EXHIBIT 10.24
TECHNOLOGY PURCHASE AGREEMENT
BY AND AMONG
RED BRICK SYSTEMS, INC.,
ENGAGE TECHNOLOGIES, INC.,
AND
CMG INFORMATION SERVICES, INC.
DATED AS OF AUGUST 29, 1997
TECHNOLOGY PURCHASE AGREEMENT
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THIS TECHNOLOGY PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of August 29, 1997, by and among RED BRICK SYSTEMS, INC. ("Red Brick"), a
Delaware corporation; ENGAGE TECHNOLOGIES, INC. ("Engage"), a Delaware
corporation; and CMG INFORMATION SERVICES, INC. ("CMG"), a Delaware corporation.
Preamble
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The respective Boards of Directors of Red Brick, Engage and CMG are of the
opinion that the transactions described herein are in the best interests of the
parties to this Agreement and their respective stockholders. This Agreement
provides for the acquisition of certain database technology (the "Database
Technology") belonging to Engage and described in EXHIBIT A attached hereto and
the assumption by Red Brick of those certain liabilities of Engage set forth on
Schedule 9.1(a) attached hereto (the "Assumed Liabilities"). The transactions
described in this Agreement are subject to the satisfaction of certain other
conditions described in this Agreement.
Certain terms used in this Agreement are defined in SECTION 9.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
PURCHASE AND SALE
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1.1. Sale and Purchase of Database Technology. Subject to the terms and
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conditions of this Agreement and in reliance upon the representations,
warranties and covenants contained herein, on the Closing Date Engage shall
sell, grant, convey, assign, transfer and deliver to Red Brick, and Red Brick
shall purchase from Engage, the Database Technology, free and clear of all
Liens.
1.2. Consideration; Method of Payment; Distribution. In consideration for
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the Database Technology, on the Closing Date Red Brick shall:
(a) Deliver to Engage Nine Million Four Hundred Eighty Thousand
Dollars ($9,480,000) in cash by wire transfer to such account(s)
as Engage shall designate;
(b) Deliver to Engage a certificate for that number of newly issued
unregistered shares of Common Stock of Red Brick (not to exceed
290,000 shares) determined by dividing the number 2,000,000 by
the average closing price of Common Stock of Red Brick over the
twenty (20) consecutive trading days ending on and including the
third day prior to the
Closing Date publicly reported for the NASDAQ Stock Market as of
4:30 P.M. Eastern Daylight Savings Time on such dates.
1.3. Liabilities Assumed. In connection with the purchase of the Database
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Technology, on the Closing Date, Red Brick will assume, from and after the
Closing Date, the Assumed Liabilities as set forth on SCHEDULE 9.1(a) attached
hereto. Except for the Assumed Liabilities which Red Brick expressly assumes on
the Closing Date, Red Brick will not assume, or be deemed to have assumed, or
otherwise be responsible in any respect for, any Liabilities of CMG or Engage of
any kind. In connection with the assumption by Red Brick of the liabilities of
Engage and CMG under the Software Development, License Agreement and Additional
Consulting Services Terms and Conditions between Northwoods Software Corporation
and CMG Direct Interactive, Inc., effective as of October 9, 1996, CMG and
Engage hereby agree to reimburse Red Brick up to a maximum amount of Ninety-Five
Thousand Dollars ($95,000) immediately upon notice to CMG of its payment of
Fifty Thousand Dollars ($50,000) for fixed price development effort and Forty-
Five Thousand Dollars ($45,000) for license fee.
1.4. Assignment of Database Technology Licenses. EXHIBIT B sets forth all of
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the relevant Contracts or licenses related to the Database Technology (the
"Database Technology Licenses") and a description of each such Database
Technology License. Notwithstanding anything to the contrary herein stated or
otherwise implied, no Database Technology License shall be transferred or
assigned hereunder if such transfer or assignment would, without the prior
consent or approval of another party which has not been obtained, be ineffective
or constitute a breach of any agreement, obligation or instrument relating to
the Database Technology. In any such event, however, CMG and Engage covenant
and agree that, at the request of Red Brick, the beneficial interest in and to
such Database Technology License shall nonetheless pass to Red Brick at the
Closing and, further, CMG and Engage shall (i) at the request of Red Brick, hold
and declare that it holds such Database Technology License for the benefit of
Red Brick, its successors and permitted assigns for a period of up to ninety
(90) days from and after the Closing Date, (ii) use all reasonable efforts (not
including the payment of any amounts) to obtain and secure any and all consents
and approvals that may be necessary to effect a valid and complete transfer or
assignment of such Database Technology License as soon as reasonably possible,
and (iii) cooperate with Red Brick in any other reasonable arrangement designed
to provide Red Brick with the beneficial enjoyment of such asset.
1.5. Time and Place of Closing. The closing of the transactions contemplated
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hereby (the "Closing") will take place at 5:00 P.M. Eastern Daylight Savings
Time on August 29, 1997, or at such other time as the Parties may mutually
agree. The Closing shall be held at the offices of ▇▇▇▇▇▇ & Dodge LLP, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, or such other location as may be mutually
agreed upon by the Parties. The date of the Closing is herein referred to as
the Closing Date.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF ENGAGE AND CMG
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Except as set forth in the Engage Disclosure Memorandum attached hereto as
EXHIBIT B, Engage and CMG, jointly and severally, hereby represent and warrant
to Red Brick as of the date of the execution of this Agreement and as of the
Closing Date as follows:
2.1. Organization, Standing, and Power. Engage and CMG are each corporations
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duly organized, validly existing and in good standing under the Laws of the
State of Delaware, and each has the corporate power and authority to carry on
its business as conducted and to own, lease and operate its material assets.
Each of Engage and CMG is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of their respective assets or the
nature or conduct of their respective businesses requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CMG or Engage.
2.2. Authority: No Breach By Agreement.
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(a) Each of Engage and CMG has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and the Related Agreements to which each is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery, and
performance of this Agreement and the Related Agreements and the consummation of
the transactions contemplated herein and therein have been duly and validly
authorized by all necessary action in respect thereof on the part of Engage and
CMG. This Agreement and the Related Agreements represent legal, valid, and
binding obligations of CMG and Engage enforceable against CMG and Engage in
accordance with their terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought).
(b) Neither the execution and delivery of this Agreement and the
Related Agreements by Engage and CMG, nor the consummation by Engage and CMG of
the transactions contemplated hereby, nor compliance by Engage and CMG with any
of the provisions hereof, will (i) conflict with or result in a breach of any
provision of Engage's or CMG's Certificate of Incorporation or By-Laws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any material assets of CMG or Engage,
including the Database Technology under, any Contract or Permit of Engage or
CMG, or (iii) subject to receipt of the requisite Consents referred to in
SECTION 6.1(b), violate any Law or Order applicable to Engage or CMG or any of
their respective material assets, including the Database Technology.
(c) No notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by Engage or CMG of the other
transactions contemplated in this Agreement.
2.3. Database Technology.
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(a) EXHIBIT A sets forth in reasonable detail all of the Database
Technology which Engage owns or to which Engage has a license and which Engage
is selling to Red Brick under this Agreement. There are no outstanding Contracts
of any kind relating to the Database Technology other than the Database
Technology Licenses. Engage is not in Default under any of the Database
Technology Licenses.
(b) EXHIBIT A-1 sets forth all of the Intellectual Property related to
the Database Technology. Engage holds and is transferring or licensing hereunder
all Intellectual Property related to the Database Technology without any
conflict with or infringement upon the
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rights of others. Engage has the right to convey by sale, transfer or license
the Database Technology to Red Brick free and clear of Liens. Engage is not a
party to or bound under any agreement, contract, order, judgment or decree, or
any similar restriction not of general application which materially adversely
affects, or reasonably could be expected to materially adversely affect (i) the
continued sale or exploitation of the Database Technology by Red Brick after the
Time of Closing on substantially the same basis as said business was theretofore
operated or (ii) the consummation of the transactions contemplated by this
Agreement. The Database Technology, to the best Knowledge of CMG and Engage,
does not infringe upon any intellectual, proprietary or other rights of any
person, firm, corporation or other entity anywhere in the world. No proceedings
have been instituted, are pending, or, to the Knowledge of Engage or CMG, have
been threatened, which challenge the rights of Engage with respect to such
Database Technology used, sold or licensed by Engage in the course of its
business, nor has any person claimed or alleged any rights to such Database
Technology, nor is Engage aware of any basis or alleged basis for any such claim
or assertion. Except as disclosed in the Engage Disclosure Memorandum, Engage is
not obligated to pay any recurring royalties to any Person with respect to any
such Database Technology.
(c) Engage has taken reasonable security measures to protect the
secrecy, confidentiality and value of the Database Technology, and has not
disclosed the Database Technology (or any portion thereof) to any third party.
