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EXHIBIT 2.1
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
by and among
JDA Software Group, Inc.,
a Delaware corporation
and
JDA Software, Inc.,
an Arizona corporation and a wholly-owned subsidiary of JDA Software Group, Inc.
as "Purchaser"
and
Comshare, Incorporated,
a Michigan corporation
as "Seller"
with respect to Seller's ▇▇▇▇▇▇ and Boost Sales and Margin Planning Software
Products
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Dated as of June 4, 1998
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TABLE OF CONTENTS
Article Page
I DEFINITIONS........................................................................1
1.1. "Accounts Receivable".....................................................1
1.2. "Acquisition".............................................................1
1.3. "Affiliate"...............................................................1
1.4. "Affiliate Distributor Agreements"........................................1
1.5. "Ancillary Agreements"....................................................2
1.6. "Assets"..................................................................2
1.7. "Assumed Contracts".......................................................2
1.8. "Assumed Liabilities".....................................................2
1.9. "▇▇▇▇ of Sale, Assignment and Assumption Agreement".......................2
1.10. "Business Records"........................................................2
1.11. "Closing".................................................................2
1.12. "Closing Date"............................................................2
1.13. "COBRA"...................................................................2
1.14. "Code"....................................................................2
1.15. "Competitor Retail Software Vendor".......................................2
1.16. "Consultants".............................................................2
1.17. "Contracts"...............................................................2
1.18. "Covenant Not to Compete".................................................3
1.19. "Cross-License Agreement".................................................3
1.20. "Customer License Agreements".............................................3
1.21. "Deferred Revenue"........................................................3
1.22. "Dollars" or "dollars"....................................................3
1.23. "Employee Termination Date"...............................................3
1.24. "Employees"...............................................................3
1.25. "Encumbrances"............................................................3
1.26. "ERISA"...................................................................3
1.27. "Escrow Fund".............................................................3
1.28. "Escrow Fund Agreement"...................................................3
1.29. "Exchange Act"............................................................4
1.30. "Excluded Assets".........................................................4
1.31. "Excluded Liabilities"....................................................4
1.32. "Facilities"..............................................................4
1.33. "Financial Statements"....................................................4
1.34. "GAAP"....................................................................4
1.35. "Governmental Entity".....................................................4
1.36. "HSR Act".................................................................4
1.37. "Indemnifiable Losses"....................................................4
1.38. "Indemnification Claim"...................................................4
1.39. "Indemnitor" and "Indemnitee".............................................4
1.40. "Intangibles".............................................................4
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Article Page
1.41. "Knowledge" or "Known"....................................................4
1.42. "Laws or Decrees".........................................................4
1.43. "Liability"...............................................................4
1.44. "License Agreement".......................................................5
1.45. "Licensed Intellectual Property"..........................................5
1.46. "Losses"..................................................................5
1.47. "Material Adverse Change".................................................5
1.48. "Material Adverse Effect".................................................5
1.49. "Negotiation Period"......................................................5
1.50. "New Purchaser Consultants"...............................................5
1.51. "New Purchaser Employees".................................................5
1.52. "Permits".................................................................5
1.53. "Permitted Encumbrances"..................................................5
1.54. "Person"..................................................................6
1.55. "Products"................................................................6
1.56. "Purchase Price"..........................................................6
1.57. "SEC".....................................................................6
1.58. "Securities Act"..........................................................6
1.59. "Seller Intellectual Property"............................................6
1.60. "Seller Losses"...........................................................6
1.61. "Seller Software Programs"................................................6
1.62. "Software Programs".......................................................6
1.63. "Tangible Assets".........................................................6
1.64. "Tax".....................................................................6
1.65. "Tax Return"..............................................................7
1.66. "Third Party Distributor Agreements"......................................7
1.67. "Third Party In-Licenses".................................................7
1.68. "Third Party Software Programs"...........................................7
1.69. "Transferred Intellectual Property".......................................7
1.70. "Transition Distribution Agreement".......................................7
1.71. "Transition Services and Facilities Agreement"............................7
1.72. "Value-Added Reseller Agreement"..........................................7
1.73. "Vehicle Leases"..........................................................7
1.74. "Year 2000 Compliant".....................................................7
II PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES.............................9
2.1. Purchase and Sale of Assets and Assumption of Assumed Liabilities.........9
2.2. Assets....................................................................9
2.3. Excluded Assets..........................................................10
2.4. Assumption of Liabilities................................................10
2.5. Purchase Price...........................................................12
2.6. Escrow Fund..............................................................12
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Article Page
2.7. Allocation...............................................................12
III THE CLOSING.......................................................................12
3.1. The Closing..............................................................12
IV REPRESENTATIONS AND WARRANTIES OF SELLER..........................................12
4.1. Organization.............................................................12
4.2. Subsidiaries.............................................................13
4.3. Authorization............................................................13
4.4. No Conflicts; Consents...................................................13
4.5. Title to Assets; Entire Business.........................................13
4.6. Tangible Assets..........................................................14
4.7. Litigation and Claims....................................................14
4.8. Compliance with Laws and Regulations; Governmental Licenses, Etc.........14
4.9. Labor Matters............................................................14
4.10. Tax Matters..............................................................16
4.11. Financial Statements.....................................................17
4.12. Absence of Certain Changes or Events.....................................17
4.13. Intellectual Property; Proprietary Rights................................18
4.14. Contracts and Arrangements...............................................20
4.15. Insurance................................................................20
4.16. Brokers..................................................................20
4.17. Warranties and Service Payment Obligations...............................20
4.18. Business Records.........................................................21
4.19. SEC Documents............................................................21
V REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................................21
5.1. Organization and Good Standing...........................................21
5.2. Power, Authorization and Validity........................................21
5.3. No Violation of Existing Agreements......................................22
5.4. Compliance With Other Instruments and Laws...............................22
5.5. Litigation...............................................................22
5.6. Brokers..................................................................22
5.7. HSR Act..................................................................22
VI PRE-CLOSING COVENANTS OF SELLER...................................................23
6.1. Advice of Changes........................................................23
6.2. Conduct of Business......................................................23
6.3. Access to Information....................................................24
6.4. Satisfaction of Conditions Precedent.....................................24
6.5. Exclusive Dealings.......................................................24
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VII PRE-CLOSING COVENANTS OF PURCHASER................................................25
7.1. Advice of Changes........................................................25
7.2. Satisfaction of Conditions Precedent.....................................25
VIII MUTUAL COVENANTS..................................................................25
8.1. Regulatory Filings; Consents; Reasonable Efforts.........................25
8.2. HSR Filings..............................................................25
8.3. Further Assurances.......................................................26
IX CONDITIONS TO CLOSING.............................................................26
9.1. Conditions to Each Party's Obligations...................................26
9.2. Conditions to Obligations of Seller......................................27
9.3. Conditions to Obligations of Purchaser...................................28
X POST-CLOSING MATTERS..............................................................30
10.1. New Purchaser Employees..................................................30
10.2. New Purchaser Consultants................................................34
10.3. Affiliate and Third Party Distributor Agreements.........................35
10.4. Obtaining Necessary Consents for Assignment of the Assumed Contracts.....35
10.5. Covenant Not to Compete..................................................35
10.6. Access to Business Records...............................................36
10.7. Confidentiality..........................................................37
10.8. Tax Liability and Tax Returns............................................38
10.9. French Legal Requirements................................................38
10.10. Source Code..............................................................39
10.11. Communications Plan; Press Release.......................................39
10.12. Transition Services......................................................39
10.13. Further Assurances of Seller.............................................39
10.14. Further Assurances of Purchaser..........................................39
10.15. Deferred Revenue.........................................................39
10.16. Additional Covenants of Purchaser........................................40
10.17. Additional Covenants of Seller...........................................40
XI TERMINATION OF AGREEMENT..........................................................41
11.1. Mutual Consent...........................................................41
11.2. Termination by Purchaser.................................................41
11.3. Termination by Seller....................................................41
11.4. Termination for Other Reasons............................................41
11.5. Notice of Termination; Effect of Termination.............................42
11.6. Fees and Expenses........................................................42
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TABLE OF CONTENTS
(continued)
Article Page
XII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.......................42
12.1. Survival of Representations and Warranties...............................42
12.2. Indemnification by Seller................................................43
12.3. Indemnification by Purchaser and Parent..................................45
12.4. Procedures for Indemnification...........................................46
12.5. Defense of Third Party Claims............................................47
12.6. Settlement of Third Party Claims.........................................48
12.7. Escrow Fund..............................................................48
12.8. Escrow Period............................................................48
XIII GENERAL...........................................................................48
13.1. Governing Law............................................................48
13.2. Assignment; Binding upon Successors and Assigns..........................48
13.3. Severability.............................................................48
13.4. Entire Agreement.........................................................49
13.5. Counterparts.............................................................49
13.6. Expenses.................................................................49
13.7. Other Remedies...........................................................49
13.8. Amendment and Waivers....................................................49
13.9. Waiver...................................................................49
13.10. Arbitration..............................................................50
13.11. Notices..................................................................50
13.12. Construction and Interpretation of Agreement.............................51
13.13. No Joint Venture.........................................................51
13.14. Absence of Third Party Beneficiary Rights................................52
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EXHIBITS AND SCHEDULES
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Exhibit Description
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A-1 License Agreement
▇-▇ ▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇-▇ Value-Added Reseller Agreement
A-4 Transition Distribution Agreement
A-5 Transition Services and Facilities Agreement
B Escrow Fund Agreement
C ▇▇▇▇ of Sale, Assignment and Assumption Agreement
D Opinion of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP
E Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ PLLC
Schedule Title
-------- -----
Schedule 1.4 Affiliate Distributor Agreements
Schedule 1.7 Assumed Contracts
Schedule 1.15 Competitor Retail Software Vendors
Schedule 1.16 Consultants
Schedule 1.20 Customer License Agreements
Schedule 1.21 Deferred Revenue
Schedule 1.24 Employees
Schedule 1.41 Knowledge of Senior Officers of Seller
Schedule 1.53 Permitted Encumbrances
Schedule 1.55 Products
Schedule 1.61 Seller Software Programs
Schedule 1.66 Third Party Distributor Agreements
Schedule 1.67 Third Party In-Licenses
Schedule 1.68 Third Party Software Programs
Schedule 1.69 Transferred Intellectual Property
Schedule 1.73 Vehicle Leases
Schedule 2.7 Purchase Price Allocation
Schedule 4.2 Subsidiaries
Schedule 4.4 Conflicts and Required Consents
Schedule 4.7 Litigation and Claims
Schedule 4.9(a) Employee not listed on Schedule 1.24
Schedule 4.9(c) Employee Termination Matters
Schedule 4.9(d) Employment Contracts and Employee Benefits
Schedule 4.9(e) Employee Pension Benefit Plans
Schedule 4.9(f) Medical and Welfare Benefits
Schedule 4.10(c) Tax Audits and Deficiencies
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Schedule 4.11 Financial Statements
Schedule 4.13(b) Current Version of Products
Schedule 4.13(c) Intellectual Property Rights
Schedule 4.13(k) Year 2000 Compliance Problems
Schedule 4.13(l) Product Liability and Warranty Claims
Schedule 4.13(m) Program Errors
Schedule 4.14(a) Current Maintenance Customers
Schedule 4.14(c) Affiliate Distribution Arrangements
Schedule 4.17 Warranties and Service Payment Obligations
Schedule V Purchaser Disclosure Schedule
Schedule 10.1(a) Form of Offer of Employment
Schedule 10.5 Unbilled Deferred Revenue
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* The Registrant agrees to furnish supplementally a copy of any omitted
schedule to the Securities and Exchange Commission upon request.
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
June 4, 1998 by and among JDA SOFTWARE GROUP, INC., a Delaware corporation
("Parent") and JDA SOFTWARE, INC., an Arizona corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), on the one hand, and COMSHARE, INCORPORATED,
a Michigan corporation ("Seller"), on the other hand.
RECITALS
A. Seller is engaged in, among other things, the business of
developing, marketing, selling and supporting advanced technology merchandise
planning software products to customers in the retail industry and in the
consumer packaged goods industry (collectively, the "Business");
B. Seller desires to sell, assign, transfer and convey to Purchaser,
and Purchaser desires to purchase and acquire from Seller, certain of the
software products and other assets of Seller relating to the operation of the
Business, and in connection therewith, Purchaser has agreed to assume certain of
the liabilities of Seller relating to the Business, all on the terms set forth
herein (collectively, the "Acquisition").
NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth or referenced below:
1.1 "Accounts Receivable" shall mean any and all accounts receivable
and notes receivable of or amounts owing or payable to Seller as of the Closing
Date.
1.2. "Acquisition" shall have the meaning set forth in Recital A
hereof.
1.3. "Affiliate" of a Person shall mean any other Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with such Person. For purposes of this definition,
"control" of a Person shall mean the ownership or control of more than fifty
percent (50%) of the voting securities of such Person or the power, by contract
or otherwise, to designate a majority of the members of the board of directors
(or in the case of unincorporated entities, persons exercising similar
functions).
1.4. "Affiliate Distributor Agreements" shall mean those distributor
and other agreements pursuant to which Seller has granted an Affiliate
distribution rights for any Product within a particular territory listed on
Schedule 1.4 attached hereto.
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1.5. "Ancillary Agreements" shall mean the License Agreement, the Cross
License Agreement, the Value-Added Reseller Agreement, the Transition
Distribution Agreement and the Transition Services and Facilities Agreement, in
the forms attached hereto as Exhibits A-1 through A-5 respectively.
1.6. "Assets" shall have the meaning set forth in Section 2.2 hereof.
1.7. "Assumed Contracts" shall mean those Customer License Agreements,
Vehicle Leases and other Contracts listed on Schedule 1.7 attached hereto.
1.8. "Assumed Liabilities" shall have the meaning set forth in Section
2.4(a) hereof.
1.9. "▇▇▇▇ of Sale, Assignment and Assumption Agreement" shall mean
that certain ▇▇▇▇ of Sale, Assignment and Assumption Agreement in the form
attached hereto as Exhibit C, to be executed by the parties at Closing.
1.10. "Business Records" shall mean any and all books, records, files,
drawings, documentation, data or information of Seller that have been or now are
used exclusively in the Business, the Assets or the Assumed Liabilities,
together with all customer records related to those Customer License Agreements
listed on Schedule 1.7, a copy of Seller's report regarding its software bug and
tracking system with respect to the Products and, to the extent allowed by
applicable law, all files and records related to the Employees and the
contractors.
1.11. "Closing" shall have the meaning set forth in Section 3.1 hereof.
1.12. "Closing Date" shall have the meaning set forth in Section 3.1
hereof.
1.13. "COBRA" shall mean the provisions for the continuation of health
care enacted by the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, as set forth in the Code and ERISA, and any amendments thereto and
successor provisions thereof, including any regulations promulgated under the
applicable provisions of the Code and ERISA.
1.14. "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
1.15. "Competitor Retail Software Vendor" shall mean (i) any software
vendor who derives 50% or more of its total revenues from the retail industry,
and (ii) those Persons listed on Schedule 1.15 attached hereto.
1.16. "Consultants" shall mean those independent contractors and other
individuals supplied by third parties who are currently providing Seller with
consulting services related to or in connection with the Business listed on
Schedule 1.16 attached hereto.
1.17. "Contracts" shall mean all written contracts, agreements and
arrangements pursuant to which Seller enjoys any right or benefit or undertakes
any obligation related to the Business or the Products.
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1.18. "Covenant Not to Compete" shall mean, collectively, the covenants
of Seller set forth in Section 10.5 hereof.
1.19. "Cross-License Agreement" shall mean that certain Cross-License
Agreement, in the form attached hereto on Exhibit A-2, to be executed by the
parties at the Closing pursuant to which the Purchaser will grant Seller certain
rights with respect to the Products in connection with Customer License
Agreements to be retained by Seller, and Seller will grant Purchaser certain
rights with respect to software products retained by Seller in connection with
Customer License Agreements to be assigned to Purchaser herewith.
1.20. "Customer License Agreements" shall mean those license agreements
entered into by Seller or its Affiliates with end users of the Products pursuant
to which Seller enjoys any right or benefit or undertakes any obligation related
to any of the Products listed on Schedule 1.20 attached hereto.
1.21. "Deferred Revenue" shall mean (i) the license fees and
maintenance revenue under those Customer License Agreements and Third Party
Distributor Agreements listed on Schedule 1.21 attached hereto that have not yet
been recognized under GAAP because outstanding obligations have not been
fulfilled as of the Closing Date; (ii) prebillings for implementation services
under Assumed Contracts that has not been recognized under GAAP because the work
has not been performed as of the Closing Date; and (iii) prebilled maintenance
under Assumed Contracts or Third Party Distributor Agreements that has not been
recognized under GAAP because the maintenance relates to the maintenance period
after the Closing Date.
1.22. "Dollars" or "dollars" shall mean the lawful currency of the
United States of America.
1.23. "Employee Termination Date" shall mean (a) with respect to any
Employee based in England or Germany, the Closing Date; (b) with respect to any
Employee based in France, the French Operative Date; or (c) with respect to any
Employee based in the United States, the later of (i) June 15, 1998, or if
applicable, (ii) the date upon which such employee has received a valid U.S.
