ASSET PURCHASE AGREEMENT
by and among
NEWFRONT SOFTWARE, INC.,
XXXXXXX XXXX
and
Software & Resource Management Corporation
September 11, 2003
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND CONSTRUCTION.........................................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES..............................................10
2.1. Assets to be Acquired............................................................................10
2.2. Excluded Assets..................................................................................12
2.3. Assumption of Certain Liabilities................................................................12
2.4. Excluded Liabilities.............................................................................12
2.5. Prepaid Items and Deposits.......................................................................13
ARTICLE 3 PURCHASE PRICE......................................................................................13
3.1. Purchase Price...................................................................................13
3.2. Closing Date Purchase Price Adjustment...........................................................14
3.3. Earnout..........................................................................................14
3.4. Allocation of Purchase Price.....................................................................16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER............................................16
4.1. Organization and Capitalization..................................................................16
4.2. Corporate Power and Authority; Legal Capacity; Enforceability....................................17
4.3. Non-contravention................................................................................17
4.4. Title; Properties................................................................................18
4.5. Third Party Options..............................................................................19
4.6. Financial Statements.............................................................................19
4.7. Absence of Undisclosed Liabilities...............................................................19
4.8. Litigation; Compliance with Law, Permits and Licenses............................................20
4.9. Environmental Protection.........................................................................20
4.10. Insurance........................................................................................21
4.11. Intellectual Property............................................................................21
4.12. Labor and Employee Matters.......................................................................23
4.13. Employee Benefits................................................................................24
4.14. Contracts, Leases, Etc...........................................................................25
4.15. Other Transactions...............................................................................26
4.16. No Changes.......................................................................................26
4.17. Certain Tax Matters..............................................................................27
4.18. Brokerage........................................................................................27
4.19. Warranties and Liabilities.......................................................................27
4.20. Transactions with Affiliates.....................................................................28
4.21. Assumed Contracts; Customer Claims...............................................................28
4.22. Sufficiency of Purchased Assets..................................................................28
4.23. Relationship With Customers......................................................................28
4.24. Corporate Documents..............................................................................29
4.25. Veracity of Statements...........................................................................29
4.26. Export/Import....................................................................................29
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER.............................................................30
5.1. Organization, Power, Standing and Qualification..................................................30
5.2. Power and Authority..............................................................................30
5.3. Non-Contravention................................................................................30
5.4. Veracity of Statements...........................................................................31
ARTICLE 6 THE CLOSING.........................................................................................31
6.1. Time and Place...................................................................................31
6.2. Conduct of the Closing...........................................................................31
6.3. No Agreement to Assign...........................................................................33
ARTICLE 7 INDEMNIFICATION.....................................................................................33
7.1. By Seller and Shareholder........................................................................33
7.2. By Buyer.........................................................................................34
7.3. Notice and Defense; Costs of Defense.............................................................35
7.4. Limitation of Indemnity..........................................................................36
7.5. Characterization of Indemnity Payments...........................................................37
ARTICLE 8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS...............................................37
8.1. Representations and Warranties...................................................................37
8.2. Covenants........................................................................................37
8.3. Extension of Survival............................................................................37
ARTICLE 9 CONDUCT OF SELLER, SHAREHOLDER AND BUYER AFTER THE CLOSING..........................................38
9.1. Cooperation and Further Assurances...............................................................38
9.2. Employment of Seller Employees...................................................................39
9.3. Maintenance Fees.................................................................................39
9.4. Right of Audit...................................................................................39
9.5. Real Estate Assessments..........................................................................40
9.6. Utility Services.................................................................................41
ARTICLE 10 NON-COMPETITION AND CONFIDENTIALITY................................................................41
10.1. Agreement Not to Compete.........................................................................41
10.2. Confidentiality..................................................................................42
10.3. Specific Enforcement; Extension of Period........................................................42
ARTICLE 11 GENERAL............................................................................................43
11.1. Transfer Taxes...................................................................................43
11.2. Right of Set-off.................................................................................43
11.3. Entire Agreement; Amendments.....................................................................43
11.4. Headings.........................................................................................43
11.5. Gender...........................................................................................43
11.6. Schedules........................................................................................44
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11.7. Severability.....................................................................................44
11.8. Notices..........................................................................................44
11.9. Waiver...........................................................................................45
11.10. Assignment.......................................................................................45
11.11. Successors and Assigns...........................................................................45
11.12. Governing Law....................................................................................45
11.13. Dispute Resolution...............................................................................45
11.14. Third Party Beneficiaries........................................................................46
11.15. Public Announcements.............................................................................46
11.16. Expenses.........................................................................................46
11.17. Counterparts.....................................................................................46
11.18. Facsimile Signatures.............................................................................46
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SCHEDULES
Schedule 1.86 Permitted Liens
Schedule 2.1(a) Tangible Personal Property
Schedule 2.1(b) Personal Property Leases and Options to Purchase
Schedule 2.1(c) Assumed Contracts
Schedule 2.1(d) Intangible Property
Schedule 2.1(e) Permits
Schedule 2.1(f) Licenses
Schedule 2.1(g) Software
Schedule 2.1(i) Inventory
Schedule 2.1(m) Domain Names
Schedule 2.2 Excluded Assets
Schedule 2.5 Prepaid Items and Deposits
Schedule 3.3(a)(i) Newfront Customers
Schedule 4.1(a) Foreign Qualification Jurisdictions for Seller
Schedule 4.3 Required Consents
Schedule 4.4(a) Good and Marketable Title
Schedule 4.4(b) Real Property Leases
Schedule 4.8 Permits and Licenses
Schedule 4.9 Environmental Permits
Schedule 4.10 Insurance
Schedule 4.11(a) Intellectual Property
Schedule 4.11(b) Intellectual Property Consents, Litigation, Licenses
Schedule 4.11(h) Intellectual Property Creation
Schedule 4.12(a) Employees and Labor Matters
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Schedule 4.12(b) Independent Contractors
Schedule 4.13(a) Benefit Plans
Schedule 4.13(b) Accrued Vacation Liability
Schedule 4.14 Contracts and Leases
Schedule 4.16 Changes Since the Balance Sheet Date
Schedule 4.19 Claims under Warranties and Liabilities
Schedule 4.20 Transactions with Affiliates
Schedule 4.22 Sufficiency of Purchased Assets
Schedule 4.23(a) Customers
Schedule 4.23(b) Prepaid Maintenance Fees
Schedule 4.23(c) Prepaid Service Fees
Schedule 4.23(d) Maintenance Renewal Dates
Schedule 9.2 New Employees
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EXHIBITS
Exhibit A - Form of Xxxx of Sale
Exhibit B - Form of Assignment and Assumption Agreement
Exhibit C - Form of Employment Agreement
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made this
11th day of September, 2003, by and among NEWFRONT SOFTWARE, INC., a
Massachusetts corporation ("Seller"), XXXXXXX XXXX, an individual residing at 0
Xxxxxx Xxxxxx, Xxx. 00, Xxxxxxxxx, Xxxxxxxxxxxxx and the sole shareholder of
Seller ("Shareholder"), and SOFTWARE & RESOURCE MANAGEMENT CORPORATION, a
Delaware corporation ("Buyer") and a wholly-owned subsidiary of Systems &
Computer Technology Corporation, a Delaware corporation.
BACKGROUND
WHEREAS, Seller develops, licenses, distributes, implements,
maintains, supports and provides consulting services in connection with the
fsaATLAS Software (as defined below), for the higher education market (the
"Business");
WHEREAS, Seller desires to sell to Buyer all of the assets of
Seller, other than the Excluded Assets (as defined below), and Buyer desires to
purchase from Seller such assets on the Closing Date (as defined below);
WHEREAS, Seller desires to transfer to Buyer only certain
enumerated liabilities and obligations of Seller, all of which are more
particularly identified herein, and Buyer is willing to assume from Seller on
the Closing Date only such enumerated liabilities and obligations, in each case,
upon the terms and subject to the conditions hereinafter set forth;
WHEREAS, Buyer desires to hire the Newfront Employees (as
defined below) on the Closing Date;
and
WHEREAS, to induce each other to enter into this Agreement and
to consummate the Acquisition (as defined below), Seller, Shareholder and Buyer
are willing to enter into this Agreement and undertake their respective
obligations as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises, covenants, representations, warranties and agreements herein
contained, and intending to be legally bound, Buyer, Shareholder and Seller
agree as follows:
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
As used herein, the following capitalized terms have the
meanings set forth next to such capitalized terms below:
1.1. "Acquisition" means the acquisition of the Purchased
Assets by Buyer and all related transactions completed at the Closing as
contemplated by this Agreement.
1.2. "active PDF Redistribution License" has the meaning set
forth in Section 6.2(a).
1.3. "Affiliate" of a Person is a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Person specified.
1.4. "Affiliated Seller" has the meaning set forth in Section
4.13.
1.5. "Aggregate Products" has the meaning set forth in Section
3.3(a).
1.6. "Agreement" means this Asset Purchase Agreement, all
Schedules and Exhibits hereto, as the same shall be amended from time to time.
1.7. "Assumption Agreement" has the meaning set forth in
Section 6.2(a).
1.8. "Association" has the meaning set forth in Section
11.13(a).
1.9. "Assumed Contracts" has the meaning set forth in Section
2.1(c).
1.10. "Assumed Liabilities" has the meaning set forth in
Section 2.3.
1.11. "Balance Sheet Date" has the meaning set forth in
Section 4.6.
1.12. "Books and Records" means all files, documents,
instruments, papers, books and records relating to Seller, including without
limitation, financial statements, Tax Returns and related work papers and
letters from accountants, budgets, pricing guidelines, ledgers, journals, deeds,
title policies, customer lists, computer files and programs, retrieval programs,
operating data and plans and environmental studies and plans.
1.13. "Business" has the meaning set forth in the Background
section of this Agreement.
1.14. "Business Customer Base" has the meaning set forth in
Section 4.23(a).
1.15. "Business Day" means any calendar day which is not a
Saturday, Sunday or public holiday under the laws of the State of Delaware.
1.16. "Business Material Adverse Change" or "Business Material
Adverse Effect" means any event, fact, circumstance or change which results or
could result in a material adverse effect on the properties, assets,
liabilities, operations, results of operations or condition (financial or
otherwise) of Seller, including the Purchased Assets, either individually or
taken as a whole, other than any event, fact, circumstance or change of a
general economic or political nature or affecting the software industry
generally.
1.17. "Buyer Indemnified Parties" has the meaning set forth in
Section 7.1.
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1.18. "Buyer Material Adverse Effect" means any event, fact,
circumstance or change which results or could result in a material adverse
effect on the properties, assets, liabilities, operations, results of operations
or condition (financial or otherwise) of Buyer, either individually or taken as
a whole, other than any event, fact, circumstance or change of a general
economic or political nature or affecting the software industry generally.
1.19. "Buyer's Off-Set Claims" has the meaning set forth in
Section 11.2.
1.20. "Claim" means any demand, claim, suit, action, cause of
action, investigation, proceeding or notice by any Person, alleging actual or
potential Liability for any Loss.
1.21. "Claim Notice" means written notification as to which
indemnity for a Claim or Loss under Article 7 is sought by an Indemnified Party,
enclosing a copy of all papers served, if any, and describing in reasonable
detail the nature of and basis for such Claim or Loss, together with the amount
or, if not then reasonably ascertainable, the estimated amount, determined in
good faith, of such Claim or Loss.
1.22. "Closing" has the meaning set forth in Section 6.1.
1.23. "Closing Date" has the meaning set forth in Section 6.1.
1.24. "Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder or with respect
thereto.
1.25. "Collateral Documents" has the meaning set forth in
Section 4.2.
1.26. "Competitive Business" has the meaning set forth in
Section 10.1(a).
1.27. "Confidential Information" means any business, technical
or other information of a party, including without limitation trade secrets,
proprietary information, know how, formulae, patterns, lists, customer lists,
compilations, devices, methods, techniques or processes, that derives
independent economic value, actual or potential, from not being generally known
to the public or to other Persons who can obtain economic value from disclosure
or use of the information.
1.28. "Contract" means any written or oral contract,
agreement, arrangement, commitment, note, bond, pledge, lease, mortgage,
guaranty, indenture, license, consulting agreement, supply contract, repair
contract, distribution agreement, purchase order, work order, job order, joint
venture agreement, franchise, technology and know-how agreement, employment
agreement, instrument or any other contractual commitment that is binding on any
Person or its property.
1.29. "Copyrights" means registered copyrights, copyright
applications and unregistered copyrights.
1.30. "Court Order" means any judgment, decree, edict, writ,
injunction, award, order or ruling of any Governmental Entity or of any
arbitration or similar panel.
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1.31. "Covenant Period" means the two-year period commencing
on the Closing Date.
1.32. "Current Balance Sheet" has the meaning set forth in
Section 4.6.
1.33. "Current Policies" has the meaning set forth in Section
4.10.
1.34. "Default" means (a) a violation, breach or default, (b)
the occurrence of an event which, with the passage of time, the giving of notice
or both, would constitute a violation, breach or default, or (c) the occurrence
of an event which, with or without the passage of time, the giving of notice or
both, would give rise to a right of damages, specific performance, termination,
cancellation, renegotiation or acceleration (including, without limitation, the
acceleration of payment).
1.35. "Derivative Software" means any software created after
the Closing Date by Buyer or any of Buyer's Affiliates which (i) is an updated
version or new release of the fsaATLAS Software (including, for purposes of this
definition, updated versions or new releases of the fsaATLAS Software that
include capability for real-time interface of requisite student data to and from
SEVIS); or (ii) is sold primarily as a tool for visa management and/or to
provide SEVIS functionality. Notwithstanding the preceding, the definition of
"Derivative Software" shall not include any software acquired by Buyer or any of
Buyer's Affiliates after the Closing Date from an unaffiliated third party,
provided that such software was not commissioned or otherwise created at the
request of Buyer or any of Buyer's Affiliates.
1.36. "Earnout License Fees" has the meaning set forth in
Section 3.3(a).
1.37. "Earnout Licenses" has the meaning set forth in Section
3.3(a).
1.38. "Earnout Maintenance Fees" has the meaning set forth in
Section 3.3(a).
1.39. "Earnout Objection" has the meaning set forth in Section
9.4(b).
1.40. "Earnout Purchase Price" has the meaning set forth in
Section 3.3(a).
1.41. "Employees" has the meaning set forth in Section
4.12(a).
1.42. "Employment Agreement" has the meaning set forth in
Section 6.2(a).
1.43. "Environmental Claim" has the meaning set forth in
Section 4.9(b).