EXHIBIT B sets forth a complete and accurate list of all individuals who have
had access to the Database Technology. Except as disclosed in the Engage
Disclosure Memorandum, every officer, director, or employee of Engage is a party
to a Contract which requires such officer, director or employee to assign any
interest in any such Database Technology to Engage and to keep confidential and
refrain from using any trade secrets, proprietary data, customer information, or
other business information of Engage relating to such Database Technology, and
no such officer, director or employee is party to any Contract with any Person
other than Engage which requires such officer, director or employee to assign
any interest in any such Database Technology to any Person other than Engage or
to keep confidential any trade secrets, proprietary data, customer information,
or other business information of any Person other than Engage relating to such
Database Technology. The Database Technology does not include any inventions of
employees of Engage made prior to the time such employees became employees of
Engage nor any intellectual property of any previous employer of such employees.
(d) The Database Technology performs in accordance with all relevant
documentation and other written materials (identified on EXHIBIT A) used in
connection with the Database Technology, conforms to all relevant specifications
(identified on EXHIBIT A) related to the Database Technology and is free of all
Liens and encumbrances. In addition, the computer software of Engage included in
the Database Technology (the "Software") is in machine-readable form, contains
all current revisions of such Software, and includes all computer programs,
materials, tapes, know-how, object and source codes, other written materials,
know-how and processes related to the Software. Engage has delivered to Red
Brick complete and correct copies of all user and technical documentation
related to the Database Technology. Neither Engage nor, to the Knowledge of
Engage, any employee or agent thereof, has developed or assisted in (i) the
enhancement of the Database Technology or Software, except for enhancements
included in the Database Technology or the Software to be delivered to Red Brick
pursuant hereto, or (ii) the development of any program or product based on the
Database Technology or Software or any part thereof except for any program or
product to be delivered to Red Brick pursuant hereto. Engage has kept secret and
has not disclosed Software or any portion thereof (including, without
limitation, all or part of the source code for the Software) to any person or
entity other than certain employees or consultants of Engage who are subject to
the terms of a binding confidentiality agreement with respect thereto.
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2.4. Legal Proceedings. There is no Litigation instituted or pending, or, to
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the Knowledge of Engage, threatened (or unasserted but considered probable of
assertion) against Engage or CMG, or against any consultant or employee of
Engage or CMG, or against any asset, interest, or right of any of them, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against Engage or CMG affecting the Database
Technology in any respect. To the best of Engage's and CMG's Knowledge, there
is no basis or alleged basis upon which any such claim, litigation, action, suit
or proceeding could be brought or initiated.
2.5. Investment Representation. Engage understands that the shares of Red
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Brick Common Stock to be issued to Engage under this Agreement have not been
registered by Red Brick under the Securities Laws and, therefore, the shares
cannot be sold or otherwise transferred unless either they are registered under
the Securities Laws or an exemption from such registration is available. In
connection with such issuance, Engage hereby makes the additional
representations and warranties to Red Brick as set forth in SCHEDULE 2.5
attached hereto.
2.6. Confidential Information. The parties acknowledge and agree that during
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the course of performing their duties under this Agreement, the parties may
exchange confidential and proprietary information ("Confidential Information").
Confidential Information shall include, without limitation, customer lists,
trade secrets, product plans and schedules, new product information, technical
data and know-how, instructional and operating manuals, financial information,
marketing and sales data and plans, and any other business, financial or
technical information. Each party acknowledges that the Confidential Information
of the other party constitutes valuable trade secrets of that party. Both
parties agree that this Agreement establishes a confidential relationship
between CMG/Engage and Red Brick as to the other party's Confidential
Information. Each party agrees, therefore, to preserve the confidential nature
of the other party's Confidential Information by retaining and using such
Confidential Information in trust and confidence, solely in accordance with
their rights under this Agreement or other agreements between the parties, and
further agrees not to (except as may be otherwise permitted under this Agreement
or other agreements between the parties) (i) use the Confidential Information;
(ii) disclose the Confidential Information to any third parties; (iii) permit
the use of such Confidential Information by, or disclosure of such Confidential
Information to unauthorized persons. Each party agrees to promptly report to the
other party any violations of these provisions by its employees, consultants or
agents of which they are aware. Except as otherwise permitted under this
Agreement, neither party shall copy or make, cause or permit any third party to
copy such Confidential Information, in whole or in part, without the prior
written consent of the other party. A party receiving Confidential Information
shall not be obligated under this SECTION 2.6 with respect to information the
receiving party can document: (a) is or has become readily publicly available
without restriction through no fault of the receiving party or its employees or
agents; (b) is received without restriction from a third party lawfully in
possession of such information and lawfully empowered to disclose such
information; (c) was rightfully in possession of the receiving party without
restriction prior to its disclosure by the other party; or (d) was independently
developed by the receiving party by employees without violation of this SECTION
2.6. Notwithstanding the foregoing, all Database Technology shall be deemed
Confidential Information of Red Brick disclosed to Licensee under this Agreement
and exceptions (c) and (d) above will not be applicable thereto.
2.7. Disclosure. Engage and CMG have fully provided Red Brick with all the
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information that Red Brick has requested for deciding whether to purchase the
Database Technology and all information that Engage and CMG believe is
reasonably necessary to enable Red Brick to make such decision. Neither this
Agreement nor any of the Related Agreements,
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nor any other statement or certificates made or delivered in connection herewith
or therewith contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements herein or therein not
misleading.
2.8. Financial Statements. CMG has delivered to Red Brick its consolidated
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audited financial statements (balance sheet and income statement, statement of
stockholders' equity and statement of cash flows, including notes thereto) at
July 31, 1996, and for the fiscal year then ended, and its unaudited financial
statements (balance sheet, income statement and statement of cash flows) as at
and for the nine-month period ended April 30, 1997 (the "Financial Statements").
The Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated and with each other, except that unaudited Financial
Statements may not contain all footnotes required by generally accepted
accounting principles. The Financial Statements fairly present the financial
condition and operating results of CMG as of the dates and for the periods
indicated therein, subject in the case of unaudited Financial Statements to
normal year-end adjustments. Except as set forth in the Financial Statements,
CMG has no material liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to April 30,
1997, and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in the Financial Statements, which, in both cases,
individually or in the aggregate, are not material to the financial condition or
operating results of CMG, taken as a whole. CMG maintains its books and records
in accordance with generally accepted accounting principles.
2.9. SEC Filings.
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(a) CMG has timely filed and made available to Red Brick all SEC
Documents required to be filed by CMG since July 31, 1996 (the "CMG SEC
Reports"). The CMG SEC Reports (i) at the time filed, complied or will comply in
all material respects with the applicable requirements of the Securities Laws
and other applicable Laws, and (ii) did not, at the time they were filed (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such CMG SEC Reports or
necessary in order to make the statements in such CMG SEC Reports, in light of
the circumstances under which they were made, not misleading.
(b) Each of the Financial Statements (including, in each case, any
related notes) contained in the CMG SEC Reports complied as to form in all
material respects with the applicable published rules and regulations of the SEC
with respect thereto, was prepared in accordance with GAAP (except to the extent
required by changes in generally accepted accounting principles, as may be
indicated in the notes to such financial statements or, in the case of unaudited
interim statements, as permitted by Form 10-Q of the SEC), and fairly presented
in all material respects the consolidated financial position of CMG as at the
respective dates and the consolidated results of operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount or effect.
2.10. Absence of Undisclosed Liabilities. Neither Engage nor CMG, nor any
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Subsidiary of either Engage or CMG has any Liabilities that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Engage or CMG, except Liabilities which are accrued or reserved against in the
consolidated balance sheets of Engage or CMG as of April 30, 1997, included in
the Financial Statements or SEC Reports of CMG delivered prior to the date of
this Agreement or reflected in the notes thereto. Neither Engage
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nor CMG, nor any Subsidiary of either Engage or CMG, has incurred or paid any
Liability since April 30, 1997, except for such Liabilities incurred or paid (i)
in the ordinary course of business consistent with past business practice or
(ii) in connection with the transactions contemplated by this Agreement. There
are not debts, liabilities or obligations to which the Database Technology is
subject, liquidated, unliquidated, accrued, absolute, contingent or otherwise,
except those arising under the Database Technology Licenses set forth in EXHIBIT
B.
2.11. Absence of Certain Changes or Events. Since April 30, 1997, except as
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disclosed in the Financial Statements delivered prior to the date of this
Agreement or as disclosed in the Engage Disclosure Memorandum, there have been
no events, changes or occurrences which have had, or are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Engage or
CMG.
2.12. Title to Property and Assets. Except as set forth on the Engage
----------------------------
Disclosure Memorandum, Engage or CMG owns and has good and marketable title to
all of the hardware described in SECTION 5.6 and listed on SCHEDULE 5.6 (the
"Hardware"), free and clear of all easements, mortgages, pledges, liens,
encumbrances, security interests, equities, charges, clouds and restrictions of
any nature whatsoever. Except as set forth on the Engage Disclosure Memorandum,
by virtue of the deliveries made at the Closing, Red Brick will own and obtain
good and marketable title to the Hardware, free and clear of all easements,
mortgages, pledges, liens, encumbrances, security interests, charges, equities,
clouds and restrictions of any nature whatsoever.