Visa from the U.S. Department of Justice naming Purchaser as the employer of
such person.
1.24. "Employees" shall mean those employees of Seller listed on
Schedule 1.24 attached hereto.
1.25. "Encumbrances" shall mean any and all restrictions on or
conditions to transfer or assignment, claims, liabilities, liens, pledges,
mortgages, restrictions, and encumbrances of any kind, whether accrued,
absolute, contingent or otherwise affecting the Assets.
1.26. "ERISA" shall mean the Employment Retirement Income Security Act
of 1974, as amended from time to time.
1.27. "Escrow Fund" shall have the meaning set forth in Section 2.6
hereof.
1.28. "Escrow Fund Agreement" shall mean that certain Escrow Fund
Agreement, in the form attached hereto as Exhibit B, to be executed by the
parties at the Closing.
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1.29. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended to date.
1.30. "Excluded Assets" shall have the meaning set forth in Section 2.3
hereof.
1.31. "Excluded Liabilities" shall have the meaning set forth in
Section 2.4(c) hereof.
1.32. "Facilities" shall mean those office facilities or other real
property that are currently owned or leased by Seller or its Affiliates and used
in connection with the operation of the Business.
1.33. "Financial Statements" shall have the meaning set forth in
Section 4.11(a) hereof.
1.34. "GAAP" shall mean generally accepted accounting principles, as in
effect in the United States from time to time, as supplemented by Regulation S-X
as promulgated by the SEC, as in effect from time to time, consistently applied.
1.35. "Governmental Entity" shall mean any court, or any federal,
state, municipal, provincial or other governmental authority, department,
commission, board, service, agency, political subdivision or other
instrumentality.
1.36. "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended from time to time.
1.37. "Indemnifiable Losses" shall have the meaning set forth in
Section 12.2(a) hereof.
1.38. "Indemnification Claim" shall have the meaning set forth in
Section 12.4(b) hereof.
1.39. "Indemnitor" and "Indemnitee" shall have the respective meanings
set forth in Section 12.4(a) hereof.
1.40. "Intangibles" shall mean guarantees, rights, warranties, claims,
chooses in action, causes of action, demands, rights of recovery, suits,
covenants not to compete and other rights in favor of Seller relating
exclusively to the Assets.
1.41. "Knowledge" or "Known" when used (a) with reference to Seller
shall mean the current actual Knowledge of any of the persons listed on Schedule
1.41 and (b) with reference to Purchaser, it shall mean the current actual
Knowledge of the senior officers of Purchaser.
1.42. "Laws or Decrees" shall mean all applicable foreign, federal,
state, provincial and local laws, ordinances, rules, statutes, regulations and
all orders, writs, injunctions, awards, judgments or decrees.
1.43. "Liability" shall mean any direct or indirect liability,
indebtedness, obligation, guarantee or endorsement, whether known or unknown,
whether accrued or unaccrued, whether absolute or contingent, whether due or to
become due, or whether liquidated or unliquidated, of Seller relating to the
Business or the Assets.
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1.44. "License Agreement" shall mean that certain License Agreement, in
the form attached hereto as Exhibit A-1, to be executed by the parties at the
Closing pursuant to which Seller shall grant Purchaser a non-exclusive license
to use certain of its retained Intellectual Property in connection with the
Products.
1.45. "Licensed Intellectual Property" means the Intellectual Property
to be licensed by Seller to Purchaser pursuant to the License Agreement, the
Cross-License Agreement, the Value-Added Reseller Agreement or the Transition
Distribution Agreement.
1.46. "Losses" shall mean any loss, demand, action, cause of action,
assessment, damage, liability, cost or expense, including without limitation,
interest, penalties and reasonable attorneys' and other professional fees and
expenses incurred in the investigation, prosecution, defense or settlement
thereof or in asserting any rights hereunder, but excluding any consequential
damages related thereto other than consequential damages actually awarded to a
third party as a result of a claim by such third party against a party hereto.
1.47. "Material Adverse Change" shall mean any material adverse change
in the operations, properties, financial condition, or results of operations
relating to the Business, the Assets or the Assumed Liabilities, taken as a
whole.
1.48. "Material Adverse Effect" shall mean any material adverse effect
on the operations, properties, financial condition, or results of operations
relating to the Business, the Assets or the Assumed Liabilities, taken as a
whole.
1.49. "Negotiation Period" shall have the meaning set forth in Section
12.4(d) hereof.
1.50. "New Purchaser Consultants" shall mean the Consultants who are
engaged by Purchaser from and after the Closing Date.
1.51. "New Purchaser Employees" shall mean the Employees who accept
employment with Purchaser effective from and after the Employee Termination
Date.
1.52. "Permits" shall mean any licenses, permits, authorizations,
certificates, franchises, variances, waivers, consents and other approvals from
any Governmental Entity relating to the Business or the Products.
1.53. "Permitted Encumbrances" shall mean (a) liens for current taxes
which are not past due, and liens described in any schedule hereto which secure
Assumed Liabilities, (b) easements, covenants, rights-of-way or other similar
restrictions and imperfections of title reasonably acceptable to counsel to
Purchaser, (c) liens of mechanics, materialmen, laborers, warehousemen, carriers
and other similar common law or statutory liens arising in the ordinary course
of business which are not yet due and payable or, if due and payable, have been
adequately bonded or are being contested in good faith, (d) Customer License
Agreements, (e) Affiliate Distributor Agreements, (f) Third Party Distributor
Agreements and (g) as listed on Schedule 1.53.
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1.54. "Person" shall mean an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a Governmental Entity.
1.55. "Products" shall mean those Seller Software Programs listed on
Schedule 1.55 attached hereto.
1.56. "Purchase Price" shall have the meaning set forth in Section 2.5
hereof.
1.57. "SEC" shall mean the Securities and Exchange Commission of the
United States of America.
1.58. "Securities Act" shall mean the Securities Act of 1933, as
amended to date.
1.59. "Seller Intellectual Property" shall mean all intellectual
property owned by Seller, or otherwise licensed to Seller pursuant to Third
Party In-Licenses, and used by Seller to develop, sell, market, distribute,
operate or incorporate into the Products, including, without limitation,
patents, patent applications, patent rights, trademarks, trademark applications
and registrations, trade names, service marks, service ▇▇▇▇ applications and
registrations, copyrights, copyright registrations, know-how, licenses, trade
secrets, proprietary processes and formulae, all source and object code,
algorithms, architecture, structure, display screens, layouts, processes,
inventions, development tools and all documentation and media constituting,
describing or relating to the above, including, without limitation, manuals,
memoranda and records.
1.60. "Seller Losses" shall have the meaning set forth in Section 12.3
hereof.
1.61. "Seller Software Programs" shall mean those Software Programs
listed on Schedule 1.61 attached hereto owned by Seller and incorporated into,
or required for the ordinary use of, the Products.
1.62. "Software Programs" shall mean software programs, including any
available (a) source code (in all forms), object code, program descriptions,
databases, interfaces, modifications and updates and (b) documentation relating
to the foregoing, and (c) disks, tapes and other tangible embodiments of the
foregoing.
1.63. "Tangible Assets" shall mean those tangible assets owned or used
by Seller or its Affiliates in connection with the Business.
1.64. "Tax" shall mean any and all federal, state, territorial, local,
or foreign income, profits, gross receipts, capital gains taxes, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental, customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, business
license, occupation, value added, goods and service, alternative or add-on
minimum, estimated, or other tax or governmental charge of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not,
arising from or otherwise relating to the operation of the Business or the
Assets.
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1.65. "Tax Return" shall mean any return, declaration, report,
estimates, claim for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and including any amendment
thereof.
1.66. "Third Party Distributor Agreements" shall mean those distributor
and other agreements pursuant to which Seller or any Affiliate of Seller has
granted a third party with the distribution rights for any Product within a
particular territory listed on Schedule 1.66 attached hereto.
1.67. "Third Party In-Licenses" shall mean those licenses and other
agreements with third parties related to Third Party Software Programs listed on
Schedule 1.67 attached hereto.
1.68. "Third Party Software Programs" shall mean those Software
Programs listed on Schedule 1.68 attached hereto owned by third parties and
incorporated into, or required for the ordinary use of, the Products.
1.69. "Transferred Intellectual Property" means (a) all trademarks,
service marks and trade names of Seller listed on Schedule 1.69; (b) all
copyrights in and to the Products listed on Schedule 1.69; and (c) all other
Intellectual Property owned by Seller listed on Schedule 1.69 attached hereto.
1.70. "Transition Distribution Agreement" shall mean that certain
Transition Distribution Agreement, in the form attached hereto as Exhibit A-4,
to be executed by the parties at the Closing pursuant to which Purchaser shall
grant Seller with a non-exclusive license to use certain of the Transferred
Intellectual Property in connection with Seller's continued obligations under
the Third Party Distributor Agreements.
1.71. "Transition Services and Facilities Agreement" shall mean that
certain Transition Services and Facilities Agreement, in the form attached
hereto as Exhibit A-5, to be executed by the parties at the Closing pursuant to
which Seller shall provide certain services and use of certain Facilities to
Purchaser subsequent to the Closing for a limited period of time.
1.72. "Value-Added Reseller Agreement" shall mean that certain
Value-Added Reseller Agreement, in the form attached hereto as Exhibit A-3, to
be executed by the parties at the Closing pursuant to which Seller shall grant
Purchaser the non-exclusive right to distribute certain Seller Software Programs
retained by Seller.
1.73. "Vehicle Leases" shall mean those Vehicle leases listed on
Schedule 1.73 attached hereto.
1.74. "Year 2000 Compliant" shall mean, as to any computer system
software program, the ability to (i) receive, record, store, process, calculate,
manipulate and output dates from and after January 1, 2000, time periods that
include January 1, 2000, including leap year calculations and information that
is dependent on or relates to such dates or time periods, in the same manner and
with the same accuracy, functionality, data integrity and performance as when
dates or time periods prior to January 1, 2000 are involved, (ii) able to store
and output date information in a manner that is unambiguous as to century and
(iii) able to respond to two-digit year input so as to
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accurately resolve any ambiguity as to century in a disclosed, defined,
pre-determined manner that is practicable and efficient.
The following terms are defined elsewhere in the Agreement:
SECTION WHERE FIRST
TERM REFERENCED
Acquisition Recital B
Agreement Pre-Recital
Business Recital A
Confidential Information Section 10.7(a)
Continuing Employment Liabilities Section 2.4(a)(iii)
Current Version Section 4.13(b)
Date Section 11.5
Defenses and Claims Section 2.4(b)
DOJ Section 8.2
Employee Plans Section 4.9(c)
Escrow Agent Section 12.7
Escrow Period Section 12.8
Expenses Section 11.6
Expiration Date Section 6.5
Floor Section 12.2(c)(i)
French Operative Date Section 2.1
FTC Section 8.2
HSR Filings Section 8.2
Infringement Claims Section 12.2(b)(i)
Infringement Losses Section 12.2(b)(i)
JAMS Section 13.10(a)
Non-Solicitation Period Section 10.1(e)
Parent Pre-Recital
Parent Compliance Certificate Section 9.2(a)
Purchaser Pre-Recital
Purchaser Compliance Certificate Section 9.2(a)
Purchaser Group Section 12.2(a)
Purchaser Payments Section 11.6(b)
Seller Pre-Recital
Seller Compliance Certificate Section 9.3(a)
Seller Group Section 12.3(a)
Seller Payments Section 11.6(a)
Taxation Requirements Section 4.9(e)
Third Party Claim Section 12.5
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ARTICLE II
PURCHASE AND SALE OF ASSETS;
ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets and Assumption of Assumed Liabilities.
Upon the terms and subject to the conditions set forth in this Agreement,
effective as of the Closing Date:
(a) Seller agrees to sell, assign, transfer, convey and deliver to
Purchaser, and Purchaser agrees to purchase and acquire from Seller, all of
Seller's right, title and interest in and to the Assets, free and clear of all
Encumbrances except Permitted Encumbrances;
(b) Seller agrees to assign to Purchaser, and Purchaser agrees to
assume from Seller, the Assumed Liabilities; and
(c) Seller agrees to assign to Purchaser, and Purchaser shall
assume from Seller, all of Seller's rights and obligations under the Assumed
Contracts, subject to the obtaining of all necessary consents by the other
parties thereto.
In connection with the Acquisition, on the Closing Date, Seller shall
take (and shall cause its Affiliates to take) any and all actions that may be
required, or reasonably requested by Purchaser, to transfer title to all of the
Assets, free and clear of all Encumbrances (except Permitted Encumbrances), to
Purchaser. Seller shall make the Assets available to Purchaser on the Closing
Date, and Seller shall further deliver to Purchaser the ▇▇▇▇ of Sale, Assignment
and Assumption Agreement, as well as such other instruments of sale and/or
transfer as counsel to Purchaser may reasonably request (whether at or after the
Closing) to evidence and effect the Acquisition contemplated herein. Seller
agrees that, to the extent any Assets are owned or held by any Affiliate of
Seller, Seller shall also cause title to such Assets to be transferred and
assigned to Purchaser, free and clear of all Encumbrances (except Permitted
Encumbrances), on the Closing Date. Notwithstanding anything herein to the
contrary, the Acquisition will not be effective as to Assets and Employees
located in France and Assumed Contracts with customers located in France until
the date upon which all Laws and Decrees in France applicable to the Acquisition
have been complied with by the parties (the "French Operative Date") in at least
the manner set forth in Section 10.10 hereof.
2.2. Assets. As used in this Agreement, the term "Assets" means,
collectively, all right, title and interest in and to the following:
(a) All Products;
(b) All Accounts Receivable and other rights related to the
Deferred Revenue;
(c) All rights and benefits of Seller under the Assumed Contracts;
(d) All Transferred Intellectual Property;
(e) All Intangibles;
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(f) All Permits; and
(g) All Business Records
2.3. Excluded Assets. Except as provided herein or in any Ancillary
Agreement, Seller shall retain all of its right, title and interest in and to,
and Purchaser shall not acquire any interest in any asset or right of Seller
other than the Assets, including but not limited to, the following (collectively
referred to herein as the "Excluded Assets"):
(a) All cash and cash equivalents;
(b) All Accounts Receivable other than those related to the
Deferred Revenue;
(c) All Contracts other than the Assumed Contracts;
(d) All Seller Intellectual Property other than the Transferred
Intellectual Property;
(e) All Facilities;
(f) All Tangible Assets; and
(g) All rights to revenue under the Customer License Agreements or
Third Party Distributor Agreements that has not been received by Seller for
revenue recognized in accordance with GAAP as of the Closing Date.
2.4. Assumption of Liabilities.
(a) Subject to and upon the terms and conditions of this
Agreement, effective as of the Closing Date, Purchaser agrees to assume from
Seller and to pay, perform and discharge according to their terms only the
following Liabilities of Seller (the "Assumed Liabilities"):
(i) Liabilities arising under the Assumed Contracts,
including any Liabilities arising from the failure of the Current Version or any
future version of a Product to be Year 2000 Compliant, but excluding (A)
Liabilities arising under any Assumed Contract to the extent that such
Liabilities arise out of any obligations that are not specified in writing in
such Assumed Contract or disclosed in a Schedule attached to this Agreement, and
(B) any Liabilities arising from the failure of any versions of a Product other
than a Current Version or future version to be Year 2000 Compliant except and
only to the extent that such failure is the direct result of modifications made
to such Product by Purchaser or Persons expressly authorized by Purchaser after
the Closing Date;
(ii) Liabilities with respect to the Deferred Revenue;
(iii) Liabilities with respect to the New Purchaser Employees
arising after the Closing Date, regardless of the applicable Employee
Termination Date for each such
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person, except as otherwise provided for hereunder or under the Transition
Services and Facilities Agreements ("Continuing Employment Liabilities"); and
(iv) Liabilities with respect to the use of the vehicles
under the Vehicle Leases after the Closing.
(b) Nothing herein shall be deemed to deprive Purchaser or any
Affiliate of Purchaser of any defenses, set-offs or counterclaims which Seller
may have had or which Purchaser or any Affiliate of Purchaser shall have with
respect to any of the Assumed Liabilities (the "Defenses and Claims"). Effective
as of the Closing, Seller agrees to assign, transfer and convey to Purchaser all
Defenses and Claims and agrees to cooperate with Purchaser (at Purchaser's
expense) to maintain, secure, perfect and enforce such Defenses and Claims,
including the execution of any documents, the giving of any testimony or the
taking of any such other action as is reasonably requested by Purchaser in
connection with such Defenses and Claims.