1.44. "Environmental Laws" means all U.S. or foreign federal,
state and local laws and regulations relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C.A. ss.ss.9601 et seq., the Resource
Conversation and Recovery Act ("RCRA"), 42 U.S.C.A. ss.ss.6901 et seq., the
Clean Water Act, 33 U.S.C.A ss.ss.1251 et seq., the Clean Air Act 42 U.S.C.A.
ss.ss.7401 et seq., the Occupational Safety and Health Act, 29 U.S.C. ss.651 et
seq., ("OSHA") the Toxic Substances Control Act, 15 U.S.C. ss.2601 et seq., and
laws and regulations relating to emissions, spills, leaks, discharges, releases
or threatened releases of Materials of Environmental Concern, or otherwise
relating to the manufacture, possession, distribution, use, treatment, storage,
disposal, presence, transport or handling of Materials of Environmental Concern.
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1.45. "Environmental Loss" means any Loss arising out of,
related to or in connection with the use, treatment, removal, storage, disposal,
presence, migration, transport, handling, manufacture, possession, distribution,
or the actual emission, injection, escape, dumping, spill, leak, discharge or
release of Materials of Environmental Concern, including, without limitation,
actual liability for investigatory costs, cleanup costs, governmental response
costs, natural resource damages, property damages, personal injuries or
penalties.
1.46. "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations promulgated thereunder or
with respect thereto.
1.47. "Excluded Assets" has the meaning set forth in Section
2.2.
1.48. "Excluded Liabilities" has the meaning set forth in
Section 2.4.
1.49. "Export/Import Claim" has the meaning set forth in
Section 4.26.
1.50. "Export/Import Laws" means all U.S. or foreign federal,
state and local laws and regulations relating to the export or import of any
items (commodities, software or technology), and all laws and regulations
relating to Customs, export controls, embargoes, quotas, antiboycott and
economic sanctions, including, without limitation, the International Traffic in
Arms Regulations ("ITAR"), Arms Export Control Act ("AECA"), and Defense Trade
Security Initiatives ("DTSI") administered by the U.S. Department of Defense and
the U.S. Department of State, Office of Defense Trade Controls ("ODTC"); the
Export Administration Regulations ("EAR") (including the antiboycott laws)
administered by the U.S. Department of Commerce, Bureau of Export Administration
("BXA") and the sanctions and assets control regulations administered by the
U.S. Department of Treasury, Office of Foreign Assets Control ("OFAC").
1.51. "Financial Statements" has the meaning set forth in
Section 4.6.
1.52. "fsaATLAS Software" means the Software marketed and
licensed by Seller under the name "fsaATLAS Software," "fsaATLAS," or such
similar name, including all software utilities, and providing, without
limitation, visa tracking functionality for foreign students studying at higher
education institutions in the United States, and functionality for higher
education institution licensees to track and report data in accordance with the
requirements of SEVIS.
1.53. "General Assignment and Xxxx of Sale" has the meaning
set forth in Section 6.2(a).
1.54. "Goodwill" has the meaning set forth in Section 2.1(l).
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1.55. "Governmental Consent" means any and all permits,
licenses, waivers, consents or approvals of or from any Governmental Entity
necessary to consummate the transactions contemplated hereby or by any Exhibit
hereto, or otherwise relating to any Contract with any Governmental Entity or
any Permit, including the transfer thereof in accordance with the terms hereof.
1.56. "Governmental Entity" means any government, or political
subdivision thereof, court, arbitral tribunal, administrative agency, tribunal
or commission or any other governmental or regulatory body, instrumentality or
authority, whether domestic (federal, state or local) or foreign.
1.57. "Indebtedness" of any Person means all obligations of
such Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures
or similar instruments, (iii) for the deferred purchase price of goods or
services (other than trade payables or accruals incurred in the ordinary course
of business), (iv) under capital leases or (v) in the nature of guarantees of
the obligations described in clauses (i) through (iv) above of any other Person.
1.58. "Indemnifiable Losses" shall mean the Claims, Litigation
and Losses subject to indemnification obligations of Seller and Shareholder or
Buyer, as the case may be, pursuant to Sections 7.1 and 7.2 hereof.
1.59. "Indemnification Deductible" has the meaning set forth
in Section 7.4
1.60. "Indemnified Party" means any Person entitled to and
seeking indemnification from another Person all as otherwise provided for under
Article 7.
1.61. "Indemnifying Party" means any Person obligated to
provide indemnification and against whom indemnification is being sought by
another Person all as otherwise provided for under Article 7.
1.62. "Independent Accountant" has the meaning set forth in
Section 9.4(c).
1.63. "Independent Contractors" has the meaning set forth in
Section 4.12(b).
1.64. "Initial Purchase Price" has the meaning set forth in
Section 3.1.
1.65. "Interim Financial Statements" has the meaning set forth
in Section 4.6.
1.66. "Intellectual Property" means collectively, (a) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all Patents; (b) all Trademarks, trade
dress, logos, trade names, fictitious names, brand names, brand marks, domain
names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith; (c) all copyrightable works, all Copyrights and all applications,
registrations and renewals in connection therewith; (d) all mask works and all
applications, registrations, and renewals in connection therewith; (e) all trade
secrets and confidential business information (including, without limitation,
ideas, research and development, know-how, formulae, compositions, databases,
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manufacturing and production processes and techniques, technical data, designs,
graphics, logos, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals); (f) all
computer software (including, without limitation, data, source codes, object
codes, objects, specifications and related documentation); (g) all other
proprietary rights; and (h) all copies and tangible embodiments thereof (in
whatever form or medium).
1.67. "Inventory" has the meaning set forth in Section 2.1(i).
1.68. "IRS" means the Internal Revenue Service.
1.69. "Known," "Knowingly" or "Knowledge" means with respect
to (i) Seller, the actual knowledge of Xxxxxxx Xxxx and J. Xxxxxxx Xxxxxxx and
(b) Buyer, the actual knowledge of Xxxxxxx X. Xxxxxxxxxxx, Buyer's President and
Chief Executive Officer and Xxxx Xxxxxxx, Buyer's Executive Vice President,
Finance and Administration.
1.70. "Laws" means all laws, statutes, ordinances,
governmental regulations, orders, decrees, edicts, rules or other requirements
of any Governmental Entity.
1.71. "Liabilities" means all Indebtedness, obligations and
other liabilities, whether direct or indirect, and any loss, damage, cost,
contingent liability, loss contingency, unpaid expense, claim, deficiency,
guaranty or endorsement of or by any Person whether or not ascertainable.
1.72. "License Earnout Period" has the meaning set forth in
Section 3.3(b)(ii).
1.73. "License Earnout Statement" has the meaning set forth in
Section 3.3(b)(ii).
1.74. "Licenses" means all licenses, permits, authorizations,
approvals, franchises, rights, orders, variances, easements, rights of way, and
similar consents or certificates granted or issued by any Person other than a
Governmental Entity.
1.75. "Lien" means any mortgage, lien (including federal,
state and local tax liens), security interest, pledge, negative pledge,
encumbrance, assessment, title retention agreement, restriction or restraint on
transfer, defect of title, charge in the nature of a lien or security interest,
or option (whether consensual, statutory or otherwise) or any conditional sale
contract, title retention contract or other contract to give any of the
foregoing.
1.76. "Litigation" means (i) any action, lawsuit, arbitration,
mediation, criminal prosecution, tax audit, administrative or other proceeding
by, before or on behalf of any Person, including any Governmental Entity, or
(ii) any investigation or inquiry asserting a violation of any Law by, before or
on behalf of any Governmental Entity.
1.77. "Loss" means any and all damages (including direct,
incidental, consequential and special damages), losses, obligations,
deficiencies, Liabilities, Liens, penalties, fines, interest, costs and expenses
(including, without limitation, court costs, fees and disbursements of
attorneys, accountants, consultants and other experts, or other expenses of
investigating, prosecuting or defending any Litigation, Claim or Default).
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1.78. "Maintenance Earnout Period" has the meaning set forth
in Section 3.3(b)(i).
1.79. "Maintenance Earnout Statement" has the meaning set
forth in Section 3.3(b)(i).
1.80. "Materials of Environmental Concern" means any toxic,
reactive, corrosive, carcinogenic, flammable or hazardous pollutant or other
substance that is the subject of regulation under Environmental Laws, including,
but not limited to, any "hazardous substance," or "hazardous waste," as defined
in Environmental Laws, petroleum and petroleum products, natural gas or
synthetic gas, material that is a source, special nuclear or by-product
material, as defined by the Atomic Energy Act of 1954, 42 U.S.C.A. ss.ss.3011 et
seq., and the regulations promulgated thereto and "hazardous chemical," as
defined in 29 C.F.R. Part 1910.
1.81. "New Employees" has the meaning set forth in Section
9.2.
1.82. "Newfront Customer" has the meaning set forth in Section
3.3(a).
1.83. "Non-consenting Customers" has the meaning set forth in
Section 2.6.
1.84. "Patents" means all patents and pending applications for
patents of the United States and all countries foreign thereto, including
regional patents, certificates of invention and utility models, rights of
license or otherwise to or under letters patent, certificates of intention and
utility models which have been opened for public inspection and all reissues,
divisions, continuations and extensions thereof.
1.85. "Permits" means any and all licenses, franchises,
permits, registrations, certificates of authority, easements and rights of way,
variances (including zoning variances), rights, consents, orders, approvals,
certificates and other authorizations of or issued by any Governmental Entity.
1.86. "Permitted Liens" means those Liens listed on Schedule
1.86.
1.87. "Person" means any natural person, a sole
proprietorship, a corporation, a partnership, a joint venture, a limited
liability company, a limited liability partnership, an association, a trust, or
any other entity or organization, including a Governmental Entity.
1.88. "Plans" has the meaning set forth in Section 4.13.
1.89. "Prepaid Maintenance Fees" has the meaning set forth in
Section 4.23(b).
1.90. "Prepaid Maintenance Fees Adjustment" means the product
of (i) 0.60, multiplied by (ii) the amount, if any, by which (a) the Prepaid
Maintenance Fees, exceeds (b) $43,500; provided, however, that, solely for
purposes of calculating the Prepaid Maintenance Fee Adjustment, the Prepaid
Maintenance Fees shall not include any Prepaid Maintenance Fees which have been
paid by means of an application of Prepaid Service Fees as set forth on Schedule
4.23(c) hereto.
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1.91. "Prepaid Service Fees" has the meaning set forth in
Section 4.23(c).
1.92. "Prepaid Service Fees Adjustment" means the amount if
any by which (a) the Prepaid Service Fees, exceeds (b) $71,000.
1.93. "Purchase Price" has the meaning set forth in Section
3.1.
1.94. "Purchased Assets" has the meaning set forth in Section
2.1.
1.95. "Real Property" has the meaning set forth in Section
4.4(c).
1.96. "Real Property Leases" has the meaning set forth in
Section 4.4(b).
1.97. "Required Consents" has the meaning set forth in Section
4.3.
1.98. "Retained License Agreements" has the meaning set forth
in Section 2.6.
1.99. "Schedules" means the Schedules to this Agreement.
1.100. "Seller Indemnified Parties" has the meaning set forth
in Section 7.2.
1.101. "Seller Intellectual Property" has the meaning set
forth in Section 4.11(a).
1.102. "Seller's Clerk's Certificate" has the meaning set
forth in Section 6.2(a).
1.103. "SEVIS" means the U.S. Department of Justice
Immigration and Naturalization Service Student and Exchange Visitor Information
System.
1.104. "Shares" has the meaning set forth in Section 4.1(b).
1.105. "Software" means all computer software programs,
including, without limitation, all firmware, middleware, software libraries and
software tools, and related objects, object codes, source codes and runtime
codes owned, marketed, licensed or under development by Seller, as the case may
be, or for which Seller has the right and license to copy, distribute, prepare
derivative works of, display and perform publicly, modify, use or market, and
any enhancements, improvements or modifications thereto owned or under
development by Seller. All documentation and specifications used in connection
with and related to the Software shall be included in the definition of
Software.
1.106. "Tangible Personal Property" has the meaning set forth
in Section 2.1(a).
1.107. "Tax" or Taxes" means any and all federal, state, local
or foreign taxes, charges, fees, levies or other assessments, including but not
limited to all net or gross income, gross receipts, net proceeds, sales, use,
value added, ad valorem, transfer, franchise, bank shares, profits, withholding,
payroll, employment, social security, unemployment, excise, estimated, stamp,
occupation, property or other taxes, alternative or add-on minimum,
environmental, customs duties, fees, assessments or charges of any kind
whatsoever, including all interest and penalties thereon, and additions to tax
or additional amounts in each case imposed by any taxing authority, domestic or
foreign upon a Person or any of its properties.
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1.108. "Tax Returns" means all returns, declarations, reports,
estimates and information returns and statements required by applicable law to
be filed with respect to Taxes.
1.109. "Territory" means the entire world.
1.110. "Trademarks" means registered trademarks, registered
service marks, trademark and service xxxx applications and unregistered
trademarks and service marks.
1.111. "Transfer Taxes" means any and all sales, use,
transfer, real property transfer, recording, documentary, stamp, registration,
gains, stock transfer and other similar taxes and fees (including any penalty
and interest) arising as a result of any transaction contemplated by this
Agreement.
1.112. "Version 6.x Software Products" has the meaning set
forth in the Section 4.11(a).
1.113. "WebEx Assignment" has the meaning set forth in Section
6.2(a).
1.114. "Y2K Compliant" means the capability of a software
product to accurately process, calculate, manipulate, store and exchange
date/time data from, into, and between the twentieth and twenty-first centuries,
including, without limitation, the years 1999 and 2000 and any leap year
calculations, provided that all other information technology used in combination
with such software product properly exchanges date/time date with such software
product.
1.115. "Year-End Financial Statements" has the meaning set
forth in Section 4.6.
Certain other capitalized terms are defined in other
provisions of this Agreement, and each such term has the meaning ascribed to it
in this Agreement whenever such capitalized term is used in this Agreement.
Unless the context of this Agreement otherwise requires, (a)
words of any gender include each other gender; (b) words using the singular or
plural number also include the plural or singular number, respectively, (c) the
terms "hereof," "herein," "hereby", "hereto" and derivative or similar words
refer to this entire Agreement; and (d) the terms "Article" or "Section" refer
to the specified Article or Section of this Agreement. Whenever this Agreement
refers to a number of days, such number shall refer to calendar days unless
Business Days are specified.
ARTICLE 2
SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1. Assets to be Acquired. Subject to the terms and
conditions contained herein, on the Closing Date, Seller shall sell, assign,
transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller,
free and clear of all Liens, other than Permitted Liens and Assumed Liabilities,
all right, title and interest in and to the following assets of Seller, whether
real, personal or mixed, and whether tangible or intangible, used, intended for
use or required to be used (the "Purchased Assets"):
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(a) Tangible Personal Property. All furniture, fixtures,
machinery, and related equipment, spare parts, office equipment and other
tangible personal property of Seller, including any items purchased subject to
any conditional sales or title retention agreement in favor of any other Person,
set forth on Schedule 2.1(a) attached hereto (the "Tangible Personal Property");
(b) Personal Property Leases. All of Seller's leases of
Tangible Personal Property (excluding the lease of the automobile referred to in
Section 2.2.3 as an Excluded Asset), together with any options to purchase the
underlying property, including those leases and options to purchase set forth on
Schedule 2.1(b) attached hereto.
