EXHIBIT 10.11
ASSET PURCHASE AGREEMENT
by and among
Texas Instruments Incorporated
Dialogic Corporation
Spectron Microsystems, Incorporated
dated as of
January 22, 1998
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the 22nd day of January, 1998, by and among Texas Instruments
Incorporated, a Delaware corporation ("TI" or "Purchaser"), Dialogic
Corporation, a New Jersey corporation ("Parent"), and Spectron Microsystems,
Incorporated, a California corporation ("Seller").
RECITALS:
WHEREAS, Seller presently conducts the business (the "Business") of
designing, developing, manufacturing and selling software products and services
which comprise operating systems for digital signal processors and related
software tools and services (the "Products"); and
WHEREAS, Seller desires to sell and Purchaser desires to purchase
substantially all the assets, rights and properties of Seller used or useful in
the operation of the Business and, in connection with such purchase and sale,
Purchaser is willing to assume certain obligations and liabilities relating to
the Business, all on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, the parties hereto agree as follows:
I. PURCHASE OF ASSETS
1.1 Purchase and Sale of Assets. On the terms and subject to the conditions
hereof and subject to Sections 1.2 and 1.3, at the Closing (as defined in
Section 8.1), Seller will sell, transfer, convey, assign and deliver, and
Purchaser will purchase and accept, all right, title and interest of Seller in
and to all rights, properties and assets of Seller used in connection with the
Business and existing at the Closing, wherever located (collectively, the
"Assets"), free and clear of all liens, security interests, encumbrances,
mortgages, pledges and similar restrictions ("Liens"), except Permitted Liens
(as defined in Section 4.18(a)). The Assets include, without limitation, all of
Seller's right, title and interest in and to the following rights, properties
and assets of the Seller:
(a) Cash. Cash and cash equivalents;
(b) Contract Rights. Subject to Sections 1.2(c) and 1.3, all rights
and incidents of interest in and to all contracts, licenses, leases, agreements
and other instruments and obligations (whether oral or written, pending or
executory) ("Contracts") to which Seller is a party or by which Seller or its
properties or assets are or may be bound relating to the Business; such
Contracts include, without limitation, the Contracts set forth on Schedule
1.1(b) hereto;
(c) Inventories and Stores and Supplies. All raw materials,
components, work-in-process, finished products, packaging materials, stores and
supplies, spare parts and samples, wherever located;
(d) Tangible Personal Property. All machinery and equipment, tools,
spare and maintenance parts, furniture, vehicles and all other tangible personal
property owned by Seller, wherever located, used in the Business; such assets
include, without limitation, the assets set forth in Schedule 1.1(d) hereto;
(e) Manufacturers' and Vendors' Warranties. Subject to Section 1.3,
all of Seller's rights under manufacturers' and vendors' warranties relating to
items included in the Assets and all of Seller's similar rights against third
parties relating to items included in the Assets;
(f) Intellectual Property. Subject to the provisions of the license
agreement described in Section 8.2(f), all of Seller's right, title and interest
in and to all Intellectual Property (as hereinafter defined). "Intellectual
Property" shall mean and include (i) all domestic and foreign patents (including
certificates of invention and other patent equivalents), patent applications and
patents issuing therefrom as well as any division, continuation or
continuation-in-part thereof, and any reissue, reexamination, extension, revival
or renewal of any patent; (ii) all domestic and foreign marks, trademarks, trade
names, service marks, assumed names, trade dress, and logos, in each case
whether registered or at common law, and registrations for and applications to
register any of the same; (iii) all copyrights and registration of claim to
copyright and applications for registration of claim to copyright; (iv)
inventions or discoveries for novel devices, processes, compositions of matter,
methods, techniques, observations, discoveries, apparatuses, designs,
expressions, theories and ideas, whether or not patentable; (v) the Software (as
hereinafter defined) ("Software" shall mean the expression of an organized set
of instructions in a natural or coded language that is contained on a physical
media of any nature (e.g., written, electronic, magnetic, optical or otherwise)
and that may be used with a computer or other automated data processing
equipment device of any nature which is based on digital technology, to make
such computer or other device operate in a particular manner and for a certain
purpose, as well as any related documentation for such set of instructions and
its subsystems and shall include computer programs in source and object code,
test or other significant data libraries, user documentation for computer
programs, and any of the following that is contained on a physical media of any
nature and that is used in the design, development, modification, enhancement,
testing, installation, maintenance, diagnosis or assurance of the same: flow
diagrams, masks, input and output formats, file layouts, development tools,
database formats, interfaces, test programs, installation and operating
instructions, diagnostic and maintenance instructions, and other similar
materials and information); (vi) any and all works of authorship fixed in any
tangible medium of expression, regardless of whether copyrighted ("Works of
Authorship"); (vii) any formula, design, device or compilation of information
that is used or held for use in the exploitation of the Intellectual Property
which gives the holder thereof an advantage or opportunity for advantage over
competitors which do not have or use the same, and which is not generally known
by, and has not been disclosed to, the public ("Trade Secrets"); provided,
however, that the term "Trade Secrets" shall not include any formula, design,
device or compilation that was created by, or for the exclusive benefit of,
Parent, regardless of whether or not employees of Seller are aware of any such
formula, design, device or compilation; and (viii) scientific, engineering,
programming, mechanical, electrical, financial, marketing or practical knowledge
or experience useful in the exploitation of the Intellectual Property
("Know-How").
(g) Real Property. All rights and incidents of interest of Seller in
and to all real property leases (the "Real Property Leases") relating to the
operations of the Business, a true and complete list of which leases as of the
date hereof is set forth in Schedule 1.1(g) hereto (the real property subject to
such Real Property Leases being hereinafter referred to as the "Real Property"),
and all of Seller's rights in all of the structures, fixtures and improvements
located on the Real Property;
(h) Government Licenses, Permits and Approvals. Subject to Section
1.3, all rights and incidents of interest of Seller in and to all permits issued
to Seller by any Governmental Authority (as hereinafter defined) to the extent
that such permits ("Permits") are assignable; such Permits include, without
limitation, the Permits set forth on Schedule 1.1(h) hereto;
(i) Books and Records. Except for the assets described in Section 1.2,
all the books and records of Seller, including without limitation all books and
records relating to employees (but, with respect to employees, only to the
extent and in the manner permitted by law), the purchase of materials, supplies
and services, financial, accounting and operations matters, product engineering,
research and development, manufacture and sale of products and all customer and
vendor lists relating to the operation of the Business and all files and
documents (including credit information) relating to customers and vendors of
the Business;
(j) Seller's Name. All Seller's rights to the name "Spectron
Microsystems Incorporated" and any derivative or variant thereof; and
(k) Prepaid Items. All prepaid items..
1.2 Excluded Assets Notwithstanding anything contained in this Agreement to
the contrary, the following rights, properties and assets of Seller will not be
included in the Assets:
(a) Corporate Documents. Seller's corporate seal, minute books,
charter documents, corporate stock record books and such other books and records
as pertain to the organization, existence or share capitalization of Seller, any
other records or materials relating to (i) any asset excluded pursuant to any
other sub-paragraph of this Section 1.2, (ii) any Retained Liabilities or (iii)
Seller generally (provided that such records and materials do not involve or
relate to the Assets or the operation or operations of the Business) and
duplicate copies of (A) such other records as Seller or Parent shall reasonably
require in order to satisfy their tax, accounting, securities and other
applicable regulatory requirements and (B) books and records pertaining to
Intellectual Property covered by the license agreement described in Section
8.2(f).
(b) Benefit Plans. Any and all employee benefit plans (and assets held
thereunder) maintained or otherwise sponsored, in whole or in part, by Seller or
Parent for the benefit of Seller's employees.
(c) Other Scheduled Assets. Any right, property or asset which is
described in Schedule 1.2(d) hereto and any Contract which is dependent on
another Contract which latter Contract (a) cannot be assigned hereunder and (b)
the financial and business benefits of which cannot be transferred to Purchaser
pursuant to Section 1.3(c).
1.3 Nonassignable Contracts and Permits.
(a) Nonassignability. Without limiting or otherwise affecting the
rights of Purchaser pursuant to Article X to obtain indemnification in the event
that Seller fails to perform its obligations under this Section 1.3, to the
extent that any Contract or Permit to be assigned pursuant hereto is not capable
of being assigned without the consent, approval or waiver of a third person or
entity (including without limitation any agency, court or instrumentality of any
foreign, federal, state or local governmental authority (each, a "Governmental
Authority")), nothing in this Agreement will constitute an assignment or require
the assignment thereof except to the extent provided in this Section 1.3,
nothing in this Agreement will afford Purchaser the right to terminate this
Agreement or the right to refuse to perform its obligations at Closing by virtue
of the inability to obtain any such consent, approval or waiver (provided that
Seller performs its obligations under this Section 1.3) and nothing in this
Agreement will subject Seller or Parent to any liability by virtue of the
failure to obtain any such consent, approval or waiver (provided that Seller
performs its obligations under this Section 1.3).
(b) Seller to Use Reasonable Commercial Efforts. Notwithstanding
anything contained in this Agreement to the contrary, Seller will not be
obligated to assign to Purchaser any of its rights and obligations in and to any
of the Contracts or Permits without first having obtained all consents,
approvals and waivers necessary for such assignment; provided, however, that
Seller shall use reasonable commercial efforts to obtain all such consents,
approvals and waivers prior to and, if the Closing occurs, after the Closing
Date (as defined in Section 8.1). Such reasonable commercial efforts shall not
include the payment of any consideration by Seller to obtain any such consents,
approvals or waivers.
(c) If Waivers or Consents Cannot Be Obtained. To the extent that the
consents, approvals and waivers referred to in Section 1.3(a) are not obtained
by Seller, Seller shall use its reasonable commercial efforts (subject to the
limitation set forth in the last sentence of Section 1.3(b)) to (i) provide to
Purchaser the financial and business benefits of any Contract or Permit referred
to in Section 1.3(a) and (ii) enforce, at the request and expense of Purchaser,
for the account of Purchaser, any rights of Seller arising from any such
Contract or Permit (including without limitation the right to elect to terminate
such Contract or Permit in accordance with the terms thereof upon the advice,
and at the expense, of Purchaser), provided, however, that Seller shall not be
required to take any action which would constitute a breach of any such Contract
or Permit other than an action to terminate any such Contract or Permit in
accordance with the terms of this Section 1.3(c). With respect to Contracts and
Permits for which such waivers or consents cannot be obtained but as to which
Seller is able to pass on the financial and business to Purchaser, Purchaser
shall assume Seller's obligations thereunder. With respect to Contracts and
Permits for which such waivers or consents cannot be obtained and as to which
Seller is unable to pass on the financial and business to Purchaser, Seller
shall retain its obligations thereunder.
II. ASSUMPTION OF LIABILITIES
2.1 Assumed Liabilities. As of the Closing, Purchaser will assume and
thereafter in due course pay and fully satisfy the following liabilities and
obligations of Seller (the "Assumed Liabilities") and no other liabilities or
obligations:
(a) all liabilities of Seller in respect of paid time off accrued by
the Seller's employees who accept offers of employment from Purchaser prior to
Closing in respect of vacation, sick time, personal leave and family leave,
provided that Purchaser shall not be liable for more than $140,000 of
liabilities pursuant to this Section 2.1(a);
(b) the obligations of Seller arising after the Closing in respect of
the Real Property Leases and the Contracts described in Section 1.1, other than
Contracts and Leases executed by the Seller subsequent to the date hereof
outside the ordinary course of business (consistent with the past practice of
Seller) or otherwise not in accordance with Section 6.6;
(c) the obligations of Seller under any written or oral purchase order
or sale order outstanding on the Closing Date, provided that such purchase order
or sale order was given in the ordinary course of business consistent with past
practice and in accordance with Section 6.6;
(d) intentionally omitted
(e) all accounts payable of Seller outstanding on the Closing Date,
provided that such accounts payable (1) have arisen in the ordinary course of
business, (2) do not constitute bank debt or other indebtedness for borrowed
money or indebtedness to Parent and (3) do not exceed, in the aggregate,
$250,000; and
(f) the obligations described in Schedule 2.1(f) hereto.
2.2 Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Purchaser does not assume or agree to pay, satisfy,
discharge or perform, and will not be deemed by virtue of the execution and
delivery of this Agreement or any document delivered at the Closing pursuant to
this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay,
satisfy, discharge or perform, any liability, obligation or indebtedness of
Seller, whether primary or secondary, direct or indirect, other than the Assumed
Liabilities (such liabilities and obligations retained by Seller being referred
to herein as the "Retained Liabilities"). It is specifically agreed that such
Retained Liabilities shall include, without limitation, (a) liabilities and
obligations arising from or relating to Employee Plans (as hereinafter defined),
including, but not limited to, workers compensation and disability benefits
arising from or related to an injury, illness or other physical or mental
condition incurred prior to the Closing (regardless of when reported) and (b)
all liabilities and obligations of Seller relating to Taxes, whether applicable
to the Business or otherwise, attributable to periods (or portions thereof)
ending on or prior to the Closing Date or to the pre-Closing portion of any
period that includes but does not end on the Closing Date (allocable to such
pre-Closing portion of a period by closing the books of Seller at the close of
business on the Closing Date or, where not susceptible to such allocation, pro
rata on the basis of the number of days elapsed in the period).
III. PURCHASE PRICE
3.1 Purchase Price. In consideration of the conveyance to Purchaser of the
Assets and the other rights granted to Purchaser pursuant hereto and subject to
the conditions and in accordance with the terms hereof, Purchaser shall (a) pay
to Seller the Purchase Price (as defined in Section 3.2(a)) and (b) assume the
Assumed Liabilities.
3.2 Payment of Purchase Price.
(a) Subject to adjustment as provided in Section 3.2(b), the purchase
price payable by Purchaser hereunder (the "Purchase Price") will consist of U.S.
$26,000,000 payable in cash at Closing (the "Closing Date Payment"). The Closing
Date Payment will be paid by wire transfer of immediately available funds to
such account as shall have been designated by Seller to Purchaser at or prior to
the Closing.
