EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of May 30, 2002 is made and entered
into by and among Pilot Software Acquisition Corp. a Delaware corporation,
("Newco I"), and Pilot Software Services Corp., a Delaware corporation, ("Newco
II", and together with Newco I, sometimes collectively referred to herein as the
"Purchaser"), and Accrue Software, Inc., a Delaware corporation ("Accrue"),
Pilot Software, Inc., a Delaware corporation ("Pilot"), Marketwave Corporation,
a Washington corporation ("Marketwave"), Accrue GmbH, a company organized under
the laws of Germany ("Accrue Germany"), Pilot Software Ltd, a company organized
under the laws of England and Wales ("Pilot U.K.") and Thorn EMI Computer
Software Ltd, a company organized under the laws of England and Wales ("Thorn
EMI"). Accrue, Pilot, Marketwave, Accrue Germany, Pilot U.K. and Thorn EMI are
sometimes collectively referred to herein as "Seller" and individually as "a
Seller" or "each Seller". Capitalized terms not otherwise defined herein have
the meanings set forth in Section 12.01.
WHEREAS, a portion of Seller's business includes the business of providing
corporate data analysis software known as Accrue Pilot Suite, as described in
Section 5 of Section 1.01(a)(iv) of the Disclosure Schedule ("Pilot Software
Products") and analytic business software products focusing on Internet customer
behavior through its software known as Accrue Hitlist, as described in Section 5
of Section 1.01(a)(iv) of the Disclosure Schedule ("Hitlist Software Products")
(the Pilot Software Products and the Hitlist Software Products are collectively
referred to as the "Products"); and
WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and
Purchaser desires to purchase, acquire and assume from Seller, certain of the
assets and liabilities of Seller relating to the Products all on the terms set
forth herein (the "Transaction");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
SALE OF ASSETS AND CLOSING
1.01 Assets. (a) Assets Transferred. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Seller agrees to
sell, assign, transfer, convey and deliver to Newco I (except as provided
below), and Newco I (except as provided below), agrees to purchase from the
Seller free and clear of all Liens all of the following assets, except to the
extent that such assets constitute Excluded Assets (collectively, the "Assets"):
(i) Real Property Lease. The lease of real property described
in Section 1.01(a)(i) of the Disclosure Schedule as to which Seller
is the lessee, together with any options to purchase the underlying
property and leasehold improvements thereon, and all other rights,
subleases, licenses, permits, deposits and profits appurtenant to or
related to such lease (the "Real Property Lease"), a copy of
which is attached hereto as Exhibit A (provided that the Real
Property Lease shall be assigned to Newco II);
(ii) Tangible Personal Property. All tangible personal
property owned by the Seller and listed in Section 1.01(a)(ii) of
the Disclosure Schedule) (the "Tangible Personal Property");
(iii) Product Contracts. (A) All distribution, sales
representative, reseller or similar Contracts relating to the
Products to which Seller is a party and which are described in
Section 1.01(a)(iii)(A) of the Disclosure Schedule (the
"Distribution Agreements"), and (B) all software license, support
and maintenance or similar Contracts relating to the Products to
which Seller is a party and which are described in Section
1.01(a)(iii)(B) of the Disclosure Schedule (the "Software License
and Support Agreements"), and (C) the consulting or other similar
Contracts relating to the Products to which Seller is a party and
which are described in Section 1.01(a)(iii)(C) of the Disclosure
Schedule (the "Consulting Agreements", and together with the
Software License and Support Agreements and Distribution Agreements,
the "Product Contracts"); provided, however, that the Software
License and Support Agreements shall be assigned to Newco II;
provided, further, that no Product Contract for which a third party
consent is required to assign such Product Contract to Purchaser
shall be assigned at Closing unless the required consent is obtained
prior to the Closing;
(iv) Intangible Personal Property. All right, title and
interest of Seller in and to the Intellectual Property Rights
primarily relating to the Products including, without limitation,
the Intellectual Property Rights listed in Section 1.01(a)(iv) of
the Disclosure Schedule (the "Intangible Personal Property"), and
all rights, privileges, claims, causes of action, goodwill and
options of Seller primarily relating to the Products. For purposes
hereof, "Intellectual Property Rights" includes, without limitation,
all U.S. and foreign patents, patent applications, patent rights,
trademarks, trademark applications, trade names (including Seller's
goodwill therein), service marks (including Seller's goodwill
therein), service ▇▇▇▇ applications, copyrights (including Seller's
goodwill therein), copyright applications, franchises, licenses,
databases, domain names, pages on the World Wide Web, computer
programs and other computer software, including the software
program, server codes, documentation, manuals, modules, artwork,
database codes and Hyper Text Markup Language ("HTML") codes
developed or used by, or on behalf of, Seller (or any of its
Affiliates or subsidiaries), trade secrets, customer lists,
proprietary technology, processes and formulae, source code, object
code, algorithms, architecture, structure, display screens, layouts,
development tools, instructions, templates, marketing materials,
inventions, trade dress, logos and designs, and all documentation
and all media constituting, describing or relating to the foregoing
including, without limitation, recommended product features, all
uniform resource locators associated with each of the Products and
the business of selling the Products including, without
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limitation, any Websites associated with each of the Products and
the business of selling the Products together with all content of
such Websites;
(v) Government Licenses. All Government Licenses (including
applications therefor) necessary for the license, sale,
distribution, maintenance or operation of the Products including,
without limitation, the Government Licenses listed in Section
1.01(a)(v) of the Disclosure Schedule (the "Assigned Government
Licenses");
(vi) Personal Property Leases. The personal property leases
listed in Section 1.01(a)(vi) of the Disclosure Schedule (the
"Personal Property Leases") (provided that the Personal Property
Leases shall be assigned to Newco II);
(vii) Contacts. A copy of all contacts with all current
clients of Seller with respect to the Products and potential clients
contacted by Seller prior to the Closing with respect to the
Products including, without limitation, Seller business development
contacts, including all electronic and hard copy records,
correspondence, images and other information relating to business
development for the Products (the "Contacts"); provided, however,
that Seller shall be permitted to retain a copy of the Contacts to
use in connection with its business.
(viii) Books and Records. Copies of all Books and Records
relating to the Assets and Products, including without limitation,
all books, payment records, accounts, correspondence, production
records, technical, accounting and procedural manuals; development
and design data, and other useful business records including,
without limitation, marketing plans, market research, beta test
summaries, electronic media, and any confidential or other
information that has been reduced to writing, relating to the
Products, and any and all supplier and customer lists relating to
the Products (the "Product Books and Records"); provided, however,
that Seller shall be permitted to retain a copy of the Product Books
and Records for tax, accounting and other administrative purposes
only.
(b) Excluded Assets. Notwithstanding anything in this Agreement to
the contrary, the following assets of Seller (the "Excluded Assets") shall be
excluded from and shall not constitute Assets:
(i) Tax Refunds. All refunds or credits, if any, of Taxes due
to or from Seller;
(ii) Accounts Receivable and Maintenance Revenue. Seller's
right, title and interest in and to accounts receivable and
maintenance revenue arising under the Software License and Support
Agreements, whether such accounts receivable and maintenance revenue
are paid by the customer before or after the Closing Date (the
"Accounts Receivable"); provided that, such accounts receivable and
maintenance revenue paid by the customer after the Closing Date for
services provided by Purchaser after the one-year anniversary of
such Software License and Support Agreement (or any renewal or
extension thereof in effect on the
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Closing Date) shall be payable to Purchaser and shall not be an
Excluded Asset; provided further, that, all Software License and
Support Agreements being assumed by Purchaser that have maintenance
revenue payable to Seller after the Closing Date are set forth on
Schedule 1.01(b)(ii) of the Disclosure Schedule;
(iii) Certain Distribution Rights. The rights in the
Distribution Agreements to distribute Accrue G2 and/or Insight;
provided that, Seller covenants and agrees that Seller's
distribution of Accrue G2 and/or Insight under such Distribution
Agreements will not interfere with Purchaser's sale or distribution
of Products or Purchaser's relationship with the third parties under
the Distribution Agreements and the distribution of Bundled Products
(as defined in the License Agreement) shall only be conducted in
accordance with the terms and provisions of the License Agreement;
(iv) Execplan Litigation. All of Seller's rights arising under
or with respect to the Execplan litigation referenced in Section
2.08 of the Disclosure Schedule;
(v) Excluded Intellectual Property. All of Seller's
Intellectual Property Rights listed in Section 1.01(b)(v) of the
Disclosure Schedule (the "Excluded Intellectual Property"); and
(vi) Certain Agreements. All Software License and Support
Agreements to which Accrue SARL, Accrue's French subsidiary, and
Pilot Software PTE. Ltd., Accrue's Singapore subsidiary, are a party
(the "Excluded Software License and Support Agreements").
1.02 Liabilities.
(a) Assumed Liabilities. In connection with the sale, transfer,
conveyance, assignment and delivery of the Assets pursuant to this Agreement, on
the terms and subject to the conditions set forth in this Agreement, effective
at the time of Closing, (i) Newco II will assume and agree to pay, perform and
discharge when due all of Seller's obligations arising under or with respect to
the Real Property Lease, the Software License and Support Agreements and the
Personal Property Leases (the "Newco II Assumed Liabilities") and (ii) Newco I
will assume and agree to pay, perform and discharge when due all of Seller's
obligations arising under or with respect to Assets other than the Real Property
Lease and the Software License and Support Agreements (including, without
limitation, obligations arising under or with respect to the Consulting
Agreements, Distribution Agreements (but only with respect to the Products), the
Intangible Personal Property, the Assigned Government Licenses and the Personal
Property Leases) (the "Newco I Liabilities"; and together with the Newco II
Assumed Liabilities, the "Assumed Liabilities").
(b) Retained Liabilities. Except for the Assumed Liabilities and as
otherwise expressly provided in this Agreement (including, without limitation,
in Section 1.06(b) and Section 9.02, except with respect to any Liabilities
relating to or arising out of any Benefit Plan which will not be assumed by
Purchaser), Purchaser shall not assume by virtue of this
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Agreement or the transactions contemplated hereby, and shall have no liability
for, any Liabilities of Seller of any kind, character or description whatsoever
(the "Retained Liabilities") including, without limitation, (i) all Taxes now or
hereafter owed by the Seller or any Affiliate of the Seller, or attributed to
the Assets, relating to any period, or any portion of any period ending on or
prior to the Closing Date and (ii) any Liabilities of Seller arising under or
with respect to the Execplan litigation referenced in Section 2.08 of the
Disclosure Schedule.
1.03 Purchase Price. The aggregate purchase price to be paid by the
Purchaser to the Seller for the Assets shall be One Million Five Hundred
Thousand Dollars ($1,500,000), which shall be paid by wire transfer to an
account designated by Purchaser (the "Purchase Price").
1.04 Closing. The Closing will take place by teleconference, at 10:00 A.M.
(New York time), on the Closing Date. At the Closing, Purchaser will pay the
Purchase Price as described in Section 1.03. Simultaneously, (a) Seller will
assign and transfer to Purchaser good and valid title in and to the Assets (free
and clear of all Liens, other than Permitted Liens) by delivery of (i) a General
Assignment and ▇▇▇▇ of Sale substantially in the form of Exhibit B hereto (the
"General Assignment"), duly executed by Seller, (ii) an assignment of the
Intellectual Property Rights in form and substance reasonably satisfactory to
Purchaser, and (iii) such other good and sufficient instruments of conveyance,
assignment and transfer, in form and substance reasonably acceptable to
Purchaser and Purchaser's counsel, as shall be effective to vest in Purchaser
good title to the Assets it is acquiring (the General Assignment and the other
instruments referred to in clauses (ii) and (iii) being collectively referred to
herein as the "Assignment Instruments"), and (b) Purchaser will assume from
Seller the due payment, performance and discharge of the Assumed Liabilities by
delivery of (i) an Assumption Agreement substantially in the form of Exhibit C
hereto (the "Assumption Agreement"), duly executed by Purchaser, and (ii) such
other good and sufficient instruments of assumption, in form and substance
reasonably acceptable to Seller's counsel, as shall be effective to cause
Purchaser to assume the Assumed Liabilities as and to the extent provided in
this Agreement (the Assumption Agreement and such other instruments referred to
in clause (ii) being collectively referred to herein as the "Assumption
Instruments"). At the Closing, there shall also be delivered to Seller and
Purchaser the opinions, certificates and other contracts, documents and
instruments required to be delivered under Articles VI and VII hereof.
1.05 Further Assurances. At any time and from time to time after the
Closing Date, upon the terms and subject to the conditions contained herein, the
parties agree, (i) to use all reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder (including obtaining any documents required
to remove Liens on or security interests in any of the Assets), and (iii) to
cooperate with each other in connection with the foregoing. Without limiting the
generality of the foregoing, at any time and from time to time after the Closing
Date, at the request of the Purchaser and without further consideration, the
Seller will execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation as may be reasonably requested in order
to more effectively transfer, convey and assign to the Purchaser and to confirm
the Purchaser's title to the Assets.
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1.06 Third-Party Consents.
(a) To the extent that any Contract included in the Assets is not by
its express terms assignable without the consent of another party, this
Agreement shall not constitute an assignment or an attempted assignment thereof
if such assignment or attempted assignment would constitute a breach thereof.