(c) Contracts. All Contracts to which Seller is a party
or otherwise applicable to Seller's facility (excluding any Contract and/or any
Contract obligations set forth on Schedule 2.2 as an Excluded Asset), including
the Contracts set forth on Schedule 2.1(c) attached hereto (the "Assumed
Contracts");
(d) Intangible Property. The Intellectual Property owned
or licensed by Seller, and other intangible property used in connection with the
operation of the Business, other than Software, including the Intellectual
Property and other intangible property set forth on Schedule 2.1(d) attached
hereto;
(e) Permits. All of Seller's Permits, including Seller's
Permits set forth on Schedule 2.1(e) attached hereto, to the extent transferable
to Buyer;
(f) Licenses. All of Seller's Licenses, including the
Licenses set forth on Schedule 2.1(f) attached hereto;
(g) Software. All Software marketed commercially by
Seller (including any version or upgrade thereto not available for general
release or otherwise in development, in whole or in part), including the
Software set forth on Schedule 2.l(g) attached hereto; provided, however, that
Seller shall only deliver to Buyer software code for fsaATLAS version 5 and
fsaATLAS versions 6.0 through 6.5;
(h) Choses in Action. All of Seller's Claims or right to
Claims whether or not pending, threatened or presently contemplated, by Seller
as of the Closing Date, except for any Claims related to the Excluded Assets
referenced in Section 2.2 below;
(i) Inventory. All Seller's supplies, sales, marketing
and promotional materials and supplies, catalogs, packaging materials, artwork
for packaging and marketing and promotional materials, spare parts, raw
materials, work in process and inventories, including those items set forth on
Schedule 2.1(i) attached hereto (the "Inventory");
(j) Warranties. All guarantees, warranties, indemnities
and similar rights in favor of Seller with respect to any Purchased Assets;
(k) Books and Records. All of Seller's Books and Records
related to the Purchased Assets, subject to the right of Seller to retain copies
of all or any portion of such Books and Records and expressly excluding the
Minute Book of Seller;
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(l) Goodwill. All of Seller's rights in and to the
goodwill of Seller (the "Goodwill");
(m) Internet Addresses. All of Seller's rights in the
Internet addresses listed on Schedule 2.1(m); and
(n) Rights. All of Seller's rights under the
Confidentiality and Non-Competition Agreement between Seller and each of
Seller's employees listed on Schedule 9.2 and each of the following former
employees of Seller: Xxxxxx Xxxxxxx, Xxx Couturer, Thikshan Arulampalam and Xxx
Xxxxxxxx.
2.2. Excluded Assets. The following assets, properties and
rights of Seller are specifically excluded from the Purchased Assets ("Excluded
Assets") :
2.2.1. all cash, cash equivalents, money, funds on
deposit, deposit accounts and certificates of deposit of Seller;
2.2.2. all accounts and notes receivable of Seller;
2.2.3. Seller's lease of the 2003 Nissan Pathfinder; and
2.2.4. those assets, properties and rights set forth on
Schedule 2.2.
Title to the Excluded Assets is not being transferred to Buyer pursuant to this
Agreement or otherwise.
2.3. Assumption of Certain Liabilities. Buyer will not assume
any Claims, Liabilities or obligations of Seller, whether Known, unknown,
absolute, contingent, accrued or otherwise, and whether or not related to the
Purchased Assets or the Business, except as expressly provided in this Section
2.3. Buyer hereby assumes and agrees to pay, perform and discharge all
obligations of Seller to the other parties under the Assumed Contracts (except
that Buyer will not assume any Liability or obligation of Seller under any
Assumed Contract that did not arise in Seller's ordinary course of business
consistent with past practices) (the "Assumed Liabilities").
2.4. Excluded Liabilities. Except for the Assumed Liabilities,
Buyer does not acquire, discharge, assume, or become responsible for any Claims,
Liabilities or obligations of Seller, including, without limitation, any Claims,
Liabilities or obligations to pay any severance, accrued vacation pay or any
other amounts in connection with the termination of any of Seller's employees
employment with Seller and any Claims, Liabilities or obligations to the extent
related to or arising out of version 5 of the Software listed on Schedule 2.1(g)
not being Y2K Compliant (collectively, the "Excluded Liabilities") and does not
hereby become, and shall not in any way be, obligated to pay, perform, satisfy
or discharge any Claims, Liabilities or obligations of Seller. Seller agrees to
pay and satisfy when due all Excluded Liabilities. Notwithstanding the
preceding, Buyer's obligations in Section 9.2 herein to offer New Employees
credit for accrued vacation time with Seller shall continue.
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2.5. Prepaid Items and Deposits. Without in any way limiting the foregoing
provisions of this Agreement, Buyer shall reimburse to Seller, at Closing, the
deposits and other prepaid items paid by Seller under any one or more of the
Assumed Contracts set forth on Schedule 2.5 attached hereto.
2.6 Assignment of Certain Customer Agreements. Notwithstanding
anything to the contrary contained in this Agreement, the parties acknowledge
that in each instance, the assignment by Seller to Buyer of any of the nine (9)
customer license agreements set forth on Schedule 4.3 attached hereto (the
"Retained License Agreements") requires the consent of the customer thereunder.
Seller and Shareholder shall use commercially reasonable efforts (but without
any payment of money by Seller or Shareholder other than its out-of-pocket legal
expenses) to obtain, within 30 days of the Closing Date, the consent of each
such customer to the assignment to Buyer of the applicable Retained License
Agreement. Upon the consent of each such customer, Seller shall promptly assign
the Retained License Agreement of such customer to Buyer pursuant to an
assignment and assumption agreement substantially in the form of Exhibit B
attached hereto. If Seller or Shareholder is unable to obtain the consent of any
one or more of such customers within the time period set forth above (the
"Non-consenting Customers"), Seller shall promptly notify each such
Non-consenting Customer that Seller shall no longer provide support services to
such Non-consenting Customer beginning on the one year anniversary of the date
of such notice. With respect to each Retained License Agreement, for the period
beginning on the Closing Date and ending on the earlier of (i) the date such
Retained License Agreement is assigned by Seller to Buyer and (ii) the one year
anniversary of the date that Seller notifies the Non-consenting Customer of such
Retained License Agreement that Seller shall no longer provide support services
for Seller's products under such Retained License Agreement, Buyer shall provide
support services, as a subcontractor of Seller, to the customer of such Retained
License Agreement in accordance with the terms of such Retained License
Agreement. During such period, Seller shall (i) pay to Buyer all maintenance
fees received by Seller from each such customer with respect to support services
so performed by Buyer and (ii) make no agreements with or other commitments to
any such customers to provide any support services other than those support
services already provided for in any such customer's Retained License Agreement.
Notwithstanding anything to the contrary contained in this Agreement, all
maintenance fees received by Seller and paid to Buyer in accordance with the
foregoing provisions of this Section 2.6 shall be included in the calculation of
Earnout Maintenance Fees pursuant to Section 3.3(a)(i) below.
ARTICLE 3
PURCHASE PRICE
3.1. Purchase Price. The aggregate purchase price for the
Purchased Assets (the "Purchase Price") shall be comprised of (a) Seven Hundred
Thousand Dollars ($700,000), as may be decreased pursuant to Section 3.2 (the
"Initial Purchase Price"), plus (b) the Earnout Purchase Price, plus (c) the
assumption of the Assumed Liabilities.
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3.2. Closing Date Purchase Price Adjustment.
(a) On the Closing Date, immediately prior to the
Closing, Seller shall provide Buyer with (i) Schedule 4.23(b), which sets forth
the Prepaid Maintenance Fees, together with a schedule setting forth a
calculation of the Prepaid Maintenance Fee Adjustment, and (ii) Schedule
4.23(c), which sets forth the Prepaid Service Fees, together with a schedule
setting forth a calculation of the Prepaid Service Fee Adjustment.
(b) The Initial Purchase Price payable at the Closing
shall be reduced, if at all, by the sum of the Prepaid Maintenance Fee
Adjustment and the Prepaid Service Fee Adjustment.
3.3. Earnout. As additional consideration and as part of the
Purchase Price, Seller shall be entitled to a payment of the Earnout Purchase
Price from Buyer as set forth below:
(a) For the purposes of this Agreement, "Earnout Purchase
Price" shall mean the amount equal to the sum of (i) the Earnout Maintenance
Fees and (ii) the Earnout License Fees, each calculated as follows:
(i) Forty Percent (40%) of the aggregate maintenance
and support fees for the fsaATLAS Software or any Derivative Software, including
without limitation the Annual Support Services Fees payable under Seller's
fsaATLAS Enterprise Edition Software End User License Agreement (collectively,
the "Software Maintenance Fees"), received by Buyer or any of Buyer's Affiliates
from each Newfront Customer (as defined below in this Section), including
without limitation any maintenance fees collected by Seller from Non-consenting
Customers and paid to Buyer in accordance with the provisions of Section 2.6
above, for a period (with respect to each Newfront Customer, the "Maintenance
Renewal Periods") equal to the initial three consecutive full 12-month
maintenance renewal periods for such customer (including, without limitation,
any such renewal periods that commenced prior to the Closing Date), or such
lesser period of time if such customer no longer receives maintenance services
for the fsaATLAS Software or any Derivative Software from Buyer or any of
Buyer's Affiliates; (the "Earnout Maintenance Fees"). Notwithstanding anything
to the contrary contained herein, the Prepaid Maintenance Fees, if any, shall be
excluded from the aforesaid aggregate fees prior to the calculation of the
Earnout Maintenance Fees. The Maintenance Renewal Periods will be calculated
separately for each Newfront Customer based on the maintenance renewal dates
specified in each such Newfront Customer's fsaATLAS Software or Derivative
Software license or sublicense agreement. The term "Newfront Customer" shall
mean Seller's customers, as of the Closing Date, that are a party to a license
or sublicense for fsaATLAS Software and are set forth on Schedule 3.3.(a)(i).
Notwithstanding the foregoing provisions of this Subsection 3.3(a)(i), in the
event that Buyer or any of Buyer's Affiliates adopts a business model for the
sale of the fsaATLAS Software or any Derivative Software that represents a
departure from Seller's current practice with respect to the sale or support of
the fsaATLAS Software and, as a direct result of such departure, any Newfront
Customer fails to renew maintenance under its license or sublicense agreement
for the fsaATLAS Software or any Derivative Software, then, in such event, the
aggregate Software Maintenance Fees used to calculate the Earnout Maintenance
Fees hereunder shall be increased by an amount equal to the total Software
Maintenance Fees which would have been payable by such Newfront Customer with
respect to the then unexpired balance of such Customer's Maintenance Renewal
Periods, at the rates charged by Buyer or Buyer's Affiliate, as applicable, for
maintenance or support services during such period for comparable software,
which fees shall be deemed received by Buyer or Buyer's Affiliate, as the case
may be, on the date(s) on which such Customer would have paid the same but for
such non-renewal.
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(ii) Ten Percent (10%) of the aggregate fees payable
to Buyer or any of Buyer's Affiliates for Earnout Licenses (as defined below in
this Section) sold by Buyer or any of Buyer's Affiliates during the thirty-six
(36) month period immediately following the Closing Date (the "Earnout License
Fees"). Except as set forth below, the term "Earnout Licenses" shall mean any
and all licenses or sublicenses of the fsaATLAS Software or any material portion
thereof or any Derivative Software sold by Buyer or any of Buyer's Affiliates to
any third party. For purposes of the earnout payments under this Subsection
3.3(a)(ii), a sale of an Earnout License shall be deemed to have occurred on the
date on which Buyer or Buyer's Affiliate (as applicable) is first entitled to
invoice a customer or distributor for such sale. Notwithstanding the foregoing,
(x) the "Earnout License Fees" for any given sale shall be decreased by any
amount payable by Buyer or any of Buyer's Affiliates for any third party
components licensed by Buyer or any of Buyer's Affiliates for such sale and
included in any Earnout License and (y) where any Earnout License is packaged
together with Buyer's or any of Buyer's Affiliates' other proprietary products
(together, the "Aggregate Products") and sold at a discount off of Buyer's or
any of Buyer's Affiliates' then current list price license fees for each of such
Aggregate Products, the discount on that portion of the sale attributable to the
Earnout License for purposes of calculating the Earnout License Fees shall be
equal to a pro-rata discount based on the discount on the Aggregate Products;
provided, however, that if any such Earnout License so packaged does not have a
then current list price license fee because it is not sold separately from the
Aggregate Products, the license fee therefor shall be deemed equal to the lowest
list price for a license of any fsaATLAS Software or Derivative Software that is
sold separately and that includes all or substantially all of the functionality
of the software under such packaged Earnout License. Notwithstanding anything
contained herein to the contrary, Earnout License Fees shall not include sales
proceeds to the extent derived from consulting services, installation or
implementation services, maintenance services, or other support services.
(b) The Earnout Purchase Price shall be paid as follows:
(i) Within 30 days after the end of each calendar
month during which Buyer is obligated to pay Earnout Maintenance Fees to Seller
as provided for in Subsection 3.3(a)(i) above, and beginning with the first
calendar month ending after the Closing Date (the "Maintenance Earnout Period"),
Buyer shall deliver to Seller (x) a Maintenance Earnout Statement (as defined
below in this Subsection) and (y) by plain check, the portion of the Earnout
Maintenance Fees to which Seller is entitled for the immediately preceding
monthly period. The term "Maintenance Earnout Statement" means a written
statement which shall include (A) the calculation of the portion of the Earnout
Maintenance Fee to which Seller is entitled for the immediately preceding
monthly period, and (B) the Earnout Maintenance Fees, broken down by maintenance
fees received from each Newfront Customer, with respect to such preceding
monthly period.
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(ii) Within ten (10) Business Days after the end of
each calendar quarter during which Buyer is obligated to pay Earnout License
Fees to Seller as provided for in Subsection 3.3(a)(ii) above, and beginning
with the first calendar quarter ending after the Closing Date (the "License
Earnout Period"), Buyer shall deliver to Seller (x) a License Earnout Statement
(as defined below in this Subsection) and (y) by plain check, the portion of the
Earnout License Fees to which Seller is entitled for the immediately preceding
calendar quarter. The Term "License Earnout Statement" means a written statement
which shall include (A) the calculation of the portion of the Earnout License
Fee to which Seller is entitled for the immediately preceding quarterly period
and (B) the Earnout License Fees, broken down by licenses and sublicenses sold
to third parties (including the names of such third parties) to which applicable
software products were licensed or sublicensed, with respect to such preceding
quarterly period.