(b) The Purchase Price shall be subject to adjustment in accordance
with Schedule 3.2(b) hereto.
3.3 Seller and Purchaser agree to consult with each other with respect to
the allocation of the Purchase Price and Assumed Liabilities to the Assets and
the other rights granted to Purchaser pursuant hereto, provided that such
undertaking shall in no way obligate either party to agree on such allocation.
IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER
Each of Parent and Seller, jointly and severally, makes the following
representations and warranties to Purchaser, each of which is true and correct
as of the date hereof, and shall be unaffected by any investigation heretofore
or hereafter made by or on behalf of Purchaser. Parent and Seller acknowledge
that Purchaser is relying on such representations and warranties in connection
with the entering into of this Agreement and the purchase of the Assets.
4.1 Organization and Good Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
Seller has the requisite corporate power and authority to own, lease or
otherwise hold the assets owned, leased or otherwise held by it and to carry on
its business as presently conducted by it. Seller is in good standing and duly
qualified to conduct business as a foreign corporation in every jurisdiction in
which its ownership or lease of property or conduct of the Business makes such
qualification necessary and where the failure to so qualify would have a
"Material Adverse Effect" on Seller (as hereinafter defined). Each of the
foregoing jurisdictions are listed on Schedule 4.1 hereto.
4.2 Authorization and Effect of Agreement. Each of Seller and Parent has
the requisite corporate power to execute and deliver this Agreement and the
agreements to be entered into by such party at the Closing (the "Seller
Ancillary Documents") and to perform the transactions contemplated hereby and
thereby to be performed by it. The execution and delivery by each of Seller and
Parent of this Agreement and the Seller Ancillary Documents and the performance
by each of them of the transactions contemplated hereby and thereby to be
performed by it have been, or, in the case of the Seller Ancillary Documents,
will at the Closing be, duly authorized by all necessary corporate and
shareholder action on the part of Seller and Parent. This Agreement has been,
and each Seller Ancillary Document will at the Closing be, duly executed and
delivered by duly authorized officers of each of Seller and, as applicable,
Parent and, assuming the due execution and delivery of this Agreement and, as
applicable, any Seller Ancillary Document, by Purchaser, this Agreement
constitutes, and each Seller Ancillary Document will at the Closing constitute,
a valid and binding obligation of Seller and, as applicable, Parent, enforceable
against Seller and, as applicable, Parent in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium, or
other similar laws affecting the enforcement of creditors' rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.3 No Interests in Other Entities. The Seller does not own or hold any
shares of any corporation or any other ownership or investment interests,
whether owned or held of record, beneficially or equitably, in any Person (as
hereinafter defined).
4.4 No Conflicts. The execution and delivery of this Agreement and each
Seller Ancillary Document by Seller or, as applicable, Parent does not or, in
the case of the Seller Ancillary Documents, will not, and the performance by
Seller or Parent of the transactions contemplated hereby or thereby to be
performed by either of them will not (a) conflict with or violate any provision
of the articles or certificate of incorporation or by-laws of Seller or Parent,
(b) conflict with, or result in any violation of, or constitute a default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation, or acceleration of any obligation or to loss of a
benefit under, any provision of any material document to which Parent or Seller
or any of their respective assets or properties is bound (including, without
limitation, any Contract listed or required to be listed on any schedule
hereto), (c) constitute a violation of any law applicable to Seller or Parent or
any the Assets or (d) result in the creation of any Lien (other than any
Permitted Liens) upon any of the Assets. No consent, approval, order, or
authorization of, or registration, declaration, or filing with, any Governmental
Authority or any individual, corporation, partnership, limited liability
company, joint venture or other form of business or legal entity (collectively,
a "Person"), whether pursuant to Contract or otherwise, is required to be
obtained or made by or with respect to Seller or Parent in connection with the
execution and delivery of this Agreement or any Seller Ancillary Document or the
performance by Seller or Parent of any of their obligations hereunder or
thereunder, except for (i) such of the foregoing as are listed or described on
Schedule 4.4, which Schedule 4.4 shall be provided to Purchaser on or before
January 30, 1998 and (ii) any filings, if required, with the Federal Trade
Commission and Department of Justice pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act") (such filings in clause
(ii) being hereinafter referred to as the "Governmental Approvals").
4.5 No Third-Party OptionsIV.5No Third-Party Options. There are no existing
agreements, options, commitments or rights with, of or to any person to acquire
any of the Assets or any interest therein, except for Contracts, purchase orders
and sales orders entered into in the ordinary course of business consistent with
past practice.
4.6 Financial Statements. Seller has delivered to Purchaser true and
complete copies of its unaudited balance sheet as of November 30, 1997 (the
"November Balance Sheet"), and the related statements of income, changes in
stockholder's equity and cash flow for the eleven months then ended
(collectively, the "Financial Statements"), all of which, except as set forth on
Schedule 4.6 hereto, have been prepared in accordance with U.S. generally
accepted accounting principles ("GAAP") consistently applied throughout the
periods involved. The November Balance Sheet fairly presents the financial
position, assets and liabilities (whether accrued, absolute, contingent or
otherwise) of Seller at November 30, 1997, and the statements of income, changes
in stockholder's equity, and cash flow included in the Financial Statements
fairly present the results of operations, changes in stockholder's equity and
cash flow for the eleven months ended November 30, 1997. The Financial
Statements contain all adjustments, which are solely of a normal recurring
nature, necessary to present fairly the financial position and results of
operations of Seller at and for the eleven months ended November 30, 1997.
References in this Agreement to the "Interim Balance Sheet Date" shall be deemed
to refer to November 30, 1997.
4.7 Absence of Undisclosed Liabilities. Seller has no liabilities or
obligations related to the Business other than liabilities or obligations
incurred in or as a result of the normal and ordinary course of business
consistent with past practice. For purposes of this Agreement, the term
"liabilities" or "obligations" shall include, without limitation, any
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost,
expense, obligation or responsibility.
4.8 Contracts and CommitmentsIV.8 Contracts and Commitments.
(a) Except as listed or described on Schedule 4.8(a) hereto, Seller is
not a party to any written or oral:
(1) agreement, contract or commitment for the future purchase of,
or payment for, supplies or products, or for the performance of services by a
third party which supplies, products or services are used in the conduct of the
Business involving in any one case $10,000 or more;
(2) in connection with the Business involving in any one case
$10,000 or more;rvices Contractscts ("Goods Contracts
(3) agreement, contract or commitment relating to the Business
(other than the agreements described in any other clause of this Section 4.8(a))
continuing over a period of more than six months from the date hereof and
exceeding $10,000 in value;
(4) distribution, dealer, representative or sales agency
agreement, contract or commitment relating to the Business;
(5) lease or sublease involving rental payments of at least
$1,000 per month, under which Seller is either lessor or lessee, or sublessor or
sublessee, relating to the Assets or any Real Property;
(6) note, debenture, bond, equipment trust agreement, letter of
credit agreement, loan agreement or other contract or commitment for the
borrowing or lending of money relating to the Business or agreement or
arrangement for a line of credit or guarantee, pledge or undertaking of the
indebtedness of any other Person relating to the Business;
(7) agreement, contract or commitment in excess of $2,500 for any
charitable or political contribution relating to the Business;
(8) commitment or agreement for any capital expenditure or
leasehold improvement in excess of $10,000 relating to the Business;
(9) agreement, contract or commitment limiting or restraining
Seller, the Business or any successor thereto from engaging in any business ,
nor, to Seller's Knowledge (as hereinafter defined), is any employee of Seller
(other than Excluded Employees (as hereinafter defined)) engaged in the conduct
of the Business subject to any such agreement, contract or commitment other than
agreements identified as such in such Schedule 4.8(a);
(10) distributorship agreement (regardless of the dollar amount
involved) or license, franchise or other Contract involving payments to or by
Seller which are reasonably expected to be more than $100,000 per year which, in
the case of any such distributorship agreement, license, franchise or other
Contract, relates in whole or in part to any Software of Seller (including any
Contract (regardless of the dollar amount involved) by which Seller has licensed
or otherwise provided access to its source code, including by way of any escrow
or similar arrangement), patent, trademark, trade name, service ▇▇▇▇ or
copyright or to any ideas, technical assistance or other Know-How of or used by
Seller in the conduct of the Business;
(11) joint development or joint venture agreement or agreement
obligating the Seller to perform research for a third-party in exchange for
compensation; or
(12) any other material agreement, contract or commitment
relating to the Business not made in the ordinary course of business.
(b) Each of the agreements, contracts, commitments, leases, plans and
other instruments, documents and undertakings listed on Schedule 4.8(a) is a
valid and binding obligation of the Seller and, to Seller's Knowledge, is a
valid and binding obligation of each other party thereto. Seller is, and to
Seller's Knowledge all other parties thereto are, in substantial compliance with
the provisions of the agreements, contracts, commitments, leases, plans and
other instruments, documents and undertakings listed on Schedule 4.8(a); and to
Seller's Knowledge, no event has occurred which, with or without the giving of
notice or lapse of time, or both, would constitute a default thereunder.
(c) Except as disclosed on Schedule 4.8(c), each Service Contract is
substantially in the form referred to in Schedule 4.8(c).
(d) Schedule 4.8(d) accurately discloses with respect to each Services
Contract disclosed in Schedule 4.8(a), the customer name; and the total ▇▇▇▇▇▇▇▇
as of December 31, 1997 under such contract.
4.9 Intellectual Property.
(a) Schedule 4.9(a) hereto sets forth a true and complete list of all
items of Intellectual Property which both (i) are owned by Seller and (ii) are
used or held for use in the Business (collectively, the "Owned IP"), except for
the Know-How and Trade Secrets of Seller. Schedule 4.9(a) includes, without
limitation, a complete list of all United States and foreign patents, registered
trademarks, registered copyrights, registered trade names, registered service
marks and any other registered Intellectual Property rights of Seller, and any
applications therefor, owned by Seller ("Registered Owned IP") and specifies,
where applicable, the jurisdictions in which each item of Registered Owned IP
has been issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners.
(b) Schedule 4.9(a) hereto sets forth a true and complete list of all
items of Intellectual Property which both (i) Seller does not own, but in which
Seller has valid license or other rights, and (ii) are used or held for use in
the Business (collectively, the "Not-Owned IP"), other than generally available
Software used on personal computers having an individual acquisition cost of
$1,000 or less. The right of Seller to use the Not-Owned IP in the Business is
evidenced solely by the written license agreements identified pursuant to
Section 4.8 and license agreements for such generally available Software.
(c) The Owned IP, Not-Owned IP, Know-How, Owned Software (as
hereinafter defined), Not-Owned Software (as hereinafter defined) and Trade
Secrets include all of the Intellectual Property rights reasonably necessary to
conduct the Business as it is now conducted, and includes all of the
Intellectual Property rights used in the development, marketing, licensing or
support of the Software.
(d) To the Knowledge of Seller, the development, license, use, sale,
distribution and modification of the Owned IP and Not-Owned IP by Seller in
connection with the Business has not infringed on or otherwise violated any
presently existing patent or any other intellectual property rights of any other
Person or constituted an unlawful disclosure, use or misappropriation of the
rights of any other Person. To the Knowledge of Seller, Seller is not in
violation of, or in default (with or without notice or lapse of time or both)
under, any legal requirement relating to Seller's Intellectual Property.
(e) Except as set forth in Schedule 4.9(e) hereto, there is no pending
or, to the Knowledge of Seller, threatened claims or actions of any nature
affecting the Intellectual Property of Seller or any rights therein. Schedule
4.9(e) hereto also lists all written notices currently pending or received by
Seller since February 28, 1995 (or relating to any unresolved claim received at
any time with respect to which any correspondence has been received since
February 28, 1995) which claim infringement or misappropriation or breach, as
the case may be, of any Intellectual Property of any third party. None of the
Intellectual Property of Seller is subject to any outstanding decree, order,
judgment or stipulation to which Seller is a party restricting in any respect
the exploitation or licensing thereof by Seller and, to Seller's Knowledge, none
of the Intellectual Property of Seller is subject to any outstanding decree,
order, judgment or stipulation to which Seller is not a party restricting in any
material respect the exploitation or licensing thereof by Seller.
(f) Except as set forth in Schedule 4.9(f) hereto, (i) there are no
material restrictions to which Seller is a party, and, to Seller's Knowledge, no
material restrictions to which Seller is not a party, on the ability of Seller,
or any successor or assign of Seller, to sell, market, license, distribute,
exploit or use the Owned IP in the manner and geographical scope and in
connection with the goods and services in which the Owned IP is presently sold,
marketed, licensed, distributed, exploited or used , and (ii) subject to
licenses given by Seller to other Persons as disclosed pursuant to Sections 4.8,
4.9 or 4.10, Seller is the sole and exclusive owner of, with all right, title
and interest in and to (free and clear of any Liens), the Owned IP, and has sole
and exclusive rights (and is not contractually obligated to pay any compensation
to any third party in respect thereof) to the use thereof or the material
covered thereby in connection with the services or products in respect of which
the Owned IP of Seller is being used. At the Closing, Purchaser will acquire all
of such rights on the same basis and geographic scope as that enjoyed by Seller
immediately prior to the Closing Date.
(g) Except as set forth in Schedule 4.9(g) hereto (and subject only to
the express terms of those license agreements identified pursuant to Section
4.8), Seller is the licensee of, with all right, title and interest in and to
(free and clear of any Liens), the Not-Owned IP, and has non-exclusive rights
(and is not contractually obligated to pay any compensation to any third party
in respect thereof) to the use thereof or the material covered thereby in
connection with the services or products in respect of which the Owned IP of
Seller is being used. At the Closing, Purchaser will acquire all of such rights
on the same basis and geographic scope as that enjoyed by Seller immediately
prior to the Closing Date.
(h) Except as disclosed pursuant to Section 4.8, Seller has not
granted or, to Seller's Knowledge, obligated itself to grant to any Person any
license, option or other right to develop, license, sell, distribute or modify
(including any rights under any source code escrow agreement) in any manner, in
whole or in part, any of the Owned IP or Not-Owned IP.