(c) Except as expressly set forth in Section 2.4(a) above,
Purchaser shall not assume or become liable or obligated in any way, and Seller
shall retain and remain solely liable for and obligated to pay, perform and
discharge all debts, expenses, accounts payable, contracts, agreements,
commitments, obligations, claims, suits and other liabilities of any nature
whatsoever, whether or not related to the Business or the Assets, whether known
or unknown, accrued or not accrued, fixed or contingent, current or arising
hereafter, including, without limitation, any of the following (collectively
referred to herein as "Excluded Liabilities"):
(i) Any Liability of the Seller for unpaid Taxes (with
respect to the Business, the Assets, the Employees or otherwise), or any
Liability of the Seller for Taxes arising in connection with the consummation of
the Acquisition (including any income taxes and transfer taxes); and
(ii) Any Liability related to or arising from failure of any
version of a Product, other than the Current Version or any future version of
such Product, to be Year 2000 Compliant except and only to the extent that such
failure is the direct result of modifications made by Purchaser or Persons
expressly authorized by Purchaser after the Closing Date, and any Liability
related to or arising from failure of any Licensed Intellectual Property
licensed to end users under any Assumed Contracts to be Year 2000 Compliant;
provided, however, that Purchaser shall use reasonable commercial efforts to
assist Seller in mitigating any such Liability, including but not limited to (A)
by December 31, 1998, delivering Year 2000 Compliant versions of Products to all
of Purchaser's customers currently on maintenance with respect to any non-Year
2000 Compliant versions of Products in replacement thereof, together with a
notice to each such customer that as of June 30, 1999, Purchaser will stop
providing support for such non-Year 2000 Compliant versions of the Products
other than telephone support, and (B) at Seller's request, delivering Year 2000
Compliant versions of Licensed Intellectual Property (which have been provided
by Seller to Purchaser free of any royalty obligation to Seller) to any of
Purchaser's customers currently on maintenance with respect to any non-Year 2000
Compliant version of such Licensed Intellectual Property in replacement thereof;
provided, further, that if Purchaser fails to take the actions described in
subclause (A) above, then Purchaser shall cease providing maintenance for any
non-Year 2000 Compliant versions of Products sixty (60) days
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after the receipt of written request by Seller. For the avoidance of doubt, any
services Purchaser provides to customers in connection with its obligations as
set forth in subclause (A) and (B) above, other than services provided pursuant
to maintenance, shall be charged at Purchaser's then standard rates for such
services.
2.5. Purchase Price. The aggregate purchase price for the Assets is
Forty Four Million Dollars ($44,000,000), (the "Purchase Price"), which, except
as provided in Section 2.6 and subject to adjustment as herein provided,
Purchaser shall pay to Seller in immediately available funds at the Closing by
wire transfer to an account designated in writing by Seller.
2.6. Escrow Fund. On the Closing Date, Purchaser will withhold from the
Purchase Price and deposit into escrow for and on behalf of Seller the sum of
Three Million Dollars ($3,000,000) in cash (the "Escrow Fund"). Ten Thousand
Dollars ($10,000) of the Escrow Fund shall be held until the French Operative
Date, after which date such amount shall be released to Seller pursuant to the
provisions of the Escrow Fund Agreement. The remainder of the Escrow Fund shall
be held as collateral for Seller's indemnification obligations pursuant to
Article XII of this Agreement and pursuant to the provisions of the Escrow Fund
Agreement.
2.7. Allocation. Purchaser and Seller agree to allocate the Purchase
Price (and all other capitalizable costs) among the Assets for all purposes
(including financial accounting and tax purposes) in accordance with the
allocation schedule set forth on Schedule 2.7 attached hereto. Neither Purchaser
nor Seller shall take any position for purposes of any federal, state,
provincial or local income tax with respect to the allocation of the Purchase
Price which is inconsistent with such allocation. Notwithstanding anything above
to the contrary, Purchaser and Seller agree that Ten Thousand Dollars ($10,000)
of the Purchase Price shall be allocated to the Assets located in France
(including Customer License Agreements with French end users).
ARTICLE III
THE CLOSING
3.1. The Closing. The consummation of the Acquisition will take place
at a closing to be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇ (the "Closing")
on June 4, 1998, or at such other time or date as may be agreed to in writing by
the parties to this Agreement (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants, to Purchaser, as set forth
below:
4.1. Organization. Seller is a corporation validly incorporated,
validly in existence and in good standing under the laws of the State of
Michigan. Seller is duly qualified or licensed to do business as a foreign
corporation in each state of the United States or other jurisdiction in which it
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is required to be so qualified or licensed, except in states and other
jurisdictions in which the failure to be so qualified or licensed, in the
aggregate, would not have a Material Adverse Effect on Seller or the Business.
4.2. Subsidiaries. Except as listed on Schedule 4.2 attached hereto,
Seller does not own any equity interest, directly or indirectly, in any
corporation, partnership, limited liability company, joint venture, business,
trust or other entity, whether or not incorporated, which is engaged in the
Business.
4.3. Authorization. This Agreement, the Escrow Fund Agreement, the ▇▇▇▇
of Sale, Assignment and Assumption Agreement and all of the Ancillary Agreements
have been, or upon their execution and delivery hereunder will have been, duly
and validly executed and delivered by Seller and constitute, or will constitute,
valid and binding agreements of Seller, enforceable against Seller in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general equitable principles or the exercise
of judicial discretion in accordance with such principles. Seller has all
requisite power and authority to execute and deliver this Agreement, the
Ancillary Agreements, the Escrow Fund Agreement, and the ▇▇▇▇ of Sale,
Assignment and Assumption Agreement, and at the time of the Closing, will have
all requisite power and authority to carry out the transactions contemplated in
this Agreement, the Ancillary Agreements, the Escrow Fund Agreement and the ▇▇▇▇
of Sale, Assignment and Assumption Agreement. All requisite corporate action on
the part of Seller has been taken to authorize the execution and delivery of
this Agreement, the Ancillary Agreements, the Escrow Fund Agreement, and the
▇▇▇▇ of Sale, Assignment and Assumption Agreement.
4.4. No Conflicts; Consents. The execution and delivery of this
Agreement, the Ancillary Agreements, the Escrow Fund Agreement and the ▇▇▇▇ of
Sale, Assignment and Assumption Agreement by Seller do not, and the consummation
of the transactions contemplated herein and therein and compliance with the
provisions hereof and thereof will not, conflict with, result in a breach of,
constitute a default (with or without notice or lapse of time, or both) under or
violation of, or result in the creation of any lien, charge or Encumbrance
pursuant to, (a) any provision of any charter document of Seller, (b) any Law or
Decree or (c) any provision of any agreement, instrument or understanding to
which Seller is a party or by which Seller or any of its properties or assets is
bound or affected, nor will such actions give to any other Person or entity any
interests or rights of any kind, including rights of termination, acceleration
or cancellation, in or with respect to any of the Assets or the Assumed
Liabilities. Except as listed on Schedule 4.4 attached hereto, no consent of any
third party or any Governmental Entity is required to be obtained on the part of
Seller to permit the consummation of the transactions contemplated in this
Agreement, the Ancillary Agreements, the Escrow Fund Agreement or the ▇▇▇▇ of
Sale, Assignment and Assumption Agreement.
4.5. Title to Assets; Entire Business. Seller has good and marketable
title to all of the Assets, free and clear of all Encumbrances except for
Permitted Encumbrances. At the Closing, Seller will sell, convey, assign,
transfer and deliver to Purchaser good and valid title and all the Seller's
right and interest in and to all of the Assets, free and clear of any
Encumbrances, except for Permitted Encumbrances.
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4.6. Tangible Assets. The Tangible Assets have been maintained and
repaired by Seller in the ordinary course of business and are in such condition
and repair, reasonable wear and tear excepted, as is suitable for the purposes
for which they are presently used by the Seller.
4.7. Litigation and Claims. Except as listed on Schedule 4.7 attached
hereto, there are no claims, actions, suits, proceedings or investigations in
progress or pending before any Governmental Entity, against or relating to the
Business, the Assets or the Assumed Liabilities, nor, to Seller's Knowledge, is
there any threat thereof. Seller is not a party to or subject to any decree,
order or arbitration award (or agreement entered into in any administrative,
judicial or arbitration proceeding with any Governmental Entity) with respect to
or affecting the Business, the Assets or the Assumed Liabilities.
4.8. Compliance with Laws and Regulations; Governmental Licenses, Etc.
To Seller's Knowledge, Seller is in compliance with all applicable Laws or
Decrees with respect to or affecting the Business, the Assets or the Assumed
Liabilities, including, without limitation, Laws or Decrees relating to
anticompetitive or unfair pricing or trade practices, false advertising,
consumer protection, export or import controls, occupational health and safety,
equal employment opportunities, fair employment practices, and sex, race,
religious and age discrimination. Seller is not subject to any order, injunction
or decree issued by any Governmental Entity which could impair the ability of
Seller to consummate the transactions contemplated herein. There are no Permits
necessary or required for Purchaser to operate the Business after the Closing
Date in substantially the same manner as Seller has operated such businesses
prior to the Closing Date, except where the failure to have such a Permit would
not have a Material Adverse Effect. Neither the sale and transfer of the Assets
pursuant to this Agreement, nor Purchaser's possession and use thereof from and
after the Closing Date because of such sale and transfer will: (a) violate any
law pertaining to bulk sales or transfers or to the effectiveness of bulk sales
or transfers as against creditors of Seller or (b) result in the imposition of
any liability upon Purchaser for appraisal rights or other liability owing to
any stockholder of Seller.
4.9. Labor Matters.
(a) Except as set forth on Schedule 4.9(a) attached hereto, the
Employees listed on Schedule 1.24 include all Seller's current employees who
have devoted substantially all of their time during the immediately preceding
ninety (90) day period designing, developing, manufacturing, marketing, selling
or servicing the Products. The Consultants listed on Schedule 1.16 include all
the current independent contractors and other individuals who are supplied by
third parties to perform consulting services to Seller who have devoted at least
50% of their time during the immediately preceding ninety (90) day period
designing, developing, manufacturing, marketing, selling or servicing the
Products.
(b) To Seller's Knowledge, Seller is in compliance with respect to
the Employees with all currently applicable Laws or Decrees with respect to or
affecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices, and is not engaged in any unfair labor practice. Seller has not
received any written notice from any Governmental Entity and, to the
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Knowledge of Seller, there has not been asserted before any Governmental Entity,
any current claim, action or proceeding to which Seller is a party relating to
the Employees and there is neither pending nor, to the Knowledge of Seller, has
there been threatened in writing, any investigation or hearing to which Seller
is a party relating to the Employees arising out of or based upon any such Laws
or Decrees. There is no pending claim against Seller relating to the Employees
under any workers' compensation plan or statute. Seller is in material
compliance with and not in material violation of any agreements and/or
arrangements with any Consultant.
(c) Except as set forth on Schedule 4.9(c) attached hereto, Seller
has not given to or received from any Employee notice of termination of
employment with an effective date on or after the Closing Date. Other than as
described on Schedule 4.9(c), the consummation of the transactions contemplated
in this Agreement will not entitle any Employee to any severance pay,
unemployment compensation or any similar type of other payment. Seller is not a
party to, bound by or obligated under any labor, collective bargaining, union or
similar agreements or arrangements with respect to the Employees. There is not
occurring or, to the Knowledge of Seller, threatened, any strike, slow-down,
picket, work stoppage or other concerted action by any union or other group of
employees or other persons against the Business. To Seller's Knowledge, (i)
there has been no union or other labor organization or attempt to organize any
of the Employees during the two (2) year period preceding the date hereof, (ii)
such an effort is not pending, and (iii) there has not been any discussions of
any sort regarding such with respect to any of the Employees.
(d) Schedule 4.9(d) contains a complete and accurate list of all
of Seller's material contracts, agreements, plans, and commitments with respect
to Employees pertaining to terms of employment, compensation, bonuses, profit
sharing, securities purchases, securities repurchases, options, deferred
compensation arrangements or plans, commissions, incentives, loans or loan
guarantees, severance pay or benefits, use of Business property and related
matters. Schedule 4.9(d) sets forth a complete and accurate list of all bonus,
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance, pension, profit-sharing, retirement, health, welfare,
insurance, or other employee benefit plans and agreements for the benefit of
current or former Employees which are currently maintained by Seller or by a
subsidiary of Seller or with respect to which the Seller or a subsidiary
currently has or in the future may have any material liability or obligation to
contribute or to make payments (collectively, the "Employee Plans"). Each
Employee Plan that has been adopted or maintained by Seller, whether informally
or formally, for the benefit of Employees outside the United States
("International Employee Plan") has been established, maintained and
administered in material compliance with its terms and conditions and with the
requirements prescribed by any and all Laws or Decrees that are applicable to
such International Employee Plan. Furthermore, no International Employee Plan
has unfunded liabilities, that as of the Closing, will not be offset by
insurance or fully accrued.
(e) With respect to the Business and except as set forth on
Schedule 4.9(e), there are no "employee pension benefit plans", as defined in
Section 3(2) of ERISA or in any similar provisions of applicable Laws or
Decrees, (i) in respect of which Seller is an "employer" or a "substantial
employer", as defined in Sections 3(5) and 4001(a)(2), respectively, of ERISA or
in any similar provisions of applicable Laws or Decrees, (ii) with respect to
which Seller is a "party in interest" within the meaning of Section 3(14) of
ERISA, or (iii) in respect to which Seller is
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assuming any liability or will be liable to make contributions to or for the
payment of benefits. Seller is not a party to, and none of its operations is or
has ever been covered by, (x) any pension plan subject to Title IV of ERISA or
Section 412 of the Code, (y) any "multi-employer plan" as such term is defined
in Section 3(37) or Section 4001(a)(3) of ERISA or in any similar provisions of
applicable Laws or Decrees, or (z) other pension or retirement payment
arrangement, whether or not written, involving a past or unfunded future cost to
Seller, whether or not such plan or arrangement is covered by ERISA or any
similar provisions of applicable Laws or Decrees.
(f) The Employee Plans that provide retiree medical or other
retiree welfare benefits to any persons are set forth on Schedule 4.9(f) except
as may be required by applicable Laws or Decrees. All Employee Plans are in
compliance in all material respects with the requirements prescribed by any and
all applicable Laws or Decrees with respect thereto including requirements
prescribed by statute or regulation which must be satisfied as a prerequisite to
an Employee Plan being treated as "qualified" for the tax benefits afforded by
such statute or regulation or which must be satisfied to avoid the imposition of
any tax or penalty on the trustee of an Employee Plan or on the Seller or the
Business (such requirements are collectively referred to herein as the "Taxation
Requirements") and the Seller has performed all material obligations required to
be performed by it under, is not in default under or in violation of, and has no
Knowledge of any default or violation by any other party to, any of the Employee
Plans nor Knowledge of any material claim or dispute in respect of an Employee
Plan.
4.10. Tax Matters.
(a) Tax Returns. All Tax Returns required to be filed by the
Seller with respect to the Business have been duly filed on a timely basis, and
such Tax Returns are complete and accurate in all material respects. All Taxes
owed by the Seller with respect to the Business (whether or not shown on any Tax
Return) have been paid. No claim has ever been made by any Governmental Entity
in a jurisdiction where the Seller does not file Tax Returns that the Business
is or may be subject to taxation by that jurisdiction. There are no liens or
security interests on any of the Assets or other assets of the Business with
respect to Taxes, other than liens for Taxes not yet due and payable.
(b) Other Compliance Requirements. With respect to the Business,
the Seller has withheld and paid all Taxes required to have been withheld and
paid and complied with all information reporting and backup withholding
requirements, including maintenance of required records in respect thereto, in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(c) No Tax Audits and No Tax Deficiencies. Except as set forth in
Schedule 4.10(c), Seller's Tax Returns are not currently under audit by any
Governmental Entity, nor is any such audit pending or, to the Knowledge of
Seller, threatened (either in writing or verbally, formally or informally).
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4.11. Financial Statements.
(a) Attached hereto as Schedule 4.11 are copies of (i) Seller's
audited balance sheets pertaining to the Business as of June 30, 1997 and
statements of income and cash flows pertaining to the Business for the years
ended June 30, 1996 and June 30, 1997 and (ii) Seller's audited balance sheet
pertaining to the Business as of April 30, 1998 and statements of income and
cash flows pertaining to the Business for the ten-month period then ended
(collectively, the "Financial Statements"). The Financial Statements have been
prepared in accordance with GAAP, and present fairly the financial position of
the Business as of their respective dates and the results of operations and
changes in financial position of the Business for the periods indicated.
(b) There is no material debt, liability, or obligation of any
nature pertaining to the Business, whether accrued, absolute, contingent, or
otherwise, and whether due or to become due, that is not reflected or reserved
against in the Financial Statements, except for those (i) that have been
incurred after April 30, 1998 or (ii) that are not required by GAAP to be
included in a balance sheet or the notes thereto. All debts, liabilities, and
obligations incurred after April 30, 1998 were incurred in the ordinary course
of business.