3.4. Allocation of Purchase Price. Buyer and Seller shall use
commercially reasonable efforts to agree within sixty (60) days after the
Closing Date, to an initial allocation of the Initial Purchase Price and the
Assumed Liabilities among the Purchased Assets. Any Earnout Purchase Price shall
be allocated among the Purchased Assets in the same proportion as such initial
allocation. Such allocations will be based on arm's length negotiations and will
be prepared in accordance with Section 1060 of the Code and the Treasury
Regulations thereunder. Each party shall, to the extent permitted by applicable
Law, report the Tax consequences of the purchase and sale contemplated hereby
(including the filing of Internal Revenue Service Form 8594 in respect of the
Purchased Assets) in a manner consistent with such allocations, and shall not
voluntarily take any position inconsistent therewith upon examination of any Tax
Returns, in any claim for any Tax refund, in any litigation or otherwise.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
As a material inducement to Buyer to enter into this Agreement
and to consummate the transactions contemplated hereby, Seller and Shareholder,
jointly and severally, represent and warrant to Buyer as follows:
4.1. Organization and Capitalization.
(a) Seller is a corporation duly organized, validly
existing, and in good standing under the Laws of the Commonwealth of
Massachusetts, has full corporate power and authority to carry on its business
as it is now being conducted and to own and operate the properties and assets
now owned and operated by it. Attached hereto as Schedule 4.1(a) is a list of
each and every jurisdiction in which Seller is qualified as a foreign
corporation. Seller is and has been at all times required to be so, duly
qualified to transact business as a foreign corporation, and is and has been at
all times in good standing, in each and every jurisdiction where the ownership
or leasing of its properties and assets and the operation of the Business
requires such qualification except where failure to do so does not, individually
or in the aggregate, have a Business Material Adverse Effect.
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(b) The authorized capital stock of Seller consists of
200,000 shares of common stock, of which 20,000 shares have been validly issued
and are outstanding (the "Shares"). All of the Shares are owned by Shareholder
free and clear of any Liens, are fully paid and nonassessable, were not issued
in violation of the terms of any Contract binding upon Seller and/or
Shareholder, and were issued in compliance with Seller's articles of
organization and bylaws and all applicable federal and state securities or "blue
sky" laws and regulations. There are, and have been, no preemptive rights with
respect to the issuance of capital stock by Seller, including, without
limitation, the Shares. There are no existing Contracts, subscriptions, options,
warrants, calls, commitments or rights of any character to purchase or otherwise
acquire from Shareholder or Seller at any time, or upon the happening of any
stated event, any capital stock or other securities of Seller, whether or not
presently issued or outstanding.
4.2. Corporate Power and Authority; Legal Capacity;
Enforceability. Each of Seller and Shareholder has the requisite power and
authority to execute, deliver and perform this Agreement and each of the
documents, agreements and instruments to be executed, delivered and performed by
it or him, as the case may be, in connection with this Agreement (collectively
the "Collateral Documents"), and Seller has all requisite power and authority to
transfer the Purchased Assets to Buyer. The execution, delivery and performance
of this Agreement and each of the Collateral Documents to which Seller is a
party, and the consummation of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary corporate action on the part of
Seller, including, without limitation, the approval thereof by Shareholder, and
requires no further authorization or consent by Seller, Shareholder or any other
Person. This Agreement and the Collateral Documents to be executed and delivered
by each of Seller and Shareholder have been duly and validly executed and
delivered by Seller and Shareholder, as the case may be, and constitute the
legal, valid and binding obligation of Seller and Shareholder, as the case may
be, enforceable against each of them in accordance with their respective terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium or similar Laws affecting the enforcement of creditors' rights
generally and except as the remedy of specific enforcement and other equitable
relief may be unavailable in some cases.
4.3. Non-contravention. The execution, delivery and
performance of this Agreement and each of the Collateral Documents to which
Seller and/or Shareholder is a party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not (a) violate, breach or
contravene any of the terms, conditions or provisions of the articles of
organization or bylaws of Seller; or (b) except as set forth on Schedule 4.3
attached hereto (the consents referred to on Schedule 4.3 being referred to
herein as the "Required Consents"), (i) conflict with, constitute a Default
under or otherwise impair the good standing, validity or effectiveness of any
Contract by which Seller and/or Shareholder, or its and/or his property, is
bound, (ii) subject any of the Purchased Assets to any Contract, other than this
Agreement, to which Seller and/or Shareholder is a party, or by which Seller
and/or Shareholder or any of the Purchased Assets are bound, (iii) violate any
provision of Law, Permit or License applicable to Seller, Shareholder or any of
the Purchased Assets, (iv) result in the creation or imposition of any Lien,
other than Permitted Liens, upon Seller, any of the Purchased Assets or the
Business, or (v) otherwise adversely affect the good standing, validity or
effectiveness of any Contract to which Seller and/or Shareholder is a party, or
which is applicable to the Business or any of the Purchased Assets. There are no
restrictions of any kind that could affect Seller or Shareholder's ability to
enter into this Agreement or any of the Collateral Documents to which any of
them is a party, to perform any of their obligations thereunder, or to
consummate the transactions contemplated hereby or thereby.
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4.4. Title; Properties.
(a) Except as set forth on Schedule 4.4(a), Seller has
good and marketable title to, or a valid license to or leasehold interest in,
the Purchased Assets, including, without limitation, all Intellectual Property
free and clear of all Liens. Except as set forth on Schedule 4.4(a), no other
Person has or will have on the Closing Date any interest whatsoever in any of
the Purchased Assets. No other Person has or will have on the Closing Date any
interest whatsoever in any of the Purchased Assets that would prevent any of
such Purchased Assets from being used in the Business after the Closing Date as
the same was being conducted as of the Closing Date. There are no loans, leases
or other financing to which such Purchased Assets are or will be subject on the
Closing Date. None of the Permitted Liens, individually or in the aggregate, has
a Business Material Adverse Effect or will detract from, interfere with or will
interfere with any of Seller's or Buyer's right to dispose of or use any of the
Purchased Assets.
(b) Schedule 4.4(b) hereto is a true, complete, correct
and current list, by address, owner and usage, of all real property agreements
(including all amendments and supplements thereto) pursuant to which Seller
leases, subleases or otherwise occupies any real property (each a "Real Property
Lease" and collectively the "Real Property Leases"), copies of which have been
furnished to Buyer. Pursuant to the Real Property Leases, Seller has validly
existing and enforceable leasehold, sublease hold or occupancy interests in the
real property leased thereunder, in each case free and clear of all Liens and
free from material Defaults (i) by Seller and (ii) to Seller's Knowledge, by the
other party or parties to such Real Property Leases. Except for the Real
Property Leases, if any, described in Schedule 4.4(b), the consummation of the
transactions contemplated by this Agreement will not require any consent or
approval of any landlord or sublandlord under any such Real Property Lease,
result in any increase in rent or penalty to the party which is a tenant or
subtenant thereunder or result in the early termination of any Real Property
Lease. Seller has not transferred, assigned, hypothecated, pledged or encumbered
any of its rights or interest under any Real Property Lease. Seller has not
received any notice from any landlord or sublandlord or any other party of any
Default under, or the termination of, any Real Property Lease.
(c) The real property leased to Seller pursuant to the
Real Property Leases constitutes all real property used or occupied by Seller
(the "Real Property"). To Seller's Knowledge: (i) no portion thereof is subject
to any pending condemnation proceeding or proceeding by any government,
governmental entity or other authority and there is no threatened condemnation
or proceeding with respect thereto; (ii) the physical condition of such Real
Property is sufficient to permit the continued conduct of the Business as
presently conducted, subject to the provision of usual and customary maintenance
and repair performed in the ordinary course; (iii) there are no Contracts,
written or oral, to which Seller and/or Shareholder is a party, granting to any
party or parties the right of use or occupancy of any portion of the Real
Property; (iv) there are no parties (other than Seller) in possession of any
such Real Property and (v) no notice of any increase in the assessed valuation
of any such Real Property and no notice of any contemplated special assessment
has been received by Seller, and to Seller's Knowledge, there is no threatened
increase in assessed valuation or threatened special assessment pertaining to
any of the Real Property.
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4.5. Third Party Options. There are no Contracts or rights of
any kind with, to, of or in any third party to acquire any of the Purchased
Assets or any portion of the Business.
4.6. Financial Statements. Seller has delivered to Buyer true
and correct copies of the following financial statements:
(a) the unaudited balance sheet of Seller as of December
31, 2002 and the related statements of income for the 12-month period then ended
(the "Year-End Financial Statements"); and
(b) the unaudited balance sheet of Seller (the "Current
Balance Sheet") as of July 31, 2003 (the "Balance Sheet Date") and the related
statement of income for the 7-month period then ended (the "Interim Financial
Statements;" and together with the Year-End Financial Statements, the "Financial
Statements").
The Financial Statements are true and correct, in all material respects, and
have been prepared in accordance with the applicable Books and Records of Seller
(which Books and Records are true and complete, in all material respects) and
have been prepared on an accrual basis and fairly present, in all material
respects, the financial position and results of operations of Seller at the
dates and for the periods covered. All Liabilities of Seller at the Balance
Sheet Date are fully reflected or reserved for in the Current Balance Sheet. The
books of account of Seller fairly reflect, in all material respects, (a) all
transactions relating to Seller and (b) all items of income and expense, assets
and liabilities and accruals relating to Seller.
4.7. Absence of Undisclosed Liabilities. On the Closing Date,
Seller will not have any Liabilities (except for (i) those Liabilities set forth
in the Current Balance Sheet and (ii) those Liabilities which arose after the
Balance Sheet Date and were incurred in the ordinary course of business,
consistent with past practices and in compliance with the covenants and
agreements of Seller herein contained). Seller neither Knows nor has reasonable
grounds to Know of any basis for the assertion against Seller, or against the
Purchased Assets, of any Liability, other than those set forth in the foregoing
clauses (i) and (ii).
4.8. Litigation; Compliance with Law, Permits and Licenses.
(a) Seller has complied with each, and is not in
violation of any Law or Court Order to which Seller is subject, except for
violations that, either individually or in the aggregate, would not result in a
Business Material Adverse Effect, and has not failed to obtain, or to adhere to
the requirements of, any License, Permit or authorization necessary to the
ownership of the Purchased Assets, the employment of the Employees or the
operation of the Business, except for those which the failure to obtain, or to
which the failure to adhere, either individually or in the aggregate, would not
result in a Business Material Adverse Effect. Without limiting the generality of
the foregoing, Seller has not made any offer, payment, promise to pay or
authorization for the payment of money or an offer, gift, promise to give, or
authorization for the giving of anything of value to any person in violation of
the Foreign Corrupt Practices Act of 1977.
(b) No Litigation is pending or, to the Knowledge of
Seller, threatened against Seller or Shareholder, and Seller has no Knowledge of
any basis for any such Litigation. Neither Seller nor Shareholder is a party to
or subject to the provisions of any Court Order that provides limitations or
instructions upon the ability to operate the Business.
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(c) Seller has obtained all Permits and Licenses for the
operation of the Business, or as needed in connection with the Purchased Assets,
the Employees or the Business, except for those which the failure to obtain,
either individually or in the aggregate, would not result in a Business Material
Adverse Effect. Schedule 4.8 contains a true and correct description of all
Licenses and Permits issued in favor of Seller, all of which are in full force
and effect, and Seller currently operates in compliance with the terms of each
of the foregoing. Buyer will not be required, prior to or following the Closing
Date, to file, apply for or obtain any Permit or License in order to purchase
the Purchased Assets, employ the Employees or operate the Business pursuant to
this Agreement.
4.9. Environmental Protection.
(a) Seller is in compliance with all Environmental Laws
applicable to its use and occupancy of the Real Property and has no Knowledge of
any facts or circumstances, and Seller has not received any Claim from any
Governmental Entity, citizens group, Employee or other Person, indicating that
it is not in compliance with any such Environmental Law or the terms or
conditions of any Permit held by Seller relating to Materials of Environmental
Concern or Environmental Laws. All Permits relating to Materials of
Environmental Concern or Environmental Laws currently held by Seller are
identified on Schedule 4.9 attached hereto.
(b) There has not been to Seller's Knowledge, and Seller
has not received, any Claim from any Governmental Entity, citizens group,
Employee or other Person that there has been any past or present actions,
activities, circumstances, conditions, events or incidents, involving the
release, spill, leak, emission, injection, escape, dumping, discharge or
disposal of any Materials of Environmental Concern, that form or could form the
basis of any Claim against Seller, the Purchased Assets, or any Person whose
liability for any such Claim has or may have been retained or assumed by Seller
either contractually or by operation of law (an "Environmental Claim").
(c) To Seller's Knowledge, there is no asbestos or urea
formaldehyde foam insulation contained in or forming part of any building,
building component, structure or office space located on or in the Real
Property. To Seller's Knowledge, no polychlorinated byphenyls (PCBs) are
present, in use or stored at the Real Property and no hydraulic fluid containing
PCBs has been utilized by or at the direction of Seller at the Real Property.
4.10. Insurance. All of the Purchased Assets owned or leased
by Seller are insured against fire and casualty under the policies and in the
amounts and types of coverage set forth in Schedule 4.10 attached hereto, and
Seller is insured under liability insurance policies in the amounts set forth in
Schedule 4.10 attached hereto (the "Current Policies"). The Current Policies are
in force and the premiums thereon paid. All such insurance policies are valid,
binding and enforceable in accordance with their terms against the respective
insurers, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditor's
rights generally. To the Knowledge of Seller, no insurer of Seller is the
subject of pending or threatened insolvency proceedings. Seller has notified its
respective insurance carriers of all Known Litigation, Known Claims, and Known
facts and circumstances which could reasonably give rise to a Claim. Seller has
not received any notice from its respective insurance carrier disclaiming
coverage or defending a reservation of rights clause as to any of such
notifications.
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4.11. Intellectual Property.
(a) Seller owns or is licensed pursuant to a Contract (as
specified on Schedule 4.11(a) hereto), and will own or be licensed pursuant to a
Contract (as specified on Schedule 4.11(a) hereto), and lawfully use, as of the
Closing Date, all of Seller's Intellectual Property, free and clear of all
Liens, all of which Seller's Intellectual Property is set forth on Schedule
4.11(a) hereto (each item listed on Schedule 4.11(a) shall specify whether such
item is owned or licensed) (the "Seller Intellectual Property"). The Seller
Intellectual Property is sufficient for the operation of the Business in the
ordinary course as conducted as of the Closing Date. Version 6.5 of the Software
listed on Schedule 2.1(g) functions in all material respects in accordance with
Seller's currently published user guide therefor. Except as specifically denoted
on Schedule 4.11(a), Versions 6.0 through 6.5 of the Software listed on Schedule
2.1(g) (the "Version 6.x Software Products") are available in "general release"
form (as opposed to only "alpha," "beta" or "early release" forms). With respect
to any registrations of the Seller Intellectual Property owned by Seller,
Schedule 4.11(a) also sets forth, as to each such item of the Seller
Intellectual Property, the (i) relevant application or registration number, (ii)
relevant filing, registration, issue or application date, (iii) record owner,
(iv) jurisdiction, (v) title or description and (vi) remaining life thereof. In
addition, Schedule 4.11(a) identifies whether each item of the Seller
Intellectual Property is owned by Seller or is possessed and used by Seller
under any Contract, and if under any such Contract (except with respect to
off-the-shelf office productivity software), the identity of the parties
thereto, the term thereof and all amounts payable thereunder together with the
payment terms therefor. Except as set forth on Schedule 4.11(a), all such
Contracts are renewable by their terms in the ordinary course of business or are
perpetual licenses.
