ASSET SALE AND PURCHASE AGREEMENT
BETWEEN
NETOBJECTS, INC.
AND
MERANT INC.
Dated as of January 8, 2001
TABLE OF CONTENTS
Page
----
1 DEFINITIONS..............................................................................................1
2 SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES...................................................1
2.1 Asset Sale...................................................................................1
2.1.1 Assets...........................................................................1
2.1.2 Excluded Assets..................................................................3
2.2 Purchase Price...............................................................................4
2.3 Payment of Purchase Price....................................................................4
2.4 Assumption of Liabilities....................................................................5
3 REPRESENTATIONS AND WARRANTIES BY SELLER.................................................................5
3.1 Organization and Standing....................................................................5
3.2 Authorization................................................................................6
3.3 Litigation; Compliance with Law..............................................................6
3.4 Financial Statements and Condition; Liabilities..............................................7
3.5 Assets; Consents.............................................................................7
3.6 Intellectual Property; Licenses..............................................................8
3.7 Contracts....................................................................................10
3.8 Conflicts....................................................................................11
3.9 Taxes........................................................................................11
3.10 Employee Benefit Plans; ERISA................................................................12
3.11 Environmental Matters........................................................................13
3.12 Labor Relations..............................................................................13
3.13 Insurance....................................................................................14
3.14 Inventory....................................................................................14
3.15 Disclosure...................................................................................15
4 REPRESENTATIONS AND WARRANTIES BY BUYER..................................................................15
4.1 Organization and Standing....................................................................15
4.2 Authorization................................................................................15
4.3 Compliance with Law..........................................................................16
5 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇........................................................................................16
6 COVENANTS AND AGREEMENTS OF SELLER.......................................................................16
6.1 Negative Covenants...........................................................................16
6.1.1 Dispositions; Mergers............................................................16
6.1.2 Accounting Principles and Practices..............................................17
6.1.3 Additional Agreements............................................................17
6.1.4 Breaches; Employment Contracts...................................................17
6.1.5 Offers to Employees..............................................................17
6.1.6 No Inconsistent Negotiations.....................................................18
6.2 Affirmative Covenants........................................................................18
6.2.1 Preserve Existence...............................................................18
6.2.2 Normal Operations................................................................18
6.2.3 Taxes............................................................................18
6.2.4 Corporate Action.................................................................19
6.2.5 Transfer Tax; Bulk Sales.........................................................19
6.2.6 Access...........................................................................19
6.2.7 Other Information................................................................19
6.2.8 Insurance........................................................................19
6.2.9 Financial Statements.............................................................19
6.2.10 Consents.........................................................................20
6.2.11 Agreements.......................................................................20
6.2.12 Stockholder Consent..............................................................20
6.3 Best Efforts.................................................................................20
6.4 Employees....................................................................................20
6.5 Takeover Statutes............................................................................21
6.6 Announcements................................................................................21
7 COVENANTS AND AGREEMENTS OF BUYER........................................................................21
7.1 Corporate Action.............................................................................21
7.2 Announcements................................................................................22
8 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE......................................................22
8.1 Representations and Covenants................................................................22
8.2 Consents.....................................................................................22
8.3 Delivery of Documents........................................................................22
8.4 Financial Statements.........................................................................23
8.5 Legal Proceedings............................................................................23
8.6 Employment Agreements With Designated Employees..............................................23
8.7 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇............................................................................23
8.8 Absence of Material Change...................................................................23
8.9 Government Consents..........................................................................23
8.10 U.K. Treasury Consent........................................................................24
8.11 Technology License Agreement.................................................................24
9 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.....................................................24
9.1 Representations and Covenants................................................................24
9.2 Delivery by Buyer............................................................................24
9.3 Legal Proceedings............................................................................25
9.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇............................................................................25
9.5 Stockholder Consent and Notification.........................................................25
10 THE CLOSING..............................................................................................25
10.1 Closing......................................................................................25
10.2 Delivery by Seller...........................................................................25
10.2.1 Agreements and Instruments.......................................................25
10.2.2 Consents.........................................................................26
10.2.3 Certificate Concerning Amendments and Additional Agreements......................26
10.2.4 UCC Report.......................................................................26
10.2.5 Certified Resolutions............................................................26
10.2.6 Officers' Certificates...........................................................26
10.2.7 Opinion of Counsel...............................................................27
10.3 Delivery by Buyer............................................................................27
10.3.1 Purchase Price Payment...........................................................27
10.3.2 Agreements and Instruments.......................................................27
10.3.3 Certified Resolutions............................................................27
10.3.4 Officers' Certificate............................................................27
10.4 Apportionment at Closing Date; Customer Billing..............................................28
11 TERMINATION..............................................................................................28
11.1 Termination..................................................................................28
11.2 Survival After Termination...................................................................29
12 CONDUCT FOLLOWING CLOSING................................................................................29
12.1 Access to Information........................................................................29
12.2 Access to Personnel..........................................................................29
12.3 Trademark Abandonment........................................................................30
13 PROTECTION OF PROPRIETARY INFORMATION....................................................................30
13.1 Agreement to Keep Confidential...............................................................30
13.2 Seller's Obligation..........................................................................31
13.3 Information Not Confidential.................................................................31
13.4 Protective Order.............................................................................31
14 AGREEMENT NOT TO COMPETE.................................................................................32
15 POSSESSION AND CONTROL...................................................................................32
16 RISK OF LOSS.............................................................................................32
17 SURVIVAL; INDEMNIFICATION................................................................................33
17.1 Survival of Seller's Representations.........................................................33
17.2 Indemnification by Seller....................................................................33
17.2.1 Seller Indemnified Losses........................................................33
17.2.2 Limitations on Seller Liability..................................................34
17.3 Survival of Buyer's Representations..........................................................34
17.4 Indemnification by Buyer.....................................................................34
17.4.1 Buyer Indemnified Losses.........................................................34
17.4.2 Limitations on Buyer Liability...................................................35
17.5 Conditions of Indemnification................................................................35
17.6 Damages......................................................................................36
18 VALUE OF ASSETS..........................................................................................36
19 REMEDIES.................................................................................................37
19.1 Exclusive Remedies...........................................................................37
19.2 Failure of Seller to Pay.....................................................................37
20 ADDITIONAL ACTIONS AND DOCUMENTS.........................................................................37
21 BROKERS..................................................................................................38
22 EXPENSES.................................................................................................38
23 NOTICES..................................................................................................38
24 WAIVER...................................................................................................39
25 BENEFIT AND ASSIGNMENT...................................................................................40
26 REMEDIES CUMULATIVE......................................................................................40
27 ENTIRE AGREEMENT; AMENDMENT..............................................................................40
28 SEVERABILITY.............................................................................................41
29 HEADINGS.................................................................................................41
30 GOVERNING LAW............................................................................................41
31 DEFINITIONS AND REFERENCES...............................................................................41
32 SIGNATURE IN COUNTERPARTS................................................................................44
EXHIBITS AND SCHEDULES
ASSET SALE AND PURCHASE AGREEMENT
THIS ASSET SALE AND PURCHASE AGREEMENT is entered into as of
this 8th day of January, 2001 between NetObjects, Inc., a Delaware corporation
("SELLER"), and MERANT Inc., a California corporation ("BUYER").
WHEREAS, Seller is, among other things, engaged through its
Enterprise Division in the development, marketing, licensing, and sale of
Business Products and Business Services (as herein defined); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase or license from Seller, all of the assets that are essential to or
useful for developing, marketing, licensing and selling Business Products and
Business Services and otherwise continuing the operations of the Enterprise
Division as a going concern, subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
1 DEFINITIONS
For all purposes of this Purchase Agreement, certain capitalized
terms specified in ARTICLE 31 shall have the meanings set forth in ARTICLE 31,
except as otherwise expressly provided.
2 SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 ASSET SALE
On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions hereof, Seller agrees
to sell, assign, transfer, convey and deliver to Buyer, and Buyer agrees to
purchase from Seller, the Assets at the Closing, and Seller agrees to license
the technology which is the subject of the Technology License Agreement,
attached hereto as Exhibit A.
2.1.1 ASSETS
The Assets which are being purchased and sold pursuant
to this Purchase Agreement are:
(a) all of Seller's Intellectual Property or other
proprietary rights, including all Business Trademarks
and associated goodwill, pertaining to the Business
Products other than the Excluded Assets (as defined
below);
(b) all of Seller's Intellectual Property necessary
for developing, marketing, maintaining or licensing
Business Products or for the provision of Business
Services, or otherwise necessary for the operation of
the Enterprise Division;
(c) all of Seller's inventory of Business Products,
wherever located, including raw materials, work in
progress and under service contracts, finished products,
products subject to right of return, and inventoriable
supplies owned by Seller and used or held for use
exclusively in the conduct of the business of the
Enterprise Division, a summary of which and the
locations of which are set forth on Schedule 2.1.1(c)
(the "INVENTORY") and any rights of Seller to the
warranties received from suppliers and any related
claims, credits, rights of recovery and setoff with
respect to such Inventory;
(d) all of Seller's rights under Third-Party
contracts, agreements, leases , purchase orders, sales
orders and instruments that will be in effect on the
Closing Date to which Seller is a party, (i) used or
held for use in the conduct of the business of the
Enterprise Division, (ii) for the provision of Business
Services, or (iii) for the sale, licensing, or
distribution of Business Products, including those
identified on Schedule 2.1.1(d), and any such contracts,
agreements, instruments and leases referred to in
clauses (i) to (iii), inclusive, entered into between
the date hereof and the Closing Date by Seller but not
any Licenses or rights to payment for Business Services
performed by Seller prior to the Closing Date
(collectively, the "CONTRACTS");
(e) all licenses, agreements and other arrangements
under which Seller has the right to use any Third Party
Intellectual Property Rights used or held for use in the
conduct of the business of the Enterprise Division or
necessary for developing, marketing, maintaining or
licensing Business Products, or for the provision of
Business Services, including the licenses identified on
Schedule 2.1.1(e), but not the Nonassignable Assets
(collectively, the "LICENSES");
-2-
(f) certain tangible personal property used or held
for use in the operation of the business of the
Enterprise Division as set forth on Schedule 2.1.1(f);
(g) except as set forth on Schedule 2.1.1(g), all
mailing lists, customer lists, warranty information,
standard forms of documents, manuals of operation or
business procedures, and other similar information to
the extent used or held for use in the operation of the
business of the Enterprise Division; and
(h) all books and records of Seller (including all
contracts, commitments, reports of examination and other
records and information, including on discs, tapes and
other data-storing media, but excluding management
information systems not used exclusively in the business
of the Enterprise Division) used or held for use in the
conduct of the business of the Enterprise Division, but
in all cases excluding the originals of any personnel
records.
(i) notwithstanding the provisions of Section 2.1.2,
or any other provision of this Agreement, the Assets
shall include the pending application for federal
registration of NETOBJECTS COLLAGE, U.S. Trademark
Application Serial No. 75/919,260.