Seller shall use its commercially reasonable efforts to obtain the consent of
such other party to the assignment of any such Asset to Purchaser in all cases
in which such consent is or may be required for such assignment. If any such
consent shall not be obtained, Seller and Purchaser shall cooperate to enter
into any reasonable arrangement designed to provide for the realization and
assumption by Purchaser of the rights and obligations intended to be assigned to
and assumed by Purchaser, including enforcement, at Purchaser's expense and for
the account of Purchaser, of any and all rights of Seller against the other
party thereto arising out of the breach or cancellation thereof by such other
party or otherwise. If and to the extent that such arrangement cannot be made,
Purchaser shall have no rights or obligation with respect to any such Asset.
(b) With respect to Software License and Support Agreements that are
not assigned in accordance with Section 1.06(a), Newco II hereby agrees to
perform, on behalf of Seller, and to assume all of Seller's obligations and
liabilities under such Software License and Support Agreements, including
without limitation all performance obligations, indemnity obligations, claims,
disputes, litigation, settlements and taxes which are required to be performed
or arise after the Closing Date and do not result from any act or omission of
Seller occurring prior to the Closing Date.
(c) With respect to Contracts that are not assigned in accordance
with Section 1.06(a), after the Closing, the Purchaser and Seller shall
cooperate in negotiating with the third parties under such Contracts the
assignment of the Contracts to the Purchaser.
1.07 Collection of Accounts Receivable. The Purchaser agrees that it will,
promptly after receipt, transfer, assign and deliver to the Seller all cash
which it may receive with respect to any Accounts Receivable from and after the
Closing Date as and to the extent provided in Section 1.01(b)(ii) hereof, and
pending any such delivery to the Seller of any such property, the Purchaser
shall hold any such property in trust for the benefit of the Seller. The
Purchaser shall, after the Closing Date, if so requested by the Seller, provide
reasonable assistance at Seller's sole cost and expense (which shall not include
resorting to legal action or other third party collection methods, but shall
include subrogating or otherwise assigning to the Seller the right to pursue
legal action and collection methods) to support the Seller's efforts to collect
the Accounts Receivable.
1.08 Transfer Taxes. The Seller and the Purchaser shall each be liable for
and shall pay one-half of all federal and state sales taxes (including any
retail sales taxes, use taxes and land transfer taxes) and all other taxes,
duties, fees or other like charges of any jurisdiction properly payable in
connection with the transfer of the Assets by the Seller to the Purchaser. The
parties agree to cooperate with each other to avoid or minimize any such taxes,
duties, fees or other like charges. Without limiting the foregoing, at the
Closing, the Products shall be transferred electronically from a computer,
server or other device that is owned by Seller, located in California or
Massachusetts and not part of the Assets to a computer, server or other device
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that is owned by Purchaser, located in California or Massachusetts and not part
of the Assets, and otherwise in a manner and at a location specified by Seller.
The products shall not be transferred to Purchaser in any tangible form.
1.09 Certain Post Closing Matters. After the Closing, the Purchaser and
Seller shall reasonably cooperate in (i) negotiating with the third parties
under the Distribution Agreements to amend the Distribution Agreements to
eliminate references in such agreements to rights of such third parties to
distribute Accrue G2, (ii) causing the Real Property Lease to be assigned to
Purchaser and, in connection therewith, negotiating a sublease back to Seller
(and obtaining the landlord's consent to the sublease) of 40% of the real
property covered by the Real Property Lease for 40% of the rent and 40% of the
security deposit, (iii) causing the Excluded Software License and Support
Agreements to be assigned to Purchaser, and (iv) causing leases related to the
tangible assets listed in Section 9.06(b) of the Disclosure Schedule to be
assigned to Purchaser.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Disclosure Schedule (with paragraph references
corresponding to those set forth below), each Seller hereby jointly and
severally represents and warrants to each Purchaser, as of the date hereof, as
follows:
2.01 Organization of Seller. Each Seller is an entity duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
organization, and has full corporate power and authority to conduct its business
as and to the extent now conducted and to own, use and lease its assets and
operate its business.
2.02 Authority. Each Seller has full corporate power and authority to
execute and deliver this Agreement and the Operative Agreements to which it is a
party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby, including without limitation to
sell and transfer (pursuant to this Agreement) the Assets that it owns. Except
as specifically disclosed in Section 2.02 of the Disclosure Schedule, each
Seller is duly licensed or qualified to do business and is in good standing in
each jurisdiction in which the Real Property Lease or the operation of its
business makes such licensing or qualification necessary. The execution and
delivery by each Seller of this Agreement and the Operative Agreements to which
it is a party, and the performance by each Seller of its obligations hereunder
and thereunder, have been duly and validly authorized by all requisite action on
the part of such Seller. This Agreement has been duly and validly executed and
delivered by each Seller and constitutes a legal, valid and binding obligation
of such Seller enforceable against such Seller in accordance with its terms.
Upon the execution and delivery by each Seller of the Operative Agreements to
which it is a party, such Operative Agreements will constitute, legal, valid and
binding obligations of such Seller enforceable against such Seller in accordance
with their terms.
2.03 No Conflicts. The execution and delivery by each Seller of this
Agreement do not, and the execution and delivery by each Seller of the Operative
Agreements to which it is a party, the performance by each Seller of its
obligations under this Agreement and such Operative
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Agreements, and the consummation of the transactions contemplated hereby and
thereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or by-laws
(or other comparable corporate charter documents) of such Seller;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in Section 2.03(b) of the
Disclosure Schedule, conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to such Seller or any of the
Assets (other than such conflicts, violations or breaches which could not in the
aggregate reasonably be expected to (i) adversely affect the validity or
enforceability of this Agreement or any of such Operative Agreements or (ii)
result in a material diminution of the benefits contemplated by this Agreement
or any of the Operative Agreements to Purchaser); or
(c) except as disclosed in Section 2.03(c) of the Disclosure
Schedule, or as could not, individually or in the aggregate, reasonably be
expected to adversely affect the ability of Purchaser to consummate the
transactions contemplated hereby or by any such Operative Agreements or to
perform its obligations hereunder or thereunder, (i) conflict with or result in
a violation or breach of, (ii) constitute (with or without notice or lapse of
time or both) a default under, (iii) require such Seller to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as
a result or under the terms of, or (iv) result in the creation or imposition of
any Lien upon such Seller or any of the Assets under, any Contract or License to
which such Seller is a party or by which any of the Assets is bound.
2.04 Governmental Approvals and Filings. Except as disclosed in Section
2.04 of the Disclosure Schedule, no consent, approval or action of, filing with
or notice to any Governmental or Regulatory Authority on the part of a Seller is
required in connection with the execution, delivery and performance of this
Agreement or any of the Operative Agreements to which such Seller is a party or
the consummation of the transactions contemplated hereby or thereby, except
where the failure to obtain any such consent, approval or action, to make any
such filing or to give any such notice could not reasonably be expected to
adversely affect the ability of Seller to consummate the transactions
contemplated by this Agreement or any of such Operative Agreements or to perform
its obligations hereunder or thereunder.
2.05 Books and Records. Except as disclosed in Section 2.05 of the
Disclosure Schedule, none of the Product Books and Records is recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held by any
means (including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of one or more
Employees. The Product Books and Records are complete and correct and are
maintained in accordance with good business practices.
2.06 Absence of Changes. Except for the execution and delivery of this
Agreement and the transactions to take place pursuant hereto on or prior to the
Closing Date, since March 31, 2002 there has not been any material adverse
change, or any event or development which, individually or together with other
such events, could reasonably be expected to result in a
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material adverse change in the Assets. Without limiting the foregoing, except as
disclosed in Section 2.06 of the Disclosure Schedule, there has not occurred,
between March 31, 2002 and the date hereof, any of the following:
(i) (A) incurrences by Seller of Indebtedness secured by or
used to purchase Assets in an aggregate principal amount exceeding
$50,000 (net of any amounts discharged during such period and net of
any loans made by Purchaser), or (B) any voluntary purchase,
cancellation, prepayment or complete or partial discharge in advance
of a scheduled payment date with respect to, or waiver of any right
of Seller under, any Indebtedness of Seller secured by or used to
purchase Assets;
(ii) any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any of the Assets in
an aggregate amount exceeding $5,000;
(iii) any creation or incurrence of a Lien, other than a
Permitted Lien, on any Assets;
(iv) except in the ordinary course of business, any entering
into any material amendment, modification, termination (partial or
complete) or granting of a waiver under or giving any consent with
respect to (A) any Product Contract, (B) any Assigned Government
License (C) any Software License and Support Agreement, (D) the Real
Property Lease or (E) any agreement that is part of the Intangible
Personal Property; and
(v) any other transaction involving the Assets outside the
ordinary course of business consistent with past practice.
2.07 Taxes. (a) Except as disclosed in Section 2.07 of the Disclosure
Schedule, there are no Liens for Taxes upon the Assets except Liens for Taxes
not yet due.
(b) Seller has complied in all material respects with all applicable
laws, rules and regulations relating to the payment and withholding of Taxes
(including, without limitation, withholding and reporting requirements under
Code Sections 1441 through 1446, 3401, through 3406, 6041 and 6049 and similar
provisions under any other laws) and has, within the time and manner provided by
law, withheld from employee wages and paid over to the proper governmental
authorities all amounts required.
2.08 Legal Proceedings.
(a) Except as disclosed in Section 2.08 of the Disclosure Schedule
there are no Actions or Proceedings pending or threatened against, relating to
or affecting Seller with respect to the Assets or Products which (i) could
reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or any of the Operative
Agreements or otherwise result in a material diminution of the benefits
contemplated by this Agreement or any of the Operative Agreements to Purchaser,
or (ii) if determined adversely to Seller, could
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reasonably be expected to result in (x) any injunction or other equitable relief
that would interfere in any material respect with the business related to the
Products, or (y) Losses by Seller, individually or in the aggregate with Losses
in respect of other such Actions or Proceedings, exceeding $50,000;
(b) There are no facts or circumstances known to Seller that could
reasonably be expected to give rise to any Action or Proceeding that would be
required to be disclosed pursuant to clause (a) above; and
(c) There are no Orders outstanding against Seller with respect to
the Assets or Products.
2.09 Compliance With Laws and Orders. Except as disclosed in Section 2.09
of the Disclosure Schedule, Seller is not, nor has it at any time within the
last five (5) years been, nor has it received any notice that it is or has at
any time within the last five (5) years been, in violation of or in default
under, in any material respect, any Law or Order applicable to the Assets.
2.10 Real Property. (a) Seller has a valid and subsisting leasehold estate
in and the right to quiet enjoyment of the real property subject to the Real
Property Lease for the full term thereof. The Real Property Lease is a legal,
valid and binding agreement, enforceable in accordance with its terms, of Seller
and, to the knowledge of the Seller, of each other Person that is a party
thereto. Except as disclosed in Section 2.10(a) of the Disclosure Schedule,
there is not to the Seller's knowledge, and Seller has not received any notice
of, any default or any condition or event which after notice or lapse of time or
both, would constitute a default thereunder. Seller does not owe any brokerage
commissions with respect to any such leased space. The expiration date of the
Real Property Lease is April 1, 2005, and such Real Property Lease has not been
modified, amended or extended. No notice or other action is required by Seller
for such Real Property Lease to expire on April 1, 2005.
(b) Seller has delivered to Purchaser prior to the execution of this
Agreement true and complete copies of the Real Property Lease (including any
amendments and renewal letters) and, to the extent reasonably available, all
other documents with respect to the real property subject to the Real Property
Lease.
(c) Except as disclosed in Section 2.10(c) of the Disclosure
Schedule, Seller does not hold any right to purchase, or any right of first
refusal to purchase, the real property subject to the Real Property Lease.
(d) Except as disclosed in Section 2.10(d) of the Disclosure
Schedule, the improvements on the real property leased pursuant to the Real
Property Lease are in good operating condition and in a state of good
maintenance and repair, ordinary wear and tear excepted, are adequate and
suitable for the purposes for which they are presently being used and, to the
knowledge of Seller, there are no condemnation or appropriation proceedings
pending or threatened against such real property or improvements.
2.11 Tangible Personal Property. Seller is in possession of and has good
title to, or has valid leasehold interests in or valid rights under Contract to
use, all the Tangible Personal
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Property. All the Tangible Personal Property is free and clear of all Liens,
other than Permitted Liens and Liens disclosed in Section 2.11 of the Disclosure
Schedule, and is in good working order and condition, ordinary wear and tear
excepted, and its use complies in all material respects with all applicable
Laws.
2.12 Intangible Personal Property.
(a) Section 2.12(a) of the Disclosure Schedule sets forth a true,
correct and complete list and, where appropriate, a description of, all
Intangible Personal Property owned by a party other than Seller.
(b) Except as disclosed in Section 2.12(b) of the Disclosure
Schedule, Seller owns, free and clear of all Claims, has the sole, exclusive,
valid and unencumbered title to, and the exclusive right to use, sell, license
(or sublicense), transmit, broadcast, deliver (electronically or otherwise) and
dispose of, and has the right to bring actions for the infringement of, all of
the Intangible Personal Property. Except for the Excluded Intellectual Property
(other than third party patent rights), no other Intellectual Property Rights
are necessary for Purchaser to make, use, sell and distribute the Products. To
the best of Seller's knowledge, no third party patent rights are necessary for
Purchaser to make, use, sell and distribute the Products.