4.12. Absence of Certain Changes or Events. Since April 30, 1998,
Seller has conducted the Business in the ordinary and usual course and, without
limiting the generality of the foregoing, has not:
(a) suffered any Material Adverse Change;
(b) suffered any damage, destruction or loss, whether or not
covered by insurance, having a Material Adverse Effect;
(c) granted any increase in the compensation payable or to become
payable by Seller to any Employee or Consultant except those occurring in the
ordinary course of business, consistent with Seller's past practices with
respect to the Business;
(d) made any change in the accounting methods or practices Seller
follows relating to the Business, whether for financial or tax purposes, or any
change in depreciation or amortization policies or rates adopted therein;
(e) granted or renewed any exclusive license or agreement with
respect to the Seller Intellectual Property used in the Products;
(f) incurred any liabilities relating to the Business except in
the ordinary course of business and consistent with past practice which would be
required to be disclosed in financial statements prepared in accordance with
GAAP;
(g) permitted or allowed any of the Assets to be subjected to any
Encumbrance of any kind (other than a Permitted Encumbrance) other than in the
ordinary course of business consistent with past practices;
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(h) made any material amendment to, waived any rights under or
terminated any Contract or any other agreement which is listed on any schedule
to this Agreement;
(i) incurred any contingent liability as guarantor or otherwise
with respect to the obligations of others other than in the ordinary course,
consistent with past practices of the Business; or
(j) agreed to take any action described in this Section 4.12 or
outside of its ordinary course of business or which would constitute a breach of
any of the representations or warranties of Seller contained in this Agreement.
4.13. Intellectual Property; Proprietary Rights.
(a) Schedule 1.69 sets forth a complete and accurate list of:
(i) all registered and unregistered trademarks, service
marks and tradenames which are used exclusively in connection with the Products;
and
(ii) all registered and unregistered copyrights in and to
the Products.
(b) Schedule 1.61 sets forth a complete and accurate list of all
Seller Software Programs. Listed on Schedule 4.13(b) attached hereto is the
latest commercial version of each Product that has been made generally available
by Seller (the "Current Version"). Schedules 1.67 and 1.68 set forth a complete
and accurate list of all Third Party In-Licenses and Third Party Software
Programs.
(c) Except as listed on Schedule 4.13(c) attached hereto, the
Transferred Intellectual Property and the Licensed Intellectual Property
comprise all the material intellectual property rights necessary to conduct the
Business as conducted by Seller prior to the Closing Date; provided, however,
that the scope of the licenses granted by Seller to Purchaser pursuant to the
Ancillary Agreements is more restrictive than the scope used by Seller to
conduct the Business as of the Closing Date.
(d) No claims have been asserted against Seller (and to Seller's
Knowledge there are no claims that are likely to be asserted against Seller or
which have been asserted against others) by any person challenging Seller's use
or distribution of any Seller Intellectual Property used by Seller in the
Business or the Products (including, without limitation, technology licensed
under the Third Party In-Licenses) or challenging or questioning the validity
of, effectiveness of, or full performance by Seller of its obligations under any
license or agreement relating thereto (including, without limitation, the Third
Party In-Licenses). Seller has no Knowledge of any valid basis for any claim of
the type specified in the immediately preceding sentence relating to or
interfering with the continued enhancement and exploitation by Purchaser of any
of the Business or the Products.
(e) To Seller's Knowledge, none of the Intellectual Property
embodied in a Product, as applicable, infringes on the rights of, constitutes
misappropriation of any proprietary information or intangible or intellectual
property right of any third party.
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(f) Schedule 1.4 and 1.66 set forth a complete and accurate list
of all Affiliate Distributor Agreements and Third Party Distributor Agreements,
respectively, and except as provided in such Schedules, Seller has not granted
any third party any exclusive right to manufacture, reproduce, distribute,
market or exploit any of the Business or Products.
(g) All designs, drawings, technical specifications, source code,
object code, design documents, documentation, flow charts and diagrams
incorporating, embodying or reflecting any of the Products at any stage of their
development were written, developed and created solely and exclusively by (i)
employees of Seller or (ii) third parties who assigned ownership of any and all
of their rights arising out of, related to or resulting from their development
and creative efforts to Seller in valid and enforceable agreements.
(h) Seller has at all times used commercially reasonable efforts
to protect its trade secrets used in the Business or the Products
(i) To the Knowledge of Seller, no Employee or Consultant is in
violation of any term of any employment or consulting contract, as applicable,
or any other contract or agreement relating to the relationship of any such
person with Seller any other party, because of the nature of the Business.
(j) Each person currently or formerly employed or engaged as a
consultant by Seller (including independent contractors, if any) that has or had
access to confidential information of Seller relating to the Products has
executed a confidentiality and non-disclosure agreement sufficient to protect
the trade secret status of the Transferred Intellectual Property and to cause
the assignment to the Seller of any and all intellectual property developed by
such employees, former employees or independent consultants and relating,
directly or indirectly, to the Products. To Seller's Knowledge, neither the
execution or delivery of such agreements, nor the carrying on of the Business as
employees or consultants, as applicable, by such persons, nor the conduct of the
Business, as currently conducted, from and after the Closing Date, will conflict
with or result in a breach of the terms, conditions or provisions of or
constitute a default under any contract, covenant or instrument under which any
of such persons is obligated.
(k) Schedule 4.13(k), attached hereto, sets forth the extent to
which (i) each of the Products is Year 2000 Compliant, and (ii) each other
Seller Software Program incorporated into, or required for the ordinary use of,
any Product is Year 2000 Compliant. To its Knowledge, Seller is not using the
services or software of any third party whose systems or code are not Year 2000
Compliant where such circumstances might have a Material Adverse Effect.
(l) Except as set forth in Schedule 4.13(l), no product liability
or warranty claim with respect to any Product has been communicated to or, to
the Knowledge of Seller, overtly threatened against Seller.
(m) Attached hereto on Schedule 4.13(m) is an accurate list of
all Known material errors in any of the Products
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4.14. Contracts and Arrangements.
(a) Schedules 1.20 and 1.73 hereto contain a complete and
accurate list of all Customer License Agreements and Vehicle Leases,
respectively, and Seller has delivered to Purchaser true and complete copies of
all such written Contracts (other than a limited number of Customer License
Agreements entered into in the ordinary course of business on substantially
Seller's standard terms and conditions). Schedule 4.14(a) attached hereto sets
forth a true, complete and accurate list of all customers who are currently on
maintenance under the Customer License Agreements. Seller has delivered to
Purchaser an aged accounts receivable trial balance which reflects all
outstanding receivables from such customers.
(b) To the Knowledge of Seller, each of the Assumed Contracts is
valid, binding and in full force and effect and enforceable by Seller in
accordance with its terms, except as enforcement may be limited by general
equitable principles and the exercise of judicial discretion in accordance with
such principles. Neither Seller nor, to Seller's Knowledge, any other party, is
in default under any Assumed Contract, and there are no existing disputes or
claims of default relating thereto, or any facts or conditions Known to Seller
which, if continued, will result in a default or claim of default thereunder,
which default could reasonably be expected to have a Material Adverse Effect.
(c) All written arrangements, understandings, relationships and
agreements between Seller and its Affiliates related to the Business, the Assets
or the Products (including the purchase and sale of components, supply
arrangements, distribution arrangements, and the development and design of
Products or related Seller Intellectual Property) are listed in Schedule
4.14(c).
(d) Seller does not anticipate booking more than $218,000 of
revenue from license fees related to the Products (except for Boost Sales and
Margin Planning) during the fiscal quarter ended June 30, 1998; any such
revenues in excess of $218,000 shall be assigned or paid over to Purchaser after
Closing.
4.15. Insurance. Seller currently maintains, and has at all times prior
to the date of this Agreement maintained, liability, casualty, property loss and
other insurance coverages upon the Assets and with respect to the operation of
the Business in such amounts, of such kinds and with such carriers as are
generally deemed appropriate and sufficient for companies of similar size to
Seller and engaged in similar types of business and operations.
4.16. Brokers. There is no broker, finder, investment banker or other
person, other than Arbor Partners, LLC, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities, Inc.,
whose fees are to be paid by Seller, who would have any valid claim against any
of the parties to this Agreement for a commission or brokerage fee or payment in
connection with this Agreement or the transactions contemplated herein as a
result of any agreement of, or action taken by, Seller.
4.17. Warranties and Service Payment Obligations. To the Knowledge of
Seller, the Customer License Agreements and the Third Party Distributor
Agreements contain all of the written product warranties and warranty agreements
Seller has provided to any customer.
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Schedule 4.17 attached hereto sets forth a complete and accurate list of all
agreements pursuant to which Seller is obligated to provide service or support
services with respect to the Products. No agreement for the sale, license,
service, support or maintenance of the Products obligates Seller to provide any
material change in functionality or other alternations in the performance of the
Products or to provide new products or technology. Schedule 4.17 sets forth all
obligations of Seller with respect to the Business that are not explicitly set
forth in the Assumed Contracts.
4.18. Business Records. The Business Records to be delivered to
Purchaser are complete and accurate in all material respects and accurately
reflect in all material respects all actions and transactions referred to in
such Business Records.
4.19. SEC Documents. As of their respective filing dates, Seller's
annual report on Form 10-K for the year ended June 30, 1997 (the "1997 Form
10-K"), and Seller's quarterly reports on Form 10-Q and current reports on Form
8-K filed since the 1997 Form 10-K, and any amendments thereto (collectively,
the "SEC Documents") complied in all material respects with the requirements of
the Exchange Act and the Securities Act, and as of their respective filing dates
and taken together, the SEC Documents contain no untrue statement of a material
fact and did not omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading, except to the extent corrected or
superseded by a subsequently filed SEC Document. There has been no material
change in Seller's accounting policies or estimates except as described in the
notes to the financial statements of Seller included in the SEC Documents. There
has been no material adverse change in Seller's financial condition since March
31, 1998.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as otherwise set forth in the Purchaser Disclosure Schedule
provided to Seller, a copy of which is attached as Schedule V, each of Parent
and Purchaser, jointly and severally, hereby represents and warrants to Seller
that:
5.1 Organization and Good Standing. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full power and authority to carry on its businesses as now
conducted. Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of Arizona and has full power and authority to
carry on its businesses as now conducted.
5.2. Power, Authorization and Validity. Each of Parent and Purchaser
has the right, power, legal capacity and authority to enter into and perform
their respective obligations under this Agreement, the Escrow Fund Agreement and
the Ancillary Agreements to which it is or will be a party. The execution and
delivery of this Agreement, the Escrow Fund Agreement and the Ancillary
Agreements to which each of Parent and Purchaser is or will be a party have been
duly and validly approved and authorized by the board of directors of each of
Parent and Purchaser. No other authorization or approval, governmental or
otherwise, is necessary in order to enable each of Parent and Purchaser to enter
into and to perform the terms of this Agreement, the
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Escrow Fund Agreement or the Ancillary Agreements on its part to be performed,
except for (a) filings under applicable securities laws and (b) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under the laws of any foreign country in which Parent
or Purchaser or any of their Affiliates conducts any business or owns any
property or assets. This Agreement is, and the Escrow Fund Agreement and each of
the Ancillary Agreements, when executed and delivered by Parent or Purchaser
shall be, the valid and binding obligations of Parent or Purchaser enforceable
in accordance with their respective terms, subject to (i) laws of general
application relating to bankruptcy, insolvency, and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
5.3. No Violation of Existing Agreements. Neither the execution and
delivery of this Agreement, the Escrow Fund Agreement or any of the Ancillary
Agreements, nor the consummation of the transactions contemplated herein or
therein will conflict with, or result in a material breach or violation of, any
provision of Parent's or Purchaser's charter documents as currently in effect,
any material instrument or contract to which Parent or Purchaser is a party or
by which Parent or Purchaser is bound, or any federal, state or local judgment,
writ, decree, order, statute, rule or regulation applicable to Parent or
Purchaser. Neither the execution and delivery of this Agreement, the Escrow Fund
Agreement or any of the Ancillary Agreements , nor the consummation of the
transactions contemplated herein or therein, will have a material adverse effect
on the operations, assets, or financial condition of Parent or Purchaser.
5.4. Compliance With Other Instruments and Laws. Neither Parent or
Purchaser is in violation of (a) any provisions of its respective charter
documents as currently in effect or (b) in any material respect any applicable
Law or Decree.
5.5. Litigation. There is no suit, action, proceeding, claim or
investigation pending or, to either Parent's or Purchaser's Knowledge,
threatened against Parent or Purchaser before any court or administrative agency
or which questions or challenges the validity of this Agreement or any of the
Ancillary Agreements, or any of the transactions contemplated herein or therein,
which could have a Material Adverse Effect on the operations, assets or
financial condition of Parent or Purchaser.
5.6. Brokers. There is no broker, finder, investment banker or other
person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, whose fees are to be paid by
Purchaser, who would have any valid claim against any of the parties to this
Agreement for a commission or brokerage fee or payment in connection with this
Agreement or the transactions contemplated herein as a result of any agreement
of, or action taken by, Parent or Purchaser.
5.7. HSR Act. As of the Closing Date, the "Ultimate Parent Entity" of
the Purchaser, as such term is defined in the HSR Act, does not have annual net
sales or total assets of $100,000,000 or more, as determined pursuant to the HSR
Act and the regulations thereto.
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ARTICLE VI
PRE-CLOSING COVENANTS OF SELLER
6.1. Advice of Changes. During the period on and from the date of this
Agreement through and including the Closing Date, Seller will promptly notify
Purchaser in writing of (a) any event occurring subsequent to the date of this
Agreement that would render any representation or warranty of Seller contained
in this Agreement, if made on or as of the date of that event or the Closing
Date, untrue or inaccurate in any material respect and (b) any Material Adverse
Change.
6.2. Conduct of Business. During the period on and from the date of
this Agreement through and including the Closing Date, Seller will conduct the
Business in the ordinary course of business consistent with past practices and
will use its reasonable commercial efforts to retain the Employees and the
Consultants, to protect and preserve the Assets, and to maintain and to preserve
intact Seller's relationships with its independent contractors, licensors,
suppliers, vendors, representatives, distributors, other customers and all
others with whom it deals, all in accordance with the ordinary course of
business consistent with past practices. During the period on and from the date
of this Agreement through and including the Closing Date, Seller will not
without the prior written consent of Purchaser:
(a) mortgage, pledge, subject to a lien, or grant a security
interest in, or suffer to exist or otherwise encumber, any of the Assets;
(b) sell, dispose of or license any of the Assets to any Person,
except in the ordinary course of business consistent with past practices;
(c) fail to maintain the Tangible Assets in good working
condition and repair according to the standards it has maintained up to the date
of this Agreement, subject only to ordinary wear and tear;
(d) fail to pay and discharge any trade payable relating to the
Products or the Business in accordance with past practices;
(e) enter into any agreement or arrangement to pay any bonus,
increased salary, or special remuneration to any Employees or Consultants, as
applicable;
(f) change accounting methods relating to or affecting the Assets,
Assumed Liabilities or the Business;
(g) amend, terminate or waive any material rights under any
Assumed Contract, except in the ordinary course of business consistent with past
practices;
(h) waive or release any material right or claim relating to any
Assets, except in the ordinary course of business consistent with past
practices;
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(i) enter into any agreements, or other obligations or commitments
relating to the Business, except on commercially reasonable terms in the
ordinary course of business consistent with past practices;
(j) fail to comply in any material respect with any Law or Decree
applicable to the Business;
(k) take any action to terminate or modify, or permit the lapse of
termination of, the present insurance policies and coverages of Seller relating
to or applicable to Seller, the Business or the Assets;
(l) incur, with respect to the Business or the Assets, any
Liabilities other than Liabilities incurred in the ordinary course of business
consistent with past practices; or
(m) agree to do any of the things described in the preceding
clauses of this Section 6.2.
6.3. Access to Information. Until the Closing, Seller will allow
Purchaser and its agents reasonable access upon reasonable notice and during
normal working hours to the Business Records and Facilities relating to the
Assets and all aspects of the Business and its financial and legal affairs.
Until the Closing, Seller shall cause its accountants to cooperate with
Purchaser and its agents in making available all financial information
requested, including without limitation the right to examine all working papers
pertaining to all Financial Statements prepared or audited by such accountants.
6.4. Satisfaction of Conditions Precedent. Subject to Section 8.2,
Seller will use its reasonable commercial efforts to satisfy or cause to be
satisfied all the conditions precedent to the Closing hereunder, and to cause
the transactions contemplated in this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties which may be necessary or reasonably required on its
part in order to effect the transactions contemplated herein.
6.5. Exclusive Dealings. During the period on and including the date of
this Agreement through and including the Closing Date, or such earlier date as
Purchaser and Seller mutually agree to discontinue efforts to consummate the
Acquisition (the "Expiration Date"), (a) Seller will not (and it will use its
reasonable commercial efforts to assure that its officers, directors, employees
and agents do not on its behalf), without the express written consent of
Purchaser, take any action to solicit, initiate, seek, encourage, respond to or
support any inquiry, proposal or offer from, furnish any information to, or
participate in any negotiations with, any corporation, partnership, person or
other entity or group (other than discussion with Purchaser) regarding any sale,
license or other disposition (however structured) of the Assets or any portion
thereof (other than an immaterial portion thereof which is disposed of in the
ordinary course of business) to any person other than Purchaser, (b) Seller
shall terminate or suspend any such negotiations in progress as of the date
hereof and (c) Seller shall promptly (but in any event within four business
days) notify Purchaser regarding any contact by any third party regarding any
offer, proposal or
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written request for information regarding any such acquisition. Seller
represents and warrants that it has the legal right to terminate or suspend any
such pending negotiations and agrees to indemnify Purchaser, its representation
and agents from and against any claims by any party to such negotiations based
upon or arising out of the discussion or any consummation of the Acquisition as
contemplated in this Agreement.
