1
EXHIBIT 10.36
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), is dated and effective as
of August 2, 2000, ("Effective Date") is entered into by and between Pick
Systems, a California corporation having its principal place of business at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Buyer"), and General Automation,
Inc., a Delaware corporation having its principal place of business at ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Seller").
WHEREAS, Seller is a computer software and database developer that owns
certain Pick Systems related ("PR") database management products, related
customer accounts, related service agreements and other PR assets;
WHEREAS, Buyer is also a computer software and database developer,
manufacturer, distributor and seller;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller its PR database management products, PR customer accounts and PR
service agreements, and other PR assets, as more fully described herein;
WHEREAS, the parties hereto desire to set forth herein their agreements and
understandings with respect to the subject matter hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
and covenants hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller hereby agree as follows:
SECTION 1
PURCHASE AND SALE OF ASSETS
(a) Acquired Assets. On and subject to the terms and conditions of this
Agreement, Buyer hereby purchases from Seller, and Seller hereby sells,
transfers, conveys and delivers to Buyer, all right, title and interest of
Seller free and clear of any liens, mortgages or encumbrances in and to each of
the following assets (collectively, the "Acquired Assets"):
(i) All of the customer accounts pertaining to Seller's line of PR Database
Management Products, as defined below, including without limitation the
customer accounts previously acquired by Seller from Sequoia, ADDS, C.ITOH
and Sanyo/Icon, as more fully described on Schedule 1(a)(i) attached hereto
(the "PR Database Product Customers").
(ii) All Seller's source code to the following products (collectively, the
"PR Database Management Products"): R83, R91, Mentor Operating Environment
(MOE), ▇▇▇▇▇▇
▇
▇
▇▇/▇▇, ▇▇▇▇▇▇ PRO, mvBase, mvEnterprise, mvPRO, Sequoia PICK, Sequoia PRO,
PICK O/A, CIE PICK and PICK64+, as more fully described on Schedule
1(a)(ii) attached hereto, together with all Intellectual Property (see
Section 1(a)(viii) below) pertaining thereto.
(iii) Copies of all documents, books and records pertaining to Seller's PR
Database Management Products, as described on Schedule (1)(a)(iii) attached
hereto.
(iv) Copies of all customer lists, customer sales files and supplier lists
pertaining to Seller's PR Database Management Products, as described on
Schedule (1)(a)(iv) attached hereto.
(v) All rights to all license agreements, customer contracts, purchase
orders and other agreements pertaining to Seller's PR Database Management
Products described in Section (a) of Schedule 1(a)(v), attached hereto and
all Pick Licenses (collectively the "Assumed Agreements").
(vi) All goodwill pertaining to Seller's PR Database Management Products.
(vii) All accounts receivable of Seller derived from service contracts
pertaining to Seller's PR Database Management Products, as described on
Schedule 1(a)(vii) attached hereto (the "Assigned Accounts Receivable").
(viii) All Intellectual Property relating to the PR Database Management
Products, including, without limitation, the items of Intellectual Property
identified on Schedule 1(a)(ii), and all remedies against infringement
thereof and rights to protection of interests therein under the laws of all
jurisdictions, as more fully described on Schedule 1(a)(viii) attached
hereto (the "PR Intellectual Property").
(ix) All marketing, advertising and promotional materials pertaining to
Seller's PR Database Management Products, as described on Schedule 1(a)(ix)
attached hereto.
(x) The product names, trademarks and service marks pertaining to each of
the PR Database Management Products as listed on Schedule 1(a)(x) attached
hereto and all registrations and applications pertaining thereto (the
"Assigned Marks"), together with all goodwill associated therewith, and all
remedies against infringement thereof and rights to protection therein
under the laws of all jurisdictions.
(b) Excluded Assets. The Acquired Assets include only those assets and
properties described or referred to in Section 1(a). Buyer acknowledges that
certain data delivered to Buyer contains third party software, as identified in
Schedule 1(b). Seller is not transferring any rights to Buyer regarding this
third party software, and Buyer shall not duplicate, distribute or use this
third party software in any way whatsoever. Seller is not selling or assigning
any other assets or properties, which assets and properties shall remain the
property of Seller (collectively, the "Excluded Assets").
2
3
(c) Excluded Liabilities.
(i) Notwithstanding anything to the contrary contained in this Agreement,
except as stated in Section 1(c)(ii) below, Buyer is not hereby assuming,
and shall not assume or be liable for, any liabilities or obligations
(whether known or unknown, whether asserted or unasserted, whether absolute
or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due) of Seller (collectively,
the "Excluded Liabilities"). Seller hereby acknowledges that it is
retaining the Excluded Liabilities and Seller agrees that it shall pay,
discharge and perform all such liabilities and obligations promptly when
due.
(ii) Buyer hereby assumes, and agrees to perform, pay and/or discharge when
due each of the following (the "Assumed Obligations"): (A) all of the
liabilities, covenants and obligations of Seller under the Assumed
Agreements which first accrue from and after the Effective Date; and (B)
all of the liabilities, covenants and obligations of Seller pertaining to
the PR Database Management Products and/or the support and maintenance
thereof under each of the contracts and agreements listed in Section (b) of
Schedule 1(a)(v) attached hereto (the "Shared Agreements") which first
accrue from and after the Effective Date; and; the support and maintenance
of Power 95; and (D) all of the liabilities, covenants and obligations of
Seller pertaining to all Warranties related to the Acquired Assets or Power
95.
