1
EXHIBIT 10.14
CONFIDENTIAL TREATMENT
Confidential material has been omitted
and filed separately with the Securities
and Exchange Commission. Astericks
denote such omissions.
ASSET PURCHASE AND TRANSITION AGREEMENT
THIS ASSET PURCHASE AND TRANSITION AGREEMENT (the "Agreement") is made as
of the 28th day of May, 1996, by and among Best!▇▇▇▇, Inc., a New Jersey
corporation with its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ (the "Buyer"), and Best!▇▇▇▇, Inc., a Virginia corporation with its
principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Seller"), and
Seller's parent corporation, Best Programs, Inc., a Virginia corporation with
its principal office at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Best").
In consideration of the mutual promises hereinafter set forth and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Definitions. Unless the context otherwise requires, for purposes of
this Agreement the following terms shall have the meanings set forth in this
Section 1:
"AS/400 Assets" shall mean those assets listed on Schedule 1 hereto which
are currently located at Seller's facilities and whose function is to allow
Seller to utilize the Best AS/400 computer and systems located in Reston, VA.
"Assets" shall mean the properties, assets, and other claims, rights and
interests of the Seller relating to the Business, to be sold, conveyed,
transferred and delivered by the Seller to the Buyer pursuant to
Subsection 2.1.
"Assumed Liabilities" shall mean the following liabilities, obligations
and commitments of the Seller: (i) all the liabilities, obligations and
commitments of the Seller continuing after the Closing under the contracts,
agreements, licenses and other instruments set forth on Schedule 2.1(a)
(ii) which become due and payable or performable after the Closing Date (but
which shall not include any liabilities resulting from Seller's breach of any
such contract, agreement or other instrument prior to the Closing Date); (ii)
all the liabilities, obligations and commitments of the Buyer set forth in
Section 11; and (iii) all other liabilities, obligations and commitments of the
Seller specifically set forth on Schedule 2.4 or in Section 11 hereof.
"Bestware Products" shall mean those software products listed on EXHIBIT A
of that certain License Agreement (the "License Agreement") by and between
Data-Tech Software Pty. Ltd. ("DT") and Seller of even date herewith.
"Business" shall mean the business conducted by the Seller prior to the
Closing of developing, manufacturing, marketing and supporting the Bestware
Products and all services related thereto. The Business specifically excludes
the business conducted by Best and by Abra Cadabra Software, Inc. ("Abra"), a
wholly-owned subsidiary of Best, including without limitation, Abra's human
resources software and payroll
2
CONFIDENTIAL TREATMENT
Confidential material has been omitted
and filed separately with the Securities
and Exchange Commission. Astericks
denote such omissions.
software and all products and services related thereto, and the asset management
and budgeting software business of Best and all products and services related
thereto.
"Closing" shall mean the simultaneous execution of this Agreement and the
closing of the transactions contemplated by this Agreement.
"Closing Date" shall mean the date of the Closing.
"Encumbrances" shall mean all claims, liabilities, liens, pledges,
charges, encumbrances and equities of any kind affecting the Assets.
"Excluded Assets" shall mean those assets of the Business not specified in
Subsection 2.1(a), which Excluded Assets shall include, but not be limited to,
(i) the assets of Best, (ii) the assets of Abra, (iii) net working capital, and
(iv) the AS/400 Assets.
"Indemnified Party" shall mean the party seeking indemnification.
"Indemnifying Party" shall mean the party or parties from whom
indemnification is sought.
"Promissory Note" shall mean a secured, non-interest bearing promissory
note of the Buyer for * ( * ) maturing on March 31, 1997 in the
form of Exhibit B.
"Settlement Payment" shall mean the payment to be made by Buyer to Seller
or Seller to Buyer, based on the net amount due after comparing all obligations
subject to this provision. See Section 1l.6(c)(xi) for the process for
determining and paying the Settlement Payment.
2. Sale and Delivery of the Assets
2.1 Delivery of the Assets.
(a) Subject to and upon the terms and conditions of this Agreement, and
qualified by the terms of Section 11 hereof which dictates the treatment of
certain specified Assets, at the Closing, the Seller shall sell, transfer,
convey, assign and deliver to the Buyer, and the Buyer shall purchase from the
Seller, the following properties, assets and other claims, rights and interests:
(i) all components and finished goods inventory of the Seller solely
relating to the Business and which exist on the Closing Date;
2
3
(ii) subject to Subsection 2.2, all of the rights and benefits of
the Seller under the contracts, agreements, leases, licenses and other
instruments set forth on Schedule 2.1(a)(ii);
(iii) all production records, technical, manufacturing and
procedural manuals, designs, specifications, drawings, brochures,
catalogues, sales and marketing materials, studies, reports, summaries and
any other information which has been reduced to writing or other form,
relating to, or arising solely out of, the Business.
(iv) all rights of the Seller and Best under express or implied
warranties solely related to the Assets from the suppliers of the Assets;
and
(v) all fixed assets located at Seller's New Jersey facilities and
at Seller's remote sales offices currently used by ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇, including without limitation the fixed assets
set forth on Schedule 2.1(a)(v), but specifically excluding the AS/400
Assets.
(b) Anything in this Agreement to the contrary notwithstanding, the
Assets shall only include the assets listed in paragraph (a) above and shall in
no event include the Excluded Assets.
(c) If there is any conflict between the terms of this Subsection
2.1 and Section 11 below with regard to whether or not certain Assets are to be
transferred by Seller to the Buyer, or any restrictions on such transfer, the
terms of Section 11 shall govern.
2.2 Nonassignable Contracts. Nothing in this Agreement shall be
construed as an attempt or agreement to assign (i) any contract which is
nonassignable without the consent of the other party or parties thereto unless
such consent shall have been given or (ii) any contract or claim as to which all
the remedies for the enforcement thereof enjoyed by the Seller would not pass to
the Buyer as an incident of the assignments provided for by this Agreement.
However, the Seller shall, by itself or by its agents, at the request and
expense and under the direction of the Buyer, in the name of the Seller or
otherwise as the Buyer shall reasonably specify and as shall be permitted by
law, take all such action and do or cause to be done all such things as shall be
reasonably necessary or proper in order that the rights and obligations of, or
benefits accruing to, the Seller under such contracts shall be preserved.
3
4
2.3 Purchase Price. The Purchase Price shall be payable pursuant to
the terms of the Promissory Note, which shall be delivered by the Buyer to the
Seller at the Closing.
2.4 Assumption of Liabilities. Buyer agrees that, from the Closing
Date, Buyer shall assume and perform, pay and discharge the Assumed Liabilities.
The Buyer shall not assume or agree to perform, pay or discharge any
obligations, liabilities and commitments, fixed or contingent, of the Seller and
Best, other than the Assumed Liabilities.
2.5 Allocation of Purchase Price and Assumed Liabilities. The
aggregate amount of the Purchase Price and the Assumed Liabilities shall be
allocated as set forth on Schedule 2.5.
2.6 The Closing. The Closing shall take place at the offices of the
Seller on May 28, 1996 or at such other place, time or date as may be mutually
agreed upon in writing by the parties hereto. The transfer of the Assets by the
Seller to the Buyer shall be deemed to occur at 6:00 p.m., Eastern time, on the
Closing Date.
3. Representations of the Seller and Best. The Seller and Best, where
applicable, represent and warrant to the Buyer that the statements contained in
this Section 3 are correct and complete as of the date of this Agreement.
3.1 Organization. The Seller and Best are corporations duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia, and have all requisite power and authority (corporate
and other) to own their properties, to carry on their businesses as now being
conducted, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Certified copies of the Certificates of
Incorporation and the Bylaws of the Seller, as amended to date, have been
previously delivered to the Buyer or will be delivered within thirty days of the
Closing, are complete and correct, and no amendments have been made thereto or
have been authorized since the date thereof.
3.2 Authorization. The execution, delivery and performance of this
Agreement by the Seller and Best, and the agreements provided for herein, and
the consummation by the Seller and Best of all transactions contemplated hereby,
have been duly authorized by all requisite corporate action. This Agreement and
all such other agreements and obligations entered into and undertaken in
connection with the transactions contemplated hereby to which the Seller and
Best are a party constitute the valid and legally binding obligations of the
Seller and Best, enforceable against the Seller and Best in accordance with
their respective terms, subject as to enforcement of
4
5
remedies to applicable bankruptcy, insolvency, reorganization and similar laws
affecting generally the enforcement of the rights of contracting parties and
subject to a court's discretionary authority with respect to the granting of a
decree ordering specific performance or other equitable remedies.
3.3 Ownership of the Assets. The Seller is and at the Closing will
be, the true and lawful owner of the Assets, and will have the right to sell and
transfer to the Buyer good, clear and valid title to the Assets, free and clear
of any Encumbrances of any kind, except as set forth on Schedule 3.3.
