EXHIBIT 99.4
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is entered into as of _July 29,
2003 (the "CLOSING DATE") by and among Upperspace Corporation, an Oklahoma
corporation located at ▇▇▇ ▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("SELLER"), and
International Microcomputer Software, Inc., a California corporation located at
▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("BUYER").
In consideration of the premises and of the mutual agreements, representations,
warranties and covenants hereinafter set forth, the parties hereto agree as
follows:
Transfer of Assets.
Seller hereby sells to Buyer, and Buyer hereby purchases and accepts from Seller
all of Seller's right, title and interest in and to the tangible and intangible
assets of Seller, generally referred to as its computer aided design software
("CAD") business including, but not limited to the DesignCAD and related
software products (as described in SCHEDULE 1, the "PRODUCTS") and all related
assets including inventory, web sites and domain names relating to the Products,
content, graphics, newsletters, archives, hardware, software, databases, mailing
lists (postal and e-mail), customer lists, member lists, user lists, artist
lists, marketing materials, trademarks, including all related goodwill,
tradenames, copyright, patents, logos, development computer and server hardware,
web site design and architecture (such hardware, software and equipment as have
been necessary for Seller to develop and support CAD products immediately prior
to the Closing Date and all such other assets associated with Seller's operation
of the CAD business collectively hereafter the "BUSINESS"). These assets are
more specifically listed in SCHEDULE 1 (collectively, the "ASSETS"), free and
clear of any liens or encumbrances.
Liabilities.
Buyer is not assuming and shall not be liable for, and Seller shall retain and,
as between Buyer and Seller, remain solely liable for and obligated to
discharge, all of the debts, contracts, agreements, commitments, obligations and
other liabilities of any nature of Seller, whether known or unknown, accrued or
not accrued, fixed or contingent, and arising out of or resulting from the
operations of Seller until the Closing Date, including any liabilities resulting
from the sale of the Assets constituting a "bulk sale" under any state
commercial code. Buyer is assuming and shall be solely liable for all debts,
contracts, agreements, commitments, obligations and other liabilities of any
nature, whether known or unknown, accrued or not accrued, fixed or contingent,
and arising out of or resulting from the Buyer's operation of the Business after
the Closing Date, including assumption of the obligations arising out of those
agreements referenced in Section 5.1(e) herein.
Certain Tax Matters.
Seller shall be responsible for any sales or use, transfer, real property gains,
excise or other similar taxes imposed on Seller and resulting directly from the
sale of Assets or otherwise as a consequence of the transactions contemplated by
this Agreement. Seller shall pay promptly when due, and reimburse, indemnify and
hold harmless Buyer from the taxes described in the preceding sentence,
including interest, penalties and additions to tax in respect thereof.
Purchase Price; Allocation.
PURCHASE PRICE. The total purchase price (the "PURCHASE PRICE") for the Assets
and all other rights obtained pursuant to this Agreement will be:
A payment of seven hundred thousand dollars ($700,000), of which one hundred
thousand Dollars ($100,000) shall be held in escrow for a period of twelve (12)
months from closing to be used to fund any indemnity claims should they arise,
as further described in that Escrow Agreement attached hereto as EXHIBIT A;
A Promissory Note in the form attached hereto as EXHIBIT B in the amount of
three hundred thousand dollars ($300,000) payable in twelve months from the
Closing Date and secured by the Assets; and An earn out totaling up to three
hundred thousand dollars ($300,000) over three years based upon net revenue
("REVENUE"). As used herein, Revenue shall include: (i) all domestic and
international revenues received by Buyer from all Products and new versions of
such Products; (ii) all
revenues received by Buyer resulting from Buyer's actions to upgrade users of
the Products to any of Buyer's products, (iii) all revenues received by Buyer as
a result of sublicenses of the Intellectual Property (as defined in Section 7.7)
to any third parties for incorporation into other products; (iv) a pro rata
portion of revenue received by Buyer and attributable to existing or new
products of Buyer that incorporate software, code or technology acquired from
Seller, and (v) revenues received by Buyer from sales of Products to Target
Resellers pursuant to Section 2.01(b)(ii) of that Distribution Agreement between
the parties attached as EXHIBIT C); provided, however, that Revenue shall not
include revenues received by Buyer upon the sale of materials to Seller for
resale by Seller pursuant to the Distribution Agreement. Revenue shall be
calculated by Buyer based on U.S. generally accepted accounting principles,
applied on a consistent basis ("GAAP") and adjusted as necessary for sales
returns, allowances and bad debts. Seller shall be entitled to receive one
dollar ($1.00) of additional payment for each two dollars ($2.00) of Revenue
earned by the Business over the applicable Minimum amount, payable as follows:
Up to a maximum of one hundred thousand dollars ($100,000) provided that the
Business generates between seven hundred fifty thousand dollars ($750,000) (the
"FIRST MINIMUM") and nine hundred fifty thousand Dollars ($950,000) (the "FIRST
MAXIMUM") of Revenue for the twelve (12) consecutive calendar months following
the Closing.