(b) Except as set forth on Schedule 4.11(b), each item of
the Seller Intellectual Property licensed by Seller from a third party and
embedded in or otherwise licensed or distributed as part of or for use with the
Software listed on Schedule 2.1(g) constitutes a valid and enforceable right of
Seller. Neither the Software listed in Schedule 2.1(g), nor Seller's
modification, use, promotion, distribution or sale thereof, has infringed or
conflicted or does infringe or conflict with the Intellectual Property or other
rights of any other Person. Except as otherwise provided in Schedule 4.11(b),
Seller has no obligation to compensate, or to obtain the consent of, any third
party for the use of any item of the Seller Intellectual Property. There is
neither pending nor, to the Knowledge of Seller, threatened, except as disclosed
on Schedule 4.11(b), any Claim, grievance or Litigation against Seller
contesting the validity of the Software listed on Schedule 2.1(g), and, to the
Knowledge of Seller, there is no basis for any such Claim, grievance or
Litigation. Except as otherwise provided on Schedule 4.11(b), Seller has not
granted a license or other right to use, in any manner, the Software listed on
Schedule 2.1(g), whether or not requiring the payment of royalties, and no third
party has any right to use such Software.
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(c) The cost of outstanding obligations of Seller (i) to
perform or reperform for its customers any installation, implementation,
warranty, maintenance, modification, upgrade, enhancement, consulting, or other
services in connection with any Version 6.x Software Products, and (ii) to
deliver, license, or develop Software to or for its customers, both (i) and (ii)
in the manner in which Seller operated the Business as of the Closing Date, does
not exceed the aggregate payments received or to be received from those
customers attributable to each such obligation. The only Persons that are a
party to a license for the fsaATLAS Software are set forth on Schedule
3.3(a)(i).
(d) To Seller's Knowledge, no third party is (i)
infringing, or has been alleged to infringe, all or any portion of the Software
listed on Schedule 2.1(g), or (ii) using, or has been alleged to use, all or any
portion of the Software listed on Schedule 2.1(g) in derogation of any rights to
be transferred to Buyer under this Agreement.
(e) There is no interference action or other litigation
pending or, to the Knowledge of Seller, threatened before any Governmental
Entity (including, without limitation, the United States Patent and Trademark
Office or corresponding governmental entities in foreign jurisdictions) in
regard to any of the Software listed on Schedule 2.1(g).
(f) The inception, development and reduction to practice
of the Software listed on Schedule 2.1(g) have not constituted or involved, and
do not constitute or involve, the misappropriation of trade secrets, other
Intellectual Property or other rights of any other Person (including, without
limitation, any Governmental Entity).
(g) The Version 6.x Software Products are Y2K Compliant.
(h) Except as set forth on Schedule 4.11(h), the Software
listed on Schedule 2.1(g) was conceived, reduced to practice, reduced to
tangible form, written or otherwise created solely by employees of Seller. To
the extent that any such Software has been developed or created independently or
jointly by any person other than Seller or its employees, Seller has a written
agreement with such person with respect thereto, and Seller thereby has obtained
ownership of, and is the exclusive owner of, such Software therein by operation
of law or by valid and enforceable assignment or other agreement. Any such
assignment or agreement was and is sufficient to irrevocably transfer all rights
in such Software (including the right to seek past and future damages with
respect thereto) to Seller.
(i) Seller has no present or future commitments to
incorporate any functionality or enhancement (including, without limitation,
corrections, fixes, resolutions, patches, avoidance procedures, work-arounds or
the like to alleged defects or errors) into any standard general release version
of the Software listed in Schedule 2.1(g).
(j) All software contained in the computers included in
the Purchased Assets is subject to a license pursuant to a Contract. Each of the
computers included in the Purchased Assets contains all of the software
sufficient for the operation of such computer in the Business in the ordinary
course as conducted as of the Closing Date.
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4.12. Labor and Employee Matters.
(a) Schedule 4.12(a) lists each of Seller's employees as
of the date hereof (the "Employees") and his/her (i) base salary and (ii) bonus
arrangements, if any, each for fiscal year 2002 and as of the date hereof, and
the date on which the most recent salary increase went into effect for each of
the Employees and the amount of each such increase. There are no agreements,
Contracts or collective bargaining agreements, work rules or practices covering
or applicable to any of the Employees, except as set forth on Schedule 4.12(a).
There are no pension plans or profit sharing plans, commission agreements,
bonus, stock options, severance, other plans, agreements or arrangements
providing for any of Employees to receive any remuneration or other benefit,
except as set forth on Schedule 4.12(a). None of the Employees or Independent
Contractors of Seller is represented by any labor organization and Seller has no
Knowledge of any current union organizing activities among the Employees or
Independent Contractors of Seller, nor does any question concerning
representation exist as to such Employees or Independent Contractors. There is
not pending or, to the Knowledge of Seller, threatened any labor strike,
dispute, slowdown, work stoppage or lockout involving any Employee or
Independent Contractor of, or affecting, Seller, or any obligation to continue
the employment or engagement of any of the Employees or Independent Contractors,
except as set forth on Schedule 4.12(a). Except as disclosed on Schedule
4.12(a), Seller has not agreed to increase the compensation level of any of the
Employees nor is there any obligation or understanding respecting such an
increase. Seller has no workers' compensation penalties or assessments pending.
Seller does not currently employ, nor has Seller ever employed more than fifty
(50) employees. Seller has paid all wages and wage supplements including
salaries, commissions, bonuses, vacation pay, severance pay, sick pay, expense
reimbursements, and other compensation, if any, earned by any of Seller's
employees or due and owing to any of Seller's employees for all periods on or
before the Closing Date.
(b) Schedule 4.12(b) contains a list of the names of each
current independent contractor retained by Seller who performs services for
Seller with respect to the Software listed on Schedule 2.1(g)("Independent
Contractors") and the current rate of compensation paid to each such Independent
Contractor. Schedule 4.12(b) specifies the site at which each such Independent
Contractor performs services for Seller with respect to the Software. The
Independent Contractors, and all other independent contractors who have
previously rendered services to Seller, have in the past and continue to be
legally, properly and appropriately treated as non-employees for all Federal,
state, local and foreign tax purposes, as well as all ERISA and employee benefit
purposes. There has been no determination by any Governmental Entity, or by any
tribunal or commission that any Independent Contractor constitutes an employee
of Seller. There has been no investigation or Claim made by or threatened by any
Person or Governmental Entity that any Independent Contractor constitutes an
employee of Seller. Seller has paid all compensation and all other monetary
amounts earned by the any of Seller's independent contractors or due and owing
to any of Seller's independent contractors for all periods on or before the
Closing Date.
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4.13. Employee Benefits. (a) Schedule 4.13(a) lists all plans,
policies, arrangements or understandings to which Seller is a party which
provide any Employee or Independent Contractor (or any dependent or beneficiary
of any such Person) with (i) retirement benefits or deferred compensation; (ii)
vacation, sick leave or severance benefits; (iii) incentive, performance, stock,
share appreciation or bonus awards; (iv) health care benefits; (v) disability
income; (vi) life insurance or survivor's benefits; or (vii) any other type of
employee benefit offered under any arrangement, whether or not subject to
characterization as an "employee benefit plan" within the meaning of Section
3(3) of ERISA ("Plans"). None of the Purchased Assets are subject to any lien
under Section 401(a)(29) or 412(n) of the Code, Section 302(f) or 4068 of ERISA
or arising out of any action filed under Section 4301(b) of ERISA. Neither
Seller nor any Affiliated Seller (as defined below) has incurred any Liability
which could subject Buyer or any Purchased Asset to Liability under Sections
4062, 4063, 4064 or 4069 of ERISA. For purposes of this Section 4.13 only,
"Affiliated Seller" means (x) a member of any "controlled group" (as defined in
Section 414(b) of the Code) of which Seller is a member, (y) a trade or
business, whether or not incorporated, under common control (within the meaning
of Section 414(c) of the Code) with Seller, or a member of any affiliated
service group (within the meaning of Section 414(m) of the Code) of which Seller
is a member. Seller and any Affiliated Seller do not sponsor or contribute to,
and have not in the past sponsored or contributed to, and have no Liabilities
with respect to, any defined benefit plan subject to Title IV of ERISA or any
"multi-employer plan" (as defined in Section 3(37) of ERISA). Seller has
delivered to Buyer a complete copy of the Plans, including any related trust
agreement, and all amendments to the Plans or such trust agreement.
(b) Schedule 4.13(b) sets forth the accrued vacation time
for each of Seller's employees as of August 31, 2003.
4.14. Contracts, Leases, Etc. Except as listed on any other
Schedule attached hereto or described on Schedule 4.14 attached hereto, Seller
is not a party to any Contract of the type described below:
(a) with any current or former shareholder, director, or
officer of Seller, or any of their Affiliates;
(b) with any labor union or other representative of the
Employees;
(c) with any Employee; (d) with any Independent
Contractor;
(e) for the performance of services or the supply of
products by a third party to Seller;
(f) to sell or supply products or to perform services
which obligates Seller to sell products or perform services for a third party;
(g) outstanding proposal to sell or supply products or to
perform services for a third party which, upon acceptance of such proposal,
would obligate Seller to sell products or perform services for a third party;
(h) where Seller is acting as supplier or distributor or
where Seller is acting as principal or agent;
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(i) under which Seller is either lessor or lessee of
personal property;
(j) under which Seller is the lessor or lessee of real
property;
(k) which evidences Indebtedness, including capital
leases or providing for any Lien on any of the Purchased Assets;
(l) for any charitable or political contribution;
(m) for any capital expenditure;
(n) limiting or restraining Seller from engaging or
competing in any lines of business with any Persons;
(o) license, franchise, distributorship, joint venture,
royalty or other similar agreement, including, without limitation, those which
relate in whole or in part to any Purchased Asset or any Intellectual Property
of Seller;
(p) with any Governmental Entity;
(q) power of attorney granted by Seller in favor of any
Person;
(r) other Contract requiring payments or other
consideration by or from Seller in excess of Five Thousand Dollars ($5,000)
during the remainder of its term;
(s) which involves an obligation to indemnify, defend or
hold harmless any other Person; or
(t) other material Contract not made in the ordinary
course of business.
4.15. Other Transactions. Since the Balance Sheet Date, Seller
has not (a) operated the Business except in the ordinary course consistent with
past practice, (b) incurred any Liabilities, except in the ordinary course of
business consistent with past practice, (c) mortgaged, pledged or subjected to
Liens, or suffered to exist any Lien on, any Purchased Asset, tangible or
intangible, (d) discharged or satisfied any Liens, or paid any Liabilities,
except in the ordinary course of business consistent with past practice, or (e)
sold or transferred any of its Purchased Assets or canceled any Indebtedness or
other Liabilities of any other Person, or waived any Claims or rights of
substantial value against any other Person, except, in each case, in the
ordinary course of business consistent with past practice.
4.16. No Changes. Since the Balance Sheet Date, except as set
forth on Schedule 4.16, there has not been:
(a) any Business Material Adverse Change;
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(b) any damage, destruction or Loss (whether or not
covered by insurance) or any condemnation by any Governmental Entity which has
had or may have a Business Material Adverse Effect;
(c) any strike, lockout, labor trouble or any similar
event or condition of any character having a Business Material Adverse Effect;
(d) any increase in the compensation payable or to become
payable by Seller to any of the officers, Employees, Independent Contractors or
agents, or any Known payment or arrangement made to or with any thereof, other
than normal increases in compensation to Employees consistent with past
practices;
(e) any amendments to the articles of organization or
bylaws of Seller; or
(f) written down or written off as uncollectible any
notes or accounts receivable of Seller.
Seller has not taken or agreed to take, whether in writing or
otherwise, either (i) any action described in this Section 4.16 or (ii) any
action which would result in the occurrence of any of the events described in
this Section 4.16. Seller has not omitted to take any action where the omission
could reasonably be expected to result in or lead to the occurrence of any of
the events described in this Section 4.16.
4.17. Certain Tax Matters.
(a) Seller has duly and timely filed with the appropriate
taxing authority, body or agency all Tax Returns required to be filed, and all
such Tax Returns are true, correct and complete, and Seller has timely paid all
Taxes to the extent due and payable, whether or not shown as due on any Tax
Return. All Taxes not yet due and payable have been withheld or adequately
reserved for or, to the extent that they relate to periods on or prior to the
Balance Sheet Date, are reflected as a liability on the Current Balance Sheet.
(b) Seller has properly deducted or withheld all amounts
required by Law to be deducted or withheld for Taxes, including without
limitation with respect to social security and unemployment compensation
relating to its employees, and has timely remitted all such amounts required to
be remitted to the appropriate taxing authority, agency or body.
(c) There are no liens for Taxes upon any of the
Purchased Assets.
(d) Seller is not a United States real property holding
corporation and has not been a United States real property holding corporation
(as defined in Section 897(c)(2) of the Code) during any period specified in
Section 897(c)(1)(A)(ii) of the Code.
-26-
(e) Seller has not failed to make any required filings
pursuant to the bulk sales tax provisions of any state.
(f) There is no basis for any taxing jurisdiction in
which Seller has not filed a Tax Return to claim that Tax Returns should have
been filed by Seller.
4.18. Brokerage. Other than retaining Equation Partners to
assist Seller with the transactions contemplated by this Agreement, neither
Seller nor any of its respective officers, directors or employees, has employed
or retained, or will have employed or retained on the Closing Date, any broker,
agent, finder or consultant or has incurred, or will have incurred, other than
the fee owed to Equation Partners, any liability for any brokerage fees,
commissions, finders' fees or other fees in connection with the negotiation or
consummation of the transactions contemplated by this Agreement.
4.19. Warranties and Liabilities. No Claims under product or
service warranties or guarantees made to customers have been received by Seller
except as set forth on Schedule 4.19. The Claims set forth on Schedule 4.19 have
been satisfied by the performance of the obligations of Seller pursuant to
maintenance agreements entered into in the ordinary course of business. Other
than the express warranties set forth in writing in the Contracts with
customers, Seller has not given or made any warranties to third parties with
respect to any products sold or services performed by it.
4.20. Transactions with Affiliates. There are no Contracts
between Seller and any current or former director, officer, shareholder, or
employee of Seller or any Affiliate of any such person relating to the Purchased
Assets or the Employees, except for those identified on Schedule 4.20 or any
other Schedule attached hereto, a complete copy of which (including all
amendments) has been delivered to Buyer.
