EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
DATED FEBRUARY 4, 2004
BY AND BETWEEN
COMPUWARE CORPORATION
AND
COVISINT, LLC
TABLE OF CONTENTS
1. Definitions................................................................. 1
2. Transfer of Assets; Assumed Liabilities; Excluded Liabilities............... 7
2.1 Transfer of Assets................................................. 7
2.2 Excluded Assets.................................................... 9
2.3 Assumption of Liabilities.......................................... 9
2.4 Excluded Liabilities............................................... 9
3. Closing..................................................................... 10
3.1 Closing Date....................................................... 10
3.2 Purchase Price..................................................... 10
3.3 Additional Payments................................................ 10
3.4 Purchase Price Allocation.......................................... 11
3.5 Actions to be Taken and Documents to be Delivered at the Closing... 12
3.6 Third Party Consents............................................... 13
3.7 Additional Consideration........................................... 13
4. Representations and Warranties of Covisint.................................. 14
4.1 Organization; Power and Authority; Authorization; Due Execution;
No Conflicts....................................................... 14
4.2 Title.............................................................. 15
4.3 Properties and Improvements........................................ 15
4.4 Other Assets of Covisint........................................... 15
4.5 Claims; Litigation; Compliance with Laws; Approvals................ 15
4.6 Agreements; Contracts.............................................. 16
4.7 Proprietary Rights................................................. 16
4.8 Employees; Employee Benefits....................................... 20
4.9 Insurance.......................................................... 21
4.10 Financial Statements............................................... 21
4.11 Undisclosed Liabilities............................................ 22
4.12 Taxes.............................................................. 22
4.13 Absence of Changes or Events....................................... 23
4.14 Environmental and Occupational Matters............................. 24
4.15 Subsidiaries....................................................... 25
4.16 [Intentionally Omitted.]........................................... 25
4.17 [Intentionally Omitted.]........................................... 25
4.18 Guarantees......................................................... 25
4.19 Related Parties.................................................... 25
4.20 [Intentionally Omitted.]........................................... 25
4.21 Brokers............................................................ 25
4.22 Disclosure......................................................... 25
5. Buyer's Representations and Warranties...................................... 26
5.1 Organization; Power and Authority.................................. 26
5.2 Authorization; Due Execution; No Conflicts......................... 26
5.3 Brokers............................................................ 26
5.4 No Knowledge....................................................... 26
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6. Covenants................................................................... 26
6.1 Conduct Through the Closing Date................................... 26
6.2 Approvals and Consents............................................. 28
6.3 Advice of Changes.................................................. 28
6.4 Notice of Litigation............................................... 28
6.5 Access to Properties and Records; Inspection....................... 28
6.6 Supplemental Information and Documents............................. 28
6.7 Filings............................................................ 29
6.8 Non-Disclosure Agreement........................................... 29
6.9 Work in Progress................................................... 29
6.10 Change and Use of the Covisint Name................................ 29
6.11 Employee Matters and Noncompetition................................ 30
6.12 Maintenance of Books and Records................................... 30
6.13 Exclusivity........................................................ 31
6.14 Management Letters................................................. 31
6.15 Commissions........................................................ 31
7. Conditions Precedent to the Parties' Obligations to Close................... 32
7.1 Conditions Precedent of Buyer...................................... 32
7.2 Conditions Precedent of Covisint................................... 33
8. Default; Termination of Agreement........................................... 33
8.1 Default............................................................ 33
8.2 Termination........................................................ 33
9. Indemnification............................................................. 34
9.1 Indemnification by Covisint........................................ 34
9.2 Indemnification by Buyer........................................... 35
9.3 Claims for Indemnification......................................... 35
9.4 Third-Party Claims................................................. 36
9.5 Limits on Indemnification.......................................... 36
9.6 Tax Indemnification Procedure...................................... 38
10. Miscellaneous............................................................... 39
10.1 Notices............................................................ 39
10.2 No Waiver.......................................................... 40
10.3 Successors and Assigns............................................. 40
10.4 Severability....................................................... 40
10.5 Entire Agreement; Amendment........................................ 41
10.6 Cost of Litigation................................................. 41
10.7 Interpretation..................................................... 41
10.8 Counterparts....................................................... 42
10.9 Applicable Law; Choice of Forum.................................... 42
10.10 Expenses........................................................... 42
10.11 Press Releases..................................................... 43
10.12 Further Assurances................................................. 43
10.13 Certain Tax Matters................................................ 43
10.14 Post-Termination Confidentiality Requirements...................... 43
10.15 No Third Party Beneficiaries....................................... 43
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Schedules and Exhibits
Schedules
---------
Schedule 1(a) - Deferred Revenue *
Schedule 1(b) - Prepaid Expenses *
Schedule 2.1 - Assets Owned by Members; Transfers Requiring Consents *
Schedule 2.1(e) - Contracts *
Schedule 2.1(f) - Responder Contracts *
Schedule 2.2 - Excluded Assets *
Schedule 2.3 - Assumed Liabilities *
Schedule 3.3 - Additional Payments *
Schedule 3.4 - Purchase Price Allocation *
Schedule 4.1 - No Conflicts; Jurisdictions Where Qualified *
Schedule 4.3 - Properties and Improvements *
Schedule 4.4 - Leased Assets *
Schedule 4.5 - Claims; Litigation; Compliance with Laws; Approvals *
Schedule 4.6 - Agreements; Contracts; Warranties *
Schedule 4.7 - Proprietary Rights *
Schedule 4.8 - Employees; Employee Benefits *
Schedule 4.11 - Undisclosed Liabilities *
Schedule 4.12 - Taxes *
Schedule 4.13 - Absence of Changes or Events *
Schedule 4.15 - Subsidiaries *
Schedule 4.18 - Guarantees *
Schedule 4.19 - Related Parties *
Schedule 4.21 - Brokers (Covisint) *
Exhibits
--------
Exhibit A - Assignment and Assumption Agreement *
Exhibit B - Xxxx of Sale *
Exhibit C - Intellectual Property Assignment *
Exhibit D - [reserved] *
Exhibit E - [reserved] *
Exhibit F - Transition Services Agreement Outline *
Exhibit G - Officer's Certificate - Buyer *
Exhibit H - Form of Opinion of Buyer General Counsel *
Exhibit I - Officers' Certificates - Covisint *
Exhibit J - Form of Opinion of Honigman, Miller, Xxxxxxxx and Xxxx *
* - The Company will furnish supplementally a copy of any omitted schedule to
the Commission upon request.
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ASSET PURCHASE AGREEMENT
This Agreement is made as of February 4, 2004, by and between Compuware
Corporation, a Michigan corporation ("Buyer"), and Covisint, LLC, a Delaware
limited liability company ("Covisint"). Certain capitalized terms used in this
Agreement are either defined or referenced in Article 1 below.
RECITALS
A. Covisint is engaged in the Business as defined below.
B. Subject to the terms and conditions hereinafter set forth, Covisint
desires to sell to Buyer, and Buyer desires to purchase from Covisint,
substantially all of the assets belonging to, used or intended to be used in the
Business.
C. The Board of Directors of Buyer and the Board of Directors of the
Managing Member of Covisint have each determined that the transactions
contemplated herein are in the best interests of their respective shareholders
and members, and have approved the transactions contemplated herein, upon the
terms and subject to the conditions set forth in this Agreement.
D. Buyer and Covisint desire to make certain representations,
warranties, covenants and agreements in connection with the transactions
contemplated herein.
Therefore, the parties agree as follows:
1. Definitions. As used in this Agreement:
"Active Employee" is defined in Section 6.11(a) of this Agreement
"Adjustment Amount" is defined in Section 3.2 of this Agreement.
"Affiliate" means with respect to any specified Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such specified Person. For purposes of this definition "control,"
"controlling" and "controlled" means the ownership of voting securities or other
interests of a Person having by their terms ordinary voting power to elect a
majority of the Board of Directors of such Person or a majority of others
performing similar management functions with respect to such Person. For the
avoidance of doubt, General Motors Corporation, Ford Motor Company and XXX.Xxx
GMBH shall not be deemed Affiliates of Covisint.
"Agreement" means this Asset Purchase Agreement.
"Alternative Transaction" is defined in Section 6.13 of this
Agreement.
"Assets" is defined in Section 2.1 of this Agreement.
"Assignment and Assumption Agreement" means an assignment and
assumption agreement substantially in the form of Exhibit A attached to this
Agreement.
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"Assumed Liabilities" is defined in Section 2.3 of this Agreement.
"Benefit Plans" means "employee benefit plans" (as defined in
Section 3(3) of ERISA), and all other bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, stock bonus, phantom stock, retirement, vacation, severance, disability,
death benefit, welfare, holiday bonus, hospitalization, medical or other plan or
arrangement, providing benefits to any current or former employee, officer or
director of Covisint, or maintained or contributed to by Covisint or by any
member of its controlled group(s) as defined in Code Sections 414(b), (c), (m),
or (o) for the benefit of any employee, officer or director of Covisint.
"Xxxx of Sale" means a xxxx of sale for the sale of the Assets
substantially in the form of Exhibit B attached to this Agreement.
"Business" means Covisint's current business of development,
marketing, provision, and maintenance of systems (including hardware, software,
networks, and support thereof) related to:
(i) Covisint Connect and/or Covisint Messaging: a XML or other
uniform-language data messaging service that provides a single, or reduced
number of, connection for an enterprise's computers to exchange data with the
computers of the other enterprises with which it does business (including
integration of traditional EDI protocols into same). Covisint Connect also
includes a common web based view of traditional EDI or messaging data for
multiple originators.
(ii) Covisint Communicate and/or Covisint Portal: a common
infrastructure that permits enterprises to communicate information and to access
each other's applications via the Internet in a secure way extending down to the
individual user.
(iii) Covisint Collaborate: application, deployment and
interoperability via web services.
(iv) Covisint Problem Solver: a Covisint-developed application that
allows enterprises to communicate manufacturing problems, other associated
problems, and their subsequent resolution in a structured way via the Internet.
"Buyer" is defined in the introductory paragraph of this Agreement.
"Buyer Indemnified Parties" is defined in Section 9.1 of this
Agreement.
"Buyer's Welfare Plans" is defined in Section 6.11(a) of this
Agreement.
"Claim Notice" is defined in Section 9.3(c) of this Agreement.
"Claimant" is defined in Section 9.3(a) of this Agreement.
"Closing" is defined in Section 3.1 of this Agreement.
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"Closing Date" is the date on which the Closing takes place. For
purposes of determining any fact as of the Closing Date, such determination is
to be made as of 12:01 a.m. on such date.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Contracts" is defined in Section 2.1(g) of this Agreement.
"Covisint" is defined in the introductory paragraph of this
Agreement.
"Customers" is defined in Section 6.9 of this Agreement.
"Deferred Revenue" means the advance payments received by Covisint
with respect to obligations under Contracts to be performed by Buyer after the
Closing Date and listed on Schedule 1(a).
"Difference Amount" is defined in Section 3.3 of this Agreement.
"Entitled Party" is defined in Section 6.9 of this Agreement.
"Environmental Laws" means any Law which relates to pollution (or
the clean up of the environment), or the protection of air, surface water,
groundwater, drinking water, land (surface or subsurface), the environment or
any other natural resource or the use, storage, recycling, treatment,
generation, processing, handling, production or disposal of Hazardous Materials,
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 USC Sections 9601 et seq.
and 40 CFR Sections 302.1 et seq., and regulations thereunder; the Federal Clean
Air Act, as amended, 42 USC Sections 7401 et seq., and regulations thereunder;
the Resource Conservation and Recovery Act, 42 USC Sections 6901 et seq., as
amended, and regulations thereunder; and the Federal Water Pollution Control
Act, 33 USC Sections 1251 et seq., as amended, and regulations thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Estimated Statement" is defined in Section 3.3(a) of this
Agreement.
"Excluded Assets" is defined in Section 2.2 of this Agreement.
"Excluded Liabilities" is defined in Section 2.4 of this Agreement.
"Fees and Costs" means reasonable legal (including attorneys' and
legal assistants') fees, disbursements and costs; reasonable fees, disbursements
and costs of third party consultants and experts; court costs; and similar
items.
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"Final Determination" with respect to a Tax Proceeding means (a) a
final decision with respect to the proposed adjustment by an IRS agent or
officer, as evidenced by the issuance of a 90-day letter, IRS Form 870-AD or
like notice, unless judicial proceedings are timely initiated, (b) a final
decision with respect to the proposed adjustment by the United States Tax Court,
Court of Federal Claims or the appropriate Federal District Court, unless such
decision is timely appealed, (c) a final decision of a United States Court of
Appeals, unless such decision is timely appealed, or (d) a final decision by the
United States Supreme Court.
"Final Statement" is defined in Section 3.3 of this Agreement.
"Financial Statements" is defined in Section 4.10 of this Agreement.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"Governmental Entity" is defined in Section 4.1(c) of this
Agreement.
"Hazardous Materials" means asbestos-containing materials, mono- and
polychlorinated biphenyls, urea formaldehyde products, radon, radioactive
materials, any "hazardous substance", "hazardous waste", "pollutant", "Toxic
Pollutant", "oil" or "contaminant" as used in, or defined pursuant to any
Environmental Law, and any other substance, waste, pollutant, contaminant or
material, including petroleum products and derivatives, the use, transport,
disposal, storage, treatment, recycling, handling, discharge, Release,
threatened Release, discharge or emission of which is regulated or governed by
any Environmental Law.
"Indemnifying Party" is defined in Section 9.3(a) of this Agreement.
"Intellectual Property Assignments" means an assignment by Ford
Motor Company of the Proprietary Rights listed in Schedule 2.1, and assignments,
in the form attached hereto as Exhibit C, by Covisint and its Affiliates of all
of their respective rights in the Proprietary Rights in respect of the Business.
"IRS" means the Internal Revenue Service and any successor federal
agency.
"Law" or "Laws" means all applicable federal, state or local laws,
zoning and other ordinances, rules, regulations, building and other codes, court
or administrative orders, judgments or decrees, and the common law.
"Liability" or "Liabilities" means any commitments, liabilities,
obligations, indebtedness, accounts payable and accrued expenses (whether any of
the foregoing are known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated and/or due or to
become due) of Covisint, including any Liability or obligation for Taxes.
"License Agreements" is defined in Section 4.7(a) of this Agreement.
"Lien" is defined in Section 4.2 of this Agreement.
