ASSET PURCHASE AGREEMENT
By and Among
BASE TEN FLOWSTREAM, INC., as Buyer,
BASE TEN SYSTEMS, INC., as Parent
and
CONSILIUM, INC., as Seller
INDEX OF EXHIBITS, SCHEDULES AND APPENDICES
Exhibit A Lease Assignments
Exhibit B Real Estate License Agreement
Exhibit C [Intentionally Omitted]
Exhibit D Form of Patent License Agreement
Exhibit E Form of ▇▇▇▇ of Sale and Assumption Agreement
Exhibit F Form of Legal Opinion of the Seller's Counsel
Exhibit G Form of Legal Opinion of the Buyer's Counsel
Schedule 1(a) Software;
Shared Technology
Schedule 1(b) Equipment
Schedule 1(d) Serviced Accounts
Schedule 1(h) Intellectual Property
Schedule 2(a) Prepaid Maintenance Obligations;
Certain Employee Severance Information
Schedule 3(a) Allocation of Purchase Price
Schedule 6(a) Organization, Standing and Qualification
Schedule 6(d) Conflicts
Schedule 6(f) Encumbrances and Liens;
Locations of Business and Acquired Assets
Schedule 6(j) Labor Matters
Schedule 6(k) Claims and Litigation
Schedule 6(n) Environmental Matters
Schedule 6(o) OSHA Matters
Schedule 6(p) Non-Compliance with Contractual Requirements
Schedule 6(q) Intellectual Property Matters
Schedule 6(t) Relationship with Vendors and Customers
Schedule 12(d) Certain Employee Information
Appendix I Leases
Appendix II Vendor Contracts
Appendix III Licenses
Appendix IV Financial Statements
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (together with all Exhibits,
Schedules and Appendices attached hereto and incorporated herein by reference,
the "Agreement"), dated as of February 19, 1998, is among CONSILIUM, INC., a
Delaware corporation having its principal place of business and chief executive
offices located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Seller"), BASE TEN FLOWSTREAM, INC., a New Jersey corporation having its
principal place of business and chief executive offices located at ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Buyer") and
BASE TEN SYSTEMS, INC., a New Jersey corporation having its principal place of
business and chief executive offices located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Parent").
WHEREAS, the Seller, through its healthcare and process
industries division, engages in the business of developing, producing,
manufacturing and selling manufacturing execution systems under the trademark of
"FlowStream" for healthcare products (pharmaceutical, medical device and
biotechnology) and chemical industries (the "Business"), with its principal
product being FlowStream (together with all other products of the Business, the
"Products"); and
WHEREAS, the Seller wishes to sell to the Buyer, and the Buyer
is willing to purchase from the Seller, all of Seller's right, title and
interest in, to and under certain assets relating to the Products and the
Business;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties to this Agreement agree as follows:
1. Purchase and Sale of Assets. Subject to the terms and
conditions of this Agreement, the Seller shall sell, transfer and deliver to the
Buyer, and the Buyer shall purchase and acquire from the Seller, at the Closing
(as hereinafter defined), all of Seller's right, title and interest in, to and
under the Acquired Assets (as hereinafter specified), and the Buyer shall assume
the Assumed Liabilities (as hereinafter defined). The Seller agrees that the
Acquired Assets shall be conveyed free and clear of all liabilities (other than
the Assumed Liabilities), obligations, liens, claims and encumbrances of any
kind, except Permitted Liens (as hereinafter defined). The Acquired Assets shall
consist of:
(a) all computer programs, software, data bases
incorporated in the Products, source codes, magnetic tapes, diskettes and
punchcards used in or necessary for the conduct of the Business including
without limitation the items listed or described on Schedule 1(a) (the
"Software"), provided that, with respect to the four U.S. patents and one
foreign patent identified on Schedule 1(a) as "shared" (the "Shared
Technology"), the Acquired Assets (and Software) shall not include the title to
the Shared Technology but shall include a worldwide, royalty free,
non-transferable (except with substantially all of the assets of the Business)
license, for the respective lives of the said patents, without the rights to
sublicense, to the exclusive use of the Shared Technology for developing,
producing, manufacturing and selling manufacturing execution systems limited to
the field of healthcare products (pharmaceutical, medical device and
biotechnology) and chemical industries and provided that the Acquired Assets
(and Software) shall not include software used by the Seller with respect to the
administration (including without limitation financial, operational, electronic
mail, voice mail and word processing services, and the like) of the Seller's
businesses other than the Business (the "Administrative Software");
(b) all machinery, equipment, tools, furniture,
fixtures, fixed assets, supplies, and other personal property used exclusively
in the conduct of the Business, on as "as-is where-is" basis, without any
express or implied warranty, and as listed or described on Schedule 1(b) (the
"Equipment");
(c) all inventories (including raw materials,
magnetic tapes, diskettes, supplies, work-in-process, finished parts and
finished goods) used in or necessary for the conduct of the Business or the
manufacture of the Products on an "as-is where-is" basis without any express or
implied warranty Schedule 1(c) (the "Inventory");
(d) the Seller's rights under all contracts, purchase
orders, commitments, and arrangements (the "Customer Contracts"), copies of all
of which have been delivered to the Buyer, in respect of all customer accounts
arising from or serviced by the Business a complete listing of which is attached
hereto as Schedule 1(d) (the "Serviced Accounts");
(e) the Seller's rights under all contracts, purchase
orders, commitments and arrangements in respect of services, leased machinery or
equipment and, including without limitation services, machinery or equipment of
the type described in Section 1(b) hereof, used in the Business and included
hereto as Appendix I (the "Leases");
(f) the Seller's rights under all contracts, purchase
orders, licenses, commitments and arrangements with third-parties for supplies,
requirements or services relating to the Business or the Products attached
hereto as Appendix II (the "Vendor Contracts"), provided that, with respect to
supplies used in the Business and also used in other business of the Seller,
only such rights as may be applicable to or necessary for the conduct of the
Business;
(g) all records, books, documents, files, vendor
lists, lists of all consultants used to create, audit, revise or supplement the
Software, customer documentation, order, sales and receivables histories,
operation sheets, routing sheets, notebooks, research reports, quality control
records, inventory records, books of account, accounting records and business
plans and forecasts relating to the Acquired Assets (specifically including
without limitation installation manuals, instruction manuals, quality standards
and procedures, test archiving for all products previously delivered and
currently in-process, material on hard-drives, results of unit tests, modules
tests and code reviews, problem reports, field problems and resolutions,
upgrades, configuration records, specifications (including without limitation
user requirement, functional, software module design and software top level
specifications and platform specifications by installation), validation
protocols, validation results by site, internal training materials, customer
training materials and all records, books and other documents between Seller and
the United States Food and Drug Administration and representatives thereof (the
"Books and Records");
(h) all of the Seller's proprietary rights in respect
of the Acquired Assets and the Business (other than the Shared Technology and
the Administrative Software), including without limitation all worldwide rights,
title and interests in and to trademarks (registered or unregistered), trade
names (including without limitation "FlowStream"), service marks (including
without limitation "FlowStream"), assumed names, copyrights, all applications
for any of the foregoing, formulae, trade secrets, processes, know-how,
confidential information, inventions, research, inventors' notes, laboratory
reports, drawings, designs, customer lists, vendor lists, all information
similar to any of the foregoing, goodwill relating to the Business and the
Acquired Assets, and marketing rights in connection with all of the foregoing,
including without limitation all of those items listed or described on Schedule
1(h) (the "Intellectual Property");
(i) all records (including without limitation
compensation information and job descriptions) relating to managers and
employees of the Business excluding records relating to managers and employees
of the Business who do not become employees of the Buyer within ten days after
the Closing;
(j) all licenses, consents, permits, variances,
certifications, and approvals, if any, of government agencies held by the Seller
relating solely to the Business or the Acquired Assets, to the extent
transferable under applicable law, attached hereto as Appendix III (the
"Licenses");
(k) all warranties, claims and causes of action (and
the benefit of any and all collateral or security given in connection therewith)
inuring to the benefit of the Seller relating to the Business or any of the
Acquired Assets excluding such warranties, claims and causes of action which may
be asserted as a counterclaim, crossclaim or setoff to any Excluded Obligation;
(l) all prepaid maintenance payments in excess of an
aggregate of $1.2 million under all Customer Contracts; and
(m) all of the Seller's rights pursuant to the leases
for the locations listed on Schedule 6(f) (other than the ▇▇▇▇▇ Avenue, Mountain
View, California and the Chennai, India locations), copies of all of which have
been delivered to the Buyer, pursuant to the Lease Assignments, in substantially
the form of Exhibit A, and such of the Seller's rights to the real estate
located at ▇▇▇▇▇ Avenue, Mountain View, California, granted pursuant to the Real
Estate License Agreement, in substantially the form of Exhibit B.
The Buyer and the Seller agree that the Seller is not making representations in
this Agreement that the Acquired Assets are all those that may be necessary for
the conduct of the Business by the Buyer after the Closing Date (as hereinafter
defined). Notwithstanding any other provision of this Agreement, the Buyer and
the Seller agree that the Acquired Assets shall not include (i) cash and cash
equivalents on hand or deposited in banks or other financial institutions as of
the Closing Date, (ii) the rights to any of the Seller's claims for any federal,
state, local or foreign tax refund including tax credits and net operating loss
carry forwards, (iii) policies of insurance (including proceeds thereof and
refunds thereunder) acquired by the Seller in connection with the Acquired
Assets, (iv) any assets, properties or rights of the Seller not used in or
necessary for the conduct of the Business, (v) tax returns, books of account or
other records having to do with the corporate organization of the Seller, (vi)
life insurance policies (including proceeds thereof and refunds thereunder)
relating to officers and other employees of the Seller, (vii) all assets owned
or held by any employee benefit plans of the Seller, (viii) the minute books,
stock transfer books and corporate seal of the Seller and all books and records
relating to businesses of the Seller other than the Business, (ix) all rights
(including indemnification) and claims and recoveries under litigation of the
Seller against third parties arising out of or relating to events prior to the
Closing Date, (x) the Seller's rights under this Agreement, (xi) accounts
receivable as of the Closing Date for work or services provided by the Seller on
or before the Closing Date, (xii) security deposits as of the Closing Date,
(xiii) prepaid expenses as of the Closing Date and (xiv) leasehold improvements,
furniture and fixtures located at the Seller's Mountain View, California
offices, (the "Excluded Assets").