ARTICLE VII
PRE-CLOSING COVENANTS OF PURCHASER
7.1. Advice of Changes. Purchaser and Parent will promptly notify
Seller in writing of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty of Purchaser or
Parent contained in this Agreement, if made on or as of the date of that event
or the Closing Date, untrue or inaccurate in any material respect.
7.2. Satisfaction of Conditions Precedent. Subject to Section 7.2 of
this Agreement, Purchaser will use its reasonable commercial efforts to satisfy
or cause to be satisfied all the conditions precedent to the Closing hereunder,
and to cause the transactions contemplated herein to be consummated, and,
without limiting the generality of the foregoing, to obtain all consents,
amendments and authorizations of third parties and to make all filings with, and
give all notices to, third parties which may be necessary or reasonably required
on its part in order to effect the transactions contemplated herein.
ARTICLE VIII
MUTUAL COVENANTS
8.1 Regulatory Filings; Consents; Reasonable Efforts. Subject to the
terms and conditions of this Agreement, each of Seller, Purchaser and Parent
shall use its reasonable commercial efforts to (a) make all necessary filings
with respect to the Acquisition and this Agreement under the Securities Act, the
Exchange Act and applicable blue sky or similar securities laws and obtain
required approvals and clearances with respect thereto and supply all additional
information requested in connection therewith, (b) make premerger notification
or other appropriate filings with federal, state or local governmental bodies or
applicable foreign governmental agencies, if any, and, subject to Section 8.2 of
this Agreement, obtain required approvals and clearances with respect thereto
and supply all additional information requested in connection therewith, (c)
obtain all consents, waivers, approvals, authorizations and orders required in
connection with the authorization, execution and delivery of this Agreement and
the Ancillary Agreements and the consummation of the Acquisition and (d) take,
or cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated in this Agreement as promptly as practicable.
8.2. HSR Filings. Each of Seller, Purchaser and Parent shall make (or
shall cause its respective "ultimate parent entities" as defined under the HSR
Act to make) any and all required
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governmental filings required under the HSR Act ("HSR Filings") with respect to
the transactions contemplated in this Agreement and the Ancillary Agreements.
Neither Seller nor Purchaser shall be obligated to respond to any inquiries or
requests for additional information or documentation from the Department of
Justice ("DOJ"), the Federal Trade Commission ("FTC") or any other Governmental
Entity, as applicable. Neither Seller, Purchaser nor Parent shall be required
hereunder to divest itself of any assets, properties or businesses, and neither
Seller, Purchaser nor Parent shall be required to consent to any modification or
amendment of this Agreement if requested by DOJ, FTC or any other Governmental
Entity, as applicable. In the event an action is instituted by DOJ, FTC or any
other Governmental Entity, as applicable, challenging the Acquisition as
violative of applicable antitrust laws or an investigation is commenced, neither
Seller, Purchaser nor Parent shall be obligated to resist or resolve such action
or investigation. Each of Seller and Purchaser will notify the other of all
correspondence, filings or communications between such party and its
representatives, on the one hand, and DOJ, FTC or any other Governmental Entity,
as applicable, on the other hand, with respect to this Agreement, the Ancillary
Agreements and the transactions contemplated herein and therein. Each of Seller,
Purchaser and Parent will furnish the other with such necessary information and
reasonable assistance as such other parties may request in connection with the
preparation of the HSR Filings. Each of Purchaser, Seller, and Parent shall,
from time to time and on a reasonably timely basis, advise the other, of its
designated representatives, in reasonable detail of the status and progress of
Purchaser's or Seller's, as applicable, HSR Filings.
8.3. Further Assurances. Except as otherwise set forth in this
Agreement, prior to and following the Closing each party to this Agreement
agrees to cooperate fully with the other party and to execute such further
instruments, documents and agreements, and to give such further written
assurances, as may be reasonably requested by any other party to better evidence
and reflect the transactions described herein and the Ancillary Agreements and
contemplated herein and therein and to carry into effect the intent and purposes
of this Agreement.
ARTICLE IX
CONDITIONS TO CLOSING
9.1. Conditions to Each Party's Obligations. The respective obligations
of each party to this Agreement to consummate the transactions to be performed
by such party at the Closing are, at the option of such party, subject to the
satisfaction at or prior to the Closing of the following conditions:
(a) No Orders. No order shall have been entered, and not vacated,
by a court or administrative agency of competent jurisdiction, in any action or
proceeding which enjoins, restrains or prohibits the Acquisition or consummation
of any other transaction contemplated herein.
(b) Permits, Authorizations and Approvals. All material permits,
authorizations, approvals and orders required to be obtained under all
applicable Laws or Decrees in connection with the transactions contemplated
herein, including but not limited to any applicable consent or termination of
any
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applicable waiting period under the HSR Act, shall have been obtained and shall
be in full force and effect at the Closing Date.
(c) No Litigation. There shall be no litigation pending or
threatened by any Governmental Entity or private party in which (i) an
injunction is or may be sought against the Acquisition or any other transaction
contemplated herein or (ii) relief is or may be sought against any party hereto
as a result of this Agreement and in which, in the good faith judgment of the
board of directors of each of Purchaser and Seller (relying on the advice of its
respective legal counsel), such Governmental Entity or private party has the
probability of prevailing and such relief would have a material adverse effect
upon such party.
9.2. Conditions to Obligations of Seller. The obligations of Seller
to consummate the transactions to be performed by it at the Closing are, at the
option of Seller, subject to the satisfaction at or prior to the Closing of the
following additional conditions:
(a) Representations and Warranties. All of the representations
and warranties of Parent and Purchaser set forth in ARTICLE V hereof shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as if such representations and warranties had been made at
the Closing, and each of Parent and Purchaser shall have delivered to Seller a
certificate (the "Parent Compliance Certificate" and "Purchaser Compliance
Certificate", respectively) to such effect dated as of the Closing Date and
signed by the President or a Vice President of Parent or Purchaser,
respectively.
(b) Performance. All of the terms, covenants and conditions of
this Agreement to be complied with and performed by Purchaser at or prior to the
Closing shall have been duly complied with and performed in all material
respects, and Parent and Purchaser shall have delivered to Seller the Parent
Compliance Certificate and the Purchaser Compliance Certificate to such effect.
(c) Payment of Purchase Price. Purchaser shall have delivered
the Purchase Price net of the Escrow Fund to Seller in accordance with Sections
2.5 and 2.6 hereof.
(d) Ancillary Agreements. Purchaser shall have executed and
delivered to Seller each of the Ancillary Agreements, each in the forms attached
hereto as Exhibits A-1 through A-5.
(e) Escrow Fund and Escrow Fund Agreement. Purchaser shall have
deposited the Escrow Fund with the Escrow Agent and shall have delivered to
Seller a copy of the Escrow Fund Agreement, in the form attached hereto as
Exhibit B executed by each of Purchaser and the Escrow Agent.
(f) ▇▇▇▇ of Sale, Assignment and Assumption Agreement.
Purchaser shall have executed and delivered to Seller the ▇▇▇▇ of Sale,
Assignment and Assumption Agreement, in the form attached hereto as Exhibit C.
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(g) Opinion of Counsel to Purchaser. Seller shall have received
from ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP, counsel to Purchaser, an opinion dated as
of the Closing Date and substantially in the form attached hereto as Exhibit D.
(h) Fairness Opinion. Seller shall have received from ▇▇▇▇▇▇▇
▇▇▇▇▇ Securities, Inc. an opinion as to the fairness of the Acquisition to
Seller.
(i) Purchaser's Closing Deliverables. At the Closing, Purchaser
will deliver to Seller the following items:
(i) the Purchase Price via wire transfer in
accordance with Sections 2.5 and 2.6 hereof;
(ii) the Purchaser Compliance Certificate and Parent
Compliance Certificate in accordance with Section 9.2(a) and (b) hereof;
(iii) the executed opinion of counsel to Purchaser in
accordance with Section 9.2(g) hereof;
(iv) executed copies of the Escrow Fund Agreement, the
▇▇▇▇ of Sale, Assignment and Assumption Agreement and each of the Ancillary
Agreements executed by Purchaser;
(v) a certificate, signed by the Secretary of
Purchaser, certifying as to the truth and accuracy of, and attaching copies of,
all board of directors resolutions adopted in connection with the Acquisition;
(vi) a certificate, signed by the Secretary of Parent,
certifying as to the truth and accuracy of, and attaching copies of all board
resolutions adopted in connection with the Acquisition; and
(vii) all other documents required to be delivered to
Seller by Purchaser or Parent on or before the Closing under this Agreement.
9.3. Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions to be performed by it at the Closing
are, at the option of Purchaser, subject to the satisfaction at or prior to the
Closing of the following additional conditions:
(a) Representations and Warranties. All the representations and
warranties of Seller set forth in ARTICLE IV hereof shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as if such representations and warranties had been made at the Closing,
and Seller shall have delivered to Purchaser a certificate (the "Seller
Compliance Certificate") to such effect dated as of the Closing Date and signed
by the President or a Vice President of Seller.
(b) Performance. All of the terms, covenants and conditions of
this Agreement to be complied with and performed by Seller at or prior to the
Closing shall have been duly
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complied with and performed in all material respects, and Seller shall have
delivered to Purchaser the Seller Compliance Certificate to such effect.
(c) Required Consents. Any and all third party and Government
Entity consents listed on Schedule 4.4 which are required to allow the
consummation of the Acquisition and the other transactions contemplated herein
shall have been obtained and delivered to Purchaser.
(d) Opinion of Counsel to Seller. Purchaser shall have received
from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC, counsel to Seller, an opinion dated as of the Closing
Date and substantially in the form attached as Exhibit E hereto.
(e) Material Adverse Change. There shall have been no Material
Adverse Change from April 30, 1998, through the Closing Date.
(f) Ancillary Agreements. Seller shall have executed and
delivered to Purchaser each of the Ancillary Agreements, each in the forms
attached hereto as Exhibits A-1 through A-5.
(g) Escrow Fund Agreement. Seller shall have executed and
delivered to Purchaser the Escrow Fund Agreement in the form attached hereto as
Exhibit B.
(h) ▇▇▇▇ of Sale, Assignment and Assumption Agreement. Seller
shall have executed and delivered to Purchaser the ▇▇▇▇ of Sale, Assignment and
Assumption Agreement in the form attached hereto as Exhibit C.
(i) Fairness Opinion. Purchaser shall have received from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ an opinion as to the fairness of the Acquisition to
Purchaser.
(j) Seller's Closing Deliverables. At the Closing, Seller will
deliver to Purchaser the following items:
(i) the Assets by making the Assets available to
Purchaser at their present locations;
(ii) the Seller Compliance Certificate in accordance
with Section 9.3(a) and (b) hereof;
(iii) all required third party and Government Entity
consents in accordance with Section 9.3(c) hereof;
(iv) the executed opinion of counsel to Seller in
accordance with Section 9.3(d) hereof;
(v) executed copies of the ▇▇▇▇ of Sale, Assignment
and Assumption Agreement, the Escrow Fund Agreement and each of the Ancillary
Agreements executed by Seller;
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(vi) a certificate, signed by the Secretary of Seller,
certifying as to the truth and accuracy of, and attaching copies of all board of
directors resolutions adopted in connection with the Acquisition;
(vii) all other documents required to be delivered to
Purchaser on or before the Closing Date under the provisions of this Agreement.
ARTICLE X
POST-CLOSING MATTERS
10.1. New Purchaser Employees.
(a) Employment Offers. (i) Immediately following the Closing,
Purchaser shall make offers of employment to all of the Employees at rates of
compensation and with bonus opportunities and benefits, which taken as a whole,
are no less favorable than those provided by Seller to the Employees as of the
Closing Date. Such offers of employment shall (A) be in writing substantially in
the form of Schedule 10.1(a) attached hereto, (B) provide for employment to
commence with Purchaser as of the Employee Termination Date with respect to each
such Employee, and (C) be conditioned upon such Employee's continued employment
with Seller or its Affiliates through the Employee Termination Date. All
employment arrangements between Purchaser and the New Purchaser Employees, will
be negotiated directly between Purchaser and such employees.
(ii) Seller agrees to use its reasonable commercial
efforts to retain each Employee up to the Employee Termination Date and assist
Purchaser in securing the employment of each of the Employees after the Closing.
Seller shall not transfer any Employee to an assignment unrelated to the
Business prior to Closing without the prior written consent of Purchaser. Seller
shall notify Purchaser promptly if, notwithstanding the foregoing, any Employee
terminates his or her employment with Seller prior to the Employee Termination
Date or submits his or her resignation to terminate employment effective after
the Employee Termination Date. Seller shall terminate the employment of each
Employee immediately upon the Employee Termination Date with respect to such
Employee, and Seller shall not pay any severance to any Employee so terminated
unless required to do so by law and except as disclosed on Schedule 4.9(c). All
obligations of Seller with respect to each Employee through the Employee
Termination Date, including obligations for salary, sales commissions, bonus
compensation, payroll taxes, contributions to pension plans and all other
Employee Plans, fringe benefits, and vacation pay, shall remain the sole
obligations of Seller, subject to the reimbursement obligations of Purchaser
under the Transition Services and Facilities Agreements.
(b) Employment Taxes. (i) Seller shall be solely responsible
for any withholding or employment Taxes with respect to all Employees,
including New Purchaser Employees, through the applicable Employee Termination
Date, which accrue or become payable during the period of such person's
employment or service with Seller or arise out of the termination of such
person's employment or service with Seller, including any termination arising
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out of such person becoming employed by Purchaser. Seller shall be solely
responsible for filing all employee related Tax Returns with respect to such
persons attributable to periods of employment or service with Seller. Seller
shall provide Purchaser with access to all books and records and copies of all
Tax filings related to employment Taxes paid with respect to any New Purchaser
Employees for the period from January 1, 1998 through the applicable Employee
Termination Date.
(ii) Purchaser shall be solely responsible for any
withholding or employment Taxes with respect to any of the New Purchaser
Employees following the applicable Employee Termination Date, which accrue or
become payable during the period of such person's employment or service with
Purchaser, or arise out of the termination of such person's employment or
service with Purchaser. Purchaser shall be responsible for filing all tax
returns with respect to such persons attributable to periods of employment or
service with Purchaser.
(c) Compensation; Contractual Obligations. (i) Seller shall be
solely liable for and obligated to pay and shall indemnify and hold Purchaser
and its Affiliates harmless from any and all liabilities with respect to (A) any
of Seller's obligations under this Section 10.1, (B) any claims or obligations
arising out of the employment of any person by Seller, whether for salary,
wages, bonuses, commissions, severance, accrued vacation, vacation pay, sick pay
or otherwise, (C) mortgage assistance provided to any Employee, or (D) any claim
by any Employee arising out of the Acquisition.
(ii) Should any New Purchaser Employee at the time of
acceptance of Purchaser's employment offer, elect to roll over up to 55 hours of
paid vacation benefits accrued with Seller, Purchaser shall make such paid
vacation benefits available for use at any time after the applicable Employee
Termination Date; provided, however, to the extent required by applicable law,
the parties agree that New Purchaser Employees located in England, Germany or
France shall be entitled to roll over all paid vacation benefits accrued with
Seller up to the applicable Employer Termination Date. Seller shall pay
Purchaser the amount of any such rollover vacation benefits with respect to any
New Purchaser Employee within fifteen (15) days after the end of the month
during which the Employee Termination Date occurred for such New Purchaser
Employee; provided, further, that such amount may be offset against amounts owed
by Purchaser under the Transaction Services and Facilities Agreement.
(iii) Purchaser shall recognize service with Seller or
its Affiliates by Employees for purposes of vacation accrual and for purposes of
eligibility and vesting under Purchaser's 401(k) Plan.
(iv) Each New Purchaser Employee shall be eligible to
participate in all benefit plans of Purchaser immediately upon hiring.
(d) Seller Employee Plans.
(i) With respect to Employees based in the United
States: (A) Seller agrees that it will comply with COBRA after the Employee
Termination Date with respect to all Employees who are qualified beneficiaries
who had a qualifying event as of or prior to the
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applicable Employee Termination Date, including with respect to New Purchaser
Employees, who are entitled to elect COBRA coverage under Seller's Employee
Plans that provide medical coverage within the meaning of Section 213(d) of the
Code or that are subject to COBRA, or as otherwise may be required by applicable
law, and (B) Purchaser is not intended to be and is not a successor employer to
Seller for any purpose, including with respect to COBRA, and no benefit plan
sponsored or maintained by Purchaser is intended to be and no such plan shall be
a successor plan to any Seller Employee Plan. The Seller and Purchaser intend
that no COBRA obligations will arise with respect to the Seller's Code Section
125 Plan with respect to New Purchaser Employees whose Code Section 125 health
and/or dependent care accounts are transferred to Purchaser pursuant to (iii)
below.