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"Loss" means and includes any damage, liability, loss, claim, cost,
debt, expense, obligation, Tax, assessment, lawsuit or deficiency of any kind or
nature, fixed, actual, accrued or contingent, liquidated or unliquidated,
including, without limitation Fees and Costs incident to proceedings or
investigations or the defense of any of the foregoing, whether or not litigation
has commenced.
"Open Source Materials" is defined in Section 4.7(n) of this
Agreement.
"Patents, Trademarks, and Copyrights" means:
(a) any know-how, invention (whether patentable or
unpatentable and whether or not reduced to practice), any improvements to any
invention, and any patent, patent application, statutory invention registration
or patent disclosure for the foregoing, together with any reissuance, division,
continuation, continuation-in-part, revision, extension, or reexamination of any
patent;
(b) any trademark, service xxxx, trade dress, logo, trade
name, corporate name, domain name, Uniform Resource Locator (URL) or other
Internet address, whether or not registered, together with any translation,
adaptation, derivation, or combination and including any associated goodwill,
and any application for registration, registration, or renewal of the foregoing;
(c) any copyrightable work (including, but not limited to,
advertising and promotional materials, catalogs, logo designs, software,
compilations of data, and website content) and any copyright therefor, and any
application for registration, registration, or renewal of the copyright; and,
(d) any copies or tangible embodiment of any of the
foregoing and all files relating thereto;
"Permitted Lien" means (i) liens for Taxes not yet due and payable
or which are being contested in good faith by appropriate proceedings and fully
reserved against, (ii) encumbrances in the nature of zoning restrictions,
easements, rights or restrictions of record on the use of real property if the
same do not materially impair the use of such property in the Business, (iii)
statutory or common law liens to secure landlords, lessors or renters under
leases or rental agreements confined to the premises rented, (iv) deposits or
pledges made in connection with, or to secure payment of, worker's compensation,
unemployment insurance, old age pension programs mandated under applicable Law
or other social security, and (v) statutory or common law liens in favor of
carriers, warehousemen, mechanics and materialmen, statutory or common law liens
to secure claims for labor, materials or supplies and other like liens.
"Person" means an individual, firm, corporation, limited liability
company, syndicate, partnership, trust, association, joint venture,
unincorporated organization, Governmental Entity or other legal or business
entity.
"Prepaid Expenses" means prepaid expenses, advance payments,
security deposits and other prepaid items paid by Covisint and listed on
Schedule 1(b).
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"Proprietary Rights" means Patents, Trademarks and Copyrights, Trade
Secrets and Other Proprietary Rights, and Software.
"Purchase Price" is defined in Section 3.2 of this Agreement.
"Recipient" is defined in Section 6.9 of this Agreement.
"Related Agreements" are all written agreements, other than this
Agreement, which are executed and delivered by Buyer, Covisint or any member of
Covisint pursuant to this Agreement in connection with the transactions
contemplated by this Agreement including the agreements attached to this
Agreement as exhibits.
"Release" means spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposal,
depositing and placing, including the abandonment or discarding of barrels,
containers, and other closed receptacles containing any Hazardous Material.
"Responder Contracts" means those Contracts listed in Schedule
2.1(f).
"Ruling" means a formal ruling, a determination letter, a change in
method of accounting letter or any similar announcement issued by the IRS.
"Software" means:
(a) any computer software (whether in general release or
under development), including, without limitation, source code, object code, and
databases and all related data and related documentation; and
(b) any copies or tangible embodiment of any of the
foregoing and all files relating thereto.
"Tax Authority" includes the IRS and any state, local, foreign or
other governmental authority (domestic or foreign) responsible for the
administration of any Taxes.
"Tax Claimant" is defined in Section 9.6(a) of this Agreement.
"Tax Indemnifying Party" is defined in Section 9.6(a) of this
Agreement.
"Tax" or "Taxes" means all taxes, however denominated, including any
interest, penalties or other additions to tax that may become payable in respect
thereof, imposed by any federal, territorial, state, local or foreign government
or any agency or political subdivision of any such government, which taxes will
include, without limiting the generality of the foregoing, all income or profits
taxes (including, but not limited to, federal income taxes and state income
taxes), single business taxes, real property gains taxes, payroll and employee
withholding taxes, unemployment insurance taxes, social security taxes, sales
and use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts
taxes, business license taxes, occupation taxes, real and personal property
taxes, stamp taxes, environmental taxes, transfer taxes, workers' compensation,
Pension Benefit Guaranty Corporation premiums and other governmental
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charges, and other obligations of the same or of a similar nature to any of the
foregoing, which Covisint is required to pay, withhold or collect, whether
disputed or not.
"Tax Proceeding" is defined in Section 9.6(a) below.
"Tax Return" or "Tax Returns" means any return, declaration, report,
claim for refund, or information return or statement (including any schedule or
attachment thereto) and any amendment thereof required to be filed with, or
where none is required to be filed with a Tax Authority, the statement or other
document issued by, a Tax Authority in connection with any Tax.
"Terminating Breach" is defined in Section 8.2(d) of this Agreement.
"Third-Party Claim" is defined in Section 9.4(a) of this Agreement.
"Trade Secrets and Other Proprietary Rights" means:
(a) any trade secret or confidential or proprietary business
information (including, but not limited to, any idea, research and development,
know-how, formula, composition, manufacturing and production process or
technique, technical data, design, drawing, specification, customer or supplier
list, pricing and cost information, and business and marketing plan or
proposal);
(b) any other proprietary right including moral rights and
waivers of such rights by others and the right to xxx and recover damages,
attorneys' fees and costs for past infringement of any patent, trademark,
copyright; and
(c) any copies or tangible embodiment of any of the
foregoing and all files relating thereto.
"Treasury Regulation" or "Treasury Regulations" means any proposed,
final or temporary regulation promulgated under the Code, including any
amendments or any substitute or successor provisions thereto.
"Working Capital Allocation" is defined in Section 3.3 of this
Agreement.
2. Transfer of Assets; Assumed Liabilities; Excluded Liabilities.
2.1 Transfer of Assets. At the Closing, Covisint will sell, convey,
transfer and assign, (and cause Covisint's Affiliates to sell, convey, transfer
and assign the Assets owned by them and cause Ford Motor Company to assign to
Buyer the Proprietary Rights listed in Schedule 2.1) to Buyer, free and clear of
all Liens (other than Permitted Liens), and Buyer will purchase, all of such
rights, title and interest in and to the assets (tangible and intangible),
properties, and goodwill which relate to, or are used, held for use or intended
to be used in connection with, the operation of the Business, other than
Excluded Assets (collectively referred to herein as the "Assets"), including
Covisint's rights, title and interest in and to the following:
(a) The Business as a going concern;
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(b) All Prepaid Expenses;
(c) All owned personal property, including all computer equipment
and systems, computer accessories, machinery and equipment, materials, and
office equipment;
(d) All supplier lists and all orders, contracts and commitments
for the purchase of goods or services, including all such items relating to the
purchase of capital assets, products and supplies;
(e) Other than Responder Contracts, all customer purchase orders,
license agreements, maintenance agreements, customer contracts and customer
commitments listed on Schedule 2.1(e);
(f) All Responder Contracts, which are listed on Schedule 2.1(f)
and that are currently in effect;
(g) All other orders, contracts, commitments, personal property
leases, licenses, conditional sale or title retention agreements and guarantees
(the Assets described in items (d), (e), (f) and (g) of this Section 2.1 being
collectively referred to as the "Contracts");
(h) All Proprietary Rights owned by Covisint or Covisint's
Affiliates, and used in the Business, or owned by Ford Motor Company and listed
on Schedule 2.1;
(i) All permits, franchises, licenses, bonds, approvals,
qualifications and the like issued by any government or governmental unit,
agency, board, body or instrumentality, whether foreign, federal, state or local
and all applications therefor pertaining to the Business;
(j) All rights, claims (including refund claims), causes of action
and choses in action against third parties relating to the Assets (including,
but not limited to, rights against suppliers under warranties covering any
inventory, machinery or equipment);
(k) All financial, operating, inventory, personnel, payroll,
customer lists and customer records and all sales and promotional literature,
correspondence, proposals for the provision of services or software to
customers, and files relating to the Business;
(l) All inventory, merchandise, finished goods, raw materials,
packaging, and supplies and any prepaid deposits for the same relating to the
Business;
(m) All telephone numbers and domain names of Covisint; and
(n) All other tangible and intangible assets, whether or not
carried at value or listed on the books and records of Covisint and whether or
not in the possession of Covisint, including client relationships.
Notwithstanding the above, any items requiring a consent for transfer or
assignment and as to which consent for such transfer or assignment has not been
obtained by Covisint prior to the Closing shall be treated in accordance with
Section 3.5 and shall not be deemed to be transferred or assigned to Buyer as
part of the Assets. The foregoing sentence and Section 3.5
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shall only apply to those Contracts with respect to which Buyer has waived the
conditions for consent set forth in Section 7.1(e).
2.2 Excluded Assets. Notwithstanding the foregoing, and except as set
forth on Schedule 2.2, the following assets of Covisint shall not be sold,
conveyed, transferred or assigned to Buyer and shall not be included in the
Assets (the "Excluded Assets"):
(a) cash, cash equivalents and short term marketable securities;
(b) accounts receivable;
(c) furniture and fixtures;
(d) any real property leases;
(e) membership, ownership or other equity interests in any
subsidiaries;
(f) limited liability company seals, charter documents, minute
books, membership books, tax returns, books of accounts or other books and
records of Covisint;
(g) Benefit Plans;
(h) insurance contracts;
(i) assets not related to the Business;
(j) assets held by Covisint or any of its Affiliates in Europe
except for The General Working Frame Agreement between Peugeot Citroen
Automobile SA and Covisint Europe BV executed by Covisint on or about June 14,
2002; and
(k) all Xerox leased copiers and Pitney Xxxxx mailing machines.
2.3 Assumption of Liabilities. At the Closing, Buyer will assume only
those obligations and liabilities of Covisint under the Contracts to be acquired
by Buyer pursuant to Section 2.1 and set forth on Schedule 2.3, and only to the
extent that such obligations and liabilities arise or are in respect of any
period on or after the Closing Date (collectively, the "Assumed Liabilities").
The assumption by Buyer of the Assumed Liabilities shall not expand the rights
or remedies of any third party against Buyer or Covisint, as compared to any
rights and remedies that such third party would have had against Covisint had
Buyer not assumed the Assumed Liabilities.
2.4 Excluded Liabilities. Except as set forth in Section 2.3 above,
Buyer is not assuming or agreeing to pay or perform any of the Liabilities or
contracts of Covisint, (the "Excluded Liabilities"). Without limiting the
generality of the foregoing, and notwithstanding anything to the contrary in
this Agreement, the Excluded Liabilities shall include, but not be limited to,
the following:
(a) Taxes of Covisint;
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(b) Any Liability in connection with the Business or the Assets that
arises or is in respect of any period before the Closing Date;
(c) Any Liability relating to or arising out of the Excluded Assets;
(d) Any Liability with respect to the litigation, investigations and
other matters set forth on Schedule 4.5;
(e) Any Liability for any past or present employees, agents or
independent contractors of Covisint, including any workers' compensation claims,
any employee severance claims, any claims arising under any employment
contracts, stock option agreements or the Benefit Plans and any Liability for
continuing medical plan coverage under COBRA;
(f) All brokerage commissions, finder's fees or similar fees or
commissions, any accounting, legal and other professional fees, payable in
connection with this Agreement or any of the transactions contemplated hereby to
any broker, finder, agent, financial advisor accounts, attorneys, or other
representatives, acting or having acted on behalf of or employed by either
Covisint or its members;
(g) Any Liability to any members of Covisint arising out of (i) any
ownership interest in Covisint or (ii) any of the transactions contemplated
herein, including any dissent and appraisal rights;
(h) Any Liability under Environmental Laws; and
(i) Any other Liability not constituting Assumed Liabilities.
As between Covisint and Buyer, all of the Excluded Liabilities will
be the sole responsibility and obligation of Covisint.
3. Closing.
3.1 Closing Date. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Xxxxxx Xxxxxxx PLLC,
000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 at 10:00 a.m. on March 1, 2004
or such other day and place as is mutually agreed.
3.2 Purchase Price. Subject to the terms and conditions of this
Agreement, and except as provided below, the purchase price (the "Purchase
Price") payable for the Assets is US$8,000,000, subject to adjustment pursuant
to Section 3.3. US$7,000,000 shall be paid to Covisint at Closing in immediately
available funds by wire transfer to the bank account designated by Covisint in a
notice delivered to Buyer at least three (3) business days prior to the Closing
Date. US$1,000,000, as adjusted in accordance with Section 3.3 (the "Adjustment
Amount") of the Purchase Price shall be held by Buyer pending resolution of the
matters set forth in Section 3.3.
3.3 Additional Payments. (a) Attached as Schedule 3.3 is a good faith
estimate of the amount of Prepaid Expenses and Deferred Revenue as of the
Closing Date, determined in accordance with generally accepted accounting
principles applied on a basis consistent with the
10
Financial Statements. (the "Estimated Statement"). Within 45 days after the
Closing, Covisint and Buyer shall meet and agree upon a final calculation of the
amount of Prepaid Expenses and Deferred Revenue as of the Closing Date (the
"Final Statement"). Such calculation shall be made in accordance with generally
accepted accounting principles applied on a basis consistent with the Financial
Statements and the Estimated Statement. The "Difference Amount" shall be
calculated as Deferred Revenue less Prepaid Expenses on the Final Statement. If
the Difference Amount exceeds the Adjustment Amount, Covisint shall pay to the
Buyer the Difference Amount less the Adjustment Amount within two (2) business
days after such determination. If the Difference Amount is lower than the
Adjustment Amount, the Buyer shall pay Covisint the Adjustment Amount less the
Difference Amount within two (2) business days after such determination.
(b) "Working Capital Allocation" is defined in the following
sentence. Notwithstanding Section 3.3(a), the parties shall allocate current
liabilities and current assets between the parties at and as of the Closing Date
on the following general premise: current liabilities and current assets which
are incurred prior to the Closing Date shall remain the property or obligation
of Covisint; Assumed Liabilities and Assets (including accounts receivable)
arising or incurred on and after the Closing Date shall become the property or
obligation of Buyer.