4.21. Assumed Contracts; Customer Claims. Each of the Assumed
Contracts is a valid and existing Contract in full force and effect, enforceable
against the parties thereto, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
similar Laws affecting the enforcement of creditors rights generally and subject
to general principles of equity. Seller has made available to Buyer true and
complete copies of such Assumed Contracts. There are no existing material
Defaults of Seller under any such Assumed Contract or, to the Knowledge of
Seller, any other parties thereto. There are no obligations of Seller to any
other party to an Assumed Contract other than those obligations of Seller that
are expressly provided for in such Assumed Contract. No state of facts exists
which would constitute valid grounds for a Claim against Seller by any customer
or former customer of Seller for fraud.
4.22. Sufficiency of Purchased Assets. Except as set forth on
Schedule 4.22, all of the Purchased Assets are used in the operation of the
Business, and further, are sufficient for the operation of the Business as
operated in the ordinary course as of the Closing Date. Except for the Excluded
Assets, there are no assets currently used in the conduct of the Business, other
than the Purchased Assets.
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4.23. Relationship With Customers.
(a) Seller has used its commercially reasonable efforts
to maintain good working relationships with all of its customers. Seller's
Contracts with its customers and customer relationships, which have been
terminated or cancelled during the past year, are set forth and described on
Schedule 4.23(a). Schedule 4.23(a) also contains a list of the names of each of
Seller's current customers (the "Business Customer Base"), indicating the dollar
amount of sales to each such customer for the period beginning January 1, 2003
and ending as of the date hereof. Except as set forth on Schedule 4.23(a), none
of the customers listed on Schedule 4.23(a) has terminated or, to Seller's
Knowledge, given notice to Seller of an intention or plan to terminate any
Assumed Contract. To the Knowledge of Seller, except as set forth on Schedule
4.23(a), none of the Employees or Independent Contractors primarily responsible
for servicing customers listed thereon has indicated in writing an intention or
plan to terminate his or her employment or relationship, as the case may be,
with Seller, or an intention to not accept employment with Buyer in connection
with the consummation of the transaction contemplated by this Agreement. Except
as set forth on Schedule 4.23(a), Seller has no Knowledge of any unresolved or
outstanding Material Complaint (as defined below) by any of the customers in the
Business Customer Base. For purposes of this Section 4.23(a), the term "Material
Complaint" means any communication whereby a customer in the Business Customer
Base asserts that Seller has failed to perform its obligations under such
customer's fsaATLAS end user license agreement.
(b) Seller's prepaid maintenance fees as of the Closing
Date, which relate to any Maintenance Renewal Period (as defined in Section
3.3(a)(i)), are set forth on Schedule 4.23(b) (the "Prepaid Maintenance Fees").
(c) Seller's prepaid service fees as of the Closing Date,
which relate to any period following the Closing Date, are set forth on Schedule
4.23(c) (the "Prepaid Service Fees").
(d) The maintenance renewal date for each of Seller's
customers is set forth on Schedule 4.23(d).
4.24. Corporate Documents. Seller has furnished to Buyer for
its examination true and correct copies of the following:
(a) the articles of organization and bylaws of Seller;
and
(b) the minute books and stock books of Seller from the
inception of Seller, containing all proceedings, consents, actions and meetings
of shareholders and the board of directors (including committee meetings) of
Seller.
4.25. Veracity of Statements. No representation or warranty by
Seller or Shareholder contained in this Agreement, and no statement contained in
any certificate, Schedule or other document or instrument furnished by or on
behalf of Seller or Shareholder to Buyer pursuant hereto or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make it not misleading.
-28-
4.26. Export/Import.
(a) Seller is in compliance with all Export/Import Laws
and has no Knowledge of any facts or circumstances, and Seller has not received
any Claim from any Governmental Entity, Employee or other Person, indicating
that it is not in compliance with any Export/Import Laws or the terms or
conditions of any Permits relating to the export or import of any items
(commodities, software or technology).
(b) There has not been to Seller's Knowledge, and Seller
has not received, any Claim from any Governmental Entity, Employee or other
Person that there has been any past or present actions, activities,
circumstances, conditions, events or incidents, involving any unlawful export or
import of any items (commodities, software or technology), that form or could
form the basis of any Claim against Seller, the Purchased Assets, or any Person
whose liability for any such Claim has or may have retained or assumed either
contractually or by operation of law (an "Export/Import Claim").
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Seller and Shareholder to enter
into this Agreement and to consummate the transactions contemplated hereby,
Buyer hereby represents and warrants to Seller and Shareholder as follows:
5.1. Organization, Power, Standing and Qualification. Buyer
has been duly organized, and is validly existing and in good standing under the
Laws of the State of Delaware, and it has the full power and authority
(corporate or otherwise) to carry on its business as it is now being conducted
and to own and operate the properties and assets owned and operated by it.
5.2. Power and Authority. Buyer has the requisite power and
authority to execute, deliver and perform this Agreement and the Collateral
Documents to which it is a party and to purchase the Purchased Assets from
Seller. The execution, delivery and performance of this Agreement and each of
the Collateral Documents to which Buyer is a party, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action on the part of Buyer and require no further
authorization or consent by Buyer or any other Person. This Agreement and the
Collateral Documents to be executed and delivered by Buyer have been duly and
validly executed and delivered by, and constitute the legal, valid and binding
obligations of, Buyer, enforceable in accordance with their respective terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium or similar Laws affecting the enforcement of creditors' rights
generally and except as the remedy of specific enforcement and other equitable
relief may be unavailable in some cases.
5.3. Non-Contravention. The execution, delivery and
performance of this Agreement and each of the Collateral Documents to which
Buyer is a party, and the consummation of the transactions contemplated hereby
and thereby, do not and will not: (a) violate, breach or contravene, or
otherwise constitute a Default under, any provision of the respective
organizational documents of Buyer or any material contract arrangement or
agreement to which Buyer is a party; (b) violate any provision of Law, Permit or
License, or any judgment, order, writ, injunction, decree or demand of any
Governmental Entity, applicable to Buyer or to its properties or assets; or (c)
require any consent or License to be obtained, or filing to be made, by Buyer
(including without limitation from or with any Governmental Entity) except as
has been made or waived.
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5.4. Veracity of Statements. No representation or warranty by
Buyer contained in this Agreement, and no statement contained in any
certificate, Schedule or other document or instrument furnished by or on behalf
of Buyer to Seller pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement or a material
fact or omits or will omit to state a material fact necessary to make it not
misleading.
5.5 Litigation; Compliance with Laws. Buyer is not in
violation of any Law or Court Order to which Buyer is subject, except for
violations that, either individually or in the aggregate, would not reasonably
be expected to cause a Buyer Material Adverse Effect. No Litigation is pending
or, to the Knowledge of Buyer, threatened against Buyer or any of Buyer's
Affiliates, and Buyer has no Knowledge of any basis for any such litigation,
that could reasonably be expected to have a Buyer Material Adverse Effect.
5.8 Brokerage. Neither Buyer nor any of Buyer's Affiliates,
nor any of their respective officers, directors or employees, has employed or
retained, or will have employed or retained on the Closing Date, any broker,
agent, finder or consultant, or has incurred, or will have incurred, any
liability for any brokerage fees, commissions, finder's fees or other fees in
connection with the negotiation or consummation of the transactions contemplated
by this Agreement.
5.9 Financing. Buyer has sufficient cash, available lines of
credit or other sources of immediately available funds to enable it to complete
the transactions contemplated by this Agreement.
ARTICLE 6
THE CLOSING
6.1. Time and Place. The closing of the transactions relating
to the sale and purchase of the Purchased Assets (the "Closing") contemplated
hereby shall be held at 10:00 A.M. on the date hereof (the "Closing Date"). The
Closing shall be held at the offices of Xxxxxx Xxxxxxxx LLP at 3000 Two Xxxxx
Square, 18th & Arch Streets, Philadelphia, Pennsylvania.
6.2. Conduct of the Closing. On the Closing Date, and as a
condition to the Closing, the following additional documents, agreements,
certificates and instruments shall be duly delivered:
(a) Seller or Shareholder, as the case may be, shall
deliver to Buyer:
(i) this Agreement signed by Seller and Shareholder;
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(ii) evidence, reasonably satisfactory to Buyer,
that the Required Consents have been obtained and are in full force and effect;
(iii) a certificate dated as of the Closing Date and
signed on behalf of Seller by its Clerk to the effect that (i)(A) the certified
copy of the articles of organization for Seller, certified by the Secretary of
State of the Commonwealth of Massachusetts, attached to such certificate, is
true, correct and complete, and is in effect on and as of the Closing Date, (B)
the bylaws of Seller, attached to such certificate, are true, correct and
complete, and are in effect on and as of the Closing Date and (C) the
resolutions of the Board of Directors and Shareholder of Seller, attached to
such certificate approving the transactions contemplated by this Agreement and
the Collateral Documents to which Seller is a party are true, correct and
complete and are in full force and effect as of the Closing Date; (ii) the
officers of Seller executing this Agreement and the Collateral Documents to
which Seller is a party are incumbent officers of Seller and that the specimen
signature on such certificate are their genuine signatures; and (iii) Seller is
presently existing and in good standing in the Commonwealth of Massachusetts and
in each jurisdiction where the operations of Seller require Seller to be
qualified as a foreign corporation certificate (the "Seller's Clerk's
Certificate"). A certificate of good standing for each applicable jurisdiction
for clause (iii) above certified by the applicable governmental authority as of
a date not more than 10 days prior to the Closing Date shall be attached to
Seller's Clerk's Certificate as an exhibit;
(iv) a duly executed General Assignment and Xxxx of
Sale, in the form of Exhibit A attached hereto ("General Assignment and Xxxx of
Sale", signed by Seller;
(v) a duly executed Assumption Agreement, in the
form of Exhibit B attached hereto ("Assumption Agreement"), signed by Seller;
(vi) a duly executed Employment Agreement by and
between J. Xxxxxxx Xxxxxxx and Buyer, in the form of Exhibit C attached hereto
(the "Employment Agreement"), duly executed by J. Xxxxxxx Xxxxxxx;
(vii) Assignment Of Concurrent User Subscription
Agreement between WebEx Communications, Inc. and Newfront Software, Inc., signed
by Seller (the "WebEx Assignment");
(viii) activePDF, Inc., Redistribution License
Agreement (the "active PDF Redistribution License") together with a check made
payable to activePDF, Inc. in the amount of $1,000.00;
(ix) Assignment of Lease dated May 1, 2002 between
Central Plaza/Xxxxx Avenue LLC, as landlord, and Seller, as tenant, of premises
at 000 Xxxxxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxx, XX, signed by Seller and
Central Plaza/Xxxxx Avenue LLC; and
(x) such other documents, instruments, certificates
and agreements as may be reasonably required by Buyer to consummate and give
effect to the transactions contemplated by this Agreement.
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(b) Buyer shall deliver to Seller and Shareholder:
(i) by wire transfer of immediately available funds
to such account as shall be designated by Seller, the Initial Purchase Price;
(ii) this Agreement signed by Buyer;
(iii) the General Assignment and Xxxx of Sale signed
by Buyer;
(iv) the Assumption Agreement signed by Buyer;
(v) the Employment Agreement signed by Buyer;
(vi) Assignment Of Concurrent User Subscription
Agreement between WebEx Communications, Inc. and Newfront Software, Inc., signed
by Buyer;
(vii) activePDF, Inc., Redistribution License
Agreement, signed by Buyer;
(viii) Assignment of Lease dated May 1, 2002 between
Central Plaza/Xxxxx Avenue LLC, as landlord, and Seller, as tenant, of premises
at 000 Xxxxxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxx, XX, signed by Buyer; and
(ix) such other documents, instruments, certificates
and agreements as may be reasonably required by Seller or Shareholder to
consummate and give effect to the transactions contemplated by this Agreement
6.3. No Agreement to Assign. This Agreement will not
constitute an agreement to assign any Assumed Contract if an attempted
assignment thereof, without the consent of a third party, would constitute a
breach thereof or in any way materially adversely affect the respective rights
of Buyer or Seller thereunder. If Seller has not obtained a consent or approval
necessary for the assignment of any Assumed Contract, then Seller and
Shareholder will use their commercially reasonable efforts to obtain that
consent or approval after the Closing Date, and, at Buyer's request, will
cooperate in any reasonable arrangements requested by Buyer to provide Buyer the
benefits of that Assumed Contract, subject to Buyer's performance of any
obligations arising under that Assumed Contract. Nothing in this Section will
require Buyer to enter into, or to accept as a substitute for performance by
Seller under this Agreement, any arrangement that would impose any significant
additional cost, expense or liability on Buyer, or that would deprive Buyer of
any material benefits contemplated by this Agreement.
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ARTICLE 7
INDEMNIFICATION
7.1. By Seller and Shareholder. Regardless of any
investigation undertaken or made by Buyer or any of its advisors prior to the
Closing Date, Seller and Shareholder shall, jointly and severally, indemnify,
defend and hold harmless Buyer and its Affiliates, officers, directors, agents
and employees (collectively, the "Buyer Indemnified Parties" and, individually,
each a "Buyer Indemnified Party"), from and against any and all Claims
(including, without limitation, Claims arising out of facts or circumstances
that have occurred on or prior to the Closing Date, even though such Claim may
not be filed or come to light until after the Closing Date), Litigation and/or
Losses, which a Buyer Indemnified Party may sustain, suffer or incur, resulting
from, related to, or arising out of:
(a) any misstatement of or omission from any
representation of, or any breach of warranty by Seller and/or Shareholder
contained in this Agreement, any of the Collateral Documents, any Schedule to
this Agreement, any certificate or financial statement furnished or to be
furnished by Seller and/or Shareholder to Buyer hereunder;
(b) any breach of any covenant, agreement or undertaking
by Seller and/or Shareholder contained in this Agreement, any of the Collateral
Documents, any Schedule to this Agreement, any certificate or financial
statement furnished or to be furnished by Seller and/or Shareholder to Buyer
hereunder;
(c) any Liabilities of Seller other than the Assumed
Liabilities;
(d) any non-compliance with applicable Law relating to
bulk sales, bulk transfers and the like or to fraudulent conveyances, fraudulent
transfers, preferential transfers and the like by Seller; and
(e) any Claim or Court Order arising out of any of the
foregoing even though such Claim or Court Order may not be filed, become final,
or come to light until after the Closing Date.
7.2. By Buyer. Buyer shall indemnify, defend and hold harmless
Seller, Shareholder and their Affiliates, officers, directors, agents and
employees (collectively, the "Seller Indemnified Parties" and, individually, a
"Seller Indemnified Party") from and against any and all Claims, Litigation
and/or Losses, which a Seller Indemnified Party may sustain, suffer or incur,
resulting from, related to, or arising out of:
(a) any misstatement of or omission from any
representation of, or any breach of warranty by, Buyer contained in this
Agreement, any of the Collateral Documents, any Schedule to this Agreement, any
certificate, financial statement or other document or instrument furnished or to
be furnished by Buyer to Seller and/or Shareholder;
(b) any breach of any covenant, agreement or undertaking
by Buyer contained in this Agreement, any of the Collateral Documents, any
Schedule to this Agreement, any certificate, financial statement or other
document or instrument furnished or to be furnished by Buyer to Seller and/or
Shareholder hereunder;
(c) any of the Assumed Liabilities; and
(d) any Claim or Court Order arising out of any of the
foregoing even though such Claim or Court Order may not be filed, become filed,
or come to light after the Closing Date.