3.4 Compliance with Agreements and Laws, Regulatory Approvals. The
Seller has all requisite licenses, permits and certificates, including
environmental, health and safety permits, from federal, state and local
authorities necessary for the execution and delivery by the Seller of this
Agreement. The Seller is not in violation of any law, regulation or ordinance
(including, without limitation, those relating to building, zoning,
environmental, disposal of hazardous substances, land use or similar matters)
relating to the Assets, the violation of which could have a material adverse
effect on the Assets. All consents, approvals, authorizations and other
requirements prescribed by any law, rule or regulation which are necessary for
the execution and delivery by the Seller and Best of this Agreement and the
documents to be executed and delivered by the Seller and Best in connection
herewith have been, or will be prior to the Closing Date, obtained and
satisfied.
3.5 Investment Representation. The Seller is acquiring the Note for
its own account for the purpose of investment and not with a view to or for
sale, and the Seller has no present agreement or commitment providing for the
disposition thereof. The Seller understands that (i) the Note has not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
by reason of its issuance in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof, (ii) the
Note must be held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such registration, (iii)
the Note will bear a legend to such effect and (iv) the Seller will make a
notation on its transfer books to such effect. The Seller further understands
that the exemptions from registration afforded by Rules 144 and 144A under the
Securities Act depend on the satisfaction of various conditions and that, if
applicable, such rules afford the basis of sales of the Note in limited amounts
under certain conditions.
3.6 Litigation. Except as set forth on Schedule 3.6, there are no
pending actions, suits, or proceedings with respect to the Business or the
Assets.
3.7 Disclosure. No representation or warranty by the Seller or Best
in this Agreement or in any Exhibit hereto, or in any list, statement, document
or
5
6
information set forth in or attached to any Schedule delivered or to be
delivered pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
in order to make the statements contained therein not misleading. The Seller and
Best have disclosed to the Buyer all material facts pertaining to the
transactions contemplated by this Agreement.
3.8 Disclaimer Regarding Third Party Software. Anything to the
contrary in this Agreement notwithstanding, Buyer acknowledges that Seller has
not conducted a software audit of the third party software existing on the
personal computers at the New Jersey facility, the licenses to which, to the
extent they have been purchased by Seller, shall transfer to Buyer hereunder,
and makes no representations as to the validity of the licenses therefor except
for those licenses set forth on Schedule 3.8 which warranty shall become
effective two weeks after the Closing Date.
4. Representations of the Buyer. The Buyer represents and warrants to the
Seller and Best that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement.
4.1 Organization and Authority. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
New Jersey, and has requisite power and authority (corporate and other) to own
its properties and to carry on its Business as now being conducted. The Buyer
has full power to execute and deliver this Agreement, the Promissory Note and
the other agreements provided for herein and to consummate the transactions
contemplated hereby and thereby. Certified copies of the Certificates of
Incorporation and the Bylaws of the Buyer, as amended to date, have been
previously delivered to the Seller, are complete and correct, and no amendments
have been made thereto or have been authorized since the date thereof.
4.2 Authorization. The execution, delivery and performance of this
Agreement by the Buyer, and the agreements provided for herein, and the
consummation by the Buyer of all transactions contemplated hereby, have been
duly authorized by all requisite corporate action. This Agreement and all such
other agreements and written obligations entered into and undertaken in
connection with the transactions contemplated hereby to which the Buyer is a
party constitute the valid and legally binding obligations of the Buyer,
enforceable against the Buyer in accordance with their respective terms, subject
as to enforcement of remedies to applicable bankruptcy, insolvency,
reorganization and similar laws affecting generally the enforcement of the
rights of contracting parties and subject to a court's discretionary authority
with respect to the granting of a decree ordering specific performance or other
equitable remedies.
6
7
4.3 Compliance with Agreements and Laws; Regulatory Approvals. The
Buyer has all requisite licenses, permits and certificates, including
environmental, health and safety permits, from federal, state and local
authorities necessary for the execution and delivery by the Buyer of this
Agreement. The Buyer is not in violation of any law, regulation or ordinance
(including, without limitation, those relating to building, zoning,
environmental, disposal of hazardous substances, land use or similar matters)
relating to its Businesses or properties, the violation of which could have a
material adverse effect on the Buyer or its properties. All consents, approvals,
authorizations and other requirements prescribed by any law, rule or regulation
which are necessary for the execution and delivery by the Buyer of this
Agreement and the documents to be executed and delivered by the Buyer in
connection herewith have been, or will be prior to the Closing Date, obtained
and satisfied.
4.4 Disclosure. No representation or warranty by the Buyer in this
Agreement or in any Exhibit hereto, or in any list, statement, document or
information set forth in or attached to any Schedule delivered or to be
delivered pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
in order to make the statements contained therein not misleading. The Buyer has
disclosed to the Seller and Best all material facts pertaining to the
transactions contemplated by this Agreement.
5. Confidentiality; Public Announcements.
5.1 Confidentiality. All information not previously disclosed to the
public or generally known to persons engaged in the respective businesses of the
Seller, Best or the Buyer, which shall have been furnished by the Buyer or the
Seller/Best to the other party hereto in connection with the transactions
contemplated hereby or as provided pursuant to this Section 5 shall not be
disclosed to any person other than their respective employees, directors,
attorneys, accountants or financial advisors or other than as contemplated
herein, except to the extent such information shall have become public knowledge
other than by breach of this Agreement or any other agreement executed in
connection with the transactions contemplated by this Agreement, or such
information is disclosed to comply with any applicable law or such information
is disclosed in the enforcement of the disclosing party's rights. In no event
shall the Buyer disclose or use any non-public information about the Seller/Best
not relating solely to the Business. In no event shall the Seller/Best disclose
or use any non-public information about the Buyer relating to the Business.
5.2 Public Announcements. The parties agree that for a period of one
year after the Closing Date, except as otherwise required by law, any and all
public announcements or other public communications concerning this Agreement
and the
7
8
purchase of the Assets by the Buyer shall be subject to the approval of all
parties, which approval shall not be unreasonably withheld; provided that the
Buyer shall have no restriction upon announcements or other publications
connected with marketing the Products in the normal course. The mechanics of
public announcements and interaction immediately after the Closing Date are
addressed in Section 11 below. In no event shall the Buyer, the Seller or Best
at any time disclose the financial terms of this Agreement or any other
agreement contemplated in this Agreement, except as required by law.
6. Financial Covenants of Buyer.
6.1 Affirmative Covenants - From the Closing Date until termination
or expiration of the License Agreement, Buyer covenants and agrees that it and
its subsidiaries shall:
Financial Reports.
a) Furnish to Seller, within 30 days after the end of each quarter and
at other times, as reasonably requested by the Seller, an unaudited
financial report of the Buyer which report shall include the
following: (i) a profit and loss statement and cash flow statement
for such quarter, together with a cumulative profit and loss
statement and cash flow statement from the first day of the current
fiscal year to the last day of such quarter, which statements shall
be comparative to the corresponding period of the prior fiscal year
and shall be prepared in accordance with Generally Accepted
Accounting Principles, consistently applied; and (ii) a balance
sheet as of the last day of such quarter, which balance sheet shall
be prepared in accordance with Generally Accepted Accounting
Principles, consistently applied.
b) Furnish to Seller, within 120 days after the end of each fiscal year
of the Buyer, "Audited" financial statements of the Buyer which
shall include a profit and loss statement and cash flow statement
for such fiscal year and a balance sheet as of the last day thereof,
each prepared in accordance with Generally Accepted Accounting
Principles, consistently applied and accompanied by the opinion of a
reputable Certified Public Accountant as may be chosen by the Buyer.
In the context of this subparagraph, "Audited" shall mean an
independent Investigating Accountant's Report prepared in relation
to the end of year financial statements. The report should
specifically address the verification of the balance sheet accounts
in relation to cash balances,
8
9
bank balances, accounts receivable balances, accounts payable
balances together with investigation into the correctness of the
Gross Revenue for the year, compliance with negative and affirmative
covenants, and reporting as to any material differences or balances
in the financial statements.
Tax Returns and Payment of Taxes.
c) File all lawful tax returns and other reports which it is required
by law to file, maintain adequate reserves for the payment of all
taxes imposed upon it, its income, its profits or sales, or upon any
assets or properties belonging to it and pay and discharge all such
taxes prior to the date on which penalties attached thereto.
Business Insurance.
d) Maintain insurance coverage by financially sound and reputable
insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation. Provide a
certificate of insurance to Seller within 90 days of Closing and
thereafter on an annual basis.
Insurance.
e) Maintain life insurance coverage on ▇▇▇▇▇ ▇▇▇ by financially sound
and reputable insurers in such forms and amounts and against such
risks as are customary for corporations of established reputation.