(c) Within 45 days after the Closing Date, Covisint shall obtain
and deliver a fully executed copy of The General Working Frame Agreement between
Peugeot Citroen Automobile SA and Covisint Europe BV executed by Covisint on or
about June 14, 2002. In the event such agreement is not delivered by such date,
Buyer shall be entitled to a payment from Covisint of $144,000. Buyer shall be
permitted to offset such amount against the Adjustment Amount.
(d) The parties shall use their best efforts to reconcile these
items within 45 days after the Closing Date and pay the respective party any
adjustments within two (2) business days after the parties reach an agreement.
In the event the parties cannot agree upon the final amount of Prepaid Expenses,
Deferred Revenue or Working Capital Allocation within 45 days after the Closing
Date, the parties shall submit the determination of Prepaid Expenses, Deferred
Revenue and/or Working Capital Allocation, as the case may be, to a nationally
recognized accounting firm (to be mutually agreed upon by the parties) that does
not perform any material services for Buyer or Covisint, which determination
shall be made within thirty (30) days after submission and shall be final and
binding on all parties. The fees, costs and expenses incurred by such accounting
firm in making such determination shall be borne equally by the parties.
3.4 Purchase Price Allocation. The Purchase Price shall be allocated
among the acquired Assets in accordance with Schedule 3.4, which Buyer and
Covisint shall prepare within a reasonable period after the Closing Date. Except
as required by Code Section 1060, Buyer and Covisint agree to allocate the
Purchase Price among the acquired Assets as follows: the computer equipment,
office equipment and prepaid assets shall be allocated amounts, equal to the net
book values of such Assets as of the Closing Date. To the extent that the
Purchase Price exceeds the allocation to such Assets, the excess shall be
allocated to the goodwill of Covisint. The parties shall file all Tax Returns
(including amended returns and claims for refund) and information reports in a
manner consistent with such allocation, and shall use their reasonable efforts
to sustain such allocation in any subsequent Tax audit or Tax dispute. Without
limiting
11
the foregoing, Covisint and Buyer each agrees to file an IRS Form 8594 in
accordance with such Schedule 3.4, and the parties agree to promptly provide
each other with the information and documentation necessary to complete the IRS
Form 8594 and such Schedule 3.4.
3.5 Actions to be Taken and Documents to be Delivered at the Closing.
(a) At the Closing, Buyer will assume possession and control of
the Assets, execute and/or deliver or cause to be executed and/or delivered the
following documents and take or will cause to be taken the following actions, as
appropriate:
(1) deliver US$7,000,000 in immediately available funds to
Covisint;
(2) the Assignment and Assumption Agreement;
(3) a transition services agreement in form and substance
mutually agreeable between the parties covering the matters set
forth in Exhibit F;
(4) officer's certificate as provided in Exhibit G;
(5) an opinion of Buyer's General Counsel in substantially
the form attached hereto as Exhibit H; and
(6) such other documents and certificates as are required by
the terms of this Agreement and the Related Agreements (including
delivery of all governmental and third party consents required in
order for Buyer to execute and deliver this Agreement and the
Related Agreements to which it is a party and to consummate the
transactions contemplated by this Agreement and such Related
Agreements) or as may be reasonably requested by Covisint.
(b) At the Closing, Covisint will execute and deliver or cause to
be executed and delivered the following documents and will take or will cause to
be taken the following actions, as appropriate:
(1) a Xxxx of Sale;
(2) will permit Buyer's assumption of possession and control
of the Assets;
(3) a copy of the Certificate of Formation of Covisint and a
good standing certificate from the State of Delaware and each state
in which it is qualified to do business as a foreign entity
(certified by an appropriate state official as of a date within 30
days of the Closing Date);
(4) a certificate of Covisint, in such form and substance as
Buyer may reasonably request, attesting to the satisfaction of the
conditions set forth in Section 7.1;
(5) officer's certificate as provided in Exhibit I;
12
(6) an opinion of Honigman, Miller, Xxxxxxxx and Xxxx LLP in
substantially the form attached hereto as Exhibit J;
(7) the Intellectual Property Assignments from Covisint and
its Affiliates and from Ford Motor Company;
(8) the Assignment and Assumption Agreement;
(9) a transition services agreement in form and substance
mutually agreeable between the parties covering the matters set
forth in Exhibit F; and
(10) such other documents and certificates as are required by
the terms of this Agreement and the Related Agreements (including
delivery of all governmental and third party consents required in
order for Covisint to execute or deliver this agreement and the
Related Agreements to which it is a party and to consummate the
transactions contemplated by this Agreement and such Related
Agreements) or as may be reasonably requested by Buyer.
3.6 Third Party Consents. To the extent that Covisint's rights under any
Contract or other Asset to be assigned to Buyer hereunder may not be assigned
without the consent of another person which has not been obtained, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful, and Covisint shall
use reasonable commercial efforts to obtain any such required consent as
promptly as possible. If any such consent shall not be obtained or if any
attempted assignment would be ineffective or would impair Buyer's rights under
the Contract or other Asset in question so that Buyer would not in effect
acquire the benefit of substantially all such rights, Covisint, to the maximum
extent permitted by law and the Contract or other Asset, shall, if Buyer so
requests, cooperate with Buyer in any reasonable arrangement designed to provide
such benefits thereunder to Buyer.
3.7 Additional Consideration. As additional consideration for the
Business and Assets, Buyer agrees to pay 50% of Covisint's liability under the
real property lease, dated November 25, 2002, relating to Covisint's offices at
00000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx, accruing on and after the Closing Date.
Liability subject to this Section 3.7 shall include (a) any amounts paid in
settlement of such lease, to the extent such settlement has received the prior
written approval of Buyer, and (b) related operating expenses. Covisint shall
invoice Buyer on a monthly basis for the additional consideration due under this
Section 3.7, for liability accrued by Covisint for the preceding month, and
shall include with such invoice information in reasonable detail supporting the
charges included in the invoice and the calculation of the amount invoiced.
Payment shall be made by Buyer within fifteen (15) days after receipt of each
such invoice; provided that if Buyer disagrees with the amount of the invoice,
Buyer shall be permitted access to Covisint's books and records for the purpose
of confirming the accuracy of the amount invoiced and payment shall not be due
until Buyer and Covisint have agreed on the amount to be paid by Buyer. In the
event the parties cannot agree upon the amount within 45 days after the invoice
is received by Buyer, the parties shall submit the determination of such amount
to a nationally recognized accounting firm (to be mutually agreed upon by the
parties) that does not perform any material services for Buyer or Covisint,
which determination shall be made within thirty (30) days after submission and
shall be final and binding on all parties. The fees, costs and
13
expenses incurred by such accounting firm in making such determination shall be
borne equally by the parties.
4. Representations and Warranties of Covisint. Covisint represents and
warrants to Buyer as follows as of the date of this Agreement and through and
including the Closing Date:
4.1 Organization; Power and Authority; Authorization; Due Execution; No
Conflicts.
(a) Covisint (1) is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and (2) has the limited liability company power and authority to (A) own,
operate and lease the Assets, (B) carry on the Business as it is now being
conducted, (C) enter into this Agreement and the Related Agreements to which it
is a party and, (D) consummate the transactions contemplated by this Agreement
and the Related Agreements to which it is a party, and (3) is duly qualified or
licensed and is in good standing to do business in each jurisdiction in which
the nature of the Business conducted by it has made its qualification or
licensing a legal requirement, except for those jurisdictions where the failure
to be so qualified would not have a material adverse effect on Covisint.
(b) This Agreement and each Related Agreement to which Covisint is
a party have been duly authorized by all necessary limited liability company
action of Covisint. Upon the execution and delivery of this Agreement and the
Related Agreements to which Covisint is a party, this Agreement and each such
Related Agreement will constitute the legal, valid and binding obligation of
Covisint, enforceable against Covisint, in accordance with their respective
terms, subject to judicial discretion regarding specific performance or other
equitable remedies, and except as may be limited by bankruptcy, reorganization,
insolvency, moratorium or other laws relating to or affecting the enforcement of
creditors' rights and remedies generally.
(c) Except as set forth in Schedule 4.1 to this Agreement, the
execution, delivery and performance by Covisint of this Agreement and the
Related Agreements to which Covisint is a party will not (1) constitute a breach
or violation of (A) Covisint's Certificate of Formation or Operating Agreement,
(B) any Law, or (C) any material Contracts or material agreement, right,
license, franchise, lease, indenture, deed of trust, mortgage, loan agreement or
other material instrument to which Covisint is a party or by which Covisint is
bound; (2) constitute a violation of any order, judgment or decree to which
Covisint is a party or by which Covisint's assets or properties are bound or
affected; (3) result in the acceleration of any material debt owed by Covisint;
(4) result in the creation of any lien, charge or encumbrance upon any of
Covisint's properties or assets; or (5) require any consent, approval,
authorization or permit of or from, or filing with or notification to, any
court, government, governmental authority or other regulatory or administrative
agency or commission, domestic or foreign (each, a "Governmental Entity").
(d) Set forth in Schedule 4.1 is a true and complete list of each
jurisdiction in which Covisint is qualified or licensed to do business.
(e) Set forth in Schedule 4.1 is a true and complete list of all
of the members of Covisint.
(f) Covisint has not elected to be taxed as a corporation pursuant
to Code Sections 7701 or Treasury Regulation Sections 301.7701-3.
14
4.2 Title. Except for the Assets listed on Schedule 2.1 that are owned
by Ford Motor Company, Covisint has good and marketable title to all of the
Assets owned by it and valid leasehold interests in, or other rights to use, all
Assets not owned by Covisint, free and clear of all security interests,
mortgages, liens, pledges, charges or encumbrances of any nature ("Liens"),
other than Permitted Liens. The Assets constitute all of the property and assets
now used for the conduct of the Business as presently conducted by Covisint.
There are no special assessments against any of the Assets by any Governmental
Entity.
4.3 Properties and Improvements. Schedule 4.3 to this Agreement sets
forth a true and complete list of all real property owned or leased by Covisint.
4.4 Other Assets of Covisint.
(a) The Assets are sufficient to conduct the Business as currently
conducted, subject only to ordinary wear and tear.
(b) Except as set forth in Schedule 2.1 and Schedule 4.4, all of
the Assets of Covisint are owned by Covisint and, except as set forth on
Schedule 4.4 to this Agreement, Covisint is not leasing or holding on
consignment, any equipment, furniture, fixtures or other personal property with
a current value in excess of $2,500 individually and $15,000 in the aggregate.
4.5 Claims; Litigation; Compliance with Laws; Approvals.
(a) Except as disclosed in Schedule 4.5 to this Agreement,
Covisint is not: (1) a party to any litigation, proceeding or administrative
investigation, and, to the knowledge of Covisint, none is threatened against or
by Covisint or (2) subject to any outstanding order, writ, injunction or decree
of any court, government or governmental authority or arbitration against or, to
the knowledge of Covisint, affecting it. To the knowledge of Covisint, there is
no litigation, proceeding or administrative investigation pending or threatened
that affects or is related to the Business.
(b) Except as disclosed in Schedule 4.5 to this Agreement,
Covisint is not in violation of, and Covisint's actions in the consummation of
the transactions contemplated by this Agreement do not violate any Law,
including any Law relating to Covisint's employment or employment practices or
environmental or occupational safety or health. The Business is presently being
conducted in compliance with all requirements of Law, including the filing with
any Governmental Entity or other third party of any statement, report,
information or form required by Law, and all requirements of any Governmental
Entities having jurisdiction over the business or activities of Covisint. Except
as set forth in Schedule 4.5, Covisint has not, since its formation, received a
notice of violation of, been threatened in writing with a charge of violating,
or, to the knowledge of Covisint, been under investigation with respect to a
possible violation of, any Law which has not been complied with, rescinded or
resolved.
(c) Covisint maintains all material licenses and permits and has
filed all registrations, reports and other documents required by local, state,
federal and foreign authorities and regulating bodies in connection with the
Business. All such licenses and permits will remain in full force and effect
(without imposition of any material adverse condition, restriction, limitation,
cost or penalty) immediately after the Closing Date notwithstanding the
transactions
15
contemplated by this Agreement. Covisint is in compliance with all such
licenses, permits and approvals, and there are no proceedings pending or, to the
knowledge of Covisint, threatened which may result in the limitation,
termination, cancellation or suspension, or any adverse modification of, any
such license, permit or approval. Schedule 4.5 to this Agreement contains a full
and complete list of all such licenses, permits and approvals.
4.6 Agreements; Contracts.
(a) Except as set forth on Schedule 4.6, all of the Contracts will
be effectively transferred to Buyer at the Closing.
(b) With respect to the Contracts other than the Responder
Contracts:
(1) neither Covisint, nor, to the knowledge of Covisint, the
other parties to such Contracts, are in material default nor has
such default been asserted by any party, and there has not occurred
any event which, with or without the passage of time or giving of
notice (or both), would constitute such a default;
(2) except as set forth on Schedule 4.6, each such Contract
will remain in full force and effect (without imposition of any
restriction, limitation, cost or penalty to Buyer) notwithstanding
the transactions contemplated by this Agreement;
(3) except as set forth on Schedule 4.6, Covisint has
performed all of its obligations required to be performed by
Covisint prior to the date of this Agreement and prior to the
Closing Date; and
(4) neither Covisint nor, to the knowledge of Covisint, the
third parties to such Contracts, has repudiated any provision of any
such Contract.
(c) To the knowledge of Covisint, less than 10% of the Responder
Contracts are in material default by Covisint or the other parties.
(d) Covisint has delivered to Buyer a true and complete copy of
each Contract (other than Responder Contracts) and a true and complete copy of
the form of Responder Contract, which are representative of those used by
Covisint.
4.7 Proprietary Rights.
(a) Covisint owns or is licensed for, and in any event possesses
sufficient and legally enforceable rights with respect to, all Proprietary
Rights that are used or exploited in, or that may be necessary to conduct the
Business as is presently conducted and as currently proposed to be conducted by
Covisint and Covisint owned or was licensed for, and in any event possessed
sufficient and legally enforceable rights with respect to, all Proprietary
Rights that were used or exploited in the Business when such Proprietary Rights
were used. Schedule 4.7 sets forth, for the Patents, Trademarks, and Copyrights
owned by Covisint, a complete and accurate list of all (1) patents and patent
applications, (2) trademark and service xxxx registrations and applications
therefor, (3) unregistered trademarks and service marks, (4) domain names, (5)
copyright registrations and applications therefor, (6) material unregistered
16
copyrights and (7) trade secrets claimed by Covisint, indicating for each, where
applicable, (i) the jurisdiction, (ii) the patent, registration, or application
number, (iii) the date issued, and (iv) the date filed. Schedule 4.7 also sets
forth a complete and accurate list of all license agreements granting any right
to use or practice any rights under any Proprietary Rights, whether Covisint is
the licensee or licensor thereunder, and any written consent to use, settlement
or other agreements relating to any Proprietary Rights to which Covisint is a
party or otherwise bound (collectively, the "License Agreements").