2. Assumption of Certain Liabilities; Excluded Obligations.
(a) At the Closing, the Buyer shall assume, subject
to the limitations set forth in this Agreement, (i) only those obligations of
the Seller which are set forth in and by the terms of the Customer Contracts,
Leases, source code escrow agreements (listed on Schedule 2(a)), and Vendor
Contracts; provided, that the Buyer does not and shall not be deemed to assume
any obligations, responsibilities and liabilities arising after the Closing Date
under Customer Contracts for prepaid maintenance, listed on Schedule 2(a), in
excess of an aggregate of $1.2 million under all such Customer Contracts, (ii)
all obligations, responsibilities and liabilities of the Business or relating to
the Acquired Assets arising after the Closing Date; provided, that the Buyer
shall not be deemed to have assumed any undisclosed obligations under this
Section 2(a)(ii) or otherwise to the extent that such undisclosed obligations
were due to be performed prior to the Closing Date and are in default as of the
Closing Date, (iii) all obligations, responsibilities and liabilities arising
under the severance agreement between Seller and ▇▇▇▇▇ ▇▇▇▇▇▇, as described on
Schedule 2(a), and (iv) obligations of the Seller with respect to trade shows
relating to the Business; (the "Assumed Liabilities").
(b) Notwithstanding anything to the contrary in this
Agreement, except only as set forth in Section 2(a), the Buyer does not assume
and shall not be liable for any of the Seller's debts, liabilities or
obligations, including, without limitation, any debts, liabilities or
obligations arising out of the following (the "Excluded Obligations"):
(i) the Seller's operation of any of the Acquired
Assets or the Business prior to the Closing Date;
(ii) any violation of any of the representations,
warranties, covenants or agreements of the Seller contained in
this Agreement;
(iii) Federal, state, county, local, foreign or other
income, sales, use, real estate, excise, employee payroll or
other taxes or assessments (including interest and penalties
thereon) of any kind whatsoever payable in or attributable to
any period prior to the Closing Date;
(iv) any claims for personal injury, property damage,
product liability or strict liability, incurred or relating to
any period prior to the Closing Date (whether or not then
asserted), including workers' compensation;
(v) any claims alleging damage to the environment
under any existing law or similar claims with respect to the
operation of any of the Acquired Assets or the Business prior
to the Closing Date (notwithstanding any disclosure in
Schedule 6(n) of this Agreement of any matters, conditions or
facts which might give rise to any such claims, which matters,
conditions or facts shall be and continue to be Excluded
Obligations under this Agreement);
(vi) any claim of violation or infringement of any
copyright, patent, trademark or trade name right or other
intellectual property right of any person or entity occurring,
or arising from events occurring, prior to the Closing Date;
(vii) any claim of civil or criminal liabilities or
penalties (including interest) imposed on account of any act
or omission of the Seller or its officers, directors,
employees or agents, occurring, arising or existing prior to
the Closing Date;
(viii) contingent liabilities of the Seller of any
kind incurred, arising, accruing, or existing prior to the
Closing Date, other than those included in the Assumed
Liabilities;
(ix) any pension, profit sharing, savings,
retirement, health, medical, life, disability, dental,
deferred compensation, stock option, bonus, incentive,
severance pay, group insurance or other employee plans or
arrangements, or any policies, handbooks, or custom or
practice, or any employment agreements, whether express or
implied, and any claims by employees for vacation, sick pay,
leave or other benefits, applicable to, or accrued with
respect to, any of the Seller's employees at any time prior to
the Closing Date; and
(x) liabilities resulting from the failure to comply
with statutory provisions relating to bulk sales and
transfers.
3. Purchase Price; Adjustments; Allocation.
(a) Purchase Price. The purchase price, in
consideration for the sale and delivery by the Seller to the Buyer of the
Acquired Assets is $1,500,000 to be paid by the Buyer to the Seller, in reliance
upon the representations and warranties made by the Seller in this Agreement as
follows: (i) $1,350,000 shall be paid at Closing (the "Closing Cash Payment"),
and (ii) $150,000, subject to indemnification claims made pursuant to Section 11
hereof, shall be paid within 90 days after the Closing (the "Final Cash
Payment") (the Closing Cash Payment and the Final Cash Payment, the "Purchase
Price").
(b) Allocation. The allocation of the Purchase Price
among the Acquired Assets shall be as set forth on Schedule 3(b). The Buyer and
the Seller hereby covenant and agree that neither will take a position on any
income tax return or with any governmental agency charged with the collection of
any income tax or in any judicial proceeding that is in any way inconsistent
with such allocation or the characterization of any other payments described in
this Agreement.
4. Closing Date. Subject to the terms of this Agreement,
the closing of the purchase of the Acquired Assets (the "Closing") shall take
place at 5:00 p.m. pacific standard time, on February 19, 1998. The term
"Closing Date" means the date on which the Closing occurs.
5. Delivery and Payment; Further Assurances.
(a) Mutual Deliveries. At the Closing and subject to
the terms of this Agreement, the following documents shall be duly executed and
delivered by each of the parties thereto:
(i) the Lease Assignments;
(ii) the Real Estate License Agreement;
(iii) a Patent License Agreement between the
Seller and the Buyer with respect to the Buyer's right to
obtain from the Seller certain rights, including without
limitation, the right to use the Shared Technology, in
substantially the form of Exhibit D; and
(iv) a ▇▇▇▇ of Sale and Assumption Agreement
between the Buyer and the Seller with respect to the Acquired
Assets and the Assumed Liabilities, in substantially the form
of Exhibit E.
(b) The Seller at Closing. At the Closing and subject
to the terms of this Agreement, the Seller shall deliver or cause to be
delivered to the Buyer:
(i) full and actual possession of, or reasonable
access to, all of the Acquired Assets;
(ii) a release of each lien, security interest,
judgment, claim or other encumbrance to which any of the
Acquired Assets may be subject other than the Permitted Liens,
in form and substance reasonably satisfactory to the Buyer;
(iii) an opinion of the Seller's counsel in form
and substance reasonably satisfactory to the Buyer, in
substantially the form of Exhibit F;
(iv) within 20 days after the Closing, all
documents and other information required to make each Schedule
and Appendix hereto complete and current (it being understood
and agreed that to the extent that any of the Books and
Records are items susceptible to duplication and are either
(x) used in connection with any of the Seller's businesses
other than the Business or (y) are required by law to be
retained by the Seller, the Seller may deliver photostatic
copies or other reproductions from which information solely
concerning the Seller's business other than the Business has
been deleted);
(v) a certificate of the Secretary of the Seller
respecting (i) the Seller's Certificate of Incorporation and
By-Laws, (ii) resolutions of the Seller's Board of Directors
authorizing the entry into, and the transactions contemplated
by, this Agreement, and (iii) the incumbency of the Seller's
officers;
(vi) the Officer's Certificate described in
Section 9(f) hereof;
(vii) certificates as to the Seller's
qualification and status, dated no more than 10 days prior to
the Closing Date, issued by the Secretary of State of
Delaware, and for the States of California and Georgia, a
certificate that it is qualified to do business therein; and
(viii) within 20 days after the Closing, all other
documents, agreements, certificates, consents and assignments,
including without limitation assignments in the form required
by the United States Patent and Trademark Office and trademark
offices of relevant foreign jurisdictions, required to be
delivered to the Buyer under the provisions of this Agreement
or reasonably requested by the Buyer to effect the transfer of
the Acquired Assets to the Buyer and the other transactions
contemplated by this Agreement. Notwithstanding the foregoing,
the Seller is allowed 40 days after the Closing to transfer
all relevant foreign trademarks, tradenames and service marks
to the Buyer.
(c) The Buyer and the Parent at Closing. At the
Closing and subject to the terms of this Agreement, the Buyer and/or the Parent
shall deliver or cause to be delivered to the Seller:
(i) wire transfer of immediately available funds,
in the amount of the Closing Cash Payment;
(ii) an opinion of the Buyer's counsel, in form
and substance reasonably satisfactory to the Seller, in
substantially the form of Exhibit G;
(iii) a certificate of the Secretary of the Buyer
respecting (i) the Buyer's Certificate of Incorporation and
By-Laws, (ii) resolutions of the Buyer's Board of Directors
authorizing the entry into, and the transactions contemplated
by, this Agreement, and (iii) the incumbency of the Buyer's
officers;
(iv) a certificate of the Secretary of the Parent
respecting (i) the Parent's Certificate of Incorporation and
By-Laws, (ii) resolutions of the Parent's Board of Directors,
and (iii) the incumbency of the Parent's officers;
(v) the Officers' Certificates described in
Section 10(f) hereof;
(vi) certificate as to the Buyer's qualification
and status, dated no more than ten (10) days prior to the
Closing Date, issued by the Secretary of State of New Jersey;
(vii) a certificate as to the Parent's
qualification and status, dated no more than ten (10) days
prior to the Closing Date, issued by the Secretary of State of
New Jersey; and
(viii) all other documents, agreements and
certificates required to be delivered to the Seller under the
provisions of this Agreement or reasonably requested by the
Seller to effect the transactions contemplated by this
Agreement.
(d) Further Assurances. From time to time after the
Closing, at the Buyer's request and without further consideration, the Seller
shall execute and deliver bills of sale and assignments of the Acquired Assets
and such other instruments of sale, transfer, conveyance, and confirmation and
take such other action as the Buyer may reasonably deem necessary in order to
transfer to the Buyer and confirm the Buyer's title to the Acquired Assets, free
and clear of any and all liabilities (other than the Assumed Liabilities and the
Permitted Liens) and to put the Buyer in actual possession and operating control
thereof.
6. Representations and Warranties by the Seller. The
Seller represents and warrants to the Buyer as follows:
(a) Organization, Standing and Qualification. The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and is duly qualified to do business
and, except as set forth on Schedule 6(a), in good standing under the laws of
each other jurisdiction where the character of the properties owned or leased by
it or the nature of the business transacted by it requires it to be so
qualified, except where the lack of qualification would not have a material
adverse effect on the Acquired Assets. The Seller has all requisite corporate
power and authority and is entitled to carry on its business as it is now being
conducted, and to own, lease or operate its properties as and in the places
where such business is now conducted and where such properties are now owned,
leased or operated. The Seller's principal place of business and chief executive
office is and as of the Closing Date will be located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Seller has not conducted the Business in
any name other than its actual name during the five year period preceding the
Closing Date and as of the Closing Date, except in the name "FlowStream."