Such amount should cover at least one-sixth of any unpaid royalty
obligation, as specified in the License Agreement. Proceeds from
this policy necessary for payment of such royalty obligation should
be escrowed for payment to Licensor should Licensee's revenues not
be sufficient to satisfy all royalty obligations set forth in
Exhibit H of the License Agreement at any time during the remainder
of that Agreement's four year term. At any time, to the extent that
the amount of funds in this escrow account exceed total future
royalty obligations under the License Agreement, such excess portion
may be released from escrow into Buyer's possession. Provide a
certificate of insurance to Seller within 90 days of Closing and
thereafter on an annual basis.
6.2 Negative Covenants - From the Effective Date of the License
Agreement until termination or expiration of the License Agreement, Buyer
covenants and agrees that it and its subsidiaries shall not take the following
actions without prior approval by Seller:
9
10
a) Merge or consolidate with or acquire all or any substantial portion
of the assets or capital stock of any entity in any transactions
involving payment by Buyer of consideration having a total fair
market value in excess of the "Transaction Limitation Amount". For
purposes of this Section 6.2, the term "Transaction Limitation
Amount" shall mean, as of the Effective Date, $1 million dollars
(the "Base Amount"), and thereafter, an amount calculated as: (I)
the Base Amount, plus (II) the amount of royalties actually paid
under the License Agreement multiplied by 120%, less (III) the
amount of consideration paid by Licensee in all transactions of the
type contemplated by this Subsection (a).
b) Except for sales, leases, transfers or other dispositions of assets
made in the ordinary course of business, sell, lease, transfer,
license or otherwise dispose of any of its or its subsidiaries'
assets or properties (including transfers among the Buyer and its
subsidiaries or affiliates) having a fair market value in excess of
20% of the net book value of the Buyer and its subsidiaries, either
singularly or in the aggregate.
c) Declare or pay dividends upon any of Buyer's capital stock or make
any distributions in respect of the Buyer's capital stock or Buyer's
assets or properties to any person except for stock dividends or
splits.
d) Enter into any agreement or arrangement with any affiliate whereby
Buyer agrees to pay management fees, service fees, licensing fees,
consulting fees, research and development fees, royalties or any
other form of compensation to such affiliate, except for fees or
compensation for services rendered where such fees or compensation
are comparable to similar fees which would be paid to unrelated
third parties for the same or similar services.
e) Shall not pay compensation to any officer or director or senior
manager of Buyer representing an increase in excess of 15% of their
base compensation from the prior year (which compensation does not
include distributions and commissions). Buyer agrees that
commissions and bonuses, if granted shall be granted consistent with
historical commission or bonus plans or pursuant to plans approved
by the Seller.
f) Shall not make distributions to any officer or director of Buyer
during any agreement year until the minimum royalties for such year
have been fully paid to Seller under the License Agreement and,
thereafter during
10
11
the same year, except as required to conduct its Business in the
ordinary course, not make any such distributions until DT-Australia
has accumulated and reserved at least 25% of the next year's
minimum royalty.
g) Shall not commit or incur debt financing (excluding any debt owed to
Seller) in excess of the Debt Limitation Amount and, shall not
create, incur, assume or suffer to exist any Senior Indebtedness in
excess of the lesser of (I) the Debt Limitation Amount, and (II) an
amount determined pursuant to the following table:
Agreement Year Amount of Senior Indebtedness Permitted
-------------- ---------------------------------------
First None
Second $500,000 (less total Senior Indebtedness of Licensee)
Third $1.5 million (less total Senior Indebtedness of Licensee)
Fourth $2.5 million (less total Senior Indebtedness of Licensee)
The term "Senior Indebtedness" shall mean all future indebtedness
of Buyer for money borrowed from any bank, trust company, insurance
company or other private, commercial or governmental lending
institutions, up to the limits set forth above, regardless of
whether such indebtedness is secured by assets of Buyer, and to
which indebtedness the security given to Seller pursuant to a
separate security agreement between Buyer and Seller is expressly
subordinated in writing. With regard to any indebtedness that is
junior in payment to Seller's security, the promissory note of Buyer
evidencing such junior indebtedness shall contain subordination
provisions effectively subordinating the junior creditor's
indebtedness to that of Seller and any holder of Senior
Indebtedness.
For purposes of this Section 6.2, the term "Debt Limitation Amount"
shall mean, as of the Effective Date, $1 million dollars (the "Base
Amount"), and thereafter, an amount calculated as: (I) the Base
Amount, plus (II) the amount of royalties actually paid under the
License Agreement by Licensee multiplied by 120%, less (III) the
amount of Licensee debt currently outstanding.
6.3 Board Observer - From the Closing Date of this Agreement until
termination or expiration of the License Agreement, Buyer covenants and agrees
that Seller shall have the right to designate one representative who shall be
entitled to attend all Buyer Board of Directors Meetings. Such Board of
Directors shall meet no fewer than once annually and may hold meetings by
teleconference. Buyer will give Seller's
11
12
representative reasonable prior notice of any Buyer Board of Directors meeting.
The representative designated by the Seller shall be entitled to reimbursement
of all reasonable out-of-pocket expenses incurred in connection with attendance
at such meeting provided, however, that such representative must obtain prior
approval from Buyer for expenses greater than One Thousand Dollars ($1,000) per
meeting. Any action taken by Seller's representative shall not be deemed or
otherwise construed as an act or omission by Seller.
7. Conditions to Obligations of the Buyer. The obligations of the Buyer
under this Agreement are subject to the fulfillment, at the Closing Date, of the
following conditions precedent, each of which may be waived in writing in the
sole discretion of the Buyer:
7.1 Corporate Proceedings. All corporate and other proceedings
required to be taken on the part of the Seller and Best to authorize or carry
out this Agreement and to convey, assign, transfer and deliver the Assets shall
have been taken.
7.2 Governmental Approvals. All governmental agencies, departments,
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Seller or Best of the transactions contemplated by this
Agreement shall have consented to, authorized, permitted or approved such
transactions.
7.3 Board of Directors and Shareholder Approval. The Board of
Directors of the Seller and Best shall have duly authorized the transactions
contemplated by this Agreement and shareholder approval, if required.
7.4 Closing Deliveries. The Buyer shall have received at or prior to
the Closing each of the following:
(a) a ▇▇▇▇ of sale transferring title to the Assets;
(b) possession of the Assets; and
(c) such other documents, instruments or certificates as the Buyer
may reasonably request.
8. Conditions to Obligations of the Seller and Best. The obligations of
the Seller and Best under this Agreement are subject to the fulfillment, at the
Closing Date, of the following conditions precedent, each of which may be waived
in writing at the sole discretion of the Seller and Best:
12
13
8.1 Corporate Proceedings. All corporate and other proceedings
required to be taken on the part of the Buyer to authorize or carry out this
Agreement shall have been taken.
8.2 Governmental Approvals. All governmental agencies, departments,
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Buyer of the transactions contemplated by this Agreement
shall have consented to, authorized, permitted or approved such transactions.
8.3 Consents of Third Parties. The Buyer shall have received all
requisite consents and approvals of all lenders, lessors and other third parties
whose consent or approval is required in order for the Buyer to consummate the
transactions contemplated by this Agreement.
8.4 Board of Directors Approval. The Board of Directors of the Buyer
shall have duly authorized the transactions contemplated by this Agreement.
8.5 Closing Deliveries. The Seller and Best shall have received at
or prior to the Closing each of the following:
(a) such certificates of the Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 8
as the Seller shall reasonably request;
(b) certificate of the Secretary of State of the state of New Jersey
as to the legal existence and good standing of the Buyer in New Jersey;
(c) certificate of the Secretary of the Buyer attesting to the
incumbency of the Buyer's officers, and the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement;
(d) executed Promissory Note; and
(e) such other documents, instruments or certificates as the Seller
and Best may reasonably request.
9. Indemnification.
9.1 By the Seller and Best. The Seller and Best agree, jointly and
severally, to indemnify and hold harmless the Buyer against all claims, damages,
13
14
losses, liabilities, costs and expenses (including, without limitation,
settlement costs and any legal, accounting or other expenses for investigating
or defending any actions or threatened actions) reasonably incurred in
connection with each and all of the following:
(a) any breach by the Seller or Best of any representation or
warranty in this Agreement or any other agreement, instrument or document
furnished in connection with this Agreement;
(b) any breach of any covenant, agreement or obligation of the
Seller or Best contained in this Agreement or any other agreement, instrument or
document contemplated by this Agreement;
(c) obligations or liabilities of the Seller to its employees
arising under the Federal Worker Adjustment and Retraining Act, provided that as
of the Closing, Buyer has offered to rehire all such Seller employees; and
(d) any liability of the Seller or Best not expressly assumed by the
Buyer as an Assumed Liability, including, without limitation, any liability
resulting from claims by employees and premises-related claims arising from
events that occurred prior to the Closing Date.