(d) [Reserved]
(e) Purchase Price. The purchase price (the "Purchase Price") for the Acquired
Assets shall consist of and be paid as follows:
(i) Two Million Five Hundred Thousand Dollars and no cents ($2,500,000.00),
which shall be paid by Buyer to Seller or Seller's assignee, Comerica Bank
on the Closing Date; and
(ii) Five Hundred Thousand Dollars and no cents ($500,000.00), which shall
be paid by Buyer to Seller or its assignee, Comerica Bank, in accordance
with a Secured Promissory Note, attached hereto as Exhibit A; and
(iii) An amount equal to twenty percent (20%) of Gross Revenue generated
during the twenty four calendar month period commencing on August 1, 2000,
which shall be paid by Buyer to Seller as provided in Section 1(f) below.
(f) Payments Based on Gross Revenue. The payments required to be made by Buyer
to Seller pursuant to Section 1(e)(iii) above shall be made quarterly based on
Gross Revenue generated during each such quarter, and each such payment shall be
paid by Buyer to Seller on or before the thirtieth day following the end of the
quarter to which the payment relates. Each such payment shall be accompanied by
a written report which sets forth in reasonable detail a description of the
Gross Revenue on which the payment is based, including the identity of each
3
4
PR Database Product Customer from whom the Gross Revenue has been generated, the
amount generated from each such PR Database Product Customer, and a breakdown of
the same reflecting the nature thereof (e.g. license fees, service fees, etc.).
(g) Taxes. Seller shall be responsible for any documentary transfer taxes and
any sales or use taxes imposed by reason of the transactions contemplated by
this Agreement and any deficiency, interest or penalty asserted with respect
thereto. Upon request, Buyer will cooperate with Seller to provide any
information to assist Seller in qualifying for a resale exemption or other
similar exemption from applicable sales tax laws.
(h) Books of Account. Seller shall have the right to examine the books and
records of Buyer and its Affiliates, solely as they relate to the determination
of Gross Revenue, by an independent certified public accountant reasonably
acceptable to Buyer upon not less than ten (10) days prior written notice to
Buyer. Such examination shall be made not more frequently than once during any
calendar year, shall be made during normal office hours at the location where
such books and records are maintained, and shall be conducted at the sole
expense of Seller; provided, however, that if such examination reveals that the
payment due under Section 1(e)(iii) of this Agreement with respect to any
quarter exceeded the payment actually paid by Buyer with respect to that quarter
by more than ten percent (10%), then Buyer shall reimburse Seller's reasonable
out-of-pocket expenses incurred in conducting the examination.
SECTION 2
CONCURRENT DELIVERIES
(a) Seller Deliveries. Concurrently herewith, Seller shall deliver, or cause to
be delivered, to Buyer the following (it being understood that in the event that
any of the items described in clause (iv) below are not delivered concurrently
herewith, Seller shall use its reasonable best efforts to deliver the same to
Buyer within 30 days after the date hereof).
(i) A ▇▇▇▇ of Sale and assignment substantially in the form of Exhibit B
attached hereto (the "▇▇▇▇ of Sale");
(ii) Assignment of trademarks and copyrights included in the Acquired
Assets substantially in the form of Exhibit C attached hereto ("Trademark
Assignment"), and any other documents or instruments, in form and substance
reasonably acceptable to Buyer, necessary to effect the transfer of the PR
Intellectual Property and the Assigned Marks to Buyer;
(iii) Releases of liens affecting any of the Acquired Assets, including,
without limitation any applicable UCC forms, if necessary, attached hereto
as Schedule 2(a)(iii);
(iv) All third party consents required in connection with consummation of
the transactions contemplated by this Agreement, including, without
limitation, consents to assignment of the Assumed Agreements;
(v) An opinion of Seller's legal counsel with respect to the matters set
forth on Exhibit D attached hereto, subject to customary qualifications and
limitations;
4
5
(vi) Resolutions from Seller's Board of Directors authorizing the
transactions contemplated herein, attached hereto as Schedule 2(a); and
(vii) Approval, if required by law, regulation or agreement, of the
transactions contemplated herein by Seller's shareholders and by regulatory
authorities, as documented on Schedule 2(a)(viii), attached hereto.
(b) Buyer's Deliveries. Concurrently herewith, Buyer shall deliver to Seller the
following:
(i) That portion of the Purchase Price due and payable pursuant to Section
1(e)(i) hereof;
(ii) Resolutions from Buyer's Board of Directors authorizing the
transactions contemplated herein, attached hereto as Schedule 2(b)(ii);
(iii) The Promissory Note and accompanying Security Agreement referred to
in Section 1(e)(ii);
(iv) An opinion of Buyer's legal counsel with respect to the matters set
forth on Exhibit E attached, subject to customary qualifications and
limitations; and
(c) Third Party Consents. The parties acknowledge that the assignment of certain
of the Assumed Agreements and certain of the Shared Agreements may require the
consent of the other parties thereto and that Seller has made a good faith
effort to disclose to Buyer the identity of these other parties. The parties
agree that the good faith failure to obtain the consent of any such third party
will not be deemed a breach of any representation, warranty, covenant or
obligation of Seller under this Agreement, and also agree that, notwithstanding
the lack of any required consent, the assignment of the Assumed Agreements, and
the obligations with respect to the Shared Agreements undertaken by Buyer under
this Agreement, shall be effective on the Effective Date as between Buyer and
Seller.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows (it being understood
that each representation and warranty is qualified to the extent of any
disclosure set forth in the disclosure schedule attached hereto which has been
prepared by Seller ("Seller's Disclosure Schedule"):
(a) Organization: Good Standing and Authority. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
Seller is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its activities or the
character of the properties owned, leased or operated by it requires such
qualification, except where the failure to so qualify would not reasonably be
expected to have a material adverse effect on the Acquired Assets, or the assets
or properties, liabilities, condition
5
6
(financial or otherwise) or results of operations of Seller ("Material Adverse
Effect"). Seller has the corporate power and authority to execute and deliver
each of the Transaction Documents and to perform its obligations hereunder or
thereunder. The Transaction Documents to which Seller is a party constitutes the
valid and legally binding obligation of Seller, enforceable in accordance with
the terms and conditions hereof and thereof.
