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EXHIBIT 2.01
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ASSET ACQUISITION AGREEMENT
DATED AS OF MAY 25, 1999
AMONG
EDIFY CORPORATION
AND
WORKSCAPE, INC.
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ASSET ACQUISITION AGREEMENT
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This ASSET ACQUISITION AGREEMENT (this "AGREEMENT") is made and entered
into as of May 25, 1999 (the "EFFECTIVE DATE"), by and among Edify Corporation,
a Delaware corporation ("SELLER") and Workscape, Inc., a Massachusetts
corporation ("PURCHASER").
RECITALS
Seller desires to sell and assign to Purchaser, and Purchaser desires to
purchase and acquire from Seller, certain assets associated with Seller's
Employee Self Service Activities (as defined below) upon the terms and subject
to the conditions set forth in this Agreement;
Seller desires to grant to Purchaser, and Purchaser desires to receive
from Seller, licenses to certain intellectual property rights of Seller in
connection with the Employee Self Service Activities; and
In consideration of the facts stated in the above recitals and of the
mutual agreements and covenants hereinafter set forth, and for good and valuable
consideration, the receipt, sufficiency and adequacy of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
Section 1.1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" or "ASSOCIATE" shall have those meanings ascribed to such
terms by Rule 405 promulgated under the 1933 Act.
"ANCILLARY AGREEMENTS" means, collectively, the ▇▇▇▇ of Sale, the
Assignment and Assumption Agreement, the Marketing Agreement, the Trademark
Assignment, the License Agreement and the Intellectual Property Enforcement
Agreement.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement substantially in the form of EXHIBIT A.
"ASSUMED LIABILITIES" means those Liabilities under the Seller Contracts
to be performed or arising after the Closing, but excluding any Liability
arising from any Default by Seller of any Seller Contract on or prior to the
Closing.
"▇▇▇▇ OF SALE" means the ▇▇▇▇ of Sale substantially in the form of
EXHIBIT B.
"BOOKS AND RECORDS" means an original or copy (or all portions thereof
relating to the Employee Self Service Activities), at Seller's discretion, of
(a) all customer and partner lists to the extent that they pertain to the
Employee Self Service Activities, including contact names and numbers for
customer personnel known by Seller to be involved in any facet of the Employee
Self Service Activities, (b) all records and lists of Seller to the extent that
they pertain to the
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Purchased Assets or the Employee Self Service Activities (excluding materials
pertaining to the Licensed Assets, access to which is governed by the License
Agreement), (c) all product, business and marketing plans, sales and promotional
literature and artwork of Seller to the extent that they pertain to the
Purchased Assets or the Employee Self Service Activities, including without
limitation trade show positioning (excluding trademark and trade dress rights),
(d) all product and design manuals, plans, drawings, and technical manuals of
every kind maintained by Seller to the extent that they pertain to the Purchased
Assets or the Employee Self Service Activities (excluding materials pertaining
to the Licensed Assets, access to which is governed by the License Agreement),
and (e) all content, in electronic form, of the Vantive database as of the
Closing Date to the extent that such content pertains to the Purchased
Technology Deliverables, in each case whether maintained as hard copy or stored
in computer memory or any form of nonvolatile memory.
"BUSINESS ASSETS" means the Purchased Assets and the Licensed Assets.
"DEFAULT" means (a) a breach or default under any contract or agreement,
(b) the occurrence of an event that with the passage of time or the giving of
notice or both would constitute a breach of or default under any contract, or
(c) the occurrence of an event that with or without the passage of time or the
giving of notice or both would give rise to a right of termination,
renegotiation or acceleration under any contract or agreement.
"EMPLOYEE SELF SERVICE ACTIVITIES" means Seller's business of designing,
developing, testing, marketing, licensing, selling, distributing, using,
modifying, operating, installing, servicing, supporting, maintaining, or
commercially exploiting (collectively, "EXPLOITING") (x) the Purchased
Technology Deliverables or (y) Seller's Electronic Workforce software to the
extent used in connection with, or part of or in support of, the Purchased
Technology Deliverables solely for the purpose of enabling an employer to
provide services or information to or for its employees for the purpose of its
internal operations. Employee Self Service Activities expressly excludes without
limitation Exploiting software which, in whole or in part, may be directly or
indirectly used (i) to market, promote, license, sell, distribute (or otherwise
offer or make available), support, or service an entity's products and/or
services, or (ii) to communicate with its customers, distributors, resellers,
and/or any other third party that licenses, sells, distributes, or otherwise
offers or makes available products and/or services. The term "Employee Self
Service Activities" is not meant to reference a specific line of business for
accounting or financial purposes.
"EMPLOYEE RETENTION POOL" means an amount equal to $1,600,000 to be
retained by Purchaser and paid to the Hired Employees in accordance with the
terms and subject to the conditions set forth in Section 6.5 of this Agreement.
"EMPLOYEE(S)" means the employee(s) of Seller identified on Schedule 11.
"ENCUMBRANCE" means any claim, pledge, lien, option, charge, license,
collateral assignment, security interest, mortgage, deed of trust, title
retention, conditional sale or other security arrangement, or adverse claim of
title or ownership, whether voluntarily incurred or arising by operation of law,
and any agreement to give any of the foregoing in the future, provided that any
obligation under any Seller Contract that is an Assumed Liability shall not be
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considered an "Encumbrance" for purposes of this Agreement.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974,
as amended, and the rulings and regulations promulgated thereunder.
"EXCLUDED ASSETS" means all assets of Seller other than the Purchased
Assets and the Licensed Assets, including, without limitation, (a) all Seller's
cash, bank accounts and securities; (b) all insurance policies of Seller and all
rights of Seller of every nature and description under or arising out of such
insurance policies; (c) claims for refunds of Taxes paid by Seller prior to the
Closing Date; (d) all assets of, or held by or with respect to, any employee
benefit plan (whether or not governed by ERISA) or any trust, fund or account
that is related to any such employee benefit plan or that is similar in purpose
or function thereto; (e) except as provided herein or in an Ancillary Agreement,
Seller's right, title and interest in the name "Edify" or any variation or
combination thereof, or Seller's other trademarks, monograms or logos; (f)
Seller's accounts receivable; (g) the Intuit License; and (h) the assets listed
on SCHEDULE 1 and all Intellectual Property Rights therein and thereto.
"FURNISHINGS" means all fixtures and furniture owned by Seller and used
primarily by or in connection with Hired Employees during the Occupancy Period.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"INTANGIBLE ASSETS" means, collectively, the intangible assets,
properties and rights of Seller listed on SCHEDULE 2, and all Intellectual
Property Rights that relate exclusively to such assets.
"INTELLECTUAL PROPERTY ENFORCEMENT AGREEMENT" means the Intellectual
Property Enforcement Agreement between Purchaser and Seller substantially in the
form of EXHIBIT C.
"INTELLECTUAL PROPERTY RIGHTS" means any and all existing or future
patent rights (including patent applications and disclosures), rights of
priority, copyrights, moral rights, rights of Seller in trade secrets, rights
relating to trademarks, service marks, trademark and service ▇▇▇▇ registrations
and applications therefor, domain names and registrations therefor, know-how
related to any of the foregoing, together with all goodwill associated with the
foregoing, all rights and causes of action for infringement, misappropriation,
misuse, dilution or unfair trade practices associated with the foregoing, and
any other intellectual property rights recognized in any country or jurisdiction
of the world.
"INTERNAL REVENUE CODE" means the U.S. Internal Revenue Code of 1986, as
amended, and the Treasury regulations (final and temporary) promulgated
thereunder and the administrative pronouncements issued by the Internal Revenue
Service relating thereto.
"INTUIT LICENSE" means the License Agreement dated May 17, 1999 between
Intuit, Inc. and Seller.
"INVENTORY" shall mean all of Seller's inventory held for resale and all
of Seller's raw
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materials, work in process, finished products and similar items with respect to
the Purchased Technology Deliverables, in each case wherever the same may be
located.
"LARGER TRANSACTION" means the merger of Sahara Strategy Corporation
with and into Seller in accordance with the terms set forth in the Merger
Agreement.
"LIABILITIES" means any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any Person of any type, whether accrued, absolute, contingent, matured,
unmatured, liquidated, unliquidated, known or unknown.
"LICENSE AGREEMENT" means the License Agreement between Seller and
Purchaser substantially in the form of EXHIBIT D.
"LICENSED ASSETS" means the Licensed Assets as such term is defined in
the License Agreement and Section 5.19 below (to the extent applicable).
"MARKETING AGREEMENT" means the Marketing Agreement between Seller and
Purchaser substantially in the form of EXHIBIT E.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" means any effect
or change which has or is, or would have or be, a material adverse effect on the
Employee Self Service Activities or the Business Assets.
"MERGER AGREEMENT" means the Agreement and Plan of Merger dated May 16,
1999 by and among Seller, Security First Technologies Corporation and Sahara
Strategy Corporation.
"PERMITS" shall mean all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person,
necessary or desirable for the continued conduct of, or relating to the ongoing
operation of, the Employee Self Service Activities.
"PERSON" or "PERSON" means any individual, partnership, limited
liability company, firm, corporation, association, trust, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.
"PREPAID MAINTENANCE FEES" means, for each Seller Contract, the amount
actually received by Seller under such Seller Contract that is attributable to
maintenance products or services for Employee Self Service Activities to be
provided, in whole or in part, after the Closing Date, calculated, as of the
Closing Date, on a straight-line basis consistent with Seller's past practice in
the treatment of such income.
"PURCHASED TECHNOLOGY DELIVERABLES" means the deliverables and software
applications listed on SCHEDULE 3 (or which are added to Schedule 3 after the
Closing pursuant to the provisions of Section 5.19 below) in both source and
object code, and all related user, developer, technical and design documentation
as of the Closing Date, and all Intellectual Property Rights that relate
exclusively to such assets.
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"PURCHASER'S DISCLOSURE LETTER" means Purchaser's Disclosure Letter
dated as of the Effective Date which is being delivered to Seller concurrently
with the execution of this Agreement.
"SELLER CONTRACTS" means those leases, licenses, agreements, contracts,
distribution agreements, value added reseller agreements, understandings,
arrangements, commitments and purchase orders listed on SCHEDULE 4, or portions
thereof pertaining to the Employee Self Service Activities if so identified on
the Schedule, and such other leases, licenses, agreements, contracts,
distribution agreements, value added reseller agreements, understandings,
arrangements, commitments and purchase order that (a) pertain exclusively to the
Employee Self Service Activities, (b) are entered into by Seller in the ordinary
course of business between the Effective Date and the Closing Date, and (c) are
approved in advance and in writing by Purchaser, which approval may not be
unreasonably withheld.
"SELLER'S DISCLOSURE LETTER" means Seller's Disclosure Letter dated as
of the Effective Date which is being delivered to Purchaser concurrently with
the execution of this Agreement.
"SELLER'S KNOWLEDGE" or "KNOWLEDGE OF SELLER": A particular fact or
other matter shall be deemed to be within "Seller's knowledge" if any
director-level or more senior employee of Seller is actually aware of such fact
after making reasonable inquiries of relevant employees; provided that a person
will be deemed to be aware of information contained in relevant files of Seller,
unless "Actual" precedes either term.
"TANGIBLE ASSETS" means all tangible assets described on SCHEDULE 5.
"TAX" or "TAXES" means all taxes or similar governmental charge or levy
of any kind whatsoever (whether payable directly or by withholding), including
without limitation, income taxes, gross receipts taxes, franchise taxes,
transfer taxes or fees, stamp taxes, sales taxes, use taxes, excise taxes, ad
valorem taxes, value added taxes, documentary taxes, intangible personal
property taxes, withholding taxes, real or personal property taxes, employee
withholding taxes, worker's compensation, payroll taxes, unemployment insurance,
social security, minimum taxes or windfall profits taxes, together with any
related liabilities, penalties, fines, additions to tax or interest, imposed by
any governmental agency.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY ASSETS" means the assets, tangible and intangible, used by
Seller in the Employee Self Service Activities which are licensed or leased to
Seller by third parties and Seller's license or other rights in and to such
assets. The Third Party Assets are listed on SCHEDULE 6.
"TRADEMARK ASSIGNMENT" means the Trademark Assignment substantially in
the form of EXHIBIT F.
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ARTICLE II.
ACQUISITION OF ASSETS
Section 2.1. Assets to Be Acquired and Licensed.