9.2 By the Buyer. The Buyer agrees to indemnify and hold harmless
the Seller and Best against all claims, damages, losses, liabilities, costs and
expenses (including, without limitation, settlement costs and any legal,
accounting or other expenses for investigating or defending any actions or
threatened actions) reasonably incurred in connection with each and all of the
following:
(a) any breach by the Buyer of any representation or warranty in
this Agreement or any other agreement, instrument or document furnished in
connection with this Agreement;
(b) any breach of any covenant, agreement or obligation of the Buyer
contained in this Agreement or any other agreement, instrument or document
contemplated by this Agreement;
(c) any products sold/licensed after the Closing which are
manufactured in whole or in part out of the inventory being conveyed to Buyer on
the Closing Date;
(d) any Assumed Liability.
14
15
9.3 Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder, the Indemnified Party shall promptly notify the
Indemnifying Party of the claim and, when known, the facts constituting the
basis for such claim. In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings by
a third party, the notice to the Indemnifying Party shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom.
9.4 Defense by Indemnifying Party. In connection with any claim
giving rise to indemnity hereunder resulting from or arising out of any claim or
legal proceeding by a person who is not a party to this Agreement, the
Indemnifying Party at its sole cost and expense may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
it acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim. The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its counsel and at its own expense; provided
that if the Indemnifying Party assumes control of such defense and the
Indemnified Party reasonably concludes that the Indemnifying Party and the
Indemnified Party have conflicting interests or different defenses available
with respect to such action, suit or proceeding, the reasonable fees and
expenses of counsel to the Indemnified Party shall be considered "damages" for
purposes of the Agreement. If the Indemnifying Party does not assume the defense
of any such claim or litigation resulting therefrom within 30 days after the
date such claim is made, (a) the Indemnified Party may defend against such claim
or litigation, in such manner as it may deem appropriate, and (b) the
Indemnifying Party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense. If the
Indemnifying Party thereafter seeks to question the manner in which the
Indemnified Party defended such third party claim, the Indemnifying Party shall
have the burden to prove by a preponderance of the evidence that the Indemnified
Party did not defend or settle such third party claim in a reasonably prudent
manner. In either case, the party controlling the defense shall keep the other
party advised of the status of such action , suit or proceeding and the defense
thereof and shall consider in good faith recommendations made by the other party
with respect thereto. None of the parties shall agree to any settlement of any
such action, suit or proceeding without the prior written consent of the other
party(s), which shall not be unreasonably withheld.
9.5 Survival of Representations, Claims for Indemnification. All
representations and warranties made by the parties herein or in any instrument
or document furnished in connection herewith shall expire on the first
anniversary of the Closing Date, except for claims, if any, asserted in writing
prior to such first anniversary, which shall survive until finally resolved and
satisfied in full. All claims and actions for indemnity pursuant to this
Purchase Agreement for breach of any
15
16
representation or warranty shall be asserted or maintained in writing by a party
hereto on or prior to the expiration of such one-year period. Notwithstanding
anything to the contrary in this Section 9, the aggregate amount payable under
this Section 9 by the Seller and Best collectively, or the Buyer shall not
exceed Five Hundred Thousand Dollars ($500,000), except that amounts to be paid
by either party to the other under Section II shall not be applied against this
limitation.
9.6 Payment. Any indemnification under this Agreement shall be
effected by payment of cash or delivery of a cashiers or bank check.
9.7 Consequential Damages. UNDER NO CIRCUMSTANCES SHALL THE SELLER,
BEST OR THE BUYER BE LIABLE, DIRECTLY TO ANY OTHER PARTY OR BY WAY OF INDEMNITY
ARISING OUT OF ANY THIRD-PARTY CLAIM, FOR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR LOSSES, INCLUDING WITHOUT LIMITATION LOST PROFITS OR
LOST SALES, ARISING OUT OF OR CONNECTED TO THIS AGREEMENT OR THE TRANSACTION OF
WHICH IT IS A PART.
10. Post-Closing Agreements.
10.1 Proprietary Information. Subject to the last sentence of this
Subsection 10.1, from and after the Closing Date, the Seller and Best shall hold
in confidence, and use its reasonable efforts to have all of Seller's and Best's
officers, directors and personnel hold in confidence, all commercial knowledge
and information of a secret or confidential nature relating to the Assets or the
Business and shall not disclose, publish or make use of the same without the
written consent of the Buyer, except to the extent that such information shall
have become public knowledge other than by breach of this Agreement by the
Seller or Best, such information is disclosed to comply with any applicable law,
or such information is disclosed in the enforcement of the Seller's or Best's
rights.
10.2 Solicitation of Employees. For a period of one year after the
Closing Date, the Buyer shall not, without Best's prior written consent, solicit
or hire (whether as an employee or a consultant) any employee or former employee
of Best or Abra, unless (a) such employee was involuntarily terminated by Best
or Abra, or (b) such employee has been out of Abra's or Best's employ for at
least twelve months. For a period of one year after the Closing Date, the Seller
and Best (including Abra) shall not, without Buyer's prior written consent,
solicit or hire (whether as an employee or a consultant) any employee or former
employee of Buyer, unless (a) such employee was involuntarily terminated by
Buyer, or (b) such employee has been out of Buyer's employ for at least twelve
months.
16
17
10.3 Sharing of Data. Promptly after the Closing Date, Seller or
Best shall provide Buyer with access to such books, records and accounts (or
copies thereof), including financial information, correspondence, production
records, and other similar information as necessary for Buyer to utilize the
Assets and conduct the Business, which shall be in addition to those records
purchased by Buyer as described in Section 2.1 (a)(iii) above (the "Production
Records"). Such books, records and accounts shall remain the property of Seller
or Best and Seller and Best shall have the right to remove such books, records
and accounts from Buyer's premises at any time, provided that Seller or Best
shall allow Buyer sufficient time to make copies of any such books, records and
accounts it reasonably needs to retain in order to operate its business. With
regard to any records that Seller or Best maintains at a separate facility,
Buyer shall have the right for a period of three years following the Closing
Date to have reasonable access to those books, records and accounts, including
financial and tax information, correspondence, production records, employment
records and other records, to the extent any of the foregoing relates to the
Business, and for the purpose of complying with its obligations under applicable
securities, tax, environmental, employment or other laws and regulations, or any
other reasonable purpose relative to the operation of its ongoing business. With
regard to those books, records and accounts of Seller or Best that remain in
Buyer's possession, not including the Production Records, Buyer shall maintain
such books, records and accounts, including financial information,
correspondence, production records, and other similar information until at least
June 1, 2000. Thereafter, Buyer may destroy such books, records and accounts
after giving no less than thirty days prior written notice to Seller and Best
which notice shall give Seller and Best the opportunity to take possession of
such books, records and accounts.
10.4 References. No written or printed material, including, without
limitation, any catalogue, brochure, sales or any kind of promotion material or
other selling material, and no other tangible Asset acquired by the Buyer from
the Seller or Best pursuant to this Agreement that contains the name of or
references to Best shall be used publicly or distributed by the Buyer until such
names or references are deleted or covered by a sticker acceptable to Best,
except as specifically permitted in Section II below.
11. Transitional Issues. All transitional issues relate to the operations
of Seller in New Jersey, and Seller in the United Kingdom and Canada, to the
extent applicable. To the extent that any specific documents or agreements are
required in order to complete the intention of the transition plan in the UK
and/or Canada, the parties agree to promptly execute such documents or
agreements.
17
18
11.1 Personnel
(a) Termination and Rehire. Effective as of the close of business on
the Closing Date, Seller will terminate all of its employees, except for any
employees who are being transferred to Best or Abra. Effective the first
business day following the Closing Date, Buyer will offer employment to, and
hire, all employees with such employment to be on substantially the same terms
as when the employees were employees of Seller. Seller will not incur any costs
associated with any severance pay due to the termination of the employees.
(b) Termination Package. Seller will provide a termination package
for each terminated employee in accordance with its company policies and
procedures that will include the following:
(i) Final paycheck. A check reflecting hours worked for Seller
through the Closing Date plus any vacation earned but not used since April
1, 1996, less appropriate taxes and other withholdings. The final check
will be reduced for any amounts owed by the employee. Since Seller and
Buyer have agreed to maintain the continuity of the payroll cycle,
depending on where the Closing Date falls in the payroll cycle, the
payroll amount due to each employee will be split into two separate checks
to reflect the hours worked by the employee for the Buyer and Seller
(Seller's checks to be adjusted as discussed above). No later than two
business days prior to the date that the payroll checks will be issued by
the Buyer to the employees after the Closing Date, Seller will transfer
funds to its payroll bank account sufficient to cover Seller's paychecks.
A detail payroll register and other supporting documentation as reasonably
requested by Seller will be sent to Seller, for approval, prior to the
funding of Seller's portion of the payroll.
(ii) Computer Purchase Loan. Seller will forgive 50 % of any
outstanding computer purchase loan balance due as of the Closing Date.
This constitutes a taxable income event for the employee and will be
reflected in the year-end W-2 statement. For those employees hired by
Buyer, the 50 % remaining due will be recovered from the employee by Buyer
based on continued employment at Buyer. Buyer will reimburse Seller its
50% share of the computer purchase loans in the Settlement Payment.