An additional payment of up to a maximum of one hundred thousand dollars
($100,000) provided that the Business generates between eight hundred
twenty-five thousand dollars ($825,000) (the "SECOND MINIMUM") and one million
twenty-five thousand Dollars ($1,025,000) (the "SECOND MAXIMUM")of Revenue for
the thirteenth through twenty-fourth (13 - 24) consecutive calendar months
following the Closing.
An additional payment of up to a maximum of one hundred thousand dollars
($100,000) provided that the Business generates between nine hundred thousand
dollars ($900,000) (the "THIRD MINIMUM") and one million one hundred thousand
Dollars ($1,100,000) (the "THIRD MAXIMUM")of Revenue for the twenty-fifth
through thirty-sixth (25 - 36) consecutive calendar months following the
Closing. Any payments to be made to Seller pursuant to paragraphs (i), (ii) or
(iii) above shall be made forty-five (45) days following the applicable
calculation period.
ALLOCATION OF PURCHASE PRICE. For purposes of complying with the requirements of
Section 1060 of the Internal Revenue Code of 1986, as amended (the "CODE"), the
Purchase Price shall be allocated as provided in SCHEDULE 4.2. Each party hereto
agrees to prepare its federal and state income tax returns for all current and
future tax reporting periods and file Form 8594 (and corresponding state forms)
with respect to transfer of the Assets to Buyer contemplated under this
Agreement in a manner consistent with such allocation. If any state or federal
taxing authority challenges such allocation, the party receiving notice of such
challenge shall give the other prompt written notice of such challenge, and the
parties shall cooperate in good faith in responding to such challenge in order
to preserve the effectiveness of the allocation.
POST-CLOSING ASSET ADJUSTMENTS.
As soon as reasonably practical after the Closing, but in no event more than
thirty (30) days after the Closing Date, Buyer shall prepare (i) a detail of the
Assets as of the close of business on the Closing Date (the "CLOSING DATE ASSET
DETAIL "), together with (ii) a schedule (the "ADJUSTMENT REPORT") showing the
purchase price adjustment, if any (the "NET ASSET ADJUSTMENT"), to be made to
the extent that the value of the Assets presented in the Closing Date Asset
Detail differs from the Purchase Price. The Closing Date Asset Detail shall be
prepared in accordance with GAAP standards.
Buyer and Seller shall attempt to resolve all disputes between them regarding
the Net Asset Adjustment. If Buyer and Seller cannot resolve all such disputes
within thirty (30) days from the Closing Date, the matters in dispute shall be
determined by a nationally recognized independent public accounting firm
mutually satisfactory to Buyer and Seller (the "ARBITER"). Promptly, but not
later than thirty (30) days after the acceptance of its appointment, the Arbiter
shall determine (based solely on presentations by Seller and Buyer to the
Arbiter and not by independent review) only those items in dispute and shall
render a report as to its resolution of such items and the resulting calculation
of the Net Asset Adjustment (the "FINAL NET ASSET ADJUSTMENT"). For purposes of
the Arbiter's determination, the amounts to be included shall be the appropriate
amounts from the Closing Date Asset Detail or the Adjustment Report, as the case
may be, as to items that are not in dispute, and the amounts determined by the
Arbiter, as to items that are submitted for resolution by the Arbiter. In
resolving any disputed item, the Arbiter may not assign a value to such item
greater than the greatest value for such item claimed by either party or less
than the lowest value for such item claimed by either party. Buyer and Seller
shall cooperate with the Arbiter in making its determination and such
determination shall be conclusive and binding upon Buyer and Seller. Buyer and
Seller shall each bear one-half of the fees and expenses of the Arbiter.
Within five Business Days after the final determination of the Net Asset
Adjustment in accordance with this Section 4.4: either (x) Buyer shall pay
Seller by wire transfer of immediately available funds the amount, if any, by
which the Final Net Asset Adjustment is greater than zero; or (y) Seller shall
pay Buyer by wire transfer of immediately available funds the amount, if any, by
which the Final Net Asset Adjustment is less than zero.
Nothing in this Section 4.4 or in the statements, reports or documents
contemplated hereby shall affect the parties' rights and obligations in respect
of a breach or alleged breach of any representation or warranty herein.
Closing.
The closing of the transaction contemplated by this Agreement (the "CLOSING")
shall be deemed to occur simultaneously with execution of this Agreement. At the
Closing:
Seller shall deliver the Assets to Buyer, to the extent possible transmitting
such Assets electronically to Buyer as directed by
Buyer.
Buyer shall deliver the Purchase Price to Seller.
Seller shall deliver to Buyer a General ▇▇▇▇ of Sale substantially in the form
of EXHIBIT D, duly executed by Seller, assigning to Buyer all of Seller's right,
title and interest in and to the Assets.
Buyer and Seller shall execute the Escrow Agreement the Distribution Agreement,
and a Security Agreement, attached as EXHIBIT E, governing the security interest
in the Assets. Pursuant to the Distribution Agreement, [essential terms to be
completed on finalization of Distribution Agreement].
Buyer shall assume the performance of all obligations arising under the
Distribution and Republishing Agreements set forth on Schedule 1.
Post-Closing Matters.
