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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
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AGREEMENT entered into as of the 10th day of August 1999 (the "Effective
Date"), between L&H Applications USA Inc. with its principal place of business
in Waltham, Massachusetts ("Buyer"), and International Microcomputer Software,
Inc., a California corporation with its principal headquarters in Novato,
California ("Seller or Company").
RECITALS:
WHEREAS, Seller is in the business, among others, of the development and
sale of speech recognition software with regard to language learning software;
WHEREAS, the Buyer wishes to acquire (directly or indirectly through
subsidiaries) from Seller all of the assets and properties necessary for or
material to the business and operations of the Seller's language learning
product lines listed on Exhibit 4 attached hereto (the "Business"), and Seller
wishes to convey such assets to Buyer, subject to the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration for the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, in order to consummate said sale,
the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1. Sale of Assets.
1.1.1. Subject to the provisions of this Agreement, Seller agrees to sell and
Buyer agrees to purchase, at the Closing (as defined in Section 1.4
hereof), all of the assets necessary for or material to the Business of
every kind and description, tangible and intangible, whether or not
currently used in the Business, and wherever located, without limitation
including the following:
(i) All copies of the source code to the software for the Business
and copies of the object code of the software for the Business, (whether
licensed, owned or under development) and all trade secrets, formulae,
algorithms, technical documentation, patents, shrink wrap/end user
license agreements, copyrights, trademarks, data and other proprietary
information relating to the Business;
(ii) All dictionaries for all languages.
(iii) All development tools created to build the source and object
code and the dictionaries.
(iv) All master CD-ROMs of all final versions of object code being
purchased pursuant to this Agreement.
(v) All of the following materials pertaining to the Business: (A)
pre-existing database customer lists and end-user registration
databases, (B) training manuals and materials, (C) advertising
and promotional materials, (D) plans, designs, procedures,
research data, drawings, models, blue prints, specifications,
flow sheets, equipment and parts list and descriptions and
related instructions (the "Business Records") and (E) product
packaging, marketing collateral, product strategy documentation,
press quotes and awards;
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(vi) All of the Seller's rights, title and interest in its
intellectual property and to its patent applications and
patents, including any patents issuing therefrom, and any
reissues, reexaminations, divisions, continuations in whole or
in part, extensions and foreign counterparts thereof;
(vii) To the extent transferable, any and all permits, licenses,
orders, ratings and approvals of federal, state or local
governmental or regulatory authorities held in connection with,
necessary for, or material to the Business; and
(viii) All of the assets set forth in Exhibit 5 attached hereto.
1.1.2. In addition, Seller agrees to provide Buyer a CD-ROM that contains clip
art images from its MasterClips collection and to license such clip art
to L&H in order to make them available for use in Buyer's technologies
and products. Seller agrees that Buyer may select up to 20,000 clip art
images royalty free from the aforementioned CD-ROM.
1.1.3. Seller will also deliver to Buyer a list of its Voice Direct registered
usernames and Buyer will have unlimited access to reasonably use those
names in its course of business. Seller agrees that it will not make
those names available for any usage or purpose whatsoever to any other
company competing with the business of Buyer or to its resellers such
as, but not limited to, mail catalogs etc. Buyer agrees that it will
honor the "opt out" field that indicates whether the registered user
will accept unsolicited electronic mail to any Voice Direct registered
user.
The assets, property and business of the Seller to be sold to and purchased by
Buyer under this Agreement are hereinafter sometimes referred to as the "Subject
Assets."
1.2. Purchase Price and Payment
1.2.1. The total consideration for the sale by the Seller to Buyer of the
Subject Assets shall be 1,800,000 USD ("Purchase Price"). The
Purchase Price shall be paid as follows:
- Upon Buyer receiving a mutually acceptable executed copy of this
Agreement, by facsimile, from Seller, Buyer will pay 50,000 USD
to Seller within 3 business days as "good faith" pursuant to
wire instructions provided by Seller to Buyer in writing.
- On the Closing Date, Buyer will initiate a wire transfer in the
amount of 1,500,000 USD (subject to adjustment pursuant to
article 1.2.2. below) from Belgium to the bank account indicated
by Seller in writing prior to the initiation of the wire
transfer. Buyer shall provide Seller with evidence of the
initiation of such wire transfer.