18
19
(iii) Health/Insurance benefits.
(A) Termination of Old Plans. Current Seller health
(medical/dental) and insurance plan coverage will continue
through May 31, 1996. Effective June 1, 1996, Buyer will
establish health and insurance plan coverage for those
employees that it is hiring.
(B) COBRA. A letter defining the employees' rights under the COBRA
provisions will be given to all terminated employees by Seller
as part of the termination package.
(iv) 401(k). For those Seller employees participating in the Seller
401(k) plan, including current and former employees, all vested assets and
funds will transfer into a qualified 401(k) plan to be established by
Buyer. This is being structured to constitute a roll-over such that this
will not necessitate payment of 20% withholding tax, etc.
(v) Tuition Reimbursement. Seller will fulfill tuition reimbursement
obligations. Prior to Closing, Buyer will notify Seller of any employees
that are currently participating in the tuition reimbursement program,
along with the potential costs of the program and the estimated completion
date of the academic period. Eligible employees will notify Buyer at
completion of academic period, and if reimbursement is earned, Buyer will
compensate employee in the normal paycheck process. This liability is
retained by the Seller. Seller will reimburse Buyer in the Settlement
Payment.
(c) Buyer will hire all employees effective the first business day
following the Closing Date and will provide those employees with the following:
(i) Health, Employment and Life Insurance Benefits. Benefit plans
and procedures for its employees that, where practical, are consistent
with the plans in place at Seller as of the Closing Date. These plans will
be in effect as soon as possible after the Closing Date so as to minimize
any disruption or discontinuity of benefit protection. Buyer will work
with those employees who participate in the Flexible Spending Account
(FSA) to define a course of action for the remainder of 1996. Seller has
no liability for actions subsequent to the Closing Date other than
provided by FSA procedures.
(ii) Seniority. A credit with regard to seniority equal to the term
of service reflected on Seller's records as of the Closing Date. Such
credit will apply to those benefits that are affected by service. Employee
records defining
19
20
start date and credited years of Seller service have been provided to
Buyer by Seller.
(iii) Continuation of Pay. Continuation of pay at current effective
rate.
(iv) Paid Time Off. Vacation/sick leave policy reflecting the
termination from Seller on the Closing Date and the fact that employees
have already been paid for their vacation that was earned and unused since
April 1, 1996. Seller does not compensate for unused sick leave upon
termination.
(v) Computer Loans. Buyer will reimburse Seller in the Settlement
Payment for 50% of the outstanding computer loan balance for those Seller
employees it hires and will amortize the employees' payment of those loans
based on continued employment with Seller on terms that it will define.
(vi) Sales Commissions. Buyer will continue Seller's current sales
commission plan at least through June 30, 1996 and will pay, in accordance
with the terms of that plan, eligible employees the sales commission that
is earned and payable based on first quarter achievements under such plan
(April, 1996 through June, 1996). Upon receipt of notice that commission
payment is due plus a report reconciling the amounts to be paid, Seller
will compensate Buyer, in the Settlement Payment, for a share of those
sales commissions, where Seller's share will be a pro-rata share of the
commission equal to the pro rata portion of sales recorded up to/including
the Closing Date as a percentage of total net sales recorded in the
quarter. Net sales will be determined, in accordance with Seller's sales
commission plan, as total sales less a 25% allowance for future credits.
11.2 Leases and Other Commitments.
(a) Real Property. The lessor of the real property and facilities
currently occupied by Seller has agreed to assign the current leases, as
amended, to Buyer as of the Closing Date, which assignment shall include a
provision releasing Seller and Best of all future liability under such leases.
The parties agree that Buyer rent payment obligation under such leases shall
begin the day after the period covered by the final rent payment made by Seller
for May 1996.
(b) Cable & Wireless (Long Distance). Seller and Buyer agree that
Buyer will continue to use the C&W Long Distance and will not seek to obtain
other such services for the period remaining on the current C&W agreement.
Seller will use commercially reasonable efforts to obtain C&W's consent to amend
this agreement to
20
21
provide Buyer with continuation of service through the current agreement at
current prices, as well as for direct invoice to and payment from Buyer. Buyer
is free to discontinue its use of C&W at the conclusion of the current
agreement, October 1997, and make other arrangements if it so desires.
(c) Telephone System. Seller will use commercially reasonable
efforts to obtain Leasing Technologies, Inc.'s (LTI) consent to assignment of
the current lease to Buyer. Until the assignment is executed, Buyer shall fully
comply with all the terms and conditions of the current lease, including making
all payments thereunder to LTI.
(d) Access Line. Seller will assign and Buyer will accept assignment
of the Access Line contract. Until this assignment is executed, Buyer shall
fully comply with all the terms and conditions of the current agreement,
including making all payments thereunder to Access Line.
(e) Other Leases (furniture, copiers, etc.) and Commitments. For
minor leases/commitments not already discussed in this Section 11.2, Buyer will
continue to make payments under the current agreements and, as soon as possible
after the Closing Date, Buyer will contact the vendors to establish business
relations in its own name. In the event that Buyer fails to make payments or
fulfill any other obligation in these leases, it will indemnify Seller and hold
Seller harmless for any costs that Seller incurs as a result of a Buyer
deficiency. Such indemnification will be subject to the indemnifications
procedures set forth in Section 9 except that any amounts due pursuant to this
indemnification shall not count against the $500,000 indemnification cap.
Failure to fulfill these obligations or cure the deficiency promptly after
written notice from Seller will be considered a breach of this Agreement.
(f) Buyer Indemnification of Seller. In the event that Buyer fails
to make payments or fulfill any other obligation, after the Closing, under any
of the leases or agreements, Buyer will indemnify Seller and hold Seller
harmless for any costs (including penalties and attorneys' fees) that Seller
incurs as a result of a Buyer breach. Such indemnification will be subject to
the indemnification procedures set forth in Section 9 except that any amounts
due pursuant to this indemnification shall not count against the $500,000
indemnification cap. Failure to fulfill these obligations or promptly cure any
breach after written notice from Seller will be considered a breach of this
Agreement.
11.3 Assets, Inventory & Fulfillment.
(a) Fixed Assets and Inventory. Seller is transferring fixed assets
and inventory to Buyer pursuant to Section 2.1 above. Such inventory shall
include all
21
22
of the Product inventory, including that inventory at Echo Systems in
Downingtown, PA. However, Buyer agrees that it will make available, at no cost
to Seller, any items from that inventory necessary for any of Seller's
obligations due to any Product licenses sold prior to the Closing Date to be
fulfilled.
(b) The AS/400 Assets. Buyer agrees that upon its termination of use
of the Best AS/400 system, it will assist Best in shipping the AS/400 Assets to
Best's facility. Best will be responsible for arranging for, and for the cost
of, shipping these assets to whatever location it designates. Buyer shall return
the AS/400 Assets to Best in the same condition that they were on the Closing
Date, ordinary wear and tear excepted. If the AS/400 Assets as returned to Best
requires repair, or if any of the AS/400 Assets are not returned to Best as
required by this Section (b), Buyer shall immediately pay to Best, upon receipt
of invoice, the reasonable cost of such repair, or if any AS/400 Asset is not
returned, the replacement cost of such AS/400 Asset.
(c) Fulfillment. Until it makes other arrangements, Buyer will
utilize Echo Systems to fulfill product orders. Current operating procedures
between Seller and Echo involve unique pricing and ordering procedures and
invoicing and payment directly between Seller and Echo. Buyer will continue to
use those procedures and will make all payments due to Echo directly to Echo. As
soon as practical, Buyer will establish its own specific order fulfillment
arrangement with a vendor of its choice. Immediately after the Closing Date,
Seller and Buyer will jointly advise Echo in writing of this arrangement and
will advise Echo that Seller has no liability with respect to any obligation of
Buyer accruing after the Closing Date.
(d) Pre-Assembled Product. The pre-assembled Bestware Products in
inventory at Echo Systems can be utilized by Buyer, without change, to fulfill
orders after the Closing Date. The license agreement and all collateral material
that utilize the Seller designation can be used "as is" except for the Certified
Consultant Directory. Since the Certified Consultant Directory references Seller
as a "Best!" company, all unassembled stock of this document are to be
destroyed immediately after the Closing Date, or Buyer will obscure the
reference to a "Best" company by means of a sticker at Buyer's cost and sole
discretion. Buyer will be responsible for replacing that Directory with a new
version that does not include any reference to Best. In addition, there are a
number of small print references that may be in Seller end-user materials being
transferred to or sold to Buyer hereunder (such as polybag notices, license
agreements, etc.). When transferred stock is depleted, any reprints of such
material shall delete any reference to Best or Abra. With respect to materials
sold to Buyer by Seller (e.g., poly bags), Buyer shall make all reasonable
efforts to create and utilize replacements for any and all such materials,
without any reference to Abra or Best. Buyer shall indemnify and hold Seller,
Best and Abra harmless from any costs, damages or liability any of them may
incur as a result of Buyer's use of this inventory after the Closing Date.