2.13. Transferred Employees. Engage and CMG are not aware that any of the
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Transferred Employees, as defined in SECTION 5.5 and listed on SCHEDULE 5.5 are
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement or subject to any judgment, decree or order of
any court or administrative agency, that would (i) prevent any of such
Transferred Employees from being employed by Red Brick, (ii) interfere with the
ability of any such Transferred Employees from using his or her best efforts to
promote the interests of Red Brick, or (iii) conflict with Red Brick's business
as proposed to be conducted. Neither the execution nor delivery of this
Agreement nor any of the Related Agreements, nor the carrying on of Engage's or
CMG's business by the Transferred Employees prior to the Closing, nor the
proposed employment of the Transferred Employees by Red Brick immediately after
the Closing, will, to the best of Engage's or CMG's knowledge, conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any of such
Transferred Employees is now obligated. Engage and CMG do not believe it is or
will be necessary for Red Brick to utilize any inventions of any of the
Transferred Employees made prior to or outside the scope of their employment by
Engage or CMG.
ARTICLE 3
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REPRESENTATIONS AND WARRANTIES OF RED BRICK
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Except as set forth in the Red Brick Disclosure Memorandum attached hereto as
EXHIBIT C, Red Brick hereby represents and warrants to Engage and CMG as of the
date of execution of this Agreement and as of the Closing Date, as follows:
3.1. Organization, Standings and Power. Red Brick is a corporation duly
---------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the
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corporate power and authority to carry on its business as now conducted and to
own, lease and operate its material assets. Red Brick is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Red Brick.
3.2. Authority; No Breach By Agreement.
---------------------------------
(a) Red Brick has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and the
Related Agreements and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the
Related Agreements and the consummation of the transactions contemplated herein
and therein have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of Red Brick. This Agreement and the
Related Agreements represent legal, valid, and binding obligations of Red Brick
enforceable against Red Brick in accordance with their terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement and the
Related Agreements by Red Brick, nor the consummation by Red Brick of the
transactions contemplated hereby, nor compliance by Red Brick with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of Red Brick's Certificate of Incorporation or Bylaws, or (ii) constitute or
result in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any material asset of any Red Brick Company under, any
Contract or Permit of any Red Brick Company, where such Default or Lien, or any
failure to obtain such Consent, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Red Brick, or, (iii) subject to
receipt of the requisite Consents referred to in SECTION 6.1(B), violate any Law
or Order applicable to any Red Brick Company or any of their respective material
assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
and other than Consents, filings, or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Red Brick, no notice to, filing with, or Consent of,
any public body or authority is necessary for the consummation by Red Brick of
the transactions contemplated in this Agreement.
3.3. Capital Stock.
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(a) The authorized capital stock of Red Brick consists of (I)
20,000,000 shares of Red Brick Common Stock, of which 11,492,824 shares are
issued and outstanding as of July 31, 1997, and (II) 2,000,000 shares of Red
Brick Preferred Stock, of which no shares are issued and outstanding. All of the
issued and outstanding shares of Red Brick Capital Stock are, and all of the
shares of Red Brick Common Stock to be issued in accordance with the terms of
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this Agreement, will be, duly and validly issued and outstanding and fully paid
and nonassessable. None of the outstanding shares of Red Brick Capital Stock has
been, and none of the shares of Red Brick Common Stock to be issued in
accordance with the terms of this Agreement will be, issued in violation of any
preemptive rights of the current or past stockholders of Red Brick.
(b) Except as set forth in the Red Brick Disclosure Memorandum, there
are no shares of capital stock or other equity securities of Red Brick
outstanding and no outstanding Rights relating to the capital stock of Red
Brick.
3.4. SEC Filings; Financial Statements.
---------------------------------
(a) Red Brick has timely filed and made available to Engage all SEC
Documents required to be filed by Red Brick since December 31, 1996 (the "Red
Brick SEC Reports"). The Red Brick SEC Reports (i) at the time filed, complied
or will comply in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws, and (ii) did not, at the time they
were filed (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such Red
Brick SEC Reports or necessary in order to make the statements in such Red Brick
SEC Reports, in light of the circumstances under which they were made, not
misleading.
(b) Each of the Red Brick Financial Statements (including, in each
case, any related notes) contained in the Red Brick SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP (except to the extent required by changes in generally accepted accounting
principles, as may be indicated in the notes to such financial statements or, in
the case of unaudited interim statements, as permitted by Form 10-Q of the SEC),
and fairly presented in all material respects the consolidated financial
position of Red Brick as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring year-
end adjustments which were not or are not expected to be material in amount or
effect.
3.5. Absence of Undisclosed Liabilities. No Red Brick Company has any
----------------------------------
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Red Brick, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Red Brick as
of June 30, 1997, included in the Red Brick Financial Statements or SEC Reports
delivered prior to the date of this Agreement or reflected in the notes thereto.
No Red Brick Company has incurred or paid any Liability since June 30, 1997,
except for such Liabilities incurred or paid (i) in the ordinary course of
business consistent with past business practice or (ii) in connection with the
transactions contemplated by this Agreement.
3.6. Absence of Certain Changes or Events. Since June 30, 1997, except as
------------------------------------
disclosed in the Red Brick Financial Statements delivered prior to the date of
this Agreement or as disclosed in SECTION 3.6 of the Red Brick Disclosure
Memorandum, there have been no events, changes or occurrences which have had, or
are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Red Brick.
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ARTICLE 4
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CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
4.1. Affirmative Covenants of Engage. From the date of this Agreement until
-------------------------------
the earlier of the Closing or the termination of this Agreement, unless the
prior written consent of Red Brick shall have been obtained, and except as
otherwise expressly contemplated herein, Engage shall preserve intact its
business organization and Database Technology and maintain its rights and
franchises with respect thereto, and (b) take no action which would (i)
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby or (ii) adversely affect the ability of any
Party to perform its covenants and agreements under this Agreement.
4.2. Negative Covenants of Engage. From the date of this Agreement until the
----------------------------
earlier of the Closing or the termination of this Agreement, unless the prior
written consent of Red Brick shall have been obtained, and except as otherwise
expressly contemplated herein, Engage covenants and agrees that it will not do
or agree or commit to do any of the following:
(a) impose, or suffer the imposition, on any of the Database
Technology of any Lien or permit any such Lien to exist (other
than in connection with Liens in effect as of the date hereof
that are disclosed in the Engage Disclosure Memorandum), or
(b) effect any increase or decrease in compensation or benefits to
any of the Transferred Employees of Engage;
(c) enter into or amend any employment, consulting or management
Contract between Engage and any Transferred Employee (unless such
amendment is required by Law) that Engage does not have the
unconditional right to terminate without Liability (other than
Liability for services already rendered), at any time on or after
the Closing Date; or
(d) adopt any new employee benefit plan of Engage or terminate or
withdraw from, or make any change in or to, any existing employee
benefit plan of Engage; or
(e) commence any Litigation or settle any Litigation involving any
Liability of Engage for material money damages or restrictions
upon the operations of Engage which affect the Database
Technology; or
(f) enter into, modify, amend or terminate any material Contract or
waive, release, compromise or assign any material rights or
claims which affect the Database Technology in any respect; or
(g) terminate the employment of any Transferred Employee or effect a
change in their position within Engage or CMG whether by
promotion or demotion.
4.3. Covenants of Red Brick. From the date of this Agreement until the
----------------------
earlier of the Closing or the termination of this Agreement, unless the prior
written consent of Engage shall have been obtained, and except as otherwise
expressly contemplated herein, Red Brick covenants and agrees that it shall (a)
continue to conduct its business and the business of its Red Brick
-10-
Subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the Red Brick Common Stock and the business prospects of the
Red Brick Companies and to the extent consistent therewith use all reasonable
efforts to preserve intact the Red Brick Companies' core businesses and goodwill
with their respective employees and the communities they serve, and (b) take no
action which would (i) materially adversely affect the ability of any Party to
obtain any Consents required for the transactions contemplated hereby, or (ii)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement; provided, that the foregoing shall not
prevent any Red Brick Company from acquiring any assets or other businesses or
from discontinuing or disposing of any of its assets or business if such action
is, in the judgment of Red Brick, desirable in the conduct of the business of
Red Brick and its Red Brick Subsidiaries.
ARTICLE 5
ADDITIONAL AGREEMENTS
---------------------
5.1. Exchange Listing. If required by law or the NASD, Red Brick shall use
----------------
its reasonable efforts to list, prior to the Closing, on the Nasdaq National
Market the shares of Red Brick Common Stock to be issued to Engage pursuant to
this Agreement, and Red Brick shall give all notices and make all filings with
the NASD required in connection with the transactions contemplated herein.