(b) No Conflicts: No Consents. The execution, delivery and performance of the
Transaction Documents by Seller do not and will not violate, conflict with or
result in a breach of any term, condition or provision of, or require the
consent of any other Person under: (i) any law, ordinance, rule or regulation to
which Seller or any of its assets or properties is subject; (ii) any judgment,
order, writ, injunction decree or award of any Governmental Authority which is
applicable to Seller or any of its assets or properties; (iii) the Certificate
of Incorporation, Bylaws or other governing documents of Seller; or (iv) any
license, agreement, commitment or other instrument or document to which Seller
is a party or by which Seller or any of its assets or properties is otherwise
bound, except for violations, conflicts or breaches which would not reasonably
be expected to have a Material Adverse Effect. No authorization, approval or
consent of, and no registration or filing with, any Person is required in
connection with the execution, delivery or performance of any of the Transaction
Documents by Seller.
(c) Legal Compliance. Seller has complied, and is in compliance with, all
applicable laws, rules and regulations of federal, state, local and foreign
Governmental Authorities, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against Seller alleging any failure to so comply.
(d) Condition and Location of Tangible Assets. The tangible assets included in
the Acquired Assets: (A) are in good clean, useable, saleable, operating and
merchantable condition and repair, as applicable; (B) are useable in the
ordinary course of business; (C) conform to all applicable laws relating to
their construction, inspection, maintenance, use or operation; and (D) there has
been no material damage or destruction to these tangible assets;
(e) Title to and Condition of Acquired Assets. Seller has good and marketable
title to each asset included in the Acquired Assets, free and clear of any
Liens. Seller has not consigned any of the Acquired Assets to any Person. There
has been no material damage or destruction to the Acquired Assets of the Seller.
(f) Intellectual Property.
(i) Schedule 1 (a)(ii), Schedule 1(a)(viii) and Schedule 1(a)(x) identify:
(A) each item of Intellectual Property owned or used by Seller in
connection with the PR Database Management Products and any Acquired
Assets; (B) each pending patent, trademark, trade name, service ▇▇▇▇,
service name or copyright application or application for registration which
Seller or any of its Affiliates has made with respect to any Intellectual
Property relating to the PR Database Management Products and any Acquired
Assets; (C) each trademark trade name service ▇▇▇▇, service name or
copyright relating to the PR Database Management Products and any Acquired
Assets to which Seller or any of its
6
7
Affiliates has or claims common law ownership; and (D) each item of
Intellectual Property that any Person owns and that Seller or any of its
Affiliates uses in connection with the PR Database Management Products and
any Acquired Assets pursuant to license, sublicense, agreement or
permission.
(ii) Seller (or any relevant Affiliate of Seller) is, and upon consummation
of the transactions contemplated hereby, Buyer will be vested with, good,
sole and marketable right, title and interest in and to the PR Intellectual
Property (including, without limitation, the exclusive right to, or to
permit or cause others to, see, display, distribute, reproduce, create,
develop, sell, license and otherwise exploit the Intellectual Property and
all derivative works thereof). To the best of Seller's knowledge, Seller
has not, with respect to the PR Database Management Products and the
Acquired Assets, interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property rights of any
Person. Neither Seller nor any of its Affiliates has ever received any
charge, complaint, claim, demand or notice alleging any interference,
infringement, misappropriation or violation referred to in the preceding
sentence. To the best of Seller's knowledge, no Person has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
of the Intellectual Property listed on Schedule 1(a)(ii) and Schedule
1(a)(viii).
(g) Assumed Agreements.
(i) Seller has identified and provided copies of all Assumed Agreements to
Buyer. Except for the Assumed Agreements and the Shared Agreements, no
other contract, agreement or understanding, whether written or oral, exists
which relates to the PR Database Management Products and the Acquired
Assets.
(ii) Neither Seller nor, to the best of Seller's knowledge, any other party
is in default under any Assumed Agreement, except for defaults which could
not reasonably be expected to result in a Material Adverse Effect, and, to
the best of Sellers' knowledge, no event has occurred or is reasonably
likely to occur which (after notice or lapse of time or both) would
constitute a breach or default under, or otherwise permit modification,
cancellation, acceleration or termination of, any Assumed Agreement, except
for breaches, defaults, modifications, cancellations, accelerations or
terminations which could not reasonably be expected to result in a Material
Adverse Effect, or would result in the creation of or right to obtain any
Lien upon, or any Person obtaining any right to acquire, any assets or
rights of Seller or the PR Database Management Products. The execution,
delivery and performance of this Agreement by Seller will not permit
modification, cancellation, acceleration or termination of, any Assumed
Agreement and will not result in the creation of or right to obtain any
Lien upon, or any Person (other than Buyer) obtaining any right to acquire,
any assets or rights of Seller or the PR Database Management Products. Each
Assumed Agreement is in full force and effect and is valid and legally
binding against Seller and, to the best of Seller's knowledge, the other
parties thereto. There are no material unresolved disputes with respect to
any Assumed Agreement. Seller has not been informed that any party to an
Assumed
7
8
Agreement intends to modify, cancel or terminate an Assumed Agreement or to
refuse to renew an Assumed Agreement upon the expiration of the term
thereof, whether as a result of the consummation of the transactions
contemplated hereby or otherwise.