22
23
(e) Company Name. Seller and Best agree that, during the term of
this Agreement, Seller shall no longer have any right to use, and will not use
or allow any third party to use the name "Best!▇▇▇▇, Inc." after the Closing
Date; except for its use related to checks and bank accounts as specified in
Sections 11.1 and/or 11.6 or as specifically agreed in writing by Buyer. Seller
shall change its corporate name so as not to include such words, promptly after
the Closing Date.
11.4 Sales, Marketing and Support
(a) Distributor Agreements. Disposition of the current distributor
arrangements listed on an Exhibit to the License Agreement shall be handled as
set forth in the License Agreement. Pursuant to the Management Agreement, Buyer
shall manage the day to day operations of such distribution relationships on
DT's behalf.
(b) Mechanics relating to Distribution Relationships Continuing
after the Closing Date. With regard to distribution relationships existing
before the Closing Date which continue after the Closing Date, Seller will be
responsible for all aspects of those orders that were entered into prior to the
Closing Date. That is, Seller is responsible for any returns that are part of
orders dated prior to the Closing Date. Seller will also complete any co-op
arrangements that were entered into and relate to orders dated on/or before the
Closing Date, subject to the financial arrangement described in Section 11.6.
(c) Support. Buyer will use commercially reasonable efforts to
continue to provide customer support services consistent with those provided
prior to the Closing Date.
(d) Sales and Marketing, Campaigns. Buyer will not undertake new
sales or marketing campaigns after the Closing Date and until the next product
release (scheduled for October, 1996) that would motivate customer/distributors
to return product to Seller in order to re-order the same product from Buyer.
(e) Reports. Buyer will provide Seller with a copy of a quarterly
sales report showing unit sales by product by distributor, by month and
year-to-date. The report will also show returns and other credits processed
against orders received after the Closing Date. These reports should be produced
by Buyer's regular internal reporting system and be transmitted to Seller within
three days of their internal publication to Buyer. The report formats utilized
in the Seller's Quick Look Reports and the Sell-Through Reports will satisfy
this reporting requirement.
23
24
(f) Publicity. The parties agree that it is important that a
coordinated and consistent message be presented as regards to this transaction.
They will work together to define a press release to be provided to the
appropriate industry publications shortly after the Closing Date. They will also
prepare a list of typical questions and the answers for these questions to be
provided to members of management who are authorized to respond to such queries.
Each company will advise all its employees, as part of its internal
announcement, to refer any and all such inquiries to designated managers and not
to volunteer any information regarding this transaction.
11.5 Best-provided Services
(a) MIS. Best agrees to allow Buyer to continue to use Best's AS/400
computer and those selected applications named in Schedule 11.5 until Buyer has
been able to establish its own MIS operations.
(i) Buyer agrees to pay Best [ * ] per month for the use of the
AS/400 and the named applications. In addition to the [ * ] monthly
AS/400 usage fee, Buyer will also pay Best for all dedicated resources
(e.g., T1 phone lines) and for any other incremental costs incurred by
Best due to Buyer's use of the AS/400. Payment will be made monthly
within seven days of the end of each month.
(ii) The parties do not anticipate any changes to any of the AS/400
applications on behalf of Buyer. However, if Buyer wants any changes made
or requests any labor-based services, including preparing annual updates,
they will provide a written request to Best (attention ▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇). Requests for such AS/400 services should be made
reasonably in advance of the need for such services. Best will provide a
cost estimate, based on the labor rates listed in Schedule 11.5, and a
schedule for completing the work, which schedule may reflect then-current
resource availability. If Buyer wishes to proceed, it will then authorize
the work in writing.
(iii) Best agrees that it will make the AS/400 available to Buyer,
under the conditions described above, until March 31, 1997. Buyer agrees
that it will make a reasonable effort to establish its own MIS system as
soon as possible and thereby terminate its use of Best's AS/400 system on
or-before March 31, 1997.
(b) Lotus Notes. Seller will transfer to Buyer all the assets and
licenses necessary for Buyer to operate its own Lotus Notes system independent
of the Best system beginning with the Closing Date, except for information
downloaded to
* FOR CONFIDENTIAL TREATMENT
24
25
Buyer's system from the AS/400. When Buyer terminates its usage of the AS/400
system, it will establish its own procedures for transferring such information
into its own Notes system.
(c) Web site. The Best Programs Web Site is a company-wide site,
with subsections for various companies/products. Buyer will establish its own
site within 90 days of the Closing Date. Once the Buyer site is established,
Best will put directions into the Seller sections of the site that will instruct
the user as to how to reach the Buyer site. Buyer will be allowed to delay the
cut-over to its own site for 30 days with 14 days notice (a maximum of 2
extensions permitted).
(d) Other Services. In the event that Buyer requires support from
Best in areas other than those defined in this Agreement, the parties agree that
Best will make all reasonable efforts to be of assistance. Such requests should
be directed to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ for him to determine to whom to assign the
project and to prepare an estimate of the time involved and a schedule. The
parties agree that such support will be billed to Buyer for the direct hours
worked on the project. The billing rate will be calculated as the direct labor
rate of the resources performing the work plus 25%, where the 25% will cover
all the indirect costs of taxes, benefits, and all other labor related expenses.
In addition, Best will pass through to Buyer any out of pocket costs incurred on
behalf of Buyer, such as travel and entertainment associated with the project.
Best will invoice Buyer monthly for any such work performed, with payment due
within 30 days of invoice date.
11.6 Accounting/Administrative Wrap-Up. While Buyer will essentially
continue the business operations of Seller following the Closing Date, the fact
that Buyer is a new and separate company necessitates that a number of
accounting and administrative matters be dealt with. This is also the case since
Seller is retaining ownership of and responsibility for certain balance sheet
accounts.
Buyer is responsible for establishing its own bank accounts, merchant
accounts, and tax identification numbers for payroll, sales, income, and any
other purposes, along with performing any other requirement to sever their
operational ties to Seller existing after the Closing Date.
(a) Prior to the Closing Date, the parties will have prepared a
preliminary Balance Sheet, including detail lists of all accounts that are
normally available through the Seller accounting system (e.g., schedule of gross
and net accounts receivable, including a detail accounts receivable aging,
analysis of allowances for product returns and bad debt, schedule of commitments
under co-op arrangements, analysis of accrued rebates, and other analyses to
support net accounts receivable; schedules of prepaid expenses and other assets,
other accounts receivable, deposits, and
25
26
of other assets; schedule of detailed open accounts payable, schedule of accrued
payroll, including commissions and taxes payable, schedule of sales taxes
payable, etc.). The parties have agreed upon a distribution of all accounts to
either Seller or Buyer (see attached Schedule 11.6) and, as such, calculate a
Net Working Capital Proceeds Account ("NWCPA") for Seller. Within 20 days of the
Closing Date, Buyer will prepare a final version of the Balance Sheet as of the
Closing Date, including final versions of all account detail.
(b) Six months after the Closing Date, Seller will calculate a final
value for the NWCPA and a reconciliation of all accounts assigned to it. If the
final value is less than the value as of the Closing Date, Buyer will pay the
difference to Seller by March 31, 1997.
(c) During the six months following the Closing Date, the parties
will operate as follows. Buyer will perform on-going duties as it relates to the
performance of the wrap-up of affairs relative to Seller, including operations
in New Jersey, United Kingdom and Canada. Such duties include but are not
limited to:
- Closing monthly financial statements for May
- Filing all final payroll related reports, including the payment of
taxes
- Filing all final sales tax reports, including the payment of taxes
(i) Cash. Seller will take title to all bank and cash accounts at
Closing. As soon as practical after closing, Seller will change the name
of the account from Seller to either Best or its new company name. Buyer
is to open new accounts under their tax identification number and order
new check stock. Buyer to pay Seller for the impress balance of the ▇▇▇▇▇
cash account as part of the Settlement Payment,
(ii) Accounts Receivable (including Trade A/R, Accrued A/R and Other
A/R). As of the Closing, Seller retains all ownership to trade accounts
receivable; accrued accounts receivable, including but not limited to
Deluxe commissions, Access Line fees and all royalty arrangements
(including that of Licensee); and other accounts receivable; that were
accrued or should have been accrued by Seller. In order to minimize any
confusion with current distributors and resellers and to continue a
consistent practice in processing credits, rebates and other returns, the
practical approach is to continue to have payments and credit requests
sent to Buyer and be processed consistent with past practices of Seller.
Eventually, all such transactions will relate only to business
transactions entered into after the Closing Date and will be the sole
responsibility of Buyer. From the Closing Date until that time, some
transactions will contain items that impact both Seller and Buyer.