- In addition to the 1,500,000 USD (subject to adjustment) payment
made by Buyer to Seller pursuant to the previous paragraph, on
the Closing Date, Buyer will initiate a second wire transfer in
the amount of 50,000 USD from Belgium to a bank account
indicated by Seller in writing prior to the initiation of the
wire transfer. Within one (1) business day of Seller's receipt
of said 50,000 USD, Seller agrees to: (i) pay VDO Systems 50,000
USD; and (ii) effect, in writing, the satisfaction of all
royalty payments under the contract dated February 10, 1999
between Seller and VDO Systems.
- On the Closing Date Buyer will initiate a wire transfer from
Belgium in the amount of 200,000 USD to the escrow agent
according to article 1.2.3 of this Agreement.
1.2.2. Notwithstanding what is mentioned in 1.2.1, should the "Closing"
occur on or before August 13, 1999, Buyer shall receive a discount
of 50,000 USD, which will bring the total
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Purchase Price to 1,750,000 USD, which shall be applied to reduce the
$1,500,00 USD payment due on the Closing Date to $1,450,000. Both
Parties will use their best efforts to "close" the contemplated
transaction on or before August 13, 1999.
1.2.3 Buyer and Seller agree to execute, upon approval by an agreed upon
escrow agent (but no later than the Closing Date), an Escrow
Agreement in substantially the form attached hereto as Exhibit 6.
1.3. Assumption of liabilities
(a) Buyer shall not assume or agree to perform and discharge in the
ordinary course of business (i) any of the liabilities and
obligations of Seller arising under the unfilled portions of those
sales orders from customers of Seller and (ii) any accounts payables
existing or arising before the Closing.
(b) Buyer shall not assume or be bound by any obligations or liabilities
of Seller of any kind or nature, known, unknown, accrued, absolute,
contingent, whether or not disclosed on and Exhibit hereto or
otherwise, whatsoever, all of which shall be retained by Seller (the
"Retained Liabilities"). Seller shall be responsible for and pay any
and all losses, damages, obligations, liens, assessments, judgments,
fines, disposal and other costs and expenses, liabilities and
claims, including, without limitation, interest, penalties and fees
of counsel, as the same are incurred, of every kind or nature
whatsoever made by or owed to any person to the extent any of the
foregoing relates to (a) the Seller's operations and assets, (b) the
inventory existing at the moment of the Closing, (c) the Retained
Liabilities, (d) any contracts or other agreements or understandings
relating to the Business to which Seller is a party which are not
expressly listed and assumed hereunder, or (e) operations or assets
acquired under this Agreement to the extent arising in connection
with or on the basis of events, acts, omissions, conditions or any
other state of facts occurring or existing prior to or on the
Closing Date, including without limitation, any liabilities for any
express or implied warranties under any of the shrink wrap/end user
license agreements.
1.4. Closing Date.
The closing of the purchase and sale provided for in this Agreement
(herein called the "Closing") shall be held at the offices of Lernout &
Hauspie Speech Products USA, Inc. in Burlington, Massachusetts at 10:00
a.m. (Eastern Time Zone) on August 12, 1999 (the "Closing Date"), or at
such other place, date or time as may be fixed by mutual agreement of
the parties.
1.5. Transfer of Subject Assets.
At the Closing, Seller shall deliver or cause to be delivered to Buyer
good and sufficient instruments of transfer transferring to Buyer title,
free and clear of all liens, restrictions and encumbrances, to all the
Subject Assets in form and substance satisfactory to counsel for Buyer.
Seller shall, at Buyer's expense, crate, remove and transport the
Subject Assets from the Seller's facility to such destinations as Buyer
shall request.
1.6. Further Assurances.
Seller from time to time after the Closing at the request of Buyer and
without further consideration shall execute and deliver further
instruments of transfer and assignment (in
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addition to those delivered under Section 1.5) and take such other
action as Buyer may reasonably require to more effectively transfer and
assign to, and vest in, Buyer each of the Subject Assets.
1.7. Collection of Receivables.
Seller shall have the right and authority to collect the accounts
receivable of Seller (including, without limitation, those relating to
the Business) existing as of the Closing Date, provided such collection
shall be conducted in a manner which will not be reasonably expected to
impact Buyer negatively, the business being acquired hereunder or
Buyer's relationship with any customer. Buyer shall cooperate with
Seller in connection with Seller's efforts to collect such accounts
receivable, and shall promptly pay over to Seller amounts paid to Buyer
in respect of such receivables.
2. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Buyer as follows:
2.1. Organization and Qualification of Seller.
The Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and has all requisite
corporate power and authority to carry on its business as now conducted
and as proposed to be conducted and is validly existing in accordance
with its Articles of Incorporation and Bylaws.