(h) Litigation. Except as set forth on Schedule 3(h), attached hereto, Seller is
not: (i) subject to any outstanding injunction, judgment, order, decree, ruling
or charge of any judicial or administrative body or agency, or Governmental
Authority; or (ii) a party or, to the best of Seller's knowledge, is threatened
to be made a party to, any action, suit, proceeding, hearing or investigation
of, in, or before any court, arbitrator or other body or administrative agency
of any federal, state, local, or foreign Governmental Authority.
(i) Taxes.
(i) Seller (and any predecessor thereto) has filed all income, sales, use,
payroll, import, export, property, withholding, franchise and other tax
returns which are required to be filed by it prior to the date hereof, and
each such tax return is true, complete and accurate in all respects.
(ii) Seller (and any predecessor thereto) has paid all income, sales, use,
payroll, import, export, property, withholding, franchise and other taxes
due and owing by it (whether or not shown on any tax return) with respect
to which successor, transferee or any other liability for any taxes could
apply to or be payable by Buyer as a result of the transactions
contemplated by the Transaction Documents.
(iii) No deficiency for any amount of income, sales, use, payroll, import,
export, property, withholding, franchise and other tax has been asserted or
assessed by a taxing authority against Seller with respect to the
operations of Seller (or any predecessor thereto) and Seller has no
knowledge that any such assessment or asserted tax liability shall be made.
Seller has not consented to extend the time in which any tax may be
assessed or collected by any taxing authority.
(j) Solvency. No order has been made, petition presented or resolution passed
for the winding up or contemplated winding up (or other process whereby the
business is terminated and the assets of the company concerned are distributed
among its creditors and/or shareholders) of Seller. There are no cases or
proceedings pending under any applicable insolvency, reorganization or similar
law in any jurisdiction concerning Seller, and no circumstances exist which,
under applicable laws, would justify any such cases or proceedings. No receiver
or trustee has been appointed with respect to all or any portion of Seller's
business or assets. Seller is able to pay its debts and obligations in the
ordinary course as they mature, and Seller owns property, tangible and
intangible, which, at a fair valuation, is greater than the sum of its
respective liabilities (including contingent liabilities) whether or not
reflected on a balance sheet prepared in accordance with GAAP. Seller has not
stopped paying its debts as they fall due. No lien, restraint, execution or
other process has been levied on any asset of Seller. Seller has capital
sufficient to carry on its business and all businesses in which it is about to
engage.
8
9
(k) Brokers' Fees. Seller does not have any liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by the Transaction Documents for which Buyer could
become liable or obligated.
(l) Seller's Past Revenue. Seller represents to Buyer that Seller's annual
revenue for the past three (3) fiscal years derived from Seller's line of PR
Database Management Products and related service agreements has been at least
eight million dollars ($8,000,000) per year, as reflected on the financial
statements previously provided to Buyer. Seller acknowledges that Buyer has
relied on this representation in formulating the total Purchase Price of the
acquisition.
(m) Warranties. Schedule 3(m) attached hereto sets forth all Warranties given or
made by the Seller during the five (5) years prior to the Effective Date. None
of the customers of Seller has claimed to Seller that the PR Database Management
Products are defective. To the best knowledge of Seller, no PR Database
Management Products have been shipped by Seller in a condition that such
products might reasonably be expected to be returned by the customer, except
returns by customers in the ordinary course of business and consistent with
Seller's Warranties in amounts which are not materially in excess of Seller's
historical experience.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows (it being understood
that each representation and warranty is qualified to the extent of any
disclosure set forth in the disclosure schedule attached hereto which has been
prepared by Buyer ("Buyer's Disclosure Schedule"):
(a) Organization: Good Standing and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. Buyer has the corporate power and authority to execute and deliver
each of the Transaction Documents to which Buyer is a party. Each of the
Transaction Documents to which Buyer is a party constitutes the valid and
legally binding obligation of Buyer enforceable in accordance with their
respective terms and conditions.
(b) No Conflicts: No Consents. The execution, delivery and performance by Buyer
of each of the Transaction Documents to which Buyer is a party does not and will
not violate, conflict with or result in a breach of any term, condition or
provision of, or require the consent of any other Person under: (i) any law,
ordinance, rule or regulation to which Buyer or any of its assets or properties
is subject; (ii) any judgment, order, writ, injunction, decree or award of any
Governmental Authority which is applicable to Buyer or any of its assets or
properties; (iii) the Articles of Incorporation, Bylaws or other governing
documents of Buyer; or (iv) any license, agreement, commitment or other
instrument or document to which Buyer is a party or by which Buyer or any of its
assets or properties is otherwise bound. No authorization, approval or consent
of, and no registration or filing with, any Person is required in connection
with the execution, delivery or performance of the Transaction Documents to
which Buyer is a party.
9
10
(c) Brokers' Fees. Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by the Transaction Documents to which Buyer is a party for which
Seller could become liable or obligated.