(i) To Seller's Knowledge, there has been no material unauthorized
use, infringement or misappropriation of any Intellectual Property of Seller by
any third party, including any employee or former employee of Seller.
(j) To Seller's Knowledge all patent, trademark and copyright
registrations constituting part of the Owned IP are valid and subsisting, have
been properly maintained, and are in full force and effect in accordance with
their terms, and neither Seller, nor to Seller's Knowledge any other Person, is
in default or violation thereunder. To Seller's Knowledge, no Person, other than
Seller, has applied for any patent or registered any claim to copyright or
trademark with respect to any part of the Owned IP. Purchaser acknowledges that
Seller has not followed a practice of registering copyrights.
4.10 Software.
(a) Schedule 4.9(a) or Schedule 4.10(a) hereto sets forth a true and
complete list of all items of Software which both (i) are owned by Seller and
(ii) are used or held for use or under development in the Business (the "Owned
Software"). Except as set forth on such Schedule 4.9(a), the Owned Software
shall include without limitation all earlier or predecessor versions of any of
such Software.
(b) Schedule 4.9(b) or Schedule 4.10(b)hereto sets forth a true and
complete list of all items of Software which both (i) Seller does not own but in
which Seller has rights to use (by license or otherwise), and (ii) are used or
held for use in the Business, other than licenses for generally available
commercial Software used on personal computers having an individual acquisition
cost of $1,000 or less (excluding such licenses for such generally available
commercial Software, the "Not-Owned Software").
(c) Except as set forth in Schedule 4.10(c) hereto, to Seller's
Knowledge there are no defects in the most recent generally distributed
commercial versions of the Owned Software (excluding any computer Software in
the process of development and any versions distributed as beta, test or
evaluation releases) (after such exclusion, the "Commercial Owned Software")
that would prevent the Commercial Owned Software from substantially performing
the functions in the documentation accompanying such Commercial Owned Software
as updated(the "Documentation") when such Commercial Owned Software is used in
its unmodified form, from undamaged media, and in accordance with the
instructions and specifications stated in the Documentation.
(d) Except as qualified in the last sentence of this Section 4.10(d)
and as set forth in Schedule 4.10(d), the Commercial Owned Software is capable
of identifying, manipulating and calculating data and information correctly
using dates within and outside of the 1990-1999 year range. In addition, except
as qualified in the last sentence of this Section 4.10(d) and as set forth in
Schedule 4.10(d), the Commercial Owned Software is not expected by Seller to (i)
have any operational impediments, (ii) malfunction, (iii) cease to perform, (iv)
generate incorrect or ambiguous data or (v) produce incorrect or ambiguous
results, in each case with respect to same-century and multi-century formulas,
functions, date values and date-data interfaces. With respect to the period
beginning on the first anniversary of the Closing Date and expiring on the
second anniversary of the Closing Date (as set forth in Section 10.1 hereof),
this representation is made to Seller's Knowledge.
4.11 Development and Protection of Intellectual Property.
(a) The Owned Software consists exclusively of (i) "works made for
hire" as that term is used in Title 17 of the United States Code, and Seller is
considered the author of each of such works, and (ii) works developed by
independent contractors or consultants engaged by Seller or a predecessor in
interest to Seller that have assigned to Seller all of their right, title and
interest in and to the work or works produced, including all copyright and other
intellectual property rights therein pursuant to a valid and enforceable written
Contract.
(b) Seller has taken reasonable and appropriate measures to protect in
all material respects the confidential and proprietary nature of the Trade
Secrets and the source code and access codes for the Owned Software and the
Not-Owned Software (the "Confidential Software"). All employees, agents and
consultants of Seller who have had access to any of the Trade Secrets or
Confidential Software have executed and delivered a proprietary information and
confidentiality agreement substantially in Seller's standard form or, with
respect to agents of Seller are otherwise obligated to Seller to maintain the
confidentiality of the Trade Secrets and Confidential Software. To Seller's
Knowledge, no Person that is a party to any such proprietary information and
confidentiality agreement or confidentiality obligation is in breach or default
thereunder in any material respect.
(c) To Seller's Knowledge, no employee of Seller is in violation of
any confidentiality agreement with any former employer or business associate.
(d) Seller has taken reasonable and appropriate measures to protect in
all material respects the confidential and proprietary nature of the information
related to the business strategy, finances, marketing plans or employees of
Seller that has not been published and is not generally known to the public.
4.12 Conduct of the Business Since the Interim Balance Sheet Date. Except
as described on Schedule 4.12 hereto and except for actions which would not
constitute a breach of Section 6.6 if occurring subsequent to the date hereof,
since the Interim Balance Sheet Date Seller has not
(a) incurred any liabilities, other than liabilities incurred in the
ordinary course of business consistent with past practice, or failed to pay or
discharge when due any liabilities of which the failure to pay or discharge has
caused or will cause any material damage or risk of material loss to Seller or
any of its assets or properties;
(b) sold, encumbered, assigned, or transferred any assets or
properties which would have been included in the Assets, except for the
replacement or betterment of obsolete or worn out equipment and the sale of
inventory or other Assets in the ordinary course of business consistent with
past practice;
(c) made or suffered any amendment or termination of any Contract
listed on Schedule 1.1(b) or Schedule 4.8(a) or of any Permit, or canceled,
modified, or waived any substantial debts or claims held by it or waived any
rights of substantial value, except in any case for acts or omissions arising in
the ordinary course of business;
(d) made or suffered any amendment or termination of any license,
franchise, distributorship or other Contract, whether or not in the ordinary
course of business, by which Seller has licensed or otherwise provided access to
its source code, including by way of escrow or other similar arrangement;
(e) received notice or had Knowledge of any actual or threatened
strike, material labor trouble or other material employment-related occurrence,
event or condition of any similar character;
(f) made commitments or Contracts for capital expenditures, capital
additions or betterments, or research and development, exceeding $10,000
individually or $50,000 in the aggregate, except such as may be involved in
ordinary repair, maintenance, or replacement of the Assets;
(g) increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary business expenses) or
loan to, any of its employees or made any increase in, or any addition to, other
benefits to which any of its employees may be entitled, except in any such
instance for increases and advances arising in the ordinary course of business
in amounts consistent with past practices;
(h) entered into any transaction other than in the ordinary course of
business consistent with past practice; or
(i) suffered any one or more events or circumstances that individually
or in the aggregate has had or could reasonably be expected to have a Material
Adverse Effect on Seller..
4.13 Personnel Information.
(a) Except for contracts listed on Schedule 4.13(a) hereto, Seller is
not a party to or bound by any employment, consulting or agency agreement with
any employee or consultant or any collective bargaining agreement or other labor
agreement, or any pension, retirement, stock option, stock purchase, savings,
profit sharing, deferred compensation, bonus, group insurance or other incentive
or welfare contract, plan or arrangement.
(b) Schedule 4.13(b) hereto contains a true and complete list of all
persons employed by Seller other than Excluded Employees, setting forth for each
such employee such employee's date of hire, job title, department, monthly base
salary and 1997 bonuses (showing separately profit-sharing payments,
performance-based bonuses and non-performance-based bonuses). Such Schedule also
sets forth, with respect to each stock option granted by Parent to each such
employee, the number of Shares of Parent's Common Stock subject to such stock
option, the plan pursuant to which such stock option was granted, whether or not
such option constitutes an "incentive stock option", the exercise price thereof,
the date of grant, the expiration date, the vesting schedule and a summary
reference to the terms and conditions governing such stock option. Except as
otherwise set forth in Schedule 4.13(b), to Seller's Knowledge no employee of
Seller is a party to or is bound by a non-competition agreement, confidentiality
agreement or any similar agreement or arrangement that would affect the ability
of Purchaser to utilize the Intellectual Property, prohibit such employee from
becoming an employee of Purchaser or interfere with such employee's performance
of his duties as an employee of Purchaser.
(c) Seller has not agreed to recognize any union or other collective
bargaining unit, nor has any union or other collective bargaining unit been
certified as representing any of Seller's employees. To Seller's Knowledge,
there has been no organizational effort since February 28, 1995 by or on behalf
of any labor union with respect to employees of Seller other than efforts which
have not resulted in any material impact upon the Business.
(d) Except as listed or described on Schedule 4.13(d) hereto, Seller
(i) has no written or oral personnel policy applicable to its employees, (ii) is
and has been in material compliance since its inception with all applicable laws
regarding employment and employment practices, including without limitation the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and those
laws relating to terms and conditions of employment, wages and hours,
occupational safety and health and workers' compensation and, to Seller's
Knowledge, is not engaged in any unfair labor practices, (iii) has no unfair
labor practice charges or complaints pending or, to Seller's Knowledge,
threatened against it before the National Labor Relations Board, (iv) has no
material grievances pending or, to Seller's Knowledge, threatened against it,
and (v) has no charges pending against it before the Equal Employment
Opportunity Commission or any state or local agency responsible for the
prevention of unlawful employment practices.
(e) As of the date hereof, Seller employs the persons referred to as
Tier Employees and Potential Tier Employees in the Letter (as such term is
defined in Schedule 3.2(b) hereto. As of the date hereof, to Seller's Knowledge,
neither Parent nor Seller has received any notice or otherwise has any reason to
believe that any specific Tier Employee (as such term is defined in such
Schedule 3.2(b)) intends to terminate his or her employment with the Business as
a result of the execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby, or otherwise.
4.14 Employee Benefit Plans.
(a) All "employee benefit plans," as defined by Section 3(3) of ERISA,
maintained by Seller or Parent for the benefit of Seller's employees (the
"Employee Plans"), are identified as such on Schedule 4.13(a) hereto. Each
Employee Plan complies in all material respects with the requirements provided
by any and all statutes, orders or governmental rules or regulations currently
in effect and applicable to such Employee Plan, including without limitation
ERISA and the Internal Revenue Code of 1986, as amended (the "Code"). Any
Employee Plans which constitute "employee pension benefit plans" as defined in
Section 3(2) of ERISA (the "Pension Plans") are so designated on Schedule
4.13(a) hereto. No Pension Plan constitutes a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
(b) Except as set forth in Schedule 4.14(b) hereto, each Pension Plan
that is intended to qualify under Section 401 of the Code has received a
favorable determination letter from the Internal Revenue Service indicating that
it is so qualified.
(c) All contributions required by law to have been made under any
Pension Plan (without regard to any waivers granted under Section 412 of the
Code) have been made in all material respects.
(d) To Seller's Knowledge, there has been no "reportable event" as
that term is defined in Section 4043 of ERISA and the regulations thereunder
that is not exempt from the thirty-day notice requirement under the regulations
with respect to any Pension Plan subject to Title IV of ERISA.
4.15 Litigation; Decrees. There are no judicial or administrative actions,
proceedings or investigations pending or, to Seller's Knowledge, threatened that
question the validity of this Agreement or any action taken or to be taken by
Seller in connection with this Agreement. Except as set forth in Schedule 4.15,
there are no (i) lawsuits, claims, administrative or other proceedings or
investigations pending or, to Seller's Knowledge, threatened by or against or
affecting Seller or any of the assets of Seller or (ii) orders of any
Governmental Authority binding on Seller or any of the assets of Seller.
4.16 Compliance With Law; Permits. Seller has complied in all material
respects with each law and order of any Governmental Authority to which Seller
or its business, operations, assets or properties is subject and is not
currently in violation of any of the foregoing. Seller owns, holds, possesses or
lawfully uses in the operation of its business all governmental permits which
are in any manner necessary for it to conduct the business as now conducted or
for the ownership and use of its assets, free and clear of all Liens and in
compliance with all laws. Seller is not in default in any material respect under
any Permits, nor has it received any notice of any claim of any default under
any Permits, other than defaults which have been cured prior to the date hereof.
No Person owns or has any proprietary, financial or other interest (direct or
indirect) in any governmental Permits which Seller owns, possesses or uses in
the operation of the Business as now conducted.
4.17 Environmental Matters. (A) Except as disclosed in Schedule 4.17
hereto, (a) the operations of Seller have been and are in compliance in all
material respects with all Environmental Laws and permits, authorizations or
licenses required by Environmental Laws; (b) there are no judicial or
administrative actions, proceedings or investigations pending or, to Seller's
Knowledge, threatened against Seller or its operations alleging the violation of
or seeking to impose liability pursuant to any Environmental Law; (c) Seller is
not subject to any material Environmental Costs and Liabilities and to Seller's
Knowledge there are no facts, circumstances or conditions relating to, arising
from, associated with, or attributable to the operations of Seller or any real
property owned, operated or leased by Seller that could reasonably be expected
to result in Seller's incurring material Environmental Costs and Liabilities;
(d) to Seller's Knowledge, there is not now, nor has there been at any time, on,
in or under any real property owned, leased or operated by Seller (i) any
underground storage tanks, above-ground storage tanks, dikes or impoundments
containing Hazardous Materials, (ii) any asbestos-containing materials, or (iii)
any polychlorinated biphenyls; and (e) Seller has provided Purchaser copies of
all environmentally related audits, assessments, studies, reports, analyses, and
results of investigations of any real property currently or formerly owned,
operated or leased by Seller that are in Seller's possession, custody or
control.
(B) For the purposes of this Agreement:
"Environmental Costs and Liabilities" shall mean any and all
losses, liabilities, obligations, damages, fines, penalties,
judgments, actions, claims, costs, and expenses (including fees,
disbursements, and expenses of legal counsel, experts, engineers, and
consultants and the costs of investigation and feasibility studies,
remedial, or removal actions and cleanup activities) arising from or
under any Environmental Law or any order or agreement now in effect
with any Governmental Authority or other Person.
"Environmental Law" means any law (including common law) relating
to the environment, natural resources, or public and employee health
and safety and includes, but is not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., the Clean Water Act, 33 U.S.C.
Section 1251 et seq., the Clean Air Act, 33 U.S.C. Section 2601, et
seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601, et
seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7
U.S.C. Section 136, et seq., the Oil Pollution Act of 1990, 33 U.S.C.
Section 2701, et seq., the Federal Safe Drinking Water Act, 42 U.S.C.