After the Closing, Seller will execute and deliver, upon the request of Buyer,
all such other and further materials and documents and instruments of
conveyance, transfer or assignment as may reasonably be requested by Buyer to
effect, record or verify the transfer to, and vesting in Buyer, of Seller's
right, title and interest in and to the Assets, free and clear of all Liens (as
defined in Section 7.6), in accordance with the terms of this Agreement.
RepresentationS and Warranties of Seller.
Seller represents and warrant to Buyer as follows:
ORGANIZATION. Seller is a corporation duly formed and validly existing under the
laws of Oklahoma, and has full corporate power and authority and legal right to
own and operate or lease the Assets and to carry on its business as presently
conducted, to execute and deliver this Agreement and all of the other agreements
and instruments to be executed and delivered by Seller pursuant hereto, and to
consummate the transactions contemplated hereby and thereby. Seller is qualified
to do business in Oklahoma and is not required to be qualified in any other
state or other jurisdiction.
AUTHORITY. The execution and delivery of this Agreement (and all other
agreements and instruments contemplated hereunder) by Seller, the performance by
Seller of its or their obligations hereunder and thereunder, and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors of
Seller.
EXECUTION AND BINDING EFFECT. This Agreement has been duly and validly executed
and delivered by Seller and constitutes, and the other agreements and
instruments to be executed and delivered by Seller pursuant hereto, upon their
execution and delivery by Seller, will constitute (assuming, in each case, the
due and valid authorization, execution and delivery thereof by Buyer), legal,
valid and binding agreements of Seller, enforceable against Seller in accordance
with their respective terms.
CONSENTS AND APPROVALS OF GOVERNMENTAL ENTITIES. There is no requirement
applicable to Seller to make any filing, declaration or registration with, or to
obtain any permit, authorization, consent or approval of, any local, state or
federal government department or agency, whether of the U.S. or another country
(each a "GOVERNMENTAL ENTITY") as a condition to the lawful consummation by
Seller of the transactions contemplated by this Agreement and the other
agreements and instruments to be executed and delivered by Seller pursuant
hereto or the consummation by Seller of the transactions contemplated herein or
therein.
NO VIOLATION. Neither the execution, delivery and performance of this Agreement
and all of the other agreements and instruments to be executed and delivered
pursuant hereto, nor the consummation of the transactions contemplated hereby or
thereby, will, with or without the passage of time or the delivery of notice or
both: (i) conflict with, violate or result in any breach of the terms,
conditions or provisions of the articles, bylaws or other organizational
documents or agreements of Seller; (ii) conflict with or result in a violation
or breach of, or constitute a default or require consent of any individual,
corporation, partnership, trust or unincorporated organization or Governmental
Entity ("PERSON") (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any notice,
bond, mortgage, indenture, license, franchise permit, agreement, lease or other
instrument or obligation to which Seller is a party or by which Seller, any of
the properties or assets of Seller may be bound, where such conflict, violation,
breach, default or consent would have a material adverse effect on the Assets;
or (iii) violate any statute, ordinance or law or any rule, regulation, order,
writ, injunction or decree of any Governmental Entity applicable to Seller or by
which any properties or assets of Seller may be bound, where such violation
would have a material adverse effect on the Assets.
ASSETS GENERALLY. Seller holds valid title to all of the Assets and has the
complete and unrestricted power and the unqualified right to sell, assign and
deliver the Assets to Buyer. Buyer hereby acquires valid title to the Assets
free and clear of any mortgages, pledges, liens, security interests,
encumbrances, charges or other claims of third parties of any kind ("LIENS"). No
Person other than Seller has any right or interest in the Assets, including the
right to grant interests in the Assets to third parties.
INTELLECTUAL PROPERTY.
As used herein, "INTELLECTUAL PROPERTY" shall refer to:
the Products;
Any and all copyrights in writings, artwork, clipart, CAD symbols, webart,
sounds, graphics, photographs, animations, images, designs, mask works or other
works, and registrations or applications for registration of copyrights in any
jurisdiction in and relating to the Assets ("COPYRIGHTS");
All rights to all fictional business names, trademarks and service marks
(registered or unregistered), trade dress, trade names, domain names, URLs and
other names and slogans embodying business or product goodwill or indications of
origin, all applications or registrations in any jurisdiction pertaining to the
foregoing and all goodwill associated therewith and relating to the Products
(collectively the "MARKS");
All patents, patentable inventions, discoveries, improvements, ideas, know-how,
formula methodology, processes, technology and computer programs, software and
databases (including source code, object code, development documentation,
programming tools, drawings, specifications and data) and all applications or
registrations in any jurisdiction pertaining to the foregoing, including all
reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, all relating to the Products (collectively the "PATENTS");
All trade secrets and know-how, including confidential and other non-public
information relating to the Products, and the right in any jurisdiction to limit
the use or disclosure thereof ("TRADE SECRETS"); All agreements relating to the
Products to which Seller is a party or by which Seller is bound, except for any
license implied by the sale of a product and perpetual, paid-up licenses for
commonly available software programs with a value of less than $500 under which
Seller is the licensee;
All books and records relating to the Assets, and lists of all licensees and
vendor of the Assets; and All claims or causes of action arising out of or
related to infringement or misappropriation of any of the foregoing. Except as
listed on Schedule 1, Seller has not entered into any joint ventures, licenses,
sublicenses or other arrangements whereby a third party has the right to, or use
of, any of the Intellectual Property, and all contracts, agreements and
arrangements to which Seller is a party in regard to the Intellectual Property
are fully transferable to Seller without consent of any third party. All
Intellectual Property is valid, subsisting, unexpired, in proper form and
enforceable and all renewal fees and other maintenance fees which have fallen
due on or prior to the Closing Date have been paid. The grants, registrations
and applications for the Intellectual Property have not lapsed, expired or been
abandoned and no application or registration thereof is the subject of any legal
or governmental proceeding before any governmental, registration or other
authority in any jurisdiction. All products made, used, or sold under the
Intellectual Property have been marked with the proper notice. All products and
materials containing a ▇▇▇▇ ▇▇▇▇ the proper notice where permitted by law.