(d) Solvency. No order has been made, petition presented or resolution passed
for the winding up (or other process whereby the business is terminated and the
assets of the company concerned are distributed among its creditors and/or
members) of Buyer. There are no cases or proceedings pending under any
applicable insolvency, reorganization or similar law in any jurisdiction
concerning Buyer, and no circumstances exist which, under applicable laws, would
justify any such cases or proceedings. No receiver or trustee has been appointed
with respect to all or any portion of Buyer's business or assets. Buyer is able
to pay its debts and obligations in the ordinary course as they mature, and
Buyer owns property tangible and intangible, which, at a fair valuation, is
greater than the sum of its respective liabilities (including contingent
liabilities) whether or not reflected on a balance sheet prepared in accordance
with GAAP. Buyer has not stopped paying its debts as they fall due. No lien,
restraint, execution or other process has been levied on any asset of Buyer.
Buyer has capital sufficient to carry on its business and all businesses in
which it is about to engage.
(e) Business. Buyer and its Affiliates are, among other things, in the business
of developing, marketing and selling computer software.
(f) Secured Promissory Note. The Secured Promissory Note described in Section
1(e)(ii) and attached as Exhibit A, and the accompanying Security Agreement are
valid and binding. Buyer agrees to fully cooperate with Seller regarding
execution and filing of any applicable UCC statements related to the Secured
Promissory Note.
SECTION 5
ADDITIONAL AGREEMENTS
(a) Survival. The representations and warranties set forth in this Agreement and
in each Transaction Document shall survive the date of this Agreement and the
consummation of the transactions contemplated hereby notwithstanding any
examination made for or on behalf of Buyer or Seller with respect thereto;
provided, however, that: (i) the representations and warranties of Seller set
forth in Section 3(c), 3(d), 3(e), 3(g) and 3(h) shall survive for eighteen (18)
months after the date hereof and then expire; (ii) all of the other
representations and warranties of Seller contained in this Agreement shall
survive for three years after the date hereof and then expire; and (iii) the
representations and warranties of Buyer shall survive for three years after the
date hereof and then expire. No claims may be brought by either party for breach
or inaccuracy of representation or warranty after expiration of the applicable
survival period. The covenants and agreements set forth in this Agreement and in
each Transaction Document shall survive the date of this Agreement and the
consummation of the transactions contemplated hereby in accordance with their
terms.
10
11
(b) Indemnification.
(i) Indemnification of Buyer. Subject to Section 5(a) above, from and after
the date hereof, Seller shall indemnify and hold harmless Buyer and its
officers, directors shareholders, employees, representatives, agents and
each of their respective Affiliates (collectively, the "Buyer Indemnified
Parties") from and against any loss, damage, claim or expense, including,
without limitation, reasonable attorneys' and consultants' fees and
expenses (collectively, "Damages"), suffered by any Buyer Indemnified Party
arising or resulting from: (A) any inaccuracy in or breach of any of the
representations or warranties made by Seller in this Agreement or any other
Transaction Document; (B) the failure of Seller to perform any covenants or
agreements made by Seller in this Agreement or any other Transaction
Document; (C) except as otherwise agreed, any and all royalties and fees
claimed, owed or due, arising from, or related to any Bull/Power 95 and
Monolith contracts and agreements between Seller and Bull/Power95, or
Seller and Monolith; and (D) any Excluded Liability; provided, however,
that no Buyer Indemnified Party shall be entitled to recover any Damages
from Seller based upon the foregoing or any covenant, obligation,
representation or warranty of Seller contained in this Agreement, or the
breach or inaccuracy thereof, or otherwise relating to this Agreement or
the transactions contemplated hereby, except and to the extent that such
Damages exceed $25,000 in the aggregate.
(ii) Indemnification of Seller. Subject to Section 5(a) above, from and
after the date hereof, Buyer shall indemnify and hold harmless Seller and
its officers, directors, shareholders, employees, representatives, agents
and each of their respective Affiliates (collectively, the "Seller
Indemnified Parties"), from and against any loss, damage, claim or expense,
including, without limitation reasonable attorneys' and consultants' fees
and expenses, suffered by any Seller Indemnified Party arising or resulting
from: (A) any inaccuracy in or breach of any of the representations or
warranties made by Buyer in this Agreement or any other Transaction
Document; (B) the failure of Buyer to perform any covenants or agreements
made by Buyer in this Agreement or any other Transaction Document; and (C)
any Assumed Obligation.
(iii) Third Party Claims. If any third party shall notify any party to this
Agreement (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other party to this
Agreement (the "Indemnifying Party") under this Section 5(b), then the
Indemnified Party shall promptly notify each Indemnifying Party thereof.
Within thirty (30) days after receipt of notice of a particular matter, the
Indemnifying Party may assume the defense of such matter if the
Indemnifying Party admits full or partial responsibility in writing and
reaffirms its obligation for full or partial indemnification with respect
to such matter (it being understood that such written admission and
reaffirmation may reserve Seller's right to contest the extent of Seller's
obligations under this Section); provided, however, that: (A) the
Indemnifying Party shall retain counsel reasonably acceptable to the
Indemnified Party, the Indemnified Party, at its sole cost and expense, may
participate in the defense of such claim with co-counsel of its choice; and
(B) the Indemnifying Party shall not consent to the entry of any judgment
with respect to the matter or enter into any settlement without the prior
written consent of the Indemnified Party (which shall not be
11
12
unreasonably withheld, conditioned or delayed). If, within such thirty (30)
day period, the Indemnifying Party does not assume the defense of such
matter, the Indemnified Party may defend against the matter in any manner
that it reasonably may deem appropriate and may consent to the entry of any
judgment for money damages with respect to the matter or enter into any
settlement for money damages with respect to the matter without the consent
of the Indemnifying Party, subject to the right of the Indemnifying Party
to contest its obligation to indemnify and hold harmless the Indemnified
Party (it being understood that any consent to judgment or settlement for
damages other than money damages shall require the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld).