(b) Covisint has all right, title, and interest in and to the
Proprietary Rights owned by Covisint free and clear of any attachments, liens or
encumbrances and is listed in the records of the appropriate United States,
state or foreign agency as the sole owner of record for each patent,
registration, or application listed on Schedule 4.7.
(c) The Patents, Trademarks, and Copyrights (other than foreign
trademarks) and the Trade Secrets and Other Proprietary Rights owned by Covisint
and, to the best of Covisint's actual knowledge without inquiry, any Patents,
Trademarks, and Copyrights and Trade Secrets and Other Proprietary Rights
licensed, used or exploited by Covisint, are valid and subsisting, in full force
and effect, and have not been cancelled, expired, or abandoned. No claim has
been made, asserted, or threatened, or is pending against Covisint based upon,
challenging or seeking to deny or restrict the use or exploitation by Covisint
of any of the Proprietary Rights owned or licensed by Covisint. Other than ex
parte prosecution of patent, trademark, service xxxx or copyright applications,
there are no proceedings or actions pending before any court or government
agency (including the United States Patent and Trademark Office or similar
foreign government agencies) related to any of the Proprietary Rights owned by
Covisint. Except as set forth on Schedule 4.7, there are no actions that must be
taken within 180 days of the date of this Agreement, including the payment of
any registration, maintenance or renewal fees or the filing of any response to
an official action of a court or government agency (including the United States
Patent and Trademark Office) or the filing of any application for the purpose of
obtaining, maintaining, perfecting, preserving or renewing any of the United
States trademarks and patent application included among the Propriety Rights
owned by Covisint.
(d) Covisint has, or has caused to be, delivered to Buyer correct,
complete, and fully executed copies of all License Agreements identified in
Schedule 4.7 and any and all ancillary documents pertaining thereto (including,
without limitation, all amendments, consents and evidence of commencement dates
and expiration dates). With respect to each of the License Agreements, Covisint
represents and warrants that:
(1) the license agreement, together with any and all
ancillary documents pertaining thereto, is legal, valid, binding,
and enforceable and in full force and effect and represents the
entire agreement with respect to the subject matter of such license
agreement;
(2) subject to obtaining required consents, the license
agreement, together with any and all ancillary documents pertaining
thereto, will continue to be legal, valid, binding, and enforceable
and in full force and effect on terms identical to those currently
in effect upon consummation of the transactions contemplated by this
Agreement and the consummation of such transactions will not
constitute a breach or default under such license agreement or
otherwise give
17
any party to the license agreement other than Covisint a right to
terminate such license;
(3) Covisint has not received any notice of termination or
cancellation under such license agreement, nor any notice of a
breach or default under such license agreement which has not been
cured and Covisint has not itself sublicensed or granted any of the
licensed rights to another party in violation of the license
agreement; and,
(4) Neither Covisint nor to the best of Covisint's knowledge
any other party to such license is in breach or default in any
material respect and no event has occurred that, with notice or
lapse of time would constitute such a breach or default or permit
termination, modification, or acceleration under such license
agreement.
(e) The consummation of the transactions contemplated by this
Agreement will not result in the termination or impairment of any of the
Proprietary Rights owned by Covisint and will not require the consent of any
governmental authority in respect of such Proprietary Rights. Further all rights
of Covisint in each item of Proprietary Rights owned or licensed by Covisint are
transferable to Buyer as contemplated by this Agreement. As a result of the
transactions contemplated by this Agreement, upon the Closing Buyer shall own or
possess, or own or possess adequate and enforceable licenses, sublicenses, or
other rights to use and or exploit, without payment of any additional fee in
connection with the transfer thereof (other than to governmental authorities),
all the Proprietary Rights owned or licensed by Covisint.
(f) There are no settlements, forbearances to xxx, consents,
judgments, or orders or similar obligations which (1) restrict the Covisint's
rights to use any Proprietary Rights, (2) restrict Covisint's business in order
to accommodate a third party's Proprietary Rights or (3) permit third parties to
use any Proprietary Rights owned by Covisint. Covisint has not licensed or
sublicensed its rights in any Proprietary Rights other than pursuant to the
License Agreements and no royalties, honoraria or other fees are payable by
Covisint for the use of or right to use any Proprietary Rights except pursuant
to the License Agreements.
(g) To the extent indicated in Schedule 4.7, such Patents,
Trademarks, and Copyrights have been duly registered in, filed in, or issued by,
the offices indicated in Schedule 4.7. Except for the Proprietary Rights set
forth in Schedule 2.1 held by Ford Motor Company, in each case where a
registration or patent or application for registration or patent listed in
Schedule 4.7 is held by assignment, the assignment has been duly recorded with
the governmental office from which the original registration or patent issued or
before which the application for registration or patent is pending.
(h) To the best of Covisint's knowledge, no third party is
infringing, misappropriating, diluting, or violating any Proprietary Rights of
Covisint.
(i) (1) The products or services provided by Covisint in the
Business, the (2) the conduct of the Business by Covisint, and (3) the use or
exploitation of the Proprietary Rights do not infringe or misappropriate the
rights or property of any third party. No claim has been
18
made, asserted or threatened, or is pending against Covisint alleging that any
of (1), (2) or (3) conflict with or otherwise infringe or misappropriate the
rights or property of any third party.
(j) Schedule 4.7 lists all licenses or other agreements between
Covisint and any other Person wherein Covisint has agreed to, or assumed, any
obligation or duty to warrant, defend, indemnify or otherwise incur any
obligation or liability with respect to the infringement or misappropriation by
the Person of the Proprietary Rights of any other Person.
(k) All disclosures of confidential Proprietary Rights to third
parties have been made pursuant to non-disclosure agreements that protect the
confidentiality of such Proprietary Rights and restrict the use of such
Proprietary Rights to an identified purpose. Except as set forth in Schedule
4.7, all former and current employees of the Covisint have executed
non-disclosure agreements that protect the confidentiality of such Proprietary
Rights and restrict the use of such Proprietary Rights to an identified purpose.
(l) With respect to each trade secret listed on Schedule 4.7, the
documentation relating to such trade secret is current, accurate and sufficient
in detail and content to identify and explain it and to allow its full and
proper use without reliance on the knowledge or memory of any individual.
Covisint has taken all reasonable precautions to protect the secrecy,
confidentiality and value of all trade secrets (including the enforcement by
Covisint of a policy requiring each employee or contractor to execute
proprietary information and confidentiality agreements substantially in
Covisint's standard form, and all current and former employees and contractors
of Covisint have executed such an agreement). The trade secrets are not part of
the public knowledge or literature and, to Covisint's knowledge, have not been
used, divulged or appropriate either for the benefit of any Person (other than
Covisint) or to the detriment of the Covisint.
(m) The software products currently licensed by Covisint to
customers are in substantial conformance with all applicable contractual
commitments, express and implied warranties, specifications and the current
documentation, whether electronically embedded, written or otherwise, shipped
with such software products, except for errors and bugs of the type, scope and
nature generally acceptable in the software industry for similar types of
software products. Covisint has taken all actions customary in the software
industry to document the software products and their operation, such that the
software, including its source code and documentation, may be understood,
modified, and maintained in an efficient manner by reasonably competent
programmers.
(n) Schedule 4.7 lists all software or other material that is
distributed as "free software," "open source software" or under a similar
licensing or distribution model (including but not limited to the GNU General
Public License, GNU Lesser General Public License, Sun Community Source License
(SCSL) or the Sun Industry Standards License (SISL)) ("Open Source Materials")
that is used by Covisint in any way and describes the manner in which the Open
Source Materials were used and, if appropriate, modified and distributed by the
Covisint. Except as set forth in Schedule 4.7, Covisint has not (1) incorporated
Open Source Materials into, or combined Open Source Materials with, Covisint's
Software or products, (b) distributed Open Source Materials in conjunction with
Covisint's Software or products, or (c) used Open Source Materials that create,
or purport to create, obligations for Covisint with respect to Covisint's
Proprietary Rights or products or grant, or purport to grant, to any third
party, any
19
rights or immunities under Covisint's Proprietary Rights (including using any
Open Source Materials that require, as a condition of use, modification or
distribution of such Open Source Materials that other software incorporated
into, derived from or distributed with such Open Source Materials be (i)
disclosed or distributed in source code form, (ii) be licensed for the purpose
of making derivative works, or (iii) be redistributable at no charge). No
Proprietary Rights or products of the Company are subject to the terms of
license of any such Open Source Materials.
4.8 Employees; Employee Benefits.
(a) Attached as Schedule 4.8 are the respective dates of hire,
positions and base salary of the employees of Covisint identified by Buyer
pursuant to Section 6.11(a). Except as set forth on Schedule 4.8, none of such
employees has any agreement with Covisint. With respect to those employees
listed on Schedule 4.8, Covisint has provided Buyer with complete copies of all
such agreements. Covisint does not have any collective bargaining or union
contracts or agreements. Except as set forth on Schedule 4.8, there have not
been any unfair labor practice complaints, material labor difficulties or work
stoppages, or threats thereof, affecting any of the employees or activities of
Covisint. To the knowledge of Covisint, there is no union campaign presently
being conducted to solicit employees to authorize a union to request a national
labor relations board certification election with respect to the employees of
Covisint. Except as set forth in Schedule 4.8, any employee of Covisint listed
on Schedule 4.8 may be terminated at will, with or without cause, without any
severance obligation.
(b) Covisint has deducted and remitted to the relevant
Governmental Entities all income taxes, unemployment insurance contributions and
other Taxes and amounts which it is required to deduct and remit to such
Governmental Entities, and Covisint has made all required filings in respect
thereof.
(c) Except as set forth on Schedule 4.8 or as otherwise required
by Law, the consummation of the transactions contemplated by this Agreement will
not in and of itself (1) entitle any current or former employee of Covisint
identified by Buyer pursuant Section 6.11(a) to severance pay, unemployment
compensation or any other similar payment, or (2) accelerate the time of payment
or vesting or increase the amount of compensation due to any such employee or
former employee.
(d) [reserved]
(e) Except as set forth on Schedule 4.8, to the knowledge of
Covisint, none of Covisint, any officer of Covisint or any of the Benefit Plans,
or any trusts created thereunder, or any trustee or administrator thereof, has
engaged in a "prohibited transaction" (as defined in Code Section 4975 or ERISA
Section 406) or any other breach of fiduciary responsibility that would subject
Covisint or any officer of Covisint to a material Tax or penalty on prohibited
transactions or to any liability under ERISA.
(f) Except as disclosed on Schedule 4.8, no such Benefit Plan that
is an employee welfare benefit plan (as defined in ERISA Section 3(1)) provides
benefits to current or future retirees or current or future former employees and
their dependents, except as required by COBRA, or applicable state continuation
coverage law.
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(g) Except as would not impose a material liability on Covisint,
or except as set forth on Schedule 4.8, each Benefit Plan and all related trust
or other agreements conform in form and operation to, and comply with, all
applicable Laws and regulations, including, without limitation, ERISA and the
Code, and all reports or information relating to each such Benefit Plan required
to be filed with any Governmental Entity or disclosed to participants has been
timely filed and disclosed.
(h) Except as disclosed in Schedule 4.8, Covisint has not
announced a plan to create, nor does it have any legally binding commitment to
create, any new arrangement which would, when established, constitute an
employee benefit plan, as defined in Section 3(3) of ERISA.
(i) All insurance premiums or contributions required, with respect
to any Benefit Plan, have been paid or accrued in full and there exist no
funding deficiencies within the meaning of Code Section 412 with respect to any
Benefit Plan. Except as disclosed on Schedule 4.8, there are no known material
retrospective adjustments provided for under any insurance contracts maintained
pursuant to any Benefit Plan with regard to policy years or other periods ending
on or before the Closing Date. No Pension Benefit Guaranty Corporation premiums
are required with respect to any Benefit Plan.
(j) Except as disclosed on Schedule 4.8, no Benefit Plan, or the
Tax deduction of any contributions thereto by Covisint, is, to the knowledge of
Covisint, the subject of an audit by any Governmental Entity, and no litigation
or asserted claims exist against Covisint or any Benefit Plan or fiduciary with
respect thereto, other than such benefit claims as are made in the normal
operation of a Benefit Plan.
4.9 Insurance. Covisint's insurance policies (i) are sufficient for
compliance with all requirements of Law; (ii) are valid, outstanding and
enforceable policies; and (iii) will remain in full force and effect through the
Closing Date.
4.10 Financial Statements. Covisint has delivered to Buyer (i) complete
copies of its audited financial statements for the years ended December 31,
2002, 2001 and 2000 with the corresponding accountants' reports, including
balance sheets and accompanying statements of profit and loss and related
schedules of cost and expense for the covered periods, as applicable, (ii) its
unaudited income statements for the year ended December 31, 2003; and (iii) its
unaudited balance sheet at December 31, 2003. All of the foregoing are referred
to as the "Financial Statements." Each of the Financial Statements presents
fairly in all material respects the financial condition, and results of
operations of Covisint as of such dates and for the periods then ended (except,
with respect to the unaudited income statement for the year ended December 31,
2003 and the unaudited balance sheet as of such date, for normal year-end
adjustments and lack of footnotes), and all of such statements were prepared in
accordance with GAAP (except, with respect to the unaudited income statement for
the year ended December 31, 2003 and the unaudited balance sheet as of such
date, for normal year-end adjustments and lack of footnotes). Additionally, as
of the date of the most recent Financial Statement submitted to Buyer and as of
the Closing Date, Covisint has no debt for borrowed money, whether long-term or
short-term, that would be required under GAAP to be reflected on such Financial
Statement which is not so reflected.
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4.11 Undisclosed Liabilities. Covisint has no material Liability except
for such Liabilities that (i) are reflected or reserved for on the most recent
Financial Statements; (ii) are disclosed in Schedule 4.11 or the other Schedules
to this Agreement; (iii) are not required to be set forth in the Schedules to
this Agreement or (iv) are commitments under Contracts.