Trade Secrets.
Seller has taken all reasonable precautions to protect the secrecy,
confidentiality, and value of the Trade Secrets. Seller has good title and an
absolute (but not necessarily exclusive) right to use the Trade Secrets. The
Trade Secrets are not part of the public knowledge or literature, and, to
Seller's Knowledge, have not been used, divulged, or appropriated either for the
benefit of any Person (other than Seller) or to the detriment of Seller. No
Trade Secret is subject to any adverse claim or has been challenged or
threatened in any way.
To the Knowledge of Seller, there are no conflicts with or infringements of any
Intellectual Property by any third party. No Patent has been or is now involved
in any interference, reissue, reexamination or opposition proceeding. No ▇▇▇▇
has been or is now involved in any opposition, invalidation or cancellation and,
to Seller's Knowledge, no such action is threatened with respect to any of the
Marks. The conduct of Seller's business as currently conducted does not conflict
with or infringe in any way with any proprietary right of any third party, which
conflict or infringement could have a material adverse effect on Seller, the
Intellectual Property or the Business. There is no claim, suit, action or
proceeding pending or threatened against Seller (i) alleging any such conflict
or infringement with any third party's proprietary rights or (ii) challenging
the ownership, use, validity or enforceability of the Intellectual Property.
Seller has not entered into any material consent, indemnification, forbearance
to ▇▇▇, settlement agreement or cross-licensing arrangement with any person
relating to the Intellectual Property or the intellectual property of any third
party other than as may be contained in the agreements listed in Schedule 1.
Except as set forth in Schedule 1, Seller is not under any obligation to pay
royalties or similar payments in connection with any license to any of its
Affiliates.
The Intellectual Property does not infringe any patent, trade name, trademark,
copyright, trade secret or any other intellectual property right of any Person,
without the necessity of relying upon any license held by Seller to any such
intellectual property right of any Person. Seller specifically represents that
it is not aware of any other international licenses, patents, trade name,
trademark, copyright, trade secret or any other intellectual property rights
relating to the Business or the Products held by any Person in any other
countries than the United States except as listed on the attached
Schedules. There is no pending or threatened claim by Seller against any Person
for infringement, misuse or misappropriation of any of the Assets. Seller is not
obligated or under any liability whatsoever to make any payments by way of
royalties, fees or otherwise to any owner of, licensor of, or other claimant to,
any patent, trademark, trade name, copyright, trade secret or other intellectual
property rights, with respect to the use thereof or in connection with the
conduct of Seller's business or otherwise.
No former or present employees, officers, directors or consultants or
contractors of or to Seller hold any right, title or interest directly or
indirectly, in whole or in part, in or to any Intellectual Property.
The Assets are sufficient, adequate and all that is necessary for the Business
to be continued as contemplated herein and in the Distribution Agreement.
SOFTWARE.
To the extent the Products have been designed or developed by Seller's
management information or development staff or by consultants on Seller's
behalf, such Products are original and are protected by the copyright laws of
the United States, and Seller has complete rights to and ownership of the
Assets. No part of any of the Assets or the use thereof infringes upon the
rights of any other person or entity, or violates or infringes upon any common
law or statutory rights of any other person or entity, including, without
limitation, rights relating to defamation, contractual rights, copyrights,
patents, trade secrets and rights of privacy or publicity. Seller has not sold,
assigned, licensed, distributed or in any other way disposed of or encumbered
the Assets. Apart from the Alliance DXF and DWG import/export file filters
licensed from the OpenDWG Alliance, which may be transferred only to other
members of the OpenDWG Alliance, the Products and any software components
incorporated into such Products, to the extent licensed from any third party
licensor or constituting "off-the-shelf" software, are held by Seller
legitimately and are fully and freely transferable without any third party
consent. All of Seller's computer hardware being transferred to Buyer has
legitimately-licensed software installed therein.
The Products are free from any significant software defect or programming or
documentation error, operates and run in a reasonable and efficient business
manner, conforms to the specifications thereof, and, with respect to owned
Products, the applications can be recreated from their associated source code.