Section 300F, et seq., and the Occupational Safety and Health Act, 29
U.S.C. ▇▇▇▇▇▇▇ ▇▇▇, ▇▇, ▇▇▇., as such Laws have been amended or
supplemented, and the regulations promulgated pursuant thereto, and
all analogous state or local statutes.
"Hazardous Material" means any substance, material, or waste
which is regulated by any Governmental Authority, including, without
limitation, any material, substance, or waste which is defined as a
"hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous substance," "restricted hazardous waste,"
"contaminant," "toxic waste," or "toxic substance" under any provision
of Environmental Law, which includes, but is not limited to,
petroleum, petroleum products (including crude oil and any fraction
thereof), asbestos, asbestos-containing materials, urea formaldehyde,
and polychlorinated biphenyls.
4.18 Title to Assets.
(a) Except as listed or described in Schedule 4.18(a) hereto, Seller
has, and following the Closing, Purchaser will have, good, valid and marketable
title to the Assets, other than Assets which are not assignable in accordance
with Section 1.3, free and clear of all Liens, other than (a) Liens for Taxes,
assessments and other governmental charges which are not due and payable or
which may thereafter be paid without penalty, (b) mechanics', carriers',
workmen's, repairmen's, and other like Liens arising or incurred in the ordinary
course of business consistent with past practice and (c) purchase money security
interests. The items described in Schedule 4.18(a) hereto and the items referred
to in clauses (a), (b) and (c) of the immediately preceding sentence are
hereinafter referred to as "Permitted Liens".
(b) The Assets constitute all the assets and rights necessary to
operate the Business as currently conducted.
4.19 Taxes.
(a) All Tax Returns required to be filed by or with respect to Seller
and the Assets for the past three years have been duly and timely filed with the
appropriate Federal, state, local and foreign governments or foreign agencies.
All such Tax Returns are true, correct and complete in all material respects.
Seller has duly and timely paid (or is challenging in good faith, pursuant to
challenges described in Schedule 4.19 hereto, the payment of) all Taxes that are
due, or claimed or asserted by any taxing authority to be due, from or with
respect to it. Except as set forth in Schedule 4.19 hereto, for the past three
years Seller has not executed or filed with the Internal Revenue Service or any
other taxing authority any agreement extending the period for filing any Tax
Return.
(b) To Seller's Knowledge, for the past three years no material claim
for assessment or collection of Taxes has been asserted against Seller or any of
its assets, other than claims which were resolved on or before the Interim
Balance Sheet Date. Except as set forth in Schedule 4.19 hereto, no audit,
investigation, or other proceeding by any court, governmental or regulatory
authority, or similar person is pending or, to Seller's Knowledge, threatened
with respect to the assessment or collection of Taxes with respect to Seller and
the Assets.
(c) Except as set forth in Schedule 4.19 hereto, no waivers of
statutes of limitation in respect of any Tax Returns have been given or
requested by Seller, nor has Seller agreed to any extension of time with respect
to a Tax assessment or deficiency during the past three years. To Seller's
Knowledge, no claim has been made or threatened within the past three years by a
Governmental Authority in a jurisdiction where Seller does not currently file
Tax Returns that it is or may be subject to taxation by that jurisdiction.
(d) Intentionally omitted.
(e) The performance of the transactions contemplated hereby will not
(either alone or upon the occurrence of any additional or subsequent event)
result in any payment that would constitute an "excess parachute payment" within
the meaning of Section 280G of the Code. Except as set forth in Schedule 4.19
hereto, none of the Assets is (i) "tax-exempt use" property within the meaning
of Section 168(h) of the Code; (ii) required to be treated as owned by another
person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to the enactment of the
Tax Reform Act of 1986; or (iii) "tax exempt bond financed property" within the
meaning of Section 168(g) of the Code.
(f) Except as described on Schedule 4.19 hereto, Seller is not a party
to any tax allocation agreement, tax sharing agreement, tax indemnity agreement,
or similar agreement, arrangement, or practice with respect to Taxes (including
any advance pricing agreement, closing agreement, private letter ruling, or
other agreement relating to Taxes with any Governmental Authority).
(g) Seller is not a foreign person within the meaning of Section 1445
of the Code.
(h) "Tax" and "Taxes" shall mean all taxes, charges, fees, levies, or
other similar assessments or liabilities, including without limitation (a)
income, gross receipts, ad valorem, premium, excise, real property, personal
property, sales, use, transfer, withholding, employment, payroll, Medicare, and
franchise taxes imposed by the United States of America, or by any state, local,
or foreign government, or any subdivision, agency, or other similar Person of
the United States or any such government; and (b) any interest, fines,
penalties, assessments, or additions to taxes resulting from, attributable to,
or incurred in connection with any Tax or any contest, dispute, or refund
thereof. "Tax Returns" shall mean any report, return or statement required to be
supplied to a taxing authority in connection with Taxes.
4.20 Real Property.
(a) Owned Real Property. Seller does not own any real property.
(b) Leased Real Property. With respect to the Real Property leased by
Seller:
(1) each Real Property Lease is, and at Closing shall be, in full
force and effect and has not been assigned, modified, supplemented or
amended, and to Seller's Knowledge no circumstances or state of facts
presently exists which, with the giving of notice or passage of time, or
both, would permit the landlord or sublandlord under any Real Property
Lease to terminate any Real Property Lease; and
(2) subject to Section 1.3, at the Closing, Seller shall assign
to the Purchaser all right, title and interest of Seller in and to all Real
Property Leases (and shall deliver to Purchaser original copies of all
consents obtained with respect to such assignments) and all security
deposits made by Seller pursuant to any of the Real Property Leases,
together with all accrued and unpaid interest earned on such deposits.
(c) Zoning. To Seller's Knowledge, the Real Property complies with all
applicable zoning and other land use requirements.
(d) Utility Services. The water, electric, gas and sewer utility
services and the septic tank and storm drainage facilities currently available
to the Real Property are adequate for the present use of the Real Property by
Seller in conducting the Business, are being supplied to Seller by utility
companies or municipalities, and to Seller's Knowledge there is no condition
which will result in the termination of the present access from the Real
Property to such utility services and other facilities.
(e) Access. Seller has obtained all Permits and rights-of-way,
including proof-of-dedication, which are necessary to ensure vehicular and
pedestrian ingress and egress to and from the Real Property. To Seller's
Knowledge, there are no conditions which will result in the termination of the
present access from the Real Property to neighboring existing highways and
roads.
(f) Intentionally omitted.
(g) Eminent Domain. Seller has received no notices, oral or written,
and has no Knowledge, that any Governmental Authority having the power of
eminent domain over the Real Property has commenced to exercise the power of
eminent domain or a similar power with respect to all or any part of the Real
Property.
(h) No Violations. Seller has received no written notices from any
Governmental Authority, and has no Knowledge, that the Real Property or any
improvements erected or situate thereon, or the uses conducted thereon or
therein, violate in any material respect any laws of any Governmental Authority
having jurisdiction over the Real Property.
(i) Improvements. The improvements located on the Real Property are
generally in good condition and are structurally sound, and all mechanical and
other systems located therein are in good operating condition, subject to normal
wear and tear. To Seller's Knowledge no condition exists requiring material
repairs, alterations or corrections with respect to the Real Property.
(j) Intentionally omitted.
(k) Flood Plain. No part of the Real Property contains, is located
within, or abuts any flood plain, navigable water or other body of water,
tideland, wetland, marshland or any other area which is subject to special
state, federal or municipal regulation, control or protection.
4.21 Brokers. Neither Seller nor any of Seller's Affiliates (as hereinafter
defined) have made any Contract with any Person or taken any action which would
cause any Person to claim an agent's, broker's or finder's fee or commission
from Purchaser in connection with the transactions contemplated hereby. For
purposes of this Agreement, the term "Affiliate", when used in reference to a
party, shall mean any entity directly or indirectly controlling, controlled by,
or under common control with, such party.
4.22 Agents. Seller has not designated or appointed any Person to act for
it or on its behalf pursuant to any power of attorney other than with respect to
any power of attorney granted with respect to any filing related to Taxes.
4.23 Books and Records. Copies of all the minute books and stock record
books of Seller have been delivered to Purchaser for inspection and contain
accurate records of all meetings of, and written consents by, the boards of
directors (and any committees thereof) and stockholders of Seller since February
28, 1995. The stock ledger and transfer books of Seller are complete and correct
and properly reflect all transfers of the capital stock of Seller. All
accounting, financial, reporting, business, tax, corporate and other similar
books and records of Seller accurately reflect in all material respects the
business and financial condition of Seller.
4.24 Insurance. Seller has insurance policies in full force and effect for
such amounts as are sufficient for material compliance with all requirements of
law and of all contracts and agreements to which Seller is a party or by which
it is bound. Set forth in Schedule 4.24 hereto is a list of all fire, liability
and other forms of insurance and all fidelity bonds held by or applicable to
Seller, setting forth, in respect of each such policy, the policy name, policy
number, carrier, term, type of coverage and annual premium. Excluding insurance
policies that have expired and been replaced in the ordinary course of business,
none of Seller's insurance policies have been canceled within the last two years
and to Seller's Knowledge no threat has been made to cancel any insurance policy
of Seller during such period. To Seller's Knowledge, no event has occurred,
including, without limitation, the failure by Seller to give any notice or
information or Seller's giving any inaccurate or erroneous notice or
information, which limits or impairs in any material respect the rights of
Seller under any such insurance policies.
4.25 Condition of Assets. All the Assets are in good operating condition
and repair, subject to normal wear, tear and maintenance and are usable in the
regular and ordinary course of business. No Person other than Seller owns any
equipment or other tangible assets or properties necessary to the operation of
the Business of Seller, except for leased items disclosed pursuant to Section
4.8(a)(5) or below the disclosure threshold set forth in Section 4.8(a)(5).
4.26 Disclosure. No representation or warranty by Seller contained in this
Agreement (including without limitation representations and warranties set forth
in the Financial Statements and the Schedules referenced in this Article IV), in
the documents to be delivered by Seller at the Closing pursuant to Article VIII
and in any other instrument furnished or to be furnished by or on behalf of
Seller or Parent to Purchaser or any of its representatives 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 any material fact
necessary, in light of the circumstances under which it was or will be made, in
order to make the statements herein or therein not misleading or necessary in
order fully and fairly to provide the information required to be provided in any
such document or other instrument.
V. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and warranties to
Parent and Seller, each of which is true and correct as of the date hereof and
shall be unaffected by any investigation heretofore or hereafter made by Parent
or Seller. Purchaser acknowledges that Parent and Seller are relying on such
representations and warranties in connection with the entering into of this
Agreement and the sale of the Assets contemplated hereby.
5.1 Corporate Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and has the requisite corporate power and authority to own, lease
or otherwise hold its properties and assets and to carry on its business as
presently conducted.
5.2 Authorization and Effect of Agreement. Purchaser has the requisite
corporate power to execute and deliver this Agreement and the agreements to be
entered into by it at the Closing pursuant hereto (the "Purchaser Ancillary
Documents") and to perform the transactions contemplated hereby and thereby to
be performed by it. The execution and delivery by Purchaser of this Agreement
and the Purchaser Ancillary Documents and the performance by it of the
transactions contemplated hereby and thereby to be performed by it have been or,
in the case of the Purchaser Ancillary Documents will at the Closing be, duly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been, and each Purchaser Ancillary Document will at the Closing
be, duly executed and delivered by duly authorized officers of Purchaser and,
assuming the due execution and delivery of this Agreement and, as applicable,
any Purchaser Ancillary Document, by Parent and Seller, this Agreement
constitutes, and each Purchaser Ancillary Document will at the Closing
constitute, a valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
5.3 No Conflicts. The execution and delivery of this Agreement and each
Purchaser Ancillary Document by Purchaser does not or in the case of the
Purchaser Ancillary Documents will not, and the performance by Purchaser of the
transactions contemplated hereby or thereby to be performed by it will not,
(a) conflict with the certificate or articles of incorporation (or other
organizational documents) or by-laws of Purchaser, (b) conflict with, or result
in any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation, or
acceleration of any obligation or to loss of a benefit under, any provision of
any material document to which Purchaser or any of its assets or properties is
bound, or (c) constitute a violation of any law applicable to Purchaser. No
consent, approval, order, or authorization of, or registration, declaration, or
filing with, any Governmental Authority or other Person whether pursuant to
contractual obligation or otherwise, is required to be obtained or made by or
with respect to Purchaser in connection with the execution and delivery of this
Agreement or any Purchaser Ancillary Document or the performance by Purchaser of
any of its obligations hereunder or thereunder, except for the Governmental
Approvals.
5.4 Brokers. Neither Purchaser nor any of Purchaser's Affiliates has made
any agreement with any Person or taken any action which would cause any Person
to claim an agent's, broker's or finder's fee or commission from Seller in
connection with the transactions contemplated hereby.
VI. PRE-CLOSING COVENANTS
6.1 No Inconsistent Action. Neither Purchaser, on the one hand, nor Parent
or Seller, on the other hand, shall take any action which is materially
inconsistent with their respective obligations under this Agreement.
6.2 Injunctions. If any United States, state or foreign court having
jurisdiction over any party issues or otherwise promulgates any order which
prohibits the consummation of the transactions contemplated hereby, the parties
will use their respective reasonable efforts to have such injunction dissolved
or otherwise eliminated as promptly as possible and to pursue the underlying
litigation diligently and in good faith.
6.3 Governmental Filings. Purchaser, on the one hand, and Parent and
Seller, on the other hand, shall as promptly as practicable following the
execution and delivery of this Agreement, file with the United States Federal
Trade Commission and the United States Department of Justice, the notification
and report form under the HSR Act required for the transactions contemplated
hereby and any supplemental information requested in connection therewith
pursuant to the HSR Act. Purchaser, on the one hand, and Parent and Seller, on
the other hand, shall as promptly as practicable comply with any other laws
which are applicable to any of the transactions contemplated hereby and pursuant
to which any consent, approval, order, or authorization of, or registration,
declaration, or filing with, any Authority or any other Person in connection
with the transactions contemplated hereby is necessary. Purchaser, on the one
hand, and Parent and Seller, on the other hand, shall furnish to the other such
necessary information and reasonable assistance as the other may reasonably
request in connection with its preparation of any filing, registration, or
declaration which is necessary under the HSR Act or any other similar laws.