(ii) Pursuant to the Provisions of Code Section
401(k)(10)(A) (ii) and the Regulations promulgated thereunder, and other
relevant provisions of the Code, as soon as administratively feasible after the
end of the calendar quarter immediately following the applicable Employee
Termination Date, Seller shall provide each New Purchaser Employee who is a
participant in Seller's Profit Sharing Plan, the option to take a distribution
of such employee's Profit Sharing Plan assets, which assets may then be (i)
rolled over to an Individual Retirement Account, (ii) rolled over to another
employer's tax-qualified retirement plan or (iii) distributed directly to such
employee.
(iii) With respect to each New Purchaser Employee,
Seller will transfer to Purchaser within fifteen (15) days after the end of the
month during which the Employee Termination Date occurred with respect to such
employee assets equal to the amount that the employee had contributed through
salary reduction to the Seller's Health Care Reimbursement Program and/or the
Seller's Dependent Care Reimbursement Program under the Seller's Code Section
125 Plan, from January 1, 1998 through the applicable Employee Termination Date,
less any reimbursements paid to the employee for claims incurred in 1998 ("the
Code Section 125 Transfer").
Upon Purchaser's receipt of the Code Section 125
Transfer, each New Purchaser Employee will immediately begin participating in a
Health Care Reimbursement Program and/or Dependent Care Reimbursement Program
maintained by Purchaser ("Purchaser Code Section 125 Plan") for the remainder of
the 1998 calendar year, subject to the following conditions: (a) new Purchaser
Employees are not permitted to change the amount they previously elected to
contribute to their health and/or dependent care reimbursement accounts for the
1998 calendar year solely because of the Code Section 125 Transfer. Employees
may change elections to the extent permitted by Purchaser and Code section 125
and the regulations thereunder; (b) each New Purchaser Employee will be credited
with an opening account balance equal to such employee's current account balance
in the Seller's Health Care Reimbursement Program and/or the Seller's Dependent
Care Reimbursement Program; (c) Purchaser will deduct from each such employee's
pay on a pre-tax basis the amount which the employee previously elected to
contribute to the Seller's Health Care Reimbursement Program and/or the Seller's
Dependent Care Reimbursement Program; (d) Purchaser will reimburse each such
employee for unreimbursed, eligible dependent care expenses incurred during the
1998 calendar year, up to the amount actually credited to the employee's
dependent care reimbursement account; (e) Purchaser will reimburse each such
employee for unreimbursed, eligible health care expenses up to the full
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amount elected for contribution for the 1998 calendar year (less any
reimbursements previously paid), even if the amount actually credited to the
employee's health care reimbursement account does not cover the expense; (f) any
amounts remaining in the health and dependent care reimbursement accounts under
the Purchaser's Code Section 125 Plan after the grace period for submitting
claims for the 1998 calendar year will revert to Purchaser; and (g) Seller shall
be responsible for health care and/or dependent care claims submitted by New
Purchaser Employees on or before the Employee Termination Date. Purchaser shall
be responsible for any health care and/or depending care claims submitted after
the Employee Termination Date, including those claims for expenses that may have
been incurred prior to the Employee Termination Date but for which no claim has
been submitted.
(iv) Seller shall be responsible for any liability for
claims filed with respect to any Employee eligible for coverage, reimbursement
and/or benefits under the terms of any Employee Plan maintained by Seller,
provided such liability (A) accrued or became payable during the period of such
person's employment or service with Seller, (B) accrued or became payable as a
result of such person's employment or service with Seller, or (C) arose out of
the termination of such person's employment with Seller. This provision shall
not apply to liability for claims with respect to amounts transferred under the
Code Section 125 Transfer.
(v) Seller shall be responsible for any liability for
all accrued benefits with respect to any former or current Employee who, as a
result of their employment or service with Seller, was a participant in any
Employee Plan maintained by Seller. This provision shall not apply to liability
for accrued benefits with respect to amounts transferred under the Code Section
125 Transfer. Seller shall treat all New Purchaser Employees as having completed
the 1998 Fiscal Year as an employee for purposes of determining eligibility for
employer fixed contributions under the Seller's Profit Sharing Plan.
(vi) Seller shall be responsible for making all
payments to New Purchaser Employees pursuant to commission or incentive programs
or plans for periods ending on or before May 31, 1998. For each New Purchaser
Employee who was eligible for payments from Seller pursuant to a commission or
incentive programs or plans for the fiscal quarter or the fiscal year ended June
30, 1998, Purchaser shall make such payments on or before July 31, 1998. With
respect to any such bonuses or commissions based up revenues from such fiscal
quarter or fiscal year, Seller shall promptly reimburse Purchaser for the amount
of such payments based upon revenue recognized by Seller during the relevant
period, and Purchaser shall be responsible for the amount of such payments based
upon revenue recognized by Purchaser during the relevant period. With respect to
any discretionary bonuses, Seller and Purchaser shall cooperate to pay such
bonuses in accordance with Seller's past practices, and Seller shall promptly
reimburse Purchaser for its proportionate share of such bonuses based upon the
time during the relevant period that each employee was employed by Seller. With
respect to any such reimbursements to be paid by Seller to Purchaser, Seller
shall have the right to offset against such reimbursement the amount of draws
advanced by Seller to any New Purchaser Employee for the relevant period in
excess of what Seller is responsible for with respect to such employee as
determined hereunder.
(e) No Solicitation or Hiring of Former Employees. (i) Seller
acknowledges that the value of the Acquisition to Purchaser is dependent in
large part upon the hiring of the
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Employees and the retention of the know how related to the ongoing Business
which is strictly in the possession of such persons. Accordingly, Seller agrees
that, for a period of two (2) years after the Closing Date (the
"Non-Solicitation Period"), it shall not, and shall cause its subsidiaries and
Affiliates not to, without first obtaining the written consent of Purchaser,
which consent may be withheld for any reason, hire or attempt to hire, directly
or indirectly, solicit or attempt to solicit any Employee or any other person
who is employed by Purchaser or its subsidiaries or Affiliates to leave his or
her employer or to become an employee of Seller or any of its subsidiaries or
Affiliates.
(ii) Purchaser acknowledges that Seller has provided
Purchaser with access to certain of its employees and retention of such
employees (other than the Employees) by Seller as a material component of the
Acquisition. Accordingly, except as contemplated by this Agreement, Purchaser
agrees that, during the Non-Solicitation Period, it shall not, and shall cause
its subsidiaries and Affiliates not to, without first obtaining the written
consent of Seller, which consent may be withheld for any reason, hire or attempt
to hire, directly or indirectly, solicit or attempt to solicit any person who is
employed by Seller or its subsidiaries or Affiliates to leave his or her
employer or to become an employee of Purchaser or any of its subsidiaries or
Affiliates.
(iii) In the event a New Purchaser Employee commences
employment with Seller, or an employee of Seller (other than a New Purchaser
Employee) commences employment with Purchaser during the Non-Solicitation
Period, the Seller or Purchaser, as the case may be, shall pay the other party
an amount equal to two (2) times such person's annual salary. The parties
acknowledge and agree respectively, that (x) the damages to either party in the
event that any employee of such party leaves his or her employment and
thereafter commences employment or engagement with the other party during the
nonsolicitation period would be difficult to measure accurately, (y) the payment
set forth in the immediately preceding sentence will constitute liquidated
damages in such event and (z) such payments set forth in the immediate preceding
sentence are not excessive or punitive and are in no way intended as penalty.
(f) No Rights Conferred Upon Employees. Nothing in this
Agreement shall confer any rights or remedies on any Employee (including without
limitation any New Purchaser Employee) and no person (including without
limitation any New Purchaser Employee) shall be a person's beneficiary with
respect to any provision in this Agreement.
10.2. New Purchaser Consultants.
(a) Seller shall be solely responsible for and obligated to
pay, and shall indemnify and hold Purchaser and any Affiliates thereof harmless
from, any and all liabilities with respect to New Purchaser Consultants for (A)
payment for services which were supplied to Seller by such persons on or prior
to the Closing Date, (B) filing all tax returns required with respect to such
services, and (C) withholding or employment Taxes or benefits under any Employee
Plan which accrue or become payable with respect to such services as a result of
a determination by an appropriate Government Entity that such individual is
Seller's employee under applicable law.
(b) Purchaser shall be solely responsible for and obligated to
pay, and shall indemnify and hold Seller and any Affiliates thereof harmless
from, any and all liabilities with respect to independent contractors or other
individuals provided by third parties whom Purchaser
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or any Affiliate thereof engages to supply services for (A) payment for services
which are provided to Purchaser or any Affiliate thereof by such persons after
the Closing Date, (B) filing all tax returns required with respect to such
services, and (C) withholding or employment Taxes or benefits under any of
Purchaser's Employee Plans which accrue or become payable with respect to such
services as a result of a determination by an appropriate Government Entity that
such individual is Purchaser's employee under applicable Law.
10.3. Affiliate and Third Party Distributor Agreements. Pursuant to
the terms of the Transition Distribution Agreement, Seller shall use reasonable
commercial efforts to take such actions as are necessary to effectuate the
removal of all Affiliate Distributor Agreements and Third Party Distributor
Agreements from the list of Permitted Encumbrances.
10.4. Obtaining Necessary Consents for Assignment of the Assumed
Contracts. After the Closing Date, Seller shall use reasonable commercial
efforts to obtain any and all consents necessary for the effective assignment to
and assumption by Purchaser of the Assumed Contracts. All such consents shall be
in writing in a form reasonably acceptable to counsel to Purchaser and executed
counterparts thereof shall be delivered promptly to Purchaser. Seller shall not
agree to any modification of any Assumed Contract in the course of obtaining any
such consent, where such modification would materially [or] adversely effect
Purchaser's ability to continue the Business as heretofore conducted. To the
extent permitted by applicable law, until such consents are obtained by Seller,
such Assumed Contracts shall be held, as and from the Closing Date, by Seller in
trust for Purchaser and the covenants and obligations thereunder (related to the
Assets or Amended Liabilities) shall be performed by Purchaser in Seller's name
and all benefits and obligations existing thereunder (related to the Assets or
Assumed Liabilities) shall be for Purchaser's account (provided, however, that
such performance by Purchaser shall be contingent on the passing of all such
benefits of such Assumed Contracts to Purchaser). Seller shall take or cause to
be taken such actions in its name or otherwise as Purchaser may reasonably
request so as to provide Purchaser with the benefits of the Assumed Contracts
(as they relate to the Assets) and to effect collection of money or other
consideration to become due and payable under the Assumed Contracts, and Seller
shall promptly pay over to Purchaser all money or other consideration received
by it in respect to all Assumed Contracts (as they relate to the Assets). As of
and from the Closing Date, Seller authorizes Purchaser, to the extent permitted
by applicable law and the terms of the Assumed Contracts, at Purchaser's
expense, to perform all the obligations and receive all the benefits of Seller
under the Assumed Contracts (as they relate to the Assets or the Assumed
Liabilities) and appoints Purchaser its attorney-in-fact to act in its name and
on its behalf with respect thereto.
10.5. Covenant Not to Compete.
(a) For a period of five (5) years from the Closing Date,
Seller covenants and agrees that it will not engage in the business of
developing, marketing, selling or supporting (i) merchandise planning software
products to customers in the retail or consumer packaged goods industries or
(ii) AIM star schema data structure specifically designed for merchandise
planning; provided, however, that Purchaser agrees that Seller may sell or
license its other products without such restriction.
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(b) For a period of two (2) years from the Closing Date, Seller
covenants and agrees that it will not directly or indirectly enter into any
relationship, including without limitation any relationship involving the
transfer, sale, license, assignment or other transaction involving, non-retail
components of AIM or Comshare Decision (or other software products similar to
Performance Analysis) with any Competitor Retail Software Vendor, unless and
until, with respect to a given entity, such entity becomes an Affiliate of a
third party entity (as a result of merger, acquisition or otherwise) that itself
is not a Competitor Retail Software Vendor. To the full extent of its legal
right to do so, Seller shall require its Affiliates to comply with the foregoing
provisions.
(c) To the fullest extent allowed under applicable law, the
restrictions set forth in this Section 10.5 shall be effective within all
cities, counties and states of the United States, and all other countries in
which Seller has engaged in licensing or sales activities or otherwise conducted
business or selling or licensing efforts during the two (2) year period ending
on the Closing Date.
(d) Nothing contained in this Section 10.5 shall prohibit
Seller from owning up to one percent (1%) of the outstanding shares of any class
of equity securities of a corporation engaged in any such prohibited activity
whose securities are listed on a national securities exchange or quoted daily in
the over-the-counter listings of The Wall Street Journal.
(e) Seller agrees that the terms and time period provided for,
and the geographical area encompassed by, the covenants contained in this
Section 10.5 are necessary and reasonable in order to protect Purchaser in the
conduct of the Business and the utilization of the Assets, tangible and
intangible, including the goodwill of Seller relating to the Business, acquired
pursuant to this Agreement.
(f) If any court having jurisdiction at any time hereafter
shall hold any provision or clause of this Section 10.5 to be unreasonable as to
its scope, territory or term, and if such court in its judgment or decree shall
declare or determine that scope, territory or term which such court deems to be
reasonable, then such scope, territory or term, as the case may be, shall be
deemed automatically to have been reduced or modified to conform to that
declared or determined by such court to be reasonable.
(g) It is expressly agreed that monetary damages would be
inadequate to compensate Purchaser for any breach by Seller of Seller's
covenants as set forth in this Section 10.5 and, accordingly, that in the event
of any breach or threatened breach by Seller of any such covenant, Purchaser
will be entitled to seek and obtain preliminary and permanent injunctive relief
in any court of competent jurisdiction, in addition to any other remedies at law
or in equity to which Purchaser may be entitled.
10.6. Access to Business Records. From and after the Closing Date,
Purchaser shall use ordinary care to maintain the Business Records acquired by
it pursuant hereto and, damage by fire or other casualty or accident excepted,
shall not for a period of six (6) years after the Closing Date destroy or
dispose of any such Business Records unless it shall first have notified Seller
of its intention to do so and shall have afforded Seller an opportunity to take
possession thereof. Seller
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shall have the right to retain an archive copy of the Business Records.
Similarly, from and after the Closing Date, Seller shall use ordinary care to
maintain Seller's copy of the Business Records are of any records relating to
the Business not transferred to Purchaser and, damage by fire or other casualty
or accident excepted, shall not for a period of six (6) years after the Closing
Date destroy or dispose of any such records unless it shall first have notified
Purchaser of its intention to do so and shall have afforded Purchaser an
opportunity to take possession thereof. From and after the Closing Date, each
party shall afford the other access to all preclosing Business Records and other
information acquired or retained by it pursuant hereto, including data
processing information, upon reasonable notice during ordinary business hours
for all reasonable business purposes, and each party shall permit the other
party to make copies of any such records and retain possession of such copies.
Each of Purchaser and Seller shall use reasonable care to maintain the
confidentiality of the Business Records in the possession of such party pursuant
to the terms and subject to the conditions set forth in the Confidentiality
Agreement.
10.7. Confidentiality.
(a) Definition. As used in this Agreement, the term
"Confidential Information" shall mean any trade secrets and other confidential
or proprietary business, technical, personnel or financial information, in
written, graphic, oral or other tangible or intangible forms, including but not
limited to specifications, samples, records, data, computer programs, drawings,
diagrams, models, customer names, business or marketing plans, studies,
analysis, projections and reports, communications by or to attorneys (including
attorney-client privileged communications), memos and other materials prepared
by attorneys or under their direction (including attorney work product), and
software systems and processes. Any information which is not readily available
to the public shall be considered to be a trade secret and confidential and
proprietary, even if it is not specifically marked as such, unless the
disclosing party ("Disclosing Party") advises the other party ("Recipient")
otherwise in writing.
(b) Non-Disclosure Obligation. Each Party shall treat as
confidential all Confidential Information of the Disclosing Party and shall not
disclose any such Confidential Information conveyed to the Recipient from any
source prior to the Closing. It is expressly understood and agreed that any such
Confidential Information conveyed to Recipient is intended for the Recipient's
internal use only to perform Recipient's obligations hereunder, and shall be
protected by the Recipient with the same diligence, care, and precaution (but in
no event less than reasonable care) that the Recipient uses to protect its own
Confidential Information. Both parties agree not to disclose the specific
contents or provisions of this Agreement without the prior express written
consent of the other party, except as required under applicable law or stock
exchange requirements. Either party may disclose Confidential Information of the
other party to third parties provided that: (i) the disclosure of such
Confidential Information is pursuant and necessary to the performance of the
Recipient's obligations under this Agreement, and (ii) such third party agrees
to be bound by the provisions of this Section 10.7.
(c) Exceptions to Confidentiality Obligation. No party shall
have any obligation with respect to disclosure and use of information to the
extent such information:
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(i) Is or becomes generally available to the public
other than as a consequence of a breach of an obligation of confidentiality by
the Recipient;
(ii) Is made public by the Disclosing Party;
(iii) Is independently developed by Recipient;
(iv) Is received from a third party independent of
either party without breaching an obligation of confidentiality; or
(v) Is required to be disclosed by operation of law.
