APPENDIX C - ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT
BY AND AMONG
POWERCERV CORPORATION,
POWERCERV TECHNOLOGIES CORPORATION
PCV ACQUISITION, INC
AND
ASA INTERNATIONAL, LTD.
Dated as of October 1, 2002
INDEX OF EXHIBITS
Exhibit Description
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Exhibit A Form of Promissory Note
Exhibit B Form of Instrument of Assumption of Liabilities
Exhibit C ▇▇▇▇ of Sale and General Assignment of Seller Assets
Exhibit D Trademark Assignment
Exhibit E Copyright Assignment
Exhibit F Non-Competition Agreement
INDEX OF SCHEDULES
Seller Schedule Description
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the or this "Agreement") is made and entered
into as of October 1, 2002 by and among PCV Acquisition, Inc., a Delaware
corporation ("Buyer"); PowerCerv Corporation, a Florida corporation
("PowerCerv"); PowerCerv Technologies Corporation, a Florida Corporation and
wholly-owned subsidiary of PowerCerv (the "Subsidiary", and together with
PowerCerv, the "Seller"); and ASA International Ltd., a Delaware Corporation and
the sole Stockholder of Buyer ("ASA").
RECITALS
A. The Boards of Directors of each of Seller and Buyer believe it is in
the best interests of each company and its respective stockholders
that Buyer acquire certain of the assets of, and assume certain of the
liabilities of, Seller (the "Acquisition").
B. Seller is engaged in the business of designing, developing, licensing,
supporting, maintaining, selling and marketing and implementing
software primarily for manufacturing companies (the "Business").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the parties agree as follows:
ARTICLE I
THE ACQUISITION
1.1 Purchase of Assets.
(a) Purchase and Sale of Assets. On the terms and subject to the conditions
set forth in this Agreement, Seller will sell, convey, transfer, assign and
deliver to Buyer, and Buyer will purchase and acquire from Seller on the Closing
Date (as defined in Section 1.5), all of Seller's rights, title and interest in
and to all of the assets of Seller (collectively the "Seller Assets") free and
clear of all liens, pledges, charges, claims, security interests or other
encumbrances of any sort (collectively, "Liens"), (excluding Liens listed on
Schedule 2.7), including without limitation, the following (provided, however,
that the Seller Assets shall not include those assets set forth on Schedule
1.1(b)):
(i) All rights, title and interest in and to (a) the software
designed, developed, maintained, implemented, supported, licensed or sold by
Seller (including but not limited to ERP Plus, eSeries and their respective
components), including all released and unreleased source code and object code
versions thereof and all related documentation and development notes (the
"Software"), and (b) all other intellectual property of Seller including
databases, market information, research and development, patents, patent
applications, copyrights, copyright registration applications, trademarks and
service marks and related applications, trade names, trade secrets, proprietary
information, technology rights and licenses, proprietary rights and processes,
know-how, research and development in progress, and any and all other
intellectual property including, without limitation, all things authored,
discovered, developed, made, perfected, improved, designed, engineered, devised,
acquired, produced, conceived or first reduced to practice by Seller, or that
are relevant to an understanding or to the development of the Business or to the
performance by the products of the Business of their intended functions or
purposes, whether tangible or intangible, in any stage of development, including
without limitation enhancements, designs, technology, improvements, inventions,
works of authorship, formulas, processes, routines, subroutines, techniques,
concepts, object code, flow charts, diagrams, coding sheets, source code,
listings and annotations, programmers' notes, information, work papers, work
product and other materials of any types whatsoever, and all rights of any kind
in or to any of the foregoing (collectively, with the Software, "Intellectual
Property");
(ii) All rights, title and interest in and to all end-user software
licenses (any such contracts to be listed on Schedule 1.1(a)(ii) and to be
referred to the "License Agreements") sold by Seller in connection with the use
of the Software; provided, however, that pursuant to the Purchase Price
Adjustment Notice (as defined in Section 1.3), Buyer may, in its sole
discretion, reject any such License Agreements, in which event such rejected
License Agreements shall constitute Excluded Assets (as defined in Section
1.1(b)).
(iii) All rights, title and interest in and to any contracts for
maintenance in connection with the Software (any such contracts to be listed on
Schedule 1.1(a)(iii) and to be referred to as the "Maintenance Agreements");
provided, however, that pursuant to the Purchase Price Adjustment Notice, Buyer
may, in its sole discretion, reject any such Maintenance Agreements, in which
event such rejected Maintenance Agreements shall constitute Excluded Assets.