4.12 Taxes.
(a) Covisint has timely filed (or has caused, or will cause, to be
timely filed) on its behalf (either separately or as a member of a consolidated,
combined, unitary or similar group of companies) all Tax Returns required to be
filed by it with any Tax Authority, taking into account any valid and proper
extension of time to file granted to or obtained on behalf of Covisint and all
such Tax Returns (i) are true, correct and complete in all respects at the time
of filing, (ii) correctly reflect the Liabilities of Covisint for Taxes for the
periods, properties or events covered thereby, and (iii) were prepared in
accordance with applicable laws. All Taxes (whether or not shown on such Tax
Returns) owed by Covisint through the Closing have been timely paid in full. No
unresolved deficiency for any amount of Taxes has been asserted in writing or,
to the knowledge of Covisint, has been threatened or is likely to be assessed by
a Tax Authority against Covisint. No claim has ever been made in writing by a
Tax Authority in a jurisdiction where Covisint does not file Tax Returns that
Covisint is or may be subject to taxation by that jurisdiction. Except as set
forth on Schedule 4.12, Covisint is not currently the beneficiary of any
extension of time within which to file any Tax Return. There are no Liens or
security interests on any of the assets of Covisint that arose in connection
with any failure (or alleged failure) to pay Taxes.
(b) Covisint has accrued, adequately reserved and shown on its
Financial Statements as a liability in accordance with GAAP all Taxes of
Covisint for all taxable periods (or portions thereof) which end on or before
the date of such Financial Statements. Moreover, Covisint will accrue,
adequately reserve and show as a liability in accordance with GAAP all Taxes of
Covisint for all taxable periods (or portions thereof) which end on or before
the Closing Date, including all Taxes attributable to the transaction
contemplated by this Agreement, on all financial statements for such periods.
(c) Covisint has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party, and has
otherwise complied with applicable laws relating thereto.
(d) Except as set forth in Schedule 4.12, there is no audit or
other dispute, examination, claim or other proceeding concerning any Taxes or
Tax Return of Covisint either made or raised by, or involving, any Tax
Authority, nor, to the knowledge of Covisint, is there any threat or expectation
thereof. Schedule 4.12 lists all federal, state, local, and foreign income and
other Tax Returns filed by Covisint for taxable periods ended on or after
December 31, 2001 that have been audited by a Tax Authority, and indicates those
Tax Returns that currently are the subject of audit by a Tax Authority. Covisint
has delivered, or will make available prior to the Closing Date, to Buyer true,
correct and complete copies of all Tax Returns filed by Covisint since its
formation. Covisint has delivered, or will make available prior to the Closing
Date, to Buyer all examination reports, and statements of deficiencies assessed
against or agreed to by its members (with respect to Covisint) and/or Covisint
since its formation.
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(e) Except as set forth on Schedule 4.12, Covisint has not waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(f) Except as set forth on Schedule 4.12, Covisint has disclosed
on its Tax Returns all positions taken therein, the nondisclosure of which could
give rise to a substantial understatement penalty within the meaning of Code
Sections 6662 or any similar provision of state, local or foreign law.
(g) None of the Assumed Liabilities is an obligation to make a
payment that will not be deductible pursuant to Code Sections 280G.
(h) There are no Rulings from, or requests for Rulings with, any
Tax Authority addressed to or involving Covisint.
(i) Covisint has complied with all Tax-related record keeping
requirements.
4.13 Absence of Changes or Events. Except as disclosed on Schedule 4.13
to this Agreement or as disclosed in the Financial Statements, Covisint has
operated the Business only in the ordinary course and, since November 30, 2003:
(a) Covisint has not made any change in its Certificate of
Formation or Operating Agreement;
(b) Covisint has not borrowed any amount or incurred, assumed,
become subject to or guaranteed any Liability, whether absolute or contingent,
other than in the ordinary course of business.
(c) Covisint has not made any material changes in its practices or
methods of accounting including, but not limited to, for Tax purposes.
(d) Covisint has not made any change in or introduced any pension,
retirement, profit sharing or bonus arrangement or other employee welfare or
benefit arrangement or other Benefit Plan.
(e) Other than the continuing deterioration of Covisint's
financial condition, Covisint has not suffered any material adverse change in
its operations, operating results, properties, assets, liabilities or condition
(financial or otherwise) of the Business or the Assets.
(f) Covisint has not suffered any event or condition of any
character which, either individually or in the aggregate, is reasonably likely
to materially adversely affect the Business or the Assets.
(g) Covisint has not suffered any damage, destruction or Loss,
whether covered by insurance or not, which is reasonably likely to materially
adversely affect its business, operations, operating results, properties,
assets, liabilities or condition (financial or otherwise).
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(h) Covisint has used its reasonable efforts to preserve its
business organizations and to retain the services of its officers and key
employees as they relate to the Business.
(i) Covisint has not increased any salary, wages, compensation or
fringe or other benefits payable or to become payable to its officers, directors
or employees, except for such increases as are in the ordinary course of
business consistent with past practice or required by applicable minimum wage
laws.
(j) Covisint has exercised its commercially reasonable efforts to
maintain the good-will of suppliers, customers and employees of, and others
having material business relationships with, Covisint relating to the Business.
(k) Covisint has not (other than the ordinary course of business)
made any Tax election nor has it settled or compromised any income or other Tax
liability or refund.
(l) Covisint has not paid, discharged or satisfied any claim or
Liability, whether absolute, accrued, asserted or unasserted, contingent or
otherwise, other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practices or in accordance with their
terms, of liabilities reflected or reserved against in the Financial Statements
and trade payables incurred since the date of the most recent Financial
Statement.
(m) Covisint has not, except in the ordinary course of business,
entered into, amended, modified or terminated any material agreement, commitment
or transaction.
(n) Covisint has not made any provision for material price
discounts or other special considerations in respect of its goods or services
not in the ordinary course of business consistent with past practices.
(o) Covisint has not sold, transferred, leased, mortgaged,
pledged, subjected to any Lien or otherwise disposed of any of its properties or
assets, real, personal or mixed, tangible or intangible, except in the ordinary
course of business consistent with past practices.
(p) Covisint has not transferred, leased, mortgaged, pledged,
subjected to any Lien or otherwise disposed of any Assets other than in the
ordinary course of business.
(q) Covisint has not entered into any agreement or understanding
to do any of the foregoing.
4.14 Environmental and Occupational Matters.
(a) Covisint has not generated, used, stored, treated,
transferred, transported, processed, manufactured, refined, handled, produced or
disposed of Hazardous Materials at or affecting such property in any manner
which violates any Environmental Law or which would give rise to Liability under
Environmental Law. Covisint has not (1) caused any property to be used to
generate, manufacture, refine, transport, treat, dispose of, transfer, produce
or process Hazardous Materials in violation of any Environmental Laws or in a
manner which gives rise to an investigatory, remedial or other duty or Liability
under any Environmental Laws, or (2)
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caused any Release or threatened Release of Hazardous Materials at, from or
affecting any property, in violation of Environmental Laws or which gives rise
to any investigatory, remedial or other duty under Environmental Laws.
(b) Covisint has never received any notice, claim or allegation of
any violation of, Liability under or of any duty to investigate or remediate any
condition under, any Environmental Law at any property. Covisint has at all
times complied and is currently in compliance with all Environmental Laws.
4.15 Subsidiaries. Except as set forth on Schedule 4.15, Covisint does
not have, nor has it had any equity interest, or right to acquire any equity
interest, whether direct or indirect, in any corporation, joint venture,
partnership, limited liability company, firm or other entity.
4.16 [Intentionally Omitted.]
4.17 [Intentionally Omitted.]
4.18 Guarantees. Except as disclosed on Schedule 4.18, none of the
Assumed Liabilities is guaranteed by any third parties.
4.19 Related Parties. Schedule 4.19 is a true and complete list and brief
description of all contracts and agreements or other transactions entered into
or agreed to within the past three years (including, without limitation, all
oral contracts and outstanding bids or offers for the foregoing) either (i)
involving amounts in excess of $50,000, or (ii) currently effective, to which
Covisint, on the one hand, is or was a party, with respect to which any officer
or director of Covisint, or any person related to any of the foregoing by blood
or marriage, on the other hand, is or was a party, other than arrangements
related to the employment of such person that are otherwise disclosed pursuant
to this Agreement. True and complete copies of all such contracts and all
documentation relating to such transactions, including, without limitation, all
amendments thereto and modifications thereof, have been delivered to Buyer prior
to the date of this Agreement. No member, director, officer or employee of
Covisint is indebted to Covisint except pursuant to a Contract.
4.20 [Intentionally Omitted.]
4.21 Brokers. Except as set forth on Schedule 4.21:
(a) Covisint (1) has not dealt with any broker or finder in
connection with this transaction; (2) has not caused or created any liability to
any broker or finder in connection with this transaction; or (3) is not aware of
any claim from any third party that it is entitled to brokerage, finders or
other similar fees in connection with this transaction.
(b) Covisint is not aware of any broker or finder which was
instrumental or had any part in bringing about this transaction.
4.22 Disclosure. To Covisint's knowledge, the statements, representations
and warranties made by Covisint in this Agreement, and the Schedules,
attachments and Exhibits to this Agreement, do not contain any untrue statement
of any material fact or omit a material fact
25
necessary to make the statements contained in this Agreement, or such
Schedules, attachments or Exhibits, in light of the circumstances in which they
were made, not misleading.
5. Buyer's Representations and Warranties. Buyer represents and
warrants to Covisint as follows, as of the date of this Agreement:
5.1 Organization; Power and Authority. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Michigan, and has the corporate power and authority to enter into this
Agreement and the Related Agreements and to consummate the transactions
contemplated by this Agreement and the Related Agreements.
5.2 Authorization; Due Execution; No Conflicts.
(a) This Agreement and each Related Agreement has been duly
authorized by all necessary corporate action on the part of Buyer. Upon the
execution and delivery by Buyer of this Agreement and the Related Agreements,
this Agreement and the Related Agreements will each constitute the legal, valid
and binding obligation of Buyer, enforceable against Buyer in accordance with
their respective terms, subject to judicial discretion regarding specific
performance or other equitable remedies, and except as may be limited by
bankruptcy, reorganization, insolvency, moratorium or other laws relating to or
affecting the enforcement of creditors' rights and remedies generally.
(b) Buyer's execution, delivery and performance of this Agreement
and the Related Agreements will not (1) constitute a breach or violation of (A)
Buyer's Articles of Incorporation or Bylaws (B) any Law or (C) any material
agreement, right, license, franchise, lease, indenture, deed of trust, mortgage,
loan agreement or other material instrument to which Buyer is a party or by
which Buyer is bound; or (2) constitute a violation of any order, judgment or
decree to which Buyer is a party or by which any of Buyer's assets are bound or
affected; (3) require any consent, approval, authorization or permit of or from,
or filing with or notification to, any Governmental Entity, except for
anti-trust notice filings.
5.3 Brokers.
(a) Buyer (1) has not dealt with any broker or finder in
connection with this transaction; (2) has not caused or created any liability to
any broker or finder in connection with this transaction; and (3) is not aware
of any claim from any third party that it is entitled to brokerage, finders or
other similar fees in connection with this transaction.
(b) Buyer is not aware of any broker or finder which was
instrumental or had any part in bringing about this transaction.
5.4 No Knowledge. Buyer has no actual knowledge of a breach of the
representations and warranties in this Agreement by Covisint.
6. Covenants.
6.1 Conduct Through the Closing Date. From and after the date of this
Agreement and through the Closing Date, Covisint will (except as otherwise
consented to in writing by Buyer):
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(a) Operate the Business in the ordinary course as historically
conducted, including payment of all trade payables and other liabilities that
constitute Assumed Liabilities pursuant to the terms of such payables without
extending the due date of such payables or liabilities, except to the extent
consistent with past practices.
(b) Not enter into any transaction, take any action, or fail to
take any action, which would result in, or could reasonably be expected to
result in, any of the representations, warranties or agreements of Covisint in
this Agreement or the Related Agreements or the Exhibits or Schedules to this
Agreement and the Related Agreements or in connection with the consummation of
the transactions contemplated by this Agreement or the Related Agreements, to
not be true and complete immediately after the occurrence of such transaction in
a manner which is adverse to the Business. Without limiting the obligations of
Covisint under this Section 6.1(b), Covisint will use commercially reasonable
efforts to: (1) maintain its assets and properties in good operating condition,
subject to ordinary wear and tear; (2) maintain its present insurance in force;
and (3) comply in all material respects with the provisions of all Contracts and
Laws, and (4) not change the compensation of any employee listed on Schedule 4.8
other than in the ordinary course; provided, however, that if any such change
involves an employee whose compensation is (or will be as a result of such
change) in excess of $100,000 per year, then such change will not be made
without the prior written consent of Buyer, which consent will not be
unreasonably withheld.
(c) Not enter into any agreements, contracts, purchases or sales
relating to the Business or the Assets other than in the ordinary course of its
business without the written consent of Buyer, including any agreements that
would dispose of or encumber any of the Assets.
(d) Use commercially reasonable efforts to preserve its present
business organization and goodwill relating to the Business and the Assets,
including the present business relationships and goodwill with customers,
suppliers and others having material business dealings with Covisint in
connection with the Business.
(e) Not (other than in the ordinary course of business): (i) make
any Tax election, (ii) file, amend or take any position on any Tax Return, (iii)
settle or compromise any Tax liability, (iv) agree to an extension of a statute
of limitation with respect to any amount of Tax (other than extensions for
filing Tax Returns) or (v) take any action, omit to take any action or enter
into any transaction that would have the effect of increasing the Tax Liability
or reducing any Tax Benefit or asset of Buyer.
(f) Except as provided by Section 6.1(e) above, prepare and file
on or before the due date therefor all Tax Returns required to be filed by
Covisint (except for any Tax Return for which an extension has been properly and
timely granted) on or before the Closing Date, and pay all Taxes (including
estimated Taxes) due on such Tax Returns (or due with respect to Tax Returns for
which an extension has been properly and timely granted) or which are otherwise
required to be paid at any time prior to or during such period.
(g) To the extent Covisint receives written notice of the
commencement or scheduling of any Tax audit, of the assessment or collection of
any Tax, or of the commencement or scheduling of any other administrative or
judicial proceeding with respect to the
27
determination, assessment or collection of any Tax for Covisint, provide prompt
written notice to Buyer of such matter, setting forth information (to the extent
known) describing any asserted or potential Tax liability in reasonable detail
and including copies of any written notice or other documentation received from
the applicable Tax Authority with respect to such matter.