(c) Section 2.12(c) of the Disclosure Schedule sets forth a true,
correct and complete list of all agreements pursuant to which Seller exploits
Intellectual Property Rights of a third party in connection with the
manufacture, marketing or distribution of the Products, and represents all third
party Intellectual Property Rights as are necessary or desirable to manufacture,
market and distribute the Products. Each agreement specified in Section 2.12(c)
of the Disclosure Schedule is legal, valid, binding and enforceable against
Seller (and to Seller's knowledge against the third parties who are parties
thereto), and in full force and effect, and neither Seller nor, to the knowledge
of Seller, any other party thereto is in breach, and, to the knowledge of
Seller, no circumstances or grounds exist that would give rise to a claim of
breach or a right of rescission, termination, revision, or amendment to any such
agreement.
(d) Section 2.12(d) of the Disclosure Schedule sets forth a true,
correct and complete list of all agreements (other than the Software License and
Support Agreements) pursuant to which Seller entitles third parties to exploit
any of the Intellectual Property Rights listed on Section 1.01(a)(iv) of the
Disclosure Schedule. Each agreement specified in Section 2.12(d) of the
Disclosure Schedule is legal, valid, binding, enforceable against Seller (and to
Seller's knowledge against the third parties who are parties thereto), and in
full force and effect, and, to the knowledge of Seller, neither Seller nor any
other party thereto is in breach, and, to the knowledge of Seller, no
circumstances or grounds exist that would give rise to a claim of breach or a
right of rescission, termination, revision, or amendment to any such agreement.
(e) Seller has full right, power and authority to transfer to
Purchaser all of the rights, title and interest in and to the Intangible
Personal Property pursuant to this Agreement. The execution, delivery and
performance of this Agreement and all other agreements contemplated herein, and
the consummation of the transactions contemplated hereby and thereby will not
breach, violate or conflict with any instrument or agreement governing any
Intangible Personal Property, will not cause the forfeiture or termination of
any Intangible Personal
11
Property or in any way impair the right of Seller (or Purchaser, after the
Closing) to use, sell, exclusively license (or sublicense), transmit, broadcast,
deliver (electronically or otherwise) or dispose of or to bring any action for
the infringement of, any Intangible Personal Property or any portion thereof.
(f) Seller has taken all necessary and reasonable measures to
protect the proprietary nature of the Intangible Personal Property (except with
respect to the decision of whether to file patents). To the best of Seller's
knowledge, except as disclosed in Section 2.12(f) of the Disclosure Schedule, no
other person or entities has any rights (including Intellectual Property Rights)
to the Products or any trade secrets of Seller relating to the Products and to
the Seller's knowledge no other person or entity is infringing, violating or
misappropriating any, or to the knowledge of the Seller of any payments on
account of third party patents of the Intangible Personal Property. There are no
non-patent royalties, honoraria, fees or other payments payable by Seller to any
person by reason of the ownership, use, license (sublicense), sale,
transmission, broadcast, delivery (electronically or otherwise) or disposition
of the Intangible Personal Property. To the best of Seller's knowledge,
Purchaser's manufacture, use, sale or distribution of the Products will not
infringe any patent or other intellectual property right of any third party.
(g) Neither the marketing, license, sale, transmission, broadcast,
delivery (electronically or otherwise) or use of any of the Products or Assets
violates (or as a result of the consummation of the transactions contemplated by
this Agreement will violate) any license or agreement of Seller with any third
party or, to the best of Seller's knowledge, infringes any common law or
statutory rights of any other party, including, without limitation, rights
relating to defamation, contractual rights, Intellectual Property Rights and
rights of privacy or publicity; nor is, to the best of Seller's knowledge, any
third party infringing upon, or violating any license agreement with Seller
relating to, any Intangible Personal Property; and there is no pending or, to
the best of Seller's knowledge, threatened claim or litigation contesting the
validity, ownership or right to use, sell, license, or dispose of any Intangible
Personal Property, nor, to the best of Seller's knowledge, is there a basis for
any such claim, nor has Seller received any notice asserting that any Intangible
Personal Property or the proposed use, sale, license, transmission, broadcast,
delivery (electronically or otherwise) or disposition thereof conflicts with or
will conflict with the rights of any other party, nor, to the best of Seller's
knowledge, is there any basis for any such assertion.
(h) To the best of Seller's knowledge, all personnel, including but
not limited to, developers, designers, editors, authors, employees, agents,
consultants, and contractors who have contributed to or participated in the
conception and/or development of the Intangible Personal Property or the
Products either (i) have been a party to a written "work-for-hire" agreement
with Seller, in accordance with applicable federal and state laws, that has
accorded Seller full, effective, exclusive and original ownership of all
tangible and intangible property thereby arising, or (ii) have executed and
delivered to Seller appropriate instruments of assignment in favor of Seller as
assignee that have conveyed to Seller full, effective and exclusive ownership of
all tangible and intangible property thereby arising, and such agreements have
been made available to the Purchaser. To the Seller's knowledge, the third party
licensors have the right to grant the licenses to the Intellectual Property
Rights set forth on Section 1.01(a)(iv)(6) of the Disclosure Schedule that are
incorporated into the Intangible Personal Property. Seller has made and will
continue through the Closing Date to make commercially reasonable efforts to
12
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all Intangible Personal Property.
(i) With respect to each item of Intangible Personal Property:
(i) the Seller possesses sole and exclusive right, title and
interest in and to such item;
(ii) such item is not subject to any outstanding security
interest, judgment, order, decree, stipulation or injunction;
(iii) except with respect to the indemnification provisions
contained in the Contracts disclosed in Schedules 1.01(a)(iii) and
1.01(a)(iv) of the Disclosure Schedule, the Seller has not agreed to
indemnify any person or entity for or against any infringement,
misappropriation or other conflict with respect to such item; and
(iv) the Seller is not, and, to the Seller's knowledge, no
other party is, in material breach or default (including without
limitation breaches of warranty) of any applicable license or other
agreement covering such item, and no event has occurred that with
notice or lapse of time or both would constitute a breach or default
by Seller, or to Seller's knowledge, by any other party, or permit
termination, modification or acceleration thereunder.
(j) The Seller has, without material interruption, distributed
and/or sold each of the Products since September 30, 1999, with respect to the
Hitlist Software Products, and since September 20, 2000, with respect to the
Pilot Software Products. The Seller has not conveyed or otherwise transferred
any Intangible Personal Property, nor any right to distribute and/or sell each
of the Products or use its goodwill, to any Person, except (i) to Purchaser
pursuant to this Agreement, (ii) the nonexclusive license of the Products and
the Intangible Personal Property in the ordinary course of the Seller's
business, and (iii) pursuant to the Distribution Agreements. To the best of
Seller's knowledge, the transactions contemplated by this Agreement will not
result in Purchaser not having the right to continue the distribution and/or
sale of each of the Products in a manner consistent with the Seller's past
practice.
(k) To the best of Seller's knowledge, all written material and
software used in connection with each of the Products through the date hereof
have properly displayed the copyright notice or notices prescribed by ▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ Code as in effect from time to time, and, except as disclosed in
Section 2.12(k) of the Disclosure Schedule, any reprints, excerpts or copies of
all or a portion of any such materials published, distributed or authorized by
Seller have also displayed the copyright notice prescribed by such law.
(l) The Products and all services provided by or through Seller to
customers with respect to the Products conform in all material respects to (i)
applicable contractual commitments in the Product Contracts, (ii) express and
implied warranties, product specifications and product documentation in the
Product Contracts and (iii) to any representations provided to customers in the
Product Contracts. Seller has no material Liability (and, to the knowledge of
Seller, there is no legitimate basis for any present or future action, suit,
proceeding, hearing, investigation,
13
charge, complaint, claim or demand against Seller giving rise to any material
Liability) for refund, replacement or repair of Products sold pursuant to the
Product Contracts or other damages in connection therewith. Seller has made
available to Purchaser all documentation and notes in its possession or control
relating to the testing of the Products.
(m) The representations and warranties as to Intangible Personal
Property contained in the second to last sentence of Section 2.12(f) and in
Subsection 2.12(i)(ii) are given to best of knowledge of Seller with respect to
third party Intellectual Property Rights identified in Section 1.01(a)(iv)(6) to
the Disclosure Schedule that are incorporated into the Intangible Personal
Property. The representations and warranties as to Intangible Personal Property
contained in the first sentence of Section 2.12(b), the first sentence of
Section 2.12(h), and Subsection 2.12(i)(i) are not being made with respect to
any third party Intellectual Property Rights set forth on Section 1.01(a)(iv)(6)
to the Disclosure Schedule that are incorporated into the Intangible Personal
Property.
2.13 Product Contracts. (a) Each Product Contract is in full force and
effect and constitutes a legal, valid and binding agreement, enforceable in
accordance with its terms, of the Seller and, to the knowledge of Seller, of
each other party thereto; and except as disclosed in Section 2.13(a) of the
Disclosure Schedule neither Seller nor, to the knowledge of Seller, any other
party to such Product Contract is in violation or breach of or default under any
such Product Contract (or with notice or lapse of time or both, would be in
violation or breach of or default under any such Product Contract) the effect of
which, individually or in the aggregate, could reasonably be expected to have a
materially adverse effect on the Assets or which violation or breach of or
default will otherwise result in a material diminution of the benefits
contemplated by this Agreement or any of the Operative Agreements to Purchaser.
(b) Except as disclosed in Section 2.13(b) of the Disclosure
Schedule, Seller has made all payments required to be made by it under the
Product Contracts through the date hereof and will have made all such payments
through the Closing Date. Seller is not aware of any financial obligations of
Seller outstanding under any Software License and Support Agreement.
(c) Except as disclosed in Section 2.13(c) of the Disclosure
Schedule, (i) the execution, delivery and performance by Seller of this
Agreement and the Operative Agreements to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, will not (A)
result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (B) result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (C) result in the creation or
imposition of any Lien upon Seller or any of the Assets under any Product
Contract, and (ii) Seller is not a party to or bound by any Product Contract
that has been or could reasonably be expected to be, individually or in the
aggregate with any other Product Contracts, materially adverse to the condition
of the Assets.
2.14 Assigned Government Licenses. With respect to the Assigned Government
Licenses, Section 2.14 of the Disclosure Schedule sets forth the grantor, the
grantee, the function and the expiration and renewal date of each. Prior to the
execution of this Agreement, Seller has
14
delivered to Purchaser true and complete copies of all Assigned Government
Licenses. Except as disclosed in Section 2.14 of the Disclosure Schedule:
(i) Seller owns or validly holds all of the Assigned
Government Licenses;
(ii) each Assigned Government License is valid, binding and in
full force and effect;
(iii) Seller is not in default (or with the giving of notice
or lapse of time or both, would be in default) under any Assigned
Government License in any material respect; and
(iv) the execution, delivery and performance by Seller of this
Agreement and the Operative Agreements to which it is a party, and
the consummation of the transactions contemplated hereby and
thereby, will not (A) result in or give to any Governmental or
Regulatory Authority any right of termination, cancellation,
acceleration or modification in or with respect to, (B) result in or
give to any Governmental or Regulatory Authority any additional
rights or entitlement to increased, additional, accelerated or
guaranteed payments under, or (C) result in the creation or
imposition of any Lien upon Seller or any of the Assets under, any
Assigned Government License.
2.15 Employees; Labor Relations.
(a) Seller has provided to Purchaser each Offered Employee's
position or function, annual base salary or wages, accrued and unused vacation,
and any incentive or bonus arrangement with respect to such Offered Employee in
effect on date hereof. Seller has not received any information that would lead
it to believe that any Offered Employee will refuse an offer of employment from
Purchaser in connection with the consummation of the transactions contemplated
by this Agreement.
(b) Except as disclosed in Section 2.15 of the Disclosure Schedule,
no Offered Employee is presently a member of a collective bargaining unit.
2.16 Environmental Matters.
(a) To the Seller's knowledge, Seller has obtained all Licenses
which Seller is required to obtain under applicable Environmental Laws in
connection with the Real Property Lease and with respect to the Assets. Each
such License is in full force and effect, and Seller is in compliance with the
terms and conditions of all such Licenses and with any applicable Environmental
Laws.
(b) Except as disclosed in Section 2.16(b) of the Disclosure
Schedule, no oral or written notification of a Release of a Hazardous Material
in connection with the Real Property Lease has been filed by or on behalf of
Seller, and, to Seller's knowledge, the real property underlying the Real
Property Lease is not listed or proposed for listing on the NPL, CERCLIS or any
similar state or local list of sites requiring investigation or clean-up.
15
(c) To Seller's knowledge, except as disclosed in Section 2.16(c) of
the Disclosure Schedule, there have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by, or that are in
the possession of, Seller in relation to the real property underlying the Real
Property Lease.
2.17 Substantial Customers. Section 2.17 of the Disclosure Schedule lists
the 20 largest customers of the Products on the basis of revenues for goods sold
or services provided for the most recently-completed fiscal year. Except as
disclosed in Section 2.17 of the Disclosure Schedule, to the knowledge of
Seller, no such customer is threatened with imminent bankruptcy or insolvency.
2.18 No Guarantee. None of the Assumed Liabilities is guaranteed by or
subject to a similar contingent obligation of any other Person.
2.19 Assets. Except as disclosed in Section 2.19 of the Disclosure
Schedule, the Seller has the complete and unrestricted power and unqualified
right to sell, assign, transfer, convey and deliver the Assets and Products to
the Purchaser without penalty or other adverse consequences. Following the
consummation of the transactions contemplated by this Agreement and the
execution of the instruments of transfer contemplated by this Agreement, the
Purchaser will own, with good, valid and marketable title, or lease, under valid
and subsisting leases, or otherwise acquire the interests of the Seller in the
Assets and Products, free and clear of any Liens, other than Permitted Liens,
and without incurring any penalty or other adverse consequence, including,
without limitation, any increase in rentals, royalties or license or other fees
imposed as a result of, or arising from, the consummation of the transactions
contemplated by this Agreement. All of the Assets are in good operating
condition and repair, ordinary wear and tear excepted. The sale of the Assets by
Seller to Purchaser and the assumption by Purchaser of the Assumed Liabilities
pursuant to this Agreement will effectively convey to Purchaser all of the
assets and rights (other than third party patent rights) as are necessary for
Purchaser to make, use, sell and distribute the Products.