Purchaser, on the one hand, and Parent and Seller, on the other hand, shall keep
each other reasonably apprised of the status of any communications with, and any
inquiries or requests for additional information from, any Governmental
Authority, and shall use reasonable efforts to comply promptly with any such
inquiry or request. Purchaser agrees that any filing fee required to be paid in
connection with any filing under the HSR Act shall be paid fully by Purchaser..
6.4 Third Party Consents. Purchaser, on the one hand, and Seller, on the
other hand, will cooperate and use their respective reasonable efforts to obtain
as promptly as practicable all consents, approvals, and waivers required by
third Persons to transfer the Assets (other than consents, approvals and waivers
relating to Contracts and Permits, which consents, approvals and waivers are
governed by Section 1.3) to Purchaser in a manner that will avoid any default,
conflict, or termination of rights in respect thereof.
6.5 Access. Except as otherwise required by the confidentiality obligations
of Seller, prior to the Closing, upon reasonable notice from Purchaser to
Seller, Seller will afford to the officers, attorneys, accountants, or other
authorized representatives (including, without limitation, environmental
consultants) of Purchaser reasonable access during normal business hours to the
employees, Assets, facilities, and the books and records of Seller so as to
afford Purchaser a full opportunity to make such review, examination, and
investigation of the Business as Purchaser may desire to make. Except as
otherwise required by the confidentiality obligations of Seller, Purchaser will
be permitted to make such extracts from or to make such copies of such books and
records as may be reasonably necessary in connection therewith. Except as
otherwise required by the confidentiality obligations of Seller, prior to the
Closing, Seller will promptly furnish or cause to be furnished to Purchaser such
financial and operating data and other information as Purchaser shall reasonably
request pursuant to this Section 6.5.
6.6 Conduct Prior to Closing. During the period between the date hereof and
the Closing, (1) Parent shall have all the rights and obligations granted to it
pursuant to the Patent License Agreement referred to in Section 8.2(h) hereof as
though such Patent License Agreement had been executed on the date hereof, (2)
Seller shall be permitted to take the Permitted Actions (as hereinafter defined)
in its discretion and (3) without in any way limiting any other obligations of
Seller hereunder, except as consented to by Purchaser in writing (which consent
shall not be unreasonably withheld, other than consents relating to the license
or granting of access to source code described in Section 6.6(a)(ix) below,
which may be withheld or granted in Purchaser's sole discretion):
(a) Seller shall:
(i) (A) use reasonable efforts to conduct the Business and the
operations and affairs of Seller only in the ordinary and normal
course of business consistent with past practice; (B) not enter into
any transaction or take any action which, if effected before the date
of this Agreement, would constitute a breach of any representation,
warranty, covenant or other obligation of Seller contained herein or
would have required disclosure under Article IV, other than
transactions or actions which would not have a Material Adverse Effect
upon Seller and Permitted Actions; and (C) not enter into any supply
arrangements requiring the purchase of goods or services by Seller in
the amount (with respect to any such arrangement) of more than $50,000
per year per arrangement or Contracts contemplating the payment to or
by Seller in the amount (with respect to any such Contract) of more
than $250,000 per year per Contract (arrangements and Contracts
falling below the thresholds set forth in this Section 6.6(a)(i)(C),
unless otherwise expressly prohibited in clauses (ii) through (x)
below, being hereinafter referred to as "Permitted Actions");
(ii) use reasonable efforts to continue to maintain in full force
and effect all policies of insurance or renewals thereof now in
effect, take out, at the expense of the Purchaser, such additional
insurance as may be reasonably requested by the Purchaser and give all
notices and present all claims under all policies of insurance in a
due and timely fashion (except if the failure to give such notices and
present such claims would not have a Material Adverse Effect upon
Seller);
(iii) pay and discharge the liabilities of Seller in the ordinary
course of business in accordance and consistent with the previous
practices of Seller, except those contested in good faith by Seller;
(iv) except for pay increases and bonuses made to Excluded
Employees, not increase the compensation or benefits of or make any
advance (excluding advances for ordinary and necessary business
expenses) or loan to any director, officer or employee of Seller;
(v) not sell, assign, or transfer any of the Assets, except for
the replacement or betterment of obsolete or worn out equipment and
sales of inventory in the ordinary course of business consistent with
past practice, and not permit any of the Assets to be subjected to any
Lien (other than Permitted Liens);
(vi) not make commitments or Contracts for capital expenditures
or capital additions or betterments which exceed $10,000 individually
or $50,000 in the aggregate, except such as may be involved in
ordinary repair, maintenance or replacement of the Assets;
(vii) not acquire or agree to acquire any assets that would
constitute Assets except in the ordinary course of business consistent
with past practices;
(viii) not enter into any Contract or other transaction with
Parent or any Affiliate of Parent or any officer or director of Parent
or of any Affiliate of Parent;
(ix) not amend, modify or terminate any of the Contracts listed
on Schedule 6.6(a)(ix) hereto, enter into any Contracts by which
Seller proposes to license or otherwise provide access to its source
code (including by way of escrow or other similar arrangement) or
enter into any Contracts that grant any exclusive rights to any
Person; or
(x) not agree, in writing or otherwise, to do any of the
foregoing.
(b) Seller shall use its reasonable efforts to preserve intact the
Business and the property, assets, operations and affairs of Seller and carry on
the Business and the affairs of Seller as currently conducted, keep available to
Seller the services of the present employees of Seller, preserve and protect its
Intellectual Property and the value thereof, and promote and preserve for the
Purchaser the goodwill of suppliers, customers, creditors and others having
business relations with Seller.
6.7 Notification.
(a) Seller shall provide prompt written notice to Purchaser, and
Purchaser shall provide prompt written notice to Seller (in each case within
five (5) business days), of any litigation, arbitration, or administrative
proceeding pending or, to its Knowledge, threatened against Parent or Seller, on
the one hand, or Purchaser, on the other hand, which challenges the transactions
contemplated hereby.
(b) Seller will provide prompt written notice to Purchaser (in any
event within five (5) business days) of any development or information causing
or which constitutes or would at the Closing constitute a material breach of any
of its representations and warranties contained herein or any Schedules referred
to herein or attached hereto and shall promptly furnish any information which
Purchaser may reasonably request in relation to such development or information;
provided, however, that such notice shall not operate to cure any breach of the
representations and warranties made herein or in any Schedules referred to
herein or attached hereto.
6.8 No Solicitation. Except for the transactions contemplated by this
Agreement, from and after the date of this Agreement until the Closing or the
termination of this Agreement, neither Parent nor Seller shall, nor shall they
authorize or permit any officer, director, or employee of, or any investment
banker, attorney, accountant, or other representative retained by, Parent or
Seller to, directly or indirectly, solicit, initiate, encourage or entertain
(including by way of furnishing information) discussions, inquiries, offers, or
proposals, or participate in any discussions or negotiations for the purpose or
with the intention of leading to any proposal or offer from any Person which
constitutes or concerns, or may reasonably be expected to lead to, any
proposals, for a merger or other business combination constituting an
acquisition of Seller or any proposal or offer to acquire any of the outstanding
shares of capital stock of Seller or any material portion of the Assets.
6.9 Publicity. Prior to the Closing, neither party will issue or cause the
publication of any press release or other public announcement with respect to
this Agreement or the transactions contemplated hereby without the prior consent
of the other party, which consent will not be unreasonably withheld; provided,
however, that nothing herein will prohibit either party from issuing or causing
publication of any such press release or public announcement to the extent that
such party determines such action to be required by law or the rules of any
national stock exchange or self-regulatory organization applicable to it or its
Affiliates, in which event the party making such determination will, if
practicable in the circumstances, use reasonable efforts to allow the other
party reasonable time to comment on such release or announcement in advance of
its issuance.
6.10 Satisfaction of Conditions. Without limiting the generality or effect
of any provision of Article VI, prior to the Closing, each of the parties will
use reasonable best efforts with due diligence and in good faith to satisfy
promptly all conditions required hereby to be satisfied by such party in order
to expedite the consummation of the transactions contemplated hereby.
6.11 Seller's Employees. Purchaser shall have the right to interview and
offer employment, such employment to commence immediately after the Closing, to
all persons employed by Seller as of the date hereof other than the Excluded
Employees. Notwithstanding the foregoing, Purchaser shall have the right to
interview and offer employment (to commence immediately after the Closing) to
Excluded Employees to the extent, and in the manner, permitted in Schedule
3.2(b) hereto. All initial offers of employment made pursuant to this Section
6.11 shall be made on terms consistent with the terms described in Schedule 6.11
hereto. Seller shall not offer employment to any of Seller's employees to whom
employment has been offered by Purchaser (such persons are hereinafter referred
to as "Offerees" provided that they are not Excluded Employees) unless (a) this
Agreement is terminated or (b) such offer complies with Section 9.10.
6.12 Transferred Employees. Purchaser covenants the following with respect
to Transferred Employees (as defined in Section 6.12(a) hereof):
(a) Purchaser shall give service credit under all of its employee
benefit plans, for purposes of determining eligibility to participate, vesting,
satisfaction of pre-existing medical conditions exclusion provisions, and
calculation of vacation and severance benefits, to all employees of Seller who
become employees of Purchaser immediately after the Closing ("Transferred
Employees") for all of their service with Seller and its Affiliates.
(b) Purchaser shall give credit under its employee medical plans for
any deductibles, co-payments, and other out-of-pocket expenses paid by
Transferred Employees and credited under Seller's medical plan prior to the
Closing.
(c) Intentionally omitted.
(d) Intentionally omitted.
(e) Intentionally omitted.
(f) As of the Closing, Purchaser shall provide all Transferred
Employees with an employee benefits package that Purchaser reasonably believes
to be, in the aggregate, no less valuable to the Transferred Employee than the
employee benefits package provided to such employees as of the Closing Date.
6.13 Excluded Employees. For purposes of this Agreement, the term "Excluded
Employees" shall mean ▇▇▇▇▇ House, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (but only after
it is determined that ▇▇. ▇▇▇▇▇▇ will not be an "Accepting Tier Employee" within
the meaning of Schedule 3.2(b) hereto), ▇▇▇▇▇ ▇▇▇▇▇▇ (but only after it is
determined that ▇▇. ▇▇▇▇▇▇ will not be an "Accepting Tier Employee" within the
meaning of Schedule 3.2(b) hereto), ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇.
Except as provided below, the Purchaser shall not offer employment to the
Excluded Employees for a period of two years after the Closing Date:
(a) The Purchaser shall be permitted to offer employment to ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and the Excluded Employees to the extent, and in the
manner, provided for in Schedule 3.2(b) hereto.
(b) The Seller and Parent shall use reasonable efforts to make ▇▇▇▇▇
House available to assist Purchaser during the first six months after the
Closing, at no cost to Purchaser. Such availability shall not extend to any more
than 10 days during such six month period. Such services shall be provided to
Purchaser pursuant to the Transition Services Agreement described in Section
8.2(h).
(c) At Purchaser's request, the Seller and Parent shall use reasonable
efforts to make ▇▇▇▇ ▇▇▇▇▇▇▇ available to assist Purchaser, in the areas of
requirements and products definition, specifications review and design review,
during the first two years after the Closing, at no cost to Purchaser. Such
availability shall not extend to any more than 5 days during any three month
period during such two year period. Such services shall be provided to Purchaser
pursuant to the Transition Services Agreement described in Section 8.2(i).
VII. CLOSING CONDITIONS
7.1 Conditions to Obligations of Each of the Parties. The obligation of
each party to effect the transactions contemplated hereby (the "Transaction")
and to consummate the Closing shall be subject to the fulfillment, at or prior
to the Closing Date, of the following conditions:
7.1.1 No Prohibition of Transaction.
(a) No third party shall have instituted any suit or proceeding to
restrain, enjoin or otherwise prevent the consummation of the Transaction.
(b) The waiting period required by Section 7(b)(1) of the HSR Act and
the regulations promulgated thereunder shall have expired without any
administrative or judicial proceeding having been instituted by the Federal
Trade Commission or the Department of Justice with respect to the Transaction.
(c) No order shall have been issued by any court or administrative
body to restrain, enjoin or otherwise prevent consummation of the Transaction.
7.1.2 Compliance with Law. All Governmental Approvals shall have been
obtained.
7.2 Conditions to the Obligations of the Purchaser. The obligations of the
Purchaser hereunder are subject to the satisfaction, on or prior to the Closing
Date, of all the following conditions, compliance with which or the occurrence
of which may be waived in whole or in part by the Purchaser in writing:
7.2.1 Representations and Warranties True at the Closing Date. Except
for (i) changes expressly contemplated by this Agreement, (ii)
misrepresentations which individually or in the aggregate do not, or could not
reasonably be expected to, have a Material Adverse Effect upon the Seller and
(iii) representations made as of a particular date, the representations and
warranties of the Seller and the Parent contained in Article IV of this
Agreement shall be deemed to have been made again at and as of the Closing Date
and shall then be true and correct in all material respects (except for
representations and warranties which are qualified as to materiality, which
representations and warranties shall be true in all respects). At the Closing,
the Seller shall have delivered to the Purchaser a certificate to the foregoing
effect signed by the Seller and dated the Closing Date.
7.2.2 No Material Adverse Change. During the period from December 1,
1997 through the Closing Date, (a) there shall not have been any adverse change
in the financial condition or results of operations of the Seller, nor any loss
or damage to its assets, whether or not insured, in either case which affects
the Seller's ability to conduct the Business, (b) none of the events described
in Section 4.12 of this Agreement shall have occurred and (c) the Seller shall
not have taken any action outside of the ordinary course of business, other
than, in any such case covered by clauses (a), (b) or (c) of this Section 7.2.2,
changes, losses, damages, events or actions which, individually and in the
aggregate, do not constitute a Material Adverse Effect upon Seller. At the
Closing, the Seller shall have delivered to the Purchaser a certificate, dated
the Closing Date and signed by the Seller, to the foregoing effect.