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7.3. Notice and Defense; Costs of Defense.
(a) Promptly after acquiring Knowledge of any Litigation,
Claim or Loss against which an Indemnified Party is or may be entitled to
indemnification hereunder, such Indemnified Party shall send a Claim Notice to
the Indemnifying Party, but any failure to so provide the Claim Notice to the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
that it may have to the Indemnified Party under this Article 7 except to the
extent that the Indemnifying Party's ability to defend or mitigate such Claim,
Litigation or Loss, is materially prejudiced by the failure to give the Claim
Notice and only to extent thereof. The Indemnifying Party shall be entitled to
participate in the defense of such action and to assume control of such defense;
provided, however, that:
(i) the Indemnified Party shall be entitled to
participate in the defense of such Claim, Litigation or Loss, and to employ
counsel at its own expense to assist in the handling of such Claim, Litigation
or Loss;
(ii) the Indemnifying Party shall obtain the prior
written approval of the Indemnified Party (such approval shall not be
unreasonably withheld, conditioned or delayed) before entering into any
settlement of such Claim, Litigation or Loss or ceasing to defend against such
Claim, Litigation or Loss, if, pursuant to or as a result of such settlement or
cessation, injunctive or other equitable relief would be imposed against the
Indemnified Party;
(iii) the Indemnifying Party shall not consent to
the entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to each
Indemnified Party of a release of each such Indemnified Party from liability in
respect of such Claim, Litigation or Loss; and
(iv) the Indemnifying Party shall not be entitled to
control but shall be entitled to participate at its own expense in the defense
of, and the Indemnified Party shall be entitled to have sole control at its own
expense over, the defense or settlement of any Claim, Litigation or Loss to the
extent the Claim, Litigation or Loss seeks an order, injunction or other
equitable relief against the Indemnified Party which, if successful, could
materially interfere with the business, operations, assets, condition or
prospects of the Indemnified Party. In such case, the Indemnified Party shall
obtain the prior written approval of the Indemnifying Party (such approval shall
not be unreasonably withheld) before entering into any settlement of such Claim,
Litigation or Loss or ceasing to defend against such Claim, Litigation or Loss,
if, pursuant to or a result of such settlement or cessation, injunctive or other
equitable relief would be imposed against the Indemnified Party.
(b) After written notice by the Indemnifying Party to the
Indemnified Party of its election to assume control of the defense of any such
Claim, Litigation or Loss, the Indemnifying Party shall not be liable to such
Indemnified Party hereunder for any legal expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof. If the Indemnifying
Party does not assume control of the defense of such Claim, Litigation or Loss
as provided in this Section 7.3, the Indemnified Party shall have the right to
defend such Claim in such manner as it may deem appropriate at the cost and
expense of the Indemnifying Party, and the Indemnifying Party will promptly
reimburse the Indemnified Party therefor in accordance with this Section 7.3.
The reimbursement of fees, costs and expenses required by this Section 7.3 shall
be made by periodic payments during the course of the investigation or defense,
as and when bills are received or expenses incurred.
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(c) In the event that Seller or Shareholder is required
to pay any Buyer Indemnified Party for any Indemnifiable Losses under this
Section 7.3, such amount may be deducted from or offset against the Earnout
Purchase Price at the sole discretion of Buyer.
(d) In calculating any amount of damages to be paid by an
Indemnifying Party pursuant to this Agreement, the amount of such damages will
be reduced by all reimbursements credited to or received by the Indemnified
Party, relating to such damages, and will be net of any tax benefits and
insurance proceeds received by the Indemnified Party with respect to the matter
for which indemnification is claimed.
7.4. Limitation of Indemnity. Neither a Buyer Indemnified
Party nor a Seller Indemnified Party shall make a Claim for Indemnifiable Losses
pursuant to Sections 7.1(a) or (b) or Sections 7.2(a) or (b), as the case may
be, unless the aggregate amount of all such Indemnifiable Losses for a Buyer
Indemnified Party or a Seller Indemnified Party, as the case may be, exceeds
Twenty Five Thousand ($25,000) (the "Indemnification Deductible") at which point
the Indemnified Party shall be entitled to indemnification for all of such
party's Indemnifiable Losses in excess of the Indemnification Deductible.
Notwithstanding the foregoing, the Indemnification Deductible shall not apply to
any and all Claims, Litigation and/or Losses, sustained, suffered or incurred,
resulting from, related to, or arising out of (i) any Tax Liabilities of Seller,
(ii) any breach of any covenant by Seller or Shareholder in Section 2.6, Section
9.1(b), Section 9.1(c), Section 9.1(d), Section 9.1(e), Section 9.5, Section 9.6
or (iii) any misstatement of or omission from any representation of, or any
breach of warranty by Seller and/or Shareholder, contained in Section 4.4(a),
Section 4.13(b), Section 4.17, Section 4.23(b), Section 4.23(c) and Section
4.23(d). For purposes of calculating the amount of Indemnifiable Losses incurred
by Buyer Indemnified Parties or Seller Indemnified Parties arising out of or
resulting from any misstatement, omission or breach of a representation,
covenant or agreement by Seller, Shareholder or Buyer, as the case may be, the
references to a "Business Material Adverse Effect," a "Buyer Material Adverse
Effect" or materiality (or other correlative terms) shall be disregarded,
provided the existence of the breach itself is first established on the basis of
the presence of such "Business Material Adverse Effect," "Buyer Material Adverse
Effect" or materiality or other correlative term, as applicable. The limitations
on the assertion of claims for indemnification (i.e. the Indemnification
Deductible) contained in this Section 7.4 shall not apply to, and shall not in
any way limit the right of any Buyer Indemnified Party or Seller Indemnified
Party to pursue, any rights, remedies or Claims based on fraud. Notwithstanding
anything to the contrary contained in this Agreement but subject to the
immediately following sentence, the liability of Seller and Shareholder under
this Agreement shall be limited, in the aggregate, to a maximum amount equal to
the sum of (i) fifty percent (50%) of the Initial Purchase Price and (ii) fifty
percent (50%) of the Earnout Purchase Price as and when the same is paid or
payable to Seller. Notwithstanding the foregoing, the liability of Seller and
Shareholder under this Agreement for Tax Liabilities of Seller or any
misstatement of or omission from any representation or warranty contained in
Sections 4.4(a), 4.11 or 4.17 shall be limited, in the aggregate, to a maximum
amount equal to the Purchase Price. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall the liability of Seller and
Shareholder for all Indemnifiable Losses of any nature arising under this
Agreement exceed, in the aggregate, a maximum amount equal to the Purchase
Price.
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7.5. Characterization of Indemnity Xxxxxxxx.Xx the extent
permitted by applicable Law, any payment made pursuant to this Article 7 shall
be treated, for Tax purposes, as an adjustment to the Purchase Price.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
8.1. Representations and Warranties.
Notwithstanding anything to the contrary herein or any investigation made by
or on behalf of Seller, Shareholder or Buyer prior to the Closing Date, all
representations and warranties made hereunder by any party on the Closing Date
shall survive the Closing Date and shall end upon the expiration of the Covenant
Period, except that the representations and warranties made in Sections 4.1
(Organization and Capitalization), 4.4(a) (Title), 4.9 (Environmental
Protection), 4.13 (Employee Benefits) and 4.17 (Certain Tax Matters) shall
survive for 180 days past the applicable statute of limitations and except that
the representations and warranties made in Section 4.11 (Intellectual Property)
shall survive for a period of three (3) years from and after the Closing Date.
8.2. Covenants. Each covenant contained in this Agreement
shall survive the Closing Date for the period specified in such covenant;
provided, however, if a particular covenant does not specify a survival period,
such covenant shall end upon the expiration of the applicable statute of
limitations.
8.3. Extension of Survival. Any representation, warranty,
covenant or agreement that would otherwise terminate in accordance with this
Article will continue to survive if notice of such Claim has been timely given
prior to the expiration of the applicable survival period, until the related
Claim for indemnification has been satisfied or otherwise resolved as provided
in herein. Notwithstanding anything herein, any breach of representation or
warranty contained in this Agreement made by any party or any written
information furnished by any party as of the Closing Date that was made by such
party fraudulently or with intent to defraud or mislead shall survive for the
applicable statute of limitations after the Closing Date.
ARTICLE 9
CONDUCT OF SELLER, SHAREHOLDER AND BUYER AFTER THE CLOSING
9.1. Cooperation and Further Assurances.(a) Buyer, Seller and
Shareholder will cooperate upon and after the Closing Date in effecting the
orderly transfer of the Purchased Assets and the Business to Buyer and to
consummate the other transactions contemplated by this Agreement. In addition,
after the Closing Date, at the request of any party and at the requesting
party's expense, but without additional consideration, the other parties shall
execute and deliver from time to time such further instruments of assignment,
conveyance and transfer, (including, without limitation any documents necessary
to record the assignment transferring ownership of the Seller Intellectual
Property to Buyer with the United States Patent and Trademark Office, the U.S.
Copyright Office and their respective equivalents in any foreign jurisdiction),
shall cooperate in the conduct of Litigation and the processing and collection
of insurance Claims, and shall take such other actions as may reasonably be
required to accomplish the orderly transfer to Buyer of the Purchased Assets and
the Business as contemplated by this Agreement in accordance with the terms and
conditions of this Agreement.
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(b) Seller and Shareholder shall promptly, but in no
event more two (2) Business Days after the Closing Date, transfer ownership of
the following domains to Buyer:
(i) xxx.xxxxxxxx.xxx; and
(ii) xxx.xxxxxxxxxxxxxxxx.xxx
In connection with the transfer of such domains, Seller and
Shareholder shall make all necessary payments to the applicable domain
registrars within the time frame referenced above in order to effectuate the
transfers.
(c) Seller and Shareholder shall promptly, but in no
event more than ten (10) Business Days after the Closing Date, change the
corporate name of Seller to a name that is not substantially similar to Seller's
current name.
(d) Seller and Shareholder shall promptly use
commercially reasonable efforts to promptly obtain evidence of WebEx
Communications, Inc.'s acceptance of the WebEx Assignment.
(e) Seller and Shareholder shall promptly, but in no
event more than two (2) Business Days after the Closing Date, deliver the signed
activePDF Redistribution License to activePDF, Inc., together with the $1,000
transfer fee delivered to Buyer at the Closing. Seller and Shareholder shall
promptly use commercially reasonable efforts to promptly obtain evidence of
activePDF, Inc.'s acceptance of the activePDF Redistribution License.
(f) For a period of five years following the Closing
Date, Buyer, Seller and Shareholder shall furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such information and
assistance relating to the Purchased Assets and the Business as is reasonably
necessary for the filing of all Tax Returns, and making of any election related
to Taxes, the preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating to any Tax
Return. During the aforesaid period, Seller, Shareholder and Buyer shall
cooperate with each other in the conduct of any audit or other proceeding
related to Taxes involving the Business and each shall execute and deliver such
powers of attorney and other documents as are reasonably necessary to carry out
the intent of this Section 9.1(b). Notwithstanding the foregoing, neither Buyer,
Seller nor Shareholder shall be required unreasonably to prepare any document or
determine any information not then in its possession in response to a request
pursuant to this Section 9.1(e).
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9.2. Employment of Seller Employees. Buyer will offer
employment to the Seller Employees listed on Schedule 9.2 attached hereto to be
effective upon the Closing Date (the "New Employees"). Any offer of employment
to a New Employee shall (i) be for a position with substantially equivalent job
skills and responsibilities as that which he or she held with Seller as
immediately prior to the Closing Date, (ii) be at substantially equivalent or
better total compensation as paid by Seller to such New Employee immediately
prior to the Closing Date, (iii) credit such New Employee's years of service
with Seller as years of service with Buyer for purposes of such New Employee's
vacation time and, to the extent Buyer is reasonably able to do so under the
terms thereof, for purposes of Buyer's benefit plans, (iv) credit such New
Employee's accrued vacation time with Seller (the accrued vacation time for such
New Employee is set forth on Schedule 4.13(b)) as accrued vacation time with
Seller for purposes of calculating and crediting such New Employee's vacation
time with Buyer, (v) include rights of participation in all of Buyer's benefits
plans on the same terms and conditions as other Buyer employees at a
substantially similar level and (vi) be subject to such New Employee executing
Buyer's standard form of employee confidentiality and assignment of inventions
agreement. Subject to (iii) and (iv) above, a New Employee that accepts
employment with Buyer shall be subject to Buyer's current vacation time accrual
and utilization policies. All such actual employment of any New Employee shall
be subject to Buyer's right, in its sole discretion, to establish and modify
from time to time the terms and conditions of its employees' employment and to
terminate such employment at any time. Except as otherwise specifically provided
in this Section 9.2, any New Employee hired by Buyer will be treated as a new,
at-will employee of Buyer and Buyer shall not be responsible for any costs,
direct or indirect, in connection with the termination of employment of the New
Employee as a result of the transactions contemplated to take place at the
Closing Date. Buyer has no obligation to provide any severance payments or any
other compensation to any of the Seller Employees who do not accept employment
with Buyer on the terms set forth herein.
9.3. Maintenance Fees. Buyer agree that it will use good
faith, diligent efforts to obtain renewals of maintenance for the fsaATLAS
Software and any and all Derivative Software, including without limitation by
providing adequate support and upgrades which are materially consistent with the
effort used by Buyer to obtain renewals of maintenance on other software
products of Buyer.
9.4. Right of Audit.
(a) For a period of beginning on the Closing Date and
ending 90 days after the end of the later of the Earnout Maintenance Period and
the Earnout License Period, Buyer shall keep at its principal place of business
full, accurate and complete records and books of account in such detail as to
allow Seller to make an accurate determination of all payments of the Earnout
Purchase Price due pursuant to this Agreement. All such books and records shall
be available during normal business hours upon reasonable notice for
examination, inspection and audit by Seller or its duly authorized independent
accountants; provided, however, Seller or its duly authorized independent
accountants shall not examine, inspect or audit such books and records more than
two times in any given calendar year and no more than one time in any six month
period.