(iv) All rights, title and interest in and to any contracts for
implementation of the Software whether arising from License Agreements,
statements of work, purchase orders, work or services orders or other agreements
(any such contracts to be listed on Schedule 1.1(a)(iv) and to be referred to as
the "Implementation Agreements"); provided, however, that pursuant to the
Purchase Price Adjustment Notice, Buyer may, in its sole discretion, reject any
such Implementation Agreements, in which event such rejected Maintenance
Agreements shall constitute Excluded Assets.
(v) The right, but not the obligation, to employ all employees of
Seller on the Closing Date;
(vi) All accounts receivable, notes receivable and interest receivable
of Seller which are outstanding as of the Closing Date (the "Accounts
Receivable"), which Accounts Receivable shall be listed, together with the
allowance for bad debt which is allocated to each such Account Receivable, on a
schedule to be delivered by Seller to Buyer and agreed to by Buyer prior to the
Closing (the "Receivables Schedule"); provided, however, that pursuant to the
Purchase Price Adjustment Notice, Buyer may, in its sole discretion, reject any
such Accounts Receivable which Buyer, in its sole discretion, believes may not
be collectible in full on a timely basis, in which event such rejected Accounts
Receivable (including the amount of any allowance for bad debt which has been
allocated to such Accounts Receivable as set forth on the Receivables Schedule)
shall constitute Excluded Assets.
(vii) All prepaid expenses of Seller as of the Closing Date (the
"Prepaid Expenses"); provided, however, that pursuant to the Purchase Price
Adjustment Notice, Buyer may, in its sole discretion, reject any such Prepaid
Expenses which Buyer, in its sole discretion, believes may not have tangible
future benefits to Buyer, in which event such rejected Prepaid Expenses shall
constitute Excluded Assets.
(viii) All other current assets of Seller as of the Closing Date;
(ix) All computers, computer equipment and related software owned by
Seller or used in conjunction with all aspects of the Seller's business;
(x) All inventory of Seller as of the Closing Date (the "Inventory");
provided, however, that pursuant to the Purchase Price Adjustment Notice, Buyer
may, in its sole discretion, reject any such Inventory which Buyer, in its sole
discretion, believes may not be salable in the ordinary course of business, in
which event such rejected Inventory shall constitute Excluded Assets.
(xi) All rights, title and interest in the promissory note in the
original principal amount of $100,000 due to PowerCerv (the "Stockholder Note")
from ▇.▇. ▇▇▇▇▇▇▇ (the "Stockholder"); and
(xii) All other property, plant, equipment, leasehold improvements and
other assets owned by Seller or used in connection with the Business.
(b) Assets Not Acquired. Seller shall retain all assets set forth
on Schedule 1.1(b), (collectively, the "Excluded Assets") including but not
limited to (i) all cash and cash equivalents as of the Closing Date
(collectively, the "Cash Equivalents") and (ii) all assets rejected by Buyer
pursuant to Section 1.1(a).
(c) Assumption of Liabilities. Buyer shall not assume any
liabilities or obligations of Seller except for those liabilities and
obligations which Buyer expressly assumes pursuant to this Section 1.1(c).
Without limiting the foregoing, it is expressly agreed that Buyer shall not
assume any liabilities for payroll, bonus, severance, change of control, accrued
vacation, 401K, other benefits or related obligations accrued prior to the
Closing Date, or taxes thereon, or for employment, income, sales, property or
other taxes incurred or accrued by Seller (collectively, "Excluded
Liabilities"). Seller will indemnify and hold Buyer harmless from and against
any and all losses, costs, expenses, claims, liabilities, deficiencies,
judgments and damages incurred or suffered by Buyer or any of its affiliates
related to or arising out of any liabilities or obligations of Seller, except
for those liabilities or obligations expressly assumed by Buyer in this Section
1.1(c). At the Closing, Buyer shall assume the following obligations and
liabilities of Seller (collectively, the "Assumed Liabilities"):
(i) All of Seller's implementation and software development
obligations, whether arising from License Agreements, Maintenance Agreements,
Implementation Agreements, statements of work, purchase orders, work or services
orders or other agreements, that are transferred to Buyer ("Implementation
Obligations") as of the Closing Date, provided that Seller identifies on
Schedule 1.1(c)(i) (which schedule shall be updated by Seller prior to the
Closing for any Implementation Obligations entered into after the date of this