(b) Authority and Binding Effect. The Seller has all
power and authority necessary to enter into this Agreement and to carry out the
transactions contemplated hereby and all corporate and other proceedings
required to be taken by the Seller to authorize the execution, delivery and
performance of this Agreement and the agreements, instruments and other
documents relating hereto have been properly taken and have been approved by the
Seller's Board of Directors and shareholders. This Agreement has been duly
executed and delivered by a duly authorized officer of the Seller, and
constitutes, and will constitute on the Closing Date, the valid and binding
obligation of the Seller, enforceable in accordance with its terms.
(c) Approvals, etc.
(i) No approval, consent, withholding of objection
or other authorization is required from, and no filing or registration is
required to be made with, any court, administrative agency or governmental
authority in connection with this Agreement or the transactions contemplated
hereby, other than (i) compliance with and filings under the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), solely with respect to disclosure of the transactions
contemplated by this Agreement, and (ii) approvals, consents, withholdings of
objection or other authorizations, filings and registrations where the failure
to obtain the same would not have a material adverse effect on the Acquired
Assets.
(ii) The Seller has not been advised by any third
party that the consents or approvals described in Sections 10(e) and 12(c)
hereof of such third party will not be given or is otherwise unavailable. The
Seller will make reasonable efforts to obtain the third party approvals
described in Section 10(e) and 12(c) hereof
(d) No Conflict. Except as set forth on Schedule
6(d), neither execution and delivery nor performance by the Seller of this
Agreement or of the transactions contemplated hereby will, with or without the
giving of notice or passage of time or both, conflict with, result in a default
which has not been waived on or before the Closing, right to accelerate or loss
of rights under, or result in the creation of any lien, charge or encumbrance on
any of the Acquired Assets pursuant to, (i) any provision of the Seller's
Charter or By-Laws, (ii) the terms of any equity securities or debt instruments
issued by the Seller, (iii) any (A) franchise, mortgage, deed of trust, lease,
license, loan agreement or other agreement or understanding, (B) law, ordinance,
rule or regulation, or (C) order, judgment, award, decree, permit, license or
registration, to which the Seller is a party or by which the Seller or any of
the Acquired Assets may be bound or affected, or (iv) any license, permit,
approval, or registration issued by any governmental authority or other
organization and held by the Seller, except where the conflict, default, right
to accelerate, loss of rights, lien, charge or encumbrance would not have a
material adverse effect on the Acquired Assets; nor will such execution,
delivery or performance by the Seller give any party with rights under any
equity security, debt instrument, franchise, mortgage, deed of trust, lease,
license, loan agreement or other material agreement or understanding the right
to terminate, modify, accelerate or otherwise change the existing rights or
obligations of the Seller thereunder, except for such rights as to which
requisite waivers or consents have been obtained and except for rights, the
exercise of which would not have a material adverse effect on the Acquired
Assets.
(e) Financial Information. The Seller has delivered
to the Buyer unaudited income statements for the years ended October 31, 1996
and October 31, 1997 (the "Financial Statements"), a copy of which is annexed
hereto as Appendix IV. The Financial Statements are in the aggregate and in all
material respects accurate, complete and in accordance with the books and
records of the Business and present fairly the financial condition of the
Business as of their respective dates and the results of operations of the
Business for the periods then ended, in conformity with generally accepted
accounting principles applied on a consistent basis ("GAAP"), provided that all
of the footnotes required by GAAP for complete financial statements are not
included. The books of account of the Business reflect in all material respects
the items of income and expense, and the assets, liabilities and accruals
required to be reflected therein in accordance with GAAP.
(f) Title to Properties; Location of Assets. The
Seller currently has (except only as set forth on Schedule 6(f)), and as of the
Closing (except for sales of Inventory between the date hereof and the Closing
in the ordinary course of business) the Seller will have and convey to the Buyer
without exception, good and marketable title or other rights to use to all of
the Acquired Assets, free and clear of all liens, leases, encumbrances, taxes
(except such sales taxes, excise taxes and other taxes required under law to be
paid by the Buyer under this Agreement), claims, liabilities, equities, security
interests, charges and restrictions of any kind or nature whatsoever, except for
liens for current real or personal property taxes not yet due and payable, liens
disclosed on Schedule 6(f), worker's, carriers and materialmen's liens, and
liens that would not have a material adverse effect on the Acquired Assets and
which will not interfere with the present use of the properties they affect and
which in the aggregate do not result in the Buyer incurring an expense or cost
in excess of $10,000.00 ("Permitted Liens"). All of the Acquired Assets are, and
as of the Closing Date will be, located at the address of the Seller office
locations set forth in Schedule 6(f).
(g) Assets Necessary to Operate the Business. The
Acquired Assets currently are and as of the Closing will be (i) owned by the
Seller, (ii) (other than the Shared Technology) used in the conduct of the
Business, exclusive of any other business conducted by Seller, and (iii) in
conformity with all applicable laws, ordinances, codes, rules and regulations
relating to their construction, use, operation and maintenance, except where the
nonconformity would not have a material adverse effect on the Acquired Assets.
The Seller represents and warrants to the Buyer that all the rights that are
used by the Seller to conduct the Business as it is presently operated are (A)
conveyed to the Buyer pursuant to the Patent License Agreement, (B) conveyed to
the Buyer pursuant to this Agreement, (C) conveyed to the Buyer pursuant to the
Real Estate License and the Lease Assignments, or (D) held by the Seller (but
are not being conveyed to the Buyer) and related to the Administrative Software.
(h) Development, Ownership and Performance of the
Software and Products; Year 2000 Compliant Software. All programming and
development of the Software and the Products was performed by persons who, at
the time they performed the work, were employees of the Seller, or engaged by
the Seller under agreements by which the Seller was assigned all ownership in
the work, or was performed pursuant to a license from a third party. The
Software and the Products perform in accordance with their respective
specifications without errors which materially adversely effect its performance.
The Books and Records contain a true and complete list of problem reports and
field problems and resolutions that have occurred within the past 3 years. The
Software and the Products shall record, store, process and present calendar
dates falling on or after January 1, 2000 in the same manner and with the same
functionality as the Software and the Products record, restore, process and
present calendar dates falling on or before December 31, 1999, and in all other
aspects, the Software and the Products shall not in any way lose functionality
or degrade in performance as a consequence of such Software or Products
operating at a date later than December 31, 1999. The Acquired Assets include
any compatibility information and technical information, including without
limitation software interfaces and source codes, that is required to (i) perform
regular maintenance of the Software and the Products and (ii) design equipment
and/or software which is functionally interconnectable with the Software and the
Products. The codes and manuals included in the Software describe completely all
of the application programs and operating programs included in the Software.
(i) Inventory. The Inventory was acquired and has
been maintained in accordance with the Seller's regular business practices,
consists of items of a quality and quantity useable or saleable in the ordinary
course of business of the Business consistent with past practice, is valued at
the lower of the Seller's cost and market value on the Financial Statements, and
with respect to Inventory intended for sale, is saleable at prices at least
equal to the value thereof on the books of the Business.
(j) Labor Matters.
(i) Except as set forth on Schedule 6(j), (a) The
Seller is not a party to or bound by any written or oral agreement, contract,
commitment or arrangement with (A) any present or former shareholder, director,
officer, employee or consultant or for the employment of any person, including
any consultant, in connection with the Business, or (B) any labor union or other
representative of employees associated with the Business, (b) the Seller has
operated the Business, and the Business is, in compliance in all material
respects with all applicable laws respecting employment and employment
practices, (c) there is no unfair labor practice charge or complaint against the
Seller or the Business pending or to the knowledge of the Seller threatened
before the National Labor Relations Board nor is there any grievance or any
arbitration proceeding arising out of or under collective bargaining agreements
pending or to the knowledge of the Seller threatened with respect to the
Business, (d) there is no labor strike, slow-down or work stoppage pending or to
the knowledge of the Seller threatened against the Seller or the Business, (e)
there is no charge or complaint pending or to the knowledge of the Seller
threatened against the Seller or the Business before the Equal Employment
Opportunity Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices, and (f) except for a pending audit
from the United States Department of Labor relating to affirmative action, the
Seller has no knowledge that any federal, state or local agency responsible for
the enforcement of labor or employment laws intends to conduct an investigation
of or relating to the Seller or the Business, and no such investigation of which
the Seller is aware is in progress.
(k) Claims and Litigation. Except as set forth on
Schedule 6(k):
(i) there is no claim, legal action, suit,
arbitration, governmental investigation or other legal, regulatory or
administrative proceeding, or any order, judgment, decree or award pending or to
the best of the Seller's knowledge threatened, against or affecting any of the
transactions contemplated by this Agreement, the Business or any of the Acquired
Assets, and the Seller knows of no basis for the same;
(ii) there is no litigation, arbitration,
investigation or other proceeding of or before any court, arbitrator or
governmental, regulatory or administrative official, body or authority pending
or to the knowledge of the Seller threatened against or affecting the Acquired
Assets; and
(iii) Within the three year period ending on the
date of this Agreement, the Seller has not been a defendant in any product
liability litigation in respect of the Products, nor to the Seller's knowledge
has any such litigation been threatened against the Seller during such period.
(l) Licenses. All Licenses are in good standing,
valid and effective in accordance with their respective terms, and there is not
under any License any existing default or event which, with notice or lapse of
time, or both, would constitute a default which would have a material adverse
effect on the Acquired Assets. The Seller has all licenses, consents, permits,
variances, certifications and approvals of government agencies necessary for the
Seller to conduct the Business as presently operated (the "Permits").
(m) Compliance with Laws and Other Requirements. The
Seller has not received notice of noncompliance with, and has complied in all
material respects with, all laws, rules, regulations, ordinances, orders,
judgments, and awards applicable to the Acquired Assets, the Products, the
Business, and the Real Property or to which any of the Acquired Assets, the
Products, the Business, and the Real Property is subject. The Seller has not
failed to obtain or to adhere to the material requirements of any license,
permit or authorization (including without limitation the Licenses) necessary to
the ownership of the Acquired Assets, the Products, or the Real Property, or to
the conduct of the Business.