Seller has not knowingly altered the data, or any Product or supporting software
which may in turn damage the integrity of the data, stored in electronic,
optical or magnetic form. Seller has no knowledge of the existence of any bugs
or viruses with respect to the Products which cause the Products to be
commercially nonviable.
EMPLOYEES. Buyer intends to extend offers of employment to certain employees of
Seller. No Seller employee or consultant is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would conflict with his or her obligation to use his or her best
efforts to promote the interests of Seller in the Assets. There are no written
or oral contracts of employment between Seller and any Employee or consultant to
Seller who has provided substantial services to Seller regarding the Business.
TAXES. All sales and use taxes, real and personal property taxes, gross receipts
taxes, documentary transfer taxes, employment taxes, withholding taxes,
unemployment insurance contributions and other taxes or governmental charges of
any kind, however denominated, including any interest, penalties and additions
to tax in respect thereto, for which Buyer could become liable as a result of
acquiring the Assets or which could result in a lien on or charge against the
Assets (collectively, "TAXES") have been or will be paid for all periods (or
portions thereof) prior to the due dates thereof. Seller and any other person
required to file returns or reports of Taxes have duly and timely filed (or will
file prior to the Closing Date) all returns and reports of Taxes required to be
filed prior to such date, and all such returns and reports are true, correct,
and complete. There are no liens for Taxes on any of the Assets. There are no
pending or, to the knowledge of Seller, threatened proceedings with respect to
Taxes, and there are no outstanding waivers or extensions of statutes of
limitations with respect to assessments of Taxes. Seller is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Code.
CLAIMS. There are no claims, actions, suits, inquiries, proceedings or
investigations relating to Seller or the Assets which are currently pending or,
to the best knowledge of Seller, threatened, at law or in equity or before or by
any Governmental Entity. There are no claims relating to any of the Assets
containing allegations that the Assets are defective or in breach of any
warranty, or were improperly designed or manufactured or improperly labeled.
DEFAULTS. Seller is not (or has not received notice of any) default under or
with respect to any judgment, order, writ, injunction or decree of any court or
any Governmental Entity relating to (or that could affect) any of the Assets.
There does not exist any default by Seller, to the knowledge of Seller, by any
other Person, or event that, with notice or lapse of time, or both, would
constitute a default under any agreement (including, without limitation, any of
the Transferred Agreements) entered into by Seller which could adversely affect
the Assets.
FULL DISCLOSURE. Seller is not aware of any facts pertaining to the Assets which
could affect the Assets in a material adverse manner or which are likely in the
future to affect the Assets in a material adverse manner. Neither this Agreement
nor any other agreement, exhibit, schedule or certificate being entered into or
delivered pursuant hereto contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein contained not misleading.
FAIR CONSIDERATION; NO FRAUDULENT CONVEYANCE. The sale of the Assets pursuant to
this Agreement is made in exchange for fair and equivalent consideration, Seller
is not now insolvent and Seller will not be rendered insolvent by the sale,
transfer and assignment of the Assets pursuant to the terms of this Agreement.
Seller is not entering into this Agreement and the other agreements referenced
in this Agreement with the intent to defraud, delay or hinder its creditors and
the consummation of the transactions contemplated by this Agreement, and the
other agreements referenced in this Agreement, will not have any such effect.
The transactions contemplated in this Agreement or any agreements referenced in
this Agreement will not constitute a fraudulent conveyance, or otherwise give
rise to any right of any creditor of Seller whatsoever to any of the Assets in
the hands of Buyer after the Closing.
Representations and Warranties of Buyer. Buyer represents and warrants to Seller
as follows:
ORGANIZATION. Buyer is a corporation duly formed and validly existing under the
laws of California, and has full corporate power and authority to execute and
deliver this Agreement and all of the other agreements and instruments to be
executed and delivered by Buyer pursuant hereto, and to consummate the
transactions contemplated hereby and thereby.
AUTHORITY. The execution and delivery of this Agreement (and all other
agreements and instruments contemplated hereunder) by Buyer, the performance by
Buyer of its obligations hereunder and thereunder, and the consummation by Buyer
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary action by the Board of Directors of Buyer. No other act or
proceeding on the part of Buyer or its members is necessary to approve the
execution and delivery of this Agreement and such other agreements and
instruments, the performance by Buyer of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby.
EXECUTION AND BINDING EFFECT. This Agreement has been duly and validly executed
and delivered by Buyer and constitutes, and the other agreements and instruments
to be executed and delivered by Buyer pursuant hereto, upon their execution and
delivery by Buyer, will constitute (assuming, in each case, the due and valid
authorization, execution and delivery thereof by Sellers), legal, valid and
binding agreements of Buyer, enforceable against Buyer in accordance with their
respective terms.
CONSENT AND APPROVALS. There is no requirement applicable to Buyer to make any
filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Buyer of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Buyer pursuant hereto or the consummation of the transactions contemplated
herein or therein.