2.2. Authority and Binding Effect.
The Seller has full power and authority to enter into this Agreement and
to carry out the transactions contemplated hereby, and this Agreement
has been duly authorized, executed and delivered by the Seller and
constitutes the legal, valid and binding obligation of the Seller,
enforceable in accordance with its terms.
2.3. Present Compliance with Obligations and Laws.
Neither the ownership nor use of the Subject Assets by Seller violates
or, with or without the passage of time or the giving of notice, or
both, would reasonably be expected to violate, conflict with or result
in a default or right to accelerate under, any term of any material
lien, encumbrance, mortgage, deed of trust, lease, license, agreement or
condition of any material debt instrument or any law, regulation,
administrative order or judicial order applicable to the Seller that
could materially and adversely affect the Subject Assets.
2.4. No Conflict of Transaction with Obligations and Laws.
(a) Neither the execution, delivery nor the performance of this
Agreement by Seller, or the performance by Seller of the
transactions contemplated hereby, will: (i) constitute a breach or
violation of the bylaws of Seller; (ii) result in the creation of
any lien, charge or
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encumbrance on the Subject Assets; (iii) constitute (with or without
the passage of time or giving of notice) a default under or breach
of any material agreement, instrument or obligation to which the
Seller is a party or by which it or any of the Subject Assets are
bound; or (iv) result in a violation of any law, regulation,
administrative order or judicial order applicable to the Seller that
could materially and adversely affect the Subject Assets.
(b) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby by the Seller do not require the
Seller to obtain any material consent, waiver, approval,
authorization, exemption of or giving of notice to any governmental
authority or other third party.
2.5. Absence of Undisclosed Liabilities.
To the knowledge of Seller, there is no fact which materially adversely
affects, or may in the future (so far as can now be reasonably foreseen)
materially adversely affect, the Subject Assets provided that no
representation is made as to general economic conditions or the general
fluctuations of the speech recognition industry.
2.6. Absence of Certain Changes.
Since June 1, 1999, there has not been:
(i) any encumbrance or lien placed on any of the Subject Assets
which remains in existence on the date hereof or at the time
of Closing;
(ii) any obligation or liability incurred by the Sellers with
respect to the Business other than obligations and
liabilities incurred in the ordinary course of business,
consistent with past practice;
(iii) other than in the ordinary course of business, any adverse
change, or event or circumstances which would reasonably be
expected to result in any material adverse change in the
assets used in, or in the business relationships or the
operation of, the Business.
2.7. Title to Properties; Liens; Condition of Properties
(a) The Subject Assets do not include any real property or leasehold
interests in real property. Seller owns all of the Subject Assets,
and Seller has and is conveying to Buyer hereunder good and valid
title to all the Subject Assets. None of the Subject Assets,
tangible or intangible, is subject to any mortgage, pledge, lien,
tax lien, conditional sale agreement, security interest,
encumbrance, claim or other charge or restraint on transfer of any
nature whatsoever. All financing statements under the Uniform
Commercial Code previously filed with respect to any of the Subject
Assets in any jurisdiction have been or will be terminated, together
with the security interests and rights created thereby, and Seller
has not signed any other such financing statement or any security
agreement authorizing any secured party thereunder to file any such
financing statement. The Subject Assets comprise of all assets
necessary for or material to the continued conduct of the Business
by the Buyer as currently conducted by Seller.
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(b) To the knowledge of Seller, there does not exist any material defect
in any of the software for the Business that is of a nature of a
latent defect which would render such software unfit for its
continued use in its current mode.
2.8. Intellectual Property Rights.
To the Seller's knowledge, the Company owns or possesses sufficient
legal rights to all, patents, copyrights, trade secrets, licenses and
all other intellectual property rights necessary for the Business as now
conducted without any conflict with, or infringement of, the rights of
others. The Company has not received any communications alleging that
the Company has violated or, by conducting the Business as proposed,
would violate any of the patents, trademarks, service marks, trade
names, copyrights, trade secrets or other proprietary rights or
processes of any other person or entity. All intellectual property
rights related to the Business are listed in Exhibit 2 attached hereto.
2.9. Litigation.
There is no litigation pending (or, to the knowledge of the Seller,
threatened) against the Seller related to the Business and there are no
outstanding court orders, court decrees, or court stipulations to which
the Seller is a party and by which any of the Subject Assets is bound,
that (a) conflict with or seek to enjoin or prevent this Agreement or
affect the transactions contemplated hereby, or (b) materially restrict
the present business, properties, operations, prospects, assets or
condition, financial or otherwise, of the Business, or (c) will result
in any materially adverse change in the Subject Assets or the Business.