2.20 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Seller directly with
Purchaser without the intervention of any Person on behalf of Seller in such
manner as to give rise to any valid claim by any Person against Purchaser for a
finder's fee, brokerage commission or similar payment. Seller hereby indemnifies
and holds harmless Purchaser and the Purchaser Indemnified Parties from and
against any and all claims, demands, damages, costs and expenses (including,
without limitation, reasonable attorneys' fees and court costs) with respect to
any such finder's fee, brokerage commission or similar payment.
2.21 Products.
(a) Except as disclosed in Section 2.21(a) of the Disclosure
Schedule, each of the Products (i) is, and at all times has been, in compliance
in all material respects with all applicable Laws and (ii) conforms to any
promises, warranties and affirmations of fact made in any Product Contracts. To
the knowledge of Seller, there is no known material design defect or programming
or documentation error with respect to any Products and the Products operate in
all material respects in accordance with their specifications. The Seller has no
Products placed with its
16
customers under an understanding permitting their return to the Seller other
than pursuant to a breach of warranty.
(b) Except as disclosed in Section 2.21(b) of the Disclosure
Schedule, to the knowledge of Seller, there are no material defects in the
Products, and there are no material errors in any documentation, specifications,
manuals, user guides, promotional material, technical documentation, drawings,
diagrams and demo disks (collectively, the "Documentation") related to,
associated with or used or produced in the development of the Products. To the
knowledge of the Seller, the Products operate in all material respects as
represented in the Documentation for such Products. Section 2.21(b) of the
Disclosure Schedule sets forth a summary of all warranty claims with respect to
the Products within the past three years and a summary of any warranty claims
pending or threatened against Seller or Seller is aware of facts that may give
rise to warranty claims against Seller.
(c) Copies of all correspondence relating to Products received or
sent by or on behalf of the Seller during the past five (5) years, from or to
any Governmental Authority have been previously delivered to the Purchaser.
2.22 Insolvency. This Agreement and the Transaction contemplated hereby
(i) will not result in Seller or its estate, as of the Closing Date receiving
less than reasonably equivalent value in exchange for the Assets; (ii) will not
result in Seller or its estate, as of the Closing Date being left with
unreasonably small capital; (iii) will not render Seller or its estate, as of
the Closing Date, insolvent; and (iv) was proposed, negotiated and entered into
by and between Seller and Purchaser without collusion, in good faith and from
arm's length bargaining positions.
2.23 Disclosure. All material facts relating to the condition of the
Assets and Products have been disclosed to Purchaser in or in connection with
this Agreement. No representation or warranty contained in this Agreement, and
no statement contained in the Disclosure Schedule or in any certificate, list or
other writing furnished to Purchaser pursuant to any provision of this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein, in the light
of the circumstances under which they were made, not misleading.
2.24 Standard Software License and Support Agreements. Attached as Section
2.24 of the Disclosure Schedule are four standard forms of software license and
support agreements used by Seller in connection with the sale of the Products.
Except with respect to rights to assignment and rights to subcontract, each
Software License and Support Agreement in effect as of the date hereof (other
than those to which Accrue Germany is a party) is substantially in the same form
(including with respect to indemnification) as one of the forms set forth in
Section 2.24 of the Disclosure Schedule and there are no material terms or
provisions (including any terms or provisions which could reasonably be expected
to have a material adverse effect on the Purchaser following the Closing) which
have been added to or deleted from the Software License and Support Agreements
(when compared to the forms) and there has been no material modification to the
"limitation of liability" language in any Software License and Support Agreement
(when compared to the forms). No Software License and Support Agreement requires
Seller to perform any obligations including, without limitation, software
maintenance services for more than one (1) year from the later of its date of
execution or the effective date of
17
the most recent renewal or extension thereof without the payment of additional
fees to Seller (such additional fees to be included as Assets and not Accounts
Receivable).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Each Purchaser hereby jointly and severally represents and warrants to
each Seller as of the date hereof and as of the Closing Date as follows:
3.01 Organization of Purchaser. Each Purchaser is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and has full corporate power and authority to conduct its business as
and to the extent now conducted and to operate its business.
3.02 Authority. Each Purchaser has full corporate power and authority to
execute and deliver this Agreement and the Operative Agreements to which it is a
party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by each
Purchaser of this Agreement and the Operative Agreements to which it is a party,
and the performance by each Purchaser of its obligations hereunder and
thereunder, have been duly and validly authorized by all requisite action on the
part of such Purchaser. This Agreement has been duly and validly executed and
delivered by each Purchaser and constitutes, and upon the execution and delivery
by Purchaser of the Operative Agreements to which it is a party, such Operative
Agreements will constitute, legal, valid and binding obligations of such
Purchaser enforceable against such Purchaser in accordance with their terms.
3.03 No Conflicts. The execution and delivery by each Purchaser of this
Agreement do not, and the execution and delivery by such Purchaser of the
Operative Agreements to which it is a party, the performance by such Purchaser
of its obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or by-laws
(or other comparable corporate charter documents) of such Purchaser;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in Section 3.03(b) of the
Disclosure Schedule, conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to such Purchaser or any of its
assets and properties (other than such conflicts, violations or breaches which
could not in the aggregate reasonably be expected to adversely affect the
validity or enforceability of this Agreement or any of such Operative
Agreements); or
(c) except as disclosed in Section 3.03(c) of the Disclosure
Schedule, or as could not, individually or in the aggregate, reasonably be
expected to adversely affect the ability of Seller to consummate the
transactions contemplated hereby or by any such Operative Agreements or to
perform its obligations hereunder or thereunder, (i) conflict with or result in
a violation or breach of, (ii) constitute (with or without notice or lapse of
time or both) a default
18
under, (iii) require such Purchaser to obtain any consent, approval or action
of, make any filing with or give any notice to any Person as a result or under
the terms of, or (iv) result in the creation or imposition of any Lien upon such
Purchaser or any of its assets or properties under, any Contract or License to
which such Purchaser is a party or by which any of its assets and properties is
bound.
3.04 Governmental Approvals and Filings. Except as disclosed in Section
3.04 of the Disclosure Schedule, no consent, approval or action of, filing with
or notice to any Governmental or Regulatory Authority on the part of either
Purchaser is required in connection with the execution, delivery and performance
of this Agreement or the Operative Agreements to which it is a party or the
consummation of the transactions contemplated hereby or thereby, except where
the failure to obtain any such consent, approval or action, to make any such
filing or to give any such notice could not reasonably be expected to adversely
affect the ability of such Purchaser to consummate the transactions contemplated
by this Agreement or any of such Operative Agreements or to perform its
obligations hereunder or thereunder.
3.05 Legal Proceedings. (a) There are no Actions or Proceedings pending
or, to the knowledge of either Purchaser, threatened against, relating to or
affecting either Purchaser or any of its Assets and Properties which could
reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or any of the Operative
Agreements or otherwise result in a material diminution of the benefits
contemplated by this Agreement or any of the Operative Agreements to Seller.
(b) There are no facts or circumstances known to either Purchaser
that could reasonably be expected to give rise to any Action or Proceeding that
would be required to be disclosed pursuant to clause (a) above.
3.06 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Purchaser directly
with Seller without the intervention of any Person on behalf of Purchaser in
such manner as to give rise to any valid claim by any Person against Seller for
a finder's fee, brokerage commission or similar payment. Purchaser hereby
indemnifies and holds harmless Seller and the Seller Indemnified Parties from
and against any and all claims, demands, damages, costs and expenses (including,
without limitation, reasonable attorneys' fees and court costs) with respect to
any such finder's fee, brokerage commission or similar payment.
3.07 Insolvency. This Agreement and the Transaction contemplated hereby
(i) will not result in Purchaser or its estate, as of the Closing Date,
receiving less than reasonably equivalent value in exchange for the
consideration paid for the Assets; and (ii) was proposed, negotiated and entered
into by and between Seller and Purchaser without collusion, in good faith and
from arm's length bargaining positions.
19
ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser that, at all times from and
after the date hereof, Seller will comply with all covenants and provisions of
this Article IV, except to the extent Purchaser may otherwise consent in
writing.
4.01 Regulatory and Other Approvals. Seller will (a) take all commercially
reasonable steps necessary or desirable, and proceed diligently and in good
faith and use all commercially reasonable efforts, as promptly as practicable to
obtain all consents, approvals or actions of, to make all filings with and to
give all notices to Governmental or Regulatory Authorities or any other Person
required of Seller to consummate the transactions contemplated hereby and by the
Operative Agreements, including without limitation those described in Section
2.03(b) and Section 2.04 of the Disclosure Schedule, (b) provide such other
information and communications to such Governmental or Regulatory Authorities or
other Persons as such Governmental or Regulatory Authorities or other Persons
may reasonably request in connection therewith and (c) provide reasonable
cooperation to Purchaser in obtaining all consents, approvals or actions of,
making all filings with and giving all notices to Governmental or Regulatory
Authorities or other Persons required of Purchaser to consummate the
transactions contemplated hereby and by the Operative Agreements. Seller will
provide prompt notification to Purchaser when any such consent, approval,
action, filing or notice referred to in clause (a) above is obtained, taken,
made or given, as applicable, and will advise Purchaser of any communications
(and, unless precluded by Law, provide copies of any such communications that
are in writing) with any Governmental or Regulatory Authority or other Person
regarding any of the transactions contemplated by this Agreement or any of the
Operative Agreements.
4.02 Due Diligence Investigation by Purchaser. Seller shall (i) provide
Purchaser and its officers, employees, counsel, accountants, financial advisors,
consultants and other representatives (collectively, "Representatives") with
full access, upon reasonable prior notice and during normal business hours, to
the Employees and such other officers, employees and agents of Seller who have
responsibilities relating to the Assets and (ii) furnish Purchaser and such
other Persons with all such information and data (including without limitation
copies of Product Contracts, Intangible Personal Property, Assigned Government
Licenses and Product Books and Records) concerning the Assets and the Assumed
Liabilities as Purchaser or any of such other Persons reasonably may request in
connection with such investigation. The covenants contained in this Section 4.02
shall expire on the earlier of the termination of this Agreement or the Closing
Date.
4.03 No Solicitations. Seller shall not take, nor will it permit any
Affiliate of Seller (or authorize or permit any investment banker, financial
advisor, attorney, accountant or other Person retained by or acting for or on
behalf of Seller or any such Affiliate) to take, directly or indirectly, any
action to solicit, encourage, receive, negotiate, assist or otherwise facilitate
(including by furnishing confidential information with respect to the Assets)
any offer or inquiry from any Person concerning the direct or indirect
acquisition of the Assets, other than Purchaser or its Affiliates. If Seller or
any such Affiliate (or any such Person acting for or on their behalf) receives
from any Person (other than Purchaser or any Person acting for or on its behalf)
any offer, inquiry or informational request referred to above, Seller will
promptly advise such Person,
20
by written notice, of the terms of this Section 4.03 and will promptly, orally
and in writing, advise Purchaser of such offer, inquiry or request and deliver a
copy of such notice to Purchaser The covenants contained in this Section 4.03
shall expire on the earlier of the termination of this Agreement or the Closing
Date.
4.04 Delivery of Books and Records, etc.; Removal of Property. (a) On the
Closing Date and for a period ending on the expiration of Purchaser's
maintenance obligations under the Software License and Support Agreements
(without taking into account any renewals or extensions thereof that occur after
the Closing Date), Seller will make available to Purchaser for copying, at
Purchaser's expense, at the locations at which the business related to the
Assets or Products is conducted all of the Product Books and Records and such
other Assets as are in Seller's possession at other locations, and if at any
time after the Closing Seller discovers in its possession or under its control
any other Product Books and Records or other Assets, it will make available to
Purchaser for copying, at Purchaser's expense, copies of such Product Books and
Records or other Assets to Purchaser.
(a) On or prior to the Closing Date, Seller shall remove all Assets
and properties not being sold to Purchaser hereunder from the real property
leased pursuant to the Real Property Lease (other than real property leased
pursuant to the Sublease). Such removal shall be at the sole cost and risk of
Seller, including risk of loss and damage to such Assets and properties.
4.05 Noncompetition. (a) Seller shall, for a period of three (3) years
from and after the Closing Date, refrain from, either alone or in conjunction
with any other Person, or directly or indirectly through its present or future
Affiliates, disclosing (unless compelled by judicial or administrative process)
or using any confidential or secret information relating to the Assets, except
that Seller shall be permitted to use the Contacts in connection with its
business.
(b) The parties hereto recognize that the Laws and public policies
of the various states of the United States of America may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section. It is the intention of the parties that the provisions of this Section
be enforced to the fullest extent permissible under the Laws and policies of
each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such Laws or policies) of
any provisions of this Section shall not render unenforceable, or impair, the
remainder of the provisions of this Section. Accordingly, if any provision of
this Section shall be determined to be invalid or unenforceable, such invalidity
or unenforceability shall be deemed to apply only with respect to the operation
of such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
(c) The parties hereto acknowledge and agree that any remedy at Law
for any breach of the provisions of this Section would be inadequate, and Seller
hereby consents to the granting by any court of an injunction or other equitable
relief, without the necessity of actual monetary loss being proved, in order
that the breach or threatened breach of such provisions may be effectively
restrained.