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(b) In the event that Seller conducts or has conducted an
examination, audit or inspection of Buyer's books and records and, as a result
of such examination, audit, or inspection, it is determined that there are
unreported amounts payable to Seller under the Earnout Purchase Price, Seller
shall communicate such determination in writing to Buyer which communication
shall state with reasonable specificity the basis for such determination (an
"Earnout Objection"). Buyer shall have 10 Business Days from receipt of an
Earnout Objection to respond in writing to such Earnout Objection. If Buyer
fails to respond in writing to the Earnout Objection within the period required,
then Buyer shall have no further right to challenge such Earnout Objection and
such Earnout Objection shall be final, binding and conclusive. If, however,
Buyer responds in writing to Seller during such period and Buyer and Seller can
not resolve the matter in dispute within 10 Business Days from Seller's receipt
of Buyer's response, such matter shall be resolved in accordance with Section
9.4(c). Within five (5) Business Days from the date on which either (i) an
Earnout Objection becomes final, binding and conclusive, (ii) Seller and Buyer
agree to an adjustment to the Earnout Purchase Price, or (iii) the matter is
resolved in accordance with Section 9.4(c), Buyer shall pay to Seller by plain
check, the unreported amounts payable to Seller under the Earnout Purchase
Price.
(c) The disagreement shall be tendered to by a firm of
independent certified public accountants of recognized national standing
("Independent Accountant") which does not at the time of retention provide and
has not in the prior three (3) years provided auditing services to Buyer or
Seller (or to either of their Affiliates) to make a determination as to the
subject matter of such disagreement, which determination shall be final, binding
and conclusive on the parties hereto for the purpose of this Agreement. All fees
and expenses charged by the Independent Accountant under this Section 9.4(c)
shall be shared equally by Seller and Buyer. If Buyer and Seller are unable to
agree on the Independent Accountant, Buyer and Seller will submit the name of
one accounting firm that satisfies the criteria of this Section 9.4(c) and the
Independent Accountant will be randomly selected by lot from those two
accounting firms. The Independent Accountant shall be instructed to use every
reasonable effort to perform its function within 30 days following submission of
the matter to it and, in any case, as soon as practicable after such submission
to it.
9.5. Real Estate Assessments. If at any time after the Closing
Date, Buyer is assessed fees or any charges (including without limitation rental
payments or operating expenses) under the Real Property Lease with respect to
any period on or before the Closing Date, Buyer shall notify Seller of such fees
or charges and shall provide Seller with reasonable back-up documentation
evidencing the same. Seller shall promptly pay such amounts to Buyer. Buyer will
have the right to offset any such fees or charges against the Earnout Purchase
Price upon written notice to Seller.
9.6. Utility Services. Seller, Shareholder and Buyer will
cooperate upon and after the Closing Date in effecting the prompt transfer of
all applicable utility services into the name of Seller, including, without
limitation, phone service. Neither Seller nor Shareholder shall take any action
to terminate any such utility services. Buyer shall promptly reimburse Seller
for any actual out-of-pocket fees charged by the utility provider in question
for the utility services provided to Buyer during the period of time beginning
on the Closing Date and ending on the date such utility services are transferred
to Buyer.
9.7 Real Estate Taxes and Operating Expenses. In the event
that the landlord under the Real Property Lease determines after the Closing
Date that Seller has paid any sums in excess of the actual real estate taxes
and/or Operating Expenses payable under the Real Property Lease with respect to
any period on or prior to the Closing Date, then, in such event, Buyer shall
promptly pay to Seller an amount equal to such excess.
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ARTICLE 10
NON-COMPETITION AND CONFIDENTIALITY
10.1. Agreement Not to Compete.
(a) During the three-year period commencing on the
Closing Date (the "Non-Compete Period"), neither Seller, Shareholder nor any of
Seller or Shareholder's Affiliates will do any of the following, directly or
indirectly, individually or through one or more intermediaries or Affiliates,
without the prior written consent of Buyer:
(i) engage or participate in any business activity
in the Territory that provides software, software consulting services, technical
or functional consulting services, or such other products or services regarding
or otherwise relating to visa management, or that is otherwise competitive with
the Business (a "Competitive Business");
(ii) become interested (as owner, stockholder,
lender, partner, co-venturer, director, officer, employee, agent, consultant or
otherwise) in any Person engaged in any Competitive Business, or become
interested in (as owner, stockholder, lender, partner, co-venturer, director,
officer, employee, agent, consultant or otherwise) any portion of the business
of any Person where such portion of such business is a Competitive Business
(notwithstanding the foregoing, Seller, Shareholder or any of Seller or
Shareholder's Affiliates may hold not more than 1% of the outstanding securities
of any class of any publicly-traded securities of a Person that is engaged in a
Competitive Business);
(iii) influence or attempt to influence any
supplier, customer or prospect of Buyer or any of Buyer's Affiliates to
terminate, modify or not enter into any written or oral agreement or course of
dealing with Buyer or any of Buyer's Affiliates; or
(iv) influence or attempt to influence any Person
either (A) to terminate or modify any Contract with Buyer or any of Buyer's
Affiliates, or (B) to employ or retain, or arrange to have any other Person or
entity employ or retain, any Person who has been employed or retained by Buyer
or any of Buyer's Affiliates after the Closing Date or Seller (before the
Closing Date) as an employee, consultant, agent or distributor of Buyer, any of
Buyer's Affiliates or Seller at any time during the two (2) year period prior to
the Closing Date or during the Non-Compete Period.
(b) Notwithstanding the preceding, Shareholder and any
other Affiliate of Seller is permitted to (i) be employed by Buyer or any of
Buyer's Affiliates or (ii) provide services to Buyer or any of Buyer's
Affiliates, without violating the terms of this Article 10.
(c) Seller and Shareholder acknowledge that (i) it and
he, respectively, has carefully read and considered the provisions of this
Section 10.1, (ii) it and he, respectively, has obtained legal counsel in
determining whether to enter into this Agreement, (iii) up to the Closing Date,
it and he, respectively, has been engaged in the Business, the market for which
includes the Territory and (iv) Buyer would not enter into this Agreement or
consummate the transactions contemplated hereby except for the expansion
opportunities relating to the Business and the agreement of Seller and
Shareholder contained herein as it relates to the Territory.
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(d) The terms of the covenants contained in this Section
10.1 shall be construed as separable and shall be independent and shall be
interpreted and applied consistently with the requirements of reasonableness and
equity.
10.2. Confidentiality. From and after the Closing, neither
Seller nor Shareholder shall divulge, communicate or use in any way, any
Confidential Information of Seller, the Business, Buyer or any of Buyer's
Affiliates. Notwithstanding anything herein to the contrary, each party to this
Agreement (and each Affiliate and Person acting on behalf of any such party)
agrees that each party hereto (and each employee, representative, and other
agent of such party) may disclose to any and all Persons, without limitation of
any kind, the tax treatment and tax structure of the transactions contemplated
by this Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to such party or such Person relating to such tax
treatment and tax structure, except to the extent necessary to comply with any
applicable federal or state securities laws.
10.3. Specific Enforcement; Extension of Period.
(a) Seller acknowledges that the restrictions contained
in Article 10 hereof are reasonable and necessary to protect the legitimate
interests of Buyer and that Buyer would not have entered into this Agreement in
the absence of such restrictions. Seller also acknowledges that any breach of
Article 10 hereof will cause continuing and irreparable injury to Buyer for
which monetary damages would not be an adequate remedy. Seller agrees that it
shall not, in any action or proceeding to enforce any of the provisions of this
Article 10, assert the Claim or defense that an adequate remedy at law exists.
In the event of such breach by Seller, Buyer shall have the right to enforce the
provisions of Article 10 hereof by seeking injunctive or other relief in any
court, without a requirement that a bond be posted, and this Article 10 shall
not in any way limit remedies of law or in equity otherwise available to Buyer.
(b) In the event that Seller breaches any of the
covenants set forth in Section 10.1, the Covenant Period shall be suspended for
the time required for Litigation to enforce the relevant covenants; provided,
that Buyer is successful on the merits in any such Litigation and commences such
Litigation within twelve (12) months after Buyer has Knowledge of such breach.
The "time required for Litigation" is herein defined to mean the period of time
from the earlier of such party's first breach of such covenants or service of
process upon such party through the expiration of all appeals related to such
litigation.
ARTICLE 11
GENERAL
11.1. Transfer Taxes. Seller shall pay all Transfer Taxes
payable by reason of the transactions contemplated by this Agreement, and Seller
shall indemnify, defend and hold harmless Buyer with respect to such Transfer
Taxes. Seller shall, at its own expense, file all necessary Tax Returns and
other documentation with respect to such Transfer Taxes.11.2. Right of Set-off.
Notwithstanding anything contained in this Agreement to the contrary, in the
event and to the extent that any Buyer Indemnified Party is entitled to any
payments from Seller pursuant to this Agreement (whether on account of
indemnification or otherwise) (collectively, the "Buyer's Off-Set Claims"), any
amounts payable as Earnout Purchase Price may be applied by Buyer to off-set
against and to discharge said obligations and Buyer shall be entitled to a
credit for any such amounts so applied by Buyer in respect of any such amounts
due and owing to Seller in respect of Earnout Purchase Price.
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11.3. Entire Agreement; Amendments. This Agreement, the
Schedules and the Exhibits hereto constitute the entire understanding among the
parties with respect to the subject matter contained herein and supersedes any
prior understandings and agreements among them respecting such subject matter.
This Agreement may be amended and supplemented only by a written instrument duly
executed by all the parties.
11.4. Headings. The headings in this Agreement are for
convenience of reference only and shall not affect its interpretation.
11.5. Gender. Words of gender may be read as masculine,
feminine, or neuter, as required by context.
11.6. Schedules. Each Schedule referred to herein is
incorporated into this Agreement by such reference.
11.7. Severability. If any provision of this Agreement is held
illegal, invalid, or unenforceable, such illegality, invalidity, or
unenforceability will not affect any other provision hereof. The parties hereto
authorize that the provisions of this Agreement may, in such circumstances, be
modified to the extent necessary to render enforceable the provisions hereof.
11.8. Notices. All notices and other communications hereunder
shall be in writing and shall be given to the Person either personally or by
United States overnight express mail, postage prepaid, or by
nationally-recognized courier service guaranteeing next Business Day delivery,
charges prepaid, or by fax, to such party's address (or to such party's fax
number). All notices shall be deemed received on the date when dispatched in
accordance the foregoing sentence.
If to Buyer, to:
c/o Systems & Computer Technology Corporation
0 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attn: General Counsel
Fax No.: 000.000.0000
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with a copy to:
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
00xx & Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax No.: 000.000.0000
If to Seller or Shareholder, to:
Xx. Xxxxxxx Xxxx
0 Xxxxxx Xxxxxx, Xxx. 00
Xxxxxxxxx, XX 00000
Fax No.: 000.000.0000
with a copy to:
White White & Van Etten LLP
00 Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxx Xxxxx, Esq.
Fax No.: 000.000.0000
Notice of any change in any such address shall also be given in the manner set
forth above. Whenever the giving of notice is required, the party entitled to
receive such notice may waive the giving of such notice.
11.9. Waiver. The failure of any party to insist upon strict
performance of any of the terms or conditions of this Agreement will not
constitute a waiver of any of its rights hereunder.
11.10. Assignment. No party may assign any of its rights or
delegate any of its obligations hereunder without the prior written consent of
the other parties.
11.11. Successors and Assigns. This Agreement binds, inures to
the benefit of, and is enforceable by the successors and permitted assigns of
the parties, and does not confer any rights on any other Persons.
11.12. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Delaware without regard to
the conflict-of-laws provisions thereof.
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11.13. Dispute Resolution.
(a) Good Faith Negotiations; Mediation. Except as
otherwise set forth in this Agreement, if any dispute arises under this
Agreement that is not settled promptly in the ordinary course of business, the
parties shall seek to resolve such dispute between them, first, by negotiating
promptly with each other in good faith in face-to-face negotiations. If the
parties are unable to resolve such dispute between them within ten (10) Business
Days (or such period as the parties shall otherwise agree) through these
face-to-face negotiations, then any such dispute shall be submitted to
non-binding mediation conducted on a confidential basis under the then current
Commercial Arbitration Rules of the American Arbitration Association (the
"Association") strictly in accordance with the terms of this Agreement and the
substantive law of the State of Delaware. The mediation shall be conducted at
the Association's regional office located in Boston, Massachusetts, by an
attorney who shall be experienced in the software business (to the extent
available). If the parties are unable to resolve such dispute by mediation
within sixty (60) Business Days after submission of the dispute to mediation (or
such period as the parties shall otherwise agree), then such dispute shall be
resolved in the manner set forth below in Section 11.13(b) hereof.
(b) Resolution of Disputes. Except as set forth in
Sections 10.3 and 11.13(a) of this Agreement or as otherwise set forth in this
Agreement, any controversy or Claim not resolved in accordance with Section
11.13(a) of this Agreement shall be settled exclusively by binding arbitration
conducted on a confidential basis under the then current Commercial Arbitration
Rules of the Association strictly in accordance with the terms of this Agreement
and the substantive law of the State of Delaware. The arbitration shall be
conducted at the Association's regional office located in Boston, Massachusetts
by an attorney who shall be experienced in the software business (to the extent
available). The arbitrators may not award consequential, special, punitive or
exemplary damages. Judgment upon the arbitrators' award may be entered and
enforced in any court of competent jurisdiction. Neither party shall institute
an arbitration proceeding hereunder unless at least thirty (30) days prior
thereto such party shall have given written notice to the other party of its
intent to do so. Neither party shall be precluded hereby from securing equitable
remedies in courts of any jurisdiction, including temporary restraining orders
and preliminary injunctions, to protect its rights and interests, but neither
party shall seek any such equitable remedies as a means to avoid or stay
arbitration.
11.14. Third Party Beneficiaries. The representations,
warranties, covenants and agreements contained in this Agreement are for the
sole benefit of the parties hereto and their successors and assigns, and they
shall not be construed as conferring and are not intended to confer any rights
on any other Persons.
11.15. Public Announcements The parties hereto shall consult
with each other before issuing any press release or making any public statement
with respect to this Agreement and the Acquisition and, except as may be
required by applicable Law or any applicable stock exchange or regulations of
the National Association of Securities Dealers, the parties hereto shall not
issue any such press release or make any such public statement without the
consent of the other parties hereto.
11.16. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by Buyer if incurred by Buyer or by Seller if
incurred by Seller or Shareholder.
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11.17. Counterparts. This Agreement may be executed in any
number of counterparts and any party hereto may execute any such counterpart,
each of which when executed and delivered shall be deemed to be an original and
all of which counterparts taken together shall constitute but one and the same
instrument. The execution of this Agreement by any party hereto will not become
effective until counterparts hereof have been executed by all the parties
hereto. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
11.18. Facsimile Signatures. This Agreement may be executed by
facsimile signature, which shall be deemed to be an original for all purposes.
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IN WITNESS WHEREOF, the parties have executed this Asset Purchase Agreement
on the date first above written.
NEWFRONT SOFTWARE, INC.
By: /s/ Xxxxxxx Xxxx
--------------------------------
Xxxxxxx Xxxx, President
/s/ Xxxxxxx Xxxx
--------------------------------
Xxxxxxx Xxxx, Individually
SOFTWARE & RESOURCE MANAGEMENT
CORPORATION
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
Title: Executive Vice President