Procedures for handling these transactions and
26
27
for providing proper reporting to Seller are defined as follows. Buyer
will receive all payments and process requests for credits, return
authorizations and co-ops, as well as all other accounts receivable
transactions in the normal course of business. Any payments received that
are wholly owed to Seller will immediately be forwarded to the Seller's
Lock Box, along with all remittance information. As time proceeds, and
payments reflect items that belong to both parties, Buyer will process
such payments and apportion the payments based on the invoices paid and
the credits taken. Buyer will make payments to Seller and transmit to the
Seller's Lock Box on a weekly basis.
(iii) Co-op. Buyer will process all co-op credit requests in the
normal course of business and reconcile them with the list of open
approved requests as of the Closing Date. Buyer will provide a monthly
report summarizing all such transactions.
(iv) Rebates. Seller will be responsible for all rebates that are
received by Buyer within 60 days of Closing Date. Buyer will provide a
report on a monthly basis of rebates reimbursed and a final report on
rebates process. Seller to reimburse Buyer in the Settlement Payment.
(v) Credit Card Transactions. Buyer will establish its own credit
card merchant numbers. Immediately after the Closing Date, Buyer and
Seller will notify credit card processors that all transactions after this
notification are to be processed to Buyer's bank account. Seller will
leave its bank and merchant accounts open for 45 days after the Closing
Date to process any charge backs against products sold prior to the
Closing Date. If Buyer receives any charge backs requests for sales made
prior to the Closing Date after the Seller accounts are closed, Buyer will
process these requests in normal course of business and provide a monthly
report to Seller. Seller will reimburse Buyer, in the Settlement Payment,
for any costs Buyer incurs as a result of such approved charge backs.
Specifically with respect to credit card transactions in the
UK/Canada, the Buyer agrees as follows: (A) to limit the use of Seller's
merchant account to less than 45 days; (B) to indemnify Seller for
consequences of improper use and any damages; (C) to provide a
precheck-writing report to Seller before checks are dispersed for accounts
payable; and (D) to provide final reconciliation of cash.
(vi) Prepaid Expenses and Deposits. Buyer will pay Seller an amount
equal to the prepaid expense and deposit account balances, as of Closing
Date,as
27
28
part of the Settlement Payment. Buyer will collect for itself all
deposits that are released as conditions are fulfilled.
(vii) Payables. Immediately following the Closing Date, Buyer will
prepare a payables report reflecting all items at least 30 days old and
all under 30 days. Seller will transfer funds to Seller's bank account for
it to make the payments, as payments are scheduled to be made. Those over
30 days will be paid in Buyer's first check run after the Closing Date.
Those under 30 days will be paid in the second check run. After each check
run, Buyer will provide Seller with a report showing all checks to be
issued along with copies of the corresponding invoices/purchase orders.
Such checks are to be forwarded to Seller (c/o Best) for signature by an
authorized Seller or Best employee, and for dispatch to the appropriate
vendor, all of which shall occur within ten working days of receipt of the
checks from Buyer. If new invoices are received after the Closing Date
that wholly or partially belong to Seller, Buyer will prepare a payables
request indicating the amount owed. Such amounts will be included in the
Settlement Payment, unless there is a dispute about the payable. Such
disputes will be discussed and if not resolved, will be added to the
payable report and funded by Seller pursuant to the above procedure, such
amount counting against the NWCPA final value. As soon as practical after
the Closing Date, Buyer and Seller will notify all vendors that Seller is
not and will not be responsible for obligations incurred after the Closing
Date.
(viii) Accrued Compensation and Taxes. Promptly after Closing, Buyer
shall prepare a schedule of all unpaid compensation and tax obligations
that exist as of the Closing Date. Buyer will process for the period up to
Closing Date, for Seller's signature, all final tax returns, and Buyer
will pay taxes associated with such filings under Seller's tax
identification number. Seller will reimburse Buyer for payroll taxes paid
on its behalf in the Settlement Payment.
(ix) Foreign Tax Credit. Seller shall retain all rights to the
foreign tax credits whether paid or accrued or should have been paid or
accrued by Seller.
(x) Sales Tax Payable. Buyer to provide a schedule of all sales
taxes owed, as of the date of Closing. Buyer will prepare all sales tax
returns in the normal course of business, for Seller's signature and Buyer
will pay taxes as they become due. Seller will reimburse Buyer the amount
of the taxes paid in the Settlement Payment.
28
29
(xi) Settlement Payment. A reconciliation for amounts due, for the
following, will be made by the Buyer:
- Seller's prorata share of "shared" accounts payable
- ▇▇▇▇▇ cash account owed to Seller by the Buyer
- Deposits owed to the Seller by the Buyer
- Prepaid expenses owed to the Seller by the Buyer
- Buyer's obligation for 50 % of the computer purchase obligation, as
of the Closing Date
- Tuition reimbursement owed by Seller to Buyer
- Sales commissions owed by Seller to Buyer
- Sales taxes payable owed by Seller to Buyer
- Payroll taxes payable owed by Seller to Buyer
- Rebates owed by Seller to Buyer
- Credit card charge backs owed Seller to Buyer
The reconciliation will reflect, by category, the amount owed by Buyer to Seller
or by Seller to Buyer, along with a net amount owed by one party to the other.
This reconciliation will be made as of the July month end and will be forwarded
to Seller by August 10, 1996, along with detail schedules supporting the
amounts. After acceptance by both parties, and not later than August 15, 1996, a
payment will be made by the "owing" party.
12. Transfer and Sales Tax; Bulk Sales.
12.1 Taxes. Notwithstanding any provisions of law imposing the
burden of such taxes on the Seller, Best or the Buyer, as the case may be, the
Buyer shall pay (a) all sales, use and transfer taxes, and (b) all governmental
charges, if any, upon the sale or transfer of any of the Assets hereunder.
12.2 Bulk Sales. The Buyer hereby waives compliance by the Seller or
Best with any applicable bulk transfer laws, including, without limitation, the
bulk transfer provisions of the Uniform Commercial Code of any state, or any
similar statute, with respect to the transactions contemplated hereby. The
Seller and Best shall at all times defend, indemnify and save harmless the Buyer
from and against any and all claims by creditors of the Seller or Best that the
Buyer may incur as a result of its agreement to waive the requirements of the
Bulk transfer provisions of the Uniform Commercial Code, unless such claims
arise solely out of the Buyer's failure to pay or otherwise satisfy, when due,
any of the duties that were assumed by and delegated to the Buyer pursuant to
this Agreement.
29
30
13. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if sent by Federal Express (required form
for international communications) or similar overnight courier or by registered
or certified mail, postage prepaid, addressed in any event as follows or to such
other address of which the parties have given notice in accordance with this
Section 13:
To the Seller: Best!▇▇▇▇, Inc. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Treasurer
To Best: Best Programs, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
In either case with ▇▇▇▇ and ▇▇▇▇
a copy to: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
To the Buyer: Best!▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
With a copy to: Data-Tech Software Pty Ltd
▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Such notices or other communications shall be deemed received (a) on the date
delivered, if delivered personally, (b) three Business days after being
deposited with the U.S. Post Office, if sent by registered or certified mail, or
(c) on the next Business day, if sent by Federal Express or similar overnight
courier.
14. Assignment. Buyer may not assign this Agreement or any rights
hereunder without the prior written consent of Seller or Best. Seller or Best
may not assign this Agreement nor any rights hereunder to any third party
without the prior written consent of Buyer unless (a) such third party agrees
to assume all of Seller or
30
31
Best's obligations, and (b) such party is not a named competitor of Buyer listed
on EXHIBIT N of the License Agreement. Anything to the contrary herein
notwithstanding, Seller or Best shall be permitted at any time to assign this
Agreement, without consent, (a) to any subsidiary or associated company of
Seller or Best, and (b) pursuant to any merger, consolidation, change in control
or other reorganization. Any attempted assignment of this Agreement in
contravention of this provision shall be void and of no effect. Subject to the
foregoing, this Agreement shall bind and inure to the benefit of the respective
parties hereto and their successors, and assigns.
15. Entire Agreement; Amendments; Attachments
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the parties pursuant hereto
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
and all contemporaneous oral negotiations, commitments and understandings
between such parties. The Buyer, Best and the Seller may amend or modify this
Agreement, in such manner as may be agreed upon, by a written instrument
executed by them.
(b) If the provisions of any Schedule or Exhibit to this Agreement
are inconsistent with the provisions of this Agreement, the provision of the
Agreement shall prevail. The Exhibits and Schedules attached hereto or to be
attached hereafter are hereby incorporated as integral parts of this Agreement.
16. Expenses. Except as otherwise expressly provided herein, tile Buyer,
Best and the Seller shall each pay their own expenses in connection with this
Agreement and the transactions contemplated hereby.