(n) Environmental Matters.
(i) Except as set forth on Schedule 6(n), the
Seller has obtained all permits, licenses and other authorizations which are
required under "Environmental Laws" for the use and operation of the Acquired
Assets and the conduct of the Business. As used in this Agreement,
"Environmental Laws" shall include, without limitation, any and all federal,
state, local and foreign laws and requirements relating to health and safety and
pollution or protection of the environment currently in effect, including laws
and requirements relating to emissions, discharge, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including without
limitation ambient air, surface water, groundwater or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes. As used herein, "hazardous
substances or wastes" shall include, without limitation, (A) gasoline, petroleum
products, explosives, radioactive materials, polychlorinated biphenyls,
alcohols, chemical solvents or related or similar materials, (B) any substance
or material defined as a hazardous, extremely hazardous or toxic substance,
material or waste or as a pollutant or contaminant under any Environmental Law,
and (C) any asbestos or asbestos-containing substance.
(ii) Except as set forth on Schedule 6(n), the
Seller is in all material respects in compliance with all limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any and all Environmental Laws or
contained in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder by
any federal, state or local court or other governmental authority, agency or
instrumentality and applicable to the use or operation of the Acquired Assets,
the Products or the conduct of the Business.
(iii) Except as set forth on Schedule 6(n), the
Seller has not received and, to the Seller's knowledge, is not party to a civil,
criminal or administrative action, suit, demand, claim, hearing, notice or
demand letter, notice of violation, investigation, or proceeding pending or to
the Seller's knowledge threatened against the Seller in respect of the Business,
the Acquired Assets or the Products and pursuant to any Environmental Law or any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, and the Seller knows
of no basis for the same.
(o) OSHA. Except as set forth on Schedule 6(o), the
Seller has not violated, or received a notice or charge asserting any violation
of, the Occupational Safety and Health Act of 1970 or any other federal, state,
local or foreign law (including rules and regulations thereunder) regulating or
otherwise affecting the health and safety of employees associated with the
Business.
(p) Contracts.
(i) The Customer Contracts, the Vendor Contracts
and the Leases are valid, binding and enforceable in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency or other laws affecting the rights of creditors generally or general
principles of equity whether asserted in an action at law or in equity or
otherwise. The Seller and, to the Seller's knowledge, the other parties to the
Customer Contracts, the Vendor Contracts and the Leases (A) are in compliance in
all material respects with the provisions thereof; and (B) are not in default in
the performance, observance or fulfillment of any obligation, covenant or
condition (except, in connection with the Closing, conditions relating to
assignment) contained in any Customer Contract, Vendor Contract or Lease. To the
Seller's knowledge, no event has occurred which with or without the giving of
notice or lapse of time, or both, would constitute a default under any thereof
which default would have a material adverse effect on the Acquired Assets.
(ii) Except as disclosed on Schedule 6(p), no
Customer Contract, Vendor Contract or Lease contains any contractual requirement
with which there is a reasonable likelihood that the Business or to the Seller's
knowledge any other party thereto will be unable to comply.
(q) Intellectual Property. Except as disclosed on
Schedule 6(q), the Business does not utilize any patent, trademark, trade name,
service ▇▇▇▇, copyright, trade secret or proprietary rights other than the
Intellectual Property, and to the knowledge of the Seller, the use of the
Intellectual Property does not, and the Seller has not received any notice or
demand claiming that the Intellectual Property does, conflict with, or infringe
upon, any patent, trademark, trade name, service ▇▇▇▇, copyright, trade secret
or other proprietary rights owned or claimed by another. The Seller owns free
and clear of all liens, encumbrances and similar rights, or has rights to use,
all proprietary rights (including without limitation all patents, trademarks,
trade names, service marks, copyrights and trade secrets) that are necessary for
or used in the conduct of the Business as now conducted and are included in the
Acquired Assets. Except as disclosed on Schedule 6(q), the Seller has not
granted, conveyed, assigned, licensed, leased or otherwise transferred to any
other person or entity any proprietary, financial or other interest, whether
joint or sole, direct or indirect, (not including any interest provided to
customers in the ordinary course of Seller's sale of the Products) in any
unpatented design or device which the Seller is using or the use of which is
necessary in the operation of the Business as it is now, or within the past five
(5) years has been, conducted.
(r) No Material Adverse Change. Since the October 31,
1997, there has not occurred any material adverse change in the Acquired Assets.
(s) Brokers. No broker, finder or financial advisor
or other person is entitled to any brokerage fees, commissions, finders' fees or
financial advisory fees in connection with the transactions contemplated hereby
for the Buyer or the Parent by reason of any action taken by the Seller or any
of its directors, officers, employees, representatives or agents.
(t) Relationship with Vendors and Customers. Except
as described on Schedule 6(t), the Seller is not aware of any facts or
information upon which the Seller concludes in its reasonable opinion that any
customer (whether under a Serviced Account, Customer Contract or otherwise) or
third-party (whether under a Vendor Contract or otherwise) intends to cease
doing any material amount of business with the Business.
(u) Other Businesses. The business of Seller, other
than the Business, does not compete in the Business.
7. Representations and Warranties by the Buyer and the Parent.
The Buyer and the Parent represent and warrant to the Seller as follows:
(a) Organization, Standing, Qualification. Each of
the Buyer and the Parent is a corporation validly existing and in good standing
under the laws of the State of New Jersey and in each other jurisdiction where
the character of the properties owned or leased by it or the nature of the
business transacted by it requires it to be so qualified. Each of the Buyer and
the Parent has all requisite corporate power and authority and is entitled to
carry on its business as described in Parent's Annual Report on Form 10-K for
the year ended October 31, 1997, and to own, lease or operate its properties as
and in the places where such business is now conducted and where such properties
are now owned, leased or operated.
(b) Authority and Binding Effect. Each of the Buyer
and the Parent has all power and authority necessary to enter into this
Agreement and to carry out the transactions contemplated hereby and all
corporate and other proceedings required to be taken by the Buyer and the Parent
to authorize the execution, delivery and performance of this Agreement and the
agreements, instruments and other documents relating hereto have been properly
taken and have been approved by the Buyer's and the Parent's respective Boards
of Directors. This Agreement has been duly executed and delivered by a duly
authorized officer of the Buyer and of the Parent, and constitutes, and will
constitute on the Closing Date, the valid and binding obligation of the Buyer
and the Parent enforceable in accordance with its terms.
(c) Approvals, etc. No approval, consent, withholding
of objection or other authorization is required from, and no filing or
registration is required to be made with, any court, administrative agency or
governmental authority in connection with this Agreement or the transactions
contemplated hereby, other than compliance with and filings under the Exchange
Act solely with respect to disclosure of the transactions contemplated by this
Agreement.
(d) No Conflict. Neither execution and delivery nor
performance by the Buyer or the Parent of this Agreement or of the transactions
contemplated hereby will, with or without the giving of notice or passage of
time or both, conflict with or result in a default, right to accelerate or loss
of rights under, (i) any provision of the Buyer's or the Parent's respective
Certificate of Incorporation or By-Laws, (ii) the terms of any equity securities
or debt instruments issued by the Buyer or the Parent, (iii) any (A) franchise,
mortgage, deed of trust, lease, license, loan agreement, or any other agreement
or understanding, (B) law, ordinance, rule or regulation, or (C) order,
judgment, award, decree, permit, license or registration to which the Buyer or
the Parent is a party or by which either the Buyer or the Parent or their
respective assets (excluding the Acquired Assets) may be bound or affected, or
(iv) any license, permit, approval or registration issued by any governmental
authority or other organization and held by the Buyer or the Parent, except
where the conflict, default, right to accelerate or loss of rights under the
same would not have a material adverse effect on the operations, properties,
prospects or financial condition of the Buyer or the Parent.
(e) Claims and Litigation. There is no claim, legal
action, suit, arbitration, governmental investigation or other legal, regulatory
or administrative proceeding, or any order, judgment, decree or award pending or
to the best of the Buyer's or the Parent's knowledge threatened, against or
relating to acquisition of the Acquired Assets by the Buyer or the Parent and
neither the Buyer nor the Parent knows of any basis for the same.
(f) Financing. The Buyer has sufficient cash and/or
available borrowing capacity under existing credit facilities to pay the
Purchase Price in its entirety and to make all other necessary payments in
connection with the consummation of the transactions contemplated by this
Agreement.
(g) Brokers. No broker, finder or financial advisor
or other person is entitled to any brokerage fees, commissions, finders' fees or
financial advisory fees in connection with the transactions contemplated hereby
from the Seller by reason of any action taken by the Buyer or the Parent or any
of their respective directors, officers, employees, representatives or agents.
8. Pre-Closing Covenants and Agreements.
(a) Conduct of Business Prior to Closing. From the
date hereof until the Closing Date, the Seller will use the Acquired Assets and
conduct the Business only in the ordinary course, will use commercially
reasonable efforts to maintain and preserve the Acquired Assets in their current
condition (except for changes in the ordinary course of business). The Seller
shall not, without the prior written consent of the Buyer, engage in any
transaction related to the Acquired Assets or the Business not in the ordinary
course or engage in any activity which could have a material and substantial
adverse effect thereon. The Seller shall use commercially reasonable efforts to
preserve the Acquired Assets (except sales of Inventory in the ordinary course
of business) and the Business, to keep available the services of the employees,
agents and consultants of the Business, and to maintain the goodwill of the
suppliers to and the customers of the Business. Without limiting the generality
of the foregoing, the Seller shall not, between the date of this Agreement and
the Closing Date, without the prior written consent of the Buyer:
(i) enter into any agreement, contract, commitment
or arrangement (A) with any present or former shareholder, director, officer,
employee or consultant or for the employment of any person, including any
consultant, in connection with the Business, (B) with any labor union or other
representative of employees of the Business, (C) for the future lease or
purchase of, or payment for, supplies, products, machinery or equipment for the
Business, or for the performance of services for the Business by a third party,
involving in any one case $10,000.00 or more, other than Inventory purchases for
the Business in the ordinary course of business consistent with the Seller's
levels of prior Inventory purchases, (D) to sell or supply products or to
perform services for the Business, involving in any one case $10,000.00 or more,
(E) with any representative, sales agency, dealer or distributor, for the
Business (F) limiting or restraining the Business from engaging or competing in
any lines of business with any person, or (G) any other agreement, contract,
commitment or arrangement for the Business exceeding $10,000.00 in value;
(ii) grant rights under any license, franchise, or
distributorship agreement in respect of the Business or the Products;
(iii) modify, amend, terminate, assign, waive,
release or relinquish any rights or claims pursuant to any Customer Contract,
Vendor Contract or Lease;
(iv) grant any increase in the salary or other
compensation of, or grant any bonus to, the managers or other employees of the
Business who may be employed by the Buyer after the Closing, or make any loan to
or enter into any material transaction of any other nature with such managers or
employees;
(v) take any action to institute any new severance
or termination pay practices with respect to any managers or other employees of
the Business who may be employed by the Buyer after the Closing, or to increase
benefits payable under existing severance or termination pay policies; or
(vi) adopt or amend, in any respect, except as may
be required by applicable law or regulation, any bonus, profit sharing,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust, fund,
plan or arrangement for the benefit or welfare of any managers or other
employees of the Business who may be employed by the Buyer after the Closing.