2.1.2 EXCLUDED ASSETS
Notwithstanding the provisions of SECTION 2.1.1, or any
other article of this Purchase Agreement, the Assets shall not include, and
Seller is not selling, transferring, assigning, conveying or delivering to
Buyer, and Buyer is not purchasing, acquiring or accepting from Seller, any
rights or assets applicable to the non-Enterprise Division portion of Seller's
operations, including, but not limited to, the following (the "EXCLUDED
ASSETS"):
(a) any of Seller's cash, bank deposits or similar
cash items existing as of the close of business on the
Closing Date;
(b) any of Seller's accounts receivable as of the
Closing Date;
(c) any fixed assets or other tangible personal
property of Seller that is not on Schedule 2.1.1(c) or
Schedule 2.1.1(f);
(d) any leaseholds or other interests in real
property;
(e) any Intellectual Property used in products and
services of Seller other than the Business Products or
Business Services,
-3-
and any Intellectual Property which is licensed to Buyer
under the Technology License Agreement attached as
Exhibit A;
(f) any claim, right or interest of Seller in or to
any refund, rebate, abatement or other recovery for U.S.
federal, state, local or foreign net income, franchise,
gross income, alternative or add-on minimum, gross
income, gross receipts, sales, use, ad valorem,
transfer, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation,
premium, environmental, windfall profit, real or
personal property taxes, customs, duties or other taxes,
governmental fees or other like assessment or charges of
any kind whatsoever, together with any interest due
Seller thereon, for any periods prior to the Closing
Date;
(g) any units or copies of Business Products sold or
licensed in the ordinary course of business between the
date hereof and the Closing Date; and
(h) the contracts, licenses, agreements, and
instruments referred to on Schedule 2.1.2.(h).
2.2 PURCHASE PRICE
For and in consideration of the conveyances and assignments
described herein and in addition to the assumption of liabilities as set forth
in SECTION 2.4, Buyer agrees to pay to Seller, and Seller agrees to accept from
Buyer, a purchase price (the "PURCHASE PRICE") equal to Eighteen Million Dollars
($18,000,000.00). The Purchase Price shall be payable as described in SECTION
2.3. The Purchase Price shall be allocated among the Assets in accordance with
ARTICLE 18.
2.3 PAYMENT OF PURCHASE PRICE
The Purchase Price shall be payable to Sellers at the Closing as
follows:
(a) Seller received on December 21, 2000 Four Million
Dollars ($4,000,000.00) pursuant to that Option Agreement dated December 19,
2000 between Buyer and Seller. Pursuant to that Option Agreement, the $4,000,000
shall be credited against the Purchase Price payable hereunder.
(b) Buyer shall deliver the amount of Fourteen Million
Dollars ($14,000,000.00) to Seller by wire transfer of federal funds to an
account which will be identified by Seller not less than seven (7) days prior to
the Closing Date.
-4-
2.4 ASSUMPTION OF LIABILITIES
At the Closing, Buyer shall assume only the liabilities and
obligations of Sellers set forth below:
(a) The liabilities and obligations of Sellers to be
performed after the Closing Date under the contracts, agreements and leases set
forth and described in Schedule 2.4(a); and
(b) The liabilities and obligations of Sellers to be
performed after the Closing Date under any Additional Agreements entered into
after the date hereof in compliance with SECTION 6.1.
Buyer shall not assume or be deemed to assume any debts, liabilities or
obligations of Sellers except as specified in this SECTION 2.4. In particular,
without limiting the generality of the foregoing, Buyer shall have no liability
or obligation for Seller's actions, or failure to act, prior to the Closing Date
with respect to the contracts set forth in Schedule 3.3, and Buyer shall have no
liability or obligation to or with regard to the individuals listed in Schedule
3.6(g) with respect to works of authorship with they may have created in the
service of Seller. All such assumptions pursuant to this SECTION 2.4 shall be
subject to Buyer's confirmation with creditors of existing unperformed
obligations.
3 REPRESENTATIONS AND WARRANTIES BY SELLER
Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND STANDING
Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified to
do business as a foreign corporation and is in good standing under the laws of
the State of California. Neither the nature of the business conducted by Seller,
nor the character of the properties owned, leased or otherwise held by Seller
makes any such qualification necessary in any other state, country, territory or
jurisdiction. Seller has the full and unrestricted power and authority,
corporate and otherwise, to own, lease and otherwise to hold and operate the
Assets, to carry on the business of the Enterprise Division as now conducted,
and to enter into and perform the terms of this Agreement, the other Seller
Documents and the transactions contemplated hereby and thereby.
-5-
3.2 AUTHORIZATION
The execution, delivery and performance of this Agreement and of
the other Seller Documents, and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary actions of Seller (none of which actions has been modified or
rescinded and all of which actions are in full force and effect). This Agreement
constitutes, and upon execution and delivery each other Seller Document will
constitute, a valid and binding agreement and obligation of Seller, enforceable
in accordance with its respective terms, except to the extent that enforcement
of the rights and remedies created hereby and thereby may be limited by
bankruptcy and other similar laws of general application affecting the rights
and remedies of creditors and by general equity principles. Except as specified
in SECTION 3.5, the execution, delivery and performance by Seller of this
Agreement and of the other Seller Documents will not require the consent,
approval or authorization of any person, entity or governmental authority.
3.3 LITIGATION; COMPLIANCE WITH LAW
Except as set forth in Schedule 3.3, there is no action, suit,
investigation, claim, arbitration or litigation pending or threatened against or
involving either Seller, the Assets, or the Enterprise Division, or the
propriety of this Agreement or any other Seller Document, at law or in equity,
or before or by any court, arbitrator or governmental authority, and Seller is
not operating under or subject to any order, judgment, decree or injunction of
any court, arbitrator or governmental authority. No governmental agency or
authority has at any time challenged, questioned, or commenced or given notice
of intention to commence any investigation relating to, the legal right of
Seller to conduct the business of the Enterprise Division as now or heretofore
conducted by Seller. Seller has complied and is in compliance with all laws,
ordinances, regulations, awards, orders, judgments, decrees and injunctions
applicable to Seller, to the Assets, and to its business and operations,
including all federal, state and local laws, ordinances, regulations and orders
pertaining to employment or labor, safety, health, environmental protection,
zoning and other matters, the violation of which would materially adversely
affect the Assets, the Enterprise Division, or Seller's ability to effect the
transactions contemplated by this Agreement. Seller has obtained and holds all
permits, licenses and approvals (none of which has been modified or rescinded
and all of which are in full force and effect) from all governmental authorities
necessary in order to conduct its business and operations as presently conducted
and to own, use and maintain the Assets.
-6-
3.4 FINANCIAL STATEMENTS AND CONDITION; LIABILITIES
(a) Attached hereto as Schedule 3.4 is the statement of the
results of operations (before interest and income taxes) of the Enterprise
Division on a separately stated basis for the fiscal year ended September 30,
2000 (the "BUSINESS OPERATING STATEMENTS"). The Business Operating Statements
have been compiled from and are in accordance with Seller's books and records
for the Enterprise Division (which books and records are correct and complete)
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, in all material respects
(except for the omission of footnotes and as otherwise disclosed on Schedule
3.4), and fairly present in all material respects the results of operations
(before interest and income taxes) and of the Enterprise Division for the
periods then ended, and are correct and complete in all material respects. The
amounts reflected in the Business Operating Statements (other than as of and for
the period ended June 30, 2000) are as included in Seller's audited consolidated
financial statements for the same periods covered thereby.
(b) Since September 30, 2000, Seller has not made any
contract, agreement or commitment or incurred any obligation or liability
(contingent or otherwise) relating to the Assets, nor has there been any
discharge or satisfaction of any obligation or liability owed by Seller, which
is not in the ordinary course of business or which is inconsistent with past
business practices, nor has there occurred any loss or material injury to the
Assets as the result of any fire, accident, act of God or the public enemy, or
other casualty, or any adverse material change in the Assets or in the condition
(financial or otherwise) of the Enterprise Division.
3.5 ASSETS; CONSENTS
(a) Seller is the sole and exclusive legal and equitable
owner of and has good, marketable, and insurable (at standard rates) title to
the Assets free and clear of any Encumbrances, except for those Encumbrances set
forth in Schedule 3.5(a), which shall be removed prior to or contemporaneously
with the Closing, and those Encumbrances on the Assets set forth on Schedule
2.1.1(f).
(b) On the Closing Date, Buyer shall acquire good,
marketable and insurable title to, and all right, title and interest in, the
Assets, free and clear of all Encumbrances. The Assets so acquired, together
with the technology transferred pursuant to the Technology License Agreement and
commercially available software licenses, at the Closing shall constitute all of
the real, personal and mixed assets and property, both tangible and intangible,
excluding the Excluded Assets, which are used, held for use, necessary or useful
for the business and operations of the Enterprise Division.
-7-
(c) All of the Assets to be sold hereunder are transferable
by Seller by Seller's sole act and deed, and no consent on the part of any other
person is necessary to validate the transfer to Buyer, except that certain of
the agreements described in Schedule 3.5(c) may be assigned only with the
consent of third parties.
(d) Nothing in this Agreement shall be construed as an
attempt or agreement to assign any Asset, including any license, certificate,
approval, authorization, agreement, contract, lease, or other right, which by
its terms or by law is nonassignable, or is nonassignable without the consent of
a third party, unless and until a consent shall be given from the party whose
consent would be required ("NONASSIGNABLE ASSETS"). In the event that Seller is
not successful in obtaining any consent to assign an agreement set forth on
Schedule 3.5(c), and Buyer shall waive the condition to closing set forth in
SECTION 8.2, Seller agrees to cooperate with Buyer at its request and use
reasonable efforts in endeavoring to obtain such consent promptly; provided,
however, that such cooperation shall not require Seller to remain secondarily
liable with respect to any Nonassignable Asset.
3.6 INTELLECTUAL PROPERTY; LICENSES
(a) Seller owns, or is licensed or otherwise possesses all
necessary rights to use, all Intellectual Property that is used in the business
of the Enterprise Division ("ENTERPRISE DIVISION INTELLECTUAL PROPERTY"). Except
as set forth in Schedule 3.6(a), Seller owns all Enterprise Division
Intellectual Property free and clear of Encumbrances.
(b) Schedule 3.6(b) lists all (i) patents, patent
applications, registered and unregistered trademarks, trade names and service
marks, registered and material unregistered copyrights (including all computer
software) included in the Enterprise Division Intellectual Property, including
the jurisdictions in which each such item of Enterprise Division Intellectual
Property has been issued or registered or in which any application for such
issuance and registration has been filed, (ii) licenses, sublicenses and other
agreements as to which Seller is a party and pursuant to which any person is
authorized to use any Enterprise Division Intellectual Property, and (iii)
licenses, sublicenses and other agreements as to which Seller is a party and
pursuant to which Seller is authorized to use any third party patents,
trademarks or copyrights, including software which are incorporated in, are or
form a part of any Business Product, or otherwise are necessary for research and
development or any operations of the Enterprise Division ("THIRD PARTY
INTELLECTUAL PROPERTY RIGHTS").
(c) Except as set forth in Schedule 3.6(c), there are no
royalties, fees or other payments payable by Seller to any person by reason of
the ownership, use, sale or disposition of Intellectual Property in the conduct
of the business of the Enterprise Division. Schedule 3.6(c) identifies all
licenses or similar agreements
-8-
involving Third Party Intellectual Property Rights which require third party
consent for assignment to Buyer or require a new license to Buyer.