2.10. Product Warranty Claims.
As of the date of this Agreement: (i) there have been no product or
service warranty claims made by customers of Seller relating to the
Business for an amount in excess of $5,000 with respect to any single
claim or for amounts in excess of $50,000 with respect to all claims
made in any fiscal year; (ii) there have been no product recalls having
a customary standard unit cost in excess of $5,000 with respect to any
single recall or of products having a customary standard unit cost in
excess of $50,000 in the aggregate with respect to all product recalls
in any fiscal year; and (iii) except as stated in the end user license
agreement there are no product or service warranties outstanding or
currently being offered to customers of Seller relating to the Business.
2.11 Product Liability Claims.
No product liability or other tort claims have been made or, to the
knowledge of Seller, threatened against the Seller, relating to products
sold or services performed by the Business in the past three (3) years.
To the knowledge of the Seller, there are no defects in the design or
manufacture of the products manufactured, distributed or sold by Seller
as related to the Business on or before the date hereof.
2.12 Year 2000
All operating codes, programs, utilities of the Subject Assets are
designed to record, store, process, and present calendar dates falling
on or after January 1, 2000 in the same manner, and with the same
functionality, as provided on or before December 31, 1999. Such software
and hardware is designed to not lose functionality or degrade in
performance as a consequence of such software operating at a date later
than December 31, 1999.
2.13. Disclosure of Material Information.
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No representation or warranty of Seller contained in this Agreement, or
any other document, certificate or other instrument referenced in this
Agreement or any Schedule or Exhibit hereto, contains or will contain
any untrue statement of a material fact or omits, or will omit to state
any material fact necessary, in light of the circumstances under which
it was or will be made, in order to make the statements herein or
therein not misleading.
3. PRECLOSING COVENANTS AND CONDITIONS PRECEDENT TO CLOSING
3.1 Seller will conduct the Business from the Effective Date to the Closing
only in the ordinary course of business on a basis consistent with past
practice. Seller will not pursue, sign, or enter into any OEM or
distribution agreements material to the Business from the Effective Date
to the Closing.
3.2 Prior to the Closing, Seller shall; (i) have delivered to Buyer the
source code for Easy Language 25 for Windows and (ii) Seller shall
demonstrate to Buyer that the final executable code to this product can
in fact be derived from this source code. Seller shall provide its best
technical efforts to assist Buyer in realizing this condition.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Seller as follows:
4.1. Authority and Binding Effect.
The Buyer has full power and authority to enter into this Agreement and
to carry out the transactions contemplated hereby, and this Agreement
has been duly authorized, executed and delivered by the Buyer and
constitutes the legal, valid and binding obligation of the Buyer,
enforceable in accordance with its terms.
4.2. No Conflicts.
Neither the execution and delivery of this Agreement by the Buyer nor
the consummation of the transactions contemplated hereby in accordance
with the terms hereof (i) will materially conflict with, result in a
material breach of or constitute a material default under any indenture,
mortgage, lease or other agreement to which the Buyer is a party or to
which it or any of its properties may be subject or (ii) will result in
a material violation of any order, writ, injunction, decree or award of
any court or governmental authority to which the Buyer or any of its
properties may be subject.
4.3. Authorization.
No approval, consent, withholding of objection or other authorization is
required from any court, administrative agency or governmental authority
in connection with the execution, delivery or performance by the Buyer
of this Agreement and the related agreements referred to herein. The
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execution, delivery or performance by the Buyer under this Agreement do
not conflict with or constitute a breach or default of any law or
regulation to which the Buyer is submitted, of the Articles of
Association and/or Bylaws and of any agreement entered into or binding
upon the Buyer.
4.4 Disclosure of Material Information.
No representation or warranty of Buyer contained in this Agreement, or
any other document, certificate or other instrument referenced in this
Agreement or any Schedule or Exhibit hereto, contains or will contain
any untrue statement of a material fact or omits, or will omit to state
any material fact necessary, in light of the circumstances under which
it was or will be made, in order to make the statements herein or
therein not misleading.
5. COVENANTS OF SELLER.
The Seller hereby covenants and agrees with the Buyer as follows:
5.1 After the Effective Date, Seller will not sell or ship any products
related to the Business to any OEM anywhere in the World. Subject to the
provisions of the previous sentence: (a) after the Effective Date and
until August 31, 1999, Seller will only sell or ship products related to
the Business to those accounts listed on Exhibit A attached hereto and
Exhibit A to the Letter of Intent signed between the Parties dated July
15, 1999 (the "Letter of Intent"); and (b) after August 31, 1999 and
until November 30, 1999, Seller will only sell or ship products related
to the Business to those accounts listed on Exhibit A attached to the
Letter of Intent. After November 30, 1999, Seller will not ship or sell
any products related to Business to any person or entity anywhere in the
World. Notwithstanding the foregoing, Seller will never ship or sell the
Easy Language 35 for Windows product (a product currently under
development), or any product with similar functions to the Easy Language
35 for Windows product, to any person or entity anywhere in the World.