NO VIOLATION. Neither the execution, delivery and performance of this Agreement
and all of the other agreements and instruments to be executed and delivered
pursuant hereto, nor the consummation of the transactions contemplated hereby or
thereby, will, with or without the passage of time or the delivery of notice or
both: (a) conflict with, violate or result in any breach of the terms,
conditions or provisions of the articles or bylaws of Buyer; (b) conflict with
or result in a violation or breach of, or constitute a default or require
consent of any Person (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any notice,
bond, mortgage, indenture, license, franchise, permit, agreement, lease or other
instrument or obligation to which Buyer is a party or by which Buyer or any of
its properties or assets may be bound, where such conflict, violation, breach,
default or consent would have a material adverse effect on the business or
assets of Buyer; or (c) violate any statute, ordinance or law or any rule,
regulation, order, writ, injunction or decree of any Governmental Entity
applicable to Buyer or by which any of its properties or assets may be bound,
where such violation would have a material adverse effect on the business or
assets of Buyer.
FAIR CONSIDERATION; NO FRAUDULENT CONVEYANCE. The sale of the Assets pursuant to
this Agreement is made in exchange for fair and equivalent consideration, Buyer
is not now insolvent and Buyer will not be rendered insolvent by the purchase of
the Assets pursuant to the terms of this Agreement. Seller is not entering into
this Agreement and the other agreements referenced in this Agreement with the
intent to defraud, delay or hinder its creditors and the consummation of the
transactions contemplated by this Agreement, and the other agreements referenced
in this Agreement, will not have any such effect.
BUYER REVIEW OF PRODUCTS. Buyer has reviewed those of the Products which are
commercially available as of the Closing Date, and has deemed them to be free of
any bugs or viruses which would cause such Products to be commercially
nonviable.
Covenants of Seller.
NONDISCLOSURE; NONCOMPETITION; NONSOLICITATION.
From and after the Closing Date for a period of three (3) years, Seller shall
not use, divulge, furnish or make accessible to anyone any proprietary, material
non-public, confidential or secret information to the extent relating to the
Business (including, without limitation, customer lists, supplier lists and
pricing and marketing arrangements with customers or suppliers), and Seller
shall cooperate reasonably with the Buyer in preserving such proprietary,
confidential or secret
aspects of the Business. Notwithstanding the foregoing, nothing in this
Agreement shall prohibit the disclosure of the tax treatment and tax structure,
each as defined in Treasury Regulations Section 1.6011-4, of the transaction
(but no other details about the matters covered by this Agreement, including,
without limitation, the identities of the parties except as may be required by
legal rule, regulation or legal process). From and after the Closing Date,
Seller shall not, and it shall cause each of its Affiliates, officers and
directors (so long as such officers and directors are serving as such) not to,
directly or indirectly, (i) engage in Competitive Business Activities (as
hereinafter defined); (ii) own stock or otherwise have an equity interest in or
be affiliated with any person or entity engaged in Competitive Business
Activities (except as a stockholder holding less than 5% of the stock of a
publicly held corporation); or (iii) utilize its special knowledge of the
Business or its relationships with customers, suppliers or others to compete
with the Buyer in its conduct of the Business after the Closing Date, for the
period applicable to such aspect of the Business, as set forth in Section 9.1(c)
below.
As used herein, "COMPETITIVE BUSINESS ACTIVITIES" shall mean:
development or sale, during the three (3) year period following the Closing
Date, of general purpose CAD or mechanical CAD products, other than those
products to be offered by Seller immediately following the Closing, and new
versions of such products, except as otherwise provided herein and in the
Distribution Agreement; and
development or sale during the two (2) year period following the Closing Date,
of home design products, other than those products to be offered by Seller
immediately following the Closing, and new versions of such products, except as
otherwise provided herein and in the Distribution Agreement.
Notwithstanding the foregoing, development and sale of remote control [vehicle]
modeling software shall not be deemed a Competitive Business Activity and shall
be unrestricted by this Agreement.
Seller shall not, directly or indirectly, for a period of three (3) years from
the Closing Date, (i) solicit for hire or enter into any contractual arrangement
with ▇▇▇▇ ▇▇▇▇▇▇-Shi, ▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇ (each an "EMPLOYEE")
without the prior written consent of the Buyer unless such Employee has not been
employed or otherwise engaged by the Buyer for a period of one year; or (ii)
call on or solicit any of the customers of the Business or make known the names
and addresses of such customers or any other information relating in any manner
to the Business, except to the extent that such customer was a purchaser of
Seller's products other than the Products prior to the Closing, and any such
call, solicitation or provision of information relates to the conduct of
Seller's business after the Closing in accordance with the terms of this
Agreement and the Distribution Agreement. Seller agrees that repeated violations
of this Section will cause irreparable injury to the Buyer, and the Buyer shall
be entitled, in addition to any other rights and remedies it may have at law or
in equity, to an injunction enjoining and restraining Seller from doing or
continuing to do any such violation and any other violations or threatened
violations of this Section.
Seller acknowledges and agrees that the covenants set forth in this Section are
reasonable and valid in scope and in all other respects. If any of such
covenants is found to be invalid or unenforceable by a final determination of a
court of competent jurisdiction (i) the remaining terms and provisions hereof
shall be unimpaired and (ii) the invalid or unenforceable term or provision
shall be deemed replaced by a term or provision that is valid and enforceable
and that comes closest to expressing the intention of the invalid or
unenforceable term or provision.