6.2 Approvals and Consents. Covisint will use commercially reasonable
efforts to obtain, in writing, all third party approvals and consents (other
than any governmental approvals, which are covered under Section 6.7 of this
Agreement, and other than consents to the assignment of Contracts, which to the
extent required, are covered in this Section 6.2 below) required in order to
authorize and approve this Agreement and the Related Agreements and to
consummate the transactions contemplated by this Agreement. Covisint will use
commercially reasonable efforts to obtain, in writing, all consents required for
the assignment of the Contracts.
6.3 Advice of Changes. Between the date of this Agreement and the
Closing Date, Covisint will promptly notify Buyer in writing of any fact which,
if existing or known at the date of this Agreement, would have been required to
be set forth in this Agreement or disclosed pursuant to this Agreement or a
Related Agreement or which would affect or change any of the information set
forth in the Exhibits or Schedules of this Agreement or any Related Agreement.
6.4 Notice of Litigation. Buyer, on the one hand, and Covisint, on the
other hand, will promptly notify the other in writing if, between the date of
this Agreement and the Closing Date, inclusive, it (or they) receives any
notice, or otherwise becomes aware, of any action or proceeding instituted or
threatened before any court or governmental agency by any third party to
restrain or prohibit, or obtain substantial damages in respect of, this
Agreement or any Related Agreement or the consummation of the transactions
contemplated by this Agreement or the Related Agreements.
6.5 Access to Properties and Records; Inspection. From the date of this
Agreement through the Closing Date, Buyer and its counsel, accountants and other
representatives will, upon written notice and so as not to disrupt Covisint's
operation of its business, be given reasonable access during normal business
hours to all of the properties, personnel, financial and operating data, books,
tax returns, contracts, commitments and records of Covisint, including such
access as is needed to conduct a physical inspection of the properties of
Covisint with respect to the Southfield, Michigan property in connection with
the matters to be covered in the transition services agreement between Buyer and
Covisint.
6.6 Supplemental Information and Documents. If at any time on or prior
to the Closing Date, Covisint learns or becomes aware of fact, circumstance,
situation or development that causes any of the representations or warranties
set forth in Article 4 of this Agreement to be or become false, Covisint will
promptly deliver to Buyer on or prior to the Closing Date written amendments to
the Schedules disclosing such fact, circumstance, situation or development. Upon
receipt of any one or more of such proposed amendments, Buyer may, in its sole
discretion at any time on or prior to the Closing Date, either (i) without
liability, withdraw from the transactions contemplated under this Agreement if
any fact, circumstance, situation or development set forth in such amendment
constitutes a material and adverse change to the Business or Assets, whereupon
this Agreement will automatically terminate without liability of any party, or
(ii) complete the Closing, with the aforesaid Schedule as amended, whether or
not such fact, circumstance, situation or development constitutes a material
change to such Schedule,
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whereupon this Agreement will be deemed to be (x) properly amended thereby and
(y) not breached by any such fact, circumstance, situation or development;
provided, however, that if such fact, circumstance, situation or development was
within Covisint's reasonable control and occurred after the date of this
Agreement, and Buyer elects to close the transactions contemplated by this
Agreement, then Buyer will be entitled to seek indemnification pursuant to
Article 9 of this Agreement with respect to such fact, circumstance, situation
or development, notwithstanding the preceding clause (y) of this Section 6.6.
Nothing in this Section 6.6 will relieve Covisint of liability for the breach of
any representation or warranty discovered after the Closing Date resulting from
any fact, circumstance, situation or development that arose prior to the date of
this Agreement, and Covisint will promptly notify Buyer of any such fact,
circumstance, situation or development when Covisint learns thereof.
6.7 Filings. The parties will prepare and make any necessary
notifications or filings under any federal, state, local, foreign or other laws,
rules and regulations which may be required in connection with this Agreement
and all of the transactions contemplated by this Agreement, as soon as possible,
including any antitrust law-related notifications or filings in foreign
countries. The parties will also provide all information necessary or desirable
for making (or responding to any requests for further information following) any
notification or filing.
6.8 Non-Disclosure Agreement. Covisint and Buyer agree that each party's
non-disclosure obligations contained in any non-disclosure agreement signed by
Covisint and Buyer will remain in full force and effect in accordance with the
terms of such agreement.
6.9 Work in Progress. From and after the Closing, Buyer will, in the
ordinary course of business, invoice customers under any of the Contracts who
are licensing, sublicensing or otherwise using any Proprietary Rights
(collectively, "Customers") which were not invoiced prior to the Closing. From
and after the Closing, Covisint will refer to Buyer all requests, communications
and inquiries of any Customers relating to the conduct of the Business after the
Closing. Covisint will cooperate with Buyer, and take such actions as Buyer
reasonably requests and to ensure that Customers send or deliver their payments
relating to the conduct of the Business after the Closing directly to Buyer and
to ensure that payments from or on behalf of Customers which are improperly sent
or delivered to Covisint are not commingled with Covisint's assets. Each party
(the "Recipient") will promptly remit to the other party (the "Entitled Party")
all amounts paid to the Recipient but to which the Entitled Party has the right,
including insurance proceeds. To the extent appropriate to accomplish the
foregoing, the Recipient will endorse all checks and other instruments in favor
of the Entitled Party. The Recipient will provide the Entitled Party with such
information as is necessary or reasonably requested to determine the amounts to
which the Entitled Party is entitled. Covisint will not take any action that
could interfere with Buyer's relationship with any of the Customers.
6.10 Change and Use of the Covisint Name. On or within five (5) days
after the Closing Date, Covisint shall take or cause to be taken such action as
may be required to change the company name of Covisint and the corporate name of
Covisint Inc. to a name that is not the same as, or confusingly similar to,
Covisint's current name or the other names or marks of Covisint transferred to
Buyer hereunder, and promptly thereafter Covisint shall deliver to Buyer
evidence that all necessary filings in the jurisdictions in which Covisint and
Covisint Inc. are licensed or qualified to do business to effect such name
change have been made.
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6.11 Employee Matters and Noncompetition.
(a) Buyer intends to offer employment to the Covisint employees
listed on Schedule 4.8, but shall have no obligation to hire any other employees
of Covisint; provided however, that Buyer shall be free to negotiate with and
hire any of such other employees (including without limitation persons on
approved leaves of absence). Covisint shall, and shall cause its members to,
cooperate with Buyer and encourage its employees to accept employment with
Buyer. Any Covisint employee that accepts employment with Buyer ("Active
Employee") shall be eligible to participate in Buyer's employee benefit and
fringe benefit plans, programs, policies or arrangements ("Buyer's Welfare
Plans") on such terms and conditions set forth in such plans; provided, however,
Buyer shall treat service by Active Employees with Covisint in the same manner
as service with Buyer for purposes of eligibility to participate in the Buyer
Welfare Plans, to the extent permitted under such Plans. Notwithstanding the
foregoing, Buyer will not be required to assume any employment contracts or
Benefit Plans.
(b) During the two (2) year period following the Closing Date,
Covisint shall not, and shall not permit any Affiliate to, directly or
indirectly:
(1) as an owner, member, general partner, controlling
shareholder of a privately-held corporation or shareholder to the
extent of five percent (5%) or more of the outstanding shares of a
publicly-held corporation, engage or participate in or assist others
in engaging or participating in the Business anywhere in the world;
(2) solicit, induce, or influence any customer, known
potential customer, supplier, lender, lessor or any other person
that has a business relationship at any time with Buyer, in each
case to the extent related to the Business, to discontinue, modify,
or reduce the extent of such relationship with Buyer; or
(3) recruit, solicit or otherwise induce or influence any
employee or consultant of Buyer, any material portion of whose
duties involve the Business, or any person who served as such at any
time during the six (6) months prior to the time of determination,
any material portion of whose duties involved the Business, to
discontinue such employment or consultant relationship with Buyer,
or employ or seek to employ, or cause or assist any person that
competes with Buyer in the Business, to employ or seek to employ any
employee or consultant of Buyer any material portion of whose duties
involve the Business.
6.12 Maintenance of Books and Records. Each of Buyer and Covisint shall
preserve or cause to be preserved until the sixth anniversary of the Closing
Date all records (including Tax records) possessed or to be possessed by such
party relating to any of the Assets or Assumed Liabilities prior to the Closing
Date. After the Closing Date, where there is a legitimate purpose (which shall
be deemed to include Tax filings of either party), such party shall provide the
other party with access, upon prior written reasonable request specifying the
need therefor, during regular business hours, to (a) the officers and employees
of such party and (b) the books of account and records of such party, but, in
each case, only to the extent relating to the Assets or Assumed Liabilities
prior to the Closing Date, and the other party and its representatives shall
30
have the right to make copies of such books and records; provided, however, that
the foregoing right of access shall not be exercisable in such a manner as to
interfere unreasonably with the normal operations and business of such party;
and further provided that, as to so much of such information as constitutes
trade secrets or confidential business information of such party, the requesting
party and its officers, directors and representatives will use due care to not
disclose such information except (i) as required by law, (ii) with the prior
written consent of such party, which consent shall not be unreasonably withheld,
or (iii) where such information becomes available to the public generally, or
becomes generally known to competitors of such party, through sources other than
the requesting party, its Affiliates or its officers, directors or
representatives. Notwithstanding anything contained in this Section to the
contrary, such records may nevertheless be destroyed by a party if such party
sends to the other parties written notice of its intent to destroy records,
specifying with particularity the contents of the records to be destroyed. Such
records may then be destroyed after the 30th day after such notice is given
unless another party objects to the destruction, in which case the party seeking
to destroy the records shall deliver such records to the objecting party.
6.13 Exclusivity. Covisint grants to Buyer the exclusive right to acquire
the Business and the Assets unless and until this Agreement is terminated as
provided in Section 8.2. Neither Covisint, nor any of its directors, officers,
employees, members, Affiliates or representatives shall in any way, either
directly or indirectly, (i) solicit, entertain, initiate or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any equity interest or the Assets or Business of Covisint, including any
transaction structured as a merger, consolidation or share exchange (an
"Alternative Transaction") or (ii) participate in any discussions or
negotiations (and shall cease any ongoing discussions) regarding furnishing any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. Covisint shall notify Buyer immediately if any Person makes any
proposal or offer with respect to any of the foregoing.
6.14 Management Letters. Covisint will provide Buyer, prior to the
Closing Date, with true and complete copies of all "management letters" received
by Covisint in connection with any prior audit within the last three years.
6.15 Commissions. After the Closing, Buyer agrees to reimburse Covisint
for any commissions earned and paid, following approval by Covisint's chief
executive officer or chief financial officer, under Covisint's Sales
Compensation Plan for sales booked by Covisint prior to the Closing Date to the
extent Buyer will receive revenue after the Closing Date. Payment shall be made
by Buyer within fifteen (15) days after receipt of each such invoice; provided
that if Buyer disagrees with the amount of the invoice, Buyer shall be permitted
access to Covisint's books and records for the purpose of confirming the
accuracy of the amount invoiced and payment shall not be due until Buyer and
Covisint have agreed on the amount to be paid by Buyer. In the event the parties
cannot agree upon the amount within 45 days after the invoice is received by
Buyer, the parties shall submit the determination of such amount to a nationally
recognized accounting firm (to be mutually agreed upon by the parties) that does
not perform any material services for Buyer or Covisint, which determination
shall be made within thirty (30) days after submission and shall be final and
binding on all parties. The fees, costs and expenses incurred by such accounting
firm in making such determination shall be borne equally by the parties.
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7. Conditions Precedent to the Parties' Obligations to Close.
7.1 Conditions Precedent of Buyer. Buyer's obligations under this
Agreement are subject to the satisfaction at or before the Closing Date of each
of the following conditions (the fulfillment of any of which may be waived in
writing by Buyer):
(a) All terms of this Agreement and the Related Agreements to be
complied with or performed by Covisint prior to or on the Closing Date will have
been complied with and performed by Covisint in all material respects, including
Covisint's timely taking of all actions and delivery of all documents required
to be taken and delivered by them under this Agreement and the Related
Agreements.
(b) The representations and warranties of Covisint contained in
this Agreement will be true and correct at and as of the Closing Date as if made
at and as of such time, with the same force and effect as if made at and as of
the Closing Date, (1) subject to Section 6.6, (2) except for those
representations and warranties which address matters only as of a particular
date which were true and correct as of such date and (3) except where the
failure to be true and correct would not, in the aggregate, have a material
adverse effect on the Business or the Assets; provided, however, that, subject
to the provisions of Section 6.6, Buyer will be entitled to seek indemnification
as provided in Article 9 of this Agreement.
(c) There will not have been any material adverse change in the
Business or the Assets.
(d) All courts of law, Governmental Entities and other third
parties, the consent, authorization or approval of which is necessary under any
applicable law, rule, order or regulation or under any contract, commitment or
other agreement of Covisint, for the consummation of the transactions
contemplated by this Agreement, will have consented to, authorized, permitted or
approved such transactions, except where the failure to obtain such consent,
authorization or approval will not have a material adverse effect on the
Business or the Assets, and any applicable waiting periods prescribed by any
domestic or foreign antitrust-related laws shall have expired.
(e) Buyer shall have received written consent in a form reasonably
satisfactory to Buyer from all third parties whose consent is necessary for the
assignment of any Contracts to be assigned and assumed by Buyer pursuant to the
terms of this Agreement, except to the extent the failure to receive any such
consent will not have a material adverse effect on the Business or the Assets.
(f) Buyer shall have received the following:
(1) Consistent with the summary provided to Buyer, a revised
or amended Services and Fees Schedule between Ford Motor Company and
Covisint, LLC, so as to indicate the 18 month term of the Portal
Services provided pursuant to Services and Fee Schedule
#NA01XXX00389, and the monthly user fee obligation of $5,000, each
as described in the proposal made to Ford Motor Company; and
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(2) A copy of exhibit 3.19 of the first amendment to the
Transaction Agreement between Covisint and Delphi Automotive
Systems, LLC, effective June 28, 2001.