Agreement) each such Implementation Obligation to Buyer and provides to Buyer on
Schedule 1.1(c)(i) the following information for each such Implementation
Obligation:
(1) Customer name;
(2) Commencement date and estimated completion dates of
implementation project;
(3) Method of fee calculation (time and materials or fixed
price) and the agreed upon billing rates involved,
where applicable;
(4) Amount, if any, of deposits received from customer in
advance of work performed;
(5) Nature of any custom software development involved with
the implementation, excluding normal configuration and
integration to back-end accounting systems; and
(6) Material problems, if any, in connection with the
implementation;
(ii) All of Seller's maintenance, support and warranty
obligations, whether arising from License Agreements, Maintenance Agreements,
Implementation Agreements, statements of work, purchase orders, work or service
orders or other agreements, that are transferred to Buyer ("Maintenance
Obligations") as of the Closing Date, provided that Seller identifies each such
Maintenance Obligation to Buyer on Schedule 1.1(c)(ii) (which schedule shall be
updated by Seller prior to the Closing for any Maintenance Obligations entered
into after the date of this Agreement) and provides to Buyer on Schedule
1.1(c)(ii) the following information for each such Maintenance Obligation:
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(1) Customer name;
(2) Maintenance period and related maintenance fee; and
(3) Any Maintenance Obligations assumed by Buyer that are
out of the ordinary course of business; and
(iii) The following liabilities of Seller solely to the extent
they are set forth with supporting detail on Schedule
1.1(c)(iii):
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(1) Accounts payable and accrued expenses incurred in the
normal course of business (excluding Excluded
Liabilities);
(2) Deferred revenue; and
(3) The Assigned Contracts set forth on Schedule 2.11.
(d) Limitation on Assumed Liabilities. Notwithstanding anything to the
contrary set forth herein:
(i) In no event shall Buyer assume any liabilities associated
with any Excluded Assets, including but not limited to Excluded Assets which are
rejected by Buyer pursuant to Section 1.1 hereof; and
(ii) In no event shall the value of the Assumed Liabilities cause
a deficit in the value of the Net Tangible Assets (as defined in Section 1.3).
To the extent that the Assumed Liabilities would cause a deficit in Net Tangible
Assets, then the Buyer shall be entitled, in the Purchase Price Adjustment
Notice, (x) to the extent of the first $90,000 of such deficit, to reduce the
amount of the Note in an amount equal to the amount of the deficit; and (y) to
the extent such deficit exceeds $90,000, to reject any liabilities equal to the
amount of such excess, which liabilities would otherwise constitute Assumed
Liabilities, and such rejected liabilities shall be paid in full by Seller when
due. Any liabilities so rejected shall be deemed not to have been assigned to or
assumed by Buyer; provided, however, that if necessary or appropriate, Buyer
shall assign or re-convey such liabilities to Seller, which shall cooperate with
and accept such assignment or reconveyance.
(e) Risk of Loss. In the event any of the Seller Assets are
unavailable for delivery to Buyer on the Closing Date as a result of risks for
which such Seller Assets were insured by Seller, Buyer may at its option elect
(i) to require Seller to deliver to Buyer assignments of such Seller's rights
under its insurance policies, if any, applicable to such Seller Assets and to
close on that basis, or (ii) to not close due to the failure of a condition to
closing if the amount of the loss reasonably can be expected to be in excess of
$50,000, unless such loss is covered by Seller's insurance policies and Seller
has used the proceeds of any insurance proceeds to repair or replace such Assets
to Buyer's satisfaction. Seller hereby agrees to make an assignment of its
rights under its insurance policies if Buyer so elects and if Seller can do so
without violating the terms and conditions of such insurance policies.
1.2 Purchase Price for Assets. As consideration (the "Purchase Price") for
the sale of the Seller Assets to Buyer, in addition to the assumption of the
Assumed Liabilities provided by Section 1.1(c):
(a) at the Closing, on the terms and subject to the conditions set
forth in this Agreement, Buyer shall pay to PowerCerv, by wire transfer of same
day funds, an amount equal to $500,000; and
(b) at the Closing, Buyer shall deliver to PowerCerv a promissory note
in substantially the form of Exhibit A hereto in the principal amount of $90,000
and due on the date which is six months after the Closing date (the "Note").