(b) Continued Information. Between the date of this
Agreement and the Closing Date, the Seller shall (i) advise the Buyer of each
significant business decision affecting the Business made by the senior
management of the Business before each such decision is implemented or
announced, and (ii) give the Buyer prompt written notice of any material change
in any of the information contained in the Seller's representations and
warranties set forth herein.
(c) Access. At all reasonable times during normal
business hours prior to the Closing, the Seller shall give the Buyer, the Parent
and their representatives access to (i) the Acquired Assets (and the Seller's
documentation related thereto) in order to verify the existence and condition
thereof, (ii) the Seller's sales records relating to the Products, the Business
and the Serviced Accounts, and (iii) the Seller's employees involved in the
Business in order to review and discuss transition matters. Access to the
Seller's employees shall be subject to the Seller's approval (which shall not be
unreasonably withheld), at the Seller's option shall be made in the presence of
the Seller or the Seller's designee, and shall not disrupt or interfere with the
Seller's business operations.
(d) No Inconsistent Activities. Neither the Seller
nor any of its officers, shareholders and other representatives will, directly
or indirectly, from the date hereof to and including the Closing Date or the
earlier termination of this Agreement, initiate, solicit, or participate in any
way in proposals, discussions or negotiations with, or provide any information
or assistance to, any third party concerning any acquisition of all or any part
of the Acquired Assets or the Business (whether by merger, purchase of assets,
tender offer or otherwise).
(e) Confidentiality. The parties acknowledge their
respective obligations pursuant to the Mutual Nondisclosure and Confidentiality
Agreement between the Seller and the Parent dated January 22, 1998.
9. Conditions Precedent to the Buyer's and the Parent's
Obligations. The obligations of the Buyer and the Parent under this Agreement
are subject, at the option of the Buyer and the Parent, to fulfillment or waiver
of each of the following conditions at or prior to the Closing, and the Seller
shall exert all reasonable efforts to cause each such condition to be so
fulfilled:
(a) All representations and warranties of the Seller
contained herein, or in any document delivered in connection with this
Agreement, shall be correct and complete in all material respects when made and
shall be deemed to have been made again at and as of the Closing.
(b) Except for product development and product
deliveries set forth in Schedule 2(a), all material agreements and obligations
required by this Agreement to be performed by the Seller at or before the
Closing shall have been duly performed insofar as such performance is reasonably
practical.
(c) Since the date of this Agreement, there shall not
have occurred any material adverse change, or the discovery of a condition or
the occurrence of any event which would result in a material adverse change in
the Acquired Assets or the Business.
(d) All documents and agreements required to be
delivered to the Buyer at or prior to the Closing shall have been so delivered
and the Seller shall be able to deliver and convey full, actual and unimpeded
possession of, and unencumbered title (except for the Permitted Liens or
relating to the Assumed Liabilities) to, all of the Acquired Assets.
(e) No governmental agency (federal, state, or local)
or any other person or entity shall have: (i) objected to or sought to prevent
or limit (by notice, legal process or otherwise) the consummation of any of the
transfers, payments or other transactions contemplated hereby, (ii) indicated an
intention to attempt to set aside any of such transfers, payments or other
transactions, whether before or after its consummation, or to cause the Buyer to
withhold any payment to the Seller or to divest itself of any of the property
acquired, or (iii) asserted that any of such transfers, payments or other
transactions are not in compliance with law. All consents, approvals and actions
of, filings with and notices to any governmental or regulatory authority
necessary to permit the Seller and the Buyer to perform their obligation under
this Agreement and to consummate the transactions contemplated hereby shall have
been duly obtained, made or given and shall be in full force and effect.
(f) There shall be delivered to the Buyer a
certificate executed by the President or a Vice President of the Seller, dated
as of the Closing Date, certifying that the conditions set forth in paragraphs
(a) through (e), inclusive, of this Section 9 have been fulfilled.
10. Conditions Precedent to the Seller's Obligations. The
obligations of the Seller at the Closing shall be subject, at the option of the
Seller, to fulfillment or waiver of each of the following conditions at or prior
to the Closing, and the Buyer and the Parent shall exert all reasonable efforts
to cause each such condition to be so fulfilled:
(a) All representations and warranties of the Buyer
and the Parent contained herein, or in any document delivered in connection with
this Agreement, shall be correct and complete in all material respects when made
and shall be deemed to have been made again at and as of the Closing.
(b) All agreements and obligations required by this
Agreement to be performed by the Buyer and the Parent at or before the Closing
shall have been duly performed in all material respects.
(c) All documents and agreements required to be
delivered to the Seller at or prior to the Closing shall have been so delivered.
(d) No governmental agency (federal, state, or local)
or any other person or entity shall have: (i) objected to or sought to prevent
or limit (by notice, legal process or otherwise) the consummation of any of the
transfers, payments or other transactions contemplated hereby, (ii) indicated an
intention to attempt to set aside any of such transfers, payments or other
transactions, whether before or after its consummation, or to cause the Buyer to
withhold any payment to the Seller or to divest itself of any of the property
acquired, or (iii) asserted that any of such transfers, payments or other
transactions are not in compliance with law. All consents, approvals and actions
of, filings with and notices to any governmental or regulatory authority
necessary to permit the Seller and the Buyer to perform their obligations under
this Agreement and to consummate the transactions contemplated hereby shall have
been duly obtained, made or given and shall be in full force and effect.
(e) The Seller shall have received the consent of the
Imperial Bank to transfer the Acquired Assets to the Buyer in accordance with
the terms of this Agreement free of all liens and security interests of the
Imperial Bank.
(f) There shall be delivered to the Seller
certificates executed by the President or Vice President of the Buyer and of the
Parent, dated as of the Closing Date, certifying that the conditions set forth
in paragraphs (a) through (e), inclusive, of this Section 10 have been
fulfilled.
11. Indemnification.
(a) Indemnity from the Seller. Subject to the
limitations set forth in Section 11(d), the Seller hereby agrees to indemnify,
defend and hold harmless from and after the Closing the Buyer and the Parent and
their respective officers, directors, shareholders, subsidiaries, affiliated
companies, successors and assigns from and against all losses, judgments,
settlements, claims, fines, penalties, liabilities, damages, costs or expenses
(including without limitation attorneys' fees) (collectively, "Losses") asserted
against or incurred or sustained by the Buyer, the Parent or both to the extent
of the Losses arising out of or resulting, in whole or in part, from:
(i) any breach of any warranty or any
misrepresentation by the Seller, or the non-performance of any
covenant, agreement or obligation to be performed on the part
of the Seller (and not assumed by the Buyer pursuant to this
Agreement) under this Agreement or any of the related
agreements;
(ii) any claim, liability or obligation arising
out of or relating to any Excluded Obligation;
(iii) any claims or actions by third parties
(including, without limitation, employees, former employees,
and governmental entities) relating to any of the Acquired
Assets, the Products, or the Business, and accruing on or
before the Closing Date, or any acts or omissions of the
Seller with respect to third parties, whether or not disclosed
to the Buyer, and whether accrued or occurring before or at
the Closing that do not relate to the Assumed Liabilities;
(iv) any claim or allegation that any of the
Intellectual Property or the ownership, marketing, licensing,
sale or use thereof or of any of the other Acquired Assets or
the Products infringes any patent, copyright, trademark, or
other proprietary third party right;
(v) any and all other debts, obligations or
liabilities of the Seller at any time or any third party
claims or claims from the Seller's creditors attributable
thereto (except to the extent that any such debt, obligation
or liability is expressly assumed by the Buyer pursuant to
Section 2 hereof);
(vi) any claim, liability or obligation arising
out of or relating to the disclosure on Schedule 6(a); and
(vii) all reasonable costs, fees and expenses
(including attorneys' fees) incident to any of the foregoing
or incurred in enforcing this indemnity.
(b) Indemnity from the Buyer and the Parent. The
Buyer and the Parent hereby agree to indemnify, defend and hold harmless the
Seller and its officers, directors, shareholders, subsidiaries, affiliated
companies, successors and assigns from and against and to the extent of all
Losses asserted against or incurred or sustained by the Seller arising out of or
resulting from in whole or in part:
(i) any breach of any warranty or any
misrepresentation by the Buyer or the Parent, or the
non-performance of any covenant, agreement or obligation to be
performed by the Buyer or the Parent under this Agreement or
any of the related agreements;
(ii) any claims, liability or obligation arising
out of or relating to any Assumed Obligation;
(iii) any claims or actions by third parties
(including without limitation, employees, and governmental
entities) relating to any of the Acquired Assets, the Products
or the Business, accruing after the Closing Date, or any acts
or omissions of the Buyer with respect to its conduct of the
Business that do not relate to the Excluded Obligations; and
(iv) all reasonable costs, fees and expenses
(including attorneys' fees) incident to any of the foregoing
or incurred in enforcing this indemnity.
(c) Notice and Opportunity to Defend.