7.2 Conditions Precedent of Covisint. The obligations of Covisint under
this Agreement are subject to the satisfaction at, or prior to, the Closing Date
of the following conditions precedent (the fulfillment of any of which may be
waived in writing by Covisint):
(a) All terms of this Agreement and the Related Agreements to be
complied with or performed by Buyer prior to or on the Closing Date will have
been fully complied with and performed by Buyer, as appropriate, including
Buyer's timely taking of all actions and delivery of all documents required to
be taken and delivered by it under this Agreement and the Related Agreements.
(b) The representations, warranties, disclosures and statements of
Buyer contained in this Agreement and the Related Agreements will be true and
complete as of the date of this Agreement and on the Closing Date.
8. Default; Termination of Agreement.
8.1 Default. Buyer's, on the one hand, and Covisint's, on the other
hand, obligations under this Agreement are of a special and unique character and
Buyer's, on the one hand, or Covisint's, on the other hand, failure to perform
its obligations will cause irreparable injury to the other party, the amount of
which would be extremely difficult, if not impossible, to estimate or determine
and which may not be adequately compensable by monetary damages alone.
Therefore, the injured party will be entitled, as a matter of course, to an
injunction, restraining order, writ of mandamus or other equitable relief from
any court of competent jurisdiction, including specific performance, restraining
any violation or threatened violation of any term of this Agreement or any
Related Agreement, or requiring compliance with or performance of any obligation
under this Agreement or such Related Agreement, by the violating party or
parties, or such other persons as the court may order. The parties' rights under
this Section 8.1 are cumulative and are in addition to the rights and remedies
otherwise available to them under Section 8.2 below, any other provision of this
Agreement and any other agreement or applicable law.
8.2 Termination. This Agreement may be terminated at any time before the
Closing as follows:
(a) by mutual written consent duly executed by Buyer and Covisint;
(b) by either Buyer or Covisint if the Closing has not been consummated
by March 1, 2004, provided that the right to terminate this Agreement under this
Section 8.2(b) will not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the failure
of the Closing to occur on or before such date; provided further, that the right
to terminate this Agreement under this Section 8.2(b) will not be available
until after April 1, 2004 if the sole reason that the Closing has not been
consummated is that an applicable waiting period prescribed by any domestic or
foreign antitrust-related law shall not yet have expired;
33
(c) by either Buyer or Covisint if a court of competent
jurisdiction or if a Governmental Entity has issued a nonappealable final order,
decree or ruling or taken any other action having the effect of permanently
restraining, enjoining or otherwise prohibiting the transaction contemplated by
this Agreement (provided that the right to terminate this Agreement under this
Section 8.2(c) will not be available to any party who has not complied with its
obligations under this Agreement and such noncompliance materially contributed
to the issuance of any such order, decree or ruling or the taking of such
action);
(d) by Covisint or Buyer, (1) if any representation or warranty of
the other party set forth in this Agreement was untrue when made, or (2) upon a
breach of any covenant in this Agreement on the party of the other party, such
that the conditions set forth in Sections 7.1(a) or 7.1(b), or Sections 7.2(a)
or 7.2(b), as the case may be, would not be satisfied (either (1) or (2) above
being a "Terminating Breach"), provided, that, if such Terminating Breach is
curable prior to March 1, 2004 by the breaching party through the exercise of
its commercially reasonable efforts and for so long as the breaching party
continues to exercise such efforts, neither Buyer nor Covisint, respectively,
may terminate this Agreement under this Section 8.2(d); or
(e) by Buyer pursuant to Section 6.6.
Except as set forth in the following two sentences, if this
Agreement terminates in accordance with this Section 8.2, it will be null and
void and have no further force or effect, except as expressly provided in this
Agreement (including Sections 10.10 and 10.14). Except as provided in Section
6.6, any termination will not affect the terminating party's rights arising from
any breach of the obligations under this Agreement or misrepresentation of any
non-terminating parties. The parties' rights under this Section 8.2 are
cumulative and are in addition to the other rights and remedies available to the
parties under Section 8.1 above, any other provision of this Agreement, any
other agreement or applicable law.
9. Indemnification.
9.1 Indemnification by Covisint. Upon the terms and subject to the
conditions of this Article 9, Covisint will indemnify and hold Buyer, and its
directors, officers, employees, agents, consultants, representatives, Affiliates
and shareholders (collectively, "Buyer Indemnified Parties") harmless against
any Loss which any of them may incur arising out of:
(a) any breach by Covisint of any of Covisint's representations
and warranties under this Agreement or any Related Agreement, or Covisint's
breach of any covenants made in this Agreement or any Related Agreement or the
Exhibits or Schedules to this Agreement or any Related Agreement;
(b) any of the Excluded Liabilities;
(c) rules of ERISA applicable to the matters described in
paragraph (e) of Section 4.8 of this Agreement; and
(d) any action, suit, proceeding, investigation, assessment or
judgment relating to any of the matters indemnified against in this Section 9.1,
or any third-party claim
34
which if proven true would constitute a breach by Covisint of any of its
representations and warranties, including Fees and Costs (whether prior to or at
trial or in appellate proceedings).
9.2 Indemnification by Buyer. Upon the terms and subject to the
conditions of Article 9, Buyer will indemnify and hold Covisint and its
directors, officers, employees, agents, consultants, representatives, Affiliates
and members harmless against any Loss which any of them may incur arising out
of:
(a) any breach by Buyer of any of Buyer's representations,
warranties, covenants or agreements made in this Agreement or any Related
Agreement or the Exhibits or Schedules to this Agreement or any Related
Agreement, including without limitation, Buyer's obligations to pay and perform
the Assumed Liabilities; or
(b) any action, suit, proceeding, investigation, assessment or
judgment relating to any of the matters indemnified against in this Section 9.2,
or any third-party claim which if proven true would constitute a breach by Buyer
of any of its representations and warranties, including Fees and Costs (whether
prior to or at trial or in appellate proceedings).
9.3 Claims for Indemnification.
(a) Whenever any claim is made for indemnification (other than a
Tax claim) under this Article 9, the person claiming such indemnification (the
"Claimant") will give notice to the party against whom indemnification is sought
(the "Indemnifying Party") promptly after the Claimant has actual knowledge of
any event which might give rise to a claim for indemnification under this
Agreement; provided that if the Claimant receives a complaint, petition or any
other pleading in connection with a claim which requires the filing of an answer
or other responsive pleading, it will furnish the Indemnifying Party with a copy
of such pleading as soon as possible after receipt.
(b) The failure by the Claimant to give notice of a claim as
required in Section 9.3(a) above or a delay in giving such notice will not
affect the validity or amount of such claim and the indemnification obligations
of the Indemnifying Party will remain in effect as to such claim, except to the
extent that the Indemnifying Party has been prejudiced or adversely affected
thereby.
(c) If, after the amount of the claim of Loss (other than a Tax
claim) is specified by Claimant, and Claimant gives notice with respect thereto
to the Indemnifying Party (the "Claim Notice"), the Indemnifying Party objects
to any such claim or amount set forth in the Claim Notice, it may give notice to
Claimant advising Claimant of its objection within thirty (30) days of the
Indemnifying Party's receipt of the Claim Notice. If no such notice is timely
given by the Indemnifying Party to Claimant, then subject to the limitations on
indemnification set forth in Section 9.5, Claimant will be entitled to payment
from the Indemnifying Party pursuant to this Agreement. If the Indemnifying
Party advises Claimant within such period that it objects to the claim, Claimant
and the Indemnifying Party will promptly meet and use their reasonable efforts
to settle the dispute in writing. If Claimant and the Indemnifying Party are
unable to reach agreement within sixty (60) days after the Indemnifying Party
objects to the claim, then either party may bring an action to determine the
disputed portion of such claim of Loss.
35
(d) The giving of the notice by Buyer to Covisint with respect to
any particular claim in accordance with Section 9.3 within the period of
survival of any representations or warranties will toll said survival period
(but only with respect to such claim to the extent of the claim of Loss with
respect to such claim) until any liability under said notice is finally resolved
and determined.
9.4 Third-Party Claims.
(a) If the facts giving rise to the right of indemnification under
Sections 9.1 or 9.2 above involve any actual or threatened claim or demand by
any third party against the Claimant or any possible claim by the Claimant
against any third party ("Third-Party Claim"), the Indemnifying Party may
undertake, at its own expense, the defense or prosecution of such Third-Party
Claim.
(b) So long as the Indemnifying Party has assumed and is
conducting the defense of the Third-Party Claim in accordance with this Section
9.4, the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third-Party Claim without the
prior written consent of Claimant (which consent will not be unreasonably
withheld, conditioned or delayed) unless the judgment or proposed settlement
involves only the payment of money damages by the Indemnifying Party and does
not impose an injunction or other equitable relief upon Claimant.
(c) If the Indemnifying Party fails to undertake the defense or
prosecution of a Third-Party Claim, (1) the Claimant will be entitled to defend
or prosecute such Third-Party Claim with counsel of its own choice (the
reasonable Fees and Costs of such defense or prosecution being indemnified under
this Article 9), (2) the Indemnifying Party at its own expense may nevertheless
participate with the Claimant in the defense or prosecution of such Third-Party
Claim and any settlement negotiations with respect thereto, and (3) except as
provided herein, the Claimant may settle the Third-Party Claim on such terms as
it may choose, although it will not reach such a settlement until it has
consulted in good faith with the Indemnifying Party.
(d) An Indemnifying Party's defense or prosecution of, or
participation in, a Third-Party Claim will not in any manner relieve the
Indemnifying Party of its obligations to indemnify the Claimant under this
Article 9. The Indemnifying Party and the Claimant will cooperate in good faith
with each other in connection with the defense or settlement of any Third-Party
Claim and will make available to each other all information necessary or useful
to the defense or settlement of such matter.
9.5 Limits on Indemnification.
(a) The representations and warranties of Covisint set forth in
this Agreement will survive only for a period of two calendar years after the
Closing Date, and any claim for indemnification under Section 9.1 must be
asserted by notice to the Indemnifying Party within two calendar years after the
Closing Date, or the same will be null and void; provided, however, that the
representations, warranties and covenants made by Covisint under Sections 4.1,
4.20 and 4.21 shall survive indefinitely, and the representations, warranties
and covenants made by Covisint under Sections 4.12, 4.13(c) and (l), and 6.1(f)
and (g), 9.1 (with respect to Taxes), 9.6,
36
and 10.13 of this Agreement (specifically relating to Taxes) will survive until
sixty days after the expiration of the applicable statutes of limitations
(including any waivers or extensions) on assessment and collection of the Tax to
which such representation, warranty or covenant relates. If any claims for
indemnification have been made pursuant to Sections 9.1, 9.6, and 10.13 and the
same are still pending or unresolved at the expiration of the survival period,
such claims will continue to be subject to the indemnification provisions of
this Agreement.
(b) Any covenant or agreement by the parties hereto which by its
terms contemplates performance after the Closing Date will survive the Closing
Date.
(c) The Indemnifying Party will not be obligated to indemnify the
Claimant under Article 9 unless and until the aggregate of Losses for which
indemnity is provided under Article 9 reaches Eighty Thousand Dollars ($80,000),
in which event the Indemnifying Party will be obligated to indemnify the
Claimant for the full amount of all Losses; provided, however, that the
indemnification threshold of $80,000 will not apply to the indemnification
obligations related to a breach of Sections 4.1(a) and (b), 4.21, 6.1(a), 6.13
or 10.10 or indemnification obligations under Article 9 and 10.13 specifically
relating to Taxes nor will any amounts paid in respect of Sections Article 9 and
10.13 specifically relating to Taxes reduce such indemnification threshold as
the same may apply to any other claims for indemnification. In no event will an
Indemnifying Party be obligated to indemnify a Claimant under Article 9 for
Losses (excluding Losses in connection with third party Claims relating to
Proprietary Rights being transferred or purporting to be transferred pursuant to
this Agreement) in excess of four million dollars ($4,000,000) in the aggregate.
(d) The Indemnified Party will use all reasonable efforts,
consistent with normal practices and policies and good commercial practice, to
mitigate such Losses.
(e) Notwithstanding anything herein to the contrary, Losses will
not include special, indirect, consequential or punitive damages.
Notwithstanding anything herein to the contrary, Losses will not include "lost
profits" or "lost revenues", unless "lost profits" or "lost revenues" are
included in claims of third parties against Buyer. Notwithstanding the preceding
sentence, for purposes of this Article 9, "lost profits" or "lost revenues"
means a negative impact on future revenues or profits of Buyer arising as an
indirect or secondary consequence of a breach of a representation, warranty,
covenant or agreement but "lost profits" or "lost revenues" will be included in
Losses to the extent they are the direct consequence of a breach of a
representation, warranty or covenant.
(f) The parties agree that any indemnification payment made by
Covisint under Sections 9.1, 9.6 or 10.13 to Buyer is an adjustment to the
Purchase Price, and Covisint agrees to consistently so treat any such payment on
any Tax Return or claim for refund that it files, in any administrative or
appeals procedure, judicial proceedings, or any other situation in which a
characterization of such a payment is made.
(g) Each party hereby acknowledges and agrees that, from and after
the Closing Date, its sole and exclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement will be pursuant to the
provisions set forth in this Article 9 and Section 10.13 below. In furtherance
of the foregoing, but subject to the exceptions set forth in the immediately
proceeding sentence, each party hereby waives, from and after the Closing Date,
37
to the fullest extent permitted under applicable law, any and all claims, rights
and causes of action (other than claims of fraud and claims arising under this
Article 9 and Section 10.13 below) it may have relating to the subject matter of
this Agreement arising under or based upon any federal, state, local or foreign
statute, law, ordinance, rule or regulation or otherwise.
9.6 Tax Indemnification Procedure. Notwithstanding anything else in this
Agreement to the contrary:
(a) Subject to the participation and cooperation provisions of
subsections (a) and (b) of this Section 9.6, whenever any claim is made for
indemnification in respect of Taxes claimed under this Article 9, the person
claiming such indemnification (the "Tax Claimant") will give notice to the party
against whom indemnification is sought (the "Tax Indemnifying Party") promptly
after the Tax Claimant has actual knowledge of any event which might give rise
to a claim for indemnification in respect of Taxes under this Agreement, and
will permit the participation of the Tax Indemnifying Party at its expense in,
any investigation, audit, examination, controversy, litigation or other
proceeding (a "Tax Proceeding") by or with a Tax Authority empowered to
administer or enforce such Tax and will not consent to the settlement or Final
Determination in such proceeding without the prior written consent of the Tax
Indemnifying Party, which will not be unreasonably withheld, conditioned or
delayed; provided, however, that at the election of the Tax Claimant, the Tax
Indemnifying Party shall provide the Tax Claimant with an opinion in form and
substance reasonably acceptable to the Tax Claimant that there is substantial
authority for the position that the Tax Indemnifying Party is taking with
respect to such Tax Proceeding and the Tax Claimant need not and the Tax
Indemnifying Party shall not take any such position until such opinion is
delivered to the Tax Claimant. Subject to the participation and cooperation
provisions of subsections (a) and (b) of this Section 9.6 (including the
preceding sentence), Covisint will have full responsibility for and discretion
in handling any Tax Proceeding relating to Covisint; provided, however, that
neither Buyer nor Covisint shall enter into any settlement of a Tax Proceeding
which would have an adverse effect on the other party or its Affiliates without
the other party's written consent which will not be unreasonably withheld.