TAXES. Seller shall, to the extent that failure to do so could adversely affect
the Assets following Closing: (i) continue to file within the required time
period for filing all returns and reports relating to Taxes required to be filed
by Seller, and such returns and reports shall be true, correct and complete; and
(ii) be responsible for and pay when due any and all Taxes attributable to,
levied or imposed upon the Assets for periods (or portions thereof) ending on or
prior to the Closing.
POST-CLOSING COOPERATION. Seller agrees that, if requested by Buyer, it will
cooperate with Buyer in enforcing the terms of any agreements between Seller and
any third party involving the Assets, including without limitation terms
relating to the protection of intellectual property rights. In the event that
Buyer is unable to enforce its intellectual property rights against a third
party as a result of a rule or law barring enforcement of such rights by a
transferee of such rights, Seller agrees to reasonably cooperate with Buyer by
assigning to Buyer such rights as may be required by Buyer to enforce its
intellectual property rights in its own name.
NO DISTRIBUTION OF PRODUCTS. All distribution agreements under which Seller has
granted a right to resell or otherwise distribute the products, including a
brief description of the termination provisions of each such agreement, are
listed in Schedule 1. Indemnification.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller in Section 7 shall survive for a period one year after the Closing
Date, except for claims for fraud, which shall survive indefinitely, and claims
for Taxes, which shall survive until lapse of the applicable statute of
limitations (including extensions thereof). No investigation, or knowledge
acquired, by Buyer or on behalf of Buyer with respect to any breach of any
representation or warranty made by Sellers or any other matter shall affect
Buyer's rights to indemnification pursuant to this Section 10.
INDEMNIFICATION BY SELLER. Seller shall indemnify and hold harmless Buyer, each
direct and indirect subsidiary of Buyer and each of their officers, directors,
employees, agents, successors and assigns ("BUYER INDEMNITEES") for any and all
liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, legal costs and expenses
and interest on the amount of any loss from the date suffered or incurred by
Buyer Indemnitee) (a "LOSS") arising out of, resulting from or caused by: (i)
any breach or the inaccuracy of any of the representations, warranties,
covenants, or agreements in this Agreement made by Seller, and (ii) all
liabilities or obligations, including, without limitation, those relating to
Taxes, (whether known or unknown, accrued or not accrued, fixed or contingent)
of Seller existing at Closing. The obligation of Seller to indemnify Buyer under
this Section 10.2 shall not be limited in time or amount; provided that (except
in the case of fraud by Seller and claims for Taxes) the aggregate liability for
claims made solely for breaches of representations and warranties under Section
10.4(a) shall not exceed the Purchase Price, and the indemnification obligations
relating to such claims shall terminate one (1) year from the date of this
Agreement. Without limiting the generality or effect of the foregoing, Seller
shall indemnify, defend and hold harmless Buyer and each of its Affiliates (as
defined in Rule 501 under the Securities Act of 1933, as amended) from and
against any and all Loss resulting from or arising out of any of the following:
(i) any liability to any Employee as of the Closing Date arising in connection
with their employment by Seller, including, without limitation, post-retirement
health benefits, to the extent not fully funded immediately prior to the
Closing, and (ii) any severance or other benefit payable to any Employee by
reason of this Agreement or the transactions contemplated hereby, including,
without limitation, any stay bonus, golden parachute or other change-in-control
payment or benefit;
Any claim or liability resulting from or in connection with Seller having failed
to obtain, prior to the Closing Date, the approval of its shareholders for any
of the transactions contemplated by this Agreement or any other document
contemplated herein; or
Any claim or liability resulting from or in connection with Seller's breach,
prior to the Closing Date, of the terms of any license agreement or Seller's
failure to obtain a license for Seller's use of any software incorporated into a
Product prior to the Closing Date.
INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold harmless Seller
("SELLER INDEMNITEES") for any and all Losses arising out of or resulting from a
liability or obligation, including, without limitation, those relating to Taxes,
(whether known or unknown, accrued or not accrued, fixed and determined or
contingent) of Buyer arising out of or resulting from the use or sale of the
Assets by Buyer after the Closing Date, other than a liability or obligation for
which any Buyer Indemnitee is entitled to indemnification from Seller pursuant
to the provisions of Section 10.2. Buyer's obligation to indemnify Seller under
this Section 10.3 shall not be limited in time or amount.
INDEMNIFICATION PROCEDURE.
Whenever any Loss shall be asserted against or incurred by a Buyer Indemnitee or
Seller Indemnitee (the "INDEMNIFIED PARTY"), the Indemnified Party shall give
written notice thereof (a "CLAIM") to Seller or Buyer, respectively (the
"INDEMNIFYING PARTY"). The Indemnified Party shall furnish to the Indemnifying
Party in reasonable detail such information as the Indemnified Party may have
with respect to the Claim (including in any case copies of any summons,
complaint or other pleading which may have been served on it and any written
claim, demand, invoice, billing or other document evidencing or asserting the
same). The failure to give such notice shall not relieve the Indemnifying Party
of its indemnification obligations under this Agreement.