(c) Removal of Tangible Acquired Assets: Risk of Loss. Buyer, at its expense,
shall remove all tangible Acquired Assets from Seller's premises on the
Effective Date. From and after the execution and delivery of this Agreement,
Buyer shall bear all risk of loss, theft or destruction with respect to the
Acquired Assets.
(d) Allocation of the Purchase Price. The allocation of the Purchase Price among
the Acquired Assets is set forth on Schedule 5(d) attached hereto, and shall be
the allocation of the Purchase Price used by the parties in preparing: (i)
Internal Revenue Service Form 8594, Asset Acquisition Statement, for each of
Buyer and Seller, and (ii) all applicable tax returns. All allocations made
pursuant to this Section 5(d) shall be binding upon the parties and upon each of
their successors and assigns, and the parties shall report the transaction
herein in accordance with such allocations.
(e) Restrictive Covenants.
(i) Non-Disclosure of Confidential Information and Trade Secrets. Seller
covenants and agrees that, except as may be required by law, for a period of
five (5) years following the date hereof, it shall not disclose any confidential
information relating to the marketing strategies, pricing policies or
characteristics, customers, suppliers and customer and supplier information,
customer and supplier lists, product or product specifications, designs,
manufacturing, testing or assembly processes or costs, costs of materials,
business or business prospects, plans, proposals, codes, marketing studies,
research, reports, investigations, or other information of similar character
which relate to the PR Database Management Products or any of the Acquired
Assets (collectively referred to as "Confidential Information"). This limitation
upon disclosure does not apply to: (A) information readily available to
competitors through means other than as the result of unauthorized disclosure
and without substantial investment of time or money; (B) the use by Seller of
Confidential Information in connection with the satisfaction of its obligations
under this Agreement, required by law or in connection with endeavors which are
not directly competitive with the PR Database Management Products or the
Acquired Assets; or (C) any disclosures required by law or court order.
(ii) [Reserved]
12
13
(iii) Non-Competition. Because the PR Intellectual Property is being sold
by Seller to Buyer pursuant to this Agreement, Seller acknowledges that it will
be unable to and will not, from and after the Effective Date, market,
distribute, sell or support the PR Database Management Products or derivative
products.
(iv) Non-Recruitment. Seller and Buyer agree that each party has and will
invest substantial time and effort in acquiring and maintaining its workforce.
Accordingly, each party agrees that for a period of two (2) years following the
date hereof, absent consent from the other party, neither party shall hire away,
or cause any other corporation, person or entity to hire away any employee of
the other party as of the Closing Date, nor in either case, directly or
indirectly entice or solicit or seek to induce or influence any of such
employees to leave their employment.
(v) Severability and Modification of Any Unenforceable Covenant. It is the
parties' intent that each of the Restrictive Covenants be read and interpreted
with every reasonable inference given to its enforceability. However, it is also
the parties' intent that if any term, provision or condition of the Restrictive
Covenants is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions thereof shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Finally, it is also the parties' intent that if a court should determine any of
the Restrictive Covenants are unenforceable because of over-breadth, then the
court shall modify said covenant so as to make it reasonable and enforceable
under the prevailing circumstances.
(f) Transaction Expenses. Except as otherwise provided herein, each of Buyer and
Seller shall bear their own costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby (whether or not consummated).
(g) Further Assurances. Seller shall execute and deliver such further
instruments of conveyance and transfer and take such additional action as Buyer
may reasonably request to effect, consummate, confirm or evidence the transfer
to Buyer of the Acquired Assets.
(h) Return or Destruction of Licensed Source Code. Seller agrees that within
thirty (30) days from the Closing Date, it shall provide Buyer with confirmation
that it has delivered notices to all applicable parties that the source code
related to all Pick Systems Licenses between Buyer and Seller must be returned
to Buyer or destroyed within ten (10) of receipt of said notice.
(i) Limited Site License of PR Database Management Products. Buyer hereby grants
Seller a five (5) year royalty-free license for internal use only of Seller's PR
Database Management Products.
SECTION 6
RELEASE OF CLAIMS
(a) Release of Buyer. Except for: (i) the express obligations of Buyer under
this Agreement and the other Transaction Documents; and (ii) the obligations of
Buyer under the provisions of the Pick Licenses which survive, Seller hereby
releases and discharges Buyer, as well as all of its officers, directors,
employees, attorneys and agents, whether past, present or future, and the
13
14
Affiliates of each of them (the "Buyer Released Parties"), from any and all
claims, demands, costs, liabilities, obligations, damages, expenses, and actions
and causes of action of every nature, whether in law or in equity, known or
unknown or suspected or unsuspected, liquidated or unliquidated (collectively,
"Claims"), which Seller ever had or now has or makes claim to have against the
Buyer Released Parties, or any of them.