(i) Promptly after the receipt by any person or
entity entitled to indemnification hereunder (the "Indemnified Party") of notice
of any claim or the commencement of any action or proceeding by a third party
covered by the indemnification hereunder, the Indemnified Party will, if a claim
with respect thereto is to be made against another party hereto (the
"Indemnifying Person") pursuant to Section 11(a) or 11(b), as the case may be,
give such Indemnifying Person written notice of such claim or the commencement
of such action or proceeding, provided that failure of the Indemnified Party to
give reasonably prompt notice of any claim or claims shall not release, waive or
otherwise affect the obligations under this Section 11 of the Indemnifying
Person with respect thereto except to the extent that such Indemnifying Person
can demonstrate actual loss or prejudice as a result of such failure.
(ii) Unless the Indemnified Party reasonably
believes that the Indemnifying Person will be unable or not required to fully
indemnify the Indemnified Party for any such claim, action or proceeding, the
Indemnifying Person may elect to defend against such claim or defend such action
or proceeding, at its sole cost and expense, and in such event the Indemnified
Party shall, at its sole expense, have the right to participate in (but not
control) the defense through counsel chosen by the Indemnified Party. So long as
the Indemnifying Person (A) is in good faith so defending, and complying with
each of its obligations under this Section 11 or (B) is not given the
opportunity to so defend pursuant to the preceding sentence, as the case may be,
the Indemnified Party shall not compromise or settle any such claim without the
prior written consent of the Indemnifying Person, which consent shall not be
unreasonably withheld or delayed. In no event shall the Seller, if it is the
Indemnifying Person in respect of any claim described in Section 11(a)(iv)
hereof, be entitled to settle any such claim without the Buyer's written
consent, provided that if the Buyer refuses to accept a settlement offer for
which the Seller is prepared to provide complete indemnification in accordance
with the Seller's obligations under this Section 11, the Buyer thereafter shall
be responsible for paying the Buyer's attorneys' fees and expenses arising from
continued litigation, but the Seller shall remain responsible for payment of the
ultimate judgment, if any, to the extent of the Seller's obligations under this
Section 11.
(iii) If the Indemnifying Person cannot or does
not elect to defend a claim against the Indemnified Party or does not so defend
and continue to so defend in compliance with all of the terms of this Section
11, the Indemnified Party may defend such claim, action or proceeding in such
manner as the Indemnified Party may deem appropriate, including, but not limited
to, settling such claim, action or proceeding on such terms as the Indemnified
Party may deem appropriate (but after giving notice of the same to the
Indemnifying Person and obtaining the consent of the Indemnifying Person to
settle such claim, action or proceeding, which consent shall not be unreasonably
withheld), and the Indemnifying Person will promptly indemnify the Indemnified
Party in accordance with the provisions of Section 11(a) or 11(b), as the case
may be.
(d) Limitation on Liability of Seller. The Seller
shall not have any obligation to indemnify the Buyer or the Parent under this
Section 11 until the Buyer and the Parent have suffered Losses that, in the
aggregate, exceed $30,000.00, provided that Losses arising out of or resulting
from the failure of the Seller to pay all taxes, penalties and interest related
thereto, and other charges of a comparable nature irrespective of how
designated, which have been incurred, due or claimed to be due from the Seller
or imposed on the Seller or the Seller's properties, assets, income, payroll,
franchises, licenses, sales or use by any federal, state, local or foreign
taxing authorities with respect to periods ending on or prior to the Closing
(collectively, "Tax Losses") shall not be included in such calculation, and the
Seller shall be obligated to indemnify the Buyer or the Parent for all such Tax
Losses in accordance with Section 11(a) above. The Seller shall be obligated to
indemnify the Buyer and the Parent from and against any Loss(es) upon such
Loss(es) (other than Tax Losses) exceeding $30,000.00. In no event shall the
Seller be obligated to indemnify the Buyer or the Parent from and against any
Losses, if the Seller has paid an aggregate of $150,000 to the Buyer or the
Parent pursuant to this Section 11; provided that the Seller's obligation to
indemnify the Buyer and the Parent for Losses arising out of or resulting from a
breach of Section 6(q) hereof shall be limited to the Purchase Price; further
provided that there shall be no limit on the Seller's obligation to indemnify
the Buyer and the Parent for Losses arising out of or resulting from (i) a
breach of any covenant or agreement contained in Section 12 hereof, (ii) any
Excluded Obligation, and (iii) Tax Losses.
(e) Limitation on Liability of Buyer and the Parent.
The Buyer and the Parent shall not have any obligation to indemnify the Seller
under this Section 11 until the Seller has suffered Losses that, in the
aggregate, exceed $30,000.00, provided that Losses arising out of or resulting
from the failure of the Buyer or the Parent to pay all taxes, penalties and
interest related thereto, and other charges of a comparable nature irrespective
of how designated, which have been incurred, due or claimed to be due from the
Buyer and the Parent or imposed on the Buyer and the Parent or their properties,
assets, income, payroll, franchises, licenses, sales or use by any federal,
state, local or foreign taxing authorities with respect to periods beginning
after the Closing (collectively, "Tax Losses") shall not be included in such
calculation, and the Buyer and the Parent shall be obligated to indemnify the
Seller for all such Tax Losses in accordance with Section 11(b) above. The Buyer
and the Parent shall be obligated to indemnify the Seller from and against any
Loss(es) upon such Loss(es) (other than Tax Losses) exceeding $30,000.00. In no
event shall the Buyer or the Parent be obligated to indemnify the Seller from
and against any Losses, if the Buyer and the Parent have paid an aggregate of
$150,000 to the Seller pursuant to this Section 11; provided that there shall be
no limit on the Buyer's and the Parent's obligation to indemnify the Seller for
Losses arising out of or resulting from (i) a breach of any covenant or
agreement described in Section 12 hereof, (ii) any Assumed Liability, and (iii)
Tax Losses.
(f) Non-Third Party Claims. If any Indemnified Party
should have a claim pursuant to Section 11(a) or 11(b) hereof, as the case may
be, against any Indemnifying Party that does not involve a third-party claim,
the Indemnified Party shall deliver, with reasonable promptness, a written
notice describing the claim and the Losses to the Indemnifying Person (the
"Indemnity Notice"). If the Indemnifying Person notifies the Indemnified Party
that it does not dispute the claim described in the Indemnity Notice within 30
days (the "Dispute Period") following receipt of the Indemnity Notice or fails
to notify the Indemnified Party within the Dispute Period whether the
Indemnifying Person disputes the claim described in the Indemnity Notice, the
Loss(es) in the amount specified in the Indemnity Notice will be conclusively
deemed a liability of the Indemnifying Person hereunder and the Indemnifying
Person shall pay the amount of such Loss(es) to the Indemnified Party on demand
(subject to Sections 11(d) or 11(e) hereof, as the case may be). If the
Indemnifying Person has timely disputed its liability with respect to such
claim, the Indemnifying Person and the Indemnified Party will proceed in good
faith to negotiate a resolution of such dispute within 30 days following
expiration of the Dispute Period (the "Resolution Period"). If the dispute is
not resolved through negotiations within the Resolution Period, such dispute
shall be resolved by litigation in a court of competent jurisdiction.
(g) Indemnity; Final Cash Payment. Any claim for
indemnification made by the Buyer or the Parent under this Section 11 made
within the 90 day period following the Closing Date, shall be with recourse
first to any amount of the Purchase Price then remaining unpaid (subject to
Section 11(d) hereof) but any such recourse is not a limitation of any claim for
indemnification.
(h) Adjustments. The Buyer and the Seller shall make
appropriate adjustments for the receipt by the Indemnified Party of tax benefits
and insurance proceeds, if any, in determining the amount of the Loss for
purposes of this Section 11.
(i) Tax Treatment. Amounts payable in respect of the
parties' indemnification obligation shall be treated as an adjustment to the
Purchase Price. The Buyer and the Seller agree to cooperate in the preparation
of a supplemental Form 8594 as required by Treasury Regulations Sections
1.1060-1T(f) and (h)(2)(ii) as a result of any adjustment to the Purchase Price
pursuant to the preceding sentence.
(j) Remedies. The Buyer's and the Parent's sole and
exclusive remedy for all Losses occasioned by, related to or arising out of any
breach (other than a willful breach) of the Seller's representations and
warranties in this Agreement or covenants or agreements made by the Seller in
the Agreement shall be to seek indemnification from the Seller under the
provisions of this Section 11 and 12. The Seller's sole and exclusive remedy for
all Losses occasioned by, related to or arising out of any breach (other than a
willful breach) of the Buyer's and the Parent's representations and warranties
in this Agreement or covenants or agreements made by the Buyer and the Parent in
the Agreement shall be to seek indemnification from the Buyer and the Parent
under the provisions of this Section 11 and 12.
12. Miscellaneous Covenants and Agreements.
(a) Royalty Payments. The Buyer shall pay to the
Seller amounts (the "Royalty Payments") equal to 20% of all annual revenue in
excess of $3.2 million recognized on the books of the Buyer from the licensing
of "FlowStream," a manufacturing execution system developed by Seller, for the
remainder of the 1998 calendar year following the Closing Date and for the
entire 1999 calendar year. Each Royalty Payment shall be payable within 30
business days after the end of the respective calendar year. The Buyer shall, at
the Seller's reasonable request within 30 business days after receipt of each
Royalty Payment, provide the Seller with sufficiently detailed information
relating to the annual revenues recognized by the Buyer from the licensing of
"FlowStream," by the Buyer during the applicable calendar year. In the event
that there exists a discrepancy greater than $10,000 between the Buyer's and the
Seller's independent calculations as to the amount of any Royalty Payment, an
independent auditor mutually agreed upon by the Buyer and the Seller, or if not
so agreed upon by the Buyer and the Seller within 30 days after such dispute
shall have arisen, an independent auditor mutually agreed upon the respective
auditors of the Buyer and the Seller, shall determine the amount of the Royalty
Payment. All fees and expenses relating to the services provided by the
independent auditor shall by paid by the Seller; provided however, if the amount
of the Royalty Payment determined by the independent auditor exceeds the Buyer's
calculated amount by more than $10,000, then the Buyer shall pay the fees and
expenses of such independent auditor.