5.2 On or before August 31, 1999, Seller and Buyer shall send a letter to
Seller's channel parties (distributors, resellers, retailers, etc...)
requesting they return any remaining inventory to Seller. Such letter
shall be sent by registered or certified mail, or overnight courier, as
Buyer shall designate.
5.3 Within 7 days following the Closing, a joint letter from top management
of Seller and Buyer will be sent by Buyer at its sole expense to all
VoiceDirect registered users making a special offer to upgrade to L&H
Voice Xpress.
5.4. Non-Competition by Seller.
Seller, in order to induce Buyer to enter into this Agreement, expressly
covenants and agrees that neither Seller, nor any entity wholly or
substantially controlled by or under common control with Seller will,
directly or indirectly, for a period of five (5) years following the
Closing Date, develop or distribute products relating to language
translation or language learning anywhere in the World.
5.5 Payment of Debts.
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Buyer and Seller will each pay their own debts and liabilities retained
or assumed according to this Agreement.
5.6. End User Support.
The Seller shall provide technical support for all of the software
products listed on Exhibit 5 attached hereto for ninety (90) days after
the Closing Date. Thereafter, the Seller shall refer all technical
support calls and customer service calls to the Buyer at xxx.xxxx.xxx
(for international and domestic customers) and 0-000-000-0000 (for
domestic customers) and the Buyer shall be solely responsible for all
technical support and customer service for all of the software products
listed on Exhibit 5 attached hereto.
5.7 Product Claims and Returns.
The Seller shall be responsible for customer claims relating to services
rendered by Seller, and customer claims relating to, or returns of,
products of the Seller which were sold and shipped by the Seller.
5.8. Support to Buyer.
Seller shall give free reasonable telephone and e-mail support and
consulting related to technical and engineering issues of the Business
during a period of two months following the Closing upon request of
Buyer.
6. CONDITIONS TO OBLIGATIONS OF THE BUYER.
The obligations of the Buyer to consummate the transactions contemplated
by this Agreement are subject to the fulfillment prior to or at the Closing of
the following conditions:
6.1 Representations; Warranties; Covenants.
Each of the representations and warranties of the Seller set forth in
this Agreement shall be accurate in all respects as if made on and as of
the date of Closing as well as on the date hereof, other than with
respect to representations and warranties that refer to or speak as of a
certain date, and except for changes occurring in the ordinary course of
business. The Seller shall have performed in all respects all those
obligations and shall have complied with those covenants required to be
observed under this Agreement prior to the Closing.
6.2. No Material Adverse Change.
During the period from the date hereof to the Closing, there shall not
have been any material adverse change in the condition, financial or
otherwise or the results of operation of the Business other than changes
in the ordinary course none of which has been materially adverse, and
the Seller shall not have sustained any damage by casualty to, or
destruction of the Subject Assets, whether or not insured, which
materially and adversely affects the operation of the Business.
7. INDEMNIFICATION.
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7.1. The Seller hereby agrees to indemnify, defend and hold the Buyer and the
Buyer's successors and assigns, harmless from, against and in respect of
any and all losses, judgments, settlements, claims, fines penalties,
liabilities, costs or expenses incurred or sustained by the Buyer or
such other persons or entities to the extent attributable to any breach
of any warranty by the Seller made in, or any non-performance of any
covenant, agreement or obligation to be performed on the part of the
Seller under this Agreement or arising out of any liabilities of Seller
not expressly assumed hereunder.
7.2. The Buyer hereby agrees to indemnify and hold the Seller and the
Seller's successors and assigns harmless from and against and in respect
of any and all losses, judgments, settlements, claims, fines penalties,
liabilities, costs or expenses incurred or sustained by the Seller or
such other persons or entities to the extent attributable to any breach
of any warranty by the Buyer made in, or any non-performance of any
covenant, agreement or obligation to be performed on the part of the
Buyer under this Agreement.