(a) Purchased Assets. Subject to the terms and conditions of
this Agreement, at the Closing, Seller shall sell, assign, transfer, convey and
deliver to Purchaser (or cause to be sold, assigned, transferred, conveyed and
delivered to Purchaser) and Purchaser shall purchase and acquire from Seller,
free and clear of all Encumbrances, all right, title and interest in and to all
of the following (collectively, the "PURCHASED ASSETS"):
(i) the Intangible Assets;
(ii) the Tangible Assets;
(iii) all Inventory as of the Closing Date;
(iv) the Purchased Technology Deliverables;
(v) the Books and Records;
(vi) all rights under confidentiality,
non-disclosure, employee invention assignment and other proprietary rights
agreements between Seller and Hired Employees (as defined in Article VI below)
to the extent such rights relate to the Purchased Assets;
(vii) all rights under the confidentiality and similar
agreements between Seller and any other party to whom disclosure has been made
in connection with or in reference to any proposed sale of all or part of the
Purchased Assets, whether alone or part of a larger transaction, or any business
combination involving Seller, at any time before the Closing Date, to the extent
such rights relate to the Purchased Assets;
(viii) all of Seller's rights under the Seller
Contracts; and
(ix) the goodwill associated with the foregoing.
(b) Licensed Assets. The parties acknowledge that, in
addition to the Purchased Assets, certain assets related to the Employee Self
Service Activities also are essential to other businesses conducted by Seller or
licensed by Seller to third parties. Accordingly, with respect to the Licensed
Assets, at the Closing, Seller shall grant to Purchaser licenses to and deliver
the Licensed Assets on the terms and conditions set forth in the License
Agreement.
(c) Excluded Assets. The parties agree that Seller is not
selling or assigning to Purchaser, and the Purchased Assets do not include, any
of the Third Party Assets, Licensed Assets or Excluded Assets.
Section 2.2. Liabilities Assumed and Excluded. As a material inducement
and consideration to Seller to enter into this Agreement and perform its
obligations hereunder, at the Closing, Purchaser shall assume and discharge the
Assumed Liabilities. Except for the Assumed
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Liabilities, Purchaser shall not assume or otherwise become obligated to pay,
perform or discharge any Liabilities of Seller and Seller shall retain, and
shall be solely responsible and liable for paying, performing and discharging
when due, all of Seller's Liabilities other than the Assumed Liabilities.
Purchaser shall not assume any Seller Plan, and shall not assume or otherwise
become obligated to pay, perform or discharge any liabilities, debts or
obligations of Seller or any of its Affiliates under or with respect to any
Seller Plan, or any liabilities, debts or obligations of any Seller Plan. Seller
and its Affiliates, and any Seller Plan, shall retain, and shall be solely
responsible and liable for paying, performing and discharging when due, all of
its Liabilities under, or with respect to, any Seller Plan. For purposes of this
Section 2.2, "SELLER PLAN" shall mean any employee benefit plan (whether or not
governed by ERISA) that Seller or any of its Affiliates maintains, contributes
to or is obligated to contribute to, or has ever maintained, contributed to or
been obligated to contribute to, or under which Seller or any of its Affiliates
has any obligation or liability (including, without limitation, any contingent
liability).
Section 2.3. Purchase Price; Allocation.
(a) Purchase Price. In consideration of the sale, transfer
and assignment of the Purchased Assets to Purchaser, Purchaser agrees to pay to
Seller at the Closing the sum of $17,975,000, less the sum of (i) the Employee
Retention Pool, and (ii) seventy-five percent (75%) of Prepaid Maintenance Fees,
and subject to the Backlog Adjustment (determined as set forth in SCHEDULE 7)
(the "PURCHASE PRICE"). The Purchase Price shall be paid to Seller at Closing.
Purchaser acknowledges that certain payments by Purchaser to Seller will also be
due in connection with the provision by Seller of support services under the
License Agreement, as provided therein.
(b) Allocation.
(i) Purchase Price. Purchaser and Seller shall use
all commercially reasonable efforts to agree upon an allocation of the Purchase
Price among the Purchased Assets, in accordance with the allocation requirements
of Section 1060 of the Internal Revenue Code. Purchaser and Seller agree to
commence discussions regarding the allocation as soon as practicable, but in no
event later than 30 days following the Closing Date. The allocation of the
Purchase Price agreed upon by the parties pursuant to this Section shall be
reduced to a writing executed and delivered by Seller and Purchaser to each
other (the "PURCHASE PRICE ALLOCATION AGREEMENT"). Any subsequent adjustments to
the allocable Purchase Price shall be reflected in the Purchase Price Allocation
Agreement in a manner consistent with Treasury Regulation Section 1.1060-1T(f).
(ii) Consistent Treatment and Characterization of
Amounts. For all Tax purposes, Purchaser and Seller agree to report the
transactions contemplated in this Agreement in a manner consistent with the
Purchase Price Allocation Agreement, and will not take any position inconsistent
therewith in any Tax return, in any refund claim, in any litigation or
otherwise, unless required to do so by a governmental authority. Seller and
Purchaser shall each be responsible for the preparation of their own Section
1060 statements and forms in accordance with applicable Tax laws, and each shall
execute and deliver to each other such statements and forms as are reasonably
requested by the other party.
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Section 2.4. Closing. Subject to the terms and conditions of this
Agreement, the sale, purchase, license and transfer of the Business Assets and
the assumption of the Assumed Liabilities shall take place at a closing (the
"CLOSING") at the offices of Fenwick & West LLP, Two Palo Alto Square, Palo
Alto, California at 10:00 a.m., local time, on the second business day after the
satisfaction or waiver of the conditions to Closing set forth in Article VIII or
at such other time or on such other date or at such other place as Seller and
Purchaser may mutually agree in writing (the day on which the Closing takes
place being the "CLOSING DATE").
Section 2.5. Closing Deliveries by Seller. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser or Purchaser's affiliates
designated by Purchaser:
(a) all Business Assets to the facility or other location
specified by Purchaser, in such manner as Purchaser directs, in each case at
Purchaser's sole cost and expense;
(b) executed counterparts of each Ancillary Agreement to
which Seller is a party;
(c) all consents and approvals from any third party required
for the valid license of the Licensed Assets as contemplated by this Agreement
and the Ancillary Agreements (the "REQUIRED CONSENTS");
(d) all other items required to be delivered by Seller at
the Closing pursuant to Section 8.2 of this Agreement or any other provision
hereof or any Ancillary Agreement; and
(e) such other instruments as shall be reasonably required
to vest Purchaser title in and to the Purchased Assets.
Section 2.6. Closing Deliveries by Purchaser. At the Closing, Purchaser
shall deliver or cause to be delivered to Seller:
(a) payment of the full amount of the Purchase Price by wire
transfer of immediately available funds to an account of Seller designated to
Purchaser;
(b) executed counterparts of each Ancillary Agreement to
which Purchaser is a party;
(c) all consents required for the valid consummation of the
other transactions as contemplated by this Agreement and any Ancillary
Agreements; and
(d) all other items required to be delivered by Purchaser at
the Closing pursuant to Section 8.1 of this Agreement or any other provision
hereof or any Ancillary Agreement.
Section 2.7. Unassignable Assets. Notwithstanding any other provision of
this Agreement or any of the Ancillary Agreements, to the extent that any of the
Seller Contracts or any other assets constituting part of the Purchased Assets
are not assignable or otherwise transferable to Purchaser or if any of the
Licensed Assets may not be licensed to Purchaser
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without the consent, approval or waiver of another party thereto or any third
party (including any governmental agency), or if such assignment, transfer or
license would constitute a default thereof or a violation of any applicable law
or agreement with any third party, then neither this Agreement nor such
Ancillary Agreements shall constitute an assignment or transfer (or an attempted
assignment or transfer) thereof until such consent, approval or waiver of such
party or parties has been duly obtained. With respect to each Seller Contract or
Licensed Asset whose assignment, transfer or license to Purchaser requires the
consent, approval or waiver of another party thereto or any third party, Seller
shall use all commercially reasonable efforts to obtain such consent, approval
or waiver of such other party or parties or such third party to such assignment
or transfer as promptly as practicable. To the extent that the consents,
approvals and waivers referred to in this Section are not obtained by Seller,
Seller shall use all commercially reasonable efforts to (a) provide to
Purchaser, at the request of Purchaser and the expense of Seller, the payments
due after the Closing Date and other benefits of such Seller Contract or
Licensed Asset and (b) enforce, at the reasonable request of Purchaser and the
expense of Seller, for the account of Purchaser, any rights of Seller arising
from any such Seller Contract (including without limitation the right to elect
to terminate such Seller Contract in accordance with the terms thereof upon the
advice of Purchaser to the extent such rights relate to the Purchased Assets);
provided that Purchaser discharges the Assumed Liabilities. Notwithstanding the
foregoing, nothing contained herein shall obligate Seller or Purchaser to expend
or pay any amount to third parties to obtain any consents, approvals or waivers.
Furthermore, Seller shall not be obligated to extend or renew any Seller
Contracts.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that, except as
expressly set forth in the Seller's Disclosure Letter, all of the following
statements, representations and warranties are true and correct:
Section 3.1. Organization and Good Standing of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Seller has all requisite corporate power and authority
to carry on the Employee Self Service Activities and its other businesses as now
conducted and to own and lease its properties and assets.
Section 3.2. Authorization and Validity. Seller has all requisite
corporate power and authority, and has taken all corporate action necessary, to
execute and deliver this Agreement and the Ancillary Agreements to which it is a
party and to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. The execution and delivery of
this Agreement and the Ancillary Agreements, and the performance of all
obligations of Seller hereunder and thereunder, have been duly and validly
authorized by all necessary corporate and shareholder action on the part of
Seller. This Agreement has been, and at the Closing the other Ancillary
Agreements will be, duly executed and delivered by Seller. This Agreement
constitutes, and, upon mutual execution of each of the other Ancillary
Agreements, each of the other Ancillary Agreements will constitute, a legal,
valid and binding obligation of Seller enforceable against Seller in accordance
with its terms, except (a) as limited by applicable
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bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally; and (b) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
Section 3.3. No Conflict. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by Seller and the consummation of
the transactions contemplated hereby and thereby, subject to compliance with the
consents required in SCHEDULE 8, do not and will not (a) violate or conflict
with any provision of Seller's certificate of incorporation or bylaws, (b) to
Seller's knowledge result in the creation of any Encumbrance upon the Business
Assets or the Employee Self Service Activities, (c) to Seller's knowledge
violate, conflict with, or result in a breach of or constitute a Default under
any of the Seller Contracts, or any other contract to which Seller is a party
the violation(s) of which in the aggregate would have a Material Adverse Effect
on the Seller Contracts, the Employee Self Service Activities or the Business
Assets; or (d) violate any judgment, decision, consent decree, injunction,
ruling or order applicable to Seller.
Section 3.4. Consents. No consent, approval, order or authorization of
or registration, qualification, designation, declaration or filing with, any
governmental entity on the part of Seller is required in connection with the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, except for compliance with the requirements of the HSR
Act. To Seller's knowledge, SCHEDULE 9 sets forth a true and complete list of
each Business Asset with respect to which the consent or approval of any third
party or governmental authority is required in order for Seller to assign,
transfer or license to Purchaser any of the Business Assets or any rights or
obligations under Seller Contracts.
Section 3.5. Title to Purchased Assets. Seller owns all the Purchased
Assets and has good and marketable title in and to all of the Purchased Assets,
free and clear of all Encumbrances, and, upon the consummation of the
transactions contemplated by this Agreement, Purchaser will acquire good and
marketable title to the Purchased Assets free and clear of all Encumbrances,
except those Encumbrances placed on the Purchased Assets with the consent of
Seller. To Seller's knowledge, all Tangible Assets are in good operating
condition and repair and are usable in the ordinary course of business.
Section 3.6. Sufficiency of Assets. To Seller's knowledge, Seller has
disclosed to Purchaser all assets materially relevant to the Employee Self
Service Activities, and, to Seller's knowledge, the Business Assets include all
(a) software applications and all related user, developer, technical and design
documentation (including all Intellectual Property Rights that relate
exclusively to such assets) that constitute the products offered by Seller in
the Employee Self Service Activities as conducted by Seller as of the Effective
Date, except to the extent that Seller offers the Business Assets in combination
with other services or products, such as electronic banking and interactive
voice response, that are not included in the Employee Self Service Activities,
and (b) sufficient desktop computer and laboratory hardware and software and
software for use by the Hired Employees to carry on the Employees Self Service
Activities in all material respects as conducted by Seller as of the Effective
Date, except that the Business Assets do not include computer hardware, software
and systems, such as Vantive, Oracle and QA systems, used by Seller in the
Employee Self Service Activities and other activities. Seller
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makes no representation or warranty as to the sufficiency of the staffing,
facilities and senior management expertise for the operation of the Employee
Self Service Activities.