4.06 Use of Intellectual Property. (a) Immediately after the Closing the
Seller shall cease all use of the trademarks, service marks, trade dress, logos,
trade names or corporate names
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similar or related thereto included in the Assets and Products. As promptly as
practicable following the Closing, the Seller shall remove or obliterate any
Intangible Personal Property from letterheads and other materials remaining in
its possession or under its control, and Seller shall not use or put into use
after the Closing any materials that bear any trademark, service ▇▇▇▇, trade
dress, logo, trade name or corporate name contained in the Intangible Personal
Property or any trademark, service ▇▇▇▇, trade dress, logo, trade name or
corporate name similar or related thereto.
(b) Promptly following the Closing, each of Pilot and Accrue
Singapore shall change its respective corporate name and amend its respective
organizational document accordingly, to one not using any trademark, service
▇▇▇▇, trade dress, logo, trade name or corporate name contained in the
Intangible Personal Property or any trade name, service ▇▇▇▇, trade dress, logo,
trade name, or corporate name similar or related thereto.
(c) Promptly following the request by Newco I, Accrue will include
and maintain on its Website (▇▇▇▇://▇▇▇.▇▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇▇) a link that directs
customers seeking information regarding the Products to a Webpage on Newco I's
Website to be identified by Purchaser. The obligations under this Section
4.06(c) shall terminate 18 months after the Closing Date.
4.07 Notice and Cure. Seller will notify Purchaser in writing (where
appropriate, through updates to the Disclosure Schedule) of, and
contemporaneously will provide Purchaser with true and complete copies of any
and all information or documents relating to, and will use all commercially
reasonable efforts to cure before the Closing, any event, transaction or
circumstance, as soon as practicable after it becomes known to Seller, occurring
after the date of this Agreement that causes or will cause any covenant or
agreement of Seller under this Agreement to be breached in any material respect
or that renders or will render untrue in any material respect any representation
or warranty of Seller contained in this Agreement as if the same were made on or
as of the date of such event, transaction or circumstance. Seller also will
notify Purchaser in writing (where appropriate, through updates to the
Disclosure Schedule) of, and will use all commercially reasonable efforts to
cure, before the Closing, any material violation or breach, as soon as
practicable after it becomes known to Seller, of any representation, warranty,
covenant or agreement made by Seller in this Agreement, whether occurring or
arising before, on or after the date of this Agreement. No notice given pursuant
to this Section shall have any effect on the representations, warranties,
covenants or agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein or shall in any way limit
Purchaser's right to seek indemnity under Article XI.
4.08 Fulfillment of Conditions. Seller will execute and deliver at the
Closing each Operative Agreement that Seller is required hereby to execute and
deliver as a condition to the Closing, and will take all commercially reasonable
steps necessary or desirable and proceed diligently and in good faith to satisfy
each other condition to the obligations of Purchaser contained in this
Agreement.
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ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that, at all times from and
after the date hereof, Purchaser will comply with all covenants and provisions
of this Article V, except to the extent Seller may otherwise consent in writing.
5.01 Regulatory and Other Approvals. Purchaser will (a) take all
commercially reasonable steps necessary or desirable, and proceed diligently and
in good faith and use all commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions of, to make all filings
with and to give all notices to Governmental or Regulatory Authorities or any
other Person required of Purchaser to consummate the transactions contemplated
hereby and by the Operative Agreements, including without limitation those
described in Section 3.03(b) and Section 3.04 of the Disclosure Schedule, (b)
provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as such Governmental or Regulatory
Authorities or other Persons may reasonably request in connection therewith and
(c) cooperate with Seller as promptly as practicable in obtaining all consents,
approvals or actions of, making all filings with and giving all notices to
Governmental or Regulatory Authorities or other Persons required of Seller to
consummate the transactions contemplated hereby and by the Operative Agreements.
Purchaser will provide prompt notification to Seller when any such consent,
approval, action, filing or notice referred to in clause (a) above is obtained,
taken, made or given, as applicable, and will advise Seller of any
communications (and, unless precluded by Law, provide copies of any such
communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement or any of the Operative Agreements.
5.02 Notice and Cure. Purchaser will notify Seller in writing (where
appropriate, through updates to the Disclosure Schedule) of, and
contemporaneously will provide Seller with true and complete copies of any and
all information or documents relating to, and will use all commercially
reasonable efforts to cure before the Closing, any event, transaction or
circumstance, as soon as practicable after it becomes known to Purchaser,
occurring after the date of this Agreement that causes or will cause any
covenant or agreement of Purchaser under this Agreement to be breached in any
material respect or that renders or will render untrue in any material respect
any representation or warranty of Purchaser contained in this Agreement as if
the same were made on or as of the date of such event, transaction or
circumstance. Purchaser also will notify Seller in writing (where appropriate,
through updates to the Disclosure Schedule) of, and will use all commercially
reasonable efforts to cure, before the Closing, any material violation or
breach, as soon as practicable after it becomes known to Purchaser, of any
representation, warranty, covenant or agreement made by Purchaser in this
Agreement, whether occurring or arising before, on or after the date of this
Agreement. No notice given pursuant to this Section shall have any effect on the
representations, warranties, covenants or agreements contained in this Agreement
for purposes of determining satisfaction of any condition contained herein.
5.03 Fulfillment of Conditions. Purchaser will execute and deliver at the
Closing each Operative Agreement that Purchaser is hereby required to execute
and deliver as a condition to the Closing, and will take all commercially
reasonable steps necessary or desirable and proceed
23
diligently and in good faith to satisfy each other condition to the obligations
of Seller contained in this Agreement.
5.04 Purchaser Restriction. (a) For a period of two (2) years from the
Closing Date, Purchaser shall not offer a product or service that integrates the
Hitlist Software Product with a data processing accelerator or product similar
to Accrue's Infocharger product or the Accrue G2 product (as each such exists on
the Closing Date). Accrue shall have the right to have an independent third
party audit Purchaser's use of the Hitlist Software Product to determine if
Purchaser has complied with the conditions set forth in this Section 5.04;
provided that, Accrue may only conduct one (1) such audit every year and may
only conduct such audits during the first two (2) years following the Closing
Date.
(b) The parties hereto recognize that the Laws and public policies
of the various states of the United States of America may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section. It is the intention of the parties that the provisions of this Section
be enforced to the fullest extent permissible under the Laws and policies of
each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such Laws or policies) of
any provisions of this Section shall not render unenforceable, or impair, the
remainder of the provisions of this Section. Accordingly, if any provision of
this Section shall be determined to be invalid or unenforceable, such invalidity
or unenforceability shall be deemed to apply only with respect to the operation
of such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
(c) The parties hereto acknowledge and agree that any remedy at Law
for any breach of the provisions of this Section would be inadequate, and Seller
hereby consents to the granting by any court of an injunction or other equitable
relief, without the necessity of actual monetary loss being proved, in order
that the breach or threatened breach of such provisions may be effectively
restrained.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Assets and to
assume and pay, perform and discharge the Assumed Liabilities are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Purchaser in its sole
discretion):
6.01 Representations and Warranties. Each of the representations and
warranties made by Seller in this Agreement shall be true and correct, in all
respects material (other than such representations and warranties as are
qualified by materiality, which shall be true and correct as of the Closing) to
the validity and enforceability of this Agreement and the Operative Agreements
and to the condition of the Assets and Products, on and as of the Closing Date
as though made on and as of the Closing Date or, in the case of representations
and warranties made as of a specified date earlier than the Closing Date, on and
as of such earlier date.
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6.02 Performance. Seller shall have performed and complied with, in all
material respects, the agreements, covenants and obligations required by this
Agreement to be so performed or complied with by Seller at or before the
Closing.
6.03 No Material Adverse Change. No circumstance, change in, or effect on
the Assets shall have occurred which would reasonably be expected to have a
material adverse effect on the condition of the Assets.
6.04 Officers' Certificate. Accrue shall have delivered to the Purchaser a
certificate dated the Closing Date, executed by the Chief Executive Officer and
Chief Financial Officer of Accrue certifying that the conditions specified in
Sections 6.01, 6.02 and 6.03 above have been fulfilled and as to such other
matters as the Purchaser may reasonably request.
6.05 Orders and Laws. There shall not be in effect on the Closing Date any
Order or Law restraining, enjoining or otherwise prohibiting or making illegal
the consummation of any of the transactions contemplated by this Agreement or
any of the Operative Agreements or which could reasonably be expected to
otherwise result in a material diminution of the benefits of the transactions
contemplated by this Agreement or any of the Operative Agreements to Purchaser,
and there shall not be pending or threatened on the Closing Date any Action or
Proceeding or any other action in, before or by any Governmental or Regulatory
Authority which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to Purchaser
or the transactions contemplated by this Agreement or any of the Operative
Agreements of any such Law.
6.06 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Purchaser and Seller to perform their obligations under this
Agreement and the Operative Agreements and to consummate the transactions
contemplated hereby and thereby shall have been duly obtained, made or given and
shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions contemplated by this Agreement and the
Operative Agreements shall have occurred.
6.07 Third Party Consents. All consents (or in lieu thereof waivers)
necessary to permit Seller to validly transfer and assign all Assets and
Products to Purchaser shall have been obtained and shall be in full force and
effect.
6.08 Opinion of Counsel. Purchaser shall have received the opinion of the
Venture Law Group, counsel to Accrue, Pilot and Marketwave, dated the Closing
Date, substantially in the form and to the effect of Exhibit D hereto.
6.09 Deliveries. Seller shall have delivered to Purchaser the General
Assignment, the other Assignment Instruments and the Operative Agreements to
which it is a party.
6.10 Liens. Seller shall have provided Purchaser with evidence,
satisfactory to Purchaser, that any and all outstanding Liens on the Assets have
been extinguished prior to Closing.
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6.11 Proceedings. All proceedings to be taken on the part of Seller in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Purchaser, and Purchaser shall have received copies of all such
documents and other evidences as Purchaser may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
6.12 License and Support Agreement. Accrue and Newco I shall have entered
into the License Agreement and Support Agreement substantially in the forms
attached hereto as Exhibit E (collectively, the "License Agreement").
6.13 Due Diligence. Purchaser shall have completed all of its business,
legal, accounting and environmental due diligence with respect to the Assets and
Products and shall, in its sole and absolute judgment, be satisfied with the
results thereof.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder to sell the Assets are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Seller in its sole
discretion):
7.01 Representations and Warranties. Each of the representations and
warranties made by Purchaser in this Agreement shall be true and correct, in all
respects material (other than such representations and warranties as are
qualified by materiality, which shall be true and correct as of the Closing) to
the validity and enforceability of this Agreement and the Operative Agreements,
on and as of the Closing Date as though made on and as of the Closing Date or,
in the case of representations and warranties made as of a specified date
earlier than the Closing Date, on and as of such earlier date.
7.02 Performance. Purchaser shall have performed and complied with, in all
material respects, the agreements, covenants and obligations required by this
Agreement to be so performed or complied with by Purchaser at or before the
Closing.
7.03 Officers' Certificate. Purchaser shall have delivered to the Seller a
certificate, executed by Newco I's Chairman, dated the Closing Date, certifying
that the conditions specified in Sections 7.01 and 7.02 above have been
fulfilled.
7.04 Orders and Laws. There shall not be in effect on the Closing Date any
Order or Law restraining, enjoining or otherwise prohibiting or making illegal
the consummation of any of the transactions contemplated by this Agreement or
any of the Operative Agreements or which could reasonably be expected to
otherwise result in a material diminution of the benefits of the transactions
contemplated by this Agreement or any of the Operative Agreements to Seller, and
there shall not be pending or threatened on the Closing Date any Action or
Proceeding or any other action in, before or by any Governmental or Regulatory
Authority which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to Seller or
the transactions contemplated by this Agreement or any of the Operative
Agreements of any such Law.
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7.05 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Seller and Purchaser to perform their obligations under this
Agreement and the Operative Agreements and to consummate the transactions
contemplated hereby and thereby shall have been duly obtained, made or given and
shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions contemplated by this Agreement and the
Operative Agreements shall have occurred.
7.06 Opinion of Counsel. Seller shall have received the opinion of Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to Purchaser, dated the
Closing Date, substantially in the form and to the effect of Exhibit F hereto.
7.07 Deliveries. Purchaser shall have delivered to Seller (i) the
Assumption Agreement, the other Assumption Instruments and the Operative
Agreements to which it is a party, and (ii) the cash constituting the Purchase
Price as provided in Section 1.03.
7.08 Proceedings. All proceedings to be taken on the part of Purchaser in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have received copies of all such documents
and other evidences as Seller may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
7.09 License Agreement. The Seller and Newco I shall have entered into the
License Agreement.
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01 Purchase Price Allocation. An amount equal to the sum of (i) the
Purchase Price and (ii) an amount equal to the Assumed Liabilities, shall be
allocated among the Assets as of the Closing Date in accordance with Exhibit G.
Any subsequent adjustments to the Purchase Price or the Assumed Liabilities
shall be effected in accordance with Section 1060 of the Code and applicable
Treasury Regulations. For all Tax purposes, the Purchaser and the Seller agree
to report the transactions contemplated by this Agreement in a manner consistent
with the terms of this Agreement, including the allocation under Exhibit G, and
not to take any position inconsistent therewith in any Tax Return, in any refund
claim, in any Action, or otherwise.