If the Claim is based on a claim of a person that is not a party to this
Agreement, the Indemnifying Party shall, at its expense, undertake the defense
of such Claim with attorneys of its own choosing reasonably satisfactory to the
Indemnified Party. In the event the Indemnifying Party, within a reasonable time
after receiving notice of a Claim from the Indemnified Party, fails to defend
the Claim, the Indemnified Party may, at the Indemnifying Party's expense,
undertake the defense of the Claim and may compromise or settle the Claim, all
for the account of the Indemnifying Party. After notice from the Indemnifying
Party to the Indemnified Party of its election to assume the defense of such
Claim, the Indemnifying Party shall not be liable to the Indemnified Party under
this Section 10.4 for any legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof, except for such
expenses incurred in connection with cooperation with, or at the request of, the
Indemnifying Party; provided, however, that the Indemnified Party shall have the
right to employ counsel to represent it if, in the Indemnified Party's
reasonable judgment, based upon the advice of counsel, it is advisable, in light
of the separate interests of the Indemnified Party and the Indemnifying Party,
for the Indemnified Party to be represented by separate counsel, and in that
event the reasonable fees and expenses of such separate counsel shall be paid by
the Indemnifying Party.
The Indemnifying Party shall not, except with the consent of the Indemnified
Party, given in its sole discretion, consent to entry of any judgment or enter
into any settlement.
General Terms.
NOTICES. Every notice or other communication required or contemplated by this
Agreement by either party shall be delivered to the other party at the address
first set forth above by: (i) personal delivery; (ii) postage prepaid, return
receipt requested, registered or certified mail; (iii) internationally
recognized express courier, such as Federal Express, UPS or DHL; or (iv)
facsimile or email with a confirmation copy sent simultaneously by postal mail.
Notice not given in writing shall be effective only if acknowledged in writing
by a duly authorized representative of the party to whom it was given.
SEVERABILITY. In the event any provision of this Agreement shall be determined
to be invalid or unenforceable under applicable law, all other provisions of
this Agreement shall continue in full force and effect unless such invalidity or
unenforceability causes substantial deviation from the underlying intent of the
parties expressed in this Agreement or unless the invalid or unenforceable
provisions comprise an integral part of, or are inseparable from, the remainder
of this Agreement. If this Agreement continues in full force and effect as
provided above, the parties shall replace the invalid provision with a valid
provision which corresponds as far as possible to the spirit and purpose of the
invalid provision.
AMENDMENTS AND WAIVERS. No amendment, modification, termination or waiver of any
provision of this Agreement or consent to any departure by any party therefrom
shall in any event be effective without the written concurrence of the other
party hereto. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given. No notice to or
demand on any party in any case shall entitle any other party to any other or
further notice or demand in similar or other circumstances.
ABSENCE OF THIRD-PARTY BENEFICIARIES. No provisions of this Agreement, express
or implied, are intended or shall be construed to confer upon or give to any
Person other than the parties hereto, any rights, remedies or other benefits
under or by reason of this Agreement unless specifically provided otherwise
herein, and except as so provided, all provisions hereof shall be personal
solely between the parties to this Agreement.
GOVERNING LAW. The validity, construction, performance and enforceability of
this Agreement shall be governed in all respects by the laws of the State of
California, without reference to the choice-of-law principles thereof.
INTERPRETATION. This Agreement, including any exhibits, addenda, schedules and
amendments, has been negotiated at arm's length and between persons
sophisticated and knowledgeable in the matters dealt with in this Agreement. The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect the purposes of the parties and this Agreement. The article and section
headings contained in this Agreement are for reference purposes only and will
not affect in any way the meaning or interpretation of this Agreement.
ENTIRE AGREEMENT. The terms of this Agreement and the other writings referred to
herein and delivered by the parties hereto are intended by the parties to be the
final expression of their agreement with respect to the subject matter hereof
and may not be contradicted by evidence of any prior or contemporaneous
agreement. The parties further intend that this Agreement, together with the
exhibits and schedules hereto, shall constitute the complete and exclusive
statement of its terms. The parties acknowledge and agree that this Agreement
and exhibits and schedules hereto constitute the agreements necessary to
accomplish the transactions contemplated by this Agreement and are parts of an
integrated arrangement between the parties with respect to the purchase and sale
of the Assets.
COUNTERPARTS. This Agreement may be executed simultaneously in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. Execution and delivery of
this Agreement by exchange of facsimile copies bearing the facsimile signature
of a party hereto shall constitute a valid and binding execution and delivery of
this Agreement by such party. Such facsimile copies shall constitute enforceable
original documents.
EXPENSES. Each of the parties agrees to pay its own expenses in connection with
the transactions contemplated by this Agreement, including without limitation
legal, consulting, accounting and investment banking fees, whether or not such
transactions are consummated.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, this Asset Purchase Agreement has been duly executed and
delivered by the authorized officers of Seller and Buyer as of the date first
above written.
UPPERSPACE CORPORATION INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
CEO Executive Vice President