Section 3.7. Seller Contracts. True and complete copies of each of the
Seller Contracts have been made available to Purchaser. The Seller Contracts are
valid, binding and enforceable in accordance with their respective terms (except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally and as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies). To Seller's
knowledge, neither Seller nor, any other party to any Seller Contract is in
Default in performance of any of their respective obligations thereunder. To
Seller's knowledge, the products and services called for by any Seller Contract
can be supplied by Seller in accordance with the terms of such Seller Contract,
including time specifications.
Section 3.8. Financial Information. The financial information attached
as SCHEDULE 10 (collectively, the "FINANCIAL INFORMATION") is consistent with
the books and records of Seller and to Seller's knowledge fairly and accurately
present, in all material respects, the matters set forth therein as of the dates
and for the periods indicated.
Section 3.9. Litigation. There is no claim, action, suit, arbitration,
mediation, investigation or other proceeding of any nature pending or, to
Seller's knowledge, threatened, at law or in equity, by way of arbitration or
before any court, governmental department, commission, board or agency (a)
against, related to or affecting the Employee Self Service Activities or the
Business Assets, or any Employee with respect to their relationship with or to
the Employee Self Service Activities, or (b) seeking to delay, limit or enjoin
the transactions contemplated by this Agreement or the Ancillary Agreements.
There are no judgments, decrees, injunctions or orders of any court,
governmental department, commission, agency, instrumentality or arbitrator
pending or binding against Seller which adversely affect the Employee Self
Service Activities or any of the Business Assets.
Section 3.10. Intellectual Property Rights.
(a) Rights to Conduct Business. Seller owns or is licensed,
and has all rights in and to, all Intellectual Property Rights, to the extent
required to conduct the Employee Self Service Activities as conducted by Seller
as of the Closing Date, and to enter into, and to perform its obligations under
the License Agreement.
(b) Ownership of Certain Assets. Except for the Third Party
Assets, Seller owns all right, title and interest in and to the Intangible
Assets and the Purchased Technology Deliverables, and all Intellectual Property
Rights that relate exclusively thereto, free and clear of all Encumbrances
(except for licenses granted by Seller which are disclosed in Seller's
Disclosure Letter or, under the terms of this Agreement, are not required to be
so disclosed).
(c) Third Party Assets. SCHEDULE 6 to Seller's Disclosure
Letter sets forth a list of all Third Party Assets used in the Employee Self
Service Activities, and all license agreements or other contracts pursuant to
which Seller has the right to use (in the manner used by Seller in connection
with the Employee Self Service Activities) such Third Party Assets
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(excluding such Third Party Assets in or to which Purchaser is to be given any
rights in hereunder the absence of which rights would not, individually or in
the aggregate, have a Material Adverse Effect on Purchaser's ability to conduct
the Employee Self Service Activities immediately following the Closing) (the
"THIRD PARTY LICENSES"), indicating, with respect to each of the Third Party
Licenses listed therein the applicable Third Party Asset licensed thereunder.
Seller has the lawful right to use (to the full extent permitted under the terms
of the applicable Third Party License) all Third Party Assets incorporated in or
used in the development or production of the Intangible Assets, the Purchased
Technology Deliverables and/or the Licensed Assets as they currently are being
developed, licensed, marketed or used by Seller in the conduct of the Employee
Self Service Activities as now conducted. All Third Party Licenses are valid,
binding and in full force and effect; Seller and, to Seller's knowledge, each
other party thereto has performed in all material respects its obligations
thereunder; and neither Seller nor, to Seller's knowledge, any other party
thereto is in Default thereunder. Seller has not received written notice or, to
Seller's knowledge, oral or other notice that any party to any Third Party
License intends to cancel, terminate or refuse to renew (if renewable) any such
Third Party License.
(d) Trademarks. SCHEDULE 2 sets forth as of the date hereof
a list of all trademarks, trade names, brand names, service marks, logos or
other identifiers used in connection with the Employee Self Service Activities
that are to be transferred pursuant to the Trademark Assignment (the "COMPANY
MARKS"), together with the status (i.e., registered, unregistered, application)
for each Company ▇▇▇▇, the applicable United States Patent and Trademark Office
("USPTO") registration or application number, the classes covered by each
registration or application, the next renewal date for registered Company ▇▇▇▇,
and a description of the goods or services in connection with which such Company
Marks are used. To Seller's knowledge, the Company Marks are valid and Seller
has full legal and beneficial ownership of all rights conferred by use of the
Company Marks and, as to those Company Marks that have been registered in the
USPTO, by federal registration of the Company Marks.
(e) IP Registrations. Seller's Disclosure Letter sets forth
as of the date hereof all patents, patent applications and copyright
registrations (and applications therefor) filed or obtained by Seller and
claiming or covering the Intangible Assets and/or the Purchased Technology
Deliverables (or any portion thereof) (collectively, the "IP REGISTRATIONS").
Seller owns all right, title and interest, free and clear of any Encumbrances
(except for licenses granted by Seller which are disclosed in Seller's
Disclosure Letter or, under the terms of this Agreement, are not required to be
so disclosed), in and to the IP Registrations, together with all Intellectual
Property Rights therein and thereto.
(f) Maintenance of Rights. Seller has not conducted its
business (including without limitation the Employee Self Service Activities),
and has not used or enforced (or, to the knowledge of Seller, failed to use or
enforce) any of the Intangible Assets, Purchased Technology Deliverables as
currently being used by Seller, in a manner that would result in the
abandonment, cancellation or unenforceability of any item of the Intangible
Assets or Purchased Technology Deliverables, and Seller has not taken (or, to
Seller's knowledge, failed to take) any action that would result in the
forfeiture or relinquishment of any Intangible Assets or Purchased Technology
Deliverables, or any portion of the foregoing, in each case where such
abandonment,
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cancellation, unenforceability, forfeiture or relinquishment would have a
Material Adverse Effect. Except for the Seller Contracts and the Intuit License,
Seller has not granted to any third party any rights or permissions to use any
of the Intangible Assets or Purchased Technology Deliverables. To Seller's
knowledge, except pursuant to reasonably prudent safeguards, (a) no third party
has been given by Seller any confidential information relating to the Purchased
Assets, and (b) Seller is not under any contractual or other obligation to
disclose to any third party any confidential information relating to the
Purchased Assets. Each employee of Seller and, to Seller's knowledge, each
consultant to Seller who has access to Seller's confidential or proprietary
information related to the Purchased Assets, has executed a proprietary
information agreement in commercially reasonable form. To Seller's knowledge, no
officer or key employee is in violation of any prior employee contract or
proprietary information or invention assignment agreement.
(g) Third Party Claims. Seller has not received any notice
or claim (whether written, oral or otherwise) challenging Seller's ownership or
rights in or to the Purchased Assets or any Intellectual Property Rights therein
or thereto (excluding the Third Party Assets) or claiming that any other person
or entity has any legal or beneficial ownership with respect thereto which
notice, claim or challenge is inconsistent with Seller's ownership or rights
therein or thereto. Seller has not received any notice or claim (whether
written, oral or otherwise) challenging the validity or enforceability of any of
the Intellectual Property Rights embodied in the Purchased Assets (excluding the
Third Party Assets). To Seller's knowledge, no other person or entity is
infringing or misappropriating any part of the Purchased Assets or any
Intellectual Property Rights therein or thereto (excluding the Third Party
Assets) or otherwise making any unauthorized use of the Purchased Assets or any
Intellectual Property Rights therein or thereto (excluding the Third Party
Assets).
(h) Infringement by Seller. To Seller's knowledge, the use
of the Purchased Assets and any Intellectual Property Rights therein or thereto
(excluding the Third Party Assets) in connection with the Employee Self Service
Activities as currently used does not infringe, violate or constitute an
appropriation of any right, title or interest (including, without limitation,
any patent, copyright or trade secret right) held by any other person or entity,
and there have been no claims made with respect thereto.
(i) Confidentiality. Except as set forth on Seller's
Disclosure Letter, (a) Seller has not disclosed any software source code
included in the Intangible Assets and/or the Purchased Technology Deliverables
to any person or entity other than an employee of Seller and under a written
nondisclosure agreement; (b) Seller has at all times maintained and enforced
commercially reasonable procedures to protect all confidential information
relating to the Purchased Assets; (c) neither Seller nor, to Seller's knowledge,
any escrow agent acting on Seller's behalf is under any contractual or other
obligation to disclose any software source code or any other proprietary
information included in or relating to the Intangible Assets and/or the
Purchased Technology Deliverables; and (d) Seller has not deposited any software
source code relating to the Intangible Assets and/or the Purchased Technology
Deliverables into any software source code escrows or similar arrangements. If,
as disclosed on Seller's Disclosure Letter, Seller has deposited any software
source code relating to the Intangible Assets and/or the Purchased Technology
Deliverables into any software source code escrows or similar
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arrangements, Seller has not taken any action and has not failed to take any
action which action or omission has or could reasonably form the basis for a
release of such software source code from such escrows or arrangements.
(j) Warranty Against Defects. The Purchased Technology
Deliverables are free from known material defects and substantially conform to
the applicable published specifications and documentation, and Seller has
received no notice of any warranty, service, support or maintenance claims under
any of the Seller Contracts that, individually or in the aggregate, may
reasonably be expected to have a Material Adverse Effect. Without limiting the
foregoing, Purchaser acknowledges that the Purchased Technology Deliverables are
not error free.
(k) Domain Names. Seller's Disclosure Letter sets forth a
list of all Internet domain names solely in connection with the Purchased Assets
(collectively, the "DOMAIN NAMES"). Seller has, and after the Closing the
Purchaser will have, a valid registration and all material rights (free of any
material restriction) in and to the Domain Names.
(l) Year 2000. The Purchased Technology Deliverables and the
Licensed Assets (excluding any Third Party Assets) (i) will correctly process,
provide and receive date data before, during and after the Year 2000, (ii) do
not cause any other programs or hardware to fail or to generate errors, provided
such other programs and hardware accept or provide date data in four-digit year
format, (iii) use a four-digit year format in internal structures, data files
and databases, and in user interfaces and reports, (iv) will process date data
such that date calculations, comparisons, day-of-week computations, and
sequencing will work correctly for dates in the same century and dates in
different centuries, (v) will process date data such that leap year calculations
will be performed correctly (collectively, "Y2K COMPLIANT"); provided that
third-party software operating in connection with the Purchased Technology
Deliverables and the Licensed Assets are also Y2K Compliant. Seller has
conducted reasonable tests in accordance with industry practices with respect to
the foregoing.
(m) Indemnification. Except in the ordinary course
consistent with past practice, Seller has not entered into any agreement or
offered to indemnify any person against any charge of infringement by the
Intangible Assets and/or the Purchased Technology Deliverables, or any other
Intellectual Property Right embodied in or used in connection with the Employee
Self Service Activities. To Seller's knowledge, Seller has not entered into any
agreement granting any person the right to bring any infringement action with
respect to, or otherwise to enforce, any of the Intangible Assets and/or the
Purchased Technology Deliverables.
Section 3.11. Compliance with Laws. Seller has complied in all material
respects with and has not received any notices to the effect that, or has
otherwise been advised that, it is not in compliance with any federal, state or
local statute, law or regulation applicable to the Employee Self Service
Activities or any of the Business Assets.
Section 3.12. Permits. There are no Permits used or otherwise held by
Seller exclusively in connection with the operation of the Employee Self Service
Activities. Seller has, and at all times has had, all Permits required under any
law, rule or regulation in the operation of
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Employee Self Service Activities or in the ownership of the Business Assets, and
owns or possesses such Permits free and clear of all Encumbrances. Seller is not
in Default, nor has it received any notice of any claim of Default, with respect
to any such Permit. To Seller's knowledge, no present or former shareholder,
director, officer or employee of Seller or any affiliate thereof, or any other
person, firm, corporation or other entity, owns or has any proprietary,
financial or other interest (direct or indirect) in any Permit which Seller
owns, possesses or uses.
Section 3.13. Tax Matters.
(a) Seller has filed all Tax Returns that it was required to
file, and all such Tax Returns were correct and complete in all material
respects. All Taxes owed by Seller (whether or not shown on any Return) have
been paid. Seller currently is not the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an authority
in a jurisdiction where Seller does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are (and as of immediately
following the Closing there will be) no Encumbrances on any of the Purchased
Assets that arose in connection with any failure (or alleged failure) to pay any
Tax.
(b) Seller has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to all Employees
and any other employee, and, to Seller's knowledge, independent contractor,
creditor, stockholder or other third party.
(c) There is no dispute, claim or assessment pending or, to
Seller's knowledge, threatened, concerning any Tax liability of Seller, and to
the knowledge of Seller, there is no audit or investigation with respect to any
Tax liability of Seller. Seller has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
Section 3.14. Employees. Set forth in SCHEDULE 11 is a list, as of the
Effective Date, of all sales, engineering, product marketing, consulting
services, technical support and product assurance employees of Seller (other
than those employees at a vice-president level or above) whose primary function
relates to the Employee Self Service Activities, including, for each Employee, a
true and complete description of such Employee's title, date of hire, current
annual base salary, all bonuses, profit sharing, or commissions accrued or
payable, any other compensatory agreements between such Employee and Seller, and
whether such Employee is engaged as a full- or part-time employee of Seller or
is a foreign national working in the United States pursuant to a visa. Seller is
not a party to any labor agreement with respect to the Employees with any labor
organization, union, group or association and there are no employee unions, (nor
any other similar labor or employee organizations) under local statutes, custom
or practice. Seller has not experienced any attempt by organized labor or its
representatives to make Seller conform to demands of organized labor relating to
the Employees or to enter into a binding agreement with organized labor that
would cover such Employees. There is no labor strike or labor disturbance
pending or, to Seller's knowledge, threatened against Seller with respect to the
Employee Self Service Activities nor is any grievance currently being asserted,
and Seller has not experienced a work stoppage or other labor difficulty
relating to the Employee Self Service
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Activities, and is not and has not engaged in any unfair labor practice in
connection with the Employee Self Service Activities. Without limiting the
foregoing, Seller, with respect to the Employee Self Service Activities, is in
compliance with the Immigration Reform and Control Act of 1986 and maintains a
current Form I-9, as required by such Act, in the personnel file of each
employee hired after November 6, 1986.
Section 3.15. Pension and Employee Benefit Matters. Neither Seller nor
any entity which, at any relevant time, has been in a controlled group of
corporations, under common control, or affiliated with Seller within the meaning
of Section 414(b), (c), (m) or (o) of the Internal Revenue Code, or Section
4001(b) of ERISA, has ever maintained, contributed to or been required to
contribute to, or has any liability (including without limitation any contingent
liability) under or with respect to, any plan subject to Section 302 or Title IV
of ERISA or Section 412 of the Internal Revenue Code, or any "multiemployer
plan" as such term is defined in Section 3 (37) or 4001(a)(3) of ERISA.
Purchaser will incur no liability to the Pension Benefit Guaranty Corporation in
connection with the transactions contemplated hereby.
Section 3.16. Customers. Set forth on SCHEDULE 12 is true and complete
list of the current customers of the Employee Self Service Activities, including
for each customer, whether such customer is a direct customer of Seller or
indirect licensee of Seller, and, to Seller's knowledge, in the case of indirect
licensees of Seller, the authorized value added reseller(s) or distributor(s) of
Seller from whom such customer obtained such license or sublicense.
Section 3.17. Books and Records. Seller has given Purchaser access to
books and records that accurately and fairly reflect the operations and
activities of Seller with respect to the matters set forth in such books and
records. The minute books of Seller previously delivered to Purchaser accurately
and adequately reflect all action previously taken by the shareholders, board of
directors and committees of the board of directors of Seller that in any
material way relates to the Employee Self Service Activities.
Section 3.18. Inventory. The Inventory as of the Effective Date or
arising since the Effective Date was acquired and has been maintained in
accordance with the regular business practices of Seller.
Section 3.19. Payments. Seller has not, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item or property, however
characterized, to any finder, agent, client, customer, supplier, government
official or other party, in the United States or any other country, which is in
any manner related to the Employee Self Service Activities, Business Assets or
related operations of Seller, which is, or may be with the passage of time or
discovery, illegal under any existing federal, state or local laws of the United
States (including without limitation the U.S. Foreign Corrupt Practices' Act)
or, to Seller's knowledge, any other country having jurisdiction; and Seller has
not participated, directly or indirectly, in any boycotts or other similar
practices affecting any of its actual or potential customers.
Section 3.20. No Other Agreements to Sell the Business Assets. Neither
Seller nor, to Seller's knowledge, any of Seller's officers, directors,
employees or affiliates have any legal obligation, absolute or contingent, to
any other person other than Purchaser, to sell, assign,
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transfer or effect a sale of any of the Business Assets, to sell or effect a
sale of a majority of the capital stock of Seller, to effect any merger,
consolidation, liquidation, dissolution or other reorganization of Seller
(except as set forth in the Merger Agreement), or to enter into any agreement or
cause the entering into of an agreement with respect to any of the foregoing.
Section 3.21. Brokers. Other than ▇▇▇▇▇▇▇ Sachs & Co., the fees and
expenses of whom shall be paid by Seller, Seller has not employed any broker,
finder, investment banker or agent, incurred or agreed to pay any brokerage fee,
finder's fee or commission with respect to the transactions contemplated by this
Agreement, or dealt with anyone purporting to act in the capacity of a broker,
finder, investment banker or agent with respect thereto.
Section 3.22. No Undisclosed Liabilities. Seller has no Liabilities,
other than the Assumed Liabilities, which, individually or in the aggregate,
have or will have a Material Adverse Effect on the Employee Self Service
Activities or the Business Assets.
Section 3.23. Material Misstatements or Omissions. To Seller's
knowledge, no representations or warranties by Seller in this Agreement, nor any
Ancillary Agreement, document, written information, exhibit, statement,
certificate or schedule heretofore or hereinafter furnished by Seller, any of
Seller's representatives to Purchaser pursuant hereto, or in connection with the
transactions contemplated hereby or by the Ancillary Agreements, including the
Seller's Disclosure Letter, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary to
make the statements or facts contained herein not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that, except as set
forth in the Purchaser's Disclosure Letter, all of the following statements,
representations and warranties are true, accurate and correct:
Section 4.1. Organization and Good Standing. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Massachusetts. Purchaser has all requisite corporate power and
authority to carry on its business as now conducted and to enter into this
Agreement and the Ancillary Agreements.
Section 4.2. Authorization and Validity. Purchaser has all requisite
corporate power and authority, and has taken all corporate action necessary, to
execute and deliver this Agreement and the Ancillary Agreements, to consummate
the transactions contemplated hereby and thereby, and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Ancillary Agreements, and the performance of all obligations of Purchaser
hereunder and thereunder, have been duly and validly authorized by all necessary
corporate and shareholder action on the part of Purchaser. This Agreement has
been, and at the Closing the other Ancillary Agreements will be, duly executed
and delivered by Purchaser. This Agreement constitutes, and the other Ancillary
Agreements when executed and delivered, will constitute,
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valid and legally binding obligations of Purchaser, as applicable, enforceable
in accordance with their respective terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally and (b) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
Section 4.3. No Conflict. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by Purchaser and the consummation of
the transactions contemplated hereby and thereby do not and will not (a) violate
or conflict with any provision of Purchaser's governance documents, (b) violate,
conflict with, or result in a breach of or constitute a Default under, or
require a notice under, or result in the creation of any Encumbrance upon, any
of Purchaser's assets under, any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, security interest or other arrangement to which
Purchaser is a party or by which it is bound or to which any of its assets are
subject, which violation(s) in the aggregate would have a material adverse
effect on the Purchaser or (c) violate any judgment, decision, consent decree,
injunction, ruling or order applicable to Purchaser.
Section 4.4. Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
governmental entity or third party on the part of Purchaser is required in
connection with the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, except for compliance with the
requirements of the HSR Act.
Section 4.5. Litigation. There is no claim, action, suit, arbitration,
mediation, investigation or other proceeding of any nature pending or, to
Purchaser's knowledge, threatened, at law or in equity, by way of arbitration or
before any court, governmental department, commission, board or agency seeking
to delay, limit or enjoin the transactions contemplated by this Agreement or the
Ancillary Agreements.
Section 4.6. Brokers. Neither Purchaser, nor any of its affiliates has
employed any broker, finder or agent, incurred or agreed to pay any brokerage
fee, finder's fee or commission with respect to the transactions contemplated by
this Agreement, or dealt with anyone purporting to act in the capacity of a
broker, finder or agent with respect thereto.
ARTICLE V.
COVENANTS
Section 5.1. Conduct of Business Prior to the Closing. From the
Effective Date and continuing until the earlier of the Closing Date or the
termination of this Agreement according to its terms, ▇▇▇▇▇ ▇▇▇▇▇ shall report
solely to the CEO of Seller, and shall have general management authority with
respect to all aspects of the Employee Self Service Activities, including sales,
consulting, technical support, engineering and other functions of the Employee
Self Service Activities, subject to coordination and cooperation with
appropriate management responsible for Seller's other business activities. The
parties acknowledge that ▇▇. ▇▇▇▇▇ shall
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have no budgetary authority and shall remain subject to Seller's customary human
resource policies and procedures and shall abide by his duty of loyalty to
Seller as an employee of Seller. Seller shall have no obligation to increase ▇▇.
▇▇▇▇▇' benefits or compensation for such additional responsibilities and can
elect to require such written acknowledgment from ▇▇. ▇▇▇▇▇. Seller shall, on
the Effective Date, make an internal announcement to the Employees (and others,
if appropriate) regarding the role and responsibilities of ▇▇. ▇▇▇▇▇ with
respect to the Employee Self Service Activities. Subject to the foregoing,
Seller shall, from the Effective Date and continuing until the earlier of the
Closing Date or the termination of this Agreement in accordance with Section 9.1
of this Agreement, carry on the Employee Self Service Activities in the ordinary
course and consistent with Seller's past practice (taking into account the sale
of the Purchased Assets contemplated hereby and Seller's other agreements
hereunder) except for such actions of Seller as may be contemplated by this
Agreement or agreed to by Purchaser. Without limiting the foregoing, during the
period described in the preceding sentence, except as may be required by law or
as permitted under Section 5.12 or Article VI below or as agreed to by
Purchaser, Seller shall not:
(a) enter into, extend, materially modify, terminate or
renew any Seller Contract, except in the ordinary course of business;
(b) sell, assign, transfer, convey, lease, mortgage, pledge
or otherwise dispose of or encumber any of the Business Assets, or any interests
therein, except in the ordinary course of business;
(c) fail to produce and maintain Inventory in the ordinary
course of business consistent with its past practices;
(d) fail to maintain the Tangible Assets in substantially
their current state of repair, excepting normal wear and tear or failure to
replace consistent with Seller's past practice inoperable, worn-out or obsolete
or destroyed Tangible Assets;
(e) fail to comply with all laws, rules and regulations
applicable to the Business Assets and the Employee Self Service Activities;
(f) intentionally do any other act which would cause any
representation or warranty of Seller in this Agreement to be or become untrue in
any material respect;
(g) fail to use its commercially reasonable efforts to (i)
retain the Employees and (ii) maintain the Employee Self Service Activities so
that such employees will remain available to Purchaser, (iii) maintain existing
relationships with suppliers, customers and others having business dealings with
Seller with respect to the Employee Self Service Activities; and (iv) otherwise
to preserve the goodwill of the Employee Self Service Activities so that such
relationships and goodwill will be preserved;
(h) transfer any Employee to any other division or position
of employment within Seller;
(i) terminate the employment of any Employee other than
pursuant to Seller's
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customary policies and procedures;
(j) change the base salary or bonus of any Employee or
establish a bonus plan or any new employee benefits for any Employee; or
(k) encourage any Employee to accept any offer of employment
other than by Purchaser.
Section 5.2. Transition of Business; Consent of Third Parties. Following
the Closing Date, Seller shall use its commercially reasonable efforts to assist
Purchaser in contacting the customers of the Employee Self Service Activities
identified on Schedule 4 in order to transition such customer relationships to
Purchaser. Seller shall use its commercially reasonable efforts to obtain the
consent in writing of all persons, if any, necessary to permit Seller to assign
and transfer all of the Purchased Assets free and clear of all Encumbrances,
license all of the Licensed Assets to Purchaser and to obtain the consents of
the persons identified on Schedule 9. Purchaser shall use commercially
reasonable efforts to cooperate with Seller in connection with Seller's efforts
to obtain such contents, which obligation shall not be construed to require
Purchaser to pay any fees or costs, or otherwise incur any expense or financial
obligations, associated with such consents.
Section 5.3. Notification of Certain Matters. From the Effective Date
through the Closing Date, Seller shall give prompt notice to Purchaser of (a)
the occurrence, or failure to occur, of any event which occurrence or failure
would be reasonably likely to cause any representation or warranty contained in
this Agreement or in any exhibit or schedule hereto to be untrue or inaccurate
in any material respect and (b) any failure of Seller to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement or any exhibit or schedule hereto; provided, however, that
such disclosure shall not be deemed to cure any breach of a representation,
warranty, covenant or agreement or to satisfy any condition. Seller shall
promptly notify Purchaser of any Default under this Agreement or any Seller
Contract, or any Material Adverse Change or Material Adverse Effect prior to the
Closing. Seller shall notify Purchaser in writing within two business days after
notice of the early termination or material amendment of any Seller Contract.
Section 5.4. Access to Information. Seller shall afford to Purchaser's
representatives, including Purchaser's counsel and auditors, during normal
business hours, and without undue disruption to Seller's activities, (a) from
the Effective Date until the earlier of the Closing Date or the termination of
this Agreement according to its terms, access to any and all of the Business
Assets; and (b) after Closing (but no later than the third anniversary of the
Closing Date), Seller will provide access, at all reasonable times upon
reasonable notice, to its books and records, general ledger, accounting
personnel and its public accountants and their work papers (subject to
reasonable confidentiality undertakings) to allow Purchaser to prepare and have
audited the financial statements for all prior periods beginning January 1,
1996, if reasonably necessary for filings with the Securities and Exchange
Commission in regard to any offering of securities by Purchaser. Subject to the
foregoing, appropriate staff and personnel of Seller will confer with
Purchaser's representatives and will furnish to Purchaser, either orally or by
means of such records, documents, and memoranda as are available or reasonably
capable of preparation, such
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information as Purchaser may reasonably request, and Seller shall furnish to
Purchaser's auditors all consents and authority that they may reasonably request
in connection with any such examination. Purchaser shall reimburse Seller for
the actual and reasonable cost incurred by Seller in connection with the
engagement of Seller's independent auditors for the purposes set forth in clause
(b) of this Section 5.4, and any additional personnel hired specifically for
such purposes, to the extent such auditors or personnel are engaged for such
purpose at the written request of Purchaser). Purchaser acknowledges that Seller
makes no representation or warranty with respect to Purchaser's ability to
prepare or have audited financial statements based on the books and records of
Seller.
Section 5.5. Further Actions. Each of the parties hereto shall, at its
own expense, execute and deliver such documents and other papers and take such
further actions as may be required to carry out the provisions of this Agreement
and the Ancillary Agreements, to cause the conditions to Closing set forth in
Article VIII to be fulfilled as promptly as possible, and to give effect to the
transactions contemplated by this Agreement and the Ancillary Agreements. Seller
will sign and deliver any and all instruments and documents necessary or
appropriate to fully effect and perfect the transfer or license, as the case may
be, to Purchaser of the Business Assets pursuant to the terms of this Agreement.
Section 5.6. Confidentiality.
(a) In connection with the negotiation of this Agreement and
the preparation for consummating the transactions set forth in this Agreement,
and the performance of obligations under this Agreement, Purchaser and Seller
each acknowledge that it has had access to confidential information relating to
the other party, whether received before or after the Effective Date, including
financial, employee, technical, manufacturing or marketing information, ideas,
methods, developments, inventions, improvements, business plans, trade secrets,
scientific or statistical data, diagrams, drawings, specifications or other
proprietary information relating thereto, together with analyses, compilations,
studies or other documents, records or data prepared by the other party or its
representatives which contain or otherwise reflect or are generated from such
information ("CONFIDENTIAL INFORMATION"). For purposes of this Section 5.6, the
term "representatives" shall include employees, contractors, agents, attorneys,
accountants, advisors, shareholders, officers and directors of a party. The term
"Confidential Information" does not include:
(i) For Purchaser, information received in
connection with the transactions contemplated hereby which (A) is or becomes
generally available to the public other than as a result of a disclosure by
Purchaser or its representatives, (B) was within Purchaser's possession prior to
its being furnished to Purchaser by or on behalf of the Seller in connection
with the transactions contemplated in this Agreement, provided that the source
of such information was not known by Purchaser to be bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to Seller or any other Person with respect to such information
or (C) becomes available to Purchaser on a non-confidential basis from a source
other than Seller or any of its representatives, provided that such source is
not bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to Seller or any other Person with
respect to such information.
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(ii) For Seller, information received in connection
with the transactions contemplated hereby which (A) is or becomes generally
available to the public other than as a result of a disclosure by Seller or its
Representatives, (B) was within Seller's possession prior to its being furnished
to Seller by or on behalf of the Purchaser in connection with the transactions
contemplated in this Agreement, provided that the source of such information was
not known by Seller to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to Purchaser or
any other Person with respect to such information or (C) becomes available to
Seller on a non-confidential basis from a source other than Purchaser or any of
its representatives, provided that such source is not bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to Purchaser or any other Person with respect to such
information.
(b) For a period of five (5) years after the Closing Date
(and in perpetuity with respect to software code and related user, developer,
technical and design documentation), Purchaser and Seller shall treat all
Confidential Information as confidential, preserve the confidentiality thereof
and not disclose any Confidential Information, except to their respective
representatives who need to know such Confidential Information in connection
with the transactions contemplated hereby, or for the purpose of negotiating and
exercising their respective rights under this Agreement and the Ancillary
Agreements. If the parties fail to consummate the transactions contemplated by
this Agreement, for a period of five (5) years after the Closing Date (and in
perpetuity with respect to software code and related user, developer, technical
and design documentation), Purchaser and Seller shall not use to the detriment
of the other party any Confidential Information obtained from such other party
or such other party's representatives. Purchaser and Seller shall use all
reasonable efforts to cause their respective representatives to treat all
Confidential Information as confidential, preserve the confidentiality thereof
and not disclose any Confidential Information. Purchaser and Seller each shall
be responsible for any breach of this Section 5.6 by any of their respective
representatives. If, however, Confidential Information is disclosed, the
disclosing party shall immediately notify the other party in writing and take
all reasonable steps required to prevent further disclosure.
(c) All Confidential Information shall remain the property
of the party who originally possessed such information unless otherwise set
forth in this Agreement. In the event of the termination of this Agreement for
any reason whatsoever, Purchaser and Seller shall, and shall cause their
respective representatives to, return to the other party all Confidential
Information (including all copies, summaries and extracts thereof, whether in
physical or electronic form) furnished to it by that other party in connection
with the transactions contemplated by this Agreement.
(d) If Purchaser or Seller is requested or required (by oral
questions, interrogatories, requests for information or documents in legal
proceedings, subpoena, civil investigative demand or other similar process) or
is required by operation of law to disclose any Confidential Information, it
shall provide the other party with prompt written notice of such request or
requirement, which notice shall, if practicable, be at least 48 hours prior to
making such disclosure, so that that other party may seek a protective order or
other appropriate remedy and/or waive compliance with the provisions of this
Agreement. If, in the absence of a protective order or other remedy or the
receipt of such a waiver, the party requested or required to disclose
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Confidential Information is nonetheless, in the opinion of counsel, legally
compelled to disclose Confidential Information, then that party may disclose
that portion of the Confidential Information which such counsel advises is
legally required to be disclosed, provided that that party uses its reasonable
efforts to preserve the confidentiality of the Confidential Information,
whereupon such disclosure shall not constitute a breach of this Agreement.
Section 5.7. Public Announcements. On and prior to the Closing Date,
Purchaser and Seller shall advise and confer with each other prior to the
issuance of any reports, statements or releases concerning this Agreement
(including the exhibits hereto) and the transactions contemplated hereby.
Purchaser and Seller will agree in good faith on the text and timing of any
public disclosure prior to the Closing or with respect to such matters, except
as may be required by law, court process, securities exchange listing agreement
or the rules of the National Association of Securities Dealers.
Section 5.8. Books and Records. Seller shall provide access to all
financial books, records, data, files and reports regarding the relationships
and arrangements between Seller and the customers, vendors and value added
resellers of the Employee Self Service Activities prepared or maintained by
Seller during the six-month period prior to the Closing Date, to the extent
accessible without placing an unreasonable burden an Seller. If, in order
properly to prepare documents required to be filed with governmental authorities
(including Tax authorities) or its financial statements, it is necessary that
any party hereto or any successors be furnished with additional information
relating to the Business Assets or the Employee Self Service Activities, and
such information is in the possession of any other party hereto, such party
agrees to use all commercially reasonable efforts to promptly furnish such
information to the party needing such information, at the cost and expense of
the party being furnished such information. From and after the Effective Date
and continuing after the Closing, Seller shall reasonably cooperate with
Purchaser and provide to Purchaser at Purchaser's expense all financial
information that may be required to enable Purchaser to comply with all
applicable laws, rules and regulations, and any governmental filing
requirements, with respect to reporting and reflecting the transactions
contemplated by this Agreement and the Ancillary Agreements. From and after the
Effective Date and continuing after the Closing, Purchaser shall reasonably
cooperate with Seller and provide to Seller at Seller's expense all financial
information that may be required to enable Seller to comply with all applicable
laws, rules and regulations, and any governmental filing requirements, with
respect to reporting and reflecting the transactions contemplated by this
Agreement and the Ancillary Agreements.
Section 5.9. Regulatory and Other Authorizations; Consents.
(a) Efforts. Each party hereto will use all commercially
reasonable efforts to obtain all authorizations, consents, orders and approvals
of all federal, state and local regulatory bodies and officials that may be or
become necessary for the execution and delivery of, and the performance of its
obligations pursuant to, this Agreement and the Ancillary Agreements and will
cooperate fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals. Each party hereto agrees to make
an appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby as promptly as is
practicable after the date hereof and to supply promptly
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any additional information and documentary material that may be requested by any
governmental authority pursuant to the HSR Act. The parties hereto will not take
any action that will have the effect of delaying, impairing or impeding the
receipt of any required approvals. Without limiting the generality of the
parties' undertakings pursuant to this Section, the parties shall use all
commercially reasonable efforts to prevent the entry in a judicial or
administrative proceeding brought under any antitrust or similar law by the
Federal Trade Commission, the Department of Justice or any other United States
federal or state, or non-U.S. government or governmental authority (an
"ANTITRUST AUTHORITY") or any other party of any permanent or preliminary
injunction or other order that would make consummation of the acquisition of the
Purchased Assets in accordance with the terms of this Agreement unlawful or that
would prevent or delay such consummation. In connection therewith, if any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging any transaction contemplated by this Agreement as
violative of any antitrust or similar law, each of the parties hereto shall
cooperate and use all commercially reasonable efforts to contest and resist any
such action or proceeding and to have vacated, lifted, reversed, or overturned
any decree, judgment, injunction or other order, whether temporary, preliminary
or permanent, that is in effect and that prohibits, prevents, or restricts
consummation of any such transaction, unless by mutual agreement the parties
decide that litigation is not in their respective best interests.
(b) Communications. Each party hereto shall promptly inform
the other of any communication between such party and an Antitrust Authority
regarding any of the transactions contemplated hereby. If any party or any
affiliate of such party receives a request for additional information or for
documents or any material from an Antitrust Authority, or an Antitrust Authority
makes any objection with respect to the transactions contemplated hereby, then
such party shall use all commercially reasonable efforts to promptly resolve
such request or such objections. Each party shall use all commercially
reasonable efforts to provide prior disclosure to, and coordinate with the other
parties and their counsel in connection with the submission of written materials
by such party to an Antitrust Authority in connection with HSR Act compliance or
the merger control or competition regulations of any other country, and prior to
initiating any oral communications with such Antitrust Authorities by such
party. Each party hereto will cooperate in connection with reaching any
understandings, undertakings or agreements (oral or written) involving an
Antitrust Authority in connection with the transactions contemplated hereby.
(c) HSR Filing Fee. Purchaser shall pay the cost of the
filing fee required under the HSR Act.
Section 5.10. Taxes. Seller shall, (a) continue to file within the time
period for filing all returns and reports relating to Taxes, and such returns
and reports shall be true, correct and complete, to the extent any failure to do
so would have a Material Adverse Effect on Purchaser, the Purchased Assets or
the Employee Self Service Activities and (b) pay when due any and all Taxes
attributable to or levied or imposed upon the Business Assets for periods (or
portions thereof) until the Closing.
Section 5.11. Export Compliance. Without prior authorization of the
United States Office of Export Administration, neither Seller nor Purchaser
shall knowingly export or re-export
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(including but not limited to delivery to a foreign national) directly or
indirectly any technical data received from the other party, any technical data
relating to the commodities received from the other party or any immediate
products (including processes and services) produced directly by use of any of
such technical data to any country to the extent such export or re-export
violates the Export Control Regulations of the Bureau of International Commerce
of the United States Department of Commerce (the "EXPORT REGULATIONS").
Section 5.12. No Other Bids. Until the earlier to occur of (a) the
Closing or (b) the termination of this Agreement pursuant to its terms, Seller
shall not, and shall not permit its officers, directors, employees, agents or
other representatives to, directly or indirectly, (i) initiate, solicit or
knowingly encourage (including by way of furnishing evaluation material or other
information regarding Seller) any inquiries regarding the sale of the Employee
Self Service Activities or all or a portion of the Business Assets, or (ii)
negotiate, engage in any substantive discussions, or enter into any agreement,
with any person concerning the sale of the Employee Self Service Activities or
the Business Assets. Purchaser acknowledges that the execution and delivery of
the Merger Agreement, the consummation of the transactions contemplated by the
Merger Agreement, and any discussions related to the consummation of the
transactions contemplated by the Merger Agreement, will not be deemed to violate
the provisions of this Section 5.12. Seller agrees to notify Purchaser in
writing within 24 hours of receiving an unsolicited offer to purchase the
Employee Self Service Activities or the Business Assets.
Section 5.13. Occupancy License.
(a) Occupancy of Licensed Area. For the term described in
this Section, Seller agrees to permit Purchaser to occupy no more than 4,000
square feet (the "LICENSED AREA") of Seller's Santa Clara, California facility
(the "BUILDING") for the exclusive purpose of locating Hired Employees (as
defined in Article VI) who are providing services for Purchaser related to the
Business Assets. Purchaser acknowledges that this right of use is a license only
and not a leasehold interest and that Purchaser will not be entitled to any
actions, claims, defenses, or other rights afforded to lessees, tenants or
"parties in possession" under applicable law. The occupancy license granted to
Purchaser in this Section shall have a term of three months commencing on the
Closing Date (the "OCCUPANCY PERIOD").
(b) No Occupancy License Fee. Seller shall allow Purchaser
use of the Licensed Area, and shall provide for the Furnishings and Services (as
defined below), for the Occupancy Period with no charge to Purchaser. To the
extent Purchaser holds over in the Licensed Area after the Occupancy Period,
Purchaser shall pay to Seller an amount equal to $4.00 per square foot per
month.
(c) Furnishings and Services. Seller shall permit Purchaser
to maintain the Tangible Assets in the Licensed Area for the use of Hired
Employees during the Occupancy Period. Purchaser shall not make any alterations
or modifications to or upon the Licensed Area, or add to, delete from or
relocate any of the same, without Seller's prior written consent. Purchaser will
promptly pay Seller for any damage to the Licensed Area, Building or Furnishings
resulting from the negligent acts or omissions of Purchaser or the Hired
Employees. Purchaser shall use the Licensed Area only for general office
purposes, and shall not cause or permit any
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hazardous materials or toxic substances to be used, stored, generated, handled
or transported to or from the Licensed Area or the Building. Seller shall
provide the Furnishings to accommodate the Hired Employees. Seller shall also
provide light, electricity and janitorial services ("SERVICES") to the Licensed
Area in the same general manner as provided to other areas of the Building.
Purchaser shall be responsible for providing, moving and installing all of
Purchaser's and its employees office supplies and other equipment and services,
such as telephone and computer network access, and for removing same by the end
of the Occupancy Period. Seller shall reasonably cooperate with Purchaser as
Purchaser enables such other services. Purchaser and its employees shall comply
with all of Seller's policies and procedures regarding building access and
security, and all policies regarding employee conduct, which policies Seller may
change from time to time in good faith. Purchaser shall, and shall cause its
employees to, safeguard the confidentiality of the work spaces, discussions,
work product, systems, files, and all other proprietary information of Seller.
Purchaser agrees that Seller shall have the right to enter the Licensed Area at
all reasonable times for the purpose of inspecting the same; provided, that
Seller shall use its reasonable efforts not to interfere with Purchaser's use of
the Licensed Area in connection with such entry. Purchaser acknowledges that
Seller has made no representations or warranties regarding the safety or
security of the Building, the condition of the Licensed Area, or the suitability
thereof for Purchaser's purposes, and Purchaser accepts same in its "AS IS"
condition. Seller shall not be liable for any interruption in services,
utilities or access beyond Seller's reasonable control.
(d) Insurance. Purchaser shall obtain, at its sole expense,
and deliver to Seller prior to its first occupancy of the Licensed Area, signed
certificates of insurance evidencing the following currently effective policies
of insurance: (i) commercial general liability insurance with broad contractual
liability coverage and limits of not less than $2,000,000 combined each
occurrence and in the aggregate insuring against any liability of Purchaser or
Seller with respect to the Licensed Area, the occupancy thereof, or in
connection with the conduct of Purchaser's business within the Building or the
grounds thereof, (ii) casualty insurance covering Seller's personal property in
amount equal to their full replacement value, and (iii) workers' compensation
insurance in such forms and amounts as required under California state law. Such
certificates shall contain a provision that such policies of insurance may not
be canceled or reduced without Seller's prior written permission, so long as
Purchaser is occupying the Licensed Area.
Section 5.14. Seller and Third Party Software. In respect of any
software owned by a third party and loaded on any hardware purchased by
Purchaser under this Agreement (other than any software that constitutes part of
the Business Assets), Purchaser shall promptly either obtain a license for such
software or destroy such software.
Section 5.15. Non-Competition.
(a) For a period of three (3) years following the Closing
Date (the "NON-COMPETE PERIOD"), Seller (i) shall not, directly or indirectly,
market, promote, license, sell, distribute (or otherwise offer or make
available) or develop (collectively, "PROVIDE") to or for any employer any
Employer Self Service Applications, and (ii) shall ensure that no present or
future subsidiary, affiliate, assign or successor in interest, or any venture or
partnership in which
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Seller or any of Seller's present or future subsidiaries, affiliates, assigns or
successors in interest are substantial or controlling owners, co-owners,
operators, joint operators or investors (each, a "RELATED PARTY"), do not,
directly or indirectly, use any Employees or Business Assets, or any
Intellectual Property Rights that pertain exclusively to the Business Assets, to
Provide to or for any employer any Employer Self Service Applications. For
purposes of this Section 5.15, "EMPLOYEE SELF SERVICE APPLICATIONS" means
software applications for the purpose of enabling an employer to provide
products, services or information to or for its employees.
(b) Notwithstanding Section 5.15(a), Seller and any Related
Party may:
(i) Provide Employee Self Service Applications to or
for Intuit pursuant to and in accordance with the Intuit License, and otherwise
carry out its obligations thereunder;
(ii) Provide Employee Self Service Applications to or
for financial services institutions for distribution by such financial services
institutions as part of a range of services, products or applications that
include significant applications that are not Employee Self Service
Applications;
(iii) Provide Employee Self Service Applications to or
for those value added resellers listed on SCHEDULE 13 (the "WEB-BASED VARS") for
use by such Web-Based VARs in connection with any internet- or web-based
applications, provided that neither Seller nor any Related Party may Provide
Employee Self Service Applications to Web-Based VARs for a period longer than
the lessor of (A) the remaining term of the current agreement between Seller and
such Web-Based VAR (excluding any renewals or extensions), or (B) one year from
the Closing Date;
(iv) Provide Employee Self Service Applications to or
for those value added resellers listed on SCHEDULE 14 (the "NON-HR VARS") for
use by such Non-HR VARs, provided that Seller and each Related Party, as
applicable, shall ensure that (A) such Non-HR VARs Provide Employee Self Service
Applications as part of a range of services, products or applications that
include significant applications that are not Employee Self Service
Applications, and (B) such Non-HR VARs do not Provide Employee Self Services
Applications in connection with any internet- or web-based applications; and
(v) Provide Employee Self Service Applications to
employers to the extent and only to the extent such Employee Self Service
Applications permit an employee of any such employer to purchase the products or
services of his or her employer.
(c) The restrictions contained in this Section 5.15 are made
and given to protect and preserve unto Purchaser the benefit of the acquisition
of the Employee Self Service Activities and the Purchased Assets and the
goodwill associated therewith. Seller and Purchaser further each acknowledge and
agree that such restrictions are fair and reasonable, that such restrictions are
necessary to protect and preserve until Purchaser the benefit of their bargain
in the acquisition of the Purchased Assets, and that such restrictions are
necessary for the protection of the legitimate business interests of Purchaser.
The restrictive covenant contained in this Section
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5.15 is independent of any other provision of this Agreement, and the existence
of a claim which one party may allege against the other, whether based on this
Agreement or otherwise, will not prevent the enforcement of this covenant.
Seller and Purchaser each hereby agree that Purchaser's remedies at law for any
breach or threat of breach by such person of this Section 5.15 will be
inadequate, and that Purchaser shall be entitled to seek an injunction or
injunctions to prevent breaches of the provisions of this Section 5.15 and to
enforce specifically the terms and provisions hereof. Should any provision of
this covenant be held invalid, illegal or unenforceable, in whole or in part,
the validity, legality or enforceability of the other provisions hereof, shall
not be affected thereby. If any invalidity shall be caused by the length of any
period of time, the size of the restricted area, or the scope of activities set
forth herein, such period of time, such area, such scope or all of such factors
shall be considered to be reduced to the maximum period, area, or scope as would
cure such invalidity and still be enforceable. Any provision of this Section
5.15 which is held invalid, illegal or unenforceable in any jurisdiction shall
not be deemed invalid, illegal or unenforceable in any other jurisdiction.
Section 5.16. Third Party Fees. Seller shall pay all fees, license fees,
and similar fees for Third Party Assets whether incurred before or after the
Closing.
Section 5.17. Customer Leads. Seller shall, for a period of one (1) year
after the Closing Date, use its reasonable efforts to forward to Purchaser
inquiries received from those companies that may represent a sales opportunity
in Seller's reasonable judgment for the products and services associated with
the Purchased Technology Deliverables.
Section 5.18. Consulting Services Billing. Seller shall have the right
to ▇▇▇▇ and collect for all consulting services rendered by Seller in connection
with the Seller Contracts prior to the Closing Date ("SELLER'S FEES"), and
Purchaser shall have the right to ▇▇▇▇ and collect for any consulting services
rendered by Purchaser in connection with the Seller Contracts from and after the
Closing Date ("PURCHASER'S FEES"). Seller and Purchaser shall cooperate in
connection with the billing and collection of Seller's Fees and Purchaser's
Fees. Seller shall promptly transfer and deliver to Purchaser any Purchaser's
Fees collected by Seller, and Purchaser shall promptly transfer and deliver to
Seller any Seller's Fees collected by Purchaser.
Section 5.19. Incidental Software. In the event that Schedule 3
(Purchased Technology Deliverables) fails to include all software, in source and
object code, and related user, developer, technical and design documentation
(other than Licensed Assets) used by Seller in the Employee Self Service
Activities as of the Effective Date ("INCIDENTAL SOFTWARE") then, promptly upon
identifying such Incidental Software, either (a) the parties shall agree to
include such in the Purchased Technology Deliverables if such software was used
exclusively in connection with the other Purchased Technology Deliverables by
Seller as of the Effective Date or (b) Seller shall license Purchaser to use
such Incidental Software on a perpetual, fully paid up, non-exclusive basis in
connection with the Employee Self Service Activities. In the event that parties
dispute the existence or characterization of such Incidental Software (as either
category "a" or "b" above), the parties agrees to resolve the dispute by
referring the matter to arbitration under the commercial rules of the American
Arbitration Association, with a mutually acceptable expert in software acting as
the arbitrator, each party being one half of the arbitrator and association
fees. Seller shall have no obligation to include Incidental Software in the
Purchased
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Technology Deliverables unless notified of an omission prior to the
second anniversary of the Effective Date of this Agreement.
Section 5.20. Survival of Covenants. Each of the covenants set forth in
Sections 5.2, 5.4, 5.5, 5.6, 5.8, 5.10, 5.11, 5.13, 5.14, 5.15, 5.16, 5.17,
5,18, and 5.19 shall survive the Closing according to their terms. The covenants
set forth in Section 5.6 shall survive the termination or expiration of this
Agreement according to its terms.
ARTICLE VI.
EMPLOYEE MATTERS
Section 6.1. Hired Employees.
(a) Seller agrees that, (i) from the Effective Date and
continuing until the earlier of fourteen days later (the "SELECTION DATE") or
the termination of this Agreement according to its terms, Seller will provide
Purchaser with reasonable access to and the opportunity to meet and interview
each Employee for the purposes of negotiating offers of employment contingent
upon the Closing, and (ii) from the Effective Date and continuing until the
earlier of seven days later or the termination of this Agreement according to
its terms, Seller shall use its commercially reasonable efforts to assist
Purchaser in recruiting Employees to accept offers of employment with Purchaser.
By the Selection Date, Purchaser shall identify all Employees it wants to retain
as Hired Employees and shall have made written offers of employment to such
Employees that are contingent upon the Closing.
(b) An Employee hired by Purchaser no later than twenty (20)
days after the Closing Date shall be referred to herein as a "HIRED EMPLOYEE."
Purchaser agrees that, to the extent not inconsistent with the terms and
conditions of Purchaser's benefit plans or applicable law, each Hired Employee
shall be given full credit for such Hired Employee's period of employment with
Seller for purposes of determining eligibility for employee benefits.
(c) For the period beginning on the Effective Date and
ending sixty (60) days after the Closing Date, Seller shall not offer or provide
to any Employee any severance or other termination benefits except in accordance
with the severance policy of Seller attached as SCHEDULE 15 or as required by
law, and, for the period beginning on the Effective Date and ending ninety (90)
days after the Closing Date, Seller shall not promise, offer or provide to any
Employee any increase in salary, bonus (or bonus potential) or benefits,
including equity incentives, in connection with such Employee's continued
employment with Seller, regardless of whether in the same or different position
with Seller.
Section 6.2. Employee Obligations of Purchaser. Purchaser shall be
liable for and shall indemnify and hold Seller and its affiliates harmless from,
any and all liabilities with respect to (i) the employment by Purchaser or
termination of employment by Purchaser of any past, current or future employee
or consultant of Purchaser or any of its affiliates, including without
limitation, Hired Employees after the Closing Date (collectively, "PURCHASER
EMPLOYEES"), whether in connection with the transactions contemplated hereby or
otherwise;
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(ii) any claims of discrimination under state or federal law arising from a
Purchaser Employee's employment or service with or termination by Purchaser;
(iii) any withholding or employment Taxes with respect to any Purchaser
Employees which accrue or become payable during the period of such Purchaser
Employee's employment or service with Purchaser or any affiliate of Purchaser or
arise out of the termination of such person's employment with Purchaser or any
affiliate of Purchaser; (iv) any other claims or obligations arising out of the
terms and conditions of employment by Purchaser or any of its affiliates of any
Purchaser Employee, whether for salary, wages, bonuses, profit sharing,
commissions, severance, vacation pay, sick pay or otherwise; or (v) any duties
or obligations of Purchaser or administrators under any existing or future
employee benefit plans or arrangements maintained by Purchaser with respect to
Purchaser Employees. Purchaser shall be responsible for filing all employment
Tax returns with respect to Purchaser Employees attributable to periods of
employment or service with Purchaser or any affiliate of Purchaser.
Section 6.3. Employee Obligations of Seller.
(a) Seller shall be liable for and shall indemnify and hold
Purchaser and its affiliates harmless from, any and all liabilities with respect
to: (i) the employment by Seller or termination of employment by Seller of any
past, current or future employee or consultant of Seller or any of its
affiliates (collectively, "SELLER EMPLOYEES"); (ii) any claims of discrimination
under state or federal law arising from a Seller Employee's employment or
service with or termination by Seller; (iii) any withholding or employment Taxes
with respect to any Seller Employees which accrue or become payable during the
period of such Seller Employee's employment or service with Seller or any
affiliate of Seller or arise out of the termination of such person's employment
with Seller or any affiliate of Seller; (iv) any other claims or obligations
arising out of the terms and conditions of employment by Seller or any of its
affiliates of any Seller Employee, whether for salary, wages, bonuses, profit
sharing, commissions, severance, vacation pay, sick pay or otherwise; or (v) any
duties or obligations of Seller or administrators under any existing or future
employee benefit plans or arrangements maintained by Seller with respect to
Seller Employees. Seller shall be responsible for filing all employment Tax
returns with respect to Seller Employees attributable to periods of employment
or service with Seller or any affiliate of Seller.
(b) Seller shall pay to all Employees (including, without
limitation, Hired Employees) terminated by Seller, any liability for accrued
vacation, sick leave or similar accrued benefits with respect to such Employees
attributable to periods of employment or service with Seller, consistent with
Seller's policies and applicable law, and shall make such payment within the
statutory time period therefor.
(c) Seller shall pay bonuses to all sales representatives
who are Hired Employees for the 2nd Quarter of 1999 which are at a minimum equal
in amount to one hundred percent (100%) of the target bonuses for such employees
for the 2nd Quarter of 1999, regardless of whether the operation of Seller's
bonus formula would have yielded that amount at such time as such amounts would
otherwise be due. This Section 6.3(c) does not restrict Seller from providing
bonuses higher than that amount to Hired Employees for the 2nd Quarter of 1999
if the application of Seller's bonus formula so yields.
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(d) Seller shall comply with the provisions of any statute
or regulation regarding termination of employment, plant closing or layoffs and
to perform all obligations required by Seller with respect to the cessation of
any operations of the Employee Self Service Activities or the termination,
re-assignment, re-location or change in position of any Employee in connection
with the transactions contemplated hereby.
Section 6.4. No Solicitation. Except as provided by law, for a period of
one year after the Effective Date, without Purchaser's written permission,
Seller shall not, directly or through recruiters, solicit for employment any of
the officers or employees of Purchaser (including any Hired Employee and any
Hired Employee subsequently terminated by Purchaser); provided, that the use of
advertisements in publications or participation in career days and hiring as a
result thereof shall not be deemed a violation of this Section 6.4. Except as
provided by law, (a) for the period beginning on the Effective Date and ending
on the Closing Date, without Seller's written permission, Purchaser shall not,
directly or through recruiters, solicit or interview for employment, or make
offers of employment to, any individual who, at the time of such solicitation,
interview or offer of employment, is an officer or employee of Seller, and (b)
for a period of one year after the Closing Date, without Seller's written
permission, Purchaser shall not, directly or through recruiters, solicit for
employment any of the officers or employees of Seller; provided, that the use of
advertisements in publications or participation in career days and hiring as a
result thereof shall not be deemed a violation of this Section 6.4. Seller
acknowledges that Purchaser shall not be deemed to have "solicited" any employee
of Seller who makes the initial contact or inquiry with respect to a position
with Purchaser. Seller further acknowledges that, for purposes of this Section
6.4, Purchaser shall not be liable or otherwise responsible for the acts of any
employee of Seller (during the term of their employment with Seller), provided
that such acts are not authorized or directed by Purchaser. For the purposes of
this Section 6.4, "employment" includes direct hiring, use of the person as a
consultant, and use of the person by independent contracting or through
third-party contracting agencies.
Section 6.5. Employee Retention Pool. Purchaser shall distribute the
Employee Retention Pool to Hired Employees in accordance with the terms and
subject to the conditions set forth on SCHEDULE 16. Purchaser shall have the
right to retain any amounts remaining from the Employee Retention Pool after the
distributions to Hired Employees in accordance with the terms and subject to the
conditions set forth on SCHEDULE 16.
Section 6.6. Health Plans. Prior to Closing, Seller shall reasonably
cooperate with Purchaser in connection with contacting Seller's health care
benefits broker. Furthermore, Seller shall have no obligation to continue
coverage for any Hired Employee after the Closing except as required by law.
Section 6.7. Survival. Each of the agreements and covenants set forth in
this Article VI shall survive the Closing according to its terms.
ARTICLE VII.
TAX MATTERS
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Section 7.1. Transfer Taxes. Purchaser shall be responsible for, and
shall defend, indemnify and hold harmless Seller from and against any and all
excise, value added, registration, stamp, property, documentary, transfer,
sales, use and similar Taxes, levies, charges and fees (including all real
estate transfer taxes) incurred, or that may be payable to any taxing authority,
in connection with, the transactions contemplated by this Agreement
(collectively, "TRANSFER TAXES"). Seller and Purchaser shall use all
commercially reasonable efforts to cooperate in order to minimize the Transfer
Taxes and any Taxes to be paid or withheld in connection with the transactions
contemplated by the License Agreement, including delivery of Intangible Assets
via electronic medium only to the extent practicable.
Section 7.2. Other Taxes. Other than as set forth in Section 7.1 with
respect to Transfer Taxes:
(a) Seller is and shall remain solely responsible for all
Taxes arising from or relating to the Purchased Assets and related businesses
for any taxable period ending on or prior to the Closing, including the
pre-Closing portion of any taxable period that begins before and ends after the
Closing (together, the "PRE-CLOSING PERIOD"). Any apportioning required with
respect to a taxable period that begins before and ends after the Closing shall
be determined by the number of days in such period on or before the Closing as
compared to the total number of days in such period. Seller shall indemnify and
hold Purchaser harmless from any liability for, or arising out of or based upon,
or relating to, any Taxes arising from the Purchased Assets and related
businesses with respect to the Pre-Closing Period.
(b) Purchaser shall be solely responsible for all Taxes
arising from or relating to the Purchased Assets and related businesses for any
taxable period after the Closing (the "POST-CLOSING PERIOD"). Purchaser shall
indemnify and hold Seller harmless from any liability for, or arising out of or
based upon, or relating to, any Taxes arising from the Purchased Assets and
related businesses with respect to the Post-Closing Period.
(c) Seller and Purchaser shall cooperate concerning all
Taxes relating to this division of responsibility, including, but not limited
to, the filing of Tax Returns.
ARTICLE VIII.
CONDITIONS TO THE CLOSING
Section 8.1. Conditions to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Accuracy of Representations and Warranties; Covenants.
The representations and warranties of Purchaser contained in Article IV of this
Agreement (as qualified by Purchaser's Disclosure Letter) shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made as of the Closing, and all the covenants contained in this
Agreement to be complied with by Purchaser on or before the Closing shall have
been complied with in all material respects, and Seller shall have received a
certificate of
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Purchaser, dated as of the Closing Date, to such effect signed by an
officer thereof.
(b) HSR Act; No Order. Any waiting periods under the HSR Act
applicable to the transactions contemplated by this Agreement shall have expired
or been terminated. No federal, state or other governmental authority or other
agency or commission or federal, state or other court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and has the effect of making the transactions
contemplated by this Agreement and/or the Ancillary Agreements illegal or
otherwise restraining or prohibiting consummation of such transactions;
provided, however, that the parties hereto shall use all commercially reasonable
efforts to have any such order or injunction vacated.
(c) Opinion. Seller shall have received an opinion of
Purchaser's counsel with respect to those matters set forth in EXHIBIT H.
Section 8.2. Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Accuracy of Representations and Warranties; Covenants.
The representations and warranties of Seller contained in Article III of this
Agreement (as qualified by Seller's Disclosure Letter) shall be true and correct
in all material respects as of the Closing, with the same force and effect as if
made as of the Closing, and all the covenants contained in this Agreement to be
complied with by Seller on or before the Closing shall have been complied with
in all material respects, and Purchaser shall have received a certificate of
Seller, dated as of the Closing Date, to such effect signed by an officer
thereof.
(b) HSR Act; No Order. Any waiting periods under the HSR Act
applicable to the transactions contemplated by this Agreement shall have expired
or been terminated. No federal, state or other governmental authority or other
agency or commission or federal, state or other court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and has the effect of making the transactions
contemplated by this Agreement and/or the Ancillary Agreements illegal or
otherwise restraining or prohibiting consummation of such transactions;
provided, however, that the parties hereto shall use all commercially reasonable
efforts to have any such order or injunction vacated.
(c) Consents. Seller shall have delivered to Purchaser
copies of all Required Consents.
(d) Employees. Purchaser shall have employed or received
commitments of employment from no less than two (2) of the Key Hired Employees
(as identified in Schedule 11), three (3) Employees who are quota-bearing sales
representatives, four (4) Employees who are engineers, three (3) Employees who
are technical support employees and thirty-seven (37) of the Employees in the
aggregate (collectively, the "EMPLOYEE THRESHOLDS"), or Seller shall have
elected, and delivered a binding commitment to Purchaser, to provide such number
and category
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of qualified Employees to satisfy each of the Employee Thresholds for a period
of three (3) months after the Closing Date, for which Purchaser shall pay to
Seller an amount equal to one hundred fifty percent (150%) of the fully burdened
costs for such Employees (as calculated pursuant to SCHEDULE 17).
(e) Opinion. Purchaser will have received an opinion of
Seller's counsel, Fenwick & West LLP, with respect to those matters set forth in
EXHIBIT I.
ARTICLE IX.
TERMINATION AND WAIVER
Section 9.1. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual written consent of Seller and Purchaser;
or
(b) by either Seller or Purchaser at any time prior to
Closing, if the other commits a material breach of any provision of this
Agreement that is not cured within twenty days after written notice thereof; or
(c) by either Seller or Purchaser, if the Closing shall not
have occurred prior to the three month anniversary of the Effective Date;
provided, however, that the right to terminate this Agreement under this Section
9.1(c) shall not be available to any party whose uncured material breach of any
provision of this Agreement shall have been the cause of, or shall have resulted
in, the failure of the Closing to occur prior to such date; or
(d) by either Seller or Purchaser if a permanent injunction
or other order by any federal, state or foreign court of competent jurisdiction
which would make illegal or otherwise restrain or prohibit the consummation of
the transactions contemplated by this Agreement and the Ancillary Agreements
shall have been issued and shall have become final and nonappealable.
Section 9.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become void
(excepting only those provisions hereof that by their terms survive the
termination of this Agreement) and there shall be no liability on the part of
any party hereto; provided that nothing herein shall relieve either party from
liability for any willful breach hereof.
Section 9.3. Waiver. At any time prior to the Closing, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party to be bound thereby.
ARTICLE X.
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INDEMNIFICATION
Section 10.1. Loss Defined; Indemnitees. For purposes of this Article X,
the term "LOSS" will mean and include any and all liability, loss, damage,
claim, expense, cost, fine, fee, penalty, obligation, injury and other losses
resulting form any shutdown or curtailment of operations, lawsuits,
deficiencies, demands or amounts paid in settlement, together with reasonable
costs and expenses, including the reasonable attorneys' and experts' fees, court
costs, arbitration costs, filing fees and other legal costs and expenses
relating thereto. As used in this Article X, the term "PURCHASER INDEMNITEES"
means and includes Purchaser and any present or future officer, director,
employee, affiliate, stockholder or agent of Purchaser and its successors and
assigns. As used in this Article X, the term "SELLER INDEMNITEES" means and
includes Seller and any present or future officer, director, employee,
affiliate, stockholder or agent of Seller and its successors and assigns.
Section 10.2. Indemnification by Seller. Seller shall, subject to the
other terms, conditions and limitations of this Article X indemnify the
Purchaser Indemnitees against, and to hold the Purchaser Indemnitees harmless
from, all Loss arising out of, resulting from, caused by or attributable to:
(a) the failure of any representation or warranty of Seller
contained in this Agreement (including Seller's Disclosure Letter), to be true
and correct as of the Effective Date or as of the Closing Date;
(b) the breach or violation by Seller of any covenant or
agreement of Seller contained in this Agreement;
(c) except for the Assumed Liabilities, the operation of the
Employee Self Service Activities at any time or times on or prior to the Closing
Date and, except as otherwise provided in Article VI hereof, any charges or
actions brought by employees, agents or representatives of Seller arising out of
or based upon events occurring on or prior to the Closing Date;
(d) any Encumbrance upon the Purchased Assets existing at
the Closing; or
(e) any Liability of Seller not expressly assumed by
Purchaser under this Agreement or the Ancillary Agreements.
Section 10.3. Indemnification by Purchaser. Purchaser agrees, subject to
the other terms, conditions and limitations of this Agreement (including the
provisions of Section 10.5(b) hereof), to indemnify the Seller Indemnitees
against, and to hold the Seller Indemnitees harmless from, all Loss arising out
of, resulting from, caused by or attributable to:
(a) the failure of any representation or warranty of
Purchaser contained in this Agreement (including Purchaser's Disclosure Letter),
to be true and correct as of the Effective Date or as of the Closing Date;
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(b) the breach or violation by Purchaser of any covenant or
agreement of Purchaser contained in this Agreement;
(c) the Assumed Liabilities;
(d) the operation or disposition of the Employee Self
Service Activities and the sale and license of products and services by
Purchaser after the Closing Date; or
(e) Purchaser's use and occupancy of the Licensed Area or
the Building.
Section 10.4. Procedures for Indemnification.
(a) As used herein, an "INDEMNIFIED PARTY" means a Purchaser
Indemnitee seeking indemnification pursuant to Section 10.2 hereof or a Seller
Indemnitee seeking indemnification pursuant to Section 10.3 hereof. The
Indemnified Party agrees to give the other party ("INDEMNITOR") prompt written
notice of any event, or any claim, action, suit, demand, assessment,
investigation, arbitration or other proceeding by or in respect of a third party
(a "THIRD PARTY CLAIM") of which it has knowledge, for which such Indemnified
Party is entitled to indemnification under this Article X (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). No delay on the part of an Indemnified Party in giving
the Indemnitor notice of a Third Party Claim shall relieve the Indemnitor from
any obligation hereunder unless the Indemnitor is prejudiced thereby.
(b) Within twenty days of delivery of such written notice,
the Indemnitor may, at the expense of the Indemnitor, elect to take all
necessary steps properly to contest any Third Party Claim or to prosecute such
Third Party Claim to conclusion or settlement; provided, that without the prior
written consent of an Indemnified Party, the Indemnitor will not enter into any
settlement of a Third Party Claim which would lead to liability or create any
financial or other obligation on the part of such Indemnified Party for which
such Indemnified Party is not indemnified hereunder. If the Indemnitor makes the
foregoing election, an Indemnified Party will have the right to participate at
its own expense in all proceedings. If the Indemnitor does not make such
election or if the Indemnitor fails to take reasonable steps necessary to
diligently defend such Third Party Claim within twenty days after receiving
written notice from the Indemnified Party that the Indemnified Party believes
that the Indemnitor has failed to take such steps, an Indemnified Party shall be
free to handle the prosecution or defense of any such Third Party Claim, will
take all necessary steps to contest the Third Party Claim or to prosecute such
Third Party Claim to conclusion or settlement satisfactory to such Indemnified
Party at the sole cost and expense of the Indemnitor (including reasonable
attorney's and expert's fees and expenses and court and arbitration costs), will
notify the Indemnitor of the progress of any such Third Party Claim, will permit
the Indemnitor, at the sole cost of the Indemnitor, to participate in such
prosecution or defense and will provide the Indemnitor with reasonable access to
all relevant information and documentation relating to the Third Party Claim and
the prosecution or defense thereof. In any case, the party not in control of the
Third Party Claim will cooperate with the other party in the conduct of the
prosecution or defense of such Third Party Claim. Notwithstanding the foregoing,
if an Indemnified Party is offered a written settlement proposal
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by a third party that has as its sole component the payment of money by the
Indemnified Party and the Indemnitor recommends to the Indemnified Party in
writing that it accept such settlement proposal (the "SANCTIONED SETTLEMENT")
and the Indemnified Party refuses to accept such settlement proposal, in such
event if the ultimate settlement terms agreed to by the Indemnified Party with
such third party or the final monetary damages award against the Indemnified
Party (either, a "FINAL SETTLEMENT AMOUNT"), is greater than the amount of the
Sanctioned Settlement, the Indemnified Party shall be responsible for the
differential between the Final Settlement Amount and the Sanctioned Settlement
and the Indemnitor's liability shall be limited to the amount specified in the
Sanctioned Settlement.
Section 10.5. Limitations on Indemnification.
(a) Limits on Seller Indemnification.
(i) Seller shall not be required to provide
indemnification under Section 10.2 unless and until the aggregate Loss for which
one or more Purchaser Indemnitees seeks indemnification thereunder exceeds an
aggregate of two hundred thousand dollars ($200,000), in which event Seller
shall be liable to indemnify the Purchaser Indemnitees for aggregate Loss which
exceeds two hundred thousand dollars ($200,000).
(ii) The maximum aggregate Loss recoverable by
Purchaser Indemnitees (considered together as a group) against Seller under
Section 10.2, in the aggregate, shall not exceed three million dollars
($3,000,000).
Notwithstanding the foregoing, Seller's indemnification of
Purchaser Indemnitees under Section 10.2(e) shall not be subject to the
limitations set forth in this Section.
(b) Limits on Purchaser Indemnification.
(i) Purchaser shall not be required to provide
indemnification under Section 10.3 unless and until the aggregate Loss for which
one or more Seller Indemnitees seeks indemnification thereunder exceeds an
aggregate of two hundred thousand dollars ($200,000), in which event Purchaser
shall be liable to indemnify the Seller Indemnitees for aggregate Loss which
exceeds two hundred thousand dollars ($200,000).
(ii) The maximum aggregate Loss recoverable by Seller
Indemnitees (considered together as a group) against Purchaser under Section
10.3, in the aggregate, shall not exceed three million dollars ($3,000,000).
Notwithstanding the foregoing, Purchaser's indemnification of
Seller Indemnitees under Section 10.3(c) shall not be subject to the limitations
set forth in this Section.
(c) Time Limits. Notwithstanding anything herein to the
contrary, no claim for indemnification under Sections 10.2 or 10.3 may be
brought after the one year anniversary of the Closing Date, provided, however,
that this limitation shall not apply to claims made in regard to claims in
regard to Taxes or ERISA, claims against Purchaser under Section 10.3(c), or
claims against Seller under Section 10.2(e).
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Section 10.6. Exclusive Remedy. From and after the Closing Date, the
foregoing provisions of Article X, together with the other specific
indemnifications and allocations of liability specified in other Sections or
Articles of this Agreement, are the sole and exclusive remedy of an Indemnified
Party for a breach of a representation, warranty, covenant or agreement of the
other party contained in this Agreement.
ARTICLE XI.
GENERAL PROVISIONS
Section 11.1. Expenses. Except as specifically set forth in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
Section 11.2. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made by
delivery in person, by overnight courier service, by facsimile (confirmed in
writing), or by registered or certified mail (postage prepaid, return receipt
requested), and shall be deemed to have been duly given or made upon actual
delivery, or if mailed by registered or certified mail, on the third business
day following deposit in the mails, to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to Seller:
Edify Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
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(b) if to Purchaser:
Workscape, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Section 11.3. Headings; Disclosure. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. A disclosure made in any section of
Purchaser's Disclosure Letter or Seller's Disclosure Letter, respectively, with
respect to a representation made in this Agreement may apply to or qualify any
other representation made by such party in this Agreement.
Section 11.4. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
Section 11.5. Survival. The representation and warranties made herein
shall survive until the first anniversary of the Closing Date.
Section 11.6. Entire Agreement. This Agreement, the Ancillary Agreements
and any other written agreement between Seller and Purchaser entered into
contemporaneously with this Agreement constitute the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and undertakings with respect to the subject
matter hereof, both written and oral.
Section 11.7. Assignment. This Agreement shall not be assigned by
Purchaser or Seller without the prior written consent of the non-assigning
party; provided, however, that, subject to the parties' obligations under this
Agreement, either party may assign all or a portion of its rights and
obligations hereunder to one or more wholly-owned subsidiaries or affiliates of
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such party or in connection with a merger or sale of substantially all of such
party's assets to such party's successor after notice to the other party or
pursuant to the Larger Transaction. Any purported assignment not permitted by
this Section shall be voidable by the aggrieved party.
Section 11.8. No Third-Party Beneficiaries. This Agreement is for the
sole benefit of the parties hereto and their permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any other person
or entity, including but not limited to any Employee or Hired Employee, any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement. No statement, reference or disclosure set forth in
this Agreement, the Ancillary Agreements or the exhibits or schedules thereto
constitutes an admission (express or implied) of any liability or obligation of
the parties hereto to any third party, nor an admission (express or implied)
against any such party's interests.
Section 11.9. Amendment; Waiver. This Agreement may not be amended or
modified except by an instrument in writing signed by Seller and Purchaser.
Waiver of any term or condition of this Agreement shall only be effective if in
writing and shall not be construed as a waiver of any subsequent breach or
waiver of the same term or condition, or a waiver of any other term or condition
of this Agreement.
Section 11.10. Governing Law; Jurisdiction and Venue. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of California applicable to contracts executed in and to be performed by
residents of California within that State. Each party irrevocably consents to
submit to the exclusive jurisdiction of any federal or state court located in
the State of California for any lawsuits, actions or proceedings with respect to
this Agreement or the transactions contemplated hereby. Each party irrevocably
agrees to waive any objection to the laying of venue in the federal or state
courts located in Santa ▇▇▇▇▇ County, California, and further agrees not to
plead in any such court that any such lawsuit, action or proceeding has been
brought in an inconvenient forum. The provisions of this Section shall survive
termination of this Agreement.
Section 11.11. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
Section 11.12. No Joint Venture. Nothing contained in this Agreement
will be deemed or construed as creating a joint venture or partnership between
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 will have
the power to control the activities and operations of any other, and the
parties' status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as having
any authority or relationship in contravention of this Section.
Section 11.13. Bulk Sales. Purchaser waives compliance by Seller with
any applicable bulk sales or bulk transfer laws of any applicable jurisdiction.
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Section 11.14. WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE TRIAL BY
JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
EDIFY CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and CEO
WORKSCAPE, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and COO
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LIST OF SCHEDULES
NUMBER DESCRIPTION
------ -----------
1. Excluded Assets
2. Trademarks
3. Purchased Technology Deliverables
4. Seller Contracts
5. Tangible Assets
6. Third Party Assets
7. Purchase Price
8. Consents
9. Business Assets
10. Financial Information
11. Employees
12. Customers
13. Web-Based VARs
14. Non-HR VARs
15. Severance Policy
16. Employee Retention Pool
17. Employee Costs
LIST OF EXHIBITS
Exhibit A - Assignment and Assumption Agreement
Exhibit B - ▇▇▇▇ of Sale
Exhibit C - Intellectual Property Enforcement Agreement
Exhibit D - License Agreement
Exhibit E - Marketing Agreement
Exhibit F - Trademark Assignment
Exhibit H - Opinion of Purchaser's Counsel
Exhibit I - Opinion of Seller's Counsel
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