8.02 Indemnification. Seller shall indemnify and hold harmless Purchaser
from and against all Losses incurred by Purchaser and any of its Affiliates
resulting from, arising out of or relating to (whether as transferee or
otherwise) (i) any Taxes with respect to any Tax year or portion thereof ending
on or before the Closing Date (or for any Tax year beginning before and ending
after the Closing Date to the extent allocable to the portion of such period
beginning before and ending on the Closing Date) imposed on or with respect to
the Assets and/or the Seller (including any Taxes arising out of this
transaction that are payable by Seller) and (ii) without duplication of items
covered in clause (i), any breach of the representations and warranties in
Section 2.07. This indemnity obligation as to any Tax shall survive until thirty
(30)
27
days after the expiration of the statute of limitations for that Tax and shall
not be limited or restricted by any provision of Section 10.01.
8.03 Contests. In the event Seller or Purchaser receives notice of any Tax
examinations, claims, adjustments or related matters that may affect Tax
liabilities of any other party hereto, the relevant party shall notify the other
party in writing of such notice within ten (10) days of the receipt by the
relevant party of such notice. Seller shall be entitled at its sole expense to
handle, control and compromise or settle all proceedings for Taxes for which it
is required to indemnify Purchaser pursuant to Section 8.02; provided, however,
Purchaser may at its expense participate (but not control) in any proceeding if
Purchaser reasonably believes that Purchaser shall be materially and adversely
affected by the results of the proceeding and there shall be no settlement by
Seller without Purchaser's prior approval (which shall not be unreasonably
withheld) if such settlement does or could have a material adverse effect on
Purchaser.
8.04 Cooperation. Purchaser and Seller and their Affiliates shall
cooperate with each other in the preparation of all Tax Returns and in the
conduct of all Tax proceedings and shall make available to each other records
and other information in their possession that are reasonably relevant to such
preparation and proceedings and shall furnish each other with reasonable access
to the auditors of Seller and Purchaser.
ARTICLE IX
EMPLOYEE MATTERS
9.01 Offer of Employment. (a) On the Closing Date, the Purchaser shall
offer employment to each of the then current employees of the Seller whose name
appears on Schedule 9.01(a) hereto (the "Offered Employees"), with such
employment to commence as of the date set forth next to such employee's name on
Schedule 9.01(a) (the "Employment Transfer Date"). As used herein, "Transferred
Employee" shall mean each such employee who accepts such offer. Except as set
forth in Section 9.01(b) below and except for those Transferred Employees whose
Employment Transfer Date is after the Closing Date, the Seller shall terminate
the employment of Transferred Employees immediately prior to their respective
Employment Transfer Date (or at such other date as Seller, in its sole
discretion, shall elect if the Employment Transfer Date for any employee does
not occur within five (5) business days of the date such Employment Transfer
Date is scheduled to occur as set forth in Schedule 9.01(a)). All issues
relating to the post-closing treatment of the Transferred Employees including,
without limitation, all matters relating to salary and employee benefits
arrangements, will be addressed in a separate offer letter between the Purchaser
and the Transferred Employee, the form of which is attached hereto as Exhibit H.
Purchaser agrees that such offer letter will state that Purchaser has assumed
the obligation for each Transferred Employee's accrued flexible time off
vacation ("FTO") balance and (ii) to the extent applicable, such FTO balances
will not count against a cap on FTO days pursuant to any Purchaser policy or
manual, written or otherwise.
(b) Seller and Purchaser acknowledge that the United Kingdom
Transfer of Undertakings (Protection of Employment) Regulation 1981, as amended
(the "Transfer Regulations") apply to the transaction contemplated by this
Agreement and that accordingly each Offered Employee set forth on Schedule
9.01(b) situated in the United Kingdom will transfer to
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employment by Purchaser effective as of the Employment Transfer Date of such
Offered Employee together with all of Seller's rights, duties and obligations
under the contracts of employment to each such Offered Employee situated in the
United Kingdom in accordance with the Transfer Regulations, without termination
of such employee's employment by Seller.
9.02 Accrued FTO. The Purchaser shall assume the Seller's obligation to
provide paid FTO to the Transferred Employees with respect to accrued and unused
FTO as of the Employment Transfer Date. The aggregate dollar amount of accrued
and unused FTO owed by Seller to the Transferred Employees as of the date of
this Agreement is $156,000. Purchaser agrees that it shall not reduce the amount
of FTO Transferred Employees are eligible to accrue under Purchaser's FTO
policies by the amount of Seller's accrued FTO obligation assumed by Purchaser
pursuant to this Agreement. For the avoidance of doubt, the obligations of
Seller that Purchaser is not assuming include, without limitation, Seller's
obligations with respect to any Benefit Plan, severance obligations or any
liability for unpaid wages or other compensation (other than accrued and unused
FTO).
9.03 COBRA Coverage. With respect to each Employee Plan that is a group
health plan within the meaning of Code Section 5000(b)(1) ("Group Health Plan"),
Seller agrees to offer continuation coverage for a period of months consistent
with the requirements of Section 4980B of the Code (and the applicable Treasury
Regulations) and Sections 601 through 608 of ERISA ("COBRA Coverage"), Section
4980D of the Code and Sections 701 through 707 of ERISA, Title XXII of the
Public Health Service Act and the provisions of the Social Security Act, to the
extent any employees of the Seller lose coverage under any of Seller's Group
Health Plans in connection with the sale of assets contemplated by this
Agreement.
9.04 Management Transition Services. During the period between the Closing
Date and the Employment Transfer Date of the individuals listed on Schedule 9.04
(the "Transition Period"), such individuals will be employed by Seller or
Purchaser as set forth on Schedule 9.04 and shall be assigned to work for the
Seller or Purchaser by the payroll employer of such individual, as set forth on
Schedule 9.04 (the "Transition Services Personnel"), subject to the following
agreements:
(a) Transition Services Personnel shall be paid by the payroll
employer consistent with their pay rate prior to the Closing (as set forth on
Schedule 9.04) and in accordance with the payroll employer's regular payroll
schedule. Transition Services Personnel shall be eligible to participate in all
employee benefit programs generally available to employees of the payroll
employer for the duration of the Transition Period. The payroll employer shall
reimburse expenses of Transition Services Personnel approved in writing by
Seller with respect to expenses incurred in performing work for Seller and
approved in writing by Purchaser with respect to expenses incurred in performing
work for Purchaser.
(b) Except as specifically noted on Schedule 9.04, costs for
services of Transition Services Personnel during the Transition Period (and
following, if applicable) shall be billed by the payroll employer to the party
receiving services based on the actual salary rate (or service fee), a pro-rata
share of the benefits cost, and approved expense reimbursements. Such costs
shall be billed at least monthly, in arrears, and shall be payable by the party
receiving services within 10 business days following receipt of invoice.
29
(c) The payroll employer of Transition Services Personnel during the
Transition Period (or such longer period set forth on Schedule 9.04) shall be
responsible for providing benefits for such employee, maintaining workers'
compensation insurance, payment to such employee of all salary, wages or other
compensation, including overtime pay, if applicable, withholding and reporting
income and payroll taxes from compensation and forwarding such amounts to the
appropriate taxing authority.
(d) Seller shall be responsible for the direction and control of,
and the acts, conduct and safety of, Transition Services Personnel while they
perform services for Seller. Seller shall hold harmless, defend and indemnify
Purchaser at all times from and after the commencement of the Transition Period
against all claims based upon, resulting from or arising out of the performance
of transition services by Transition Services Personnel based upon and in
accordance with Seller's instructions, the conduct of Transition Services
Personnel during the Transition Period based upon and in accordance with the
direction of Seller, and any third party claim resulting from any act, omission,
error or judgment on the part of any Transition Services Personnel based upon
and in accordance with Seller's instructions during the Transition Period.
(e) Purchaser shall be responsible for the direction and control of,
and the acts, conduct and safety of, Transition Services Personnel while they
perform services for Purchaser. Purchaser shall hold harmless, defend and
indemnify Seller at all times from and after the commencement of the Transition
Period against all claims based upon, resulting from or arising out of the
performance of transition services by Transition Services Personnel based upon
and in accordance with Purchaser's instructions, the conduct of Transition
Services Personnel during the Transition Period based upon and in accordance
with the direction of Purchaser, and any third party claim resulting from any
act, omission, error or judgment on the part of any Transition Services
Personnel based upon and in accordance with Purchaser's instructions during the
Transition Period.
(f) Purchaser shall have and own all right, title and interest (as
"works made for hire" to the extent permitted under applicable law) in and to
all inventions, developments, and intellectual property created by Transition
Services Personnel, while under the direction and control of Purchaser and
Seller shall have and own all right, title and interest (as "works made for
hire" to the extent permitted under applicable law) in and to all inventions,
developments, and intellectual property created by Transition Services
Personnel, while under the direction and control of Seller; provided, that all
worked performed by Transition Services Personnel for either party shall be
performed pursuant to a written description of the scope of the work to be
performed by such personnel. To the extent that such inventions, developments
and intellectual property is not a "work made for hire" each party shall
cooperate with the other to assign all right, title and interest to the party
entitled to such invention, development or intellectual property.
(g) No Transition Services Personnel shall be terminated from
employment by the payroll employer of such individual during the Transition
Period without prior notice to the non-payroll employer party receiving
transition services from such individual. Nothing in the foregoing shall be
construed as prohibiting Seller or Purchaser from terminating any employee at
any time and for any reason.
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9.05 European Support Services. Until the earliest of (i) such time as all
support and maintenance obligations under European Product Contracts expire,
(ii) the Purchaser establishes, in its sole and absolute discretion, alternative
European support capabilities or (iii) 60 days after the Closing, Accrue GmbH
shall provide to Purchaser up to 120 man-hours per week of support and
maintenance obligations under European Product Contracts. The Purchaser shall
pay the Seller for such services at a rate of $41.25 per hour. Seller agrees to
indemnify Purchaser and hold Purchaser harmless for any Losses arising out of
Seller's failure to obtain the acknowledgement of the three (3) Employees in
Germany employed by Accrue GmbH that such Employees are Employees of Seller and
not employees of Purchaser, Newco I or Newco II.
9.06 Transition Space; Equipment. (a) For a period of up to 3 months after
the Closing, at no cost to Purchaser, Seller shall allow up to six Transferred
Employees (and successors to such employees), to maintain and have access to up
to six work areas in Accrue's building located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ and to enjoy the same benefits to common areas,
electricity, telephones, heating and air conditioning and other similar benefits
that Accrue's employees enjoy. Notwithstanding the foregoing, such Transferred
Employees who are given access to Accrue's building as set forth in the
preceding sentence shall not be considered employees of Seller nor shall they
hold themselves out to be employees of Seller and they shall not be given access
to any of Seller's computers, electronic systems, network or other confidential
or proprietary information.
(b) Seller agrees to permit Purchaser to use each of the tangible
assets listed on Schedule 9.06(b) at no additional cost until the earlier to
occur of thirty (30) days after the Closing Date and the date on which Seller
shall have obtained the applicable lessor's consent necessary for assignment of
such applicable lease to the Purchaser.
9.07 Waiver. To the extent any of the Transferred Employees and the
Transition Services Personnel (collectively, the "Restricted Employees"), are
parties to any agreements with Seller (or Seller's predecessors) that bind or
restrict the Restricted Employees with respect to employment or consulting
activities with Purchaser, Seller hereby waives its right to enforce any such
restrictions as to Purchaser.
9.08 Confidential Information. To the extent that Purchaser becomes
specifically aware of confidential information regarding the Seller that is
known by or otherwise in the possession of Transferred Employees (the "Seller
Confidential Information"), Purchaser agrees that it will not use or disclose
such Seller Confidential Information, except to the extent that such Seller
Confidential Information is included in the Assets. Purchaser will cause the
Transferred Employees sign confidentiality agreements prohibiting their
disclosure of Seller Confidential Information (other than the Assets) that such
Transferred Employee learned while employed by Seller.
ARTICLE X
SURVIVAL; NO OTHER REPRESENTATIONS
10.01 Survival of Representations, Warranties, Covenants and Agreements.
Notwithstanding any right of Purchaser (whether or not exercised) to investigate
the Assets or any right of any party (whether or not exercised) to investigate
the accuracy of the
31
representations and warranties of the other party contained in this Agreement,
Seller and Purchaser have the right to rely fully upon the representations,
warranties, covenants and agreements of the other party contained in this
Agreement. The representations, warranties, covenants and agreements of Seller
and Purchaser contained in this Agreement will survive the Closing (a) until 18
months after the Closing Date with respect to the representations and warranties
contained in Sections 2.02, 2.12, 2.22 and 3.02 and (b) with respect to Article
I, Section 4.05 and 4.06, Section 5.04, Article VIII, Article IX, this Article
X, Article XI, Article XIII and Article XIV, until sixty (60) days following the
last date on which such covenant or agreement is to be performed or, if no such
date is specified, indefinitely, except that any representation, warranty,
covenant or agreement that would otherwise terminate in accordance with clause
(a) above will continue to survive if a Claim Notice or Indemnity Notice (as
applicable) shall have been timely given under Article XI on or prior to such
termination date, until the related claim for indemnification has been satisfied
or otherwise resolved as provided in Article XI. All other representations,
warranties, covenants and agreements of Seller and Purchaser will expire upon
the Closing.