7.2.3 Seller's and Parent's Performance. Each of the obligations of
the Seller and the Parent to be performed on or before the Closing Date pursuant
to the terms of this Agreement shall have been duly performed in all material
respects as of the Closing Date, and, at the Closing Date, the Seller and Parent
shall have delivered to the Purchaser a certificate to the foregoing effect
dated on and as of the Closing Date.
7.2.4 Necessary Corporate Approvals. As of the date of execution of
this Agreement, the board of directors and stockholders of the Seller and the
board of directors of the Parent have duly authorized and approved the execution
and delivery of this Agreement, and all corporate actions necessary or proper to
authorize the execution, delivery and performance of this Agreement by Seller
and Parent have been taken. All such actions shall be in full force and effect
and shall not have been revoked as of the Closing Date and the Seller and Parent
shall have delivered to the Purchaser a certificate to that effect.
7.2.5 Resolutions Authorizing the Execution of this Agreement. As of
the date hereof, the Seller has furnished to the Purchaser copies of the
resolutions or consents of the Seller's board of directors and its sole
stockholder and the Parent has furnished to the Purchaser copies of the
resolutions or consents of the Parent's board of directors , authorizing the
execution, delivery, and performance of this Agreement. As of the Closing Date,
the Seller and Parent shall have delivered to the Purchaser certificate of the
Secretaries of the Seller and Parent confirming that such resolutions or
consents (in substantially the same form and substance as heretofore delivered)
remain in full force and effect as of the Closing Date.
7.2.6 Documents. The Seller and Parent shall have furnished the
Purchaser with each of the documents contemplated by Section 8.2 and 8.4.
7.2.7 Intentionally omitted.
7.2.8 Consents to Assignment. Notwithstanding any provision herein to
the contrary, provided that Seller complies with its obligations under Section
1.3 and Section 6.4, Purchaser's obligations herein shall not be conditioned on
the receipt of any consent to the assignment of any Contract or Permit.
7.3 Conditions to the Obligations of the Seller and Parent. The obligations
of the Seller and the Parent hereunder are subject to the satisfaction, on or
prior to the Closing Date, of all the following conditions, compliance with
which or the occurrence of which may be waived in whole or in part by the Seller
and Parent in writing:
7.3.1 Representations and Warranties True at the Closing Date. Except
for (i) changes expressly contemplated by this Agreement, (ii)
misrepresentations which individually or in the aggregate do not, or could not
reasonably be expected to, have a Material Adverse Effect upon the Purchaser and
(iii) representations made as of a particular date, the representations and
warranties of the Purchaser contained in Article V of this Agreement shall be
deemed to have been made again at and as of the Closing Date and shall then be
true and correct in all material respects (except for representations and
warranties which are qualified as to materiality, which representations and
warranties shall be true in all respects). At the Closing, the Seller shall have
delivered to the Purchaser a certificate to the foregoing effect signed by the
Seller and dated the Closing Date.
7.3.2 Purchaser's Performance. Each of the obligations of the
Purchaser to be performed on or before the Closing Date pursuant to the terms of
this Agreement shall have been duly performed in all material respects as of the
Closing Date, and, at the Closing Date, the Purchaser shall have delivered to
the Seller a certificate to the foregoing effect dated on and as of the Closing
Date.
7.3.3 Necessary Corporate Approvals. As of the date of execution of
this Agreement, a committee of the board of directors of the Purchaser has duly
authorized and approved the execution and delivery of this Agreement, and all
corporate actions necessary or proper to authorize the execution, delivery and
performance of this Agreement by the Purchaser have been taken. All such actions
shall be in full force and effect and shall not have been revoked as of the
Closing Date and the Purchaser shall have delivered to the Seller a certificate
to that effect.
7.3.4 Resolutions Authorizing the Execution of this Agreement. As of
the date hereof, the Purchaser has furnished to the Seller copies of the
resolutions or consents of a committee of the Purchaser's board of directors,
authorizing the execution, delivery, and performance of this Agreement. As of
the Closing Date, the Purchaser shall have delivered to the Seller a certificate
of the Secretary of the Purchaser confirming that such resolutions or consents
(in substantially the same form and substance as heretofore delivered) remain in
full force and effect as of the Closing Date.
7.3.5 Documents. The Purchaser shall have furnished the Seller and
Parent with each of the documents contemplated by Section 8.3 and 8.4.
VII.A. TERMINATION
7A.1 Right to Terminate. This Agreement may be terminated at any time
until completion of the Closing as follows:
(a) by mutual consent of the Purchaser, Seller and Parent;
(b) by the Purchaser, Seller or Parent if the Closing shall not
have occurred on or before April 30, 1998 (the "Outside Date"), but no party
shall be entitled to terminate pursuant to this Section 7A.1(b) if its own acts
or failures to act should delay the Closing beyond the Outside Date or if all
conditions to its obligation to consummate the Closing shall have been satisfied
at least five business days prior to the Outside Date;
(c) by the Purchaser or the Seller, respectively, if it shall
have discovered that (x) any representation or warranty made herein for its
benefit, or in any certificate, schedule or document furnished to it pursuant to
this Agreement, is untrue in any respect, provided that such untruth,
individually or in the aggregate, constitutes a Material Adverse Effect with
respect to the party making such representation, or (y) the Seller or the Parent
(in the case of a termination by Purchaser) or the Purchaser (in the case of a
termination by Seller or Parent) shall have defaulted in the performance of any
material obligation under this Agreement; provided, however, that in order to
terminate this Agreement under this Section 7A.1(c), the party seeking to
terminate this Agreement shall give written notice of such breach or default to
the other party and the other party shall fail to cure the breach or default by
the earlier of ten (10) days after receipt of such notice or the Outside Date;
(d) by the Purchaser or Seller if it shall have reasonably
determined that a condition to its obligation to consummate the Closing cannot
be satisfied; or
(e) by the Purchaser or Seller to the extent that such party is
afforded the right to terminate this Agreement pursuant to the terms of Schedule
3.2(b).
7A.2 Liability on Termination. Upon any termination of this Agreement
pursuant to Section 7A.1, the provisions of this Agreement shall cease to be
effective (except that the provisions of this Section 7A.2, Section 9.10 and
Article XI of this Agreement shall remain in full force and effect).
Notwithstanding the foregoing, all arrangements among the parties relating to
the subject of confidentiality shall remain in full force and effect. In the
event of any such termination, no party shall have liability to any other party
hereto, except that in the event of a termination of this Agreement pursuant to
Sections 7A.1(b), 7A.1(c) or 7A.1(d), a breaching party hereunder shall be
liable to any party damaged by such breach for such damages as shall be
permitted by law.
7A.3 Specific Enforcement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that, in addition to any other remedy to
which they are entitled at law or in equity, the parties hereto will be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction over the parties, subject to the forum
selection provisions set forth in Section 11.18.
VII. CLOSING ARRANGEMENTS
8.1 The Closing. The consummation of the purchase and sale of the Assets
contemplated hereby (the "Closing") shall take place (i) on February 16, 1998,
or, if all conditions to Closing have not been satisfied or waived by the fifth
business day prior to February 16, 1998, on the fifth business day after all
conditions to Closing have been satisfied or waived, or (ii) on such other date
as shall be mutually acceptable to Seller and Purchaser, at the offices of Weil,
Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ (or at such
other place as shall be acceptable to Seller and Purchaser). The date on which
the Closing is consummated is referred to in this Agreement as the "Closing
Date." At the Closing, the parties shall execute and deliver the documents
referred to in this Article VIII.
8.2 Documents to be Delivered by Seller and Parent. At the Closing, Seller
and Parent will deliver to Purchaser, as applicable, the following, in proper
form for recording when appropriate:
(a) Transfer Documents. Patent and trademark assignments, executed by
Seller, in form and substance reasonably satisfactory to Purchaser (which form
shall be satisfactory for filing with appropriate Governmental Authorities)
(such assignments and the ▇▇▇▇ of sale and assumption agreement referred to in
Section 8.4 hereof being hereinafter referred to as "Transfer Documents").
(b) Certified Resolutions. Certified resolutions of the Boards of
Directors (or committees thereof) of each of Parent and Seller approving the
execution and delivery of this Agreement and each of the other documents
delivered by Parent and Seller pursuant hereto and authorizing the consummation
of the transactions contemplated hereby and thereby.
(c) Good Standing Certificates. Governmental certificates showing that
Seller is duly incorporated and in good standing in the state of its
incorporation and in good standing in each state listed in Schedule 4.1 hereto,
certified as of a recent date.
(d) Officer's Certificate. A certificate, dated the Closing Date,
executed on behalf of Seller by an executive officer of Seller, certifying as to
the satisfaction of the conditions precedent set forth in Sections 7.2.1, 7.2.2
and 7.2.3; such certificate shall be in form and substance reasonably
satisfactory to Purchaser.
(e) Intentionally omitted.
(f) License Agreement. An intellectual property, license and support
agreement, dated the Closing Date, between Purchaser and Parent, in the form and
substance of the license agreement annexed hereto as Exhibit 8.2(f) (the
"License Agreement"), duly executed by Parent.
(g) Intentionally Omitted.
(h) Patent License Agreement. A patent license agreement, dated the
Closing Date, among Purchaser, Parent and Seller, the form and substance of the
management agreement annexed hereto as Exhibit 8.2(h) (the "Patent License
Agreement"), duly executed by Parent and Seller.
(i) Transition Services Agreement. A transition services agreement,
dated the Closing Date, among Purchaser, Parent and Seller, in form and
substance reasonably satisfactory to Purchaser, Parent and Seller, covering
services to be provided among the parties hereto after the Closing (the
"Transition Services Agreement"), duly executed by Parent and Seller.
(j) Other Documents. Such additional information and materials as
Purchaser shall reasonably request.
8.3 Documents to be Delivered by Purchaser. At the Closing, Purchaser will
deliver to Seller:
(a) Cash Amount. Payment to Seller in the amount of the Closing Date
Payment , by wire transfer in accordance with Section 3.2.
(b) Good Standing Certificates. Governmental certificates showing that
Purchaser is duly incorporated and in good standing in the state of its
incorporation certified as of a recent date.
(c) Officer's Certificate. A certificate, dated the Closing Date,
executed on behalf of Purchaser by an executive officer of Purchaser, certifying
as to the satisfaction of the conditions precedent set forth in Sections 7.3.1
and 7.3.2; such certificate shall be in form and substance reasonably
satisfactory to Seller.
(d) Transition Documents. The License Agreement, the Patent License
Agreement and the Transition Services Agreement, duly executed by Purchaser.
(e) Intentionally Omitted.
(f) Other Documents. Such additional information and materials as
Seller shall reasonably request.
8.4 Documents to be Delivered by Purchaser and Seller. At the Closing, each
of Purchaser and Seller shall execute and deliver, or cause to be executed and
delivered, to the other a general ▇▇▇▇ of sale and assumption agreement, in form
and substance reasonably satisfactory to the parties hereto.
IX. POST-CLOSING COVENANTS
9.1 Covenant Not to Compete. Each of Parent and Seller agrees that from the
time that the Closing is consummated pursuant to the terms hereof until the
fifth anniversary of the date hereof (the "Covenant Termination Date"), each of
Parent and Seller will not, directly or indirectly, anywhere in the world, own,
manage, operate, control or participate in the ownership, management, operation
or control of any business, whether in corporate, proprietorship or partnership
form or otherwise, engaged in the design, manufacturing or marketing of real
time operating systems software products as stand-alone products; provided,
however, that this covenant against competition shall not apply to actions which
Seller is required to take with existing customers of Seller with respect to
Contracts that cannot be assigned by Seller to Purchaser. In the event that
prior to the Covenant Termination Date, Parent is acquired by a third party in a
transaction pursuant to which Parent survives as a separate and distinct entity
from such acquiring third party, then this covenant against competition shall
continue to apply to Parent until the Covenant Termination Date but shall not
apply to such acquiring third party. Each of Parent and Seller severally
acknowledge that the geographic boundaries and the term and scope of prohibited
activities contained in this Section 9.1 are reasonable and no broader than
necessary to protect the investment by Purchaser in the Assets being acquired
pursuant to this Agreement and will not impose any unreasonable burden upon any
of Parent, Seller or their respective Affiliates. The parties hereto
specifically acknowledge and agree that the remedy at law for any breach of the
foregoing will be inadequate and that the Purchaser, in addition to any other
relief available to it, shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damage or posting any bond
whatsoever. In the event that the provisions of this Section 9.1 should ever be
deemed to exceed the limitations provided by applicable law, then the parties
hereto agree that such provisions shall be reformed to set forth the maximum
limitations permitted.
9.2 Confidentiality. Each of Parent and Seller agrees that after the
Closing it will not disclose, reveal, divulge or communicate to any person or
entity other than authorized officers, directors and employees of Purchaser, or
use or otherwise exploit for its own benefit or for the benefit of anyone other
than Purchaser, any Confidential Information (as defined below). Each of Parent
and Seller shall not have any obligation to keep confidential any Confidential
Information if and to the extent disclosure thereof is specifically required by
law; provided, however, that in the event disclosure is required by applicable
law, each of Parent and Seller shall, to the extent reasonably possible, provide
Purchaser with prompt notice of such requirement prior to making any disclosure
so that Purchaser may seek an appropriate protective order. For purposes of this
Section 9.2, "Confidential Information" shall mean any confidential information
with respect to the conduct or details of the Business, including, without
limitation, methods of operation, customers and customer lists, products,
proposed products, former products, proposed, pending or completed acquisitions
of any company, division, product line or other business unit, prices, fees,
costs, plans, designs, technology, inventions, Trade Secrets, Know-How,
Software, marketing methods, policies, plans, personnel, suppliers, competitors,
markets or other specialized information or proprietary matters; provided,
however, that the term Confidential Information does not include, and there
shall be no obligation hereunder with respect to, information that (a) is
generally available to the public on the date of this Agreement, (b) becomes
generally available to the public other than as a result of a disclosure by
Seller or Parent not otherwise permissible hereunder, (c) is independently
developed by Seller as established by documentary evidence, or (d) Seller learns
from other sources where such sources have not violated their confidentiality
obligation to Purchaser. The parties hereto specifically acknowledge and agree
that the remedy at law for any breach of the foregoing will be inadequate and
that Purchaser, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damage or posting any bond whatsoever.