7.3 Claims for Indemnification.
Whenever any claim shall arise for indemnification hereunder, the
indemnified party (the "INDEMNIFIED PARTY") shall promptly notify the
indemnifying party (the "INDEMNIFYING PARTY") of the claim and, when
known, the facts constituting the basis for such claim. In the event of
any such claim for indemnification hereunder resulting from or in
connection with any claim or legal proceedings by a third party, the
notice to the Indemnifying Party shall specify, if known, the amount or
an estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third
party for which it is entitled to indemnification hereunder without the
prior written consent of the Indemnifying Party, which shall not be
unreasonable withheld, unless suit shall have been instituted against it
and the Indemnifying Party shall not have taken control of such suit
after notification thereof as provided in this Agreement.
7.4 Defense by Indemnifying Party.
In connection with any claim giving rise to indemnity hereunder
resulting from or arising out of any claim or legal proceeding by a
person who is not a party to this Agreement, the Indemnifying Party at
its sole cost and expense may, upon written notice to the Indemnified
Party, assume and control the defense of any such claim or legal
proceeding if it acknowledges to the Indemnified Party in writing its
obligations to indemnify the Indemnified Party with respect to all
elements of such claim. The Indemnified Party shall be entitled to
participate in (but not control) the defense of any such action, with
its counsel and at its own expense. If the Indemnifying Party does not
assume the defense of any such claim or litigation resulting therefrom
within 30 days after the date such claim is made, (a) the Indemnified
Party may defend against such claim or litigation, in such manner as it
may deem appropriate, including, but not limited to, settling such claim
or litigation, after giving notice of the same to the Indemnifying
Party, on such terms as the Indemnified Party may deem appropriate, and
(b) the Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with its counsel and at its own
expense. If the Indemnifying Party thereafter seeks to question the
manner in which the Indemnified Party defended such third party claim or
the amount or nature of any such settlement, the Indemnifying Party
shall have the burden to prove by preponderance of the evidence that the
Indemnified Party did not defend or settle such third party claim in a
reasonably prudent manner.
7.5 Payment of Indemnification Obligation.
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Seller agrees to consent, in writing, to any disbursement from the
escrow created by article 1.2 hereof requested by Buyer in connection
with an uncontested claim for indemnification by the Buyer pursuant to
this Article.
7.6 Survival of Representations; Claims for Indemnification.
All representations and warranties made by the parties herein or in any
instrument or document furnished in connection herewith shall survive
the Closing and any investigation at any time made by or on behalf of
the parties hereto. All such representations and warranties shall expire
on the second anniversary of the Closing Date, except for claims, if
any, asserted in writing prior to such second anniversary, which shall
survive until finally resolved and satisfied in full. All claims and
actions for indemnity pursuant to this section shall be asserted or
maintained in writing by a party hereto on or prior to the expiration of
such two-year period.
7.7 Ceiling.
Seller shall only be required to make payments with respect to such
damages for breaches of representations or warranties within the scope
of these indemnifications up to an amount equal to the total purchase
price paid by Buyer to Seller under article 1.2 of this Agreement. Buyer
shall only be required to make payments with respect to such damages or
matters within the scope of these indemnifications up to 1,000,000USD.
8. TERMINATION OF AGREEMENT.
8.1. Termination.
At any time prior to the Closing, this Agreement may be terminated (i)
by mutual consent of Buyer and Seller with the approval of their
respective Board of Directors, notwithstanding prior approval of this
Agreement by the Board of Directors of any party, (ii) by either Buyer
or Seller if there has been a material breach of a representation or
warranty or breach of covenant by the other party in its
representations, warranties and covenants set forth herein, (iii) by
Buyer if the conditions stated in Article 3 and 6 have not been
satisfied at or prior to the Closing, and (iv) by Buyer or Seller if the
Closing does not occur on or before August 31, 1999.
8.2. Effect of Termination.
If this Agreement shall be terminated as above provided, all obligations
of the parties hereunder shall terminate but any breaching party shall
remain liable to the non-breaching parties for their damages and
out-of-pocket expenses. In the event that this Agreement is so
terminated, each party will return all papers, documents, financial
statements and other data furnished to it by or with respect to each
other party to such other party (including any copies thereof made by
the first party). In the event this Agreement is terminated: (i) by
Buyer and Seller pursuant to article 8.1(i); (ii) by Buyer pursuant to
articles 8.1(ii) or 8.1(iii); or (iii) by operation of this Agreement
pursuant to Article 8.1(iv), Seller shall, on or before two (2) business
days after such termination return the 50,000 USD "good faith" payment
made by Buyer pursuant to article 1.2.1 to Buyer, assuming that Seller
has actually received such funds from Buyer.