ARTICLE XI
INDEMNIFICATION
11.01 Indemnification.
(a) Seller shall jointly and severally indemnify Purchaser
Indemnified Parties in respect of, and hold each of them harmless from and
against, any and all Losses suffered, incurred or sustained by any of them or to
which any of them becomes subject, resulting from, arising out of or relating to
(i) any misrepresentation, breach of warranty or non-fulfillment of or failure
to perform any covenant or agreement on the part of Seller contained in this
Agreement or the Operative Agreements (but only with respect to those
representations, warranties, covenants and agreements that survive the Closing
and subject to the requirement that the Indemnified Party deliver a Claim Notice
or Indemnity Notice, as applicable, to the Indemnifying Party with respect to
such Loss prior to expiration of such surviving representations, warranties,
covenants and agreements), (ii) a Retained Liability, or (iii) any and all
Losses suffered or incurred by the Purchaser by reason of or in connection with
any claim or cause of action of any third party, including without limitation,
the legal proceedings set forth on Section 2.08 of the Disclosure Schedule, to
the extent arising out of any action, inaction, event, citation, liability or
obligation of the Seller occurring or existing prior to the Closing.
(b) Purchaser shall jointly and severally indemnify Seller
Indemnified Parties in respect of, and hold each of them harmless from and
against, any and all Losses suffered, incurred or sustained by any of them or to
which any of them becomes subject, resulting from, arising out of or relating to
(i) any misrepresentation, breach of warranty or non-fulfillment of or failure
to perform any covenant or agreement on the part of Purchaser contained in this
Agreement or the Operative Agreements (but only with respect to those
representations, warranties, covenants and agreements that survive the Closing
and subject to the requirement that the Indemnified Party deliver a Claim Notice
or Indemnity Notice, as applicable, to the Indemnifying Party with respect to
such Loss prior to expiration of such surviving representations, warranties,
covenants and agreements) or (ii) an Assumed Liability.
32
(c) No amounts of indemnity shall be payable as a result of any
claim in respect of a Loss arising under Section 11.01(a) or Section 11.01(b) in
respect of a misrepresentation or breach of warranty by Seller or Purchaser, as
the case may be, unless, until and then only to the extent that the Indemnified
Parties thereunder have suffered, incurred, sustained or become subject to
Losses referred to in such Section 11.01(a) or 11.01(b), as the case may be, in
excess of $25,000 in the aggregate, in which event the Indemnified Parties shall
be entitled to seek indemnity from Seller or Purchaser, as the case may be, only
for the amount by which such Losses exceed $25,000; provided that, this Section
11.01(c) shall not apply to a misrepresentation by Seller contained in Sections
2.02 or by the Purchaser contained in Section 3.02.
(d) Notwithstanding the foregoing in this Article XI, in no event
shall Seller's aggregate liability to a Purchaser Indemnified Party pursuant to
this Article XI exceed $1,000,000, except for a misrepresentation, breach of
warranty or covenant by Seller contained in Sections 2.02, 8.02 and 9.05 but in
any event Seller's aggregate liability shall not exceed $1,500,000 plus
Purchaser's reasonable direct out of pocket expenses.
11.02 Method of Asserting Claims. All claims for indemnification by any
Indemnified Party under Section 11.01 will be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Section 11.01 is asserted against
or sought to be collected from such Indemnified Party by a Person other than
Seller, Purchaser or any Affiliate of Seller or Purchaser (a "Third Party
Claim"), the Indemnified Party shall deliver a Claim Notice with reasonable
promptness to the Indemnifying Party. The Indemnifying Party will notify the
Indemnified Party as soon as practicable within the Dispute Period whether the
Indemnifying Party disputes its liability to the Indemnified Party under Section
11.01 and whether the Indemnifying Party desires, at its sole cost and expense,
to defend the Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the Indemnified Party
within the Dispute Period that the Indemnifying Party will defend
the Indemnified Party with respect to the Third Party Claim pursuant
to this Section 11.02(a), then the Indemnifying Party will have the
right to defend, at the sole cost and expense of the Indemnifying
Party, such Third Party Claim by all appropriate proceedings, which
proceedings will be vigorously and diligently prosecuted by the
Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (with the consent of the
Indemnified Party, which consent shall not be unreasonably
withheld). The Indemnifying Party will have full control of such
defense and proceedings, including (except as provided in the
immediately preceding sentence) any settlement thereof; provided,
however, the Indemnified Party may, at the sole cost and expense of
the Indemnified Party, at any time prior to the Indemnifying Party's
delivery of the notice referred to in the first sentence of this
Section 11.02(a)(i), file any motion, answer or other pleadings or
take any other action that the Indemnified Party reasonably believes
to be necessary or appropriate to protect its interests and not
prejudicial to the Indemnifying Party (it being understood and
agreed that, except as provided in
33
clause (ii) below, if an Indemnified Party takes any such action
that is materially prejudicial and causes a final adjudication that
is adverse to the Indemnifying Party, the Indemnifying Party will be
relieved of its obligations hereunder with respect to the portion of
such Third Party Claim materially prejudiced by the Indemnified
Party's action); and provided further, that if requested by the
Indemnifying Party, the Indemnified Party will, at the sole cost and
expense of the Indemnifying Party, cooperate with the Indemnifying
Party and its counsel in contesting any Third Party Claim that the
Indemnifying Party elects to contest, or, if appropriate and related
to the Third Party Claim in question, in making any counterclaim
against the Person asserting the Third Party Claim, or any
cross-complaint against any Person (other than the Indemnified
Party, the Indemnifying Party or any of their Affiliates). The
Indemnified Party may participate in, but not control, any defense
or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this Section 11.02(a)(i), and except
as provided in the preceding sentence, the Indemnified Party will
bear its own costs and expenses with respect to such participation.
Notwithstanding the foregoing, the Indemnified Party may take over
the control of the defense or settlement of a Third Party Claim at
any time if it irrevocably waives its right to indemnity under
Section 11.01 with respect to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the Indemnified
Party within the Dispute Period that the Indemnifying Party will
defend the Third Party Claim pursuant to Section 11.02(a), or if the
Indemnifying Party gives such notice but fails to prosecute
vigorously and diligently defend or settle the Third Party Claim, or
if the Indemnifying Party fails to give any notice whatsoever within
the Dispute Period, then the Indemnified Party will have the right
to defend, at the sole cost and expense of the Indemnifying Party,
the Third Party Claim by all appropriate proceedings, which
proceedings will be vigorously and diligently prosecuted by the
Indemnified Party to a final conclusion or will be settled at the
discretion of the Indemnified Party (with the consent of the
Indemnifying Party, which consent will not be unreasonably
withheld). The Indemnified Party will have full control of such
defense and proceedings, including (except as provided in the
immediately preceding sentence) any settlement thereof; provided,
however, if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the Indemnifying Party,
cooperate with the Indemnified Party and its counsel in contesting
any Third Party Claim which the Indemnified Party is contesting, or,
if appropriate and related to the Third Party Claim in question, in
making any counterclaim against the Person asserting the Third Party
Claim, or any cross-complaint against any Person (other than the
Indemnified Party, the Indemnifying Party or any of their
Affiliates). Notwithstanding the foregoing provisions of this
Section 11.02(a)(ii), if the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the Indemnifying
Party disputes its liability hereunder to the Indemnified Party with
respect to such Third Party Claim and if such dispute is resolved in
favor of the Indemnifying Party, the Indemnifying Party will not be
required to bear the costs and expenses of the Indemnified Party's
defense pursuant to this Section 11.02(a)(ii) or of the Indemnifying
Party's participation therein at the
34
Indemnified Party's request, and the Indemnified Party will
reimburse the Indemnifying Party in full for all reasonable costs
and expenses incurred by the Indemnifying Party in connection with
such litigation. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified
Party pursuant to this Section 11.02(a)(ii), and the Indemnifying
Party will bear its own costs and expenses with respect to such
participation.
(iii) If the Indemnifying Party notifies the Indemnified Party
that it does not dispute its liability to the Indemnified Party with
respect to the Third Party Claim under Section 11.01 or fails to
notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes its liability to the Indemnified Party
with respect to such Third Party Claim, the Loss in the amount
specified in the Claim Notice will be conclusively deemed a
liability of the Indemnifying Party under Section 11.01 and the
Indemnifying Party shall pay the amount of such Loss to the
Indemnified Party on demand..
(b) In the event any Indemnified Party should have a claim under
Section 11.01 against any Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver an Indemnity Notice with reasonable
promptness to the Indemnifying Party. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in such Indemnity
Notice, the Loss in the amount specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under Section 11.01
and the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand.
ARTICLE XII
TERMINATION
12.01 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
Seller and Purchaser;
(b) at any time before the Closing, by Seller or Purchaser, in the
event that any Order or Law becomes effective restraining, enjoining, or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Agreements,
upon notification of the non-terminating party by the terminating party; or
(c) at any time before the Closing, by either party hereto which has
not theretofore materially breached this Agreement, in the event that the other
party hereto materially breaches any of the terms or provisions of this
Agreement and fails to cure such breach within ten (10) days after being
notified thereof.
12.02 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 12.01, this Agreement will forthwith become null and void,
and there will be no liability or
35
obligation on the part of Seller or Purchaser (or any of their respective
officers, directors, employees, agents or other representatives or Affiliates)
except that Section 14.06 shall survive any such termination.
ARTICLE XIII
DEFINITIONS
13.01 Definitions. (a) Defined Terms. As used in this Agreement, the
following defined terms have the meanings indicated below:
"Accounts Receivable" has the meaning ascribed to it in Section
1.01(b)(ii).
"Accrue" has the meaning ascribed to it in the forepart of this Agreement.
"Accrue Germany" has the meaning ascribed to it in the forepart of this
Agreement.
"Actions or Proceedings" means any action, suit, proceeding, arbitration
or Governmental or Regulatory Authority investigation.
"Affiliate" means any Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning ten
percent (10%) or more of the voting securities of another Person shall be deemed
to control that Person.
"Agreement" means this Asset Purchase Agreement and the Exhibits, the
Disclosure Schedule and the Schedules hereto and the certificates delivered in
accordance with Sections 6.04 and 7.03, as the same shall be amended from time
to time.
"Assets" has the meaning ascribed to it in Section 1.01(a).
"Assets and Properties" of any Person means all assets and properties of
every kind, nature, character and description (whether real, personal or mixed,
whether tangible or intangible and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person.
"Assigned Government Licenses" has the meaning ascribed to it in Section
1.01(a)(v).
"Assignment Instruments" has the meaning ascribed to it in Section 1.04.
"Assumed Liabilities" has the meaning ascribed to it in Section 1.02.
"Assumption Agreement" has the meaning ascribed to it in Section 1.04.
"Assumption Instruments" has the meaning ascribed to it in Section 1.04.
36
"Benefit Plan" means any Plan established by Accrue, or any predecessor or
Affiliate of Accrue, existing at the Closing Date or at any time within the five
(5) year period prior thereto, to which Seller contributes or has contributed on
behalf of any Employee, former Employee or director, or under which any
Employee, former Employee or director of Seller or any beneficiary thereof is
covered, is eligible for coverage or has benefit rights.
"Books and Records" of any Person means all files, documents, instruments,
papers, books, records, financial statements and related work papers and letters
from accountants, budgets, pricing guidelines, ledgers, journals, deeds,
computer files and programs, retrieval programs and operating data and plans of
such Person.
"Business Day" means a day other than Saturday, Sunday or any day on which
banks located in the State of New York are authorized or obligated to close.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and the rules and regulations promulgated
thereunder.
"CERCLIS" means the Comprehensive Environmental Response and Liability
Information System, as provided for by 40 C.F.R. Section 300.5.
"Claim Notice" means written notification pursuant to Section 11.02(a) of
a Third Party Claim as to which indemnity under Section 11.01 is sought by an
Indemnified Party, enclosing a copy of all papers served, if any, and specifying
the nature of and basis for such Third Party Claim and for the Indemnified
Party's claim against the Indemnifying Party under Section 11.01 together with
the amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such Third Party Claim.
"Closing" means the closing of the transactions contemplated by Section
1.04.
"Closing Date" means May 30, 2002 or such other date on which Purchaser
and Seller mutually agree in writing to hold the Closing.
"COBRA Coverage" has the meaning ascribed to it in Section 9.03.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Contract" means any agreement, lease, license, evidence of Indebtedness,
mortgage, indenture, security agreement or other contract, whether oral or
written.
"Disclosure Schedule" means the record delivered to Purchaser by Seller
herewith and dated as of the date hereof, containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein by Seller pursuant to this Agreement.
"Dispute Period" means the period ending thirty (30) days following
receipt by an Indemnifying Party of either a Claim Notice or an Indemnity
Notice.
"Distribution Agreements" has the meaning ascribed to it in Section
1.01(a)(iii).
37
"Employee" means each present and former employee, officer or consultant
of Seller who was or is engaged in the conduct of Seller's business related to
the Products.
"Employment Transfer Date" has the meaning ascribed to it in Section 9.01.
"Environmental Law" means any Law or Order relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, Releases or threatened Releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning ascribed to it in Section 1.01(b).
"GAAP" means generally accepted accounting principles, consistently
applied throughout the specified period and in the immediately prior comparable
period.
"General Assignment" has the meaning ascribed to it in Section 1.04.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Government Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"Group Health Plan" has the meaning ascribed to it in Section 9.03.
"Hazardous Material" means (A) any petroleum or petroleum products,
flammable explosives, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (B) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants" or words of similar import under any Environmental Law; and
(C) any other chemical or other material or substance, exposure to which is now
or hereafter prohibited, limited or regulated by any Governmental or Regulatory
Authority under any Environmental Law.