(b) Bulk Sales Compliance. The Buyer and the Seller
hereby waive compliance with the provisions of any applicable bulk sales law of
the Uniform Commercial Code of any state including California ("Bulk Sales
Laws") to the extent applicable to any of the transactions contemplated by this
Agreement. The Seller hereby agrees to discharge when due all claims of
creditors or other persons, entities or governmental agencies which could be
asserted against the Buyer, by reason of any noncompliance with any Bulk Sales
Laws or other tax provisions, without recourse or liability of the Buyer. The
Seller hereby agrees to indemnify, defend and hold harmless the Buyer, its
affiliates, successors and assigns from and against (and shall, on demand,
reimburse the Buyer for) any Losses suffered or incurred by the Buyer or its
affiliates, successors or assigns in connection with any failure to comply with
the provisions of any Bulk Sales Law or any tax laws or provisions or any
failure of the Seller timely to discharge any such claims relating thereto.
(c) Consents to Assignment. To the extent that any of
the Customer Contracts, Vendor Contracts, Licenses or Leases are not assignable
without the consent of, or transfer of the Acquired Assets cannot be effected as
contemplated by this Agreement without the approval of, a third party and such
consent or approval is not obtained, neither this Agreement nor any related
document shall constitute an assignment or transfer, or an attempted assignment
or transfer thereof, if such assignment, transfer, or attempted assignment or
transfer would constitute a breach thereof. From and after the execution hereof,
the Seller agrees to use all reasonable efforts to obtain the consent or
approval of the other party to each Customer Contract, Vendor Contract and Lease
and the issuer of each License to the assignment thereof or the transfer of the
Acquired Assets to the Buyer. If such consent or approval is not obtained, each
of the parties agrees to cooperate with the other in any reasonable alternative
arrangement to provide the Buyer the benefits of the Customer Contracts, Vendor
Contracts, Leases and Licenses and all of the Acquired Assets.
(d) Employee Matters. The Seller agrees that the
Buyer may, but need not, make offers to any of the employees of the Seller
engaged in the Business for employment, at will, by the Buyer within 10 days
following the Closing; provided, offers to employees that would be seconded to
the Buyer may be made by the Buyer within 12 months following the Closing. The
Seller shall bear all resulting liabilities, if any, caused by or arising from
any termination of its employees (other than termination after the Closing of
employees of the Buyer), including, but not limited to, severance pay, accrued
wages or vacation pay, sick leave, unemployment compensation, claims for back
pay and/or reinstatement, claims for contributions or benefits under the
provisions of any employee benefit plan, claims asserting the right to
participate in any medical insurance program under COBRA or comparable state
law, any funding or withdrawal liability relating to any employee benefit plan,
and any and all claims arising out of employment on or prior to the Closing
Date. The Seller agrees that it will not notify, promise, represent, advise, or
otherwise communicate to any employee that the Buyer will be hiring any or all
such employees or otherwise make any offer of employment on behalf of the Buyer.
The parties acknowledge and agree that, immediately following the Closing, the
Buyer may, but is not obligated to, hire as at-will employees any or all of the
employees currently employed by the Seller in connection with the Business,
except that the Buyer agrees to employ ▇▇▇▇▇ ▇▇▇▇▇▇ on terms and with benefits
generally no less favorable than the terms and benefits currently provided to
him by the Seller, as described on Schedule 12(d).
(e) Non Competition. Seller shall not, until the
third anniversary of the Closing Date (or sooner, if the Buyer is no longer
engaged in the Business), directly or indirectly through any corporation,
partnership or other legal entity in the capacity of a partner, holder of more
than a 5% ownership interest thereof or otherwise, participate or engage in the
Business or otherwise lend assistance (financial or otherwise) to any person or
entity participating or engaged in the Business except at the direction of and
with the consent of the Buyer.
(f) Confidentiality. Subject to Section 12(g) hereof
with respect to information concerning the terms of this Agreement, from and
after the Closing the Seller, with respect to information relating to the
Acquired Assets, the Products and the Business, and the Buyer and the Parent,
with respect to any other information disclosed by the Seller to the Buyer which
is confidential and proprietary to the Seller, shall keep confidential all such
information and shall not use any such information or disclose any such
information to any third parties (other than (i) to professional advisors who
have agreed to maintain such information in confidence, (ii) as shall be
required in testimony pursuant to a subpoena issued by a court of competent
jurisdiction, after first having given sufficient written notice thereof to the
other party or parties, as the case may be, so that the other party or parties
have an opportunity to contest same, (iii) as shall be required by the rules and
regulations of the Securities and Exchange Commission, or (iv) as shall be
required for the completion of tax returns). The Seller has notified the Buyer
that customers identified in Schedule 1(d) have certain rights to source codes
relating to the Business pursuant to agreements with respect thereto identified
in Schedule 1(d). Information generally known to the public and to the industry,
other than as a result of a breach of this Section 12(f) by the party charged
with disclosure in violation of this Section 12(f), shall not be deemed
confidential and is not subject to the terms and conditions of this Section
12(f). If a breach of such obligation occurs or is threatened, in addition to
any other rights and remedies provided in this Agreement or in law or at equity
(each of which shall be independent and severally enforceable), the aggrieved
party shall have the right and remedy to have this Section 12(f) specifically
enforced by any court having jurisdiction, it being agreed that such breach or
threatened breach will cause irreparable injury to such aggrieved party and that
money damages alone will not provide an adequate remedy. The prevailing party
shall be entitled to recover from the losing party reasonable attorneys' fees
and expenses and other costs of any such legal action.
(g) Release of Information. The parties hereto agree
to cooperate in releasing information concerning this Agreement and the
transactions contemplated herein. Until after the Closing, each of the parties
hereto shall furnish to the other party drafts of all releases prior to
publication thereof, all filings to be made with governmental authorities prior
to the filing thereof, and all notices to customers and vendors of the Business
prior to the distribution thereof, to the extent such releases, filings or
notices relate to this Agreement or the transactions contemplated hereby.
Nothing contained herein shall prevent any party at any time from (i) furnishing
any information to any governmental agency or (ii) disclosing any information if
required by law.
(h) Finders. With respect to all Losses, if any,
arising from the employment or other engagement by either party hereto of, or
from services rendered to such party by, any finder, broker, agent or other
intermediary in connection with the introduction or bringing together of the
parties hereto, or the negotiation or consummation of this Agreement or any
related agreement referred to herein (or any allegation having a reasonable
basis as to any such employment or other engagement or services), such party
shall indemnify, defend and hold the other party and the affiliates, successors
and assigns of such other party harmless against such Losses.
(i) Access to Customers, Suppliers and Employees. At
the election of the Buyer from time to time prior to or within 2 days subsequent
to the Closing Date, the Seller shall provide reasonable access and
introductions to the customers of, suppliers to and employees of the Business.
(j) Access. (i) After the Closing, the Buyer and its
authorized agents, attorneys and accountants, shall have access upon reasonable
notice to any business records of the Seller to the extent reasonably required
by the Buyer in connection with any administrative, court or other governmental
proceedings (including tax audits) or for any other reasonable and proper
purpose. (ii) After the Closing, the Seller and its authorized agents, attorneys
and accountants, shall have access upon reasonable notice to any business
records of the Buyer to the extent reasonably required by the Seller in
connection with any administrative, court or other governmental proceedings
(including tax audits) or for any other reasonable and proper purpose. (iii)
After the Closing, the Buyer and its employees, agents and accountants, shall
have access upon reasonable notice to any business records of the Buyer which
have not yet been delivered by the Seller to the Buyer. (iv) For one year after
the Closing, the Seller shall make reasonably accessible to the Buyer, its
employees who may have information concerning the Business, to be responsive to
questions the Buyer may have as to the Business, its customers, and the
Software.
(k) Survival. Each representation, warranty,
indemnity, covenant and agreement made by the Seller or the Buyer in this
Agreement shall survive the Closing through but not beyond the first anniversary
of the Closing Date except each representation, warranty, indemnity, covenant
and agreement contained in Sections 6(a) (but, notwithstanding the disclosure on
Schedule 6(a), limited solely to the representation relating to the disclosure
on such Schedule 6(a)), 6(f), 6(q), 12(a), 12(e) and 11 (only to the extent
related to representations, warranties, covenants and agreements contained in
Sections 6(a) (but, notwithstanding the disclosure on Schedule 6(a), limited
solely to the representation relating to the disclosure on such Schedule 6(a)),
6(f), 6(q), 12(a) and 12(e) of this Agreement) shall survive until the third
anniversary of the Closing Date, and any claims relating to a breach of such
designated representations, warranties, covenants or agreements or claims to
recover under such indemnities shall not be subject to any defense based upon
non-survival of such representations, warranties, indemnities, covenants and
agreements. Notwithstanding the foregoing provisions of this Section 12(k), the
representations, warranties, indemnities, covenants and agreements set forth in
the Secondment Agreement by and between the Seller and the Buyer and the
documents delivered pursuant to Sections 5(a), 5(b)(viii), 5(c)(viii) and 5(d)
of this Agreement, shall be governed by the terms thereof.
(l) Additional Payments. The Buyer will make
additional payments to the Seller for rental of space from the Seller after the
Closing, secondment of employees and services rendered by the Seller to the
Buyer after the Closing (including without limitation, the provision of services
by the Seller through the Seller's employees and expenses borne by the Seller
for providing services and equipment) in such amounts and upon such terms and
conditions as the Buyer and the Seller shall agree. The Buyer will make
additional payments to the Seller for reimbursement of equipment, lease, trade
show, utility and other deposits or prepayments made by the Seller prior to the
Closing and uninvoiced services rendered by the Seller to customers on a
dollar-for-dollar basis.
(m) Certain Services. The Seller is a party to an
agreement with EDS for the provision of MIS and related services to the Seller,
including the Business (the "EDS Agreement") and is a party to an agreement with
HCL America, Inc. ("HCL") dated May 21, 1997 for the provision of consulting
services in hardware and software development to the Seller, including the
Business (the "HCL Agreement"). The EDS Agreement and the HCL Agreement will not
be transferred to the Buyer. The Seller and the Buyer shall cooperate in
introducing the Buyer to EDS and HCL and each shall use reasonable commercial
efforts in negotiating agreements as soon as possible after the Closing between
the Buyer and each of EDS and HCL for similar services to those provided the
Seller under the respective agreements with the Seller. During the transition
period, the Seller shall arrange for MIS services to be provided to the Buyer
for the Business under the EDS Agreement and for consulting services for
hardware and software development to be provided to the Buyer for the Business
under the HCL Agreement. The Seller and the Buyer agree that all intellectual
property developed on behalf of the Buyer for the Business under the HCL
Agreement during the transition period shall be owned by the Buyer.