8.3. Right to Proceed.
Anything in this Agreement to the contrary notwithstanding, if any of
the conditions specified in Article 6 hereof shall have not been
satisfied, Buyer shall have the right to waive the Buyers' right to
require fulfillment of any such condition and to proceed with the
transactions contemplated hereby.
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9. MISCELLANEOUS.
9.1. Notices.
Any notice or other communication in connection with this Agreement
shall be deemed to be delivered if in writing (or in the form of a
facsimile transmission, receipt telephonically confirmed) addressed as
provided below and if either (a) actually delivered electronically or
physically at said address, or (b) in the case of a letter, three (3)
business days shall have elapsed after the same shall have been sent by
internationally recognized overnight courier:
If to Seller to:
International Microcomputer Software, Inc.
ATTN: Xxxxx Xxxxxxxxxx
00 Xxxxxxx Xxx
Xxxxxx, XX 00000
T: 415/878-4000
F: 415/893-9860
If to Buyer, to:
Lernout & Hauspie Speech Products N.V.
Flanders Language Valley 50
B-8900 Ieper, Belgium
Attn: Legal Dept
Tel: 000-00 00 000000
Fax: 000 00 00 000000
And in any case at such other address as the addressee shall have
specified by written notice. All periods of notice shall be measured
from the date of delivery thereof.
9.2. Publicity and Disclosures.
No press releases or any public disclosure, either written or oral, of
the transactions contemplated by this Agreement, except as required by
this Agreement, shall be made by either party without the prior
knowledge and written consent of the other party, except as otherwise
required by applicable law, such consent not to be unreasonably
withheld. Buyer acknowledges that Seller is required to publicly
disclose this transaction within a reasonable time after Closing.
9.3. Confidentiality.
The parties agree that they will keep confidential and not disclose or
divulge any confidential, proprietary or secret information which they
may obtain from the other in connection with the transactions
contemplated herein, or pursuant to inspection rights granted hereunder
unless such information is or hereafter becomes public information.
Furthermore, after the Closing Date, Seller, nor any person controlling,
controlled by or under common control with Seller will, for any reason,
directly or indirectly, for itself or any other person, use or disclose
any trade secrets or confidential information, know-how or proprietary
information transferred pursuant to this Agreement, except to Buyer, its
officers, directors, employees or agents, in connection with the
operation of the Business by Seller before or by Buyer after the Closing
Date, except as may be required to be disclosed by law.
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9.4. Entire Agreement.
This Agreement (including all exhibits or schedules appended to this
Agreement and all documents delivered pursuant to this Agreement, all of
which are hereby incorporated herein by reference) constitutes the
entire agreement between the parties, and all promises, representations,
understandings, warranties and agreements with reference to the subject
matter hereof and inducements to the making of this Agreement relied
upon by any party hereto, have been expressed herein or in the documents
incorporated herein by reference.
9.5. Severability.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
hereof.
9.6. Assignability.
This Agreement may not be assigned otherwise than by operation of law
(a) by Buyer without the prior written consent of Seller, or (b) by
Seller without the prior written consent of Buyer. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
9.7. Amendment.
This Agreement may be amended only by a written agreement executed by
Buyer and Seller.
9.8. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California (other than the choice of law principles
thereof). Any claim, action, suit or other proceeding initiated by any
of the Sellers' Indemnified Persons against Buyer, or by any of the
Buyer's Indemnified Persons against any Seller, under or in connection
with this Agreement may be asserted, brought, prosecuted and maintained
in any Federal or state courts in San Francisco, California, as the
party bringing such action, suit or proceeding shall elect, having
jurisdiction over the subject matter thereof, and Seller and Buyer
hereby waive any and all rights to object to the laying of venue in any
such court and to any right to claim that any such court may be an
inconvenient forum. Seller and Buyer hereby submit themselves to the
jurisdiction of each such court and agree that service of process on
them in any such action, suit or proceeding may be effected by the means
by which notices are to be given to it under this Agreement.
9.9 Brokers.
9.9.1 For the Seller. The Seller represents and warrants that it has not
engaged any broker or finder or incurred any liability for brokerage
fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement. The Seller agrees to indemnify and hold
harmless the Buyer against any claims or liabilities asserted against it
by any person acting or
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claiming to act as a broker or finder on behalf of the Seller.
9.9.2 For the Buyer. The Buyer agrees to pay all fees, expenses and
compensation owed to any person, firm or corporation who has acted in
the capacity of broker or finder on its behalf in connection with the
transactions contemplated by this Agreement. The Buyer agrees to
indemnify and hold harmless the Seller against any claims or liabilities
asserted against it by any person acting or claiming to act as a broker
or finder on behalf of the Buyer.