(b) (1) Buyer, on the one hand, and Covisint, on the other hand,
will (A) use reasonable efforts to keep the other advised as to the status of
any Tax Proceeding, (B) promptly furnish to the other a copy of any inquiry,
request for information, notice of proposed adjustment, revenue agent's report
or similar report, or notice of deficiency together with all relevant documents
and memos related to the foregoing documents, notices or reports from any Tax
Authority concerning any Tax Proceeding, (C) timely notify the other regarding
any proposed written communication to any such Tax Authority with respect to
such Tax Proceeding, (D) give the other the reasonable opportunity to review and
comment in advance on all written submissions, filings and any other information
relevant to indemnifiable issues, and (E) consider in good faith any suggestions
made by the other to submit documentation or attend those portions of any
meetings and proceedings that relate to such Tax Proceeding. Notwithstanding the
foregoing, Buyer may make appropriate redactions in any information provided to
Covisint to the extent reasonably required to preserve the confidentiality of
such information as to issues that are not directly related to indemnifiable Tax
claims.
(2) In the event that a Tax Claimant or its Affiliates is
required to pay any Tax, file any bond or deposit any amount in
order to undertake or defend a
38
Tax Proceeding, the Tax Indemnifying Party will loan to the Tax
Claimant no later than three business days before such payment is
required to be made, without interest and until a Final
Determination with respect to such Tax Proceeding has occurred, one
hundred percent of the amount required to be paid. Within three
business days of the receipt by the Tax Claimant or its Affiliates
of a refund of any amount loaned to it by the Tax Indemnifying Party
(including any interest received by the Tax Claimant or its
Affiliates), the Tax Claimant or its Affiliates will pay such
refunded amount to the Tax Indemnifying Party net of any Tax cost
and Fees and Costs incurred by the Tax Claimant or its Affiliates as
a result of such refund.
(c) The failure by a Tax Claimant to give notice of a claim as
required in Section 9.6(a) above or a delay in giving such notice will not
affect the validity or amount of such claim and the indemnification obligations
of the Tax Indemnifying Party will remain in effect as to such claim (except to
the extent that such failure or delay shall have adversely affected the Tax
Indemnifying Party's ability to defend against any liability or claim for Taxes
that the Tax Indemnifying Party is obligated to pay hereunder).
(d) Within 60 days of any Final Determination of Tax in a Tax
Proceeding, or the written acquiescence of a Tax Indemnifying Party with respect
to a Tax Proceeding, the Tax Claimant will provide a written notice to the Tax
Indemnifying Party explaining the calculation of the amount of such Tax claim.
The Tax Indemnifying Party will pay such amount of Tax (and all other related
amounts indemnifiable hereunder) to the Tax Claimant within five (5) business
days after receipt of such notice.
(e) If a Tax Indemnifying Party for any reason fails or refuses to
perform fully its obligations or indemnifications under this Section 9.6, in
addition to its other rights under this Agreement, the Tax Claimant will have
the right of offset with respect to any payments which are due or will become
due under this Agreement or any Related Agreement. The foregoing provisions of
this Section 9.6(e) are permissive, and a failure by the Tax Claimant to
exercise its rights under this Section 9.6(e) will not affect its right to
indemnification under this Agreement.
(f) Except as otherwise specifically provided in this Agreement,
each party will bear its own Fees and Costs incurred in connection with a Tax
liability issue for which such party and its Affiliates are liable, and not
entitled to indemnification, under this Agreement.
(g) The provisions of this Section 9.6 will not be governed by any
limitations in Article 9 (except this Section 9.6) and, to the extent of any
inconsistency between this Section 9.6 and Article 9 (except this Section 9.6),
the provisions of this Section 9.6 will control.
10. Miscellaneous.
10.1 Notices. Any notice required or permitted to be given under this
Agreement must be in writing and sent by recognized overnight courier (such as
Airborne or Federal Express) or by certified or registered mail, postage
prepaid, or delivered by hand, addressed as follows:
39
(a) To Buyer: Compuware Corporation
Xxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: President
(b) With a copy to: Compuware Corporation
Xxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
(c) To Covisint: Covisint, LLC
00000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: President
With a copy to: Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx LLP
2290 First National Building
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Addresses for notices may be changed by notice given pursuant to this Section
10.1. Notice will be deemed given on the date delivered if delivered by hand.
Notice sent by recognized overnight courier will be deemed given on the business
day following delivery to such recognized overnight courier. Notice mailed as
provided herein will be deemed given on the third (3rd) business day following
the date so mailed.
10.2 No Waiver. No waiver of any breach of any provision of this
Agreement will be deemed a waiver of any preceding or succeeding breach or of
any other provision of this Agreement. No extension of time for performance of
any obligations or acts will be deemed an extension of the time for performance
of any other obligations or acts.
10.3 Successors and Assigns. This Agreement will bind and inure to the
benefit of the parties and their successors and assigns; provided that neither
Buyer nor Covisint may assign this Agreement, any Related Agreement or any
rights under this Agreement or any Related Agreement to any other person without
the prior written consent of Covisint, in the case of an assignment by Buyer, or
Buyer in the case of an assignment by Covisint. Notwithstanding the foregoing,
Buyer will have the right to assign all or a portion of its rights under this
Agreement and the Related Agreements to any direct or indirect wholly-owned
subsidiary of Buyer, including a limited liability company the sole member of
which is Buyer; provided that no such assignment shall relieve Buyer of its
duties hereunder.
10.4 Severability. The provisions of this Agreement will be deemed
severable, and if any provision or part of this Agreement is held illegal, void
or invalid under applicable Laws, such provision or part may be changed to the
extent reasonably necessary to make the provision or part, as so changed, legal,
valid and binding. If any provision of this Agreement is held illegal, void or
invalid in its entirety, the remaining provisions of this Agreement will not in
any way be affected or impaired but will remain binding in accordance with their
terms.
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10.5 Entire Agreement; Amendment.
(a) This Agreement, the Related Agreements and the Schedules and
the Exhibits attached to this Agreement and the Related Agreements contain the
entire agreement of the parties with respect to the transactions contemplated by
this Agreement and the Related Agreements, and no representations or warranties
made by any party or its representatives, whether made orally or in writing, may
be relied on unless set forth in this Agreement, the Related Agreements or in
the Exhibits and Schedules to this Agreement and the Related Agreements and no
representation or warranty made prior to the date of this Agreement by any party
will survive the execution and delivery of this Agreement.
(b) Subject to applicable law, at any time prior to the
consummation of the transactions contemplated by this Agreement, Covisint and
Buyer may, by action authorized by their Managing Member or Boards of Directors,
as the case may be (1) mutually amend this Agreement, (2) extend the time for
the performance of any of the obligations or other acts of any other person or
entity, (3) waive any inaccuracies in the representations or warranties
contained in the Agreement, or (4) waive compliance with any of the agreements
or conditions contained herein. This Agreement may not be amended except by a
writing signed by all of the parties by persons authorized to execute such
writing. Any agreement of a party to any extension or waiver will be valid only
if set forth in a writing signed on behalf of such party by a person authorized
to execute such writing, but any waiver or failure to insist on strict
compliance with any obligation, covenant, agreement or condition will not
operate as a waiver of or estoppel with respect to, any subsequent or other
failure.
10.6 Cost of Litigation. If any party breaches this Agreement or any
Related Agreement and if counsel is employed to enforce this Agreement or a
Related Agreement, the successful party will be entitled to Fees and Costs
associated with such enforcement, subject to the applicable limits on
indemnification set forth in Article 9.
10.7 Interpretation.
(a) This Agreement and the Related Agreements are being entered
into among competent and experienced business persons, represented by counsel,
and have been reviewed by the parties and their counsel. Therefore, any
ambiguous language in this Agreement or any Related Agreement will not
necessarily be construed against any particular party as the drafter of such
language. The headings contained in this Agreement are solely for the purposes
of reference, are not part of the agreement of the parties and will not in any
way affect the meaning or interpretation of this Agreement.
(b) For purposes of this Agreement and to the Related Agreements,
the knowledge of Covisint and similar references shall be deemed to be the
knowledge of Xxxxxx Xxxx, Xxxx Xxxxxxx, Xxxxxxx X'Xxxxxx, Xxxxx XxXxxxxx and
Xxxx Xxxxxxxx after due and reasonable inquiry.
(c) Unless the context of this Agreement otherwise requires: (1)
words of any gender include each other gender; (2) words using the singular or
plural number also include the plural or singular number, respectively; (3) the
terms "hereof", "herein", "hereby", "hereto" and similar words refer to this
entire Agreement and not any particular Article, Section, Clause,
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Exhibit, Appendix or Schedule or any other subdivision of this Agreement; (4)
references to "Article", "Section", "Clause", "Exhibit", "Appendix" or
"Schedule" are to the Articles, Sections, Clauses, Exhibits, Appendices and
Schedules, respectively, of this Agreement; (5) the words "include" or
"including" will be deemed to be followed by "without limitation" or "but not
limited to" whether or not they are followed by such phrases or words of like
import; and (6) references to "this Agreement" or any other agreement or
document will be construed as a reference to such agreement or document as
amended, modified or supplemented and in effect from time to time and will
include a reference to any document which amends, modifies or supplements it, or
is entered into, made or given pursuant to or in accordance with its terms. All
accounting terms used herein and not expressly defined herein will have the
meanings given to them under generally accepted accounting principles as in
effect on the Closing Date.
(d) Disclosure of any item or information in a Schedule is not an
admission that such item or information is material or is of a nature that would
cause a material adverse effect with respect to any Person or is necessarily
required to be disclosed in such Schedule. The disclosure of one item in a
Schedule will not by inference suggest that any other item not so disclosed is
material.
10.8 Counterparts. This Agreement may be executed in counterparts, each
of which, when taken together, will be deemed an original of this Agreement.
10.9 Applicable Law; Choice of Forum.
(a) This Agreement and any dispute arising hereunder or related
hereto will be construed in accordance with and governed by the laws of the
State of Michigan, without giving effect to the choice of law provisions
thereof.
(b) Any litigation based hereon, or arising out of, under, or in
connection with this Agreement will be brought and maintained exclusively in the
courts of the State of Michigan or in the United States District Court for the
Eastern District of Michigan. Each party to this Agreement hereby expressly and
irrevocably submits to the jurisdiction of the courts of the State of Michigan
and of the United States District Court for the Eastern District of Michigan for
the purpose of any such litigation as set forth in the preceding sentence. Each
party to this Agreement further irrevocably consents to the service of process
by registered mail, postage prepaid, or by personal service within or without
the State of Michigan.
(c) Each party to this Agreement hereby expressly and irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any such litigation brought in any
such court referred to above and any claim that any such litigation has been
brought in an inconvenient forum. To the extent that any party to this Agreement
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service or notice or otherwise) such party
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement.
10.10 Expenses. Each party will bear its own expenses in connection with
the transactions contemplated by this Agreement, including costs of its
respective brokers, financial advisors, attorneys and accountants, regardless of
whether any of the transactions contemplated by this Agreement are consummated.
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10.11 Press Releases. On or before the Closing Date, no party will issue
or authorize to be issued any press release or similar announcement concerning
the Agreement, the consideration to be paid hereunder, or any of other terms or
the transactions contemplated by this Agreement without the prior approval of
the other party; provided, however, that Buyer will be permitted to make such
disclosures as necessary to comply with any applicable securities laws or Nasdaq
National Market rules and policies.
10.12 Further Assurances. At any time and from time to time after the date
of this Agreement (including after the Closing Date), the parties agree to
cooperate in all reasonable respects with each other, to execute and deliver
such other documents, instruments of assignment, books and records, and do all
such further acts and things as may be reasonably required to carry out the
transactions contemplated hereby.
10.13 Certain Tax Matters.
(a) The parties will cooperate in all reasonable respects with
each other in a timely manner in the preparation and filing of any Tax Returns,
payment of any Taxes, and the conduct of any audit or other proceeding, in each
case in accordance with the terms of this Agreement. Each party will execute and
deliver such powers of attorney and make available such other documents as are
necessary to carry out the intent of this Agreement.
(b) [reserved]
(c) [Reserved]
(d) Upon request, each of the parties will use their reasonable
efforts to obtain any certificate or other document from any Tax Authority or
any other person as may be reasonably requested by the other party (including,
but not limited to, with respect to the matters contemplated by this Agreement
or the transactions contemplated by this Agreement).
(e) All transfer, documentary, stamp and other such Taxes and fees
(including any penalties and interest) incurred in connection with this
Agreement (including all such Taxes imposed by any state or political
subdivision thereof) will be paid by Covisint.
10.14 Post-Termination Confidentiality Requirements. In the event this
Agreement is terminated pursuant to Section 8.2, for a period of 12 months after
such termination, each party hereto will keep confidential all non-public,
confidential and proprietary information of the other party, except to the
extent such information (a) becomes generally available to the public other than
through a breach of this Agreement, (b) was previously available to such party,
(c) becomes available on a non-confidential basis from a source other than the
other party, or (d) is required by Law to be disclosed.
10.15 No Third Party Beneficiaries. This Agreement, the Related
Agreements, and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits and the
Schedules, are not intended to confer upon any person other than the parties to
such agreements (or their permitted assignees) any rights or remedies under this
Agreement or any other agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
set forth in the introductory paragraph of this Agreement.
COMPUWARE CORPORATION,
a Michigan corporation
By: /s/ Xxxxx Xxxxxxxx, Jr.
----------------------------------------
Its: Chief Executive Officer
COVISINT, LLC,
a Delaware limited liability company
By: /s/ Xxxxxx X. Xxxx
----------------------------------------
Its: Chief Executive Officer
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