(d) Injunctive Relief. Both parties agree that it would be
extremely difficult to measure the amount of damages to the other party from a
breach or a threatened breach of any covenant contained in this Section 10.7,
and that money damages would be an inadequate remedy, and that in such event the
damaged party shall be entitled to temporary and permanent injunctive relief to
restrain the other party from such breach or threatened breach. In the event
that any covenant made in this Section 10.7 shall be more restrictive than
permitted by applicable law, it shall be limited to the extent which it is
permitted. Nothing in this Section 10.7 shall be construed as preventing either
party from pursuing any and all remedies available for a breach or threatened
breach of a covenant made in this Section 10.7, including the recovery of
monetary damages from the other party (and/or its employees).
(e) Ownership of Confidential Information. Except as otherwise
provided for in this Agreement, Recipient agrees that all Confidential
Information acquired by Recipient's personnel, by Recipient or its employees,
subcontractors or agents hereunder shall be and shall remain the Disclosing
Party's exclusive property
10.8. Tax Liability and Tax Returns. Seller shall pay all Taxes
arising from or relating to the transactions contemplated in this Agreement,
including but not limited to any sales, use, GST, VAT or other similar Tax. The
Seller will be responsible for the preparation and filing of all Tax Returns for
Taxes accrued for any period ending on or before the Closing Date. The Seller
will make all payments required with respect to any such Tax Return; provided,
however, that Purchaser will reimburse Seller concurrently therewith to the
extent any payment the Seller is making relates to the Taxes accrued for any
period commencing after the Closing Date. The Purchaser will be responsible for
the preparation and filing of all Tax Returns for Taxes accruing after the
Closing Date. The Purchaser will make all payments required with respect to any
such Tax Return; provided, however, that Seller will reimburse Purchaser
concurrently therewith to the extent any payment the Purchaser is making relates
to the Taxes accrued for any period ending on or before the Closing Date.
10.9. French Legal Requirements. The parties shall undertake all steps
necessary to implement the terms and conditions of this Agreement in compliance
with French Laws and Decrees and to observe all legal requirements thereunder,
including but not limited to causing their respective French Affiliates to
execute such agreements and transfer documents as required by, and in such form
as complies with, French Laws and Decrees.
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10.10. Source Code. After the Closing Date, Seller shall cooperate with
Purchaser and use reasonable commercial efforts to locate all copies of the
Source Code for each of the Products and prepare a definitive list setting forth
the location and the Person who is in possession of each such copy. The parties
agree to place a copy of the Source Code for each of the Products with an
independent third party to be held in escrow indefinitely. The selection of such
third party will be subject to the approval of each party, which approval shall
not be unreasonably withheld. Seller shall be responsible for all costs and
expenses related to such Source Code escrow.
10.11. Communications Plan; Press Release. Purchaser and Seller shall
use their respective reasonable commercial efforts to carry out the
communications plan as agreed to between the parties as of the date of this
Agreement with respect to communications to their respective customers,
suppliers, employees, investors and strategic partners concerning the
transactions contemplated hereby. Upon the Closing, Purchaser and Seller shall
issue separate press releases concerning the Acquisition, which press releases
shall be approved as to form and content by each party, which approvals shall
not be unreasonably withheld.
10.12. Transition Services. From and after the Closing Date, Seller
shall provide Purchaser with transition services and facilities in accordance
with the terms of the Transition Services and Facilities Agreement.
10.13. Further Assurances of Seller. Seller shall at any time or from
time to time after the Closing Date, at the request of Purchaser and without
further consideration, execute and deliver to Purchaser such instruments of
transfer, conveyance and assignment in addition to those delivered pursuant to
Sections 2.1 and 9.3 hereof, provide such material and information and take such
other actions as Purchaser may reasonably deem necessary or desirable in order
more effectively to assign, transfer, convey and vest title in Purchaser, and to
put Purchaser in possession and operating control of, the Assets, and to assist
Purchaser in exercising all rights with respect thereto, including but not
limited to obtaining any and all required consents of third parties which Seller
has not obtained as of the Closing Date and taking all necessary action to
register the copyrights in and to all of the Products.
10.14. Further Assurances of Purchaser. Purchaser shall, from time to
time at the request of Seller, and without further consideration, execute and
deliver such instruments of assumption, and take such other action, as may be
reasonably necessary to effectively confirm the assumption by Purchaser of the
Assumed Liabilities.
10.15. Deferred Revenue.
(a) Seller will pay Purchaser the cash collected by Seller
related to Deferred Revenue less (i) related royalties payable by Purchaser to
Seller under any Ancillary Agreement and (ii) related agency finders fees under
existing Third Party Distribution Agreements. Payment for cash amounts collected
on or before Closing shall be made within fifteen (15) days after the Closing
Date, and payment for cash amounts collected after the Closing shall be made
within fifteen (15) days after the end of the month in which the cash was
collected and may be offset against payments owed by Purchaser under the
Transition Services and Facilities Agreement.
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(b) Purchaser will pay Seller the cash collected by Purchaser
related to (i) Accounts Receivable (other than those listed on Schedule 1.21)
and (ii) revenue recognized by Seller but unbilled as of the Closing Date
related to the transactions listed on Schedule 10.15. Payment will be made
within fifteen (15) days after the end of the month in which the cash was
collected.
(c) Seller will continue its collection efforts related to
Accounts Receivable for Deferred Revenue through July 31, 1998. At Seller's
request, Purchaser will cease providing maintenance to any customer that has an
outstanding Account Receivable as of that date. If Purchaser subsequently
reinstates maintenance for such customer within twelve (12) months of the
Closing Date and collects amounts due for past maintenance service provided by
Seller, Purchaser will pay Seller for Seller's pro-rata share of the maintenance
revenue for the period prior to the Closing Date. Nothing in the forgoing will
prohibit Purchaser from reinstating maintenance service for a previously
delinquent customer or from providing maintenance pursuant to a valid written
agreement to any previously delinquent customer. Purchaser will use reasonable
commercial efforts to collect past due fees from customers and to charge
previously delinquent customers a reinstatement fee to reinstate maintenance in
order to collect past due amounts on behalf of Seller.
(d) Each party shall make available to the other party the
records reasonably necessary to enable that party to verify the accuracy of the
payments made under this section.
10.16. Additional Covenants of Purchaser. After the Closing, Purchaser
shall use reasonable commercial efforts to do the following:
(a) Complete consulting and implementation services obligations
and work in process under any Assumed Contract as of the Closing Date;
(b) Commercially released ▇▇▇▇▇▇ Assortment Planning;
(c) Take the actions necessary to ensure that the Current
Version and future versions of the Products are Year 2000 Compliant; and
(d) Take the actions described in Section 2.4(c)(ii).
(e) Upon receipt of thirty (30) day written notice from Seller,
provide an account of revenues generated from sales of Assortment Planning to
Seller; provided, however, that such obligation shall not extend for sales
beyond June 30, 1999.
10.17. Additional Covenants of Seller. After the Closing, Seller shall:
(a) Within ninety (90) days after Closing, deliver to Purchaser
true, correct and complete copies of any and all Customer License Agreements not
delivered to Purchaser on or before the Closing; and
(b) Receive and hold in trust for Purchaser any Assets received
by or remaining in the possession of Seller after the Closing, including without
limitation, any amounts
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of money or other consideration received by Seller from end users of the
Products under the Assumed Contracts, which amounts Seller shall pay over and
deliver to Purchaser promptly upon receipt thereof.
ARTICLE XI
TERMINATION OF AGREEMENT
11.1. Mutual Consent. This Agreement may be terminated at any time
before the Closing Date, by the mutual written consent of Purchaser and Seller,
approved by their respective boards of directors.
11.2. Termination by Purchaser. This Agreement may be terminated at
any time before the Closing Date by Purchaser upon written notice to Seller,
specifying the basis for such termination, if (a) Seller shall have breached in
any material respect any of its respective covenants or agreements contained in
this Agreement, (b) any representation or warranty of Seller contained in this
Agreement or in any certificate, schedule or exhibit delivered by Seller
pursuant to this Agreement shall have become materially inaccurate or (c) the
Closing shall not have occurred on or before June 30, 1998 because a condition
to Purchaser's obligations to close set forth in Section 9.1 or 9.3 of this
Agreement shall not have been fulfilled; provided, however, that Purchaser's
action or failure to act has not been a principal cause of or resulted in the
failure of such condition and such action or failure to act by Purchaser
constitutes a breach of this Agreement.
11.3. Termination by Seller. This Agreement may be terminated at any
time before the Closing Date by Seller upon written notice to Purchaser,
specifying the basis for such termination, if (a) Purchaser shall have breached
in any material respect any of its covenants or agreements contained in this
Agreement, (b) any representation or warranty of Purchaser contained in this
Agreement or in any certificate, schedule or exhibit delivered by Purchaser
pursuant to this Agreement shall have become materially inaccurate, or (c) the
Closing shall not have occurred on or before June 30, 1998 because a condition
to Seller's obligations to close set forth in Section 9.1 or 9.2 of this
Agreement shall not have been fulfilled; provided, however, that Seller's action
or failure to act has not been a principal cause of or resulted in the failure
of such condition and such action or failure to act by Seller constitutes a
breach of this Agreement.
11.4. Termination for Other Reasons. This Agreement may be terminated
at any time before the Closing Date by either Purchaser or Seller if a court of
competent jurisdiction or other Governmental Entity shall have issued a final
order, decree or ruling, or taken any other action, or failed to grant its
consent, having the effect of permanently restraining, enjoining or otherwise
prohibiting the Acquisition, and all appeals with respect to such order or
action have been exhausted or the time for appeal of such order, decree, ruling,
action or consent shall have expired; provided, however, that the right to
terminate this Agreement under this Section 11.4 shall not be available to any
party hereto which has not complied with its obligations under Section 8.3
hereof.
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11.5. Notice of Termination; Effect of Termination. Any termination of
this Agreement pursuant to Section 11.1 or Section 11.4 above will be effective
immediately upon the delivery of written notice by the terminating party to the
other party to this Agreement in accordance with Section 13.11 of this
Agreement. Any termination of this Agreement pursuant to Section 11.2 or Section
11.3 above will be effective upon the date (the "Date") five (5) days after the
delivery of written notice by the terminating party to the other parties to this
Agreement in accordance with Section 13.11 of this Agreement, unless prior to
the Date such material breach of a covenant or agreement made by the
nonterminating party, such inaccuracy of a representation or warranty made by
the nonterminating party and/or such failure of a condition to the terminating
party's obligations to close has been cured. In the event of the termination of
this Agreement pursuant to Section 11.1 through Section 11.4 of this Agreement,
this Agreement shall be of no further force or effect, and no party to this
Agreement shall have any liability to any other party with respect to this
Agreement; provided, however, that (a) this Section 11.5, Section 11.6 and
ARTICLE XIII (General) shall survive the termination of this Agreement, (b) such
termination of this Agreement shall not affect the respective obligations of the
parties set forth in the Confidentiality Agreement, all of which obligations
shall survive the termination of this Agreement in accordance with the terms and
conditions set forth in the Confidentiality Agreement and (c) no party to this
Agreement shall be relieved from liability for any material and willful (i)
inaccuracy of any representation and warranty made by such party in this
Agreement or in any certificate, schedule or exhibit delivered pursuant to this
Agreement or (ii) breach of any covenant or agreement made by such party set
forth in this Agreement. Nothing herein shall be deemed to require any party to
terminate this Agreement rather than to proceed with the Closing if a condition
precedent to the obligations of such party to close has not been fulfilled.
11.6. Fees and Expenses. Each party to this Agreement shall pay
amounts payable in respect of legal, accounting and financial advisory services
provided by outside advisors and other out-of-pocket expenses incurred incident
to the negotiation, preparation and carrying out of this Agreement, the Escrow
Fund Agreement, the Ancillary Agreements and the transactions contemplated
herein and therein (with respect to each party, "Expenses") whether or not the
transactions contemplated in this Agreement are consummated. Notwithstanding
the foregoing, Purchaser shall pay all fees and expenses due or payable or to
be payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP in connection with the audit and preparation
and delivery of the Financial Statements. If this Agreement is terminated
pursuant to Section XI of this Agreement, then each party to this Agreement
shall pay its own Expenses.
ARTICLE XII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
12.1. Survival of Representations and Warranties. The representations
and warranties made by Seller and Purchaser herein, or in any certificate,
schedule or exhibit delivered pursuant hereto, shall in no manner be limited by
any investigation of the subject matter thereof made by or on behalf of either
party or by the waiver or satisfaction of any condition to closing and shall
survive the Closing and continue in full force and effect for a period of:
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(a) The longer of (i) one (1) year from the Closing Date or
(ii) the period from the Closing Date until thirty (30) days after the
expiration of the applicable statutes of limitation, in the case of the
representations and warranties in Sections 4.5 and 4.10 and all other
representations and warranties in Article IV to the extent that they relate to
title or free and clear ownership of the Assets or to Tax Matters; and
(b) Two (2) years from the Closing Date in the case of
representations and warranties that are not specified in sub-paragraph (a)
above; provided, however, that the representations and warranties set forth in
Sections 4.1, 4.3, 5.1 and 5.2 of this Agreement shall survive for an unlimited
period of time.
The obligations of Seller to indemnify members of the Purchaser Group
(as defined below) for any Indemnifiable Losses is subject to the condition that
Seller shall have received an Indemnification Claim for all Indemnifiable Losses
for which indemnity is sought on or before the expiration date for the
applicable representation or warranty set forth in Section 12.1(a) or (b). The
obligation of Purchaser to indemnify members of the Seller Group for Seller
Losses is subject to the condition that Purchaser shall have received an
Indemnification Claim for all Seller Losses for which indemnity is sought on or
before the expiration date for the applicable representation set forth in
Section 12.1(a) or (b).
12.2. Indemnification by Seller.
(a) Matters Other Than Intellectual Property Infringement.
Subject to the terms and conditions of this ARTICLE XII,
Seller agrees to indemnify, defend and hold harmless Purchaser, its
stockholders, officers, directors, employees and attorneys, all subsidiaries
and affiliates of Purchaser, and the respective officers, directors, employees
and attorneys of such entities (all such persons and entities being
collectively referred to as the "Purchaser Group") from, against, for and in
respect of any and all Losses asserted against, relating to, imposed upon or
incurred by Purchaser and/or any other member of the Purchaser Group by reason
of, resulting from, based upon or arising out of any of the following
(collectively, "Indemnifiable Losses"):
(i) the breach, inaccuracy, untruth or incompleteness
of any representation or warranty of Seller contained in or made pursuant to
this Agreement or any certificate or Schedule delivered by Seller in connection
herewith;
(ii) the breach or nonperformance of any covenant or
agreement of Seller contained in or made pursuant to this Agreement, the Escrow
Fund Agreement, or any of the Ancillary Agreements except for the Value-Added
Reseller Agreement.
(iii) any Excluded Liability; or
(iv) any breach by Seller of this ARTICLE XII;
provided, however, that in the event a Loss shall be covered by both Section
12.2(a) and 12.2(b), the provisions of Section 12.2(b) shall control.
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(b) Indemnification for Intellectual Property Infringement.
(i) Seller agrees to indemnify, defend and hold
harmless Purchaser Group from, against, for and in respect of any and all Losses
asserted against, relating to, imposed upon or incurred by Purchaser and/or any
other member of the Purchaser Group by reason of, resulting from, based upon or
arising out any of the following ("Infringement Losses"): any claim (an
"Infringement Claim") that a Product developed by (A) Purchaser subsequent to
the Closing Date infringes the intellectual property rights (including, without
limitation, patents, copyrights, trade secrets, software, technology, know-how
or processes) of any third party, to the extent that such infringement is
attributable to Seller Intellectual Property, or (B) Seller prior to the Closing
Date infringes or misappropriates the intellectual property rights (including,
without limitation, patents, copyrights, trade secrets, software, technology,
know-how or processes) of any third party; provided, however, that Seller shall
not so indemnify, defend and hold harmless Purchaser from and against Losses
resulting from trademark infringement.
(ii) Seller shall not be required to indemnify the
Purchaser Group with respect to (A) the use of the Intellectual Property by
Purchaser with one or more products or services not provided by Seller to the
extent that there would have been no infringement absent the use of such other
product or service, (B) infringement claims arising from modifications to a
Product made by Purchaser, or (C) use of a Product in ways other than as
designed or marketed by Seller prior to the Closing Date.
(iii) The indemnities set forth in Section 12.2(b)(i)
will be subject to the following conditions and limitations:
(A) All demands by Purchaser for defense and
indemnification by Seller shall be made within the applicable statute of
limitations; and
(B) If Seller has provided Purchaser notice of an
actual or probable Infringement Claim, Purchaser shall, at Seller's request and
expense, make such modifications to the Products as may be required to avoid the
infringement; provided, however, that the specific steps to be taken and the
corresponding time frames shall be determined through good faith negotiation and
mutual agreement.