(b) Release of Seller. Except for the express obligations of Seller under this
Agreement and the other Transaction Documents, Buyer hereby releases and
discharges Seller, as well as all of its officers, directors, employees,
attorneys and agents, whether past, present or future, and the Affiliates of
each of them (the "Seller Released Parties"), from any and all Claims which
Buyer ever had or now has or makes claim to have against the Seller Released
Parties, or any of them, including but not limited to any and all Claims arising
from or relating to: (i) the Pick Licenses or any breach thereof or default
thereunder; and (ii) any royalties, license fees or other amounts owed by Seller
to Buyer as of the date of this Agreement.
(c) Waiver of Civil Code Section 1542. Buyer and Seller understand that Section
1542 of the Civil Code of California provides as follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
SECTION 1542 OF THE CIVIL CODE OF CALIFORNIA IS HEREBY EXPRESSLY WAIVED BY
BUYER AND SELLER.
(d) Factual Differences. Buyer and Seller each understands and accepts the risk
that the facts with respect to the releases contained in this Section 6 may be
different from the facts now known or believed by them to be true. The
provisions of this Section 6 shall remain in all respects effective and shall
not be subject to termination or rescission by virtue of any such differences in
fact, absent a showing of intentional fraud by either party in inducing the
other party to agree to the releases contained in this Section 6.
(e) Non-Assignment. Seller hereby represents and warrants to Buyer that there
has been no assignment of any Claims or any other rights which are the subject
of the release set forth in Section 6(a) above. Buyer hereby represents and
warrants to Seller that there has been no assignment of any Claims or any other
rights which are the subject of the release set forth in Section 6(b) above.
SECTION 7
DEFINITIONS
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
14
15
"GAAP" means United States generally accepted accounting principles and
practices as in effect during the relevant period and consistently applied
throughout the periods involved.
"Governmental Authority" means a court, arbitrator or governmental or regulatory
official, department, agency, body or authority (and all agencies thereof).
"Gross Revenue" means all revenue derived by Buyer and/or any of its Affiliates
from any PR Database Product Customer, determined in accordance with GAAP;
provided however, that for purposes of determining Gross Revenue, in no event
shall the revenue deemed to be derived from any product, license or service
provided to any PR Database Product Customer be an amount which is less than 25%
of the then standard list price of the product, license or service in question
(notwithstanding the fact that the actual price charged therefore is less than
25% of the then standard list price as the result of a giveaway, discount or
promotion, or for any other reason).
"Intellectual Property" means: (i) all inventions, all improvements thereto, and
all patents, patent applications, and patent disclosures, together with all
reissuances, continuations-in-part, revisions, extensions, and reexaminations
thereof (ii) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith; (iii) all trade secrets,
know-how and confidential business information; (iv) all computer software
(other than software which is regularly available to the public); (v) all other
proprietary rights (other than trademarks, service marks, logos, trade and
business names, and corporate names); and (vi) all copies and tangible
embodiments thereof.
"Lien" means any security interest, pledge, bailment (in the nature of a pledge
or for purposes of security), mortgage, deed of trust, the grant of a power to
confess judgment, conditional sales and title retention agreement (including any
lease in the nature thereof), charge, encumbrance or other similar arrangement
or interest in real or personal property.
"Person" means any natural person, corporation, general partnership, limited
partnership, proprietorship, limited liability company or partnership, other
business organization, trust, union, association or Governmental Authority.
"Pick Licenses" means all executed, amended and revised software license
agreements effective between General Automation, Inc. and Pick Systems,
including without limitation: (1) Pick Computer Works License Agreement dated
November 23, 1982 between Seller and Buyer (as successor in interest to Pick
Computer Works, Inc.), as amended to date (the "1982 Agreement"); (iii)
Agreement dated June 13, 1988 between Buyer and Seller (as successor in interest
to Applied Digital Data Systems, Inc.), as amended to date (the "1988
Agreement"); (iv) Pick Systems PC License Agreement dated April 10, 1995 between
Buyer and Seller (as successor in interest to SunRiver Data Systems, Inc.), as
amended to date (the "1995 Agreement"); and (v) Pick Systems Open Architecture
License Agreement dated October 10, 1986 between Buyer and Seller (as successor
in interest to Concurrent Operating Systems Technology), as amended to date (the
"1986 Agreement").
15
16
"Transaction Documents" means this Agreement, the ▇▇▇▇ of Sale, the Trademark
Assignment, the Secured Promissory Note and the Security Agreement and each
other agreement, certificate, instrument or document executed and delivered by
the parties pursuant to this Agreement, including, without limitation, any
written understandings or agreements relating to the subject matter of this
Agreement.
"Warranties" mean all product return policies, service, repair, replacement and
other obligations based upon or arising out of express and implied warranties
made or deemed made in connection with the sale or licensing of the PR Database
Products or Power95 by Seller or the performance of services by the Seller
related thereto.
SECTION 8
MISCELLANEOUS
(a) No Third Party Beneficiaries. Except for the rights of the Buyer Indemnified
Parties and the Seller Indemnified Parties specifically set forth herein, this
Agreement shall not confer any rights or remedies upon any Person other than the
parties hereto and their respective successors and permitted assigns.
(b) Entire Agreement. This Agreement, the Seller's Disclosure Schedule, the
Buyer's Disclosure Schedule and the other Schedules and Exhibits hereto
(including the documents referred to herein and therein) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersede any prior understandings, agreements or representations by or between
the parties hereto, written or oral, that may have related in any way to the
subject matter hereof.