5.2. Investigation and Confidentiality.
---------------------------------
(a) Prior to the Closing, each Party shall keep the other Party advised
of all material developments relevant to its business and to the consummation of
the transactions contemplated hereby and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of any other Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Closing, each Party shall promptly return or certify the destruction of all
documents and copies thereof, and all work papers containing confidential
information received from the other Party.
5.3. Press Releases. Prior to the Closing, CMG, Engage and Red Brick shall
--------------
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this SECTION 5.3
shall be deemed to prohibit any Party from making (following notice to the other
Parties hereto) any disclosure which its counsel deems necessary or advisable in
order to satisfy such Party's disclosure obligations imposed by Law.
5.4. Certain Actions. Except with respect to this Agreement and the
---------------
-11-
transactions contemplated hereby, neither Engage nor CMG nor any Affiliate
thereof nor any Representatives thereof retained by Engage or CMG shall directly
or indirectly solicit any Acquisition Proposal by any Person. Neither Engage
nor CMG nor any Affiliate or Representative thereof shall furnish any non-public
information that it is not legally obligated to furnish, negotiate with respect
to, or enter into any Contract with respect to any Acquisition Proposal other
than this Agreement. Engage and CMG shall promptly advise Red Brick following
the receipt of any Acquisition Proposal other than this Agreement and the
details thereof, and advise Red Brick of any developments with respect to such
Acquisition Proposal promptly upon the occurrence thereof. Engage and CMG shall
(I) immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and (II) direct and use their reasonable efforts to
cause all of their Affiliates and Representatives not to engage in any of the
foregoing.
5.5. Transferred Employees. Red Brick shall offer employment (within twenty
---------------------
(20) miles of Andover, Massachusetts) to certain Persons listed on SCHEDULE 5.5
hereto who are or were prior to the Closing Date employees of Engage, on such
terms and conditions as Red Brick shall deem appropriate which terms and
conditions shall include comparable wages or substantially similar compensation
in the aggregate. Any such employees who desire to accept employment with Red
Brick (a "Transferred Employee") shall be allowed by Engage and CMG to accept
such employment, and Engage and CMG will use their best efforts to encourage and
assist any such employees in becoming employees of Red Brick. Red Brick agrees
to open a development facility in the Greater Boston area for the Transferred
Employees, provided, however, that Red Brick makes no commitment to keep such
facility open in the future. The Transferred Employees shall cease to be
employees of Engage and shall become employees of Red Brick as of the Closing
Date (and Red Brick shall thereafter be responsible for and obligated to pay all
compensation and fringe benefits with respect to said Transferred Employees);
provided, however, that Engage shall continue to provide said Transferred
Employees with their current working environment without charge to Red Brick
until the Operational Cutover Date. If any of the Transferred Employees continue
to occupy premises occupied by CMG or Engage after the Operational Cutover Date,
CMG and Engage shall continue to maintain the Transferred Employees' work
environment, and Red Brick shall continue to pay all compensation and fringe
benefits with respect to the Transferred Employees and, in addition, shall
reimburse CMG and Engage for all lease costs of CMG and Engage with respect to
such premises occupied by said Transferred Employees (including a reasonable
allocation of common areas) and shall reimburse CMG and Engage for all
utilities, taxes and other costs of operating such premises and shall reimburse
CMG and Engage for all other costs reasonably associated with or related to said
Transferred Employees and said occupied premises. Red Brick shall reimburse such
costs immediately to CMG or Engage upon the receipt by Red Brick of an invoice
for such costs. Red Brick, CMG and Engage agree to use their best efforts to
make sure that the Operational Cutover Date occurs on or before January 1, 1998.
In connection with the foregoing, Red Brick agrees to use its best efforts to
vacate the premises occupied by CMG or Engage on or before January 1, 1998, and
CMG and Engage agree to use their best efforts to provide (if reasonably
possible and on arm's length terms) a development facility for Red Brick on or
before January 1, 1998, within separate space available to CMG under its
sublease from FTP Software, Inc. Red Brick will not assume any existing
collective bargaining agreement between Engage or CMG and any labor organization
with respect to the Transferred Employees, and further, Red Brick will not be
responsible or liable for any claim arising out of or alleging Engage's or CMG's
non-compliance with any collective bargaining agreement prior to the Closing
Date. Red Brick will not be responsible or liable for (a) any unfair labor
practices, including, but not limited to, any claim that Engage or CMG failed to
fulfill any bargaining obligation it may have had with respect to any aspect of
this transaction or its effects upon the Transferred Employees; (b) any
violations of local, state or federal law, including, but not limited to, the
Worker Adjustment and Retraining
-12-
Notification Act up to the Closing Date; (c) any claim or demand related to any
service of any Transferred Employee with Engage or CMG, including, but not
limited to, any accrued vacation or severance; (d) any unfunded liabilities
relating to pension benefits, including, but not limited to, any complete or
partial withdrawal liabilities; and (e) any claim or demand arising out of the
termination of the employment of any of Engage's or CMG's employees up to and
including the Closing Date.
5.6. Hardware. CMG and Engage agree to sell to Red Brick and Red Brick
--------
agrees to buy at the Closing the hardware used in the development of the
Database Technology and Software and set forth on SCHEDULE 5.6 attached hereto
at book value as set forth therein.
5.7. Software. CMG and Engage agree to provide Red Brick with certain
--------
miscellaneous software free of charge as set forth on SCHEDULE 5.7 attached
hereto.
5.8. Mutual Reseller and Alliance Agreement. Engage, CMG and Red Brick shall
--------------------------------------
enter into a Mutual Reseller and Alliance Agreement as of the Closing Date in
the form attached hereto as EXHIBIT F with the understanding that the right of
CMG and Engage to enforce the non-competition covenant set forth therein shall
be construed and interpreted in the context of this Technology Purchase
Agreement and shall be supported by the consideration (the sale of the Database
Technology) as set forth in this Agreement.
5.9. Transferred Employee Agreement and Release. The Transferred Employees
------------------------------------------
listed on SCHEDULE 5.5 and Engage shall have executed the Transferred Employee
Agreement and Release in the form attached hereto as EXHIBIT G.
5.10. Mutual Non-Solicitation.
-----------------------
(a) The parties further agree that (i) prior to the Closing Date,
neither party (whether on their own account or as a stockholder, partner, joint
venturer, and/or agent, of any person, firm, corporation or other entity) will
directly or indirectly hire or solicit, encourage or recruit any of the other
party's employees (including, with respect to CMG and Engage, the Transferred
Employees), and (ii) for a period of two (2) years after the Closing Date,
neither party (whether on their own account or as a stockholder, partner, joint
venturer, and/or agent, of any person, firm corporation or other entity) will
directly or indirectly solicit or recruit any of the other party's employees
(including, with respect to CMG and Engage, Transferred Employees) to leave
their employment for any reason. For the purpose of clarification, the foregoing
obligation in this SECTION 5.10(a) does not apply to Red Brick with respect to
the Transferred Employees.
(b) Without limitation, the parties agree and intend that the covenants
contained in this SECTION 5.10 shall be deemed to be a series of separate
covenants and agreements, one for each and every county of each state and each
political subdivision of the United States and each other nation to which this
Agreement is applicable. If, in any judicial proceeding, a court shall refuse to
enforce in such action any or all of the separate covenants deemed included
herein, then unenforceable covenants shall be deemed modified or eliminated from
the provisions hereof for the purpose of such proceeding to the minimum extent
necessary to permit the remaining separate covenants to be enforced in such a
proceeding to the maximum possible extent.
5.11. Registration of Shares of Red Brick Common Stock. The shares of Red
------------------------------------------------
Brick Common Stock being issued to Engage or CMG pursuant to SECTION 1.2(B) of
this Agreement
-13-
are unregistered shares of Common Stock. The parties to this Agreement currently
contemplate that CMG or Engage or the holder of any such shares will be able to
sell any part or all of such shares issued pursuant to this Agreement at any
time following the first anniversary of the Closing Date pursuant to Rule 144
("Rule 144") of the Securities Act of 1933, as amended, and any applicable state
securities laws (the "State Securities Laws"). If CMG or Engage or any such
holder cannot sell all of such shares of Red Brick Common Stock (or any part
thereof which CMG or Engage or such holder desires to sell) pursuant to Rule 144
and applicable State Securities Laws during any period not exceeding ten (10)
business days occurring at any time after the first anniversary of the Closing
Date, or if any such sale of such shares during any such period pursuant to Rule
144 and applicable State Securities Laws (as opposed to a registration
statement) would have an adverse effect on Engage or CMG or any such holder,
then Red Brick agrees that upon the request of CMG or Engage or any such holder,
Red Brick will use its best efforts promptly to register one time only any part
or all of such shares of Red Brick Common Stock, provided that the total dollar
amount of securities offered in such registration (net of underwriting discounts
and commissions) by Engage or CMG or any other holder or any other stockholder
of Red Brick participating in such registration shall be at least Five Hundred
Thousand Dollars ($500,000). The cost of such registration (excluding
commissions and selling expenses) shall be borne by Red Brick. Red Brick shall
have the right to delay any demand registration for a period of up to ninety
(90) days once during any twelve (12) month period provided that the Board of
Directors issues a notice to CMG, Engage or any such holder following a request
for a demand registration stating that such registration would have a material
adverse effect on Red Brick at that time. All registration rights hereunder will
terminate and be of no further force or effect three (3) years following the
Closing Date and shall also terminate and be of no further force or effect with
respect to any shares of Red Brick Common Stock sold pursuant to Rule 144 or
pursuant to an effective registration statement. Engage and CMG acknowledge that
Red Brick is currently a party to that certain Amended and Restated Investor
Rights Agreement dated November 5, 1993 (the "Existing Registration Rights
Agreement"), a copy of which has been provided to Engage or its counsel. CMG and
Engage agree that the registration of shares of Red Brick Common Stock pursuant
to this SECTION 5.11 will not cause Red Brick to breach its obligations under
the Existing Registration Rights Agreement as in effect on the Closing Date,
provided that nothing herein shall relieve Red Brick from its obligation to use
its best efforts to register shares of Red Brick Common Stock belonging to CMG
or Engage or any such holder as provided above in a manner as consistent as may
be possible with said existing Registration Rights Agreement.