(d) To the knowledge of Seller, there is no unauthorized
use, disclosure, infringement or misappropriation of any Enterprise Division
Intellectual Property, any trade secret material to the Enterprise Division, or
any Intellectual Property right of any third party to the extent licensed by or
through the Enterprise Division, or Seller on behalf of the Enterprise Division,
by any third party, including any employee or former employee of Seller. Seller
represents and warrants that it has the right to bring an action for the
infringement or misappropriation of all of Seller's Intellectual Property that
pertains to the Business Products or the Business Services or otherwise is used
in the operation of the Enterprise Division.
(e) Seller is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of Seller's
obligations under this Agreement, in breach of any license, sublicense or other
agreement relating to the Enterprise Division Intellectual Property or Third
Party Intellectual Property Rights.
(f) To Seller's knowledge, the conduct of the business of
the Enterprise Division does not infringe any patent, trademark, service ▇▇▇▇,
copyright, trade secret or other Intellectual Property right of any third party;
and the Seller has not advised any third party that such third party may be
infringing any Enterprise Division Intellectual Property or breaching any
license or agreement involving Enterprise Division Intellectual Property.
(g) Except as identified on Schedule 3.6(g), all officers,
employees and consultants of Seller that currently are or ever have been
officers, employees or consultants of the Enterprise Division have executed and
delivered to Seller an agreement regarding the protection of proprietary
information and the assignment to Seller of any Enterprise Division Intellectual
Property arising from services performed for Seller by such persons. All
employees who contributed to the Enterprise Division Intellectual Property did
so within the scope of their employment with Seller. All employees and
consultants who contributed to the Enterprise Division Intellectual Property
have been identified on Schedule 3.6(g).
(h) Except as set forth on Schedule 3.6(h), any third party
to which Seller has disclosed or allowed access to proprietary and confidential
Enterprise Division Intellectual Property has executed a confidentiality and
nondisclosure agreement with respect to such Intellectual Property.
(i) Except as set forth on Schedule 3.6.(i), no source code
for any of the Business Products has been licensed or otherwise made available
to any person other than Seller, Seller has treated such source code, and the
data associated
-9-
therewith, as confidential and proprietary business information, and has taken
all reasonable steps to protect the same as trade secrets of Seller.
(j) All Business Products perform in all material respects,
free of significant bugs or programming errors, with the functions described in
any published specifications or end user documentation or other information
provided to customers of Seller on which such customers relied when licensing or
otherwise acquiring such Business Products.
(k) Seller has taken the actions customary in the software
industry to document the software for the Business Products and its operation
and the source code and documentation of or relating to the Business Products
have been written in a clear and professional manner so that they may be
understood, modified and maintained in an efficient manner by reasonably
competent programmers.
(l) Seller has not exported or transmitted Business Products
or Software Tools to any country to which such export or transmission is
restricted by any applicable U.S. regulation or statute, without first having
obtained all necessary and appropriate United States or foreign government
licenses or permits.
(m) There are no material claims pending against Seller with
respect to any warranties or maintenance obligations with respect to any
Business Products or Business Services, or any claim that the Business Products
have not performed.
(n) Version 2.0 of NetObjects Collage will not include
TeamFusion 1.5 which is the component of NetObjects Collage that includes the
Intellectual Property being licensed to Buyer under the Technology License
Agreement.
3.7 CONTRACTS
Set forth and described in Schedules 2.1.1(d) and 2.1.1(e) are
all of the Contracts and Licenses (both written and verbal) relating to the
Assets, to the Enterprise Division or to the business and operations thereof.
Seller has not entered into any agreement or understanding, whether written or
oral, which waives any of its rights under any such Contract or License. Seller
has delivered true and complete copies of all such Contracts or Licenses
relating to NetObjects Collage and all such other Seller contracts as Buyer may
reasonably request (and all amendments and modifications thereto) to Buyer prior
to the execution of this Agreement. The unperformed obligations ascertainable
from the terms on the face of such Contracts and Licenses (and such amendments
or modifications thereto), are the only existing unperformed obligations
thereunder. Each Contract and License is in full force and effect, and
constitutes a valid and binding obligation of, and is legally enforceable in
accordance with its terms against, the parties thereto, except to the extent
that enforcement of the rights and remedies created hereby and
-10-
thereby may be limited by bankruptcy and other similar laws of general
application affecting the rights and remedies of creditors and by general equity
principles. Seller has complied with all of the provisions of such Contracts and
Licenses and is not in default thereunder, and there has not occurred any event
which (whether with or without notice, lapse of time, or the happening or
occurrence of any other event) would constitute such a default. There has not
been (i) any failure of any party to any such Contract or License to comply with
all provisions thereof, (ii) any default by any party thereunder, (iii) any
threatened cancellation thereof, (iv) any outstanding dispute thereunder, or (v)
any basis for any claim of breach or default thereunder.
3.8 CONFLICTS
Except as set forth in Schedule 3.8, the execution and delivery
of this Agreement and the other Seller Documents, the fulfillment of and the
compliance with the respective terms and provisions of each, and the
consummation of the transactions described in each, do not and will not conflict
with or violate any law, ordinance, regulation, order, award, judgment,
injunction or decree applicable to Sellers, to the Assets or to the Enterprise
Division, or conflict with or result in a breach of or constitute a default
under any of the terms, conditions or provisions of Seller's articles of
incorporation or bylaws, or any contract, agreement, lease, commitment, or
understanding to which Seller is a party or by which Seller is bound or to which
any of the Assets or the Enterprise Division is subject, or result in the
acceleration of any indebtedness or in the creation of any Encumbrance upon the
Assets.
3.9 TAXES
Seller has filed all tax returns and forms required to be filed,
and has paid in full all taxes, estimated taxes, interest, penalties,
assessments and deficiencies which have become due pursuant to such returns or
without returns or pursuant to any assessments received by Seller. Such returns
and forms are true and correct, and Seller is not required to pay any other
taxes except as shown on such returns. Seller is not a party to any pending
action or proceeding, and there is no action or proceeding threatened by any
government or authority against Seller, for assessment or collection of taxes;
and no unresolved claim for assessment or collection of taxes has been asserted
against Seller. Prior to the Closing Date, Seller shall pay all tax assessments
or other tax liabilities when due with respect to the ownership, business or
operations of the Assets. There are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any tax return of
Seller for any period.
-11-
3.10 EMPLOYEE BENEFIT PLANS; ERISA
(a) Schedule 3.10(a) contains a true and complete list and
description of all employee benefit plans (within the meaning of Section 3(3) of
ERISA) and each bonus, profit sharing, compensation, termination, stock option,
stock appreciation right, restricted stock, performance unit, pension,
retirement, deferred compensation, employment, severance, termination pay,
welfare, retiree medical or retiree life insurance, plan, program, agreement or
arrangement, and any other employee benefit plan, program, agreement or
arrangement, labor arrangement or agreement, trust, plan, fund or other
arrangement in effect as of the date hereof for the benefit or welfare of any
director, officer, employee or former employee of Seller (each, a "SELLER
PLAN").
(b) Seller has provided to Buyer prior to the Closing
complete copies of all Seller Plans together with a copy of (i) a written
description of any oral Seller Plans, (ii) the current summary plan description
and summary of material modifications, if applicable, (iii) the most recently
prepared actuarial report, financial statement and Form 5500 prepared for each
Seller Plan (if applicable), and (iv) a copy of the most recent determination
letter received for each qualified plan or, if no such letter exists, a copy of
the most recently submitted determination letter application.
(c) Each Seller Plan is in material compliance with all
applicable laws including ERISA and the Code. No condition exists that is
reasonably expected to subject Seller to a material civil penalty under Section
502(i) of ERISA, material liability under Section 4069 of ERISA or 4795 or 4980B
of the Code, the loss of a federal tax deduction under Sections 280G or 404 of
the Code, to any penalties or tax liability arising from the loss of
qualification under Section 401(a) of the Code or other material liability with
respect to Seller Plans as a fiduciary or otherwise that is not reflected on the
Seller Balance Sheet.
(d) Each Seller Plan that is intended to qualify under
Section 401 of the Code, and each trust maintained in respect thereof that is
intended to qualify under Section 501 of the Code, so qualifies and a favorable
determination letter has been received from the IRS for changes required by the
Tax ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, or an application therefor has been timely made in respect
of each such Seller Plan and related trust, and the IRS has taken no action to
revoke or refuse to issue any such letter. Each Seller Plan that is required to
file Forms 5500 with the IRS has timely done so in respect of each completed
plan year.
(e) None of the Seller Plans is a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA or is or has been subject to Sections
4063 or 4064 of ERISA.
-12-
(f) All contributions required to have been made in respect
of all the Seller Plans (without regard to any waivers granted under Section 412
of the Code) to any funds or trusts established in connection therewith have
been made by the due date thereof and all contributions for any period ending on
or before the Closing Date which are not yet due will have been paid prior to
the Closing Date. No accumulated funding deficiencies exist in any of the Seller
Plans subject to Section 412 of the Code.
(g) There is no "amount of unfunded benefit liabilities" as
defined in Section 4001(A)(18) of ERISA in any of the respective Seller Plans
which are "employee pension plans," as defined in Section 3(2) of ERISA subject
to Title IV of ERISA, utilizing the actuarial assumptions prescribed for use by
the Pension Benefit Guaranty Corporation for such calculations.
(h) No Seller Plan or other agreement or arrangement will
provide a benefit or payment, or an increased benefit or payment, or
acceleration or realization of any rights to any person as a result of the
transactions contemplated by this Agreement.
3.11 ENVIRONMENTAL MATTERS
With respect to environmental matters:
(a) the operations of the Enterprise Division have been and
are in compliance with all applicable Environmental Laws and all permits,
licenses or other authorizations issued pursuant to Environmental Laws
("ENVIRONMENTAL PERMITS"), and Seller has obtained all Environmental Permits
necessary to operate the business;
(b) there are no judicial or administrative proceedings
pending or, to the knowledge of Seller, threatened against Seller alleging the
violation of any Environmental Laws;
(c) there are no investigations pending or, to the knowledge
of Seller, threatened against Seller which could lead to the imposition of any
liability pursuant to any Environmental Laws; and
(d) Seller has not received any notice claiming any
violation of any Environmental Laws or any Environmental Permit.
3.12 LABOR RELATIONS
(a) There are no strikes, work stoppages, grievance
proceedings, union organization efforts, or other controversies pending or
threatened between Seller and any of its employees or agents or any union or
collective bargaining unit.
-13-
Seller has complied and is in compliance in all material respects with all laws
and regulations relating to the employment of labor, including, without
limitation, provisions relating to wages, hours, collective bargaining,
occupational safety and health, equal employment opportunity, and the
withholding of income taxes and social security contributions. Except as set
forth in Schedule 3.12(a) hereto, there are no collective bargaining agreements,
employment agreements between Seller and any of its respective employees or
professional service contracts not terminable at will relating to the Enterprise
Division. The consummation of the transactions contemplated hereby will not
cause Buyer to incur or suffer any liability relating to, or obligation to pay,
severance, termination, or other payments to any person or entity. Except as set
forth in Schedule 3.12(a) hereto, no employee of Seller has any contractual
right to continued employment by Seller following consummation of the
transactions contemplated by this Agreement. Seller has previously delivered to
Buyer an accurate and complete list, dated as of the date of this agreement, of
all employees of the Enterprise Division, and the positions with Seller and the
rate of compensation (including salary, bonuses and commissions) of each such
employee.