17. Exclusive Remedies. Except for any matter for which injunctive relief
is sought (as, for example, any infringement of Seller's proprietary rights) or
any matter involving Seller's rights under any security agreement(s) executed by
Buyer or any Buyer affiliate on Seller's behalf (the "Security Agreements"), the
parties hereby agree that they may resort to only those dispute resolution
remedies explicitly set forth in this Section 17 in the event of any
disagreement, dispute, breach or claim of breach, non-performance or repudiation
hereunder; the entire transaction represented hereby and the structure and
amount of the fees and other financial terms of this Agreement are based upon
strict compliance with this Paragraph 17, and the exclusive remedies set forth
herein have been explicitly bargained for and negotiated and shall bind the
parties as an integral part of this Agreement in accordance with the following
terms and conditions:
17.1 Internal Resolution Procedure. In the event that the parties
have any disagreement, dispute, breach or claim of breach, non-performance, or
repudiation
31
32
arising from, related to or in connection with this Agreement or any of the
terms or conditions hereof, or any transaction hereunder, including, but not
limited to, either party's failure or alleged failure to comply with any of the
provisions of this Agreement (hereinafter collectively the "Dispute"), the
parties shall first conduct a management procedure as follows. Within ten (10)
calendar days of the time that a senior management representative of either
party having the authorization to do so informs the other party of a Dispute by
sending a written notice specifically referencing and invoking this Paragraph
17, the parties shall conduct a meeting at a location halfway between the
locations of the two parties (unless otherwise agreed) and use their best
efforts to either: (a) resolve the matter and set forth such resolution in
writing, or (b) define the Dispute in writing including a description of the
position of each party.
17.2 Arbitration Resolution Procedure. If the parties are unable to
reach an agreement pursuant to subparagraph (a) above, the Dispute shall be
resolved by mandatory, binding, expedited arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association before an
arbitrator with knowledge and experience in the areas of computer software
licensing. The result of the arbitration shall be final and binding, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The decision of the arbitrator shall be in writing.
He or she shall be compensated by the party that does not substantially prevail
in the arbitration, and the party responsible for payment shall be specified in
the arbitrator's award. IN NO EVENT SHALL THE ARBITRATOR HAVE THE POWER TO
MODIFY, AMEND, OR OTHERWISE CHANGE OR ADD TO ANY OF THE TERMS OR CONDITIONS OF
TMS AGREEMENT OR ANY EXHIBIT HERETO WITHOUT THE EXPRESS WRITTEN APPROVAL OF BOTH
PARTIES. The internal laws of the State of New Jersey shall govern the
enforcement of the award and the principles set forth in this Agreement shall be
applied by the arbitrators for both evidence and substantive law questions
during the arbitration, including the rendering of the award. Judgment upon the
award of the arbitrator, enforced in accordance with New Jersey law, shall be
final and binding upon the parties and may be entered in any court in the
country of either of the parties hereto. The parties acknowledge and stipulate
that this is a commercial contract and that any award, judgment or order,
interim or final, shall be enforceable as a commercial award, judgment or order
wherever such enforcement is sought. The arbitrator shall give effect to the
applicable statute of limitation in determining any claim, and any controversy
concerning whether an issue is arbitrable shall be determined by the
arbitrators. The arbitration proceeding and all evidence taken shall be treated
as confidential information hereunder.
17.3 Governing Law and Jurisdiction - This Agreement shall be
construed and governed in accordance with the laws of the State of New Jersey,
except for that body of law known as conflicts of law. The parties hereto
hereby irrevocably
32
33
submit to the exclusive jurisdiction of the New Jersey courts and hereby waive
any present or future objection to any such venue. The parties further agree
that final judgment against either party in any action or proceeding arising out
of or relating to this Agreement or the Security Agreements shall be conclusive
and may be enforced in any other jurisdiction within or outside the United
States of America by suit on the judgment, a certified or exemplified copy of
which shall be conclusive evidence of the fact and of the amount of the
obligation.
18. Legal Fees. In the event legal proceedings are commenced by the Buyer
against the Seller and/or Best, or by the Seller and/or Best against the Buyer,
in connection with this Agreement or the transactions contemplated hereby, the
party or parties which so not prevail in such proceedings shall pay the
reasonable attorneys' fees and other costs and expenses, including investigation
costs, incurred by the prevailing party in such proceedings.
19. Section Headings. The section headings are for the convenience of the
parties and in no way alter, modify, amend, limit, or restrict the contractual
obligations of the parties.
20. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
SELLER:
BEST!▇▇▇▇, INC.
a Virginia Corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Treasurer
33
34
BEST:
BEST PROGRAMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Treasurer
BUYER:
BEST!▇▇▇▇, INC.
a New Jersey Corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
President
34
35
Schedule 1
AS/400 ASSETS
Quantity Device
-------- ------
1 5494- (56 device capacity)
2 6010si Lasers
1 3196 terminal
1 Kentrox CSU/DSU
2 Pcs used as gateways
5 ▇▇▇▇▇▇ Gateway cards
1 Scale
1 Wedge reader
1 Scanner Gun
1 Retix Router
36
Schedule 2.1(a)(ii)
CONTRACTS, AGREEMENTS, LEASES, LICENSES
--------------------------------------------------------------------------------
NAME OF THIRD PARTY DATE OF AGREEMENT
--------------------------------------------------------------------------------
Access Line, Inc. August 3, 1995
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
Aladdin Systems, Inc. February 13, ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
The Affinity Group, Inc. May 9, 1996
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇ March 3, 1995
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
Leasing Technologies, Inc (telephone lease)
--------------------------------------------------------------------------------
Real Property Leases for ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as amended
--------------------------------------------------------------------------------
Cable & Wireless
--------------------------------------------------------------------------------
Interconsult
▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
All licenses for third party software located at Seller's New Jersey facilities
and at Seller's remote sales offices currently used by ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇, but specifically excluding the AS/400 Assets
As between the parties, management of the above contracts and leases after the
Closing Date shall be handled as specified in Section 11.
37
Schedule 2.1(a)(v)
FIXED ASSETS
38
Schedule 2.4
OTHER LIABILITIES, OBLIGATIONS AND COMMITMENTS BEING ASSUMED BY BUYER
Unearned Maintenance as of the Closing Date
39
CONFIDENTIAL TREATMENT
Confidential material has been omitted
and filed separately with the Securities
and Exchange Commission. Astericks
denote such omissions.
Schedule 2.5
ALLOCATION OF PURCHASE PRICE AND ASSUMED LIABILITIES
*
40
Schedule 3.3
ENCUMBRANCES
Lien on the Assets held by First National Bank of Maryland, to be released
within a week of Closing
41
Schedule 3.7
THIRD PARTY SOFTWARE
Software Product Copies
---------------- ------
Visual Source Safe
Version 3.3 6
Version 4 1
Metrowerks Code Manager 4
Metrowerks Code Warrior Eight 5
MS Test 3.0 7
MS Test 4.0 1
WinHelp 95 Office 4
Visual Basic 2
NT AS
Version 3.5 25
Upgrade 3.51 1
42
Schedule 3.8
LITIGATION
None
43
Schedule 11.5
MIS APPLICATIONS AND RATES
To be provided after the Closing.
44
Schedule 11.6
NET WORKING CAPITAL PROCEEDS ACCOUNT (NWCPA)
The parties have agreed that the following Accounts and values constitute the
NWCPA:
ACCOUNT VALUE
------- -----
Trade A/R $1,024,096
Accrued A/R 326,550
Return Allowance ($409,364)
A/P ($102,173)
Accrued Payables ($70,000)
Sales Co-op ($53,070)
----------
Total value $ 716,039
The parties agree that this Total Value is the minimum amount to be received by
Seller through the disposition of these accounts during the six months following
the Effective Date. Trade A/R does not include any allowance for bad debt which
will be Seller's responsibility. Any fluctuations in accrued A/R due to foreign
currency exchange fluctuations in the Data-Tech receivables is the
responsibility of Seller.
The parties further agree that all of the remaining balance sheet accounts will
be the responsibility of the Seller and will be processed in accordance with the
provisions of the Transition Agreement, including the payment of the Settlement
Payment, due not later than 8/15/96. Items marked with * will be included in the
Settlement Payment.
Those accounts and their values as of 5/24/96:
ACCOUNT VALUE
------- -----
Cash $102.5
▇▇▇▇▇ Cash* .4
PC Benefit* 5.3
Prepaid and Other* 33.9
Other A/R* 2.6
Deposits* 15.8
Fixed Asset Reimbursement* (30.0)
Accrued Payroll (48.0)
Accrued Comm./bonuses (33.8)
Accrued Rebates (20.0)
Payroll Taxes payable (8.4)
4.01 K (12.1)
Accrued Medical/Dental (45.4)
Flex. Benefit W/H (13.7)
Sales Tax Payable (3.1)
Foreign Income Tax Credit 75.4
45
Access Receivables for April and May 13.5
Coop in Excess of $53,070 (13.5 max.)
The parties further agree that the NWCPA does not include transactions relating
to Best UK and Best Canada which will be the responsibility of Seller and will
also be processed in accordance with the provisions of the Transition Agreement.