5.12. CMG and Engage shall account for the transaction contemplated under
this Agreement in accordance with the guidelines set forth in SCHEDULE 5.12
attached hereto.
5.13. As of the Closing Date, CMG and Engage hereby assign, transfer and
convey to Red Brick all of their rights and interests in those contracts or
licenses related to the Intellectual Property set forth in SCHEDULE 9.1(A).
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
6.1. Conditions to Obligations of Each Party. The respective obligations of
---------------------------------------
each Party to perform this Agreement and consummate the transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by both Parties pursuant to SECTION 9.6:
-14-
(a) Regulatory Approvals. All Consents of, filings and registrations
--------------------
with, and notifications to, all Regulatory Authorities required
for consummation of the transactions contemplated hereby shall
have been obtained or made and shall be in full force and effect
and all waiting periods required by Law shall have expired.
(b) Consents and Approvals. Each Party shall have obtained any and
----------------------
all Consents required for consummation of the transactions
contemplated hereby or for the preventing of any Default under
any Contract or Permit of such Party as set forth on SCHEDULE
6(b) attached hereto.
(c) Legal Proceedings. No court or governmental or regulatory
-----------------
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) or taken any other action
which prohibits, restricts or makes illegal consummation of the
transactions contemplated by this Agreement.
6.2. Conditions to Obligations of Red Brick. The obligations of Red Brick to
--------------------------------------
perform this Agreement and the transactions contemplated hereby are subject to
the satisfaction of the following conditions, unless waived by Red Brick
pursuant to SECTION 9.6(a):
(a) Representations and Warranties. The representations and
------------------------------
warranties of CMG and Engage set forth in this Agreement shall be
true and correct as of the date of this Agreement and as of the
Closing with the same effect as though all such representations
and warranties had been made on and as of the Closing (provided
that representations and warranties which are confined to a
specified date shall speak only as of such date).
(b) Performance of Agreements and Covenants. Each and all of the
---------------------------------------
agreements and covenants of Engage and CMG to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Closing shall have been duly
performed and complied with.
(c) Certificates. Engage and CMG shall have delivered to Red Brick
------------
(i) a certificate, dated as of the Closing and signed on their
behalf by their chief executive officers or their chief financial
officers, to the effect that the conditions set forth in SECTION
6.1 as relates to Engage and CMG and in SECTION 6.2(a) and 6.2(b)
have been satisfied, and (ii) certified copies of resolutions
duly adopted by Engage's and CMG's Boards of Directors
evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated
hereby, all in such reasonable detail as Red Brick and its
counsel shall request.
(d) Conveyance Documents. Red Brick shall have received such
--------------------
assignments, bills of sale and other instruments of transfer and
conveyance (including, without limitation, conveyance documents
from Engage) as, in the opinion of Red Brick, shall be effective
to vest in Red Brick valid legal title to the Database Technology
in accordance with the terms of this Agreement as
-15-
well as such termination statements, releases, satisfactions and
other instruments as, in the opinion of Red Brick, shall be
required to evidence payment, satisfaction and cancellation of
record of all Liens which affect ownership and title to the
Database Technology.
(e) Opinion of Counsel to CMG and Engage. Red Brick shall have
------------------------------------
received an opinion of ▇▇▇▇▇▇ & Dodge LLP, counsel to CMG and
Engage, dated as of the Closing, in form reasonably satisfactory
to Red Brick, and as set forth in EXHIBIT D.
(f) Offer Letters. All Transferred Employees of Engage listed on
-------------
SCHEDULE 5.5 have, subject to the Closing, accepted employment
with Red Brick and have executed and delivered to Red Brick offer
letters in form and substance satisfactory to Red Brick.
(g) Proprietary Information and Inventions Agreements. All
-------------------------------------------------
Transferred Employees of Engage listed on SCHEDULE 5.5 have
executed and delivered to Red Brick invention and confidentiality
agreements in form and substance satisfactory to Red Brick.
(h) Mutual Reseller and Alliance Agreement. CMG, Engage and Red
--------------------------------------
Brick shall have executed and delivered a Mutual Reseller and
Alliance Agreement in the form attached hereto as EXHIBIT F.
6.3. Conditions to Obligations of Engage and CMG. The obligations of Engage
-------------------------------------------
and CMG to perform this Agreement and consummate the transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by Engage and CMG pursuant to SECTION 9.6(b):
(a) Representations and Warranties. The representations and
------------------------------
warranties of Red Brick set forth in this Agreement shall be true
and correct as of the date of this Agreement and as of the
Closing with the same effect as though all such representations
and warranties had been made on and as of the Closing (provided
that representations and warranties which are confined to a
specified date shall speak only as of such date).
(b) Performance of Agreements and Covenants. Each and all of the
---------------------------------------
agreements and covenants of Red Brick to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Closing shall have been duly
performed and complied with in all material respects.
(c) Certificates. Red Brick shall have delivered to Engage (i) a
------------
certificate, dated as of the Closing and signed on its behalf by
its chief executive officer or its chief financial officer, to
the effect that the conditions set forth in SECTION 6.1 as
relates to Red Brick and in SECTION 6.3(a) and 6.3(b) have been
satisfied, and (ii) certified copies of resolutions duly adopted
by Board of Directors of Red Brick evidencing the taking of all
corporate action necessary to authorize the execution, delivery
and performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable detail
as Engage and CMG
-16-
and their counsel shall request.
(d) Assumption Documents. Engage shall have received such agreement
--------------------
or instruments of assumption as, in the opinion of Engage, shall
be necessary to effect Red Brick's assumption of the Assumed
Liabilities in accordance with the terms of this Agreement.
(e) Opinion of Counsel. Engage shall have received an opinion of
------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP,
counsel to Red Brick, dated as of the Closing, in form reasonably
acceptable to Engage, and as set forth in EXHIBIT E.
(f) Mutual Reseller and Alliance Agreement. CMG, Engage and Red
--------------------------------------
Brick shall have executed and delivered a Mutual Reseller and
Alliance Agreement in the form attached hereto as EXHIBIT F.
ARTICLE 7
INDEMNIFICATION
---------------
7.1. Agreement of Indemnitors to Indemnify. Subject to the terms and
-------------------------------------
conditions of this ARTICLE 7, Indemnitors jointly and severally agree to
indemnify, defend, and hold harmless Indemnitees, and each of them, from,
against, for and in respect of any and all Losses asserted against, or paid,
suffered or incurred by, an Indemnitee and resulting from, based upon, or
arising out of:
(a) the inaccuracy, untruth, incompleteness or breach of any
representation or warranty of Engage or CMG contained in or made
pursuant to this Agreement or in any certificate, Schedule, or
Exhibit furnished by Indemnitors in connection herewith;
(b) a breach of or failure to perform any covenant or agreement of
CMG or Engage made in this Agreement; or
(c) any Liability of Engage or CMG, other than the Assumed
Liabilities.
7.2. Limitations on Indemnification.
------------------------------
(a) The indemnification obligations set forth in SECTIONS 7.1(a), (b)
AND (c) shall survive the Closing Date and continue thereafter for a period of
twenty-four (24) months, provided that any Indemnification Claim under SECTION
7.1(a), (b), AND (c) made prior to the end of such twenty-four (24) month period
following the Closing Date shall survive until paid or otherwise resolved in
accordance with the terms of this Agreement. Notwithstanding the foregoing
sentence, any indemnification obligations related to tax liabilities shall
survive the Closing Date and continue for so long as a claim may normally be
brought against a party for breach of such obligations under the provisions of
the applicable statute of limitations governing such obligations.
(b) The Indemnitors shall have no obligation for indemnification under
this
-17-
ARTICLE 7 unless and until the aggregate amount of Losses (on a cumulative
basis) claimed against all Indemnitors exceed Fifty Thousand Dollars ($50,000);
provided that once the aggregate Indemnification Claims reach that amount, there
shall be no limitation on the ability to assert Claims hereunder and the
Indemnitees shall be liable for all such Indemnification Claims, including
amounts required to reach the Fifty Thousand Dollars ($50,000) threshold.
(c) In no event shall the indemnification obligations of CMG and Engage
hereunder exceed a maximum of Two Million Dollars ($2,000,000) in the aggregate.
7.3. Procedures for Indemnification.
------------------------------
(a) An Indemnification Claim shall be made by an Indemnitee by delivery
of a written notice to the Indemnitors requesting indemnification and specifying
the basis on which indemnification is sought and the amount of asserted Losses.
(b) The Indemnitors shall have 45 days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection. Failure
to timely so object shall constitute a final and binding acceptance of the
Indemnification Claim by the Indemnitors. If an objection is timely interposed
by the Indemnitor and the dispute is not resolved by such Indemnitee and the
Indemnitor within 15 days from the date the Indemnitee receives such objection,
such dispute shall be resolved by arbitration as provided in SECTION 7.5.
(c) Upon determination of the amount of an Indemnification Claim,
whether by agreement between the Indemnitor and the Indemnitee or by an
arbitration award or by any other final adjudication, the obligation of the
Indemnitors shall be immediately satisfied.
ARTICLE 8
TERMINATION
-----------
8.1. Termination. Notwithstanding any other provision of this Agreement,
-----------
this Agreement may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Closing:
(a) By mutual written consent of Red Brick, and Engage and CMG; or
(b) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or
other agreement contained in this Agreement) in the event of a
breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured
within 30 days after the giving of written notice to the
breaching Party of such breach and which breach is reasonably
likely, in the opinion of the non-breaching Party, to have,
individually or in the aggregate, a Material Adverse Effect on
the non-breaching Party; or
(c) By either Party (provided that the terminating Party is not then
in material breach of any representation, warranty, covenant, or
other agreement contained in this Agreement) in the event of a
material breach by the other Party of any covenant or agreement
contained in this Agreement which
-18-
cannot be or has not been cured within 30 days after the giving
of written notice to the breaching Party of such breach; or
(d) By either Party in the event any Consent of any Regulatory
Authority required for consummation of the transactions
contemplated hereby shall have been denied by final nonappealable
action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal; or
(e) By either Party in the event that the transactions contemplated
hereby shall not have been consummated by September 30, 1997; or
(f) By either Party in the event that any of the conditions precedent
to the obligations of such Party to consummate the transactions
contemplated hereby cannot be satisfied or fulfilled by the date
specified in SECTION 8.1(e).
8.2. Effect of Termination. In the event of the termination and abandonment
---------------------
of this Agreement pursuant to SECTION 8.1, this Agreement shall become void and
have no effect, except that (i) the provisions of this SECTION 8.2 and ARTICLE 9
and SECTION 2.6 and SECTION 5.2(b) shall survive any such termination and
abandonment, and (ii) a termination pursuant to SECTIONS 8.1(b), 8.1(c) or
8.1(f) shall not relieve the breaching Party from Liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination.
ARTICLE 9
MISCELLANEOUS
-------------
9.1. Definitions.
-----------
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock and/or assets of, or other
business combination involving such Party or any of its
Subsidiaries or the acquisition of a substantial equity interest
in, or a substantial portion of the assets of, such Party or any
of its Subsidiaries which includes in any event the Database
Technology.
"AFFILIATE" of a Person shall mean any other Person directly, or
indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person.
"AGREEMENT" shall mean this Technology Purchase Agreement,
including the Exhibits and Schedules delivered pursuant hereto and
incorporated herein by reference.
"ASSUMED LIABILITY" shall mean the Liabilities of Engage listed on
SCHEDULE 9.1(a) hereto, and no others.
-19-
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CMG" shall mean CMG Information Services, Inc., a Delaware
corporation and stockholder of Engage.
"CONFIDENTIALITY AGREEMENT" shall mean that certain
Confidentiality Agreement, dated June 2, 1997, between Engage and
Red Brick.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or
undertaking of any kind or character, or other document to which
any Person is a party or that is binding on any Person or its
capital stock, assets or business.
"DATABASE TECHNOLOGY" shall mean the software and other technology
described in EXHIBIT A, including the Intellectual Property and
all user or product documentation or other written materials
related thereto.
"DEFAULT" shall mean (i) any breach or violation of or default
under any Contract, Law, Order, or Permit, (ii) any occurrence of
any event that with the passage of time or the giving of notice or
both would constitute a breach or violation of or default under
any Contract, Law, Order, or Permit, or (iii) any occurrence of
any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate,
increase, or impose any Liability under, any Contract, Law, Order,
or Permit.
"ENGAGE DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Engage Technologies, Inc. Disclosure Memorandum"
delivered on the date of this Agreement to Red Brick describing in
reasonable detail the matters contained therein and, with respect
to each disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is being
made. Information disclosed with respect to one Section shall not
be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"EXHIBITS" A through G, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such
Exhibits are hereby incorporated by reference herein and made a
part hereof, and may be referred to in this Agreement and any
other related instrument or document without being attached
hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"INDEMNIFICATION CLAIM" shall mean a claim for indemnification
under
-20-
Article 7.
"INDEMNITEES" shall mean Red Brick and its Affiliates and
representatives.
"INDEMNITORS" shall mean Engage and CMG.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents, patent
rights, trademarks, service marks, service names, trade names,
applications therefor, technology rights and licenses, computer
software (including any source or object codes therefor or
documentation relating thereto), trade secrets, franchises, know-
how, inventions, and any other intellectual property rights
throughout the world.
"KNOWLEDGE" as used with respect to a Person (including references
to such Person being aware of a particular matter) shall mean
those facts that are known or should reasonably have been known
after due inquiry by the chairman, president, chief financial
officer, chief accounting officer, chief credit officer, general
counsel, any assistant or deputy general counsel, or any senior,
executive or other vice president of such Person.
"LAW" shall mean any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute
applicable to a Person or its assets, Liabilities, or business,
including those promulgated, interpreted or enforced by any
Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or
expense (including costs of investigation, collection and
defense), claim, deficiency, guaranty or endorsement of or by any
Person (other than endorsements of notes, bills, checks, and
drafts presented for collection or deposit in the ordinary course
of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention or other security arrangement,
or any adverse right or interest, charge, restriction or claim of
any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for current property taxes
not yet due and payable, and (ii) Liens which do not materially
impair the use of or title to the property subject to such Lien.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other
proceeding relating to or affecting a Party, its business, its
assets (including Contracts related to it), or the transactions
contemplated by this Agreement.
"LOSSES" shall mean any and all demands, claims, actions or causes
of action, assessments, losses, diminution in value, damages
(including special and consequential damages), liabilities, costs,
and expenses, including interest, penalties, cost of investigation
and defense, and
-21-
reasonable attorneys' and other professional fees and expenses.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change
or occurrence which, individually or together with any other
event, change or occurrence, has a material adverse impact on (i)
the financial position, business, or results of operations of such
Party and its Subsidiaries, taken as a whole, or (ii) the ability
of such Party to perform its obligations under this Agreement or
to consummate the transactions contemplated by this Agreement,
provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in Laws of general applicability
or interpretations thereof by courts or governmental authorities,
(b) changes in generally accepted accounting principles or
regulatory accounting principles, and (c) actions and omissions of
a Party taken with the prior informed written Consent of the other
Parties in contemplation of the transactions contemplated hereby.
"MATERIAL" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this
Agreement shall determine materiality in that instance.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market System of
the National Association of Securities Dealers Automated
Quotations System.
"OPERATIONAL CUTOVER DATE" means the date of completion of Work
Order Number 1 under the Consulting Services Agreement of even
date herewith.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other
court, arbitrator, mediator, tribunal, administrative agency, or
Regulatory Authority.
"PARTY" shall mean either CMG or Engage or Red Brick, and
"Parties" shall mean all of CMG, Engage and Red Brick.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right to which any
Person is a party or that is or may be binding upon or inure to
the benefit of any Person or its securities, assets, or business.
"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"RED BRICK CAPITAL STOCK" shall mean, collectively, the Red Brick
Common Stock, the Red Brick Preferred Stock and any other class or
-22-
series of capital stock of Red Brick.
"RED BRICK COMMON STOCK" shall mean the $0.0001 par value common
stock of Red Brick.
"RED BRICK COMPANIES" shall mean, collectively, Red Brick and all
Red Brick Subsidiaries.
"RED BRICK DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Red Brick Systems, Inc. Disclosure
Memorandum" delivered on the date of this Agreement to Engage
describing in reasonable detail the matters contained therein and,
with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such
disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of
any other Section not specifically referenced with respect
thereto.
"RED BRICK SUBSIDIARIES" shall mean the Subsidiaries of Red Brick.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC, the
NASD, and all other federal, state, county, local or other
governmental or regulatory agencies, authorities (including self-
regulatory authorities), instrumentalities, commissions, boards or
bodies having jurisdiction over the Parties and their respective
Red Subsidiaries.
"RELATED AGREEMENTS" shall mean the Mutual Reseller and Alliance
Agreement referred to herein.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative
of a Person.
"RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of a Person or by
which a Person is or may be bound to issue additional shares of
its capital stock or other Rights.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents
filed, or required to be filed, by a Party or any of its
Subsidiaries with any Regulatory Authority pursuant to the
Securities Laws.
"SECURITIES LAWS" shall mean the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of
1940, as amended, the Investment Advisors Act of 1940, as amended,
the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"SUBSIDIARIES" shall mean all those corporations, associations, or
other business entities of which the entity in question either (i)
owns or controls 50% or more of the outstanding equity securities
either directly or through
-23-
an unbroken chain of entities as to each of which 50% or more of
the outstanding equity securities is owned directly or indirectly
by its parent (provided, there shall not be included any such
entity the equity securities of which are owned or controlled in
a fiduciary capacity), (ii) in the case of partnerships, serves
as a general partner, (iii) in the case of a limited liability
company, serves as a managing member, or (iv) otherwise has the
ability to elect a majority of the directors, trustees or
managing members thereof.
9.2. Expenses.
--------
(a) Except as otherwise provided in this Section 9.2 and subject to
Section 7.1, each of the Parties shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder.
(b) Nothing contained in this Section 9.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the non-breaching
Party.
9.3. Brokers and Finders. Except as set forth in their respective Disclosure
-------------------
Memoranda, each of the Parties represents and warrants that neither it nor any
of its officers, directors, employees, or Affiliates has employed any broker or
finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon his or its representing or being retained by
or allegedly representing or being retained by CMG or Engage or Red Brick, each
of CMG or Engage or Red Brick, as the case may be, agrees to indemnify and hold
the other Party harmless of and from any Liability in respect of any such claim.
9.4. Entire Agreement. Except as otherwise expressly provided herein, this
----------------
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
5.1(b), for the Confidentiality Agreement). Nothing in this Agreement expressed
or implied, is intended to confer upon any Person, other than the Parties or
their respective successors, any rights, remedies, obligations, or liabilities
under or by reason of this Agreement.
9.5. Amendments. To the extent permitted by Law, this Agreement may be
----------
amended by a subsequent writing signed by each of the Parties upon the approval
of each of the Parties.
9.6. Waivers.
-------
(a) Prior to or at the Closing, Red Brick, acting through its Board of
Directors, or other authorized officer, shall have the right to waive any
Default in the performance of any term of this Agreement by Engage or CMG, to
waive or extend the time for the compliance or fulfillment by Engage or CMG of
any and all of its obligations under this Agreement, and to waive any or all of
the conditions precedent to the obligations of Red Brick under this Agreement,
except any condition which, if not satisfied, would result in the violation of
any Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Red Brick.
(b) Prior to or at the Closing, Engage and CMG, acting through their
-24-
respective Boards of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Red Brick, to waive or extend the time for the
compliance or fulfillment by Red Brick of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Red Brick under this Agreement, except any condition which, if
not satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of Engage.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
9.7. Assignment. Except as expressly contemplated hereby, neither this
----------
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party, which consent shall not be
unreasonably withheld; provided that either party may assign this Agreement and
any of its rights, interests or obligations hereunder to any assignee or
successor in interest to any of the shares of Red Brick Common Stock (with
respect to SECTION 5.11) or to any assignee or successor in interest to such
party in connection with a merger, acquisition or consolidation of such party or
to any acquiror in connection with the sale of all or substantially all of such
party's assets, including, without limitation, the sale, merger or acquisition
of Engage or the sale, merger or acquisition of CMG. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
9.8. Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered by hand, by
confirmed facsimile transmission, by registered or certified mail, postage
prepaid, or by a nationally recognized courier or overnight carrier, to the
persons at the addresses set forth below (or at such other address as may be
provided hereunder), and shall be deemed to have been delivered as of the date
so received, if addressed as set forth below or at such other address as either
party may designate by notice pursuant to this SECTION 9.8:
If to Red Brick: Red Brick Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Contracts/Legal
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Engage or CMG: Engage Technologies, Inc.
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▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CMG Information Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & Dodge LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ II, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.9. Governing Law; Jurisdiction. This Agreement and the Related Agreements
---------------------------
shall be governed by and construed in accordance with the Laws of the
Commonwealth of Massachusetts, without regard to any applicable conflicts of
Laws. Red Brick, CMG and Engage each agree that all disputes arising among them
related to this Agreement and the Related Agreements in any respect, whether
arising in contract, tort, equity or otherwise, shall be resolved only and
exclusively in either the United States Federal Court in Boston, Massachusetts,
or in a Massachusetts state court located in Essex County, Massachusetts. Red
Brick hereby consents to the jurisdiction of the United States Federal Court in
Boston, Massachusetts, and of the Massachusetts state courts in Essex County,
Massachusetts, with respect to any action, suit or proceeding commenced in any
such court by CMG or Engage or by their successors or assigns, and Red Brick
waives any defense it may have with respect to such jurisdiction or with respect
to the proper venue of any such action, suit or proceeding in any such court.
9.10. Counterparts; Facsimile. This Agreement may be executed in two or more
-----------------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. Delivery of a signature
page by facsimile transmission shall be deemed to be legally sufficient
execution and delivery of the page and the agreement or instrument for which it
relates.
9.11. Captions; Articles and Sections. The captions contained in this
-------------------------------
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of this Agreement.
9.12. Interpretations. No party to this Agreement shall be considered the
---------------
draftsman. The parties acknowledge and agree that this Agreement has been
reviewed, negotiated, and accepted by all parties and their attorneys and shall
be construed, interpreted and enforced according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
9.13. Survival of Warranties. All representations and warranties contained
----------------------
in this Agreement, including the Exhibits and Schedules delivered pursuant
hereto, shall speak only as
-26-
to the Closing Date, and shall then survive the Closing Date for a period of two
(2) years and shall thereupon terminate and be of no further force or effect.
Notwithstanding the foregoing, the representations and warranties set forth in
SECTIONS 2.8 through 2.11 hereof shall not survive the Closing Date except to
the extent that any misrepresentation on the part of Engage or CMG with respect
thereto has a materially adverse effect upon the ability of CMG and Engage to
satisfy their indemnification obligations set forth in ARTICLE 7 hereof.
9.14. Enforcement of Agreement. The Parties hereto agree that irreparable
------------------------
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any United States Federal Court in Boston,
Massachusetts, or in any Massachusetts state court in Essex County as provided
in SECTION 9.9, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.15. Severability. Any term or provision of this Agreement which is invalid
------------
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
-27-
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and attested by officers thereunto as of the day and year
first above written.
CMG INFORMATION SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Title: President
----------------------------------
ENGAGE TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: President
---------------------------------
RED BRICK SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: President
---------------------------------
-28-
EXHIBIT LIST
------------
Exhibit A Description of Technology
Exhibit A-1 Intellectual Property Related to Database Technology
Exhibit B Engage Disclosure Memorandum
Exhibit C Red Brick Disclosure Memorandum
Exhibit D Opinion of ▇▇▇▇▇▇ & Dodge LLP
Exhibit E Opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ LLP
Exhibit F Mutual Reseller and Alliance Agreement
Exhibit G Transferred Employee Agreement and Release
-29-
EXHIBIT A: DESCRIPTION OF DATABASE TECHNOLOGY
Below are generic descriptions of the products known under the trade names
▇▇▇▇▇▇.▇▇▇▇▇▇▇▇ and Engage.Fusion.
The technology acquisition from Engage Technologies, Inc. includes the following
primary capabilities:
. Definition of source data integration and generation of the resulting
target data in multiple formats
. Analysis of data in databases by means of iterative queries and creation of
business objects that represent database schema
. Centralized metadata management and storage
The technology for the definition of source data integration and generation of
the resulting target data warehouse in multiple formats includes a graphical
tool that can be used to design, evolve, generate, and control the execution of
the data integration process. This technology supports creating a data
integration process that combines relational operations, as well as non-
relational, normalizing, and systematizing operations. It also includes
capabilities that allow it to scale well in terms of data integration
complexity, of data schema complexity, and of data volume and processing speed.
It supports generation of very large scale data warehouses on parallel
processing computing systems, using a multiple input, multiple output, multiple
operation parallel execution model.
The following are sub-components of the data integration and generation
technology:
. Data integration process architect GUI . Visual programming
(graphical user interface) (diagramming) interface
. Schema import facility . C++ code generator
. Data integration server run-time . Data flow processing
"engine"
. Data integration operators . Parallel processing
framework
. Database-specific load and unload interfaces . Online help and
documentation
The technology for data analysis employs deductive analysis techniques that can
result in customized sets of queries. It allows queries using objects of many
types and sizes, including customized business objects and SQL objects. It
contains capabilities that allow it to analyze very large quantities of data.
The technology for creating business objects involves importing database schemas
and a defining a mapping between those schemas and sets of objects defined by
the user that will be used to create iterative queries against the database.
The following are the sub-components of the data analysis and interactive query
and display technology:
. End-User query GUI . Semantic object query
language (SOL) generator
and SOL interpreter
. Results manager . Administrator GUI
. Object model and schema editor . Object-relational mapper
. Database-specific SQL generator . Administrator GUI
The technology for centralized metadata manipulation and storage stores the
metadata used by the other components. The metadata technology is object-based
and allows storage of various schemas as well as other kinds of metadata.
The following are the sub-components of the metadata technology:
. Metadata facility . Metadata user
management GUI
. Metadata object model . Interface to Object
Design's Object Store
See also Addendum 1 to Listing of source and object files related to
-----------------------------------------------------------
Engage.Fusion, ▇▇▇▇▇▇.▇▇▇▇▇▇▇▇, and Engage Metadata Facility attached to and
------------------------------------------------------------
becoming part of Exhibit A-1.
EXCLUSIONS FROM TECHNOLOGY ACQUISITION:
Data integration process definitions, business object definitions and schemas,
and queries for Engage Technology's Web-based interactive marketing solutions.
Schedule 5.6 Hardware to be Purchased
PURCHASED EQUIPMENT LIST 8/26/97 LEASED/ ORIGINAL DEPRECIATION BOOK VALUE
PURCHASED PRICE AS OF 7/31/97 AS OF 7/31/97
▇▇▇ ▇▇▇▇▇ Vectra 500 Purchased $ 4,007 $ 401 $ 3,606
▇▇▇ ▇▇▇▇ Powermate P150 Purchased $ 4,208 $ 1,262 $ 2,946
▇▇▇▇ ▇▇▇▇▇ Powermate P120 Purchased $ 4,358 $ 1,307 $ 3,051
▇▇▇▇ ▇▇▇▇▇ Gateway Laptop Purchased $ 3,741 $ 1,122 $ 2,619
▇▇▇▇▇ ▇▇▇▇▇▇ Powermate P150 Purchased $ 4,312 $ 1,294 $ 3,018
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Powermate P150 Purchased $ 4,077 $ 408 $ 3,669
▇▇▇ ▇▇▇▇▇▇▇ Powermate Purchased $ 4,151 $ 1,245 $ 2,906
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Vectra 500 Purchased $ 3,455 $ 346 $ 3,110
▇▇▇▇▇ ▇▇▇▇▇ Powermate P120 Purchased $ 2,600 $ 780 $ 1,820
▇▇▇▇▇ ▇▇▇▇▇▇ Tecra 730CDT Purchased $ 7,111 $ 1,185 $ 5,926
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Gateway PC3 Purchased $ 5,616 $ 1,685 $ 3,931
Retained Contractor PC's
▇▇▇▇▇▇ ▇▇▇ Powermate P120 Purchased $ 2,600 $ 780 $ 1,820
Server PC's
Dilbert Powermate P150 Purchased $ 3,377 $ 1,013 $ 2,364
Test/Demo/Build PC's
(▇▇▇▇▇ ▇▇▇▇▇) Powermate P150 Purchased $ 4,721 $ 1,416 $ 3,305
(▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇) Vectra 500 Purchased $ 2,242 $ 224 $ 2,017
(▇▇▇▇▇▇▇ ▇▇▇▇) Powermate P150 Purchased $ 3,999 $ 1,200 $ 2,799
(▇▇▇▇▇ ▇▇▇▇▇▇) Powermate P150 Purchased $ 3,999 $ 1,200 $ 2,799
(▇▇▇▇▇▇ ▇▇▇▇▇▇) Powermate P150 Purchased $ 3,999 $ 1,200 $ 2,799
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇) Powermate P150 Purchased $ 3,401 $ 340 $ 3,061
(Lab) Powermate P120 Purchased $ 2,600 $ 780 $ 1,820
(Lab) Powermate P150 Purchased $ 4,031 $ 403 $ 3,628
==========
TOTAL NET BOOK VALUE AND REMAINING LEASE PAYMENTS $ 63,013
==========
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Schedule 5.7 Transferable Software Licenses and Agreements
Engage will attempt to transfer the Software Licenses and Agreements on or
before October 8, 1997. If Engage is unable to receive permission to transfer
the Software Licenses or Agreements, transfer shall not take place.
VENDOR ASSIGNABILITY
Atria Software, Inc. Development Tool
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ Sec. 2: Assignable
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ as part of transfer
involving substantially
all assets
Pure Atria Development tool
(See Atria above) (See Atria above)
Visual Components-Sybase Embedded
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. Sec. 5: Assignable
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ with notice
Northwoods Software Corp. Embedded
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Assignable per Sec. 7.7
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and Exhibit H Sec. 9
Parallel Virtual Machine System Transferability Not
(PVM v.3.3) Prohibited
U. of Tennessee, Knoxville,TN
Oak Ridge National Laboratory, Oak Ridge, TN
Emory University, Atlanta, GA
ACE (▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ & Washington University) Transferable
Department of Computer Science
School of Engineering and Applied Science
Washington University
▇▇▇▇▇ ▇▇▇▇, Room 503
Campus Box ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
MicrosoftCorporation Development Tool
One Microsoft Way Transferrable under
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Sec. 5(d)
DESCRIPTION
16-Clearcase User License on Sun/Maintenance $ 2,500.00 $ 385.00 $ 46,160.00
▇▇- ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for Windows/Maintenance $ 795.00 $ 160.00 $ 9,550.00
Maintenance Period 11/1/96-10/31/97 Taxes & Freight -------------------
Price /unit Maintenance Extended Price
2-Purify NT Subscription/Maint $ 439.70 $ 250.00 $ 1,379.40
2-Purify 4.X Simple License/Maint $ 1,235.30 $ 250.00 $ 2,970.60
2-Quantify 2.0 Simple License/Maint $ 1,235.30 $ 250.00 $ 2,970.60
2-Pure Coverage 1.0 Simple License/Maint $ 881.70 $ 200.00 $ 4,326.80
Maintenance period=Support/Updates for One Year tax & freight $ 474.20
-------------------
Order Date 2/20/97 $ 12,121.60
Royalty free License
Marking requirements specified in Addendum A $ 250.00
Quantity #1
See Schedule 9.1(a) List of Assumed Liabilities
Consent received from Northwoods on
August 26, 1997.
Free Commercial Use. May freely distribute without fee.
Copyright notice must appear in all distributed copies.
Copyright notice and permission notice must appear in supporting documentation.
Platform and Communication Independent Library
Free Commercial Use.
Include copyright statement along with code built using ACE.
Visual C++ multiple versions
Quantity #25
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Dreamlight, Inc. No Prohibition Embedded Production of Icons for
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇ Against Assignment ▇▇▇▇▇▇.▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Cost: $3,517.50 (Icons must
carry
Dreamlight's signature as
per invoice Terms &
Conditions
Lotus Development Corp. (Lotus Notes License) Transferable under Sec. Development PP Instl/Maint Notes
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2. Restrictions Tool Desktop Client
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 20 Licenses Communications Software
Agreement
Indian Institute of Technology Agreement made as of January 1, 1997 by Projects designed to
Powai Bombay-400 076 and between Engage Technologies, Inc. produce research in the
INDIA and Indian Institute of Technology areas of Sequential
Optimization and Parallel
Optimization
Persistent Systems Pvt. Ltd. Software Development Agreement made as of August Persistent Systems to
Kapilvastu 1, 1996 between CMG Direct Interactive, Inc. (Engage) perform software
▇▇▇/▇ ▇.▇. ▇▇▇▇ and Persistent Systems Pvt. Ltd. engineering, test and
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ documentation services
SOFTWARE ON PC'S All commodity Software on PC's that is transferable will be transfered free of
charge. Engage will contact vendors of non-transferable licenses and attempt to
obtain permission to transfer licenses on or before October 8, 1997. See List below.
6 Windows NT 4.0 Server
20 Windows NT 4.0 Workstation
12 Windows 95
20 Microsoft ▇▇▇▇▇▇ ▇▇
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Client 4.0
25 Norton Anti-Virus 2.0
25 Microsoft Visual C++
5 Microsoft Project 4.1
20 WRQ Reflection X
25 Integraph Disk Access
2 Blue Sky WinHelp Office
2 Blue Sky RoboHelp
2 Blue Sky Web Office
2 Paint Shop Pro
1 QuarterDeck ▇▇▇▇▇▇ ▇▇
▇ Corel Draw
5 Visio Technical 4.0
2 Microsoft Publisher
3 Microsoft Visual Basic
2 Microsoft MSDN
1 Install Shield
1 Demo Shield
2 of 3
Schedule 5.7 Transfereable Software Licenses
1 MKS Toolkit
1 Arcada Backup Exec
2 Stingray Objective Toolkit
2 Stingray Objective Grid
5 Rogue Wave Tools.H++
20 Lotus Notes
3 of 3