(b) Except as set forth in Schedule 3.12(b), neither Seller
nor any of Seller's employees is a party to any contract containing provisions
that limit in any way the ability of Seller or any of Seller's employees prior
to the Closing, or Buyer or any of Seller's employees who become employees of
Buyer after the Closing to engage in the Enterprise Division business.
(c) Except as set forth on Schedule 3.12(c), no Enterprise
Division employees have brought any claims or grievances against Seller, whether
through a formal or informal grievance process.
3.13 INSURANCE
All of the assets of the Enterprise Division, including, but not
limited to the Assets and the technology which is the subject of the Technology
License Agreement are insured on the date hereof and will continue to be insured
through the Closing Date against risks of the kind customarily insured against
and in amounts customarily carried by corporations similarly situated and
provide adequate insurance coverage for the Assets, the technology which is the
subject of the Technology License Agreement, and the Enterprise Division
(including the business and operations thereof).
3.14 INVENTORY
All inventory of the Enterprise Division, whether or not
reflected in the Business Operating Statements, consists of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net
-14-
realizable value in the Business Operating Statements. All inventories not
written off have been priced at cost. The quantities of each item of inventory
(whether raw materials, work-in-process, or finished goods) are not excessive,
but are reasonable in the present circumstances of the Enterprise Division.
3.15 DISCLOSURE
All facts of material importance to the Assets and to the
Enterprise Division have been fully and truthfully disclosed to Buyer in this
Agreement. No representation or warranty by Seller in, and no document,
statement, certificate, opinion letter, schedule or exhibit to be furnished or
delivered to Buyer pursuant to, this Agreement or any other Seller Document
contains or will contain any material untrue or misleading statement of fact or
omits or will omit any fact necessary to make the statements contained herein or
therein not materially misleading.
4 REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents, warrants and covenants to Sellers as follows:
4.1 ORGANIZATION AND STANDING
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the state of California. Buyer has all the
requisite corporate power and corporate authority to enter into and perform the
terms of this Agreement and the other Buyer Documents and to carry out the
transactions contemplated hereby and thereby.
4.2 AUTHORIZATION
The execution, delivery and performance of this Agreement and of
the other Buyer Documents, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
actions of Buyer (none of which actions has been modified or rescinded and all
of which actions are in full force and effect). This Agreement constitutes, and
upon execution and delivery each such other Buyer Document will constitute, a
valid and binding agreement and obligation of Buyer, enforceable in accordance
with its respective terms, except to the extent that enforcement of the rights
and remedies created hereby and thereby may be limited by bankruptcy and other
similar laws of general application affecting the rights and remedies of
creditors and by general equity principles. The execution, delivery and
performance of this Agreement by Buyer will not require the consent, approval or
authorization of any person, entity or governmental authority which has not been
received as of the date of this Agreement.
-15-
4.3 COMPLIANCE WITH LAW
The execution and delivery of this Agreement, the fulfillment of
and the compliance with the respective terms and provisions of this Agreement,
and the consummation of the transactions described in this Agreement, do not and
will not conflict with or violate any law, ordinance, regulation, order, award,
judgment, injunction or decree applicable to Buyer, or conflict with or result
in a breach of or constitute a default under any of the terms, conditions or
provisions of Buyer's articles of incorporation or bylaws, or any contract,
agreement, lease, commitment, or understanding to which Buyer is a party or by
which Buyer is bound. Except as specified on Schedule 4.3, the execution,
delivery and performance by Buyer of this Agreement and any agreements
contemplated hereby will not require the consent, approval or authorization of
any person, entity or governmental authority which has not been obtained as of
the date hereof.
5 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
As promptly as practicable, to the extent required, and no later
than five (5) business days following the execution of this Agreement, Sellers
and Buyers shall complete any filing that may be required pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, or shall
mutually agree that no such filing is required. Sellers and Buyer shall
diligently take, or fully cooperate in the taking of, all necessary and proper
steps, and provide any additional information reasonably requested in order to
comply with, the requirements of such Act.
6 COVENANTS AND AGREEMENTS OF SELLER
Seller covenants and agrees with Buyer as follows:
6.1 NEGATIVE COVENANTS
Pending and prior to the Closing, Seller will not, without the
prior written approval of Buyer, do or agree to do any of the following:
6.1.1 DISPOSITIONS; MERGERS
Sell, assign, lease or otherwise transfer or dispose of any of
the Assets or any of the technology subject to the Technology License Agreement;
or merge or consolidate with or into any other entity or enter into any
agreements relating thereto; provided, however, that Seller may sell, assign,
lease or otherwise transfer or dispose of any Asset if such Asset is expended in
the ordinary course of business, consistent with Seller's past business
practices and with customary practices in the
-16-
software industry, and property or equipment of like kind and equivalent value
is substituted therefor.
6.1.2 ACCOUNTING PRINCIPLES AND PRACTICES
Change or modify any of Seller's accounting principles or
practices or any method of applying such principles or practices.
6.1.3 ADDITIONAL AGREEMENTS
Materially modify or amend any Contract or License or enter into
any other contracts, leases, commitments, understandings, licenses, or other
agreements (collectively, "ADDITIONAL AGREEMENTS") or incur any obligation or
liability (contingent or absolute); provided, however, that Seller may enter
into such Additional Agreements in the ordinary course of business consistent
with Seller's past business practices and with customary practices in the
software industry, so long as such Additional Agreements do not involve
revenues, payments or obligations in excess of Twenty Thousand Dollars
($20,000.00) for each such Additional Agreement in any month, or Sixty Thousand
Dollars ($60,000.00) for all such Additional Agreements in any month in the
aggregate, and each such Additional Agreement is terminable on not more than
thirty (30) days' prior written notice and provided further that Buyer's consent
shall not be unreasonably withheld.
6.1.4 BREACHES; EMPLOYMENT CONTRACTS
Do or omit to do any act (or permit such action or omission)
which will cause a material breach of any Contract or License or any other
contract, understanding, commitment, obligation, lease, license or other
agreement to which Seller is a party or by which Seller is bound; or with
respect to Enterprise Division employees only, enter into or become subject to
any employment, labor or union contract, any professional service contract not
terminable at will, or any bonus, pension, insurance, profit sharing, incentive,
deferred compensation, severance pay, retirement, hospitalization, employee
benefit, or other similar plan; or increase the compensation payable or to
become payable to any employee, or pay or arrange to pay any bonus payment to
any employee.
6.1.5 OFFERS TO EMPLOYEES
Offer employment to any Enterprise Division employee elsewhere
than with the Enterprise Division or take any action at any time to prevent or
to discourage any Enterprise Division employee from remaining employed in
connection with the business and operations of the Enterprise Division, unless
Buyer communicates to Seller its intention not to hire the Enterprise Division
employee. The employees of the Enterprise Division at the date hereof are set
forth on Schedule 6.15.
-17-
6.1.6 NO INCONSISTENT NEGOTIATIONS
Seller shall not and shall not authorize or permit any of its
Affiliates or any officer, director, employee, investment banker, attorney or
other adviser or representative of Seller to sell, dispose of or encumber the
Assets, or any material portion thereof, or consider or solicit any offers,
engage in any negotiations, or make any agreements with respect to the sale or
disposition of the Assets or any material portion thereof. Seller shall inform
other persons with which it has been discussing the possible sale of the Assets
that Seller has entered into this Agreement, and Seller shall notify Buyer
promptly in writing following receipt of any unsolicited inquiries or offers
with respect to the foregoing.
6.2 AFFIRMATIVE COVENANTS
Pending and prior to the Closing Date, Seller will:
6.2.1 PRESERVE EXISTENCE
Preserve its corporate existences and business organizations
intact, maintain its existing licenses, use its best efforts to preserve for
Buyer its relationships with suppliers, customers, employees and others having
business relations with them, insofar as they related directly to the Enterprise
Division, and keep all Assets in their present condition, ordinary wear and tear
excepted.
6.2.2 NORMAL OPERATIONS
Subject to the terms and conditions of this Agreement
(including, without limitation, SECTION 6.1), (i) carry on the Enterprise
Division businesses and activities, in the usual and ordinary course of business
consistent with Seller's past business practices and with customary practices in
the software industry; (ii) use its best efforts to preserve its present
business organization and relationships; (iii) pay or otherwise satisfy all of
its obligations (cash and barter) as they come due and payable; (iv) maintain
all of its properties in customary repair, order and condition; (v) maintain its
books of account, records, and files in substantially the same manner as
heretofore; and (vi) pay the full salary of and any and all other compensation
due to each Enterprise Division employee through the Closing Date.
6.2.3 TAXES
Pay or discharge when due and payable all tax liabilities and
obligations, including without limitation those for federal, state or local
income, property, unemployment, withholding, sales, transfer, stamp,
documentary, use and other taxes.
-18-
6.2.4 CORPORATE ACTION
Take all corporate action under the law of any state having
jurisdiction over Seller necessary to effectuate the transactions contemplated
by this Agreement and by the other Seller Documents.
6.2.5 TRANSFER TAX; BULK SALES
Take all necessary action to provide for the payment of all
applicable state sales, transfer or use taxes, and to comply with all applicable
bulk transfer and similar laws, in connection with the transactions contemplated
by this Agreement and the other Seller Documents.
6.2.6 ACCESS
Subject to the provisions of ARTICLE 12, give to Buyer and
Buyer's authorized representatives full and complete access upon reasonable
notice during normal business hours to Seller's properties, books, records,
contracts, commitments, facilities, premises, and equipment and to Seller's
officers and employees. In addition, with Seller's consent, which shall not be
withheld unreasonably, Buyer may contact vendors, customers, suppliers,
manufacturers and others with whom Seller does business in connection with the
business and operations of the Enterprise Division; provided, however, that
Buyer will notify Seller prior to making such contact.
6.2.7 OTHER INFORMATION
Subject to the provisions of ARTICLE 12, provide to Buyer all
such other information and copies of documents concerning Seller, the operation
of the Enterprise Division and the Assets, and Seller's Enterprise Division
customers and suppliers, as Buyer may reasonably request.
6.2.8 INSURANCE
Maintain in full force and effect all of their existing
casualty, liability, and other insurance through the day following the Closing
Date in amounts not less than those in effect on the date hereof.
6.2.9 FINANCIAL STATEMENTS
Provide Buyer with unaudited monthly statements of assets and
liabilities of Seller, and statements of revenues and expenses reflecting the
results of business and operations of the Enterprise Division and of Seller
beginning with December 2000 and for each month thereafter, within twenty (20)
days of the end of each such month. All of the foregoing financial statements
shall comply with the requirements concerning financial statements set forth in
SECTION 3.4.
-19-
6.2.10 CONSENTS
Obtain all third party consents required to assign to Buyer
those agreements and licenses set forth on Schedule 3.5(c) and Schedule 3.6(c),
excluding the license to use the Unisys GIF patents.
6.2.11 AGREEMENTS
(a) In the event that any third party contractor used by
Seller in the conduct of the business of the Enterprise Division shall terminate
its agreement or arrangement with Seller between the date of this Agreement and
the Closing Date, Seller shall use commercially reasonable efforts to procure a
replacement third party contractor on substantially the same terms and
conditions as the terminated contractor.
(b) In the event that any License is terminated between the
date of this Agreement and the Closing Date, Seller shall use commercially
reasonable efforts to procure a replacement License on substantially the same
terms and conditions as the terminated License.
(c) Prior to the Closing Date, Seller shall provide Buyer
with copies of all contracts entered into between the date of this Agreement and
the Closing Date pursuant to which NetObjects Collage is licensed.
6.2.12 STOCKHOLDER CONSENT
Seller will use its best efforts to have obtained the binding
consent of its stockholders to the sale of the Enterprise Division expeditiously
following the date of this Agreement.
6.3 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Seller
and Buyer will use their Best Efforts to cause the conditions in ARTICLES 8 and
9 to be satisfied.
6.4 EMPLOYEES
(a) For a period commencing upon the execution of this
Agreement and ending twelve (12) months following the Closing Date, Seller and
its Affiliates will not offer employment to any Enterprise Division Employee
without the prior written approval of Buyer. Prior to the Closing Date, Buyer
may offer employment to the Enterprise Division Employees and in such event
Seller shall release the Enterprise Division Employee from any obligation to
Seller, but Seller shall retain any obligation it may have to the Enterprise
Division Employees with respect to their employment with Seller up to and
including the Closing Date, including without limitation with respect to
-20-
their employment, training or educational benefits, severance pay or other
termination benefits, and shall indemnify Buyer for any claim with respect
thereto by any Enterprise Division Employee in accordance with SECTION 17.2.
Seller shall retain any obligation it may have to an Enterprise Division
Employee with respect to vacation, limited only to the extent to which Buyer
has assumed the liability for a particular Enterprise Division Employee's
vacation in an employment agreement with that Enterprise Division Employee.
(b) For a period commencing upon the execution of this
Agreement and ending ninety (90) days following the Closing Date, Seller will
provide training, to Buyer's sales and support employees, relating to the
Business Products and the Business Services as described in further detail on
Schedule 6.4(b).
6.5 TAKEOVER STATUTES
If any "fair price," "moratorium," "control share acquisition,"
or other anti-takeover statute or similar statute or regulation, or any
provision of the Seller's Certificate of Incorporation, Bylaws or other
constitutive documents shall become applicable to this Agreement or any of the
other transactions contemplated hereby or thereby, the Seller and its Board of
Directors shall take all action necessary to ensure that this Agreement and the
other transactions contemplated hereby and thereby may be consummated as
promptly as practicable and otherwise to minimize the effect of such statute,
regulation or provision on this Agreement and the other transactions
contemplated hereby and thereby.
6.6 ANNOUNCEMENTS
Except for statements and regulatory filings as may be required
by applicable law or any governmental authority, neither Seller nor any of its
agents or Affiliates shall make any public statements, including, without
limitation, any press releases, with respect to this Agreement and the
transactions contemplated herein without the prior written consent of Buyer,
which consent shall not be unreasonably withheld.
7 COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees with Seller as follows:
7.1 CORPORATE ACTION
Prior to the Closing, Buyer's parent company stockholder, MERANT
plc, shall take all corporate action under the law of England and Wales
necessary to
-21-
effectuate the transactions contemplated by this Agreement and the other Buyer
Documents.
7.2 ANNOUNCEMENTS
Except for statements and regulatory filings as may be required
by applicable law or any governmental authority, neither Buyer nor any of its
agents or Affiliates shall make any public statements, including, without
limitation, any press releases, with respect to this Agreement and the
transactions contemplated herein without the prior written consent of Seller,
which consent shall not be unreasonably withheld.
8 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets and to proceed
with the Closing are subject to the satisfaction (or waiver by Buyer) at or
prior to the Closing of each of the following conditions:
8.1 REPRESENTATIONS AND COVENANTS
Except as set forth in this Agreement or in the schedules to
this Agreement, the representations and warranties of Seller made in this
Agreement or in any other Seller Document shall have been true and correct in
all material respects when made, and shall be true and correct in all material
respects on the Closing Date as though such representations and warranties were
made on and as of the Closing Date; and Seller shall have performed and complied
in all material respects with all covenants and agreements required by this
Agreement or any other Seller Document to be performed or complied with by
Seller prior to the Closing.
8.2 CONSENTS
Seller shall have obtained prior to the Closing Date all
consents necessary to effect valid assignments to Buyer of all of the contracts
and licenses specified in Schedule 3.5(c) and Schedule 3.6(c) and all other
consents necessary to consummate the transactions contemplated hereby.
8.3 DELIVERY OF DOCUMENTS
Seller shall have delivered to Buyer all agreements, instruments and
documents required to be delivered by Seller to Buyer pursuant to SECTION 10.2.
-22-
8.4 FINANCIAL STATEMENTS
Seller shall have provided Buyer with the financial statements
referred to in SECTION 6.2.9 hereof.
8.5 LEGAL PROCEEDINGS
No action or proceeding by or before any governmental authority
shall have been instituted or threatened (and not subsequently dismissed,
settled or otherwise terminated) which might restrain, prohibit or invalidate
the transactions contemplated by this Agreement or any other Seller Document,
other than an action or proceeding instituted or threatened by Buyer.
8.6 EMPLOYMENT AGREEMENTS WITH DESIGNATED EMPLOYEES
Buyer shall have entered into an employment agreement to be
effective on the Closing Date with each Designated Employee.
8.7 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
All required filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, shall have been made and all applicable
waiting periods shall have expired.
8.8 ABSENCE OF MATERIAL CHANGE
Neither the Enterprise Division nor the Assets shall have
suffered a material adverse change since the date of this Agreement, and there
shall have been no changes since the date of this Agreement in the business,
operations, prospects, condition (financial or otherwise), properties, assets or
liabilities of Seller, of the Enterprise Division or of the Assets (regardless
of whether or not such events or changes are consistent with the representations
and warranties given herein by Seller), except changes contemplated by this
Agreement and changes in the ordinary course of business which are not (either
individually or in the aggregate) materially adverse. For purposes of this
SECTION 8.8, a "material adverse change" shall be deemed not to include
continuing losses that are consistent with Seller's historical losses through
December 31, 2000.
8.9 GOVERNMENT CONSENTS
All material consents, orders, permits or authorizations of, or
declarations or filings with, or expiration of waiting periods imposed by, any
governmental entity necessary for transactions contemplated by this Agreement
shall have been filed, expired or been obtained, other than those, that,
individually
-23-
or in the aggregate, the failure to be filed, expired or obtained would not, in
the reasonable opinion of Buyer and the Seller, have a material adverse effect
on Buyer or the Seller. Each of Buyer and the Seller shall be reasonably
satisfied that: (a) (i) the transactions contemplated by this Agreement do not
constitute a merger qualifying for investigation under section 64 of the Fair
Trading ▇▇▇ ▇▇▇▇; or (ii) is not prohibited by section 2 or section 18 of the
Competition Act 1998 and (b) the Agreement does not constitute a "concentration
within a Community dimension" within the meaning of Article 1 of Council
Regulation (EC) 4064/89.
8.10 U.K. TREASURY CONSENT
H.M. Treasury shall have consented pursuant to Section 765(1)(C)
of the Income and Corporation Taxes ▇▇▇ ▇▇▇▇, or H.M. Treasury shall have
confirmed that no such consent is required, in connection with the transactions
contemplated hereby.
8.11 TECHNOLOGY LICENSE AGREEMENT
Buyer and Seller shall have entered into the Technology License
Agreement.
9 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to sell, transfer, convey and deliver
the Assets and to proceed with the Closing are subject to the satisfaction (or
waiver by Seller) at or prior to the Closing of each of the following
conditions:
9.1 REPRESENTATIONS AND COVENANTS
The representations and warranties of Buyer made in this
Agreement or in any other Buyer Document shall have been true and correct in all
material respects when made, and shall be true and correct in all material
respects on the Closing Date as though such representations and warranties were
made on and as of the Closing Date; and Buyer shall have performed and complied
in all material respects with all covenants and agreements required to be
performed or complied with by Buyer prior to the Closing.
9.2 DELIVERY BY BUYER
Buyer shall have delivered to Seller all agreements, instruments
and documents required to be delivered by Buyer to Seller pursuant to SECTION
10.3.
-24-
9.3 LEGAL PROCEEDINGS
No action or proceeding by or before any governmental authority
shall have been instituted or threatened (and not subsequently dismissed,
settled, or otherwise terminated) that might restrain, prohibit, or invalidate
the transactions contemplated by this Agreement, other than an action or
proceeding instituted or threatened by Seller.
9.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
All applicable waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, shall have expired or the
parties have received official notice of early termination of the waiting
period.
9.5 STOCKHOLDER CONSENT AND NOTIFICATION
Seller will have used its best efforts to have obtained the
binding consent of its stockholders to the sale of the Enterprise Division
expeditiously following the date of this Agreement.
10 THE CLOSING
10.1 CLOSING
The Closing hereunder shall be held on a date specified by Buyer
(the "CLOSING DATE"), and in any event not later than two (2) business days
following the satisfaction of all conditions precedent to closing. The Closing
shall be held at 10:00 A.M. local time at the offices of Seller, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other time and place as the
parties may agree.
10.2 DELIVERY BY SELLER
At or before the Closing, Seller shall deliver to Buyer:
10.2.1 AGREEMENTS AND INSTRUMENTS
The following bills of sale, statements, assignments and other
instruments of transfer, dated as of the Closing Date, in form sufficient to
transfer and convey to Buyer title (of the quality provided for in this
Agreement) to the Assets and satisfactory to counsel to Buyer:
(i) the ▇▇▇▇ of Sale;
(ii) the Assignment of Contracts;
-25-
(iii) the Technology License Agreement;
(iv) the Assumption Agreement; and
(v) Such other certificates, opinions, instruments
or documents as Buyer may reasonably request in order to effect and document the
transactions contemplated hereby.
10.2.2 CONSENTS
Copies of all consents necessary to effect valid assignments to
Buyer of all of the contracts and licenses listed on Schedule 3.5(c) and
Schedule 3.6(c), excluding the license to use the Unisys GIF patents.
10.2.3 CERTIFICATE CONCERNING AMENDMENTS AND
ADDITIONAL AGREEMENTS
A certificate of Seller describing all amendments or
modifications to any Contracts or Licenses and all Additional Agreements made or
entered into between the date hereof and the Closing Date, and certifying that
each amendment or modification and/or each such Additional Agreement, as the
case may be, were entered into in accordance with SECTION 6.1.
10.2.4 UCC REPORT
A report dated not more than ten (10) days prior to the Closing
Date of the appropriate filing officers in the jurisdictions specified in
Schedule 10.2.4 regarding absence of filings with their respective offices under
the Uniform Commercial Code of financing statements naming Seller as debtor with
respect to any of the Assets.
10.2.5 CERTIFIED RESOLUTIONS
A copy of the resolutions of directors and shareholders of
Seller, certified as being correct and complete and then in full force and
effect, authorizing the execution, delivery and performance of this Agreement,
and of the other Seller Documents, and the consummation of the transactions
contemplated hereby and thereby (ii) a copy of the by-laws of Seller, and (iii)
copy of the certificate of incorporation of Seller, all certified by the
Secretary of Seller as being true, correct and complete as of the Closing Date;
10.2.6 OFFICERS' CERTIFICATES
(i) A certificate of Seller signed by its President
and Chief Financial Officer certifying that the representations and warranties
of Seller made herein and in the other Seller Documents were true and correct in
all material respects as of the date of this Agreement and are true and correct
in all material
-26-
respects as of the Closing Date, and that Seller has performed and complied in
all material respects with all covenants and agreements required to be performed
or complied with by Seller on or prior to the Closing; and
(ii) A certificate signed by the Secretary of Seller
as to the incumbency of certain officers of Seller.
10.2.7 OPINION OF COUNSEL
An opinion of counsel to Seller, dated the Closing Date,
addressed to Buyer, substantially in the form attached hereto as Exhibit B,
covering the matters addressed under SECTIONS 3.1, 3.2, and 3.8, subject to
customary exclusions for legal opinions rendered by California counsel.
10.3 DELIVERY BY BUYER
At or before the Closing, Buyer shall deliver to Seller:
10.3.1 PURCHASE PRICE PAYMENT
The Purchase Price in the amount and manner set forth in
ARTICLE 2.
10.3.2 AGREEMENTS AND INSTRUMENTS
The following agreements and instruments:
(i) the Assumption Agreement;
(ii) the Technology License Agreement; and
(iii) Such other certificates, instruments or
documents as Seller may reasonably request in order to effect and document the
transactions contemplated hereby.
10.3.3 CERTIFIED RESOLUTIONS
Copies of the resolutions of the directors of Buyer, certified
as being correct and complete and then in full force and effect, authorizing the
execution, delivery and performance of this Agreement and of the other Buyer
Documents, and the consummation of the transactions contemplated hereby and
thereby.
10.3.4 OFFICERS' CERTIFICATE
A certificate of Buyer signed by the President and the Secretary
of Buyer certifying that the representations and warranties of Buyer made herein
were true and correct in all material respects as of the date of this Agreement
and
-27-
are true and correct in all material respects as of the Closing Date, and that
Buyer has performed and complied in all material respects with all covenants and
agreements required to be performed or complied with by Buyer prior to the
Closing.
10.4 APPORTIONMENT AT CLOSING DATE; CUSTOMER BILLING
At the Closing, the parties shall make without duplication the
usual and customary adjustments relating to the Enterprise Division as of close
of business on the business day immediately preceding the Closing Date,
including security deposits, rebates and royalties, deposits and prepaid
expenses and any other ongoing charges and all such payments, taxes and charges
shall be apportioned and adjusted as of close of business on the business day
immediately preceding the Closing Date, and at the Closing the net amount
thereof shall be paid pro rata by Seller to Buyer or by Buyer to Seller, as the
case may be. For assigned Contracts for Business Services under which payment by
the customer is due after the Closing Date on account of both services performed
by Seller prior to the Closing Date and services performed by Buyer after the
Closing Date, Seller and Buyer shall share the payment based upon the
proportionate value of the services rendered by each, as determined in
accordance with the terms of the Contract. Any such apportionments and
adjustments shall be subject to correction for any errors or omissions that
subsequently may be discovered, provided that the party discovering such error
or omission provides written notice of same to the other party not later than
one year after the Closing Date. Such other party shall, within 20 days after
receipt of such notice, reimburse the party delivering such notice for the full
amount of such error or omission. With respect to any prorated items for which
tax credits or expense deductions may be taken, Buyer and Seller shall be
entitled to take such tax credits and expense deductions in accordance with the
liability allocated to each of them, respectively, for such items pursuant to
such prorating.
11 TERMINATION
11.1 TERMINATION
(a) This Agreement may be terminated on or prior to the
Closing Date as follows:
(i) by written consent of Seller and Buyer;
(ii) by Seller or Buyer if it reasonably concludes
that a condition to its obligation to close set forth in ARTICLE 8 or 9, as the
respective case may be, cannot be satisfied prior to March 1, 2001;
-28-
(iii) by Seller if there shall have been a breach by
Buyer, or by Buyer if there shall have been a breach by Seller, of any of their
respective representations and warranties set forth in this Agreement, which
breach would entitle the party receiving the representation or warranty not to
consummate the transactions contemplated hereby under SECTION 8.1 (in the case
of a breach of representation or warranty by Seller) or SECTION 9.1 (in the case
of a breach of representation or warranty by Buyer), which breach shall not have
been cured within 20 Business Days following receipt by the breaching party of
written notice of the breach from Buyer or Seller;
Notwithstanding SECTION 11.1(a)(ii)-(iii) hereof, a
party who is or whose Affiliate is in material breach of any of its obligations
or representations and warranties hereunder shall not have the right to
terminate this Agreement pursuant to SECTION 11.1(a)(ii)-(iii).
(b) The termination of this Agreement shall be effectuated
by the delivery by the party terminating this Agreement to the other party of a
written notice of the termination. If this Agreement so terminates, it shall
become null and void and have no further force or effect, except as provided in
SECTION 11.2.
11.2 SURVIVAL AFTER TERMINATION
If this Agreement is terminated in accordance with SECTION 11.1
hereof and the transactions contemplated hereby are not consummated, this
Agreement shall become void and of no further force and effect, except for the
provisions of SECTIONS 6.6 and 7.2 and ARTICLES 13, 21 and 22 provided, however,
that the termination shall not relieve any party of any liability for any breach
of this Agreement.
12 CONDUCT FOLLOWING CLOSING
12.1 ACCESS TO INFORMATION
After the Closing Date, Buyer will provide to Seller and to
Seller's officers, employees, counsel and other representatives upon request
(subject to any limitations that are reasonably required to preserve any
applicable attorney-client privilege or third-party confidentiality obligation),
reasonable access for inspection and copying of any Business Records,
Governmental Permits, Contracts, Licenses and any other information existing as
of the Closing Date and relating to the Business which Seller reasonably chose
not to copy prior to the Closing Date.
-29-
12.2 ACCESS TO PERSONNEL
After the Closing Date, Seller and Buyer will make their
respective personnel reasonably available for interviews, depositions and
testimony in any legal matter concerning transactions, operations or activities,
relating to the Business or the Purchased Assets prior to the Closing Date, and
as otherwise may be necessary or desirable to enable the party requesting such
assistance to (i) comply with reporting, filing or other requirements imposed by
any foreign, local, state or federal court, agency or regulatory body; (ii)
assert or defend any claims or allegations in any litigation or arbitration or
in any administrative or legal proceeding other than claims or allegations that
one party to this Agreement has asserted against the other; or, (iii) subject to
clause (ii) above, perform its obligations under this Agreement. The party
requesting such information or assistance shall reimburse the other party for
all out-of-pocket costs and expenses incurred by such party in providing such
information and in rendering such assistance.
12.3 TRADEMARK ABANDONMENT
Within five (5) business days after the Closing Date, Buyer
shall file with the U.S. Patent and Trademark Office an express abandonment of
the pending application for federal registration of NETOBJECTS COLLAGE, U.S.
Trademark Application Serial No. 75/919,260, and Buyer shall, within ten (10)
business days after the Closing Date, provide Seller proof that such express
abandonment was filed. Furthermore, Buyer shall provide a copy of the
notification from the U.S. Patent and Trademark Office that such express
abandonment has been accepted, within ten (10) business days of Buyer receiving
such notification.
13 PROTECTION OF PROPRIETARY INFORMATION
13.1 AGREEMENT TO KEEP CONFIDENTIAL
Except as provided in SECTION 6.2, between the date of this
Agreement and for a period of three years following the Closing Date, Buyer and
Seller agree that each will use the same procedures to keep confidential all of
the other's proprietary information, on a confidential basis that is received
from, or made available by, the other in the course of the transactions
contemplated hereby, as it uses to protect its own confidential information.
Such information includes, for purposes of this ARTICLE 12, information about
the other's business plans and strategies, marketing ideas and concepts,
especially with respect to unannounced products and services, present and future
product plans, pricing, volume estimates, financial data, product enhancement
information, business plans, marketing plans, sales strategies, customer
information (including customers' applications and environments), market testing
information, development plans, specifications,
-30-
customer requirements, configurations, designs, plans, drawings, apparatus,
sketches, software, hardware, data, prototypes, and business information, if
such information is marked as "Confidential Information."
13.2 SELLER'S OBLIGATION
Except as provided in SECTION 6.2, Seller shall use the same
procedures to keep confidential the proprietary information conveyed to Buyer as
part of the Assets as Seller uses to protect its own confidential information.
13.3 INFORMATION NOT CONFIDENTIAL
Notwithstanding the foregoing, such proprietary information
shall not be deemed confidential and no party hereto shall have any obligation
with respect to any such Proprietary Information that:
(a) was already known to such party;
(b) is or becomes publicly known through
publication, inspection of a product, or otherwise, and through no negligence or
other wrongful act of such party;
(c) is received by such party from a third party
without similar restriction and without breach of this Agreement;
(d) is independently developed by such party; or
(e) is required to be disclosed under applicable law
or judicial process, including reports required to be publicly filed with the
Securities and Exchange Commission.
13.4 PROTECTIVE ORDER
If any party hereto is requested or required (by oral questions,
interrogatories, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any proprietary
information, such party will promptly notify the other party of such request or
requirement and will cooperate with such other party's efforts to seek an
appropriate protective order or other appropriate remedy. If, in the absence of
a protective order or the receipt of a waiver hereunder, any party is in the
written opinion of such party's counsel compelled to disclose the proprietary
information or else stand liable for contempt or suffer other censure or
significant penalty, such party may disclose only so much of the proprietary
information to the third party compelling disclosure as is required by law. In
such case, such party will exercise its good faith efforts to obtain a
-31-
protective order or other reliable assurance that confidential treatment will be
accorded to such proprietary information.
14 AGREEMENT NOT TO COMPETE
In connection with the transactions contemplated by this
Agreement, the Seller, covenants and agrees that it shall not compete at any
time, directly or indirectly with Buyer in owning, managing, operating,
controlling or being a consultant to, participating or having any ownership
interest in, or being connected in any material respect with the ownership,
management, operation or control of any enterprise which engages in the business
of providing software services similar to that of the Enterprise Division for a
period of two (2) years following the Closing Date.
15 POSSESSION AND CONTROL
Between the date hereof and the Closing Date, Buyer shall not
directly or indirectly control, supervise or direct, or attempt to control,
supervise or direct, the business and operations of the Enterprise Division, and
such operation, including complete control and supervision of all programs,
shall be the sole responsibility of Seller; provided, however, that Buyer shall
be entitled to inspect the Assets as provided in SECTION 6.2 so that an
uninterrupted and efficient transfer of ownership may be effected. On and after
the Closing Date, Seller shall have no control over, or right to intervene or
participate in, the business and operations of the Enterprise Division.
16 RISK OF LOSS
The risk of loss or damage by fire or other casualty or cause to
the Assets until the Closing Date shall be upon Seller. In the event of such
loss or damage prior to the Closing Date, Seller shall make commercially
reasonable efforts to promptly restore, replace or repair the damaged Assets to
their previous condition at Seller's sole cost and expense. In the event such
loss or damage shall not be restored, replaced, or repaired as of the Closing
Date, Buyer shall, at its option, either:
(a) proceed with the Closing and receive all insurance
proceeds to which Seller would be entitled as a result of such loss or damage;
provided, however, that if such proceeds do not equal the loss, Seller shall pay
the deficiency to Buyer, or
(b) defer the Closing Date until such restorations,
replacements or repairs are made (provided that no such deferral shall affect
the rights of the
-32-
parties hereto to terminate this Agreement pursuant to the provisions of ARTICLE
11).
17 SURVIVAL; INDEMNIFICATION
17.1 SURVIVAL OF SELLER'S REPRESENTATIONS
The representations and warranties made by Seller in this
Agreement or pursuant hereto shall survive the Closing Date for a period of
sixteen (16) months, and shall also survive and shall be unaffected by (and
shall not be deemed waived by) any investigation, audit, appraisal, or
inspection at any time made by or on behalf of Buyer, provided, however, that
the representations and warranties made in SECTIONS 3.5 and 3.6, and all other
representations and warranties as they relate to the Excluded Assets or the
non-Enterprise Division portion of the Seller's business or any liability not
expressly assumed by Buyer, shall survive indefinitely. However, a cause of
action arising under any representation or warranty which terminates on the date
which is sixteen (16) months after the Closing Date shall be preserved to the
extent that notice of a Claim in accordance with SECTION 17.5 hereof shall have
been delivered on or before such date to Seller..
17.2 INDEMNIFICATION BY SELLER
17.2.1 SELLER INDEMNIFIED LOSSES
Subject to the conditions and provisions of SECTION 17.5, Seller
agrees to indemnify, defend and hold harmless Buyer from and against any and all
demands, claims, complaints, actions or causes of action, suits, proceedings,
investigations, arbitrations, assessments, losses, damages, liabilities, costs
and expenses, including, but not limited to, interest, penalties and reasonable
attorneys' fees and disbursements (together, "LOSSES"), asserted against,
imposed upon or incurred by Buyer, directly or indirectly, by reason of or
resulting from (a) any liability or obligation of or claim against Seller or
Buyer (whether absolute, accrued, contingent or otherwise and whether a
contractual, tax or any other type of liability or obligation or claim) not
expressly assumed by Buyer pursuant to SECTION 2.4, arising out of, relating to
or resulting from the businesses of Seller, or relating to or resulting from the
Assets or the business and operations of the Enterprise Division during the
period prior to the Closing Date; (b) any misrepresentation or breach of the
representations and warranties of Seller contained in or made pursuant to this
Agreement or any other Seller Document; or (c) any noncompliance by Seller with
any covenants, agreements or undertakings of Seller contained in or made
pursuant to this Agreement or any other Seller Document. In the event of any
indemnification of Buyer pursuant to this SECTION 17.2, Buyer shall be entitled,
in addition to its rights and remedies at law or in equity, to deduct the amount
of such
-33-
indemnification from any payment made to Buyer in connection with this Agreement
or the transactions contemplated hereby.
17.2.2 LIMITATIONS ON SELLER LIABILITY
Seller's liability for claims made under SECTION 17.2.1 shall be
subject to the following limitations: (i) Seller shall have no liability for any
claims under $10,000 or until the aggregate amount of the Losses incurred by
Buyer shall exceed $70,000, in which case Seller shall become liable for all
Losses and not just the portion of the Losses exceeding $70,000 and (ii)
Seller's aggregate liability for all Losses claimed under SECTION 17.2.1 shall
not exceed $10 million; provided, however, that Seller's aggregate liability for
any breach of the representations and warranties in SECTIONS 3.5 and 3.6 shall
not be subject to the foregoing limitations and provided, further, that Buyer
shall be able to recover in full for any Losses incurred as a result of a claim
brought against Buyer resulting from the Excluded Assets (other than matters
subject to the Technology License Agreement, which will be subject to the
foregoing limitations) or the non-Enterprise Division portion of the Seller's
business or any liability not expressly assumed by Buyer pursuant to SECTION 2.4
of this Agreement. Buyer may not make a claim for indemnification under SECTION
17.2.1 for breach by Seller of a particular representation or warranty after the
expiration of the survival period specified in SECTION 17.1.
17.3 SURVIVAL OF BUYER'S REPRESENTATIONS
The representations and warranties made by Buyer in this
Agreement or pursuant hereto shall survive the Closing Date for a period of
sixteen (16) months. However, a cause of action arising under any representation
or warranty which terminates on the date which is sixteen (16) months after the
Closing Date shall be preserved to the extent that notice of a Claim in
accordance with SECTION 17.5 hereof shall have been delivered on or before such
date to Buyer.
17.4 INDEMNIFICATION BY BUYER
17.4.1 BUYER INDEMNIFIED LOSSES
Subject to the conditions and provisions of SECTION 17.5, Buyer
hereby agrees to indemnify, defend and hold harmless Seller from and against all
demands, claims, complaints, actions or causes of action, suits, proceedings,
assessments, losses, damages, liabilities, costs and expenses, including, but
not limited to, interest, penalties and reasonable attorneys' fees and
disbursements, asserted against, imposed upon or incurred by Seller, directly or
indirectly, by reason of or resulting from (a) any liability or obligation of or
claims against Seller (whether absolute, accrued, contingent or otherwise and
whether contractual, tax or any other type of liability or obligation or claim)
expressly assumed by Buyer hereunder, arising out of, relating to or resulting
from the business of Buyer, or relating to or
-34-
resulting from the Assets or the business and operations of the Enterprise
Division during the period after the Closing Date; (b) any misrepresentation or
breach of the representations and warranties of Buyer contained in or made
pursuant to this Agreement; or (c) any noncompliance by Buyer with any
covenants, agreements or undertakings of Buyer contained in or made pursuant to
this Agreement.
17.4.2 LIMITATIONS ON BUYER LIABILITY
Buyer's liability for claims made under SECTION 17.4.1 shall be
subject to the following limitations: (i) Buyer shall have no liability for any
claims under $10,000 or until the aggregate amount of the Losses incurred by
Seller shall exceed $70,000, in which case Buyer shall become liable for all
Losses and not just the portion of the Losses exceeding $70,000 and (ii) Buyer's
aggregate liability for all Losses claimed under SECTION 17.4.1 shall not exceed
$10 million.
17.5 CONDITIONS OF INDEMNIFICATION
The obligations and liabilities of Seller and of Buyer hereunder
with respect to their respective indemnities pursuant to this ARTICLE 17,
resulting from any claim or other assertion of liability by third parties
(hereinafter called collectively, "CLAIMS"), shall be subject to the following
terms and conditions:
(a) The party seeking indemnification (the "INDEMNIFIED
PARTY") must give the other party or parties, as the case may be (the
"INDEMNIFYING PARTY"), notice of any such Claim promptly after the Indemnified
Party receives notice thereof, and the Indemnified Party must give the
Indemnifying Party such information with respect to such Claim as the
Indemnifying Party may reasonably request;
(b) The Indemnifying Party shall have the right, but not the
obligation, exercisable by written notice to the Indemnified Party within 30
days of receipt of notice of the Claim, to undertake, by counsel or other
representatives of its own choosing, the defense of such claim and, subject to
the other provisions of this SECTION 17.5, control the settlement of such Claim;
(c) In the event that the Indemnifying Party shall not elect
to undertake such defense within the time provided, the Indemnified Party shall
have the right to undertake the defense, compromise or settlement of such Claim,
by counsel or other representatives of its own choosing, on behalf of and for
the account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Claim at any time prior to
settlement, compromise or final determination thereof); and
(d) If there is a reasonable probability that a Claim may
materially and adversely affect the Indemnified Party other than as a result of
money damages
-35-
or other money payments, (i) the Indemnified Party shall have the right, at its
own cost and expense, to participate in the defense, compromise or settlement of
the Claim, (ii) the Indemnifying Party shall not, without the Indemnified
Party's written consent, settle or compromise any Claim or consent to entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such Claim, and (iii) in the event that the Indemnifying
Party undertakes defense of any Claim, the Indemnified Party, by counsel or
other representative of its own choosing and at its sole cost and expense, shall
have the right to consult with the Indemnifying Party and its counsel or other
representatives concerning such Claim and the Indemnifying Party and the
Indemnified Party and their respective counsel or other representatives shall
cooperate with respect to such Claim.
(e) In the event a claim for indemnification is made by
Buyer based on an alleged breach by Seller of SECTION 3.5 or 3.6 (an
"Infringement Claim"), in lieu of the procedures set forth in SECTION 17.5(d),
the following procedures shall apply: Buyer shall have the right to participate
in (but not control), at its expense, the defense of any Infringement Claim that
Seller is defending as provided in this Agreement. Buyer shall cooperate with
Seller in a reasonable way to facilitate the settlement or defense of such
Infringement Claim, and shall not acknowledge the validity of any alleged
Infringement Claim or of any patent, copyright or any third party, or otherwise
make statements that could reasonably be expected to have the effect of
hampering or undermining Seller's defense or settlement of the Infringement
Claim. Seller shall not, without Buyer's prior written consent, enter into any
compromise or settlement that (i) commits Buyer to take, or forbear to take, any
action, other than the payment of a reasonable royalty or other reasonable
compensation for the use of Third Party Intellectual Property Rights or (ii)
does not obtain for Buyer the right to continued use of the allegedly infringing
information unless Seller has (y) procured for Buyer the right to continue using
such Third Party Intellectual Property Rights or (z) provided instructions to
replace or modify the same so that it is not subject to such Infringement Claim
and is functionally equivalent, in each case in clauses (i) and (ii), upon
commercially reasonable terms for the industries in which the Enterprise
Division participates.
17.6 DAMAGES
Notwithstanding anything contained in this Agreement to the
contrary, no party shall be liable to the other party for indirect, special, or
punitive loss or damage arising out of this Agreement. Each party agrees to
mitigate its losses.
-36-
18 VALUE OF ASSETS
Seller and Buyer each represent, warrant, covenant, and agree
with each other that the Purchase Price shall be allocated among the Assets, by
April 30, 2001. Seller and Buyer agree, pursuant to Section 1060 of the Internal
Revenue Code of 1986, as amended, that the Purchase Price shall be allocated in
accordance with this ARTICLE 18, and that all income tax returns and reports
shall be filed consistent with such allocation. Buyer and Seller agree to
allocate Ten Thousand Dollars ($10,000) of the Purchase Price to the reasonable
value of tangible property used to transfer intangible property from Seller to
Buyer in accordance with California Revenue and Taxation Code Section
6012(c)(10). Notwithstanding any other provision of this Agreement, the
provisions of this ARTICLE 18 shall survive the Closing Date without limitation.
19 REMEDIES
19.1 EXCLUSIVE REMEDIES
The right of termination provided in SECTION 11 of this
Agreement, the right of indemnity provided in SECTION 17 of this Agreement and
the right of setoff provided in SECTION 19.2 of this Agreement shall be the
exclusive remedies of Seller and Buyer against the other for any and all claims
arising under or in connection with this Agreement; provided, however, that
Buyer shall have the right to pursue any other remedies it has at law or in
equity or otherwise with respect to (i) claims of intentional misrepresentation
or fraud by Seller, its directors, officers, employees, representatives or
Affiliates, or (ii) any criminal matters committed by Seller, its officers,
directors, employees, representatives or Affiliates.