(c) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit or detriment of the parties hereto and their respective legal
representatives, successors, heirs and permitted assigns. Neither Seller nor
Buyer may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other party;
provided, however, that without the approval of the other, each of Buyer and
Seller may assign any or all of its rights and interests hereunder to one or
more of its Affiliates and designate one or more of its Affiliates to perform
its obligations hereunder (it being understood that no such assignment shall
relieve the assigning party of its obligations hereunder).
(d) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing and deemed effective via certified mail, courier,
or facsimile at the following addresses:
16
17
If to Buyer: Pick Systems
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, President and CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller: General Automation, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Higham, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth above
using any other means, but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may change the address
to which notices, requests, demands claims, and other communications hereunder
are to be delivered by giving the other party notice in the manner herein set
forth.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
any choice or conflict of law provision or rule that would cause the application
of the laws of any jurisdiction other than the State of California.
17
18
(h) Forum. The parties hereby submit to the jurisdiction of the state courts of
the State of California sitting in Orange County and the United States District
Court for the Central District of California for the purposes of any suit,
action or other proceeding brought by any party or any buyer or seller
indemnified party arising out of or based upon this Agreement or the subject
matter hereof. Upon mutual agreement of the parties, any dispute arising out of,
or based upon this Agreement, or the subject matter hereof, may be resolved
through binding arbitration. Any arbitration award shall be final and not
appealable and may be entered as a judgment and fully enforceable in any court
of competent jurisdiction.
(i) Non-Convenient Forum. In furtherance of the foregoing, the parties, to the
extent permitted by applicable law, hereby waive, and agree not to assert, by
way of motion, as a defense or otherwise, in any suit, action, proceeding or
arbitration, that said suit, action, proceeding or arbitration is brought in an
inconvenient forum, or that the venue of such suit, action, proceeding or
arbitration is improper.
(j) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by Buyer and
Seller. No waiver by any party of any default, misrepresentation or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(k) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(l) Construction. The language used in this Agreement shall be deemed to be the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against any party.
(m) Remedies. The parties shall each have and retain all other rights and
remedies existing in their favor at law or equity, including, without
limitation, any actions for specific performance and/or injunctive or other
equitable relief (including, without limitation, the remedy of rescission) to
enforce or prevent any violations of the provisions of this Agreement. Without
limiting the generality of the foregoing, Seller hereby agrees that in the event
that Seller fails to convey the Acquired Assets to Buyer in accordance with the
provisions of this Agreement, Buyer's remedy at law may be inadequate. In such
event, Buyer shall have the right, in addition to all other rights and remedies
it may have, to specific performance of the obligations of Seller to convey the
Acquired Assets.
(n) Attorneys' Fees. In the event of any proceeding to interpret or enforce this
Agreement, the prevailing party shall be entitled to collect from the
non-prevailing party such prevailing party's reasonable attorneys' fees and
costs and expenses incurred in such proceeding.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
18
19
BUYER:
PICK SYSTEMS
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇, President and CEO
SELLER:
GENERAL AUTOMATION, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
19
20
ASSET PURCHASE AGREEMENT ATTACHMENT
LIST OF OMITTED SCHEDULES
SCHEDULE DESCRIPTION
-------- -----------
1 (a)(i) List of PR Database Product Customers
1 (a)(ii) Source Code included in Acquired Assets
1 (a)(iii) Seller to provide the following:
1. Customer Support Contracts via electronic media (disk/tape)
2. Deferred Revenue effective 7/31/00 via electronic media
(disk/tape)
3. Customer support receivables 7/31/00 via electronic media
(disk/tape)
4. Copies of Customer Support Contracts
5. Copies of Reseller Agreements
1 (a)(iv) Description of all customer lists, customer files and supplier
lists pertaining to GA's PR Database Management Products.
1 (a)(v) Shared Agreements or Assumed Agreements
1 (a)(vii) List of accounts receivable being assigned to Pick
1 (a)(viii) Intellectual Property
1 (a)(ix) All marketing, advertising, and promotional materials
pertaining to Sellers PR Database Management Products.
1 (a)(x) List of Trademarks
1 (b) List of Third Party Software
2 (a)(iii) Release of Liens from Comerica and Pacific Mezzanine Fund LP
2 (a)(vii) GA Board Resolutions authorizing the transactions contemplated
by the Agreement
2 (b)(ii) Pick Board resolutions authorizing the transactions
contemplated by the Agreement
3(h) List of pending or threatened litigation involving GA and/or
its assets together with a list of any rulings, judgments,
etc. of any governmental authority applicable to GA and/or
its assets.
3(m) List of warranties made by the seller during the five (5)
years prior to the effective date, in addition to those
implied by applicable law.
5(d) Allocation of purchase price.
21
Seller's Disclosure 1. Consent to transactions required by Comerica Bank
and Pacific Mezzanine.
2. Seller is maintaining trade name service ▇▇▇▇ and
copyright to General Automation, Inc., GAI,
GaeXpres, e-Path, GaeXpress Pty, Sequoia UK Pty
Ltd., mv.Term, Liberty Integration Software
3. Please reference General Automation Inc., Form 10-K
for fiscal 1999 filed on January 15, 2000
4. Please reference General Automation, Inc. quarterly
report on Form 10-Q for quarter ended March 31,
2000 filed on may 12, 2000.
A Pick Systems Secured Promissory Note
B ▇▇▇▇ of Sale
C Assignment of Trademarks
D GA's Counsel legal opinion
E Pick's Counsel legal
"Copies of the foregoing Schedules will be provided to the Commission
supplementally upon request."