(n) Employee Confidentiality and Non-Competition
Matters. The parties acknowledge that the Seller has rights in and to
confidentiality and or non-competition agreements or arrangements (which may be
in writing or exist by operation of law) between the Seller and its employees
and consultants (the "Rights"). In order for the Buyer to benefit from the
Rights, the Seller agrees that, upon the request of the Buyer, on an as-needed
basis and in order to protect the Business, the Products or the Acquired Assets,
the Seller will either (i) grant to the Buyer third-party beneficiary rights to
the Rights, or (ii) bring an action to enforce the Rights on behalf of, for the
benefit of or as agent for the Buyer at the Buyer's cost and expense.
(o) Deliveries. When delivered pursuant to Section 5
(i) Appendix I will contain true and complete copies (or, to the extent oral,
descriptions) of all contracts, purchase orders, commitments and arrangements in
respect of services, leased machinery or equipment and owned or leased real
property used in or necessary for the conduct of the Business, (ii) Appendix II
will contain true and complete copies (or, to the extent oral, descriptions) of
all contracts, purchase orders, commitments and arrangements with third-parties
for supplies, requirements or services relating to the Business or the Products,
(iii) Appendix III will contain true and complete copies of all Licenses
material to the Business, and (iv) all Schedules will contain true and complete
information.
(p) Permits. Within 10 days following the Closing,
the Seller will provide to the Buyer and the Parent copies of all material
Permits.
13. Termination.
(a) Termination Generally. This Agreement may be
terminated at any time prior to the Closing by any one of the following methods:
(i) Mutual Consent. By the Buyer and the Seller
mutually agreeing in writing to terminate this Agreement; or
(ii) By the Buyer. By the Buyer in writing if any
of the conditions provided in Section 9 hereof has not been
fulfilled, and has not been waived by the Buyer in writing, on
or before March 15, 1998; or if any of the following has
occurred: appointment of a receiver or liquidator for the
Seller or any of its properties or the filing of any petition
by or against the Seller seeking adjudication of the Seller as
a bankrupt or insolvent or the making of any assignment for
the benefit of creditors of the Seller or admission by the
Seller in writing of its inability to pay its debts as they
mature or the institution of any proceeding for the purpose of
effecting an arrangement or composition with creditors or any
reorganization of the Seller under any federal or state law
relating to bankruptcy or the relief of debtors; or
(iii) By the Seller. By the Seller in writing if
any of the conditions provided in Section 10 hereof has not
been fulfilled, and has not been waived by the Seller in
writing, on or before March 15, 1998; or if any of the
following has occurred: appointment of a receiver or
liquidator for the Buyer or for the Parent or any of their
respective properties or the filing of any petition by or
against the Buyer or the Parent seeking adjudication of it as
a bankrupt or insolvent or the making of any assignment for
the benefit of its creditors or admission by the Buyer or the
Parent in writing of its inability to pay its debts as they
mature or the institution of any proceeding for the purpose of
effecting an arrangement or composition with creditors or any
reorganization of the Buyer or the Parent under any federal or
state law relating to bankruptcy or the relief of debtors.
In the event this Agreement is terminated in accordance with this Section 13(a)
or in accordance with Section 13(b), no party to this Agreement shall have any
obligation or liability of any nature whatsoever (including without limitation
any right to specific performance) to any other party hereto except as
specifically set forth in this Agreement and in the Mutual Nondisclosure and
Confidentiality Agreement between the Seller and the Parent dated January 22,
1998.
(b) Effect of Termination. In the event that any
termination of this Agreement pursuant to this Section 13 is due to (i) the
intentional non-fulfillment of any covenant or agreement by any party hereto or
(ii) the misrepresentation or breach of warranty on the part of any party hereto
and such party had actual knowledge of such misrepresentation or breach of
warranty or had actual knowledge of facts creating a substantial risk of such
misrepresentation or breach, the party in breach or default shall be liable to
the other parties to the extent of the expenses (including without limitation
reasonable legal, accounting and consulting fees and expenses) incurred by such
other parties in connection with this Agreement and for damages. The Buyer, the
Seller and the Parent agree that the obligations set forth in this Section 13(b)
are intended to survive any termination of this Agreement.
14. Notices. All notices or other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given (i) when personally delivered, (ii) when
delivered via telecopier (and immediately confirmed by mail), or (iii) three
business days after having been mailed by first class registered or certified
mail, return receipt requested, postage prepaid, to the party to receive notice
at the address set forth below or to such other or additional address as either
party shall have specified by notice to the other party in accordance with this
Section 14.
If to the Seller, at:
Consilium, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy concurrently to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer, at:
Base Ten FlowStream, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy concurrently to:
Pitney, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Post Office Box 1945
Morristown, New Jersey 07962-1945
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Parent, at:
Base Ten Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy concurrently to:
Pitney, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Post Office Box 1945
Morristown, New Jersey 07962-1945
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
15. Miscellaneous.
(a) Entire Agreement. This Agreement and the
Schedules, Exhibits and Appendices hereto constitutes the entire agreement and
sets forth the entire understanding of the parties with respect to the subject
matter hereof, supersedes all prior agreements, covenants, arrangements,
letters, communications, representations or warranties, whether oral or written,
by any officer, employee or representative of any party (except that certain
Mutual Nondisclosure and Confidentiality Agreement dated January 22, 1998
between the Seller and the Parent), and may not be modified, amended or
terminated except by mutual consent of the Buyer, the Seller and the Parent by a
written agreement specifically referring to this Agreement and signed by the
Buyer, the Seller and the Parent.
(b) No Waiver; Remedies. No waiver of any breach or
default hereunder shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or similar nature. No failure on the
part of any party to exercise, and no delay in exercising, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege, and no waiver whatever shall be valid unless
in writing signed by the party or parties to be charged and then only to the
extent specifically set forth in such writing. All remedies, rights, powers and
privileges afforded the parties to this Agreement shall be cumulative and shall
not be exclusive of any remedies, rights, powers and privileges provided by law.
Each party hereto may exercise all such remedies afforded to it in any order of
priority.
(c) Specific Performance. The parties hereto
acknowledge that prior to the Closing (and following the Closing solely with
respect to a breach of Section 12(c) hereof) the legal remedy for breach by any
of them of their respective obligations hereunder will be inadequate and,
therefore, in the event of any actual or threatened breach of any such
obligation prior to the Closing (and provided this Agreement has not been
terminated in accordance with Section 13 hereof), the Buyer, the Seller and the
Parent agree that, in addition to any other available remedy, such obligation
may be specifically enforced against any of them through injunctive or other
equitable relief obtained from a court with appropriate jurisdiction. The
prevailing party shall be entitled to recover from the losing party actual,
reasonable, and documented out-of-pocket attorneys' fees and expenses and other
costs of any such legal action.
(d) Assignment; Benefits. This Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the parties hereto; provided that no party may transfer or assign its rights
or delegate its performance hereunder without the prior written consent of the
other parties. This Agreement shall be for the sole benefit of the Seller, the
Buyer and the Parent and their respective successors and assigns, and shall not
be construed to provide any benefits to any third parties.
(e) Headings; References. The Index of Schedules,
Exhibits and Appendices and the Section and paragraph headings contained herein
are for the purposes of convenience only and are not intended to define or limit
the contents of any Schedule, Exhibit, Appendix, Section or paragraph. Unless
otherwise expressly stated herein, (i) references to Exhibits, Schedules,
Appendices, Sections and clauses shall refer to Exhibits, Schedules, Appendices,
Sections and clauses of this Agreement; (ii) words of any gender include each
other gender; (iii) words using the singular or plural number also include the
plural or singular number, respectively; (iv) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (v) the
phrase "ordinary course of business" refers to the Business; (vi) whenever this
Agreement refers to a number of days, such number shall refer to calendar days
unless Business Days are specified; (vii) all accounting terms used herein and
not expressly defined herein shall have the meanings given to them under GAAP;
(viii) any representation or warranty contained herein as to the enforceability
of a contract, agreement or understanding shall be subject to the effect and
limitations of any bankruptcy, insolvency, reorganization, moratorium or other
similar law affecting the enforcement of creditors' rights generally and to
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law); (ix) whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation"; (x) the phrase "made
available" in this Agreement shall mean that the information referred to has
been made available to the party to whom such information is to be made
available; (xi) the phrases "the date of this Agreement", "the date hereof," and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to February 19, 1998, and (xii) the phrases "material adverse effect on
the Assets," "material adverse change in the Assets", "material to the assets"
and phrases of similar import shall be construed to refer to the Assets taken as
a whole and not to any single Asset individually.
(f) Cooperation. Each party hereto shall cooperate
and shall take such further action and shall execute and deliver such further
documents as may reasonably be requested by the other parties in order to carry
out the provisions and purposes of this Agreement.
(g) Transaction Expenses. Whether or not the
transactions contemplated hereby are consummated, all legal and other costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
(h) Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
(i) Severability. Should any provision of this
Agreement for any reason be declared invalid or unenforceable, such invalidity
or unenforceability shall not affect the validity or enforceability of any of
the other provisions of this Agreement, which other provisions shall remain in
full force and effect; and the application of any such invalid or unenforceable
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable shall be valid and be enforced to the fullest extent
permitted by law.
(j) Governing Law; Jurisdiction. This Agreement and
all amendments hereto shall be governed by and construed in accordance with the
internal laws of the State of New Jersey or the State of California applicable
to contracts made and to be performed therein. Each party submits to the
jurisdiction of any state court sitting in New Jersey or California or any
federal court for the District of New Jersey or for the Northern District of
California in any action or proceeding arising out of or relating to this
Agreement and brought in such court, and agrees that all claims in respect of
such action or proceeding may be heard and determined in any such court.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
SELLER
CONSILIUM, INC.
By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
BUYER:
BASE TEN FLOWSTREAM, INC.
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
PARENT
BASE TEN SYSTEMS, INC.
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer