EXHIBIT 99.1
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PROGRESS DEVELOPMENT CORPORATION,
EASYASK, INC., AND
SIGMA PARTNERS LLP,
AS INDEMNIFICATION REPRESENTATIVE
DATED AS OF APRIL 29, 2005
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TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF ASSETS; CLOSING................................................... 1
1.1 PURCHASE AND SALE OF ACQUIRED ASSETS........................................................... 1
1.2 EXCLUDED ASSETS................................................................................ 1
1.3 ASSUMPTION OF LIABILITIES...................................................................... 2
1.4 EXCLUDED LIABILITIES........................................................................... 2
1.5 CONTINUING LIABILITIES......................................................................... 4
1.6 CLOSING........................................................................................ 4
1.7 CLOSING DELIVERIES............................................................................. 4
1.8 FURTHER ASSURANCES............................................................................. 5
1.9 AUTHORIZATION OF THIS AGREEMENT, THE ESCROW AGREEMENT AND THE ESCROW AGENT..................... 6
1.10 ALLOCATION OF PURCHASE PRICE................................................................... 6
ARTICLE II PURCHASE PRICE......................................................................... 6
2.1 PURCHASE PRICE................................................................................. 6
2.2 ESCROW DEPOSIT; DELIVERY OF PURCHASE PRICE..................................................... 6
(a) Escrow Agreement.......................................................................... 6
(b) Escrow Deposit............................................................................ 7
(c) Delivery of Purchase Price................................................................ 7
(d) Payment of Transaction Liabilities........................................................ 7
ARTICLE III REPRESENTATIONS AND WARRANTIES......................................................... 7
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER....................................................... 7
(a) Organization; Good Standing; Qualification and Power...................................... 7
(b) Subsidiaries; Equity Investments.......................................................... 8
(c) Capital Stock; Securities................................................................. 8
(d) Authority; No Consents.................................................................... 8
(e) Financial Information..................................................................... 9
(f) Absence of Undisclosed Liabilities........................................................ 9
(g) Absence of Changes........................................................................ 10
(h) Tax Matters............................................................................... 11
(i) Title to Assets, Properties and Rights and Related Matters................................ 12
(j) Real Property - Owned or Leased........................................................... 13
(k) Intellectual Property..................................................................... 13
(l) Software.................................................................................. 16
(m) Agreements, Etc........................................................................... 16
(n) No Defaults............................................................................... 18
(o) Litigation, Etc........................................................................... 18
(p) Accounts and Notes Receivable............................................................. 19
(q) Accounts and Notes Payable................................................................ 19
(r) Compliance; Governmental Authorizations and Consents...................................... 19
(s) Environmental Matters..................................................................... 19
(t) Employees................................................................................. 20
(u) Employee Benefit Plans and Contracts...................................................... 21
(v) Insurance................................................................................. 24
(w) Brokers................................................................................... 24
(x) Related Transactions...................................................................... 24
(y) Minute Books.............................................................................. 24
(z) Certain Practices......................................................................... 24
(aa) Projections.............................................................................. 24
(bb) Business Generally....................................................................... 25
(cc) Disclosure............................................................................... 25
1
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER........................................................ 25
(a) Organization; Good Standing; Qualification and Power...................................... 25
(b) Authority................................................................................. 25
(c) Litigation................................................................................ 25
(d) Brokers................................................................................... 25
ARTICLE IV CONDITIONS PRECEDENT................................................................... 25
4.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS......................................................... 25
(a) Approvals................................................................................. 26
(b) Legal Action.............................................................................. 26
(c) Legislation............................................................................... 26
4.2 ESCROW AGREEMENT............................................................................... 26
4.3 ASSIGNMENT OF REAL ESTATE LEASE/KEY LICENSES REQUIRING CONSENT TO ASSIGNMENT................... 26
4.4 CONDITIONS TO OBLIGATIONS OF BUYER............................................................. 26
(a) Representations and Warranties of Seller.................................................. 26
(b) Performance of Obligations of Seller...................................................... 26
(c) Authorization of Agreement................................................................ 27
(d) Acceptance by Counsel to Buyer............................................................ 27
(e) Consents and Approvals.................................................................... 27
(f) Agreements................................................................................ 27
(g) Default Under Agreements.................................................................. 27
(h) Approval by Board of Directors of Buyer................................................... 27
(i) Evidence of Corporate Authority........................................................... 27
(j) Key Employees and Other Transferred Employees............................................. 27
(k) Change of Name............................................................................ 28
(l) Completion of Investigation............................................................... 28
(m) No Adverse Change......................................................................... 28
(n) Stockholder Voting Agreements............................................................. 28
4.5 CONDITIONS TO OBLIGATIONS OF SELLER............................................................ 28
(a) Representations and Warranties of Buyer................................................... 28
(b) Performance of Obligations of Buyer....................................................... 28
(c) Related Agreements........................................................................ 28
(d) Closing Cash Payment...................................................................... 28
(e) Evidence of Corporate Authority........................................................... 29
(f) Acceptance by Counsel to Seller........................................................... 29
(g) Authorization of Agreement................................................................ 29
(h) Approval by Board of Directors of Buyer................................................... 29
(i) Key Employees and Other Transferred Employees............................................. 29
ARTICLE V ADDITIONAL AGREEMENTS.................................................................. 29
5.1 CONDUCT OF BUSINESS OF SELLER.................................................................. 29
(a) Charter Documents......................................................................... 30
(b) Dividends; Changes in Capital Stock....................................................... 30
(c) Stock Option Plans, Etc................................................................... 30
(d) Material Contracts........................................................................ 30
(e) Issuance of Securities.................................................................... 30
(f) Intellectual Property..................................................................... 30
(g) Dispositions.............................................................................. 30
(h) Indebtedness.............................................................................. 30
(i) Leases.................................................................................... 30
(j) Capital Expenditures...................................................................... 30
(k) Insurance................................................................................. 31
(l) Termination or Waiver..................................................................... 31
(m) Employee Benefit Plans; New Hires; Pay Increases.......................................... 31
(n) Severance Agreement....................................................................... 31
(o) Lawsuits.................................................................................. 31
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(p) Acquisitions.............................................................................. 31
(q) Taxes..................................................................................... 31
(r) Notices................................................................................... 31
(s) Revaluation............................................................................... 31
(t) Other Transactions........................................................................ 31
(u) Confidentiality Agreements................................................................ 31
(v) Related Party Transactions................................................................ 32
(w) Subsidiaries.............................................................................. 32
(x) Principal Business........................................................................ 32
(y) General................................................................................... 32
5.2 COOPERATION.................................................................................... 32
5.3 EXCLUSIVITY; STANDSTILL........................................................................ 32
5.4 CERTAIN INFORMATION REQUIRED BY THE CODE....................................................... 33
5.5 LITIGATION COOPERATION......................................................................... 33
5.6 RECORD MAINTENANCE............................................................................. 33
5.7 SELLER STOCKHOLDER APPROVAL; EFFORTS TO CONSUMMATE............................................. 33
5.8 PUBLIC ANNOUNCEMENTS........................................................................... 34
5.9 EMPLOYMENT MATTERS............................................................................. 34
5.10 TRANSFER TAXES................................................................................. 34
5.11 REQUIRED CONSENTS; SUBSEQUENT EVENTS........................................................... 34
ARTICLE VI INDEMNIFICATION........................................................................ 35
6.1 DEFINITIONS.................................................................................... 35
6.2 INDEMNIFICATION GENERALLY...................................................................... 36
6.3 ASSERTION OF CLAIMS............................................................................ 37
6.4 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS....................................................... 38
6.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES..................................................... 39
6.6 INDEMNIFICATION REPRESENTATIVE................................................................. 39
6.7 REMEDIES AVAILABLE............................................................................. 40
ARTICLE VII TERMINATION............................................................................ 40
7.1 TERMINATION.................................................................................... 40
7.2 EFFECT OF TERMINATION; SURVIVAL................................................................ 41
ARTICLE VIII MISCELLANEOUS.......................................................................... 41
8.1 EXPENSES....................................................................................... 41
8.2 ENTIRE AGREEMENT............................................................................... 41
8.3 INTERPRETATION................................................................................. 41
8.4 KNOWLEDGE DEFINITION........................................................................... 42
8.5 NOTICES........................................................................................ 42
8.6 COUNTERPARTS................................................................................... 43
8.7 GOVERNING LAW.................................................................................. 44
8.8 BENEFITS OF AGREEMENT.......................................................................... 44
8.9 PRONOUNS....................................................................................... 44
8.10 AMENDMENT, MODIFICATION AND WAIVER............................................................. 44
8.11 NO THIRD PARTY BENEFICIARIES................................................................... 44
8.12 CONSENTS....................................................................................... 44
8.13 INTERPRETATION................................................................................. 44
8.14 NO JOINT VENTURE............................................................................... 44
8.15 SPECIFIC PERFORMANCE........................................................................... 45
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INDEX TO DEFINED TERMS
ACQUIRED ASSETS.......................................... 1.1
ACTIONS.................................................. 3.1(o)
AFFILIATE................................................ 1.4(a)
AGREEMENT................................................ Preamble
ALLOCATION STATEMENT..................................... 1.10(a)
ARTICLES OF ORGANIZATION................................. 3.1(a)
ASSUMED CONTRACTS........................................ 2
ASSUMED LIABILITIES...................................... 1.3
▇▇▇▇ OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT........ 1.7(a)
BUSINESS................................................. Preamble
BUYER.................................................... Preamble
BUYER AFFILIATE.......................................... 8.8
BUYER EVENT OF INDEMNIFICATION........................... 6.1(a)(i)
BUYER INDEMNIFIED PERSONS................................ 6.1(b)(i)
BUYER INDEMNIFYING PERSONS............................... 6.1(c)(ii)
CLOSING.................................................. 1.6
CLOSING CASH PAYMENT..................................... 2.1
CLOSING DATE............................................. 1.6
COBRA COVERAGE........................................... 3.1(u)(iv)
CODE..................................................... 3.1(h)(iii)
COPYRIGHTS............................................... 3.1(k)
CURRENT EMPLOYEE......................................... 3.1(m)(vii)
DESIGNATED PERSONS....................................... 3.1(o)
DISCLOSURE SCHEDULE...................................... 3.1
EFFECTIVE TIME........................................... 1.6
EMPLOYEE................................................. 3.1(u)
EMPLOYEE PLANS........................................... 3.1(u)
ENCUMBRANCES............................................. 1.1
ENVIRONMENTAL LAWS....................................... 3.1(s)(i)
ERISA.................................................... 3.1(u)(i)
ERISA AFFILIATE.......................................... 3.1(u)
ESCROW AGENT............................................. 2.2(a)
ESCROW AGREEMENT......................................... 2.2(a)
ESCROW FUNDS............................................. 2.2(b)
EVENT OF INDEMNIFICATION................................. 6.1(a)
EXCESS TRANSACTION LIABILITIES........................... 2.1(b)
EXCLUDED ASSETS.......................................... 1
EXCLUDED LIABILITIES..................................... 1.4
FAS NO. 5................................................ 3.1(f)
FRAUD CLAIMS............................................. 6.2(e)
GAAP..................................................... 3.1(e)(ii)
GOVERNMENTAL AUTHORITY................................... 3.1(d)
INDEMNIFIED PERSONS...................................... 6.1(b)
INDEMNIFYING PERSONS..................................... 6.1(c)
IP RIGHTS................................................ 3.1(k)
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IRS...................................................... 3.1(h)(iii)
KEY EMPLOYEE............................................. 28
KEY EMPLOYEE AGREEMENT................................... 1.7(d)
LEASED REAL PROPERTY..................................... 3.1(j)
LEASES................................................... 3.1(j)
LIABILITY................................................ 1.4(a)
LICENSE AGREEMENTS....................................... 3.1(k)
LICENSED SOFTWARE........................................ 3.1(l)
LOSSES................................................... 6.2(a)
MATERIAL ADVERSE EFFECT.................................. 3.1(a)
MULTIEMPLOYER PLAN....................................... 3.1(u)
NOTICE OF CLAIM.......................................... 6.3
OPEN SOURCE MATERIALS.................................... 3.1(c)(i)
ORDINARY COURSE OF BUSINESS.............................. 1.3
OTHER ASSIGNMENTS........................................ 1.7(d)
PATENT ASSIGNMENT........................................ 1.7(b)
PATENTS.................................................. 3.1(k)
PENSION PLANS............................................ 3.1(u)
PRINCIPAL STOCKHOLDERS................................... 4.2
PROJECTIONS.............................................. 3.1(aa)
PROPOSED SETTLEMENT...................................... 6.4(d)
PURCHASE PRICE........................................... 2.1
RELATED AGREEMENT........................................ 1.7(e)
REPRESENTATIVES.......................................... 5.3
SELLER................................................... Preamble
SELLER EVENT OF INDEMNIFICATION.......................... 6.1(a)(ii)
SELLER FINANCIAL STATEMENTS.............................. 3.1(e)
SELLER INDEMNIFIED PERSONS............................... 6.1(b)(ii)
SELLER INDEMNIFYING PERSONS.............................. 6.1(c)(i)
SELLER INTERIM FINANCIAL STATEMENTS...................... 3.1(e)
SELLER STOCK............................................. 3.1(c)(i)
STOCKHOLDER VOTING AGREEMENT............................. 4.4(n)
SURVIVAL DATE............................................ 6.5
TAX RETURNS.............................................. 3.1(h)(i)
TAXES.................................................... 3.1(h)(i)
THIRD PARTY CLAIM........................................ 6.4
TRADE SECRETS............................................ 3.1(k)
TRADEMARK ASSIGNMENT..................................... 1.7(c)
TRADEMARKS............................................... 3.1(k)
TRANSACTION LIABILITIES.................................. 2,1(b)
TRANSFERRED EMPLOYEE..................................... 3.1(g)(ix)
EXECUTION COPY - APRIL 29, 2005 2
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "AGREEMENT") dated as of April 29, 2005, by
and among PROGRESS DEVELOPMENT CORPORATION, a Massachusetts corporation
("BUYER"), EASYASK, INC., a Massachusetts corporation ("SELLER"), and SIGMA
PARTNERS LLP, as the Indemnification Representative (the "INDEMNIFICATION
REPRESENTATIVE").
WHEREAS, Seller is in the business of providing search, navigation and
information retrieval solutions, which provide access and insight into critical
content through products for enterprise, e-commerce and independent software
vendors (the "BUSINESS");
WHEREAS, subject to the terms and conditions set forth in this Agreement,
Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller,
substantially all of the assets of Seller and Seller wishes to transfer to
Buyer, and Buyer has agreed to assume, certain of Seller's obligations and
liabilities associated with the Business, and in connection therewith the
parties hereto wish to make certain agreements related to such purchase, sale,
assignment and assumption;
WHEREAS, as a condition to the willingness of, and as an inducement to,
Buyer and Seller to enter into this Agreement, contemporaneously with the
execution and delivery of this Agreement, Seller, Buyer and certain other
parties are entering into the Related Agreements (as defined below).
NOW, THEREFORE, in consideration of the mutual benefits to be derived from
this Agreement and the representations, warranties, covenants, agreements,
conditions and promises contained herein and therein, the parties hereby agree
as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS; CLOSING
1.1 PURCHASE AND SALE OF ACQUIRED ASSETS. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing, Seller shall sell,
transfer, assign and deliver to Buyer, and relinquish to Buyer in perpetuity,
free and clear of any security interests, mortgages, liens, pledges, guarantees,
charges, easements, reservations, restrictions, clouds, equities, rights of way,
options, rights of first refusal, and all other encumbrances, whether or not
relating to the extension of credit or the borrowing of money (collectively
"ENCUMBRANCES"), all right, title and interest in and to all of the assets,
properties, good will and rights of Seller of every kind and nature, real,
personal or mixed, tangible or intangible, owned, used or held for use by Seller
(the "ACQUIRED ASSETS").
1.2 EXCLUDED ASSETS. All rights of Seller under this Agreement and the
agreements and instruments executed and delivered to Seller by Buyer pursuant to
this Agreement shall not constitute Acquired Assets. Seller represents and
warrants that the assets set forth in Section 1.2 of the Disclosure Schedule is
a complete list of excluded assets (the "EXCLUDED ASSETS").
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1.3 ASSUMPTION OF LIABILITIES. Buyer shall not assume, discharge or
perform any liability other than the following Liabilities of Seller
(collectively, the "ASSUMED LIABILITIES"), all of which Buyer will assume and
pay, discharge or perform, as appropriate, from and after the Effective Time in
accordance with the provisions of the ▇▇▇▇ of Sale, Assignment and Assumption
Agreement:
(a) Liabilities arising under the contracts disclosed in Schedules
3.1(j)(i)-(ii), 3.1(k)(vi) and (vii), 3.1(m)(i), 3.1(m)(ii), 3.1(m)(vi),
3.1(m)(ix) - 3.1(m)(xi), 3.1(m)(xvi), 3.1(m)(xvi) - (xix) of the Seller
Disclosure Schedule (the "ASSUMED CONTRACTS"), except to the extent, in respect
of each contract so assumed, the representations of Seller contained in Sections
3.1(j), (k) and (m) in respect of each such contract so assumed are untrue in
any material respect at the Closing; provided, that Buyer shall not assume, and
does not hereby agree to pay, discharge or perform any damages relating in any
manner to or arising from any breach or default of Seller or any of its
Affiliates thereof occurring on or prior to the Closing Date;
(b) Accounts payable and accrued liabilities of Seller consisting of
(i) those liabilities at March 31, 2005 as set forth on Schedule 1.3(b) hereto,
and (ii) liabilities incurred thereafter through the Closing Date, provided that
all such liabilities (i) relate to the Business, (ii) arise in the operation of
the Business consistent with Seller's usual and customary practices in managing
and operating the Business as they existed on March 31, 2005 and (iii) are
necessary to maintain the ongoing operation of the Business without regard to
the transactions contemplated hereby ("ORDINARY COURSE OF BUSINESS"); provided,
however, that such assumed liabilities shall not include Excluded Liabilities
and any obligations which would constitute Excess Transaction Liabilities; and
(c) The litigation matter described in Schedule 3.1(o)(i) to the
Seller's Disclosure Schedule.
1.4 EXCLUDED LIABILITIES. Buyer is not assuming any Liabilities of Seller
or any of its Stockholders except as expressly provided in Section 1.3. Buyer
shall have no liability whatsoever for any Liabilities of Seller which are not
specifically assumed under Section 1.3, and, without limiting the generality of
the foregoing, Buyer shall not be deemed to assume, nor shall it assume the
following Liabilities, unless such Liabilities are disclosed on the Disclosure
Schedule, the Seller Interim Financial Statements or arise in the Ordinary
Course of Business after March 31, 2005 (the "EXCLUDED LIABILITIES"):
(a) any and all Liabilities arising under or relating to any written
or oral contracts, agreements, guaranties, understandings, deeds, mortgages,
indentures, leases, licenses, commitments, undertakings or other documents or
instruments to which Seller or any entity, directly or indirectly, through one
or more intermediaries, controlling, controlled by or under common control with
such person ("AFFILIATE"), liability or obligation of any nature whether matured
or unmatured, fixed or contingent, secured or unsecured, accrued, absolute or
otherwise ("LIABILITY") hereof is a party, other than the Assumed Contracts to
the extent specifically set forth in Section 1.3(a);
(b) any and all Liabilities of Seller or any of its Affiliates in
respect of any indebtedness for or guarantees of borrowed money;
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(c) any and all Liabilities of Seller to any Affiliate of Seller;
(d) any and all Liabilities of Seller or any of its Affiliates for
or in respect of Taxes that relate to the period ending with the close of
business on the Closing Date , including any Taxes based on the transactions
contemplated by this Agreement, all of which shall be paid by Seller;
(e) any and all Liabilities of Seller or any of its Affiliates
arising out of or relating, directly or indirectly, to any property of which
Seller or such Affiliate has disposed or proposed to dispose, including any and
all Liabilities to any other person or entity incurred in connection with any
sale or proposed sale of (i) all or any substantial part of Seller or any
Affiliate, or any other business combination or proposed business combination,
(ii) any real property of Seller or any Affiliate, (iii) any other business or
(iv) any securities of Seller, any Affiliate or any other entity;
(f) any and all Liabilities arising out of or relating, directly or
indirectly, to any Employee Plan, the Management Bonus Plan or the termination
thereof ;
(g) any and all Liabilities with respect to fees and expenses
incurred by Seller or any of its Affiliates in connection with the sale or
proposed sale or other disposition or proposed disposition of all or part of the
assets or capital stock of Seller or any Affiliate (excluding the Transaction
Liabilities);
(h) any and all Liabilities of Seller or any of its Affiliates to
any present or former employee or independent contractor of Seller or any
Affiliate thereof, including any Liabilities arising out of the transactions
contemplated by this Agreement such as accrued vacation time (including the
Transaction Liabilities and excluding accrued vacation time for Transferred
Employees);
(i) any and all Liabilities of Seller or any of its Affiliates for
any Actions against Seller or any Affiliate, including any Actions pending or
threatened against Seller as of the Closing Date;
(j) any and all Liabilities of Seller or any of its Affiliates for
damage or injury to person or property including, without limitation, those
resulting from or arising out of environmental claims;
(k) any and all Liabilities of Seller or any of its Affiliates
arising out of or resulting from non-compliance with any Federal, state, local
or foreign laws, ordinances, regulations or orders;
(l) any and all Liabilities of Seller or any of its Affiliates
arising out of, relating to or resulting from any obligation to indemnify any
person or entity (including officers and directors of Seller), other than
indemnification obligations to customers as specifically set forth in any of the
Assumed Contracts;
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(m) any and all Liabilities of Seller or any of its Affiliates
arising under this Agreement or any of the Related Agreements, including the
Transaction Liabilities and Excess Transaction Liabilities;
(n) any and all other Liabilities attributable in any manner to the
Excluded Assets;
(o) any and all Liabilities of Seller's stockholders;
(p) any and all other Liabilities of Seller or any of its Affiliates
that are not Assumed Liabilities; and
(q) any and all Liabilities of Seller to Stockholders, whether such
Liabilities constitute debt, equity or fees.
1.5 CONTINUING LIABILITIES. Notwithstanding anything contained herein to
the contrary, to the extent that any damages imposed on Buyer by operation of
law or otherwise in connection with, or which otherwise arises out of or in
relation to, the transactions contemplated hereby (other than Buyer's assumption
of the Assumed Liabilities assumed by it pursuant to Section 1.3), results from
or arises out of an event or condition which is continuing or continuous in
nature, Buyer shall assume and discharge only that portion of such damage that
results from or arises out of that part of the event which occurs or condition
which exists after the Closing, without, however, releasing Seller from its
obligation to discharge that portion of such damage that results from that part
of the event which occurs or condition which exists prior to the Closing;
provided, however, that Seller shall discharge all of such continuing or
continuous damages, including, without limitation, those Assumed Liabilities
assumed by Buyer pursuant to Section 1.3 if and to the extent they result from a
breach by Seller of any of its representations, warranties or covenants
hereunder.
1.6 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") will take place at 10:00 a.m. (Eastern time) on May 6,
2005 (the "CLOSING DATE"), unless another date is agreed to in writing by the
parties. The Closing shall take place at the offices of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, Massachusetts,
unless another time or place is agreed to in writing by the parties. All
transactions contemplated to take place at the Closing shall be deemed to be
effective as of 10:00 a.m. on the Closing Date (the "EFFECTIVE TIME") and events
taking place, and periods ending after the Effective Time shall be deemed to
have taken place, or ended, after the Closing.
1.7 CLOSING DELIVERIES. At the Closing, in addition to the agreements set
forth in Article IV, the parties shall execute and deliver the following
documents:
(a) Seller and Buyer shall execute and deliver the ▇▇▇▇ of Sale,
Assignment and Assumption Agreement in the form of EXHIBIT A attached hereto
(the "▇▇▇▇ OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT") pursuant to which
Seller will transfer and assign to Buyer all of the Acquired Assets and Buyer
will assume the Assumed Liabilities;
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(b) Seller will execute and deliver the Patent Assignment in the
form of EXHIBIT B, attached hereto (the "PATENT ASSIGNMENT") pursuant to which
Seller will transfer and assign to Buyer the Patents being acquired by Buyer
pursuant to this Agreement;
(c) Seller will execute and deliver the Trademark Assignment in the
form of EXHIBIT C attached hereto (the "TRADEMARK ASSIGNMENT") pursuant to which
Seller will transfer and assign to Buyer the Trademarks being acquired by Buyer
pursuant to this Agreement;
(d) Seller will deliver Non-Competition, Confidentiality and
Assignment of Inventions Agreements executed by each of the Key Employees in the
form of EXHIBIT D attached hereto (the "KEY EMPLOYEE AGREEMENTS"); and
(e) All such other bills of sale, assignment and assumption
agreements, endorsements, copyright or other intellectual property right
assignments, consents and other good and sufficient instruments and documents of
conveyance and transfer, all dated the Closing Date and in a form reasonably
satisfactory to Buyer, as Buyer reasonably shall deem necessary or appropriate
to vest in or confirm to Buyer full and complete right, title and interest in
and to all of the Acquired Assets (collectively, the "OTHER ASSIGNMENTS")(all
documents in this Section 1.7, together with the Escrow Agreement and the
Stockholders Voting Agreement defined herein, being collectively referred to as
the "RELATED AGREEMENTS").
On the Closing Date, Seller shall transfer all of the Acquired Assets,
including the IP Rights, to such location or locations as Buyer reasonably may
request.
1.8 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the request of Buyer and without further consideration, Seller will
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation, and will take such further action, as may be
requested in order to more effectively transfer, convey and assign to Buyer, and
to confirm Buyer's title to, the Acquired Assets, and each of the parties shall
execute such other documents and take such further action as may be required or
desirable to carry out the provisions of this Agreement and the transactions
contemplated hereby. Without limiting the generality of the foregoing, Seller
shall, from time to time and at no cost to Buyer, cooperate with, and take all
action requested by, Buyer to effectively transition the Acquired Assets and the
operation and ownership of the Business, including, without limitation, all
financial information relating to the Business, all clients, suppliers and
vendors of the Business and employees, independent contractors and agents of
Seller who perform services in connection with the operation of the Business (it
being understood that Seller shall assist Buyer in identifying such employees,
independent contractors and agents) and all technology (including software
licenses), infrastructure and infrastructure-related systems used in connection
with the operation of the Business, from Seller to Buyer, and shall make its
officers, employees and agents available to, and direct such officers, employees
and agents to cooperate with, Buyer for such purposes. In addition, Seller shall
provide Buyer with a minimum of ten (10) business days notice that Seller is
terminating a group health plan (as that term is defined in Section 5000(b)(1)
of the Code) and the name, address and telephone number of any current or
potential COBRA covered beneficiary.
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1.9 AUTHORIZATION OF THIS AGREEMENT, THE ESCROW AGREEMENT AND THE ESCROW
AGENT. Approval of this Agreement by the stockholders of Seller shall constitute
approval and ratification by Seller of (i) the provisions of this Agreement and
(ii) the designation of the Escrow Agent and the terms and provisions of the
Escrow Agreement.
1.10 ALLOCATION OF PURCHASE PRICE. The parties, as a condition to Closing,
shall agree on the allocation of the Purchase Price for tax purposes on mutually
agreeable terms, which allocation shall be binding upon Buyer and Seller. Buyer,
the Seller and their respective Affiliates shall report, act and file Tax
Returns (including, but not limited to, Internal Revenue Service Form 8594) in
all respects and for all purposes consistent with such allocation, except as may
be required by law.
ARTICLE II
PURCHASE PRICE
2.1 PURCHASE PRICE.
(a) The entire consideration (the "PURCHASE PRICE") payable by Buyer
for the Acquired Assets shall be an aggregate of $9,250,000 in cash (the
"CLOSING CASH PAYMENT").
(b) Those transaction costs and employee severance payments due to
the individuals and in the amounts set forth on Schedule 2.1(b) (the
"TRANSACTION LIABILITIES"), in any event not to exceed $600,000 shall be paid
(such $600,000 limit to be reduced by the amount of severance pay for those
employees continuing on a temporary basis with Buyer after the Closing as
indicated on Schedule 2.1(b)) at the Closing from Seller's existing cash and
cash equivalent accounts otherwise due to Buyer.
(c) Any such Transaction Liabilities exceeding $600,000 in the
aggregate or exceeding the individual limits set forth on Schedule 2.1.(b) (the
"EXCESS TRANSACTION LIABILITIES") shall be the sole and exclusive responsibility
of the Seller to be paid after the Closing and shall not be paid from cash and
cash equivalent accounts otherwise due to Buyer, and (ii) as consideration for
payment by Buyer through Seller of the Transaction Liabilities, simultaneously
with the receipt of payment by each individual or entity named therein, such
individual or entity shall execute a general release running in favor of each of
Seller and Buyer, and their officers, directors and affiliates, in such form as
reasonably requested by Buyer.
(d) At the Closing, Seller shall deliver a certificate of Seller's
President or Chief Executive Officer to Buyer setting forth the actual amount of
Transaction Liabilities and Excess Transaction Liabilities, if any
2.2 ESCROW DEPOSIT; DELIVERY OF PURCHASE PRICE.
(a) ESCROW AGREEMENT. Reference is made to the escrow agreement
dated as of the Closing Date between Seller, Buyer, the Indemnification
Representative, the Principal Stockholders and U.S. Bank Portfolio Services,
Inc. (the "ESCROW AGENT") in the form of EXHIBIT E attached hereto (the "ESCROW
AGREEMENT"), for the purpose of, among other things,
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securing the indemnification obligations of the Seller Indemnifying Parties
pursuant to Article VI hereof.
(b) ESCROW DEPOSIT. At the Closing, Buyer shall cause to be
deposited with the Escrow Agent, and Seller, by its execution and delivery of
this Agreement, hereby authorizes and directs Buyer to make such deposit on its
behalf in the amount of $1,387,500 in cash (the "ESCROW FUNDS"), to be held by
the Escrow Agent in accordance with the provisions of the Escrow Agreement.
(c) DELIVERY OF PURCHASE PRICE. At the Closing, Buyer shall deliver
to Seller the Closing Cash Payment (net of the Escrow Funds).
(d) PAYMENT OF TRANSACTION LIABILITIES. At the Closing, Seller shall
pay the costs of the Transaction Liabilities and, after the Closing, shall pay
from its own accounts any Excess Transaction Liabilities to those entities and
individuals set forth on Schedule 2.1(b). Buyer shall have no obligation to pay
any Transaction Liabilities (other than to allow Seller to use cash and cash
equivalent accounts outstanding at the Closing to pay up to the amount of the
Transaction Liabilities) and the parties acknowledge and agree that none of the
Transaction Liabilities are being assumed by Buyer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
warrants to Buyer that, except as disclosed in the disclosure schedule dated the
date hereof, certified by Seller and delivered to Buyer simultaneously herewith
(which disclosure schedule shall contain specific references to the
representations and warranties to which the disclosures contained therein relate
provided that Seller will be deemed to have adequately disclosed with respect to
any section or subsection any matters that are clearly described elsewhere in
the disclosure schedule and which a person could reasonably infer relate to such
other representations and warranties) (the "DISCLOSURE SCHEDULE").
(a) ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. Seller (i)
is a corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts, (ii) has all requisite corporate
power and authority to own, lease and operate its properties and assets and to
carry on its business as now being conducted, and as proposed to be conducted,
to enter into this Agreement and the Related Agreements to which Seller is a
party, to perform its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby and (iii) is duly qualified and
in good standing to do business in those jurisdictions where the failure to be
so qualified and in good standing could be reasonably likely to have a material
adverse effect on Seller, the Business (on a going-forward basis) or the
business, properties, condition (financial or otherwise), assets, liabilities,
operations, results of operations, prospects or affairs of Seller or of the
Business (on a going-forward basis)(a "MATERIAL ADVERSE EFFECT"). Seller has
delivered to Buyer true and complete copies of the Articles of Organization, and
all amendments thereto, as the same may have been restated (the "ARTICLES OF
ORGANIZATION") and by-laws of Seller, in each case as amended to the date
hereof.
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(b) SUBSIDIARIES; EQUITY INVESTMENTS. Seller does not currently have
nor has it ever had, any subsidiaries, nor does it currently own, or, has it
ever owned, any capital stock or other proprietary interest, directly or
indirectly, in any corporation, limited liability company, association, trust,
partnership, joint venture or other entity.
(c) CAPITAL STOCK; SECURITIES.
(i) The authorized capital stock of Seller consists of
18,813,788 shares of Seller common stock, par value $.01 and 433,000
shares of Seller's Series A Preferred Stock, $.01 par value, 1,823,805
shares of Seller's Series B Preferred Stock, $.01 par value, 3,965,937
shares of Seller's Series C Preferred Stock, $.01 par value, 8,003,447
shares of Seller's Series D Preferred Stock, $.01 par value, and 3,760,341
shares of Seller's Series E Preferred Stock, $.01 par value, (collectively
the "SELLER STOCK"). All outstanding shares of Seller Stock are as
described in Section 3.1(c) of the Disclosure Schedule. All outstanding
shares of Seller Stock are duly authorized, validly issued and
outstanding, fully paid and non-assessable, are owned beneficially and of
record by the stockholders as set forth in Section 3.1(c) of the
Disclosure Schedule and are not subject to preemptive rights created by
statute, the Articles of Organization or by-laws of Seller or any
agreement to which Seller is a party or by which it is bound. All
outstanding shares of Seller Stock were issued in compliance with
applicable Federal and state securities laws.
(ii) Except as set forth in Section 3.1(c) of the Disclosure
Schedule, there are no convertible securities or any security exchangeable
into or exercisable for such convertible securities, issued, reserved for
issuance or outstanding. There are no transfer restrictions or agreements,
instruments or understandings (whether written or oral, formal or
informal) of any character to which Seller or any stockholder is a party
or by which it, he or she is bound obligating Seller or any stockholder to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of Seller Stock or any convertible securities or
obligating Seller or any stockholder to grant, extend, accelerate the
vesting of or enter into any such option, warrant, equity security, call,
right, commitment, instrument, restriction, understanding or agreement.
There are no voting trusts, proxies or other agreements or understandings
with respect to the voting, transfer or disposition of the shares of
Seller Stock.
(d) AUTHORITY; NO CONSENTS. The execution, delivery and performance
by Seller of this Agreement and the Related Agreements to which it is a party
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part
of the Board of Directors of the Seller; and this Agreement has been, and the
Related Agreements to which it is a party when executed and delivered by Seller
will be, duly and validly executed and delivered and the valid and binding
obligations of Seller, enforceable against it in accordance with their
respective terms. The execution, delivery and performance of this Agreement or
the Related Agreements to which it is a party, the consummation by Seller of the
transactions contemplated hereby or thereby, nor compliance by Seller with any
provision hereof or thereof will (A) conflict with, (B) result in any violation
of, (C) cause a default under (with or without due notice, lapse of time or
both), (D) give rise to any right of termination, amendment, cancellation or
acceleration of any obligation
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contained in or the loss of any benefit under or (E) result in the creation of
any Encumbrance on or against any assets, rights or property of Seller under any
term, condition or provision of (x) any instrument or agreement to which Seller
is a party, or by which Seller or any of its properties, assets or rights may be
bound or (y) any law, statute, rule, regulation, order, writ, injunction,
decree, permit, concession, license or franchise of any Federal, state,
municipal, foreign or other governmental court, department, commission, board,
bureau, agency or instrumentality ("GOVERNMENTAL AUTHORITY") applicable to
Seller or any of its properties, assets or rights or conflict with or result in
any violation of Seller's Articles of Organization or by-laws. No permit,
authorization, consent or approval of or by, or any notification of or filing
with, any Governmental Authority or other person or entity is required in
connection with the execution, delivery and performance by Seller of this
Agreement or the Related Agreements or the consummation by Seller of the
transactions contemplated hereby or thereby, except for the consents listed in
Section 3.1(d) of the Disclosure Schedule.
(e) FINANCIAL INFORMATION.
(i) Seller has previously delivered to Buyer the following
financial statements (collectively, the "SELLER FINANCIAL STATEMENTS"):
(1) unaudited balance sheets of Seller as of December
31, 2004 and March 31, 2005 and the related statements of
income, cash flow and shareholders' equity for the three-month
period then ended (the "SELLER INTERIM FINANCIAL STATEMENTS");
and
(2) the audited balance sheets of Seller as of December
31, 2002, and December 31, 2003 and the related audited
statements of income, cash flow and shareholders' equity for
the periods then ended (including complete footnotes thereto),
certified by Seller's independent public accountants, and
accompanied by a copy of such auditor's report.
(ii) The Seller Financial Statements are in accordance with
the books and records of Seller, fairly present, in all respects, the
financial condition of Seller as of the dates indicated and the results of
operations of Seller for the respective periods indicated, and have been
prepared consistent with the past practices of Seller or in accordance
with generally accepted accounting principals ("GAAP") except, in the case
of the Seller Interim Financial Statements for the absence of complete
footnote disclosure as required by GAAP and subject to changes resulting
from normal year-end audit adjustments, which for purposes of this Section
3.1(e) shall not exceed $20,000.
(f) ABSENCE OF UNDISCLOSED LIABILITIES. At March 31, 2005, with
respect to the balance sheet dated that date set forth in the Seller Financial
Statements, Seller had no Liability required to be set forth therein in order
for such balance sheets to accurately present the financial condition of Seller
which was not provided for or disclosed thereon. There were no material loss
contingencies (as such term is used in Statement of Financial Accounting
Standard No. 5, issued by the Financial Accounting Standards Board in March
1975, as amended ("FAS NO. 5") which were not adequately provided for on such
balance sheets, respectively, as required by FAS No. 5.
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(g) ABSENCE OF CHANGES. Since December 31, 2003 or such other date
as is specifically provided below, except as set forth in Section 3.1(g) of the
Disclosure Schedule, Seller has been operated in the Ordinary Course of
Business, and there has not been:
(i) since December 31, 2004, any event or other Action (or
inaction) that has occurred that could have or could reasonably be
expected to have a Material Adverse Effect;
(ii) any damage, destruction or loss to any of the Acquired
Assets, whether or not covered by insurance, having or which could have a
Seller Material Adverse Effect;
(iii) any Liability created, assumed, guaranteed or incurred,
or any transaction, contract or commitment entered into by Seller other
than in the Ordinary Course of Business and consistent with past practice
and not otherwise reflected in the Seller Interim Financial Statements;
(iv) any payment, discharge or satisfaction of any Encumbrance
on any of the Acquired Assets or Liability by Seller or any cancellation
by Seller of any debts or claims or any amendment, termination or waiver
of any rights of value to Seller other than in the Ordinary Course of
Business and consistent with past practice;
(v) any declaration, setting aside or payment of any dividend
or other distribution of any assets of any kind whatsoever with respect to
any shares of the capital stock of Seller or any direct or indirect
redemption, purchase or other acquisition of any such shares of the
capital stock of Seller;
(vi) any license, sale, transfer, pledge, mortgage or other
disposition of any tangible or intangible asset (including any IP Rights
of Seller) other than in the Ordinary Course of Business and consistent
with past practice;
(vii) any termination of, or written indication of an
intention to terminate or not renew, any contract, license, commitment or
other agreement between Seller and any other person;
(viii) Since December 31, 2004, any write-down or write-up of
the value of any asset of Seller, or any write-off of any accounts
receivable or notes receivable of Seller or any portion thereof in any
event in excess of $10,000 in the aggregate;
(ix) any increase in or modification of compensation payable
or to become payable to any Seller Employee to be offered employment by
Buyer (a "TRANSFERRED EMPLOYEE") other than in the Ordinary Course of
Business and consistent with past practice, or the entering into of any
employment contract with any officer or Transferred Employee;
(x) any increase in or modification or acceleration of any
benefits payable or to become payable under any bonus, pension, severance,
insurance or other benefit plan, payment or arrangement (including, but
not limited to, the granting of stock
EXECUTION COPY - APRIL 29, 2005 10
options, restricted stock awards or stock appreciation rights) made to,
for or with any Transferred Employee of Seller;
(xi) since December 31, 2004, any change in the manner in
which Seller extends discounts or credit to customers or offers any
incentives to customers other than in the Ordinary Course of Business
consistent with past practice;
(xii) any termination of employment of any officer or
Transferred Employee of Seller or any expression of intention by any
officer or Transferred Employee of Seller to resign from such office or
employment with Seller;
(xiii) since December 31, 2004, any amendments or changes in
Seller's governing instruments, including Seller's Articles of
Organization or by-laws;
(xiv) any labor dispute or any union organizing campaign;
(xv) the commencement of any litigation or other Action by or
against Seller relating in any manner to Seller;
(xvi) except as set forth in the Seller Interim Financial
Statements, any entry by Seller into any agreement, understanding,
commitment or transaction involving any expense (other than payments of
salaries and normal recurring operating lease and equipment lease payments
and other operating expenses incurred in the Ordinary Course of Business
consistent with past practice) or capital expenditure (since December 31,
2004 as to such capital expenditure), in excess of $25,000 individually or
any series of related agreements, understandings, commitments or
transactions involving expenses or capital expenditures of Seller in
excess of $50,000 in the aggregate; or
(xvii) any agreement, understanding, authorization or
proposal, whether in writing or otherwise, for Seller to take any of the
actions specified in items (i) through (xvi) above.
(h) TAX MATTERS.
(i) Seller and each other corporation or entity (if any)
included in any consolidated or combined tax return in which Seller has
been included (A) have filed in a timely and proper manner, consistent
with applicable laws, all Federal, state and local consolidated or
combined tax returns in which Seller has been included and will file, in a
timely and proper manner, consistent with applicable laws, all Federal,
state and local tax returns and tax reports required to be filed by them
("TAX RETURNS")"with the appropriate governmental agencies in all
jurisdictions in which Tax Returns are required to be filed and have
timely paid all amounts shown thereon to be due; (B) have paid all Taxes
of Seller (or such other corporation or entity) required to have been paid
thereby (or such other corporation or entity) before the Effective Time;
and (C) currently are not the beneficiary of an extension of time within
which to file any Tax Return. "TAXES" mean, with respect to any entity,
(A) all income taxes (including any tax on or based upon net income, gross
income, income as specially defined, earnings, profits or selected items
of income, earnings or profits) and all gross receipts, sales, use, ad
valorem,
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transfer, franchise, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property or windfall profits taxes,
alternative or add-on minimum taxes, customs duties and other taxes, fees,
assessments or charges of any kind whatsoever, together with all interest
and penalties, additions to tax and other additional amounts imposed by
any taxing authority (domestic or foreign) on such entity and (B) any
liability for the payment of any amount of the type described in the
immediately preceding clause (A) as a result of being a "transferee"
(within the meaning of Section 6901 of the Code or any other applicable
law) of another entity or a member of an affiliated or combined group.
(ii) All such Tax Returns were correct and complete at the
time of filing. . All Taxes of Seller attributable to all taxable periods
ending before the Effective Time, to the extent not required to have been
previously paid, have been adequately provided for on the Seller Interim
Financial Statements and on the books and records of Seller for the period
following the date of the Seller Interim Financial Statements to, but not
including, the Effective Time. Seller has not been notified by the
Internal Revenue Service or any state, local or foreign taxing authority
that any issues have been raised (and are currently pending) in connection
with any Tax Return, and no waivers of statutes of limitations have been
given with respect to Seller that are still in effect.
(iii) Except as contested by Seller in good faith and
disclosed in Section 3.1(h) of the Disclosure Schedule, any deficiencies
asserted or assessments (including interest and penalties) made as a
result of any examination by the INTERNAL REVENUE SERVICE" ("IRS") or by
any other taxing authorities of any Tax Return have been fully paid or are
adequately provided for on the Seller Interim Financial Statements, and on
the books and records of Seller for the period following the date of the
Seller Interim Financial Statements to, but not including, the Effective
Time, and Seller has not received notification that any proposed
additional Taxes have been asserted. Seller (i) has not made an election
to be treated as a "consenting corporation" under Section 341(f) of the
Internal Revenue Code of 1986, as amended, and all rules and regulations
promulgated thereunder (the "CODE") or a Subchapter "S" corporation under
Section 1362 of the Code, (ii) is not a "personal holding company" within
the meaning of Section 542 of the Code and (iii) has not been a United
States real property holding corporation within the meaning of Section
897(c) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. Seller has not agreed to, nor is it required
to, make any adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise. Seller will not incur a Tax
Liability resulting from Seller ceasing to be a member of a consolidated
or combined group that had previously filed consolidated, combined or
unitary Tax returns.
(i) TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS.
Seller has good and valid title to all of the Acquired Assets free and clear of
all Encumbrances of any kind or character. The Acquired Assets are in good
operating condition and repair (ordinary wear and tear excepted). The Acquired
Assets include all assets, properties and interests in properties (real,
personal and mixed, tangible and intangible) and all rights, leases, licenses
and other agreements necessary or desirable to enable Buyer to carry on the
Business in the manner as
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presently conducted by Seller. None of the assets, properties or rights being
retained by Seller is used in, or necessary or desirable for, the operation of
the Business as currently conducted.
(j) REAL PROPERTY - OWNED OR LEASED. Seller does not currently own,
nor has it or any of its predecessors ever owned, any real property. Section
3.1(j) of the Disclosure Schedule contains a list and brief description of (i)
all real property leased by Seller together with all buildings and other
structures and improvements located on such real property used in any way in
connection with the operation of the Business (the "LEASED REAL PROPERTY") and
(ii) with respect to each lease covering the Leased Real Property (collectively,
the "LEASES"), (A) the name of the lessor, (B) any requirement of consent of the
lessor to assignment (including assignment by way of merger or change of
control), (C) the termination date of the Lease, (D) notice requirements with
respect to termination, (E) the annual rental payment thereunder, and (F) any
renewal or purchase terms thereof. Seller is the owner and holder of all the
leasehold estates purported to be granted by each Lease, and all Leases are in
full force and effect and constitute valid and binding obligations of Seller.
Seller has made available to Buyer true and complete copies of all Leases. All
improvements included in the Leased Real Property are in good operating
condition and repair (ordinary wear and tear excepted) and there does not exist
any condition that interferes with the economic value or use of such property
and improvements.
(k) INTELLECTUAL PROPERTY.
(i) Set forth in Section 3.1(k)(i) of the Disclosure Schedule
is a true and complete list of all of Seller's IP Rights. Seller has good
and valid title to, and owns free and clear of all Encumbrances, has the
exclusive right to use, sell, transfer, license (or sublicense), transmit,
broadcast, deliver (electronically or otherwise) and dispose of, and has
the right to bring actions for the infringement of, all IP Rights. For the
avoidance of doubt, the IP Rights are not subject to any rights or claim
of any third party arising out of services provided by Seller in the
conduct of the Business or out of any co-development or other joint
development agreement between Seller and a third party. The IP Rights
include all Intellectual Property Rights necessary or desirable for the
conduct of the Business as proposed by Seller to be conducted after the
Closing Date;
(ii) The execution, delivery and performance of this Agreement
and the Related Agreements and the consummation of the other transactions
contemplated hereby or thereby, will not breach, violate or conflict with
any instrument or agreement governing any IP Rights, will not cause the
forfeiture or termination or give rise to a right of forfeiture or
termination of any IP Right or impair the right of Seller or Buyer to use,
sell, license (or sublicense), transmit, broadcast, deliver
(electronically or otherwise) or dispose of, or to bring any action for
the infringement of, any IP Right or portion thereof;
(iii) There are no royalties, honoraria, fees or other
payments payable by Seller to any person by reason of the ownership, use,
license (or sublicense), transmission, broadcast, delivery (electronically
or otherwise), sale, or disposition of IP Rights;
(iv) Except as set forth in Section 3.1.(k)(iv) of the
Disclosure Schedule, neither the manufacture, marketing, license (or
sublicense), sale, transmission,
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delivery (electronically or otherwise), or use of any product or service
currently or proposed to be licensed, sold, marketed, transmitted,
broadcast, delivered (electronically or otherwise) or used by Seller or
currently under development by Seller violates any license (or sublicense)
or agreement of Seller with any third party or infringes any common law or
statutory rights of any other party, including, without limitation, rights
relating to defamation, contractual rights, IP Rights and rights of
privacy or publicity; nor, to the knowledge of Seller, is any third party
infringing upon, or violating any license (or sublicense), transmission,
broadcast, delivery, (electronically or otherwise) or agreement with
Seller relating to, any IP Right; and, except as set forth in Section
3.1(k)(iv) of the Disclosure Schedule, there is no pending or threatened
claim or litigation contesting the validity, ownership or right to use,
manufacture, sell, license (or sublicense), transmit, broadcast, deliver
(electronically or otherwise) or dispose of any IP Right, nor is there any
basis for any such claim. Except as set forth in Section 3.1(k)(iv) of the
Disclosure Schedule, Seller has not received any notice asserting that any
IP Right or the proposed use, manufacture, sale, license (or sublicense),
transmission, broadcast, delivery (electronically or otherwise) or
disposition thereof conflicts or will conflict with the rights of any
other party, nor is there any basis for any such assertion;
(v) Except as set forth in Section 3.1(k)(v) of the Disclosure
Schedule, all works that were created, prepared or delivered by
consultants, independent contractors or other third parties for, in
partnership with, or on behalf of Seller (including any materials and
elements created, prepared or delivered by such parties in connection
therewith) (A) are and shall constitute "works made for hire" specially
ordered or commissioned by Seller within the meaning of United States'
copyright law or (B) have been duly assigned to Seller in writing;
(vi) Section 3.1(k)(vi) of the Disclosure Schedule sets forth,
for the IP Rights owned by Seller, a complete and accurate list of all
United States and foreign (a) Patents; (b) Trademarks (including Internet
domain registrations and unregistered Trademarks); and (c) Copyrights
(including unregistered copyrights) indicating for each, the applicable
jurisdiction, registration number (or application number), and date issued
(or date filed);
(vii) Section 3.1(k)(vii) of the Disclosure Schedule sets
forth a complete and accurate list of all license agreements granting any
right to use or practice any rights under any IP Rights, whether Seller is
the licensee or licensor thereunder (except for shrink-wrap licenses for
off-the-shelf software used by Seller and other licensees identified in
Section 3.1(l) of the Disclosure Schedule) and any assignments, consents,
term, forbearances to ▇▇▇, judgments, orders, settlements or similar
obligations relating to any IP Rights to which Seller is a party or
otherwise bound (collectively, the "LICENSE AGREEMENTS"), indicating for
each the title, the parties, date executed, whether or not it is exclusive
and the Intellectual Property Rights covered thereby. The License
Agreements are valid and binding obligations of Seller, enforceable in
accordance with their terms, and there exists no event or condition which
will result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default by Seller under any such
License Agreement;
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(viii) All Trademarks of Seller have been in continuous use by
Seller. To the knowledge of Seller, there has been no prior use of such
Trademarks by any third party which would confer upon said third party
superior rights in such Trademarks;
(ix) Section 3.1(k)(ix) of the Disclosure Schedule lists all
software or other material that is made generally available to the public
under license that does not require the payment of any fees or royalties,
including, without limitation, the GNU General Public License (GPL), GNU
Lesser General Public License (LGPL), vendor "open source" licenses, BSD
licenses and any other similar "free software" or "open source" licenses
(collectively, "OPEN SOURCE MATERIALS") and that is used by Seller in any
way in connection with the Acquired Assets or the Licensed Software.
Section 3.1(k)(ix) of the Disclosure Schedule identifies for each Open
Source Material the license pursuant to which it is used by Seller and
describes the manner in which such Open Source Material is used by Seller,
including, without limitation, (i) whether the Open Source Material was
modified by Seller; (ii) if the Open Source Materials were modified, the
nature of the modification; (iii) the relationship of the Open Source
Material to the Acquired Assets or the Licensed Software and other
components of the Acquired Assets; and (iv) whether or not Seller
distributes any Open Source Materials as part of or in connection with the
Acquired Assets. Except as expressly described in Section 3.1(k)(ix) of
the Disclosure Schedule, Seller has not: (A) incorporated Open Source
Materials into, or combined Open Source Materials with, any of the
Acquired Assets or the Licensed Software; or (B) distributed Open Source
Materials in conjunction with the Acquired Assets. Further, all of the
Open Source Materials used by Seller in connection with the Acquired
Assets or the Licensed Software have been used in compliance with the
terms of each respective license and in a manner that does not require
Seller to: (a) disclose source code for the Acquired Assets (other than
the Open Source Materials); (b) distribute any of the Acquired Assets
without charge or at a reduced charge; or (c) distribute any of the
Acquired Assets under license terms dictated by licensors of the Open
Source Materials;
(x) Except as set forth in Section 3.1(k)(x) of the Disclosure
Schedule, no IP Rights are vested in any third party as a result of any
co-development or partnership agreements or activities; and
(xi) Section 3.1(k)(xi) of the Disclosure Schedule lists all
employees of Seller (past and present) who have executed non-disclosure
and assignment of invention agreements in favor of Seller or who were
otherwise required to assign IP Rights to Seller.
(xii) As used herein, the term "IP RIGHTS" shall mean all
intellectual property rights worldwide, including, without limitation,
trademarks, service marks, trade names, service names, URLs and Internet
domain names and applications therefor (and all interest therein),
designs, slogans and general intangibles of like nature, together with all
goodwill related to the foregoing (including any registrations and
applications for any of the foregoing) (collectively, "TRADEMARKS");
patents (including any registrations, continuations, continuations in
part, renewals and applications for any of the foregoing) (collectively,
"PATENTS"); copyrights (including any registrations, applications and
EXECUTION COPY - APRIL 29, 2005 15
renewals for any of the foregoing (collectively, "COPYRIGHTS"); computer
programs and other computer software (including, but not limited to the
software); databases; technology, trade secrets and other confidential
information, know-how, proprietary technology, processes, formulae,
algorithms, models, user interfaces, customer lists, inventions, source
codes and object codes and methodologies, architecture, structure, display
screens, layouts, development tools, instructions, templates, marketing
materials, inventions, trade dress, logos and designs and all
documentation and media constituting, describing or relating to the
foregoing (collectively, "TRADE SECRETS").
(l) SOFTWARE.
(i) Section 3.1(l) of the Disclosure Schedule sets forth a
true and complete list of all software programs and applications licensed
by Seller from any third party and used by Seller (A) in the operation of
the Business, or (B) in the development of any of the Acquired Assets
(other than any non-customized and generally commercially available
shrink-wrapped software that (1) is so licensed solely in executable or
object code form pursuant to a nonexclusive, internal use software
license, (2) is not incorporated into any product or service developed,
manufactured, marketed or sold by Seller, or used by Seller in the
development, manufacturing, provision or distribution of, any product or
service, and (3) is generally available on standard terms for less than
$5,000 (the "LICENSED SOFTWARE").
(ii) The Licensed Software is validly held and used by Seller
and may be used by Seller pursuant to the applicable license agreements
with respect thereto without the consent of or notice to any third party.
Each of the license agreements relating to the Licensed Software are valid
and binding obligations, enforceable in accordance with their terms, and
there exists no event or condition which will result in a violation or
breach of, or constitute (with or without due notice or lapse of time or
both) a default by Seller or the licensor under any such license
agreement.
(m) AGREEMENTS, ETC. Section 3.1(m) of the Disclosure Schedule sets
forth a true and complete list of all written or oral contracts, agreements and
instruments (and, with respect to any oral contract, agreement or instrument,
provides a description of the terms of such contract, agreement or instrument
agreements and other instruments) to which Seller is a party or by which it or
its properties are bound, including, without limitation, the following:
(i) agreements for the development, modification or
enhancement of computer software or multimedia products;
(ii) distributorship, dealer, sales, advertising, agency,
manufacturer's representative, franchise or similar agreements or other
agreements relating to the payment of a commission or other fee calculated
as or by reference to a percentage of the profits or revenues of Seller or
of any business segment of Seller;
(iii) joint venture, partnership or other agreements for the
sharing of profits;
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(iv) collective bargaining agreements or other agreements with
or commitment to any labor union;
(v) agreements relating to the future purchase, sale or
license of products, material, supplies, equipment or services (other than
in the Ordinary Course of Business and which are cancelable by Seller
without penalty), requiring payments to or from Seller, or pursuant to
which Seller has granted or received manufacturing rights, most favored
nations pricing provisions or exclusive marketing or other rights relating
to any product, group of products, services, technology, assets or
territory;
(vi) license (whether as licensor or licensee), sublicense,
royalty, permit, or franchise agreements, including, without limitation,
agreements pursuant to which Seller licenses any IP Rights to any third
party (other than ordinary course licenses to end-users);
(vii) employment agreements with any individual currently
employed by the Seller ("CURRENT EMPLOYEE") or any other type of
agreement, commitment or understanding with any Current Employee;
(viii) profit-sharing, bonus, stock option, stock appreciation
right, pension, retirement, disability, stock purchase, hospitalization,
insurance or similar plans or agreements, formal or informal, providing
benefits to any current or former director, officer, employee, agent or
consultant;
(ix) indentures, mortgages, promissory notes, loan agreements,
guarantees or other agreements or commitments for the borrowing of money,
for a line of credit or for a leasing transaction of a type required to be
capitalized in accordance with Statement of Financial Accounting Standards
No. 13 of the Financial Accounting Standards Board;
(x) agreements, instruments or other arrangements granting or
permitting any Encumbrance on any of the properties, assets or rights of
Seller;
(xi) leases for real property (whether as lessor or lessee) or
any other lease or agreement under which Seller is lessee of or holds or
operates any items of tangible personal property owned by any third party;
(xii) agreements or commitments for charitable contributions;
(xiii) agreements or commitments for capital expenditures;
(xiv) agreements or arrangement for the sale of any assets,
properties or rights;
(xv) agreements which restricts Seller from engaging in any
aspect of its business or competing in any line of business in any
geographic area;
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(xvi) confidentiality, non-competition, non-solicitation or
assignment of inventions agreements with any employee, consultant or
contractor;
(xvii) source code escrow agreements that cannot be terminated
by Seller on thirty (30) days' notice without additional cost to Seller
(or licensor) exceeding $10,000;
(xviii) agreements with or commitments to third parties
exceeding $25,000 (other than normal recurring expenses in the Ordinary
Course of Business; under contracts cancelable by Seller without penalty);
and
(xix) other agreements or commitments that are material to
Seller and the conduct of its Ordinary Course of Business.
Seller has furnished to Buyer true and complete copies of all such
agreements listed in Section 3.1(m) of Disclosure Schedule and (x) each such
agreement (A) is the legal, valid and binding obligation of Seller, and, to the
knowledge of Seller, the legal, valid and binding obligation of each other party
thereto, in each case enforceable in accordance with its terms, (B) is in full
force and effect and (y) neither Seller nor, to the knowledge of Seller, any
other party or parties thereto, is or are in material default thereunder.
(n) NO DEFAULTS. Seller has performed all of the obligations
required to be performed by it to date and is not in default or alleged to be in
default under (i) its Articles of Organization or by-laws, (ii) the Assumed
Contracts or (iii) any other agreement, lease, license, contract, commitment,
instrument or obligation to which it is a party and there exists no event,
condition or occurrence which, with or without due notice or lapse of time, or
both, would constitute such a default or alleged default by it of any of the
foregoing.
(o) LITIGATION, ETC. There are no (i) actions, suits, claims,
investigations or legal or administrative or arbitration proceedings
(collectively, "ACTIONS") pending or threatened against Seller nor, to the
knowledge of Seller, is there any basis therefor, whether at law or in equity,
or before or by any Governmental Authority, (ii) judgments, decrees, injunctions
or orders of any Governmental Authority or arbitrator against Seller, or (iii)
disputes with customers or vendors of Seller. There are no Actions pending or
threatened, nor, to the knowledge of Seller, is there any basis therefor, with
respect to (A) any of the Acquired Assets or Assumed Liabilities, (B) the
employment by, or association with, Buyer, of any present officers, employees of
or consultants to the Seller ("DESIGNATED PERSONS") or (C) the use of any
information, techniques or processes presently utilized or proposed to be
utilized by Seller or any of the Designated persons, that Buyer or any of the
Designated persons are or would be prohibited from using as the result of a
violation or breach of, or conflict with any agreements or arrangements between
any Designated person and any other person, or any legal considerations
applicable to unfair competition, trade secrets or confidential or proprietary
information. Seller has delivered to Buyer all documents and correspondence
relating to such matters referred to in Section 3.1(o) of Disclosure Schedule
(including any correspondence evidencing customer dissatisfaction with Seller or
its products or services).
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(p) ACCOUNTS AND NOTES RECEIVABLE. All of the accounts receivable
and notes receivable owing to Seller being transferred and assigned to Buyer
pursuant to this Agreement constitute valid and enforceable claims arising from
bona fide transactions in the Ordinary Course of Business, and there are no
known or asserted claims, refusals to pay or other rights of set-off against any
thereof. There is (i) no account debtor or note debtor that has refused (or, to
the knowledge of Seller, threatened to refuse) to pay any obligation to Seller
for any reason, (ii) to the knowledge of Seller, no account debtor or note
debtor owing an obligation to Seller that is insolvent or bankrupt and (iii) no
account receivable or note receivable being transferred and assigned to Buyer
which is pledged to any third party by Seller.
(q) ACCOUNTS AND NOTES PAYABLE. All accounts payable and notes
payable by Seller to third parties as of the date hereof arose in the Ordinary
Course of Business, are listed in Section 1.3(b) of the Disclosure Schedule and
there is no such account payable or note payable delinquent in its payment.
(r) COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS AND CONSENTS.
(i) Schedule 3.1(r)(i) of the Disclosure Schedule contains a
true and complete list of each jurisdiction in which Seller is authorized
to do business. Seller has complied and is presently in compliance with
all Federal, state, local or foreign laws, ordinances, regulations and
orders applicable to it (including, without limitation, laws, ordinances,
regulations and orders applicable to labor, employment and employment
practices, terms and conditions of employment and wages and hours);
(ii) Seller has all Federal, state, local and foreign
governmental licenses, consents, approvals, authorizations, permits,
orders, decrees and other compliance agreements necessary in the conduct
of the Business as presently conducted or as proposed to be conducted,
such licenses, consents, approvals, authorizations, permits, orders,
decrees and other compliance agreements are in full force and effect, no
violations are or have been recorded in respect of any thereof and no
proceeding is pending or, to the knowledge of Seller, threatened to revoke
or limit any thereof; and
(iii) Section 3.1(r)(iii) of the Disclosure Schedule contains
a true and complete list of all such governmental licenses, consents,
approvals, authorizations, permits, orders, decrees and other compliance
agreements under which Seller is operating or bound, Seller is not in
default or alleged to be in default under any thereof and Seller has
furnished to Buyer true and complete copies thereof. None of such
licenses, consents, approvals, authorizations, permits, orders, decrees
and other compliance agreements shall be affected in any respect by the
transactions contemplated hereby or by any of the Related Agreements.
(s) ENVIRONMENTAL MATTERS.
(i) To the knowledge of Seller, Seller has complied with and
is in compliance with all Federal, state, local and foreign laws, statutes
(civil and criminal), common laws, ordinances, codes, regulations, rules,
notices, permits, judgments, requirements, standards, guidelines, judicial
and administrative orders and decrees
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applicable to it and its properties, assets, operations and businesses
relating to pollution, worker and public health and safety, and/or
environmental protection ("ENVIRONMENTAL LAWS"), including without
limitation Environmental Laws relating to air, water, land and the
generation, release, storage, use, handling, transportation, treatment,
discharge, disposal or other handling of Wastes, Hazardous Wastes and
Hazardous Substances (as such terms are currently defined in any
applicable Environmental Law); and
(ii) To the knowledge of Seller, Seller does not or will not
have any liability in connection with any release of any Hazardous Waste
or Hazardous Substance into the environment.
For purposes hereof, the term Environmental Laws includes, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act,
42 U.S.C. Section 1857 et seq., the Occupational Safety and Health Act of
1970, 29 U.S.C. Section 651 et seq., and the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq.
(t) EMPLOYEES.
(i) Section 3.1(t) of the Disclosure Schedule identifies all
employees and consultants employed or engaged by Seller and sets forth
each such individual's rate of pay or annual compensation, primary work
location, job title and date of hire. Except as set forth on Section
3.1(t)(i) of the Disclosure Schedule, there are no employment, consulting,
severance pay, continuation pay, termination or indemnification agreements
or other similar agreements of any nature (whether in writing or not)
between Seller and any current or former stockholder, officer, director,
employee, or any consultant. No such employment agreement disclosed on
Section 3.1(t)(i) of the Disclosure Schedule will, as a direct or indirect
result of the transactions contemplated hereby, require any payment by
Seller or Buyer or any consent or waiver from any stockholder, officer,
director, employee or consultant; or result in any change in the nature of
any rights or any stockholder, officer, director, employee or consultant,
including, but not limited to, any accelerated payments, deemed
satisfaction of goals or conditions, new or increased benefits or
additional or accelerated vesting. Except as set forth in Section 3.1(t)
of the Disclosure Schedule, no individual will as a direct or indirect
result of the transactions contemplated hereby, accrue or receive
additional benefits, service or accelerated rights to payments under any
Employee Plan (as defined in Section 3.1(u)), if any, including the right
to receive any parachute payment, as defined in Section 280G of the Code,
or become entitled to severance, termination allowance or similar payments
that could result in the payment of any such benefits or payments.
(ii) Except as set forth in Section 3.1(t)(ii) of the
Disclosure Schedule, (A) Seller is not delinquent in payments to any
Current Employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by them to date or amounts
required to be reimbursed to such employees, (B) upon termination of the
employment of any such employees, neither Seller nor Buyer will by reason
of anything done prior to the Closing be liable to any of such employees
for so-
EXECUTION COPY - APRIL 29, 2005 20
called "severance pay" or any other payments, (C) there is no unfair labor
practice complaint against Seller pending before the National Labor
Relations Board or any comparable Governmental Authority, and none of
Seller's policies or practices is currently being audited or, to the
knowledge of Seller, investigated by any Federal, state or local
government agency, (D) there is no labor strike, dispute, claim, charge,
lawsuit, proceeding, labor slowdown or stoppage pending or, to the
knowledge of Seller, threatened against or involving Seller, (E) to the
knowledge of Seller, no labor union has taken any action with respect to
organizing the employees of Seller, (F) neither any grievance nor any
arbitration proceeding arising out of or under collective bargaining
agreements covering any Current Employee is pending and no claim therefor
has been asserted against Seller, and (G) no Current Employee has informed
any officer of Seller that such employee will terminate his or her
employment or engagement with Seller or Buyer and Seller has no reason to
believe that the Current Employees that accept employment with Buyer will
not remain employees of Buyer for at least 180 days after the Closing.
Except as set forth in Section 3.1(t)(ii) of the Disclosure Schedules, all
individuals considered by Seller to be independent contractors that
provide any services to Seller are, and could only be reasonably
considered to be, in fact "independent contractors" and are not
"employees" or "common law employees" for tax, benefits, wage, labor or
any other legal purpose.
(iii) Neither Seller nor, to the knowledge of Seller, any
employee or independent contractor of Seller that provides any services to
Seller is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement relating to the
relationship of such employee or independent contractor with Seller or any
other party because of the nature of the business conducted or proposed to
be conducted by Seller or the execution and delivery of any
confidentiality agreement or similar agreement by such employee. No third
party has claimed, or, to the knowledge of Seller, has reason to claim
that any persons employed by or affiliated with Seller has (A) violated or
may be violating the terms or conditions of such person's employment,
non-competition or non-disclosure agreement with such third party, (B)
disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party, or
(C) interfered or may be interfering in the employment relationship
between such third party and any of its present or former employees. No
third party has requested information from Seller that suggests that such
a claim might be contemplated.
(u) EMPLOYEE BENEFIT PLANS AND CONTRACTS.
(i) Section 3.1(u) of the Disclosure Schedule identifies all
"employee benefit plans" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all
bonus, phantom stock, stock appreciation rights, incentive, deferred
compensation, retirement or supplemental retirement, severance, golden
parachute, vacation, cafeteria, dependent care, medical care, employee
assistance program, education or tuition assistance programs, insurance
and other similar compensation, fringe or employee benefit plans, programs
or arrangements, and any current or former employment or executive
compensation or severance agreements, written or otherwise, for the
benefit of, or relating to, any present or former Employee of
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Seller or any trade or business (whether or not incorporated) which is a
member of a controlled group or which is under common control with Seller
within the meaning of Section 414 of the Code and the regulations
promulgated thereunder (an "ERISA AFFILIATE") and all other written or
formal plans or agreements involving direct or indirect compensation
(including any employment agreements entered into between Seller and any
Employee, but excluding workers' compensation, unemployment compensation,
other government-mandated programs and Seller's salary and wage
arrangements) currently or previously maintained, contributed to or
entered into by Seller, or any ERISA Affiliate for the benefit of any
Employee or former Employee under which Seller or any ERISA Affiliate
thereof has any present or future obligation or liability (the "EMPLOYEE
PLANS"), whether or not such plan or arrangement has been terminated.
Seller has provided to Buyer true and complete copies of all Employee
Plans (and, if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof, and (where applicable) (A)
all summary plan descriptions, summaries of material modifications, and
corporate resolutions related to such plans (B) the three most recent
determination letters received from the IRS, (C) the three most recent
Form 5500 Annual Reports, with all attachments, (D) the most recent
audited financial statement and actuarial valuation, and (E) all related
agreements, insurance contracts and other agreements which implement each
such Employee Plan. Any Employee Plan that individually or collectively
would constitute an "employee pension benefit plan", as defined in Section
3(2) of ERISA, but which are not Multiemployer Plans (collectively, the
"PENSION PLANS"), are identified as such in Disclosure Schedule. For
purposes of Section 3.1(u), "EMPLOYEE"" means any common law employee,
consultant or director of Seller who provides or has provided any services
to Seller.
(ii) Each Employee Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to the date hereof, and each trust
forming a part thereof is exempt from tax pursuant to Section 501(a) of
the Code, and nothing has occurred which may be expected to cause the loss
of such qualification or exemption. There has been no "prohibited
transaction," as such term is defined in Section 406 of ERISA and Section
4975 of the Code, with respect to any Employee Plan; there are no claims
pending (other than routine claims for benefits) or, to the knowledge of
Seller, threatened against any Employee Plan or against the assets of any
Employee Plan, nor are there any current or, to the knowledge of Seller,
threatened liens on the assets of such plans; all Employee Plans conform
to, and in their operation and administration are in all respects in
compliance with the requirements prescribed by any and all statutes
(including ERISA and the Code), orders, or governmental rules and
regulations currently in effect with respect thereto (including all
applicable requirements for notification, reporting and disclosure to
participants of the Department of Labor or Secretary of the Treasury), and
Seller and each of its ERISA Affiliates have performed all obligations
required to be performed by them under, are not in default under or
violation of, and have no knowledge of any default or violation by any
other party to, any of the Employee Plans; all contributions required to
be made to any Employee Plan pursuant to Section 412 of the Code, the
terms of the Employee Plan or any collective bargaining agreement, have
been made on or before their due dates and a reasonable amount has been
accrued for contributions to each Employee Plan for the current plan
years; the transaction contemplated herein will not directly or indirectly
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result in an increase of benefits, acceleration of vesting or acceleration
of timing for payment of any benefit to any participant or beneficiary;
and Seller has reviewed the fees assessed by all third parties for
services provided in relation to any aspect of the operation of each
Employee Plan which includes a cash or deferred arrangement under Code
section 401(k) and has determined that such fees are reasonable and has
fully disclosed the nature and amount of such fees to each participant and
beneficiary of such Employee Plan.
(iii) No Employee Plan constitutes or since the enactment of
ERISA has constituted (A) a "multiemployer plan", as defined in Section
3(37) of ERISA (a "MULTIEMPLOYER PLAN") (B) a plan covered under Title IV
of ERISA, or (C) a "multiple employer plan," as defined in Section 413(c)
of the Code. Seller has never incurred any material liability under Title
IV of ERISA arising in connection with the termination of any Pension Plan
or the complete or partial withdrawal from any Multiemployer Plan.
(iv) Each Employee Plan which is a "group health plan" (as
defined in Section 5000 of the Code) has been maintained in compliance
with Section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA
("COBRA COVERAGE"), and no tax payable on account of Section 4980B of the
Code has been or is expected to be incurred with respect to any current or
former Employees of Seller. Each Employee Plan which is a group health
plan has been maintained in compliance with Section 4980D of the Code and
Sections 701 through 707 of ERISA, Title XXII of the Public Health Service
Act and the provisions of the Social Security Act, to the extent such
requirements are applicable. Each Employee Plan that is subject to Section
1862(b) (1) of the Social Security Act has been operated in compliance
with the secondary payor requirements of Section 1862(b)(1) of such Act.
(v) All contributions due and payable and all compensation in
any form due and payable on or before the Closing Date in respect of any
Employee Plan have been made in full and proper form, or adequate accruals
in accordance with generally accepted accounting principles have been
provided for in the Seller Financial Statements for all other
contributions or amounts in respect of the Employee Plans for periods
ending on the Closing Date.
(vi) Except as set forth on Schedule 3.1(u)(vi) of the
Disclosure Schedule no Employee Plan currently or previously maintained by
Seller or any of its ERISA Affiliates provides any post-termination health
care or life insurance benefits, and neither Seller nor its ERISA
Affiliates has any obligations (whether written or real) to provide any
post-termination benefits in the future (except for COBRA Coverage).
(vii) The consummation of the transactions contemplated by
this Agreement will not, except as set forth in Section 3.1(u)(vii) of the
Disclosure Schedule, (A) entitle any individual to severance or separation
pay, or (B) except as set forth in the relevant Employee Plans, accelerate
the time of payment or vesting, or increase the amount, of compensation
due to any individual. No payment made or contemplated under any Employee
Plan or Benefit Arrangement constitutes an "excess parachute payment"
within the meaning of Section 280G of the Code .
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(v) INSURANCE. Section 3.1(v) of the Disclosure Schedule contains a
list of all policies of liability, theft, fidelity, fire, product liability,
errors and omissions, workmen's compensation, indemnification of directors and
officers (including tail coverage) and other similar forms of insurance held by
Seller (specifying the insurer, the amount of coverage, the type of insurance,
the policy number and any pending claims thereunder) and a history of all claims
made by Seller thereunder during the three-year period immediately preceding the
date of this Agreement, and the status thereof. Seller has not, since its
inception, been denied or had revoked or rescinded any policy of insurance.
(w) BROKERS. Except as set forth in Section 3.1(w) of the Disclosure
Schedule, Seller has not, nor have any of its officers, directors, stockholders
or employees, employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated hereby.
(x) RELATED TRANSACTIONS. Except as may be caused by this Agreement,
no current or former director, officer or securityholder of Seller that is an
Affiliate of Seller or any associate thereof, is now, or has been since the
inception of Seller, a party to any transaction with Seller (including, but not
limited to, any contract, agreement or other arrangement providing for the
furnishing of services by, or rental of real or personal property from, or
borrowing money from, or otherwise requiring payments to, any such director,
officer or affiliated stockholders of Seller or associate thereof), or, to the
knowledge of Seller, the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a present or
potential competitor, supplier or customer of Seller (other than non-affiliated
holdings in publicly-held companies), nor, to the knowledge of Seller, does any
such person receive income from any source other than Seller which relates to
the business of, or should properly accrue to, Seller.
(y) MINUTE BOOKS. The minute books of Seller provided to Buyer for
review contain a complete recording of all meetings of and actions by their
respective directors and stockholders from the time of its incorporation to the
date of such review and reflect all actions referred to in such minutes
accurately.
(z) CERTAIN PRACTICES. Neither Seller nor any of its directors,
officers' or employees has, directly or indirectly, given or agreed to give any
rebate, gift or similar benefit to any supplier, customer, governmental employee
or other person who was, is or may be in a position to help or hinder Seller (or
assist in connection with any actual or proposed transaction) which (i) could
subject Seller or Buyer to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, or (ii) if not continued in the future,
could have an adverse effect on Seller, Buyer or the Business.
(aa) PROJECTIONS. The most recent projections dated April 5, 2005
relating to the future performance of Seller and the Business (the
"PROJECTIONS") delivered to Buyer by Seller and developed by Seller, have been
prepared by Seller in good faith based on the best knowledge, information and
belief of Seller and the members of Seller's management at the time of the
Projections. The basis on which the Projections were made were reasonable when
made, and since the date when made there have been no occurrences, developments
or facts which would cause Seller to believe either that the Projections are not
reasonable or that the
EXECUTION COPY-APRIL 29, 2005 24
assumptions on which they are based are materially incorrect, other than changes
proposed in writing to the Projections by Buyer subsequent to April 5, 2005.
(bb) BUSINESS GENERALLY. There have been no events or transactions,
or information that could reasonably be expected to have a Material Adverse
Effect, and Seller is not obligated under any contract or agreement or subject
to any corporate restriction that could have a Material Adverse Effect.
(cc) DISCLOSURE. To the knowledge of Seller, neither Section 3.1 of
this Agreement (including the Disclosure Schedule) nor any document, written
information, statement, financial statement, certificate or exhibit furnished or
to be furnished to Buyer by or on behalf of Seller or any Stockholder pursuant
hereto, or in connection with the transactions contemplated hereby contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements or facts
contained herein and therein not misleading in light of the circumstances under
which they were made.
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
to Seller as follows:
(a) ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. Buyer (i)
is a corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts, and (ii) has all requisite corporate
power and authority to enter into this Agreement and each of the Related
Agreements to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
(b) AUTHORITY. The execution, delivery and performance by Buyer of
this Agreement and each of the Related Agreements to which Buyer is a party and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Buyer. This
Agreement and each of the Related Agreements to which Buyer is a party are valid
and binding obligations of Buyer, enforceable against Buyer in accordance with
their respective terms.
(c) LITIGATION. There are no Actions pending or, to the knowledge of
Buyer, threatened against Buyer, whether at law or in equity, or before or by
and Governmental Authority, challenging or seeking to prevent the transactions
contemplated by this Agreement.
(d) BROKERS. Buyer has not, nor have any of its officers, directors,
stockholders or employees, employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligations of each party
to perform this Agreement and to consummate the transactions contemplated hereby
are subject to
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the satisfaction of the following conditions unless waived (to the extent such
conditions can be waived) by all parties hereto:
(a) APPROVALS. All authorizations, consents, orders or approvals of,
or declarations or filings with or expiration of waiting periods imposed by any
Governmental Authority necessary for the consummation of the transactions
contemplated hereby shall have been obtained or made or shall have occurred.
(b) LEGAL ACTION. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the transactions contemplated hereby shall have been issued by any Federal or
state court or other Governmental Authority and remain in effect.
(c) LEGISLATION. No Federal, state, local or foreign statute, rule
or regulation shall have been enacted which prohibits, restricts or delays the
consummation of the transactions contemplated by this Agreement or any of the
conditions to the consummation of such transactions.
(d) PURCHASE PRICE ALLOCATION SCHEDULE. The parties shall have
agreed on the allocation of the Purchase Price as described in Section 1.10.
4.2 ESCROW AGREEMENT. Each of Buyer, Seller, the Escrow Agent, the
Indemnification Representative and the stockholders of Seller listed in Schedule
4.2 (the "PRINCIPAL STOCKHOLDERS") shall enter into the Escrow Agreement, in the
form of EXHIBIT E attached hereto.
4.3 ASSIGNMENT OF REAL ESTATE LEASE/KEY LICENSES REQUIRING CONSENT TO
ASSIGNMENT. The Seller and Buyer shall have entered into an assignment and
assumption agreement for each of the real estate leases, licenses and contracts
listed on Schedule 4.3 and shall have obtained the written consent of the other
party to such agreement to the assignment of such agreement to Buyer, such
consent to be in a form reasonably satisfactory to Buyer.
4.4 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
perform this Agreement and to consummate the transactions contemplated hereby
are subject to the satisfaction of the following conditions unless waived (to
the extent such conditions can be waived) by Buyer.
(a) REPRESENTATIONS AND WARRANTIES OF SELLER. Buyer shall have
received a certificate signed by the President or Chief Executive Officer of
Seller to the effect that the representations and warranties of Seller set forth
in Sections 3.1 hereof are true and correct in all material respects (except for
any representation or warranty that by its terms is qualified by materiality, in
which case it shall be true and correct in all respects) as of the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF SELLER. Buyer shall have received
a certificate signed by the President or Chief Executive Officer of Seller to
the effect that (A) Seller has performed the obligations required to be
performed by it under this Agreement prior to or as of the Closing Date, and (B)
that the Transaction Liabilities are no greater than set forth on Schedule
1.3(c) and setting forth the actual amounts thereof.
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(c) AUTHORIZATION OF AGREEMENT. All actions necessary to authorize
the execution, delivery and performance of this Agreement and the Related
Agreements by Seller and the consummation of the transactions contemplated
hereby and thereby shall have been duly and validly taken by the Board of
Directors and the stockholders of Seller, and Seller shall have full power and
right to effect the transactions contemplated hereby and thereby on the terms
provided herein and therein.
(d) ACCEPTANCE BY COUNSEL TO BUYER. The form and substance of all
legal matters contemplated hereby and of all documents or instruments delivered
hereunder shall be reasonably acceptable to Buyer's counsel.
(e) CONSENTS AND APPROVALS. Buyer shall have received duly executed
copies of all consents and approvals contemplated by this Agreement or the
Disclosure Schedule, in form and substance reasonably satisfactory to Buyer.
(f) RELATED AGREEMENTS. Each of the Related Agreements shall be in
full force and effect as of the Closing Date and become effective in accordance
with the respective terms thereof and the actions required to be taken
thereunder by the parties thereto immediately prior to the Closing Date shall
have been taken, and each person or entity who or which is required or
contemplated by the parties hereto to be a party to any Related Agreement who or
which did not theretofore enter into such Related Agreement execute and deliver
such Related Agreement.
(g) DEFAULT UNDER AGREEMENTS. The consummation of the transactions
contemplated hereby shall not cause Seller to be in default under any material
contract relating to any of the Acquired Assets.
(h) APPROVAL BY BOARD OF DIRECTORS OF BUYER. This Agreement, all
agreements related and the Related Agreements and the transaction contemplated
hereby and thereby shall have been approved by the Board of Directors of Buyer.
(i) EVIDENCE OF CORPORATE AUTHORITY. Seller shall have delivered (A)
a certificate of the Secretary or an Assistant Secretary of Seller, dated as of
the Closing Date, certifying as to (i) the attached true and correct copies of
the Articles of Organization and by-laws of Seller, (ii) the incumbency of the
officers executing this Agreement and the Related Agreements on behalf of Seller
and (iii) the attached true and correct copies of resolutions of the board of
directors and stockholders of Seller authorizing and approving the execution,
delivery and performance of this Agreement and the Related Agreements and the
transactions contemplated hereby and thereby, and the acts of the officers of
Seller in carrying out the terms and provisions hereof; and (B) certificates of
good standing from the Secretary of State of the Commonwealth of Massachusetts
and of each jurisdiction in which it is qualified to do business as identified
on Section 3.1(a) to the Disclosure Schedule dated within five (5) days of the
Closing Date.
(j) KEY EMPLOYEES AND OTHER TRANSFERRED EMPLOYEES. Each key employee
listed on Schedule 4.4(j) (each a "KEY EMPLOYEE") shall have accepted employment
with Buyer, subject to consummation of the Closing, and shall have executed a
Non-
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Competition, Non-Disclosure and Assignment of Inventions agreement in the form
attached hereto as EXHIBIT D-1. At least two-thirds of all other Transferred
Employees shall accept employment with the Buyer, subject to consummation of the
Closing, and shall have executed a Non-Disclosure and Assignment of Inventions
Agreement in the form attached hereto as EXHIBIT D-2.
(k) CHANGE OF NAME. Seller shall deliver to Buyer immediately prior
to the Closing properly executed Articles of Amendment to be filed with the
Massachusetts Secretary of State changing the name of the Seller from "EasyAsk,
Inc." to a name not containing the words "EasyAsk" or any similar phrase.
(l) COMPLETION OF INVESTIGATION. Buyer shall have completed its due
diligence investigation of Seller and shall have been reasonably satisfied with
the results of such investigation; provided, however, that such due diligence
shall not waive any obligations of Seller under representations, warranties or
covenants of this Agreement.
(m) NO ADVERSE CHANGE. No change shall have occurred or be
threatened regarding Seller or the Business which could or could be reasonably
likely to have a Material Adverse Effect.
(n) STOCKHOLDER VOTING AGREEMENTS. The Seller shall have delivered
to the Buyer simultaneously with the execution of this Agreement the properly
executed stockholder voting agreements (the "STOCKHOLDER VOTING AGREEMENTS") of
the stockholders of Seller listed on Schedule 4.4(n) in the form attached hereto
as EXHIBIT F attached hereto.
4.5 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller to
perform this Agreement and to consummate the transactions contemplated hereby
are subject to the satisfaction of the following conditions unless waived (to
the extent such conditions can be waived) by Seller:
(a) REPRESENTATIONS AND WARRANTIES OF BUYER. Seller shall have
received a certificate signed by an officer of Buyer to the effect that the
representations and warranties of Buyer set forth in Section 3.2 hereof are true
and correct in all material respects (except for any representation or warranty
that by its terms is qualified by materiality, in which case it shall be true
and correct in all respects).
(b) PERFORMANCE OF OBLIGATIONS OF BUYER. Seller shall have received
a certificate signed by an officer of Buyer to the effect that Buyer has
performed in all material respects its obligations required to be performed by
it under this Agreement prior to or as of the Closing Date.
(c) RELATED AGREEMENTS. Buyer shall have executed and delivered the
Related Agreements to which it is a party.
(d) CLOSING CASH PAYMENT. Buyer shall have delivered the Closing
Cash Payment to Seller by means of a wire transfer to an account designated in
writing by Seller.
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(e) EVIDENCE OF CORPORATE AUTHORITY. Buyer shall have delivered (A)
a certificate of the Secretary or an Assistant Secretary of Buyer dated as of
the Closing Date, certifying as to (i) the attached true and correct copies of
the Articles of Organization and by-laws of Buyer, (ii) the incumbency of the
officers executing this Agreement and the Related Agreements on behalf of Buyer
and (iii) the attached true and correct copies of resolutions of the board of
directors of Buyer authorizing and approving the execution, delivery and
performance of this Agreement and the Related Agreements and the transactions
contemplated hereby and thereby, and the acts of the officers of Buyer in
carrying out the terms and provisions hereof; and (B) a certificate of good
standing from the Secretary of State of the Commonwealth of Massachusetts dated
within five (5) days of the Closing Date.
(f) ACCEPTANCE BY COUNSEL TO SELLER. The form and substance of all
legal matters contemplated hereby and of all documents or instruments delivered
hereunder shall be reasonably acceptable to Seller's counsel.
(g) AUTHORIZATION OF AGREEMENT. All actions necessary to authorize
the execution, delivery and performance of this Agreement and the Related
Agreements by Seller and the consummation of the transactions contemplated
hereby and thereby shall have been duly and validly taken by the Board of
Directors and the stockholders of Seller, and Seller shall have full power and
right to effect the transactions contemplated hereby and thereby on the terms
provided herein and therein.
(h) APPROVAL BY BOARD OF DIRECTORS OF BUYER. This Agreement, all
agreements related and the Related Agreements and the transaction contemplated
hereby and thereby shall have been approved by the Board of Directors of Buyer.
(i) KEY EMPLOYEES AND OTHER TRANSFERRED EMPLOYEES. Buyer shall have
offered each Key Employee and Transferred Employee employment with the Buyer and
each Key Employee shall have accepted employment with Buyer, subject to
consummation of the Closing. Each Key Employee and Transferred Employee shall
have executed a release in form reasonably requested by Seller releasing Seller
from all claims relating to such individual's employment by Seller.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 CONDUCT OF BUSINESS OF SELLER. Seller covenants and agrees that,
during the period between the date hereof and the Closing, unless Buyer shall
otherwise agree in writing, the business of Seller shall be conducted in, and
Seller shall not take any action except in, the Ordinary Course of Business and
in a manner consistent with past practice; and Seller shall use commercially
reasonable efforts to preserve intact its business organization, to keep
available the services of the current officers, employees and consultants of
Seller; and to preserve the current relationships of Seller with customers,
suppliers and other persons with which Seller has significant business
relations. Without limiting the foregoing, Seller shall not, directly or
indirectly do, or propose to do, any of the following without prior written
consent of Buyer, with it being understood that each of such clauses below shall
constitute an independent obligation of Seller, not qualified by any other such
clause:
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(a) CHARTER DOCUMENTS. Cause or permit any amendments to its
Articles of Organization or by-laws;
(b) DIVIDENDS; CHANGES IN CAPITAL STOCK. Declare or pay any
dividends on, or make any other distributions (whether in cash, stock or
property) in respect of, any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitutions for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock;
(c) STOCK OPTION PLANS, ETC. Except with respect to grants already
outstanding pursuant to the existing terms thereof, accelerate, amend or change
the period of exercisability or vesting of options or other rights granted under
any Seller stock option plan, establish any new or additional stock option plan,
or amend any Seller stock option plan, or grant any options, warrants or other
rights to acquire shares of Company securities;
(d) MATERIAL CONTRACTS. Enter into any material contract or
commitment (other than as required in the Ordinary Course of Business), or
violate, amend or otherwise modify or waive (other than as required in the
Ordinary Course of Business) any of the terms of any agreements, understandings,
instruments or contracts which are material to the business of Seller as
currently conducted and as proposed to be conducted;
(e) ISSUANCE OF SECURITIES. Issue, deliver or sell or authorize or
propose the issuance, delivery or sale of, or propose the purchase of, any
shares of its capital stock or securities or other instruments convertible into,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible instruments or securities;
(f) INTELLECTUAL PROPERTY.
(i) Sell, license, assign or transfer any IP Rights of Seller
to any other person other than Buyer, or encumber any IP Rights of Seller;
(ii) License, or otherwise acquire any IP Rights from any
third party;
(g) DISPOSITIONS. Sell, lease, license or otherwise dispose of or
encumber any of its properties or assets which are material, individually or in
the aggregate, taken as a whole;
(h) INDEBTEDNESS. Except for purchase orders or commitments entered
into in the Ordinary Course of Business, incur any indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(i) LEASES. Enter into operating leases;
(j) CAPITAL EXPENDITURES. Make any capital expenditures, capital
additions or capital improvements except in the Ordinary Course of Business and
consistent with past practice;
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(k) INSURANCE. Materially reduce the amount of any material
insurance coverage provided by existing insurance policies;
(l) TERMINATION OR WAIVER. Terminate or waive any right of
substantial value, other than in the Ordinary Course of Business;
(m) EMPLOYEE BENEFIT PLANS; NEW HIRES; PAY INCREASES. Adopt or amend
any employee benefit or stock purchase or option plan, pay any special bonuses
or special remuneration to any employee or director (other than pre-existing
obligations), or increase the salaries, bonuses or wage rates of its employees;
(n) SEVERANCE AGREEMENT. Except with respect to stock option grants
already outstanding pursuant to the existing terms thereof, adopt or approve any
severance, bonus or benefit acceleration arrangements (whether individually or
more broadly) that could be triggered as a result of the consummation of the
transactions contemplated by this Agreement;
(o) LAWSUITS. Commence a lawsuit other than (i) for the routine
collection of bills, or (ii) in such cases where it in good faith determines
that failure to commence suit would result in the material impairment of a
valuable aspect of its business, provided that it consults with Buyer prior to
the filing of such a suit;
(p) ACQUISITIONS. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof;
(q) TAXES. Make or change any election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, enter into any closing
agreement, settle any claim or assessment on respect of Taxes, or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;
(r) NOTICES. Fail to give any notices and other information required
to be given to the employees of Seller, any collective bargaining unit
representing any group of employees of Seller, or any applicable government
authority under the WARN Act, the National Labor Relations Act, the Code, COBRA,
or other applicable law in connection with the transactions provided for in this
Agreement;
(s) REVALUATION. Revalue any of its assets, including writing down
the value of inventory or writing off notes or accounts receivable other than in
the Ordinary Course of Business;
(t) OTHER TRANSACTIONS. Merge or consolidate with any entity or
liquidate, dissolve or effect a recapitalization or reorganization in any form
of transaction;
(u) CONFIDENTIALITY AGREEMENTS. Hire or retain, or continue to
retain or employ, any employee or consultant having access to confidential or
proprietary information of Seller unless such employee or consultant enters
into, or has entered into, a confidentiality and proprietary information
agreement with Seller in the form previously provided to Buyer, or
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amend or otherwise modify, or grant a waiver under, any such confidentiality or
proprietary information agreement with any such person;
(v) RELATED PARTY TRANSACTIONS. Enter into or be a party to any
transaction with any director, officer, employee, consultant, significant
stockholder, family member of any such person, corporation or other entity of
which any such person beneficially owns 10% or more of the equity interests or
has 10% or more of the voting power, or subsidiary or affiliate of Seller except
as previously approved by Seller's board of directors and disclosed on Schedule
5.1(v) and except in the Ordinary Course of Business and pursuant to reasonable
requirements of Seller's business and upon terms that are fair and reasonable to
Seller as approved by Seller's board of directors;
(w) SUBSIDIARIES. Permit any subsidiary of Seller to take any action
from which Seller would be prohibited pursuant to this Article V;
(x) PRINCIPAL BUSINESS. Engage in any business other than the
Business;
(y) GENERAL. Authorize, commit to, agree to take, or permit to occur
any of the foregoing actions.
5.2 COOPERATION. Seller covenants and agrees that, during the period
between the date hereof and the Closing, Seller shall:
(a) Promptly inform Buyer in writing of any material breaches of the
representations and warranties contained in Section 3.1 or any material
breach of any covenant hereunder by Seller;
(b) Cooperate with Buyer and use its best efforts to cause the
conditions to Buyer's obligation to close to be satisfied;
(c) Upon reasonable notice, provide to Buyer (and its
representatives) reasonable access to all information and documents which
Buyer may reasonably request regarding the business, assets, liabilities,
employees and other aspects of Seller; provided, however, that no
investigation pursuant to this subsection (c) shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
5.3 EXCLUSIVITY; STANDSTILL. From the date of this Agreement through May
12, 2005 (subject to reasonable daily extensions at Buyer's option thereafter
due to any delay by Seller in completing all conditions to closing), Seller will
refrain from, directly or indirectly, including through any officer, director,
agent, representative or otherwise (collectively "REPRESENTATIVES"), and will
cause its Representatives to refrain from, (i) soliciting, initiating,
encouraging or accepting any other inquiries, proposals or offers from any
person or entity relating to any transaction for the purchase of all or any
significant portion of the capital stock or a material portion of the assets of
Seller, (x) to enter into any business combination with Seller or (y) to enter
into any other extraordinary business transaction involving or otherwise
relating to Seller or any assets owned or licensed by Seller, or (ii)
participating in any discussions, conversations, negotiations or other
communications with any other person or entity regarding
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any of the foregoing, other than to inform any such third party of Seller's
obligation not to participate in any such discussions or conversations. Seller
agrees to promptly inform or cause its Representatives to inform Buyer in
reasonable detail (including the proposed purchase price and a description of
the principal terms of such proposal and a copy thereof, if in writing), within
twenty-four (24) hours of its receipt of such offer. Any violation of the
foregoing restrictions by any of the Representatives, whether such
Representative is purporting to act on behalf of Seller or otherwise, shall be
deemed to be a material breach of this Agreement by Seller.
5.4 CERTAIN INFORMATION REQUIRED BY THE CODE. Seller shall furnish Buyer
with any information required pursuant to Section 1060(e) of the Code at such
time and in such manner as Buyer may request in order to comply with Section
1060(e) and any regulations promulgated thereunder.
5.5 LITIGATION COOPERATION. If a party hereto shall become engaged in or
participate in any investigation, claim, litigation, arbitration, mediation, or
other proceeding with any third party relating in any way to the Acquired
Assets, the Assumed Liabilities or the Excluded Liabilities, the other parties
shall cooperate in all reasonable respects with such party in connection
therewith, including, without limitation, making available to such parties,
without cost, all relevant records and using its best efforts to make available
to the other the then employees of the parties or their Affiliates who may be
helpful with respect to such claim or litigation.
5.6 RECORD MAINTENANCE. Each party shall, in connection with the
preparation by the others of tax and financial reporting matters and other bona
fide business purposes, for a period of five (5) years from the Closing Date
afford to the other parties and their representatives the opportunity, upon
reasonable advance notice, to examine and make copies of the books and records
of the other, or portions thereof, which relate to Seller for any period prior
to the Closing, except to the extent that such access is precluded pursuant to
the provisions of a confidentiality agreement between such party and another
person that is not an Affiliate of such party or is otherwise precluded by law,
and shall maintain such records for a period of five (5) years from the date
hereof; provided, that any party may destroy any record which was first offered
to the other parties and not claimed or picked up by one or more of the other
parties within thirty (30) days, and shall not destroy any record without first
providing the other parties at least thirty (30) days' prior written notice of
its intent to destroy such record.
5.7 SELLER STOCKHOLDER APPROVAL; EFFORTS TO CONSUMMATE. Seller will take,
in accordance with applicable law and its articles of organization and bylaws,
all action necessary to convene a meeting of stockholders of Seller as promptly
as practicable after the date of this Agreement is declared effective to
consider and vote upon the approval of this Agreement and such other matters as
may be appropriate. The parties hereto shall use all commercially reasonable
efforts to do or cause to be done all such acts and things as may be necessary,
proper or advisable, consistent with all applicable laws and regulations, to
consummate and make effective the transactions contemplated hereby. In
particular, each party hereto shall use all commercially reasonable efforts to
cause all of its managers, officers and directors to support the transactions
contemplated hereby and to take all actions and execute all documents reasonably
requested by the other parties hereto to carry out the intent of the parties
with respect to the transactions contemplated hereby.
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5.8 PUBLIC ANNOUNCEMENTS. Except for the disclosure (if any) required by
any law to which a party is subject, the timing and content of all press
releases and public statements prior to and including the Closing Date
(including the press release announcing the consummation of the transaction)
concerning the transactions contemplated hereby shall be by mutual agreement of
Buyer and Seller. However, the parties recognize that Buyer is a publicly held
company that is obligated under the federal securities laws to make disclosures
of material events affecting it. Consequently, if advised by counsel that Buyer
is required to make such announcement under Federal or state securities laws
prior to the Closing, Buyer may make such announcement but will notify Seller in
advance of the proposed disclosure and consider any reasonable request of the
Seller as to minimize the disclosure of any confidential matters to the extent
allowed by law as determined by Buyer and its counsel in their discretion. Buyer
agrees promptly to inform Seller of such advice by counsel and, if practicable,
to give Seller an opportunity to comment upon the form of any required
announcement.
5.9 EMPLOYMENT MATTERS. Seller shall, in accordance with all applicable
law, pay to each employee all wages, salaries, bonuses and commissions earned
through the Closing Date, compensate each such non Transferred-Employee for all
accrued and unused vacation days, reimburse each Current Employee for all
reimbursable expenses incurred by him or her through the Closing Date and make
such other payments as may be required by applicable law to the Current
Employees as of such date. Seller shall accept sole and exclusive responsibility
for the disposition of any employee who is or was terminated on or prior to the
Closing or who does not accept employment with Buyer including, without
limitation, any obligation to offer and provide COBRA continuation coverage for
health insurance to such individual and his or her spouse and dependents, if
any.
5.10 TRANSFER TAXES. Seller shall pay all Taxes, if any, incurred as a
result of the transfer of the Acquired Assets hereunder.
5.11 REQUIRED CONSENTS; SUBSEQUENT EVENTS.
(a) Notwithstanding anything in this Agreement or in the ▇▇▇▇ of
Sale, Assignment and Assumption Agreement to the contrary, neither this
Agreement nor the ▇▇▇▇ of Sale, Assignment and Assumption Agreement shall
constitute an agreement to assign or otherwise transfer any of the Assumed
Contracts, or any rights thereunder, if an attempted assignment or transfer
thereof would constitute a breach thereof or would be ineffective, in either
case without the consent of a third party to such assignment or transfer, or
would violate any applicable law; provided, however, that this provision shall
not be deemed to modify in any respect any of Seller's representations or
warranties set forth herein or the conditions to Buyer's or Buyer's obligations
contained in Article V hereof.
(b) If any such consent has not been obtained as of the Closing Date
and Buyer nevertheless determines to proceed with the Closing, Seller shall
continue to use its best efforts to obtain such consent after the Closing. In
such circumstances, until such consent has been obtained, Buyer shall use all
commercially reasonable efforts to perform in Seller's name and, in respect of
the incremental costs incurred by Buyer in performing in Seller's name, at
Seller's expense, all of Seller's obligations with respect to each Assumed
Contract for which any such consent has not been obtained; provided, however,
that Buyer shall not be required to take
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any action in performing such obligations which, in Buyer's reasonable judgment,
would subject Buyer to any Liability or an unreasonable risk of incurring any
Liability.
(c) If any Assumed Contracts are not transferred to Buyer at the
Closing pursuant to this Section 5.11, Seller shall cooperate with Buyer in any
reasonable arrangement designed to provide for Buyer all of the benefits of, and
to have Buyer assume the burdens, liabilities, obligations and expenses
expressly assumed by Buyer hereunder with respect to, all such Assumed
Contracts. At Buyer's request, Seller shall take all reasonable actions
requested by Buyer to enforce for the benefit of Buyer any and all rights of
Seller with respect to any such Assumed Contract that is not otherwise
transferred pursuant to the provisions of this Agreement. Seller hereby
authorizes Buyer to perform all of Seller's obligations after the Closing with
respect to all such Assumed Contracts and hereby grants to Buyer a power of
attorney to act in the name of Seller with respect thereto. Such power of
attorney shall be coupled with an interest and shall be irrevocable. Seller
agrees to remit promptly to Buyer all collections or payments received by Seller
in respect of all such Assumed Contracts, and shall hold all such collections or
payments in trust for the benefit of, and promptly pay the same over to, Buyer;
provided, however, that nothing herein shall create or provide any rights or
benefits in or to third parties.
(d) If, subsequent to the Closing, a claim brought by any party
challenging any of the transactions contemplated hereby results in any ruling or
order which has the result of frustrating in a material way the transfer of any
of the Acquired Assets hereunder to Buyer or Buyer's use thereof pursuant to the
applicable transfer and licensing provisions contained herein, Seller shall
cooperate with Buyer in any reasonable arrangement designed to give Buyer, as
nearly as possible, the same economic benefits, and to have Buyer assume the
same burdens, liabilities, obligations and expenses, as if such transfer or
license had been consummated in accordance with the provisions hereof.
ARTICLE VI
INDEMNIFICATION
6.1 DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings:
(a) "EVENT OF INDEMNIFICATION" means the following:
(i) with respect to the Buyer Indemnified Persons (a "BUYER
EVENT OF INDEMNIFICATION"),
(A) the breach by Seller of any representation or
warranty contained in Section 3.1 of this Agreement, any
Related Agreement or any document delivered in connection
herewith or therewith;
(B) except for any breach described in Section
6.1(a)(i)(A) above, the breach of any agreement or covenant of
Seller contained in this Agreement, any Related Agreement or
any document delivered in connection herewith or therewith;
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(C) any claim, demand, Liability or obligation of any
nature whatsoever based upon, arising out of or related to the
Excluded Liabilities; and
(D) any claim, demand, Liability or obligation of any
nature whatsoever related to or resulting from the termination
by Seller of the Current Employees.
(ii) with respect to the Seller Indemnified Persons (a "SELLER
EVENT OF INDEMNIFICATION"),
(A) the breach by Buyer of any representation or
warranty contained in Section 3.2 of this Agreement, any
Related Agreement or any document delivered in connection
herewith or therewith;
(B) the breach of any agreement or covenant of Buyer
contained in this Agreement, any Related Agreement or any
document delivered in connection herewith or therewith; and
(C) any claim, demand, Liability or obligation of any
nature whatsoever based upon, arising out of or related to the
Assumed Liabilities.
(b) "INDEMNIFIED PERSONS" means and includes:
(i) with respect to a Buyer Event of Indemnification, Buyer
and its Affiliates, successors and assigns, and the respective officers
and directors of each of the foregoing (the "BUYER INDEMNIFIED PERSONS");
or
(ii) with respect to a Seller Event of Indemnification,
Seller, its Affiliates, successors and assigns, and the respective
officers and directors of each of the foregoing (the "SELLER INDEMNIFIED
PERSONS").
(c) "INDEMNIFYING PERSONS" means and includes:
(i) with respect to a Buyer Event of Indemnification, Seller
and its successors and permitted assigns and the Principal Stockholders
(the "SELLER INDEMNIFYING PERSONS"); or
(ii) with respect to a Seller Event of Indemnification, Buyer
and its successors and permitted assigns (the "BUYER INDEMNIFYING
PERSONS").
6.2 INDEMNIFICATION GENERALLY.
(a) The Indemnifying Persons shall indemnify the Indemnified Persons
from and against any and all losses, demands, actions or causes of action,
suits, proceedings, investigations, arbitrations, claims, shortages, damages,
liabilities (contingent or otherwise), payments, obligations, expenses
(including reasonable attorneys', accountants', consultants' and
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expert witnesses' fees), assessments and Taxes (including interest or penalties
thereon) sustained, suffered or incurred by any Indemnified Person arising from
or in connection with any such matter that is the subject of indemnification
under Section 6.2 hereof ("LOSSES") arising from or in connection with any Event
of Indemnification.
(b) Subject to the provisions of Section 6.2(e), all Losses with
respect to a Buyer Event of Indemnification described in Section 6.1(a)(i) shall
be asserted against and satisfied solely from the Escrow Funds (as defined in
the Escrow Agreement), unless such Loss is caused by a breach of the
representations and warranties made by the Seller in Sections 3.1(a) -(d), (h),
(i), (k) or (l), in which event such indemnification shall be limited to the
Closing Cash Payment.
(c) Subject to the provisions of Section 6.2(e), no indemnification
shall be payable to a Buyer Indemnified Person until the aggregate amount of
Losses related solely to those incurred by all Buyer Indemnified Persons as a
result of a Buyer Event of Indemnification described in Section 6.1(a)(i)(A)
exceeds $100,000, whereupon the Buyer Indemnified Persons shall be entitled to
receive the full amount of all Losses (including the first $100,000 of such
Losses); provided, however, with respect to any breach of the representations
and warranties set forth in Section 3.1(e), no indemnification shall be payable
to a Buyer Indemnified Person until the aggregate amount of Losses, exceeds
$20,000, whereupon the Buyer Indemnified Persons shall be entitled to receive
the full amount of all Losses (including the first $20,000 of such Losses).
(d) The maximum aggregate liability of the Buyer Indemnifying
Persons pursuant to this Article VI with respect to Losses resulting from all
Seller Events of Indemnification described in Section 6.1(a)(ii) shall be the
amount of the Escrow Funds.
(e) Notwithstanding any of the foregoing, nothing contained in this
Agreement shall in any way limit, impair, modify or otherwise affect the rights
of the Indemnified Persons nor shall there be any limitation of liability of
Indemnifying Persons, nor shall the provisions of Sections 6.2(b) or 6.2(c)
apply, in connection with any of such rights of the Indemnified Persons (1) to
bring any claim, demand, suit or cause of action otherwise available to the
Indemnified Persons based upon (i) any allegation or allegations that Seller had
an intent to defraud or made a willful or intentional misrepresentation or
willful omission of a material fact in connection with this Agreement or any
Related Agreement and the transactions contemplated hereby or thereby ("FRAUD
CLAIMS"), or (ii) any Buyer Event of Indemnification described in Section
6.1(a)(i) (B), (C), or (D),, or (2) to enforce any judgment of a court of
competent jurisdiction in connection with any claim, demand, suit or cause of
action described in clause (1) of this Section 6.2(e) or (3) arising out of the
breach of any of the covenants or agreements contained in any of the Related
Agreements
(f) The parties agree that payment pursuant to an indemnification
obligation under this Article VI shall be treated for federal income tax
purposes as an adjustment to the Purchase Price.
6.3 ASSERTION OF CLAIMS. To bring a claim for indemnification under this
Article VI, the Indemnified Person shall give the appropriate Indemnifying
Person(s) (a) written notice of
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the existence of any such claim, specifying the nature and basis of such claim
and the amount thereof, to the extent known, or (b) written notice pursuant to
Section 6.4 of any Third Party Claim, the existence of which might give rise to
such a claim (each, a "NOTICE OF CLAIM") as promptly as practicable after
becoming aware of such claim, but the failure so to provide such Notice of Claim
will not relieve the Indemnifying Person(s) from any liability which they may
have to the Indemnified Persons under this Agreement or otherwise (unless and
only to the extent that such failure results in the loss or compromise in any
material respect of any material rights or defenses of the Indemnifying Persons
and the Indemnifying Persons were not otherwise aware of such action or claim).
Notwithstanding the foregoing, no claim shall be brought under Section 6.2
hereof with respect to a breach of a representation or warranty unless the
Indemnified Persons, or any of them, at any time prior to the applicable
Survival Date (as defined in Section 6.5 hereof), give the Indemnifying Persons
a Notice of Claim. Upon the giving of such written notice as aforesaid, the
Indemnified Persons, or any of them, shall have the right to commence legal
proceedings prior or subsequent to the Survival Date for the enforcement of
their rights under Section 6.2 hereof.
6.4 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS. Losses resulting from the
assertion of liability by third parties (each, a "THIRD PARTY CLAIM") shall be
subject to the following terms and conditions:
(a) The Indemnified Persons shall promptly give written notice to
the Indemnifying Persons of any Third Party Claim that might give rise to any
Loss by the Indemnified Persons, stating the nature and basis of such Third
Party Claim, and the amount thereof to the extent known. Such notice shall be
accompanied by copies of all relevant documentation with respect to such Third
Party Claim, including, without limitation, any summons, complaint or other
pleading that may have been served, any written demand or any other document or
instrument. Notwithstanding the foregoing, the failure to provide notice as
aforesaid will not relieve the Indemnifying Persons from any liability which
they may have to the Indemnified Persons under this Agreement or otherwise
(unless and only to the extent that such failure directly results in the loss or
compromise of any rights or defenses of the Indemnifying Person and they were
not otherwise aware of such action or claim).
(b) Upon receipt of notice of the Third Party Claim, the
Indemnifying Person shall then have thirty (30) days to advise the Indemnified
Person whether the Indemnifying Person accepts the defense of such claim, and
the Indemnifying Person shall have no obligation to the Indemnified Person for
legal fees incurred by the Indemnified Person after the date of any assumption
of the defense by the Indemnifying Person; provided, that notwithstanding the
foregoing, Buyer shall have the right to control the defense of any claim which
seeks any equitable relief or permanent or temporary injunction against any
aspect of Buyer's or Buyer's business or operations.
(c) If the Indemnifying Person determines to accept the defense of
such Third Party Claim, (i) it shall defend such Third Party Claim with counsel
of its own choice and at its own expense, and (ii) the Indemnified Person shall
have the right to be represented by its own counsel at its own expense, its
participation to be subject to reasonable direction of counsel for the
Indemnifying Person. If the Indemnifying Person fails to undertake the defense
of or settle or pay any such Third Party Claim within thirty (30) days after the
Indemnified Person has given
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written notice to the Indemnifying Person of the claim, or if the Indemnifying
Person, after having given such notification to the Indemnified Person, fails
within thirty (30) days, or at any time thereafter, to defend to the reasonable
satisfaction of the Indemnified Person, settle or pay such claim, then the
Indemnified Person may take any and all necessary action to dispose of such
claim; provided, however, that in no event shall the Indemnified Person settle
such claim without the prior consent of the Indemnifying Person in accordance
with clause (d) below.
(d) In the event the Indemnified Person desires to settle any Third
Party Claim, the defense of which has not been assumed by the Indemnifying
Person, the Indemnified Person shall advise the Indemnifying Person in writing
of the amount it proposes to pay in settlement thereof (the "PROPOSED
SETTLEMENT"). The Indemnifying Person shall have twenty (20) days after the
Indemnifying Person's receipt of the notice of the Proposed Settlement to advise
the Indemnified Person whether it accepts the Proposed Settlement. If the
Indemnifying Person notifies the Indemnified Person that it accepts the Proposed
Settlement, the Indemnified Person may offer the Proposed Settlement to the
third party making the claim. If, after approval by the Indemnifying Person, the
Proposed Settlement is not accepted by the party making such claim, any new
Proposed Settlement figure which the Indemnified Person may wish to present to
the party making such claim shall again first be presented to the Indemnifying
Person in accordance with the provisions of this clause (d).
(e) The Indemnifying Person may settle any Third Party Claim that it
has agreed to accept the defense of on any terms which it may deem reasonable;
provided, that the Indemnifying Person shall not without the Indemnified
Person's prior written consent, (i) settle or compromise such proceeding, claim
or demand, or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to the
Indemnified Person of a written release from all liability in respect of such
proceeding, claim or demand or (ii) settle or compromise any such proceeding,
claim or demand, in any manner that adversely affects the Indemnified Person.
6.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject to the further
provisions of this Section 6.5, the representations and warranties of Buyer and
the representations and warranties made by Seller shall survive the Closing Date
until the date that is twenty-four (24) months after the Closing Date; provided,
however, that the representations and warranties contained in Sections 3.1
(a)-(d), (h), (i) and (l) and Fraud Claims shall survive in accordance with the
applicable statute of limitations related to such representations and
warranties, and Fraud Claims, as applicable. For convenience of reference, the
date upon which any representation and warranty contained herein shall terminate
is referred to herein as the "SURVIVAL DATE".
6.6 INDEMNIFICATION REPRESENTATIVE. From and after the Effective Time,
Sigma Partners LLP shall serve as Indemnification Representative and shall act
as agent for and on behalf of the Seller stockholders, or his, her or their
successors and shall be authorized to act on behalf of the Seller stockholders
and to take any and all actions required or permitted to be taken by the
Indemnification Representative under this Agreement with respect to any claims
(including the settlement thereof) made for indemnification pursuant to this
Article VI and with respect to any actions to be taken by the Indemnification
Representative pursuant to the terms of the Escrow Agreement, which shall
include, without limitation, the exercise of the power to: (i)
EXECUTION COPY-APRIL 29, 2005 39
authorize the delivery of all or a portion of the Escrow Funds in satisfaction
of claims; (ii) agree to, negotiate, enter into settlements and compromises of,
and comply with orders of courts with respect to any claims for indemnification;
and (iii) take all actions necessary in the judgment of the Indemnification
Representative for the accomplishment of the foregoing. In all matters relating
to this Article VI as described in the preceding sentence, the Indemnification
Representative shall be the only party entitled to assert the rights of the
Seller stockholders, and the Indemnification Representative shall perform all of
the obligations of the Seller stockholders hereunder. Any Indemnified Person
shall be entitled to rely on all statements, representations and decisions of
the Indemnification Representative. The Indemnification Representative is not
entitled to amend this Agreement or take any actions relating to this Agreement
prior to the Effective Time. Following the Effective Time, the Indemnification
Representative may amend this Agreement with the prior written consent of the
holders of a majority-in-interest in the Escrow Funds. The Indemnification
Representative may resign upon not less than twenty (20) business days' prior
written notice to Buyer and the Seller stockholders. The Seller stockholders by
the vote of a majority-in-interest of the Escrow Funds held by Seller
stockholders may remove the Indemnification Representative from time to time
upon not less than twenty (20) business days' prior written notice to Buyer. Any
vacancy in the position of the Indemnification Representative may be filled by
the approval of the holders of a majority-in-interest in the Escrow Funds held
by the Seller stockholders. Any successor Indemnification Representative shall
acknowledge in writing to Buyer his or her acceptance of the appointment as
Indemnification Representative.
6.7 REMEDIES AVAILABLE. Except for remedies that cannot be waived as a
matter of law, and the rights of the Buyer to seek specific performance of
Seller's obligations hereunder as set forth in Article VIII, the remedies set
forth in this Article VI will be the sole and exclusive remedies of the parties
hereto under this Agreement and the Related Agreements executed in connection
herewith, from and after the Closing with respect to any indemnifiable claim
under Section 6.1 above.
ARTICLE VII
TERMINATION
7.1 TERMINATION.
(a) This Agreement may be terminated at any time prior to the
Closing by the mutual consent of Buyer and Seller.
(b) This Agreement may be terminated by Buyer (i) at any time prior
to the Closing, if Seller shall have failed to comply in any material respect
with any of its covenants or agreements contained in this Agreement and such
failure or its effects shall continue for a period of at least five (5) days
following receipt by Seller of notice of such failure, or if any one or more of
the representations or warranties of Seller contained in this Agreement shall
prove to have been materially inaccurate when made, or (ii) at the Closing, if
any of the conditions precedent to the performance of the obligations of Seller
at the Closing shall not have been fulfilled, other than as a result of a breach
by Buyer of its obligations hereunder.
EXECUTION COPY-APRIL 29, 2005 40
(c) This Agreement may be terminated by Seller (i) at any time prior
to the Closing, if Buyer shall have failed to comply in any material respect
with any of its covenants or agreements contained in this Agreement and such
failure or its effects shall continue for a period of at least five (5) days
following receipt by Buyer of notice of such failure, or if any one or more of
the representations or warranties of Buyer contained in this Agreement shall
prove to have been materially inaccurate when made, or (ii) at the Closing, if
any of the conditions precedent to the performance of the obligations of Buyer
at the Closing shall not have been fulfilled, other than as a result of a breach
by Seller of its obligations hereunder.
(d) This Agreement may be terminated by any party if the Closing
shall not have occurred by May 12, 2005 (subject to reasonable daily extensions
at the option of Buyer if caused by any delay of Seller in fulfilling a
condition to Closing).
7.2 EFFECT OF TERMINATION; SURVIVAL. In the event of the termination of
this Agreement as provided in Section 7.1, this Agreement shall become void and
have no further force and effect, except that (i) the provisions of the
Confidentiality and Non-Disclosure Agreement dated as of April 4, 2005 shall
survive such termination; and (ii) no party will be released or relieved from
any liability arising from the breach by such party prior to termination of any
of its representations, warranties, covenants or agreements set forth in this
Agreement. Termination by any party in accordance with any provision of Section
7.1 shall be effective immediately upon the giving of written notice thereof.
ARTICLE VIII
MISCELLANEOUS
8.1 EXPENSES. With the exception of the Transaction Liabilities which
Seller may pay at the Closing from cash and cash equivalent accounts otherwise
due to Buyer, each party hereto shall bear its own costs and expenses in
connection with the transactions contemplated by this Agreement.
8.2 ENTIRE AGREEMENT. This Agreement (including the Disclosure Schedule
and the Exhibits attached hereto), the Related Agreements, the Confidentiality
and Non-Disclosure Agreement between the parties dated as of April 4, 2005, and
the other writings referred to herein contain the entire agreement among the
parties hereto with respect to the transactions contemplated hereby and
supersede all prior agreements or understandings, written or oral, among the
parties with respect thereto.
8.3 INTERPRETATION. Descriptive headings are for convenience only and
shall not control or affect the meaning or construction of any provision of this
Agreement. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The word "herein" and similar references mean, except where a specific Section
or Article reference is expressly indicated, the entire Agreement rather than
any specific Section or Article. The table of contents and the headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
EXECUTION COPY-APRIL 29, 2005 41
8.4 KNOWLEDGE DEFINITION. As used in Section 3.1, the term "knowledge" and
like phrases shall mean the actual knowledge of each of Dr. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, Dr. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ Gadhani and ▇▇▇▇ ▇▇▇▇▇▇. .
8.5 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally-recognized overnight courier or by registered or certified
mail, postage prepaid, return receipt requested, or by electronic mail with a
copy thereof to be delivered by mail (as aforesaid) within 24 hours of such
electronic mail, or by facsimile, with confirmation as provided above addressed
as follows:
(i) if to Buyer, to:
Progress Development Corporation
c/o Progress Software Corporation
▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Senior Vice President
and General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇
EXECUTION COPY-APRIL 29, 2005 42
with a copy to (which shall not constitute notice):
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
(ii) if to Seller, to:
EasyAsk, Inc.
290 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
with a copy to (which shall not constitute notice):
▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇@▇▇▇▇.▇▇▇
(iii) if to Indemnification Representative, to:
Sigma Partners LLP
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (a) in the case of personal
delivery, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next business day after the date when sent, (c) in the
case of facsimile transmission or electronic mail, upon confirmed receipt, and
(d) in the case of mailing, on the third business day following the date on
which the piece of mail containing such communication was posted.
8.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts by original or facsimile signature, each such counterpart shall be
an original instrument, and all such counterparts together shall constitute one
and the same agreement.
EXECUTION COPY-APRIL 29, 2005 43
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without reference
to its conflicts of laws provisions.
8.8 BENEFITS OF AGREEMENT. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement shall not be
assignable by any party hereto without the consent of the other parties hereto;
provided, however, that anything contained herein to the contrary
notwithstanding, Buyer may assign and delegate any or all of its respective
rights and obligations hereunder to any other direct or indirect wholly-owned
subsidiary of Buyer or any third party acquiring the Business from Buyer;
provided further, however, that any of the rights granted to and obligations of
Buyer under this Agreement (other than the payment of the Purchase Price) may
also be exercised or performed by any entity controlled by or under common
control with Buyer (a "BUYER AFFILIATE"); provided that such Buyer Affiliate
agrees to be bound by all of the applicable provisions hereof governing such
exercise or performance and that Seller promptly receives written notice of any
such exercise or performance.
8.9 PRONOUNS. As used herein, all pronouns shall include the masculine,
feminine, neuter, singular and plural thereof whenever the context and facts
require such construction.
8.10 AMENDMENT, MODIFICATION AND WAIVER. This Agreement shall not be
altered or otherwise amended except pursuant to an instrument in writing signed
by Buyer and Seller; provided, however, that any party to this Agreement may
waive in writing any obligation owed to it by any other party under this
Agreement. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
8.11 NO THIRD PARTY BENEFICIARIES. Nothing express or implied in this
Agreement is intended to confer, nor shall anything herein confer, upon any
person other than the parties and the respective successors or assigns of the
parties, any rights, remedies, obligations or liabilities whatsoever, except to
the extent that such third person is an Indemnified Person or Indemnifying
Person in respect of the indemnification provided in accordance with Article VI
of this Agreement.
8.12 CONSENTS. Except as otherwise expressly provided in this Agreement,
any consent or approval of Buyer requested or permitted hereunder may be given
or withheld in Buyer's sole discretion.
8.13 INTERPRETATION. This Agreement has been negotiated between the
parties and will not be deemed to be drafted by, or the product of, any party.
As such, this Agreement will not be interpreted in favor of, or against, any
party.
8.14 NO JOINT VENTURE. No party hereto shall make any warranties or
representations, or assume or create any obligations, on the other party's
behalf except as may be expressly permitted hereunder or in writing by such
other party. Each party hereto shall be solely responsible for the actions of
all its respective employees, agents and representatives.
EXECUTION COPY-APRIL 29, 2005 44
8.15 SPECIFIC PERFORMANCE. The transactions contemplated by this Agreement
are unique transactions and any failure on the part of Seller to complete the
transactions contemplated by this Agreement or any of the Related Agreements on
the terms of this Agreement or any of the Related Agreements will not be fully
compensable in damages and the breach or threatened breach of the provisions of
this Agreement or any of the Related Agreements would cause Buyer irreparable
harm. Accordingly, in addition to and not in limitation of any other remedies
available to Buyer for a breach or threatened breach of this Agreement or any of
the Related Agreements, Buyer will be entitled to specific performance of this
Agreement or any of the Related Agreements upon any breach by Seller, and to an
injunction restraining any such party from such breach or threatened breach.
[THIS SPACE INTENTIONALLY LEFT BLANK]
EXECUTION COPY-APRIL 29, 2005 45
IN WITNESS WHEREOF, each of the parties hereto has caused this Asset
Purchase Agreement to be executed on its behalf as of the day and year first
above written.
PROGRESS DEVELOPMENT
CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
EASYASK, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
INDEMNIFICATION REPRESENTATIVE
__________________________________
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
EXHIBIT INDEX
Exhibit A Form of ▇▇▇▇ of Sale, Assignment and Assumption Agreement
Exhibit B Form of Patent Assignment
Exhibit C Form of Trademark Assignment
Exhibit D-1 Form of Key Employee Non-Competition, Non-Disclosure and
Confidentiality Agreement
Exhibit D-2 Form of Non-Disclosure and Confidentiality Agreement
Exhibit E Form of Escrow Agreement
Exhibit F Form of Stockholder Voting Agreement
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]