19.2 FAILURE OF SELLER TO PAY
If Seller shall fail to pay in a timely manner any amount
becoming due under this Agreement or any other Seller Documents, or fail to pay
or indemnify Buyer pursuant to SECTION 17.2 within thirty (30) days of notice by
Buyer to Seller, then Buyer shall be entitled to set off such amounts due
against payments otherwise due to Seller pursuant to this Agreement; provided,
however, that Buyer's set off of such amounts shall be in addition to, and not
in substitution for, any other rights or remedies which Buyer may have pursuant
to this Agreement or any other Buyer Document, or at law or in equity or
otherwise.
20 ADDITIONAL ACTIONS AND DOCUMENTS
Each of the parties hereto agrees that it will, at any time,
prior to, at or after the Closing Date, take or cause to be taken such further
actions, and
-37-
execute, deliver and file or cause to be executed, delivered and filed such
further documents and instruments, and obtain such consents, as may be necessary
or reasonably requested in connection with the consummation of the purchase and
sale contemplated by this Agreement or in order to fully effectuate the
purposes, terms and conditions of this Agreement.
21 BROKERS
Seller represents to Buyer that, except for the brokerage fees
payable to Broadview International LLC described in ARTICLE 22, Seller has not
engaged, or incurred any unpaid liability (for any brokerage fees, finders'
fees, commissions or otherwise) to, any broker, finder or agent in connection
with the transactions contemplated by this Agreement; Buyer represents to Seller
that Buyer has not engaged, or incurred any unpaid liability (for any brokerage
fees, finders' fees, commissions or otherwise) to, any broker, finder or agent
in connection with the transactions contemplated by this Agreement; and Seller
agrees to indemnify Buyer, and Buyer agrees to indemnify Seller, against any
claims asserted against the other parties for any such fees or commissions by
any person purporting to act or to have acted for or on behalf of the
indemnifying party. Notwithstanding any other provision of this Agreement, this
representation and warranty shall survive the Closing without limitation.
22 EXPENSES
Except as set forth in this Article 22, each party hereto shall
pay its own expenses incurred in connection with this Agreement and in the
preparation for and consummation of the transactions provided for herein
including that Seller shall pay all brokerage fees owed to Broadview
International LLC. In the event that the Closing contemplated by this Agreement
does not take place by January 31, 2001, for reason other than the fault of
Seller (including its failure to obtain shareholder approval of the transaction,
its failure to complete its filings and notifications required by the Securities
and Exchange Commission or its failure to obtain the consents required by
SECTION 8.2) then Buyer shall, within 30 days following receipt of Seller's
invoice, reimburse Seller for the portion of the reasonable net expenses of the
Enterprise Division incurred by Seller after January 31, 2001 and until March 1,
2001; provided, however, that Buyer does not assume any liability to any third
parties for such expenses.
23 NOTICES
All notices, demands, requests, or other communications which
may be or are required to be given or made by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered,
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid, delivered by
-38-
overnight air courier, or transmitted by telegram, telex, or facsimile
transmission addressed as follows:
(i) If to Buyer:
MERANT plc
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. Silver
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Seller:
NetObjects, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
McCutchen, Doyle, ▇▇▇▇▇ & Enersen, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as the addressee may indicate by written
notice to the other parties.
Each notice, demand, request, or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it is delivered to the addressee (with
the return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a telex) the answerback being deemed conclusive but not exclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
-39-
24 WAIVER
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
25 BENEFIT AND ASSIGNMENT
Except as hereinafter specifically provided in this ARTICLE 25,
no party hereto shall assign this Agreement, in whole or in part, whether by
operation of law or otherwise, without the prior written consent of Seller (if
the assignor is Buyer) or Buyer (if the assignor is Seller); and any purported
assignment contrary to the terms hereof shall be null, void and of no force and
effect. In no event shall any assignment by Seller of its rights and obligations
under this Agreement, whether before or after the Closing, release Seller from
its liabilities hereunder. Notwithstanding the foregoing, Buyer or any permitted
assignee of Buyer may assign this Agreement and any and all rights hereunder, in
whole or in part, to any subsidiary of Buyer or to any entity in which the
controlling shareholders of Buyer maintain control.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns as
permitted hereunder. No person or entity other than the parties hereto is or
shall be entitled to bring any action to enforce any provision of this Agreement
against any of the parties hereto, and the covenants and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be enforceable only
by, the parties hereto or their respective successors and assigns as permitted
hereunder.
26 REMEDIES CUMULATIVE
Except as specifically provided herein, the remedies provided
herein shall be cumulative and shall not preclude the assertion by Seller or by
Buyer of any other rights or the seeking of any other remedies against the
other, or its successors or assigns. Nothing contained herein shall preclude a
party from seeking equitable relief, where appropriate.
-40-
27 ENTIRE AGREEMENT; AMENDMENT
This Agreement, including the Schedules and Exhibits hereto and
the other instruments and documents referred to herein or delivered pursuant
hereto, contains the entire agreement among the parties with respect to the
subject matter hereof, with the exclusion of the Option Agreement between the
parties hereto dated as of December 19, 2000, which survives the execution of
this Agreement, and supersedes all prior oral or written agreements, including
the Nondisclosure Agreement between the parties hereto dated as of August 31,
2000, commitments or understandings with respect to such matters. This Agreement
shall govern in the event of a conflict between this Agreement and the Option
Agreement. No amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by the party
against whom enforcement of the amendment, modification or discharge is sought.
28 SEVERABILITY
If any part of any provision of this Agreement or any other
agreement, document or writing given pursuant to or in connection with this
Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said agreement.
29 HEADINGS
The headings of the sections and subsections contained in this
Agreement are inserted for convenience only and do not form a part or affect the
meaning, construction or scope thereof.
30 GOVERNING LAW
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed under and in accordance with the laws of the State of Delaware,
excluding the choice of law rules thereof.
31 DEFINITIONS AND REFERENCES
As used herein, the following terms shall have the meanings set
forth below, unless the context otherwise requires:
-41-
"ADDITIONAL AGREEMENTS" shall have the meaning set forth in
SECTION 6.1.3.
"AFFILIATE" of any specified entity means any other person or
entity directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified entity. For the purposes of this
definition, "CONTROL" when used with respect to any specified entity means the
power to direct the management and policies of such entity, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"CONTROLLING" and "CONTROLLED" have correlative meanings to the foregoing.
"ASSIGNMENT OF CONTRACTS" means that certain Assignment of
Contracts, dated as of the Closing Date and executed by Sellers, substantially
in the form attached hereto as Exhibit C.
"ASSUMPTION AGREEMENT" means that certain Assumption Agreement,
dated the Closing Date and executed by Buyer and Sellers, substantially in the
form attached hereto as Exhibit D.
"▇▇▇▇ OF SALE" means that certain ▇▇▇▇ of Sale and Assignment of
Assets, dated as of the Closing Date and executed by Sellers, substantially in
the form attached hereto as Exhibit E.
"BUSINESS PRODUCTS" means any and all versions of the following
software products of the Enterprise Division: NetObjects TeamFusion, NetObjects
Authoring Server and NetObjects Collage version 1.5 (consisting of the software
products identified in Schedule C "Collage Standard Licensing Package" and
Schedule D "Collage Additional Licensing Options" to Licensor's standard Collage
Software License and Services Agreement), and also means NetObjects Collage
version 2.0 as of the date of its first commercial shipment by NetObjects, and
any other versions, releases, editions and upgrades to Collage during the term
of this Agreement (and includes both source code and object code versions
thereof and any and all prior releases or versions thereof), and related
documentation (including, without limitation, user and training manuals and
technical documentation).
"BUSINESS PRODUCTS PATENTS" means the patents used in making,
buying, licensing or selling, or offering to license or sell the Business
Products, as identified on Schedule 31.
"BUSINESS SERVICES" means any consulting, training, evaluating
or similar service provided by Seller's Enterprise Division and related to the
Business Products.
"BUSINESS TRADEMARKS" means the Seller's registered and
unregistered trademarks used in connection with marketing, licensing and selling
the Business Products and Business Services, except for the name "NetObjects" in
-42-
any form or style of ▇▇▇▇, or in any manner or means of communication of such
name, including but not limited to the following: NetObjects Collage, NetObjects
Authoring Server, and NetObjects Content Contributor Client.
"BUYER DOCUMENTS" shall mean, collectively, this Agreement, the
Deposit Escrow Agreement, the Agreement Not To Compete, the Assumption
Agreement, and the Post-Closing Escrow Agreement. "CLAIMS" shall have the
meaning specified in SECTION 17.5.
"CLOSING" means the closing of the purchase, assignment and sale
of the Assets contemplated hereunder.
"CLOSING DATE" means the time and date on which the Closing
takes place, as established by SECTION 10.1.
"DESIGNATED EMPLOYEES" shall mean those employees of Sellers
engaged in and necessary to the operation of the Enterprise Division, as listed
in Schedule 31.
"ENCUMBRANCES" mean any mortgages, pledges, liens, claims,
security interests, agreements, restrictions, defects in title, easements,
encumbrances, or charges.
"ENTERPRISE DIVISION" means that portion of the Seller's
business which involves the development, marketing, license and sale of products
used for an integrated content management environment for teams of web
contributors and developers, while providing centralized control over the site
production effort; professional services for the training and installation of
such products; and the personnel employed by Seller directly in the development,
marketing and licensing of such products, and performance of such services.
"ENTERPRISE DIVISION INTELLECTUAL PROPERTY" shall have the
meaning specified in SECTION 3.6(a).
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the
respective meanings specified in SECTION 17.5(a).
"INTELLECTUAL PROPERTY" means all patents, trademarks (and
associated goodwill), trade names, service marks, copyrights and any
applications therefor, schematics, technology, know-how, trade secrets,
inventory, ideas, algorithms, processes, computer software programs and
applications (in both source code and object code form), inventions (whether or
not patentable), improvements, and tangible or intangible proprietary
information or material.
"PURCHASE PRICE" shall have the meaning specified in
SECTION 2.2.
-43-
"SELLER DOCUMENTS" shall mean, collectively, this Agreement, the
Assignment of Leases, the ▇▇▇▇ of Sale, the Assignment of Licenses, the
Assignment of Contracts, the Agreement Not To Compete, the Assumption Agreement,
and the Post-Closing Escrow Agreement.
"SOFTWARE" means (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, specifications, techniques, designs, files, flow-charts and other
work product used to design, plan, organize and develop any of the foregoing,
and (iv) all documentation, including user manuals and training materials,
relating to any of the foregoing, in each case owned or licensed by Seller and
used in connection with the exploitation of the Business Products.
Notwithstanding the foregoing, Software does not include those items prepared
for customers in the operation of Seller's business for which the customer
contractually has vested sole title.
"THIRD PARTY INTELLECTUAL PROPERTY RIGHTS" shall have the
meaning specified in SECTION 3.6(b).
All references to clauses, Sections, Exhibits and Schedules are
to Sections of and Exhibits and Schedules to this Agreement.
32 SIGNATURE IN COUNTERPARTS
This Agreement may be executed in separate counterparts, none of
which need contain the signatures of all parties, each of which shall be deemed
to be an original, and all of which taken together constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
-44-
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or has caused this Agreement to be duly executed and delivered in its
name on its behalf, all as of the day and year first above written.
NETOBJECTS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
MERANT INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
-45-