser.
(c) The Indemnification provided for in SECTION 10.2(A) shall survive
any investigation at any time made by or on behalf of the Indemnified Party or
of any knowledge or information that the Indemnified Party may have.
10.3. MATTERS INVOLVING THIRD PARTIES.
(a) If any third party notifies an Indemnified Party with respect to
any matter which may give rise to a claim for indemnification against the
Indemnifying Party under this ARTICLE X, other than any claim relating to any
inaccuracy as of the Closing Date of a representation or warranty under SECTION
3.19 of this Agreement (a "TAX CLAIM"), then the Indemnified Party will notify
the Indemnifying Party thereof promptly and in any event within five Business
Days after receiving any written notice from a third party; provided that no
delay on the part of the Indemnified Party in notifying the Indemnifying Party
will relieve the Indemnifying Party from any obligation hereunder unless, and
then solely to the extent that, the Indemnifying Party is materially prejudiced
thereby. Once the Indemnified Party has given notice of the matter to the
Indemnifying Party, the Indemnified Party may defend against the matter in a
manner which it reasonably deems to be appropriate, subject to the following
sentence. In the event the Indemnifying Party notifies the Indemnified Party
after the date the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense of such matter, (a) the Indemnifying
Party will defend the Indemnified Party against the matter with counsel of its
choice reasonably satisfactory to the Indemnified Party, (b) the Indemnified
Party may retain separate counsel at its sole cost and expense (except that the
Indemnifying Party will be responsible for the fees and expenses of such
separate co-counsel to the extent the Indemnified Party is advised, in writing
by its counsel, that the counsel the Indemnifying Party has selected has a
conflict of interest), (c) the Indemnified Party will not consent to the entry
of a judgment or enter into any settlement
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with respect to the matter without the written consent of the Indemnifying Party
(not to be withheld or delayed unreasonably), and (d) the Indemnifying Party
will not consent to the entry of a judgment with respect to the matter or enter
into any settlement which does not include a provision whereby the plaintiff or
claimant in the matter releases the Indemnified Party from all liability with
respect thereto, without the written consent of the Indemnified Party (not to be
withheld or delayed unreasonably). Such assumption of the defense shall not
prejudice the right of the Indemnifying Party to claim at a later date that such
third party action is not a proper matter for indemnification pursuant to this
ARTICLE X.
(b) The Indemnifying Party shall have no obligation to indemnify or
hold harmless the Indemnified Party pursuant to SECTION 10.2 for any Damages to
the extent that (i) the Indemnified Party has actually recovered such Damages
(net of expenses of recovery) from any Person other than the Indemnifying Party,
or (ii) the Indemnified Party has received insurance proceeds in respect of such
Damages or has failed to use reasonable efforts to enforce its rights under any
insurance policy it may have that would provide coverage for such Damages. The
Indemnified Party hereby assigns to the Indemnifying Party any right the
Indemnified Party may have against any Person (other than the Indemnifying
Party) to recover any amounts that the Indemnifying Party has paid to the
Indemnified Party pursuant to SECTION 10.2.
(c) With respect to any Tax Claim, if a claim is made by any taxing
authority which, if successful, is likely to result in an indemnity payment to
Purchaser or any of its Affiliates pursuant to this ARTICLE X, Purchaser shall
notify Seller of such claim, stating the nature and basis of such claim and the
amount thereof, to the extent known. Failure to give such notice shall not
relieve Seller from any liability which it may have on account of this
indemnification or otherwise, except to the extent that Seller is materially
prejudiced thereby. Seller will have the right, at its option, upon timely
notice to Purchaser, to assume control of any defense of any Tax Claim (other
than a Tax Claim relating solely to any Straddle Period) with its own counsel.
Costs of such Tax Claims are to be borne by Seller unless the Tax Claim relates
to taxable periods ending after the Closing Date, in which event such costs will
be fairly apportioned between Purchaser and Seller. Purchaser shall, and shall
cause the Company to, cooperate with Seller in contesting any Tax Claim, which
cooperation shall include the retention and, upon request of Seller, the
provision of records and information
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which are reasonably relevant to such Tax Claim and making employees available
to provide additional information or explanation of any material provided
hereunder. Purchaser and Seller shall jointly control all proceedings taken in
connection with any claims for Taxes relating solely to a Straddle Period of the
Company.
10.4. EXCLUSIVE REMEDY. The indemnification provisions set forth in
this ARTICLE X will constitute the sole and exclusive recourse and remedy for
monetary damages available to the parties hereto with respect to the breach of
any representation, warranty or covenant contained in this Agreement or in any
certificate delivered pursuant to this Agreement.
10.5. PURCHASE PRICE ADJUSTMENT. Any payments by an indemnifying party
under this ARTICLE X shall be treated as an adjustment to the Purchase Price for
all foreign, federal, state and local income tax purposes.
ARTICLE XI.
EMPLOYEE BENEFIT PLANS
11.1. WELFARE PLANS.
(a) Business Employees shall cease active participation in the Employee
Welfare Benefit Plans maintained by Seller as of the Closing Date.
(b) Effective as of the Closing Date, Purchaser shall establish or
amend its group health plan to the extent necessary, so that Business Employees
who participated in Seller's Employee Welfare Benefit Plans on the Closing Date
shall be eligible to enroll in Purchaser's Employee Welfare Benefit Plans which
provide medical benefits without (i) any waiting periods, (ii) any evidence of
insurability and (iii) application of any preexisting physical or mental
condition restrictions, except to the extent that such waiting period, evidence
of insurability, or preexisting physical or mental condition restrictions would
apply under Seller's Employee Benefit Welfare Plans. Claims incurred by the
Business Employees during 1999 and prior to the Closing Date under Seller's
Employee Welfare Benefit Plans which provide medical benefits shall be counted
for purposes of applying deductibles, out-of-pocket maximums, benefit maximums
and all other similar limitations under Purchaser's Employee Welfare Benefit
Plans.
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ARTICLE XII.
MISCELLANEOUS PROVISIONS
12.1. NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given (a) when delivered personally to
the recipient or when sent to the recipient by telecopy (receipt confirmed) if
during normal business hours of a Business Day, otherwise, on the next Business
Day, (b) one (1) Business Day after the date when sent to the recipient by
reputable express courier service (charges prepaid) or (c) seven (7) Business
Days after the date when mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid. Such notices, demands and
other communications will be sent to Seller and to Purchaser at the addresses
indicated below:
If to Purchaser: Project Software & Development, Inc.
000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No. (000) 000-0000
With a copy Xxxxx, Xxxx & Xxxxx LLP
(which shall not One Post Office Square
constitute notice) Xxxxxx, Xxxxxxxxxxxxx 00000
to: Attention: Xxxxxx X. Xxxxx, Xx., Esq.
Facsimile No. (000) 000-0000
If to Seller: Strategic Distribution, Inc.
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
Facsimile No. (000) 000-0000
With a copy Strategic Distribution, Inc.
(which shall not c/o Interlaken Capital, Inc.
constitute notice) 000 Xxxxxxxxx Xxxx
to: Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No. (000) 000-0000
With a copy Xxxxxxx Xxxx & Xxxxxxxxx
(which shall not 000 Xxxxxxx Xxxxxx
constitute notice) Xxx Xxxx, Xxx Xxxx 00000
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to: Attention: Xxxx Xxxxxxxx, Esq.
Facsimile No. (000) 000-0000
or to such other address as either party hereto may, from time to time,
designate in writing delivered in a like manner.
12.2. AMENDMENTS. The terms, provisions, and conditions of this
Agreement may not be changed, modified, or amended in any manner except by an
instrument in writing duly executed by the parties hereto.
12.3. BINDING EFFECT; ASSIGNMENT AND PARTIES IN INTEREST.
(a) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Neither this Agreement nor any of the rights, duties, or
obligations of either party hereunder may be transferred or assigned (by
operation of law or otherwise) by either party hereto except (i) with the prior
written consent of the other party hereto, or (ii) in the case of Purchaser, to
an Affiliate of Purchaser, PROVIDED, THAT, the assignor shall remain liable in
respect of all its obligations.
(c) This Agreement will not confer any rights or remedies upon any
Person other than the parties hereto and their respective permitted successors
and assigns.
12.4. ANNOUNCEMENTS. All press releases, notices to customers and
suppliers and other announcements prior to the Closing Date with respect to this
Agreement and the transactions contemplated by this Agreement shall be approved
by both Purchaser and Seller prior to the issuance thereof; provided that either
party may make any public disclosure it believes in good faith after
consultation with outside counsel is required by law or regulation (in which
case the disclosing party will advise the other party prior to making such
disclosure and provide the other party an opportunity to review the proposed
disclosure).
12.5. EXPENSES. Except as set forth in SECTIONS 6.1 and 6.2 and ARTICLE
X, each party to this Agreement will bear all of its legal, accounting,
investment banking, and other expenses incurred by it or on its behalf in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated.
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12.6. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof, supersedes
and is in full substitution for any and all prior agreements and understandings
between them relating to such subject matter, and no party shall be liable or
bound to the other party hereto in any manner with respect to such subject
matter by any warranties, representations, indemnities, covenants, or agreements
except as specifically set forth herein or in an amendment hereto executed in
accordance with SECTION 12.2 hereof. The Confidentiality Agreement and the
Exhibits and Schedules to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
12.7. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
12.8. COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Agreement may be executed by any one or more parties
hereto, and each such executed counterpart shall be, and shall be deemed to be,
an original, but all of which shall constitute, and shall be deemed to
constitute, in the aggregate but one and the same instrument.
12.9. GOVERNING LAW. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Delaware, applicable to contracts made and to be performed within
such State. Any legal action or other proceeding for any purpose with respect to
this Agreement shall be brought in the state or federal courts in the State of
Delaware. The parties hereby submit to the exclusive jurisdiction of such courts
and waive any objection to the propriety or convenience of venue in such courts.
12.10. CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against either party. Any references
to any federal, state, local or foreign statute or law will also refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise.
12.11. SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to
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be invalid, illegal or unenforceable in any respect, then to the maximum extent
permitted by law, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement or any other such instrument.
12.12. SPECIFIC PERFORMANCE. Without limiting or waiving in any respect
any rights or remedies of either party under this Agreement now or hereinafter
existing at law or in equity or by statute, each party shall be entitled to seek
specific performance of the obligations to be performed by the parties in
accordance with the provisions of this Agreement.
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IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered
this Agreement as of the day and year first written above.
STRATEGIC DISTRIBUTION, INC.
By:
----------------------------------
Name:
Title:
PROJECT SOFTWARE & DEVELOPMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
----------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President & CE
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IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this
Agreement as of the day and year first written above.
STRATEGIC DISTRIBUTION, INC.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief
Executive Officer
PROJECT SOFTWARE & DEVELOPMENT, INC.
By:
----------------------------------
Name:
Title:
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