(c) (i) Seller shall not be required to indemnify
Purchaser and/or any other member of the Purchaser Group for any Indemnifiable
Losses under Section 12.2(a) or Infringement Losses under Section 12.2(b) until
the aggregate amount of all such Indemnifiable Losses and Infringement Losses
shall exceed Two Hundred Fifty Thousand Dollars ($250,000) (the "Floor");
provided, however, that if the aggregate amount of Indemnifiable Losses and
Infringement Losses shall exceed the Floor, Seller shall indemnify Purchaser
only for Indemnifiable Losses and Infringement Losses in excess of the Floor,
subject to the further limitations set forth in this ARTICLE XII. In no event
shall the aggregate liability for all Indemnifiable Losses and Infringement
Losses exceed Five Million Dollars ($5,000,000).
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(ii) The provisions of Sections 12.2(c)(i) above shall
not limit, in any manner, Seller's obligation to indemnify members of the
Purchaser Group for any breach of any covenant or agreement of Seller to be
performed by Seller following the Closing Date, including but not limited to,
Seller's obligation to perform and discharge all Excluded Liabilities and
Seller's obligations arising out of the Covenant Not to Compete, the Escrow Fund
Agreement or the Ancillary Agreements.
(iii) Purchaser and its Affiliates hereby acknowledge
and agree that, from and after the Closing, their sole remedy with respect to
any and all Indemnification Losses and Infringement Losses, respectively, shall
be pursuant to the indemnification provisions set forth in this Article XII. In
furtherance of the foregoing, Purchaser and its Affiliates hereby waive, from
and after the Closing, to the fullest extent permitted by law, any and all other
rights, claims and causes of action they may have against Seller or its
Affiliates relating to any misrepresentation in or breach of any representation
or warranty or nonfulfillment of any covenant, agreement or other obligation as
described in Section 12.2; provided, however, that nothing contained in this
Article XII shall limit, in any manner, any remedy at law or in equity which
Purchaser or any of its Affiliates shall be entitled against Seller under
Section 10.7(d) or as a result of willful fraud or intentional misrepresentation
by Seller.
12.3. Indemnification by Purchaser and Parent.
(a) Subject to the terms and conditions of this ARTICLE XII,
Purchaser and Parent, jointly and severally agree to indemnify, defend and hold
harmless Seller, its stockholders, officers, directors, employees and attorneys,
all subsidiaries and affiliates of Seller, and the respective officers,
directors, employees and attorneys of such entities (all such persons and
entities being collectively referred to as the "Seller Group") from, against,
for and in respect of any and all Losses asserted against, relating to, imposed
upon or incurred by Seller and/or any other member of the Seller Group by reason
of, resulting from, based upon or arising out of any of the following
(collectively, "Seller Losses"):
(i) the breach, inaccuracy, untruth or incompleteness
of any representation or warranty of Purchaser or Parent contained in or made
pursuant to this Agreement or any certificate or Schedule delivered by Purchaser
or Parent in connection herewith;
(ii) the breach or nonperformance of any covenant or
agreement of Purchaser or Parent contained in or made in pursuant to this
Agreement, the Escrow Fund Agreement or the Ancillary Agreements except the
Value-Added Reseller Agreement;
(iii) any Assumed Liability, or
(iv) any and all Losses imposed upon or incurred by
Seller arising out Purchaser's or Parent's infringing conduct relating to the
Products subsequent to the Closing Date; provided that Purchaser and Parent will
not be obligated to indemnify Seller under this Section for any liability
arising from Seller's misconduct.
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(b) Purchaser shall not be required to indemnify Seller and/or
any other member of the Seller Group for any Seller Losses until the aggregate
amount of all Seller Losses under all individual Indemnification Claims shall
exceed Two Hundred Fifty Thousand Dollars ($250,000) (the "Floor"); provided,
however, that if the aggregate amount of all Indemnification Losses in respect
of such Indemnification Claims shall exceed the Floor, then Purchaser shall
indemnify Seller only for Seller Losses in respect of such Indemnification
Claims in excess of the Floor, subject to the further limitations set forth in
this Article XII. In no event shall the aggregate liability for all Seller
Losses exceed Five Million Dollars ($5,000,000).
(c) The provisions of Section 12.3(b) above shall not limit, in
any manner, Purchaser's obligation to indemnify members of the Seller Group for
any breach of any covenant or agreement of Purchaser to be performed by
Purchaser following the Closing, including, without limitation, Purchaser's
obligation to perform and discharge all Assumed Liabilities, and to perform
Purchaser's obligations arising under the Escrow Fund Agreement and the
Ancillary Agreements.
(d) Seller and the Affiliates hereby acknowledge and agree
that, from and after the Closing, their sole remedy with respect to any and all
Seller Losses shall be pursuant to the indemnification provisions set forth in
this Article XII. In furtherance of the foregoing, Seller and its Affiliates
hereby waive, from and after the Closing, to the fullest extent permitted by
law, any and all other rights, claims and causes of action they may have
against Purchaser or its Affiliates relating to any misrepresentation in or
breach of any representation or warranty or nonfulfillment of any covenant,
agreement or other obligations described in Section 12.2; provided, however,
that nothing contained in this Article XII shall, limit, in any manner, any
remedy at law or in equity which Seller or any of its Affiliates shall be
entitled against Purchaser under Section 10.7(d) or as a result of willful
fraud or intentional misrepresentation by Purchaser.
12.4. Procedures for Indemnification.
(a) As used in this ARTICLE XII, the term "Indemnitor" means
the party against whom indemnification hereunder is sought, and the term
"Indemnitee" means the party seeking indemnification hereunder.
(b) A claim for indemnification hereunder (an "Indemnification
Claim," including for these provisions, an Infringement Claim) shall be made by
Indemnitee by delivery of a written notice to Indemnitor requesting
indemnification and specifying the basis on which indemnification is sought in
reasonable detail (and shall attach relevant documentation related to the
Indemnification Claim), the amount of the asserted Indemnifiable Losses or
Seller Losses, as the case may be, and, in the case of a Third Party Claim,
containing (by attachment or otherwise) such other information as Indemnitee
shall have concerning such Third Party Claim.
(c) If the Indemnification Claim involves a Third Party Claim,
then the procedures set forth in Section 12.5 hereof shall be observed by
Indemnitee and Indemnitor.
(d) If the Indemnification Claim involves a matter other than a
Third Party Claim (as defined below), Indemnitor shall have thirty (30) days to
object to such Indemnification
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Claim by delivery of a written notice of such objection to Indemnitee specifying
in reasonable detail the basis for such objection. Failure to timely so object
shall constitute a final and binding acceptance of the Indemnification Claim by
Indemnitor, and the Indemnification Claim shall thereafter be paid by Indemnitor
in accordance with Section 12.4(e) hereof. If an objection is timely delivered
by Indemnitor and the dispute is not resolved within twenty (20) business days
from the delivery of such objection (the "Negotiation Period"), such dispute
shall be resolved by arbitration in accordance with the provisions of Section
13.10 hereof.
(e) Upon determination of the amount of an Indemnification
Claim, whether by (i) an agreement between Indemnitor and Indemnitee, (ii) an
arbitration award or (iii) a final judgment (after expiration of all periods for
appeal of such judgment) or other final nonappealable order, Indemnitor shall
pay the amount of such Indemnification Claim by check or wire transfer within
ten (10) days of the date such amount is determined.
12.5. Defense of Third Party Claims. Should any claim be made, or suit
or proceeding (including, without limitation, a binding arbitration or an audit
by any taxing authority) be instituted against Indemnitee which, if prosecuted
successfully, would be a matter for which Indemnitee is entitled to
indemnification under this Agreement (a "Third Party Claim"), the obligations
and liabilities of the parties hereunder with respect to such Third Party Claim
shall be subject to the following terms and conditions:
(a) Indemnitee shall give Indemnitor written notice of any such
claim promptly after receipt by Indemnitee of notice thereof. Any delay in
giving notice hereunder which does not materially prejudice Indemnitor, shall
not affect Indemnitee's rights to Indemnification hereunder. Indemnitor may, at
its option, (i) undertake control of the defense thereof by counsel of its own
choosing reasonably acceptable to Indemnitee or (ii) decline to assume control
of but participate in the defense thereof provided that such participation by
Indemnitee shall be at its own expense. Indemnitee may participate in the
defense through its own counsel at its own expense. The assumption of the
defense of any Third Party Claim by Indemnitor shall not be an acknowledgment by
Indemnitor that such Third Party Claim is subject to indemnification under the
provisions of this ARTICLE XII and that such provisions are binding on
Indemnitor. If, however, Indemnitor fails or refuses to undertake the defense of
such Third Party Claim within ten (10) days after written notice of such claim
has been delivered to Indemnitor by Indemnitee, Indemnitee shall have the right
to undertake the defense, compromise and, subject to Section 12.6, settlement of
such Third Party Claim with counsel of its own choosing. In the circumstances
described in the preceding sentence, Indemnitee shall, promptly upon its
assumption of the defense of such Third Party Claim, make an Indemnification
Claim as specified in Section 12.4(b) which shall be deemed an Indemnification
Claim that is not a Third Party Claim for the purposes of the procedures set
forth herein. Failure of Indemnitee to furnish written notice to Indemnitor of a
Third Party Claim shall not release Indemnitor from Indemnitor's obligations
hereunder, except to the extent Indemnitor is prejudiced by such failure.
(b) Indemnitee and Indemnitor shall cooperate with each other
in all reasonable respects in connection with the defense of any Third Party
Claim, including making available records relating to such claim and furnishing
employees of Indemnitee as may be reasonably
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necessary for the preparation of the defense of any such Third Party Claim or
for testimony as witness in any proceeding relating to such claim.
12.6. Settlement of Third Party Claims. Unless Indemnitor has failed
to fulfill its obligations under this ARTICLE XII, no settlement by Indemnitee
of a Third Party Claim shall be made without the prior written consent by or
on behalf of Indemnitor, which consent shall not be unreasonably withheld or
delayed. If Indemnitor has assumed the defense of a Third Party Claim as
contemplated by Section 12.4(a), no settlement of such Third Party Claim may be
made by Indemnitor without the prior written consent by or on behalf of
Indemnitee, which consent shall not be unreasonably withheld or delayed. In the
event of any dispute regarding the reasonableness of a proposed settlement, the
party that will bear the larger financial loss resulting from such settlement
shall make the final determination in respect thereto, which determination
shall be final and binding on all involved parties.
12.7. Escrow Fund. On the Closing Date, the Escrow Fund shall be
deposited by Purchaser with ▇▇▇▇▇▇ Bank as escrow agent (the "Escrow Agent"),
and the Escrow Fund shall be governed by and administered according to the terms
and conditions of this Agreement and the Escrow Fund Agreement. Each of
Purchaser and Seller acknowledges and agrees that the Escrow Fund is not
Purchaser's sole and exclusive remedy or source of satisfaction for Seller's
indemnification obligations pursuant to this ARTICLE XII.
12.8. Escrow Period. The period commencing on the Closing Date and
ending on the second anniversary of the Closing Date shall be referred to as the
"Escrow Period."
ARTICLE XIII
GENERAL
13.1. Governing Law. It is the intention of the parties hereto that
the laws of the State of Arizona (irrespective of its choice of law principles)
shall govern the validity of this Agreement, the construction of its terms, and
the interpretation and enforcement of the rights and duties of the parties
hereto.
13.2. Assignment; Binding upon Successors and Assigns. Neither of the
parties hereto may assign any of its rights or obligations hereunder without the
prior written consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that Purchaser may assign its rights
under this Agreement (a) to any majority-owned subsidiary of Purchaser, provided
that Purchaser guarantees the obligations of such subsidiary hereunder or (b) to
any successor of Purchaser through any merger or consolidation, or purchase of
all or substantially all of Purchaser's stock or all or substantially all of
Purchaser's assets. This Agreement will be binding upon and inure to the benefit
of the parties hereto and their respective permitted successors and assigns.
13.3. Severability. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be held to be
invalid or unenforceable, the remainder of this Agreement and the application of
such provision to other persons or circumstances shall be
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interpreted so as best to reasonably effect the intent of the parties hereto.
The parties further agree to replace such invalid or unenforceable provision of
this Agreement with a valid and enforceable provision which will achieve, to the
extent possible, the economic, business and other purposes of the invalid or
unenforceable provision.
13.4. Entire Agreement. This Agreement and the exhibits and schedules
hereto, constitute the entire understanding and agreement of the parties hereto
with respect to the subject matter hereof and thereof and supersede all prior
and contemporaneous agreements or understandings, inducements or conditions,
express or implied, written or oral, between the parties with respect hereto.
13.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
13.6. Expenses. Subject to Section 11.6, the parties shall each pay
their own Expenses incurred incident to the negotiation, preparation and
carrying out of this Agreement and the transactions contemplated herein, whether
or not the transactions contemplated herein are consummated.
13.7. Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy shall not preclude the exercise of any other.
13.8. Amendment and Waivers. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed to constitute
a waiver of any other default or any succeeding breach or default.
13.9. Waiver. Each party hereto may, by written notice to the others:
(a) waive any of the conditions to its obligations hereunder or extend the time
for the performance of any of the obligations or actions of the others, (b)
waive any inaccuracies in the representations of the others contained in this
Agreement or in any documents delivered pursuant to this Agreement, (c) waive
compliance with any of the covenants of the others contained in this Agreement
or (d) waive or modify performance of any of the obligations of the others. No
action taken pursuant to this Agreement, including without limitation any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, condition or agreement contained herein. Waiver of the breach of any
one or more provisions of this Agreement shall not be deemed or construed to be
a waiver of other breaches or subsequent breaches of the same provisions.
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13.10. Arbitration.
(a) If any dispute relating to this Agreement arises between
the parties, and no agreement relating to such dispute can be reached after good
faith negotiation, either Purchaser or Seller may, by written notice to the
other, demand arbitration of the matter unless the amount of the Loss is at
issue in pending litigation with a third party, in which event arbitration shall
not be commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by arbitration
conducted by one arbitrator. Purchaser and Seller shall agree on the arbitrator,
provided that if Purchaser and Seller cannot agree on such arbitrator, either
Purchaser or Seller can request that the Judicial Arbitration and Mediation
Services ("JAMS") select the arbitrator. The arbitrator shall set a limited time
period and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity, adequate in the sole
judgment of the arbitrator, to discover relevant information from the opposing
parties about the subject matter of the dispute. The arbitrator shall rule upon
motions to compel or limit discovery and shall have the authority to impose
sanctions, including attorneys' fees and costs, to the same extent as a court of
competent law or equity, should the arbitrator determine that discovery was
sought without substantial justification or that discovery was refused or
objected to without substantial justification. Subject to the foregoing, the
arbitration shall proceed under the rules of the American Arbitration
Association. The decision of the arbitrator shall be written, shall be in
accordance with applicable law and with this Agreement, and shall be supported
by written findings of fact and conclusion of law which shall set forth the
basis for the decision of the arbitrator. The decision of the arbitrator as to
the validity and amount of any claim shall be binding and conclusive upon the
parties to this Agreement.
(b) Judgment upon any award rendered by the arbitrator may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Chicago, Illinois under the commercial rules then in effect of the American
Arbitration Association. The non-prevailing party to an arbitration shall pay
its own expenses, the fees of the arbitrator, any administrative fee of JAMS,
and the expenses, including attorneys' fees and costs, reasonably incurred by
the other party to the arbitration.
13.11. Notices. All notices and other communications hereunder will be
in writing and will be deemed given (a) upon receipt if delivered personally (or
if mailed by registered or certified mail), (b) the day after dispatch if sent
by overnight courier, (c) upon dispatch if transmitted by telecopier or other
means of facsimile transmission (and confirmed by a copy delivered in accordance
with clause (a) or (b)), properly addressed to the parties at the following
addresses:
Seller: Comshare Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
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with copies to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Parent or Purchaser: JDA Software Group, Inc.
JDA Software, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq., General Counsel
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may change its address for such communications by giving
notice thereof to the other party in conformity with this Section.
13.12. Construction and Interpretation of Agreement.
(a) This Agreement has been negotiated by the parties hereto
and their respective attorneys, and the language hereof shall not be construed
for or against either party by reason of it having drafted such language.
(b) The titles and headings herein are for reference purposes
only and shall not in any manner limit the construction of this Agreement, which
shall be considered as a whole.
(c) As used in this Agreement, any reference to any state of
facts, event, change or effect being "material" with respect to any entity means
a state of facts that is material to the current or expected condition
(financial or otherwise), properties, assets, liabilities, business, operations
or prospects of such entity. Whenever the term "enforceable in accordance with
its terms" or like expression is used in this Agreement, it is understood that
excepted therefrom are any limitations on enforceability under applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting the enforcement of creditor's rights.
13.13. No Joint Venture. Nothing contained in this Agreement shall be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party shall have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to
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each other. No party shall have any power or authority to bind or commit any
other. No party shall hold itself out as having any authority or relationship in
contravention of this Section.
13.14. Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor shall be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner of any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof shall be personal solely between the parties
to this Agreement.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of June 4, 1998.
"PURCHASER" "SELLER"
JDA SOFTWARE, INC. COMSHARE, INCORPORATED,
an Arizona corporation a Michigan corporation
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------- ----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer President
"PARENT"
JDA SOFTWARE GROUP, INC,
a Delaware corporation
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
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