"Indebtedness" of any Person means all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇), (▇▇) under capital leases and (v) in the nature of
guarantees of the obligations described in clauses (i) through (iv) above of any
other Person.
"Indemnified Party" means any Person claiming indemnification under any
provision of Article XI.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article XI.
"Indemnity Notice" means written notification pursuant to Section 11.02(b)
of a claim for indemnity under Article XI by an Indemnified Party, specifying
the nature of and basis for such claim, together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in good faith, of
such claim.
"Intangible Personal Property" has the meaning ascribed to it in Section
1.01(a)(iv).
"Laws" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other liabilities of
a Person (whether absolute, accrued, contingent, fixed or otherwise, or whether
due or to become due).
"Liens" means any mortgage, pledge, assessment, security interest, lease,
lien, adverse claim, levy, charge or other encumbrance of any kind, or any
conditional sale Contract, title retention Contract or other Contract to give
any of the foregoing.
"Loss" means any and all damages, fines, penalties, deficiencies, losses
and expenses (including without limitation interest, court costs, reasonable
fees of attorneys, accountants and other experts or other reasonable expenses of
litigation or other proceedings or of any claim, default or assessment).
"Marketwave" has the meaning ascribed to it in the forepart of this
Agreement.
"Newco I" has the meaning ascribed to it in the forepart of this
Agreement.
"Newco II" has the meaning ascribed to it in the forepart of this
Agreement.
"NPL" means the National Priorities List under CERCLA.
"Offered Employees" has the meaning ascribed to it in Section 9.01(a).
"Operative Agreements" means, collectively, the General Assignment and the
other Assignment Instruments, the Assumption Agreement and the other Assumption
Instruments, the License Agreement and any support or other agreements to be
entered into in connection with the Transaction.
39
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority (in each such case whether preliminary
or final).
"Permitted Lien" means (i) any Lien for Taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (ii) any statutory Lien
arising in the ordinary course of business by operation of Law with respect to a
Liability that is not yet due or delinquent, and (iii) any minor imperfection of
title or similar Lien which individually or in the aggregate with other such
Liens could not reasonably be expected to materially adversely affect the
condition of the Assets.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Personal Property Leases" has the meaning ascribed to it in Section
1.01(a)(vi).
"Pilot" has the meaning ascribed to it in the forepart of this Agreement.
"Pilot U.K." has the meaning ascribed to it in the forepart of this
Agreement.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, including, but not limited to, any "employee
benefit plan" within the meaning of Section 3(3) of ERISA.
"Product Books and Records" has the meaning ascribed to it in Section
1.01(a)(viii).
"Product Contracts" has the meaning ascribed to it in Section
1.01(a)(iii).
"Purchase Price" has the meaning ascribed to it in Section 1.03(a).
"Purchaser" has the meaning ascribed to it in the forepart of this
Agreement.
"Purchaser Indemnified Parties" means Purchaser and its officers,
directors, employees, agents and Affiliates.
"Real Property Leases" has the meaning ascribed to it in Section
1.01(a)(i).
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, including, without limitation, the movement of Hazardous
Materials through ambient air, soil, surface water, ground water, wetlands, land
or subsurface strata.
"Representatives" has the meaning ascribed to it in Section 4.02.
40
"Retained Liabilities" has the meaning ascribed to it in Section 1.02(b).
"Seller" has the meaning ascribed to it in the forepart of this Agreement.
"Seller Indemnified Parties" means Seller and its officers, directors,
employees, agents and Affiliates.
"Software License and Support Agreements" has the meaning ascribed to it
in Section 1.01(a)(iii).
"Tangible Personal Property" has the meaning ascribed to it in Section
1.01(a)(ii).
"Tax Return" means a report, return or other information (including any
amendments) required to be supplied to a governmental entity with respect to
Taxes, including, where permitted or required, combined or consolidated returns
for any group of entities that includes Seller.
"Taxes" means any federal, state, county, local or foreign taxes
(including but not limited to any income, sales, use, excise, bulk sales, ad
valorem or transfer tax), charges, fees, levies, other assessments or payroll or
withholding taxes or charges imposed by any governmental entity and includes any
interest and penalties (civil or criminal) on or additions to any such taxes.
"Third Party Claim" has the meaning ascribed to it in Section 11.02(a).
"Thorn EMI" has the meaning ascribed to it in the forepart of this
Agreement.
"Transferred Employee" has the meaning ascribed to it in Section 9.01(a).
"Transfer Regulations" has the meaning ascribed to it in Section 9.01(b).
"Transition Period" has the meaning ascribed to it in Section 9.04.
"Transition Services Personnel" has the meaning ascribed to it in Section
9.04.
(a) Construction of Certain Terms and Phrases. Unless the context of
this Agreement otherwise requires, (i) words of any gender include each other
gender; (ii) words using the singular or plural number also include the plural
or singular number, respectively; (iii) the terms "hereof," "herein," "hereby"
and derivative or similar words refer to this entire Agreement; and (iv) the
terms "Article" or "Section" refer to the specified Article or Section of this
Agreement. Whenever this Agreement refers to a number of days, such number shall
refer to calendar days unless Business Days are specified. All accounting terms
used herein and not expressly defined herein shall have the meanings given to
them under GAAP. Any representation or warranty contained herein as to the
enforceability of a Contract shall be subject to the effect of any bankruptcy,
insolvency, reorganization, moratorium or other similar law affecting the
enforcement of creditors' rights generally and to general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at Law). It is understood that the term "Seller" includes collectively
Accrue, Pilot, Marketwave, Accrue Germany, Pilot U.K. and Thorn EMI. The parties
acknowledge and agree that (i) any
41
representation in this Agreement that "Seller" has a particular right or
obligation means that any one or more of Accrue, Pilot, Marketwave, Accrue
Germany, Pilot U.K. and Thorn EMI have such right or obligation, and (ii) any
representation in this Agreement that "Seller" has taken a particular action
means that any one or more of Accrue, Pilot, Marketwave, Accrue Germany, Pilot
U.K. and Thorn EMI have taken such action.
ARTICLE XIV
MISCELLANEOUS
14.01 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to Seller, to:
Accrue Software, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
with a copy to:
Venture Law Group, a Professional Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to Purchaser, to:
Pilot Software Acquisition Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
Mintz, Cohn, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇, P.C.
The Chrysler Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: 212-983-3115
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt,
42
and (iii) if delivered by mail in the manner described above to the address as
provided in this Section, be deemed given three Business Days after deposit in
the mail (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice,
request or other communication is to be delivered pursuant to this Section). Any
party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.
14.02 Bulk Sales Act. The parties hereby waive compliance, if applicable,
with the Bulk Sales Act or comparable statutory provisions of each applicable
jurisdiction. Seller shall indemnify Purchaser and its officers, directors,
employees, agents and Affiliates in respect of, and hold each of them harmless
from and against, any and all Losses suffered, occurred or sustained by any of
them or to which any of them becomes subject, resulting from, arising out of or
relating to the failure of Seller to comply with the terms of any such
provisions applicable to the transactions contemplated by this Agreement.
14.03 Entire Agreement. This Agreement and the Operative Agreements
supersede all prior discussions and agreements between the parties with respect
to the subject matter hereof and thereof, including without limitation those
confidentiality agreements between the parties hereto dated April 10, 2002 and
April 26, 2002, and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof and thereof.
14.04 Expenses. Except as otherwise expressly provided in this Agreement,
whether or not the transactions contemplated hereby are consummated, each party
will pay its own costs and expenses incurred in connection with the negotiation,
execution and closing of this Agreement and the Operative Agreements and the
transactions contemplated hereby and thereby.
14.05 Public Announcements. Without the prior written consent of the other
(such consent not to be unreasonably withheld), neither Purchaser nor Seller
will, and Purchaser and Seller will cause their respective Representatives not
to, make any release to the press or other public disclosure with respect to the
existence or contents of this Agreement or any of the transactions contemplated
hereby, except for such public disclosure as may be necessary for the party
proposing to make the disclosure not to be in violation of or default under any
applicable Law. Without limiting the foregoing, Purchaser and Seller will obtain
the other's prior approval of any press release to be issued immediately
following the signing of this Agreement announcing such signing and immediately
following the Closing announcing the consummation of the transactions
contemplated by this Agreement, provided such approval shall not unreasonably be
withheld.
14.06 Confidentiality. Each party hereto will hold, and will use its best
efforts to cause its Affiliates and their respective Representatives to hold, in
strict confidence from any Person (other than any such Affiliate or
Representative), unless (i) compelled to disclose by judicial or administrative
process (including without limitation in connection with obtaining the necessary
approvals of this Agreement and the transactions contemplated hereby of
Governmental or Regulatory Authorities) or by other requirements of Law or (ii)
disclosed in an Action or Proceeding brought by a party hereto in pursuit of its
rights or in the exercise of its remedies hereunder, all documents and
information concerning the other party or any of its Affiliates
43
furnished to it by the other party or such other party's Representatives in
connection with this Agreement or the transactions contemplated hereby, except
to the extent that such documents or information can be shown to have been (a)
previously known by the party receiving such documents or information, (b) in
the public domain (either prior to or after the furnishing of such documents or
information hereunder) through no fault of such receiving party or (c) later
acquired by the receiving party from another source if the receiving party is
not aware (after due inquiry) that such source is under an obligation to another
party hereto to keep such documents and information confidential; provided,
however, following the Closing the foregoing restrictions will not apply to
Purchaser's use of documents and information concerning the Assets or the
Assumed Liabilities furnished by Seller hereunder. In the event the transactions
contemplated hereby are not consummated, upon the request of the other party,
each party hereto will, and will cause its Affiliates and Representatives to,
promptly (and in no event later than five (5) Business Days after such request)
redeliver or cause to be redelivered all copies of confidential documents and
information furnished by the other party in connection with this Agreement or
the transactions contemplated hereby and destroy or cause to be destroyed all
notes, memoranda, summaries, analyses, compilations and other writings related
thereto or based thereon prepared by the party furnished such documents and
information or its Representatives.
14.07 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
14.08 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of each party hereto.
14.09 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article XI.
14.10 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without the
prior written consent of the other parties hereto and any attempt to do so will
be void, except (a) for assignments and transfers by operation of Law and (b)
that Purchaser or Seller may assign any or all of its rights, interests and
obligations hereunder to a wholly-owned subsidiary, provided that any such
subsidiary agrees in writing to be bound by all of the terms, conditions and
provisions contained herein, but no such assignment referred to in clause (b)
shall relieve Purchaser or Seller of its obligations hereunder. Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and
is enforceable by the parties hereto and their respective successors and
assigns.
14.11 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
44
14.12 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 of any party hereto under this Agreement 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 herefrom 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.
14.13 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of New York applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
14.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
[Signature Page Follows]
45
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party as of the date first above written.
"SELLER"
ACCRUE SOFTWARE, INC.
By:
------------------------------------
Name:
Title:
PILOT SOFTWARE, INC.
By:
------------------------------------
Name:
Title:
MARKETWAVE CORPORATION
By:
------------------------------------
Name:
Title:
ACCRUE GMBH
By:
------------------------------------
Name:
Title:
PILOT SOFTWARE LTD
By:
------------------------------------
Name:
Title:
THORN EMI COMPUTER SOFTWARE LTD
By:
------------------------------------
Name:
Title:
46
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party as of the date first above written.
"PURCHASER"
PILOT SOFTWARE ACQUISITION CORP.
By:
------------------------------------
Name:
Title:
PILOT SOFTWARE SERVICES CORP.
By:
------------------------------------
Name:
Title:
ASSET PURCHASE AGREEMENT
Table of Contents*
Exhibits
A Real Property Lease
B General Assignment and ▇▇▇▇ of Sale
C Assumption Agreement
D Opinion of Seller's Counsel
E License Agreement and Support Agreement
F Opinion of Purchaser's Counsel
G Purchase Price Allocation
H Employment Offer Letter from Purchaser to Transferred Employees
Disclosure Schedule
Section 1.01(a)(i) Real Property Lease
Section 1.01(a)(ii) Tangible Personal Property
Section 1.01(a)(iii) Product Contracts
Section 1.01(a)(iv) Intangible Personal Property
Section 1.01(a)(v) Government Licenses
Section 1.01(a)(vi) Personal Property Leases
Section 1.01(b)(ii) Accounts Receivable and Maintenance Revenue
Section 1.01(b)(v) Excluded Intellectual Property
Section 1.02(a) Assumed Liabilities
Section 2.01 Organization of Seller
Section 2.02 Authority
Section 2.03 No Conflicts
Section 2.04 Governmental Approvals and Filings
Section 2.05 Books and Records
Section 2.06 Absence of Changes
Section 2.07 Taxes
Section 2.08 Legal Proceedings
Section 2.09 Compliance With Laws and Orders
Section 2.10 Real Property
Section 2.11 Tangible Personal Property
Section 2.12 Intangible Personal Property
Section 2.13 Products Contracts
Section 2.14 Assigned Government Licenses
Section 2.15 Employees; Labor Relations
Section 2.16 Environmental Matters
Section 2.17 Substantial Customers
Section 2.19 Assets
Section 2.21 Products
Section 2.24 Standard Product Contracts and Software License Agreements
Schedule 9.01 Offer of Employment
Schedule 9.04 Management Transition Services
Schedule 9.06(b) Transition Equipment
* The Exhibits and Schedules omitted from this filing are not considered
material to an investment decision but will be furnished supplementally to
the Securities and Exchange Commission upon request.