9.3 Discharge of Business Obligations. From and after the Closing Date,
Seller shall pay and discharge, in accordance with past practice but not less
than on a timely basis, all Retained Liabilities in respect of the Business, its
operations or the assets and properties used therein. From and after the Closing
Date, Purchaser shall pay and discharge, in the ordinary course but not less
than on a timely basis, the Assumed Liabilities.
9.4 Maintenance of Books and Records. Each of Parent, Seller and Purchaser
shall preserve, from and after the Closing Date until the sixth anniversary of
the Closing Date, all records possessed or to be possessed by such party
relating to any of the assets, liabilities or business of the Business prior to
the Closing Date. After the Closing Date, where there is a legitimate purpose,
such party shall provide the other parties with access, upon prior reasonable
written request specifying the need therefor, during regular business hours, to
(i) the officers and employees of such party and (ii) the books of account and
records of such party, but, in each case, only to the extent relating to the
assets, liabilities or business of the Business prior to the Closing Date, and
the other parties and their representatives shall have the right to make copies
of such books and records; provided, however, that the foregoing right of access
shall not be exercisable in such a manner as to interfere unreasonably with the
normal operations and business of such party; and further provided that, as to
such portion of such information as constitutes trade secrets or confidential
business information of such party, the requesting party and its officers,
directors and representatives will use due care to not disclose such information
except (i) as required by law, (ii) with the prior written consent of such
party, which consent shall not be unreasonably withheld, or (iii) where such
information becomes available to the public generally, or becomes generally
known to competitors of such party, through sources other than the requesting
party, its Affiliates or its officers, directors or representatives. Such
records may nevertheless be destroyed by a party if such party sends to the
other parties written notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed. Such records may then
be destroyed after the 30th day after such notice is given unless another party
objects to the destruction, in which case the party seeking to destroy the
records shall deliver such records to the objecting party.
9.5 Payments Received. Parent, Seller and Purchaser each agree that after
the Closing they will hold and will promptly transfer and deliver to the other,
from time to time as and when received by them, any cash, checks with
appropriate endorsements (using their reasonable efforts not to convert such
checks into cash), or other property that they may receive on or after the
Closing which properly belongs to the other party, including without limitation
any insurance proceeds, and will account to the other for all such receipts.
From and after the Closing, Purchaser shall have the right and authority to
endorse without recourse the name of Seller on each check or any other evidences
of indebtedness received by Purchaser on account of the Business and the Assets
transferred to Purchaser hereunder.
9.6 Post-Closing Notifications. Purchaser, Parent and Seller will comply
with any post-Closing notification or other requirements, to the extent then
applicable to such party, of any antitrust, trade competition, investment or
control, export or other law of any Governmental Authority having jurisdiction
over Seller.
9.7 Certain Tax Matters. All sales, use, transfer, stamp, conveyance, value
added or other similar taxes, duties, excises or governmental charges imposed by
any taxing jurisdiction, domestic or foreign, and all recording or filing fees,
notarial fees and other similar costs of Closing with respect to the transfer of
the Assets or otherwise on account of this Agreement or the transactions
contemplated hereby will be borne by Purchaser.
9.8 Insurance. With respect to any loss, liability or damage relating to,
resulting from or arising out of the conduct of the Business on or prior to the
Closing Date for which Seller would be entitled to assert a claim for recovery
under any policy of insurance maintained by or for the benefit of Seller in
respect of the Business or the Assets, at the request and expense of Purchaser,
Seller will, after the Closing, use reasonable efforts to assert, or to assist
Purchaser to assert, one or more claims under such insurance covering such loss,
liability or damage if Purchaser is not itself entitled to assert such claim but
Seller is so entitled.
9.9 Use of Name. From and after thirty (30) days following the Closing
Date, Parent and Seller will sign such consents and take such other action as
Purchaser shall reasonably request in order to permit Purchaser to use the name
"Spectron Microsystems Incorporated" and variants thereof. From and after the
Closing Date, Seller will not itself use the name Spectron Microsystems
Incorporated" or any derivative or variants thereof and shall promptly amend its
articles of incorporation to remove such reference.
9.10 Non-Solicitation/No-Hire. For a term of two years after the Closing
Date, neither Parent nor Seller nor their representatives on their behalf will
directly solicit any of Seller's employees hired by Purchaser (unless such
employees are no longer employed by Purchaser) and neither Purchaser nor its
representatives on its behalf will directly solicit any of Seller's employees
not hired by Purchaser as of the Closing Date (unless such employees are no
longer employed by Seller). For a term of one year after the Closing Date,
neither Parent nor Seller nor their representatives on their behalf will offer
employment to any of the Seller's employees hired by Purchaser (unless such
employees are no longer employed by Purchaser). In the event that this Agreement
is terminated for any reason, for a term of two years after the termination
date, neither Purchaser nor its representatives on its behalf will directly
solicit any of Seller's employees and for a term of one year after the
termination date, neither Purchaser nor its representatives on its behalf will
offer employment to any of Seller's employees (unless, in either such case, such
employees are no longer employed by Seller).
X. SURVIVAL AND INDEMNIFICATION
10.1 Survival of Representations, Warranties and CovenantsX.1 Survival of
Representations, Warranties and Covenants.
(a) Except as to (i) the representations and warranties contained in
Section 4.18 relating to title to the Assets, which shall survive the Closing
and remain in effect indefinitely, (ii) the representations and warranties
contained in Section 4.17 relating to environmental matters and the
representations and warranties contained in Sections 4.13 and 4.14 relating to
employees and employee benefit plans, which shall survive the Closing until the
expiration of the statute of limitations applicable thereto, and (iii) the
representations and warranties contained in Section 4.19 relating to Taxes,
which shall survive the Closing until the expiration of the last day on which
any Tax may be validly assessed by the Internal Revenue Service or any other
Governmental Authority against the Assets or the Business, the representations
and warranties of Seller, Parent and Purchaser contained in this Agreement or in
any Transfer Document shall survive the Closing until the expiration of two
years from the Closing Date. Any claim for an Indemnifiable Loss (as defined in
Section 10.2) asserted within such period of survival as herein provided will be
timely made for purposes hereof.
(b) Unless a specified period is set forth in this Agreement (in which
event such specified period will control), the covenants in this Agreement will
survive the Closing and remain in effect indefinitely.
10.2 Limitations on Liability.
(a) For purposes of this Agreement, (i) "Indemnity Payment" means any
amount of Indemnifiable Losses required to be paid pursuant to this Agreement,
(ii) "Indemnitee" means any person or entity entitled to indemnification under
this Agreement, (iii) "Indemnifying Party" means any person or entity required
to provide indemnification under this Agreement, (iv) "Indemnifiable Losses"
means any and all damages, losses, liabilities, obligations, costs and expenses,
and any and all claims, demands or suits (by any person or entity, including,
without limitation, any Governmental Authority), including, without limitation,
the costs and expenses of any and all actions, suits, proceedings, demands,
assessments, judgments, settlements and compromises relating thereto and
including reasonable attorneys' fees and expenses in connection therewith and
(v) "Third Party Claim" means any claim, action or proceeding made or brought by
any person or entity who or which is not a party to this Agreement or an
Affiliate of a party to this Agreement.
(b) Notwithstanding any other provision hereof or of any applicable
law, (i) no Indemnitee will be entitled to make a claim against an Indemnifying
Party in respect of any breach of a representation or warranty (other than the
representations and warranties contained in Section 4.18 relating to title to
the Assets) under Sections 10.3(a)(i) or 10.3(b)(i) unless and until the
aggregate amount of claims in respect of breaches of representations and
warranties asserted for Indemnifiable Losses under Section 10.3(a)(i), with
respect to claims by Purchaser, or Section 10.3(b)(i), with respect to claims by
Seller, exceeds $400,000, in which event the Indemnitee will be entitled to make
a claim against the Indemnifying Party to the extent the amount of Indemnifiable
Losses exceeds $400,000; and (ii) no Indemnitee shall be liable for Indemnity
Payments in respect of breaches of representations or warranties asserted for
Indemnifiable Losses under Sections 10.3(a)(i) or 10.3(b)(i), as applicable, to
the extent such aggregate Indemnity Payments by such Indemnifying Party exceeds
the Closing Date Payment.
(c) An Indemnity Payment shall subsequently be reduced by a payment by
the Indemnitee to the Indemnifying Party in an amount equal to any net reduction
in liability for Taxes that is actually realized or, at the Indemnitee's
election, could be realized by an Indemnitee with respect to the payment or
accrual of an Indemnifiable Loss and by any net proceeds of insurance claims
that are actually received by an Indemnitee with respect to the payment or
accrual of an Indemnifiable Loss; provided, however, that in the event a taxing
authority disallows in whole or in part such net reduction in liability for
Taxes, an Indemnifying Party shall promptly repay to the Indemnitee the amount
of such increase in Taxes.
10.3 Indemnification.
(a) Subject to Sections 10.1 and 10.2, from and after the Closing
Date, Parent and Seller agree, jointly and severally, to indemnify, defend and
hold harmless Purchaser and its Affiliates and their respective directors,
officers, partners, employees, agents and representatives from and against any
and all Indemnifiable Losses to the extent relating to, resulting from or
arising out of:
(i) any misrepresentation or breach of warranty on the part of
Parent and Seller under the terms of this Agreement, the License Agreement,
the Patent License Agreement and the Transition Services Agreement;
(ii) any nonfulfillment of any agreement or covenant on the part
of Parent and Seller under the terms of this Agreement, the License
Agreement, the Patent License Agreement and the Transition Services
Agreement;
(iii) any Retained Liabilities;
(iv) any failure to comply with any "bulk sales" laws applicable
to the transactions contemplated hereby; and
(v) the conduct of the Business or any portion thereof or the use
or ownership of any of the Assets prior to or on the Closing Date (other
than the Assumed Liabilities), including without limitation the breach of
any Contract by Seller prior to the Closing.
(b) Subject to Sections 10.1 and 10.2, from and after the Closing
Date, Purchaser agrees to indemnify, defend and hold harmless Seller and its
Affiliates, and their respective directors, officers, partners, employees,
agents and representatives from and against any and all Indemnifiable Losses to
the extent relating to, resulting from or arising out of:
(i) any misrepresentation or breach of warranty on the part of
Purchaser under the terms of this Agreement, the License Agreement, the
Patent License Agreement and the Transition Services Agreement;
(ii) any nonfulfillment of any agreement or covenant on the part
of Purchaser under the terms of this Agreement, the License Agreement, the
Patent License Agreement and the Transition Services Agreement;
(iii) any Assumed Liabilities;
(iv) the conduct of the Business or any portion thereof or use or
ownership of any of the Assets after the Closing Date(including without
limitation the breach of any Contract by Purchaser after the Closing); and
(v) any liability that may arise as a result of Seller's
delivering employment records and files to Purchaser.
10.4 Defense of Claims.
(a) If any Indemnitee receives notice of assertion or commencement of
any Third Party Claim against such Indemnitee with respect to which an
Indemnifying Party is obligated to provide indemnification under this Agreement,
the Indemnitee will give such Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than 15 calendar days after receipt
of such notice of such Third Party Claim. Such notice will describe the Third
Party Claim in reasonable detail, will include copies of all material written
evidence thereof and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have the right to participate in or, by
giving written notice to the Indemnitee, to assume the defense of any Third
Party Claim at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel (provided that such counsel is reasonably satisfactory to
the Indemnitee), and the Indemnitee will cooperate in good faith in such
defense.
(b) If, within 10 calendar days after giving notice of a Third Party
Claim to an Indemnifying Party pursuant to Section 10.4(a), an Indemnitee
receives written notice from the Indemnifying Party that the Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 10.4(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; provided, however, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party Claim
within 10 calendar days after receiving written notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps, or
if the Indemnifying Party has not undertaken fully to indemnify the Indemnitee
in respect of all Indemnifiable Losses relating to the matter, the Indemnitee
may assume its own defense, and the Indemnifying Party will be liable for all
reasonable costs or expenses paid or incurred in connection therewith. Without
the prior written consent of the Indemnitee, the Indemnifying Party will not
enter into any settlement of any Third Party Claim which would lead to liability
or create any financial or other obligation on the part of the Indemnitee for
which the Indemnitee is not entitled to indemnification hereunder. If a firm
offer is made to settle a Third Party Claim without leading to liability or the
creation of a financial or other obligation on the part of the Indemnitee for
which the Indemnitee is not entitled to indemnification hereunder and the
Indemnifying Party desires to accept and agree to such offer, the Indemnifying
Party will give written notice to the Indemnitee to that effect. If the
Indemnitee fails to consent to such firm offer within 10 calendar days after its
receipt of such notice, the Indemnitee may continue to contest or defend such
Third Party Claim and, in such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will not exceed the amount of such settlement
offer, plus costs and expenses paid or incurred by the Indemnitee through the
end of such 10 calendar day period.
(c) A failure to give timely notice or to include any specified
information in any notice as provided in Sections 10.4(a) or 10.4(b) will not
affect the rights or obligations of any party hereunder except and only to the
extent that, as a result of such failure, any party which was entitled to
receive such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise damaged as a result of such
failure.
(d) The Indemnifying Party will have a period of 30 calendar days
within which to respond in writing to any claim by an Indemnitee on account of
an Indemnifiable Loss which does not result from a Third Party Claim (a "Direct
Claim"). If the Indemnifying Party does not so respond within such 30 calendar
day period, the Indemnifying Party will be deemed to have rejected such claim,
in which event the Indemnitee will be free to pursue such remedies as may be
available to the Indemnitee on the terms and subject to the provisions of this
Article X.