9.10. Counterparts.
This Agreement may be executed in multiple counterparts and by
facsimile, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
9.11. Effect of Table of Contents and Headings.
Any table of contents, title of an article or section heading herein
contained is for convenience of reference only and shall not affect the
meaning of construction of any of the provisions hereof.
9.12. Rules of Construction.
Neither this Agreement nor any other agreement, document or instrument
referred to herein or executed or delivered in connection herewith shall
be construed against either party as the principal draft person hereof
or thereof.
9.13 Fees and expenses.
Each Party will bear its own fees and expenses.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
under seal in multiple counterparts as of the date set forth above by their duly
authorized representatives.
Seller: Buyer:
IMSI L&H Applications USA Inc.
BY: /s/ XXXXX XXXX BY: /s/ XXXXXX XXXXXXXXX
------------------------------ --------------------------
Name: Xxxxx Xxxx Name: Xxxxxx Xxxxxxxxx
------------------------------ --------------------------
Title: Chief Executive Officer Title: President and CEO
------------------------------ --------------------------
Date: August 10, 1999 Date: August 11, 1999
------------------------------ --------------------------
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EXHIBITS
Exhibit 1: Customer/Distribution List
Exhibit 2: Patents and Trademarks
Exhibit 3: Non-Disclosure Agreement
Exhibit 4: Language Learning Product Lines
Exhibit 5: Summary of Assets
Exhibit 6: Escrow Agreement
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EXHIBIT 1: CUSTOMER/DISTRIBUTION LIST
UNITED STATES:
Merisel
Navarre
GT Interactive
Xxxxxx
TechData
CANADA:
Xxxxxx
Merisel
LATIN AMERICA:
MSD - Brazil
Funny Life - Mexico
CD ROM Show - Argentina
SOUTH AFRICA:
Siltek
EUROPE:
ARES - Spain
GTI - Spain
GEM - UK
IOPI - Italy
Buhl - Germany
Innelec - France
Sybex - France
Thali - Switzerland
XX0 - Xxxxxx
XxxxXxxxxxx - Xxxxxxx
Xxxxxxx - Xxxxxx
ASIA:
Modern - India
Acer - Singapore
Softchina - Taiwan, P.R.C.
Winning Run - Japan
Jarrir - Saudi Arabia
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EXHIBIT 2: PATENTS AND TRADEMARKS
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EXHIBIT 3: NON-DISCLOSURE AGREEMENT
Page 3
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EXHIBIT 4: LANGUAGE LEARNING PRODUCT LINES
IMSI Easy Language 25 World in 1
IMSI Easy Language Deluxe Suite
IMSI Easy Language Conversational Skills
IMSI Easy Language 17 in 1
Easy Language 3.0
Easy Language Spanish
Easy Language 6 in 1
IMSI Easy Language 35 (this product is still under development)
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EXHIBIT 5: SUMMARY OF ASSETS
EASY LANGUAGE 35 WORLD LANGUAGES - (PRODUCT UNDER DEVELOPMENT)
- Current development status of all and any Source and Object Code
- Any unique development tools created by of for IMSI
EASY LANGUAGE DELUXE SUITE -
- Source and Object Code
- Registered user database
- Press clippings
- Artwork
- Sell Sheet
- Box
- CD Label
EASY LANGUAGE 25 WORLD LANGUAGES -
- Source and Object Code
- Registered user database
- Press clippings
- Artwork
- Dictionary Cover
- Sell Sheet
- CD Label
- Jewel Case Cover
- Box
EASY LANGUAGE 17 IN 1 -
- Source and Object Code
- Registered user database
- Press clipping
- Artwork
- Box
- Dictionary Cover
- Jewel Case Cover
- Sell Sheet
- CD label
- Shelf Talker
EASY LANGUAGE CONVERSATIONAL -
- Source and Object Code
- Registered user database
- Press clipping
- Artwork
- Box
- CD Label
- Jewel Case Cover
- Manual Cover
- Sell Sheet
EASY LANGUAGE 6 IN 1 -
- Source and Object Code
EASY LANGUAGE SPANISH -
- Source and Object Code
- Artwork
- Box
- Jewel Case cover
- CD Label
NON-PRODUCT SPECIFIC ASSETS -
- Voice Direct registered user database
- 20,000 images from Masterclips
- "Easy Language" Trademark
- "Easy Language" Copyright
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EXHIBIT 6: ESCROW AGREEMENT