(e) If the amount of any Indemnifiable Loss, at any time subsequent to
the making of an Indemnity Payment, is reduced by recovery, settlement or
otherwise under or pursuant to any insurance coverage, or pursuant to any claim,
recovery, settlement or payment by or against any other entity, the amount of
such reduction, less any costs, expenses, premiums or taxes incurred in
connection therewith (together with interest thereon from the date of payment
thereof at the annualized rate of interest equal to the "prime" or "reference"
rate of interest as publicly announced by Chemical Bank, N.A. and in effect from
time to time during the relevant period, calculated on the basis of the actual
number of days elapsed over 365) will promptly be repaid by the Indemnitee to
the Indemnifying Party. Upon making any Indemnity Payment the Indemnifying Party
will, to the extent of such Indemnity Payment, be subrogated to all rights of
the Indemnitee against any third party that is not an Affiliate of the
Indemnitee in respect of the Indemnifiable Loss to which the Indemnity Payment
related; provided, however, that (i) the Indemnifying Party shall then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss, and (ii) until the Indemnitee recovers fully payment of its
Indemnifiable Loss, any and all claims of the Indemnifying Party against any
such third party on account of said Indemnity Payment will be subrogated and
subordinated in right of payment to the Indemnitee's rights against such third
party. Without limiting the generality or effect of any other provision hereof,
each such Indemnitee and Indemnifying Party will duly execute upon request all
instruments reasonably necessary to evidence and perfect the above described
subrogation and subordination rights.
10.5 Tax Consequences of Indemnity Payment. Any Indemnity Payment hereunder
shall be treated on the respective tax returns of Seller and Purchaser as an
adjustment to the Purchase Price. In the event that, notwithstanding such
treatment, any Indemnity Payment is determined to be taxable to the Purchaser,
then Seller and Parent shall indemnify Purchaser for any additional Taxes
payable by Purchaser by reason of the receipt or accrual of such Indemnity
Payment (including any payment made pursuant to this Section 10.5).
XI. MISCELLANEOUS PROVISIONS
11.1 Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when
dispatched by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) or one business day after having been dispatched by a
nationally recognized overnight courier service to the appropriate party at the
address specified below:
(a) If to Seller, to:
Dialogic Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Vice President and General Counsel
Dialogic Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to Purchaser, to:
Texas Instruments Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇/▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Texas Instruments Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇/▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
11.2 Expenses. Except as otherwise expressly provided herein, each party
hereto will pay any expenses incurred by it incident to this Agreement and in
preparing to consummate and consummating the transactions provided for herein.
Parent shall bear all of the attorneys' fees and disbursements of the counsel
for Seller and Parent in the transaction contemplated by this Agreement.
11.3 Successors and Assigns. Except as otherwise provided in Section 9.1
hereof, this Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but will
not be assignable or delegable by any party without the prior written consent of
the other party; provided, however, that upon notice to Seller, Purchaser may
assign or delegate any or all of its rights or obligations under this Agreement
to any Affiliate thereof (provided that Purchaser expressly agrees to remain
liable hereunder on terms reasonably satisfactory to Seller) or to any Person
that directly or indirectly acquires, after the Closing, all or substantially
all of the assets or voting stock of Purchaser (provided that such Person
expressly agrees to assume all of Purchaser's obligations hereunder on terms
reasonably satisfactory to Seller).
11.4 Waiver. Purchaser may, by written notice to Seller, and Seller may, by
written notice to Purchaser, (a) extend the time for performance of any of the
obligations of the other party under this Agreement, (b) waive any inaccuracies
in the representations or warranties of the other party contained in this
Agreement, (c) waive compliance with any of the conditions or covenants of the
other party contained in this Agreement, or (d) waive or modify performance of
any of the obligations of the other party under this Agreement; provided,
however, that no such party may, without the prior written consent of the other
parties, make or grant such extension of time, waiver of inaccuracies or
compliance or waiver or modification of performance with respect to its (or any
of its Affiliates') representations, warranties, conditions or covenants
hereunder. Except as provided in the immediately preceding sentence, no action
taken pursuant to this Agreement will be deemed to constitute a waiver of
compliance with any representations, warranties, conditions or covenants
contained in this Agreement and will not operate or be construed as a waiver of
any subsequent breach, whether of a similar or dissimilar nature.
11.5 Entire Agreement; Disclosure Schedules This Agreement (which includes
the Schedules and Exhibits hereto and the Letter, as such term is defined in
Schedule 3.2(b) hereto), the confidentiality agreement executed by the parties
hereto on August 29, 1997 and any other side letter executed by Seller and
Purchaser as of the date hereof relating to this Agreement supersede any other
agreement, whether written or oral, that may have been made or entered into by
any party or any of their respective Affiliates (or by any director, officer or
representative thereof) relating to the matters contemplated hereby and
constitutes the entire agreement by and among the parties hereto. Unless
otherwise specified, references to "Schedules" herein refer to the corresponding
schedule set forth in the disclosure Schedules attached hereto.
11.6 Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Purchaser, Parent and Seller to be necessary, desirable or
expedient to further the purposes of this Agreement or to clarify the intention
of the parties.
11.7 Rights of the Parties. Nothing express or implied in this Agreement is
intended or will be construed to confer upon or give any Person other than the
parties hereto and their Affiliates any rights or remedies under or by reason of
this Agreement or any transaction contemplated hereby.
11.8 Further AssurancesXI.8 Further Assurances. From time to time after the
Closing, as and when requested by any party hereto, the other parties will
execute and deliver, or cause to be executed and delivered, all such documents
and instruments as may be reasonably necessary to consummate the transactions
contemplated by this Agreement.
11.9 Applicable Law This Agreement and the legal relations among the
parties hereto will be governed by and construed in accordance with the rules
and substantive laws of the State of Texas, United States of America, without
regard to conflicts of law provisions thereof.
11.10 Execution in CounterpartsXI.10 Execution in Counterparts. This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
agreement.
11.11 Titles and HeadingsXI.11 Titles and Headings. Titles and headings to
Sections herein are inserted for convenience of reference only, and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.12 Invalid ProvisionsXI.12 Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid, or unenforceable under any present or
future law, and if the rights or obligations under this Agreement of Seller on
the one hand and Purchaser on the other hand will not be materially and
adversely affected thereby, (a) such provision will be fully severable; (b) this
Agreement will be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part hereof; (c) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid, or unenforceable provision or by its
severance from this Agreement; and (d) in lieu of such illegal, invalid, or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid, and enforceable provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible.
11.13 Bulk Sales. Purchaser waives compliance by Seller with the provisions
of the so-called bulk sales laws of any jurisdiction; provided, however, that
Seller will indemnify, defend and hold harmless Purchaser and its Affiliates in
respect of any Indemnifiable Loss relating to, resulting from or arising out of
Seller's failure so to comply with such laws in connection with the transactions
contemplated by this Agreement.
11.14 Transfers. After the Closing, Purchaser, Parent and Seller will
cooperate and take such action as may be reasonably requested by the other in
order to effect an orderly transfer of the Assets and the Business with a
minimum of disruption to the operations and employees of Purchaser and Seller.
11.15 Passage of Title and Risk of Loss Legal title, equitable title and
risk of loss with respect to the Assets will not pass to Purchaser until such
Assets are transferred at the Closing, which transfer, once it has occurred,
will be deemed effective for tax, accounting and other computational purposes as
of 11:59 P.M. (Central Time) on the Closing Date.
11.16 Material Adverse Effect. For purposes of this Agreement, an event or
matter shall be deemed to have a "Material Adverse Effect" upon a party if such
event or matter had, or could reasonably be expected to have, a material adverse
effect on (a) the consolidated or, in the case of Seller, unconsolidated,
results of operations or financial condition or total assets of such party or
(b) the ability of Purchaser to conduct the Business after the Closing;
provided, however, that notwithstanding the foregoing, an event or matter shall
not be deemed to have a "Material Adverse Effect" upon Seller if either (x) such
event or matter has a substantially similar impact upon Seller's business and
other businesses in Seller's industry or (y) such event or matter involves a
loss of one or more customers as a result of the fact that Purchaser, Seller and
Parent have executed this Agreement and plan to consummate the transactions
contemplated hereby.
11.17 Knowledge. Parent and Seller shall be deemed to have "Knowledge" of a
matter or event if, and only if, such matter or event is actually known, after
reasonable inquiry under the circumstances (it being understood that such
inquiry shall not require any Person to access any information that appears on a
database that is not maintained by Seller), by either ▇▇▇▇▇▇▇ House, ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (but, as to ▇▇. ▇▇▇▇▇, only with respect to matters that
may be disclosed by ▇▇. ▇▇▇▇▇ without breaching any privilege or confidentiality
obligation owed by ▇▇. ▇▇▇▇▇ to Seller, Parent or their Affiliates), ▇▇▇
▇▇▇▇▇▇▇▇ (but, as to ▇▇▇ ▇▇▇▇▇▇▇▇, only with respect to matters pertaining to
employment benefits and other employment matters), ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
(but, as to Messrs. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇, only with respect to matters pertaining
to sales and marketing), ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (but, as to Messrs.
Grossen and ▇▇▇▇▇▇, only with respect to matters pertaining to Intellectual
Property and, as to ▇▇. ▇▇▇▇▇▇, only with respect to matters that may be
disclosed by ▇▇. ▇▇▇▇▇▇ without breaching any privilege or confidentiality
obligation owed by ▇▇. ▇▇▇▇▇▇ to Seller, Parent or their Affiliates).
11.18 Forum. IN THE EVENT THAT PURCHASER ELECTS TO COMMENCE LEGAL
PROCEEDINGS HEREUNDER AGAINST SELLER OR PARENT, SUCH ACTION SHALL BE BROUGHT IN
A STATE COURT OR FEDERAL COURT SITTING IN OR COVERING ▇▇▇▇▇▇ COUNTY, NEW JERSEY.
IN THE EVENT THAT SELLER OR PARENT ELECT TO COMMENCE LEGAL PROCEEDINGS HEREUNDER
AGAINST PURCHASER, SUCH ACTION SHALL BE BROUGHT IN A STATE COURT OR FEDERAL
COURT SITTING IN DALLAS COUNTY, TEXAS.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TEXAS INSTRUMENTS INCORPORATED
By:/s/_________________________
Name:
Title:
DIALOGIC CORPORATION
By:/s/_________________________
Name:
Title:
SPECTRON MICROSYSTEMS, INCORPORATED
By:/s/_________________________
Name:
Title:
Page
(XLV)
LIST OF DEFINED TERMS
Affiliate...........................................................Section 4.21
Agreement............................................................ Preamble
Assets.............................................................. Section 1.1
Assumed Liabilities................................................. Section 2.1
Business Recitals
Closing Date Payment..............................................Section 3.2(a)
Closing Date........................................................ Section 8.1
Closing..............................................................Section 8.1
Code............................................................ Section 4.14(a)
Commercial Owned Software....................................... Section 4.10(c)
Confidential Information............................................ Section 9.2
Confidential Software............................................Section 4.11(b)
Contracts.........................................................Section 1.1(c)
Direct Claim.................................................... Section 10.4(d)
Documentation................................................... Section 4.10(c)
Employee Plans..................................................... Section 4.13
Employee Plans...................................................Section 4.14(a)
Employment Term Sheets..............................................Section 6.11
Environmental Costs and Liabilities............................. Section 4.17(b)
Environmental Law............................................... Section 4.17(b)
ERISA........................................................... Section 4.12(d)
Financial Statements................................................ Section 4.6
GAAP................................................................ Section 4.6
Goods Contracts............................................... Section 4.8(a)(2)
Governmental Approval............................................... Section 4.4
Governmental Authority........................................... Section 1.3(a)
Hazardous Material.............................................. Section 4.17(b)
HSR Act............................................................. Section 4.4
Indemnifiable Losses............................................... Section 10.2
Indemnifying Party................................................. Section 10.2
Indemnitee......................................................... Section 10.2
Indemnity Payment.................................................. Section 10.2
Intellectual Property............................................ Section 1.1(f)
Interim Balance Sheet Date......................................... Section 4.6
Know-How......................................................... Section 1.1(f)
Knowledge........................................................ Section 11.17
liabilities......................................................... Section 4.7
License Agreement................................................ Section 8.2(f)
Liens............................................................... Section 1.1
Patent License Agreement......................................... Section 8.2(h)
Material Adverse Effect............................................. Section 4.1
Material Adverse Effect........................................... Section 11.16
Not-Owned IP..................................................... Section 4.9(b)
Not-Owned Software.............................................. Section 4.10(b)
November Balance Sheet.............................................. Section 4.6
Obligations........................................................ Section 4.7
Opinion of Seller's counsel...................................... Section 8.2(e)
Outside Date........................................................ Section7A.1
Owned IP......................................................... Section 4.9(a)
Owned Software...................................................Section 4.10(a)
Parent ................................................................ Preamble
Pension Plans................................................... Section 4.13(a)
Pension Plans................................................... Section 4.14(a)
Permits......................................................... Section 1.1(h)
Permitted Actions...........................................Section 6.6(a)(i)(C)
Permitted Liens.................................................... Section 4.18
Person.............................................................. Section 4.4
Products............................................................... Recitals
Purchase Price...................................................... Section 3.1
Purchaser Ancillary Documents....................................... Section 5.2
Purchaser............................................................. Preamble
Real Property Leases............................................. Section 1.1(g)
Real Property.....................................................Section 1.1(g)
Registered Owned IP...............................................Section 4.9(a)
Retained Liabilities................................................ Section 2.2
Seller Ancillary Documents.......................................... Section 4.2
Seller................................................................. Preamble
Service Contracts............................................. Section 4.8(a)(2)
Software......................................................... Section 1.1(f)
Tax Returns..................................................... Section 4.19(h)
Tax ............................................................ Section 4.19(h)
Taxes........................................................... Section 4.19(h)
Third Party Claim.................................................. Section 10.2
TI..................................................................... Preamble
Trade Secrets.................................................... Section 1.1(f)
Transaction......................................................... Section 7.1
Transfer Documents............................................... Section 8.2(a)
Transferred Employees........................................... Section 6.12(a)
Transition Services Agreement.................................... Section 8.2(i)
Works of Authorship.............................................. Section 1.1(f)