1.3 Adjustment to Purchase Price. The Purchase Price will be increased or
decreased, as the case may be, dollar for dollar, to the extent that the value
of the Net Tangible Assets of Seller as reflected on the Closing Balance Sheet
is greater or less than zero (the "Purchase Price Adjustment"). The Closing
Balance Sheet shall be a balance sheet of the Seller comprised of the Acquired
Assets and Assumed Liabilities (provided, however, that no value shall be
assigned to the Intellectual Property included in the Acquired Assets or the
deferred revenue included in the Assumed Liabilities) as of the Closing Date,
prepared by the Buyer, in the form and incorporating the adjustments set forth
on Schedule 1.3 hereto. The Buyer shall send a copy of the Closing Balance Sheet
to the Seller within forty-five (45) days following the Closing Date, (the date
of such notice being sometimes referred to herein as the "Purchase Price
Adjustment Date") together with a notice setting forth (a) the amount of the
adjustment in the Purchase Price and (b) a list of any assets and liabilities
rejected by Buyer pursuant to Section 1.1 hereof (the "Purchase Price Adjustment
Notice"). In the event that the Purchase Price Adjustment Notice sets forth an
increase in the Purchase Price, the Buyer shall pay such amount to the Seller
within fifteen (15) days of the Purchase Price Adjustment Date. In the event
that the Purchase Price Adjustment Notice sets forth a decrease in the Purchase
Price, the amount of such decrease shall be set-off against the amounts due
under the Note, subject to Seller's right to dispute the Purchase Price
Adjustment pursuant to Section 7.2 hereof.
1.4 Sales Taxes. Seller shall bear and pay, and, to the extent that Buyer
incurs any, shall reimburse Buyer for, any sales taxes, use taxes, transfer
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taxes, documentary charges, recording fees or similar taxes, charges, fees or
expenses ("Sales Taxes") that may become payable in connection with the sale of
the Seller Assets to Buyer. The parties shall cooperate with each other to the
extent reasonably requested and legally permitted to minimize any such Sales
Taxes.
1.5 Allocation. Prior to the Closing, Buyer and PowerCerv shall mutually
agree on the manner in which the Purchase Price is to be allocated among the
Seller Assets (the "Allocation"), which Allocation shall be set forth in
Schedule 1.5 as of the Closing Date, subject to adjustment by the parties to
reflect Purchase Price Adjustment. The Allocation shall be conclusive and
binding upon Buyer and Seller for all purposes, and the parties agree that all
tax returns and reports (including Internal Revenue Service ("IRS") Form 8594)
and all financial statements shall be prepared in a manner consistent with (and
the parties shall not otherwise file a tax return position inconsistent with)
the Allocation unless required by the IRS or state taxing authority. The
Allocation shall be prepared in a manner consistent with Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the income tax
regulations promulgated thereunder.
1.6 Closing.
(a) Closing. Unless this Agreement is earlier terminated pursuant to
Section 8.1, the closing of the transactions contemplated by this Agreement (the
"Closing") shall be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Green, P.C., ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 a.m. on December 1, 2002 or such
other time and/or date as to which the parties agree (the "Closing Date").
(b) Delivery. At the Closing:
(i) Buyer shall deliver to PowerCerv the Note in substantially
the form of Exhibit A hereto;
(ii) Buyer shall deliver to Seller an Instrument of Assignment
and Assumption of Liabilities in substantially the form of Exhibit B hereto by
which Seller shall assign the Seller Assets to Buyer and Buyer shall assume the
Assumed Liabilities as of the Closing;
(iii) Seller shall deliver to Buyer all bills of sale,
endorsements, assignments, consents to assignments to the extent obtained and
other instruments and documents as Buyer may reasonably request to sell, convey,
assign, transfer and deliver to Buyer good title to all the Seller Assets free
and clear of any and all Liens (other than Liens set forth on Schedule 2.7),
including, without limitation, a ▇▇▇▇ of Sale and General Assignment of Seller
Assets in substantially the form attached hereto as Exhibit C;
(iv) Seller shall deliver to Buyer a Trademark Assignment in
substantially the form attached hereto as Exhibit D;
(v) Seller shall deliver to Buyer a Copyright Assignment in
substantially the form attached hereto as Exhibit E; and
(vi) Seller and Buyer shall deliver or cause to be delivered to
one another such other instruments and documents reasonably necessary or
appropriate to evidence the due execution, delivery and performance of this
Agreement.
(c) Taking of Necessary Action; Further Action. If, at any time after
the Closing Date, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest Buyer with full right, title and
possession to all Seller Assets, the officers and directors of Seller are fully
authorized in the name Seller or otherwise to take, and will take, all such
lawful and necessary and/or desirable action.
1.7 Non-Assignment or Subcontracting of Certain Assets. Notwithstanding
anything to the contrary in this Agreement, to the extent that the assignment or
subcontracting hereunder of any of the Assets shall require the consent of any
other party (or in the event that any of the same shall be nonassignable or
unable to be subcontracted), neither this Agreement nor any action taken
pursuant to its provisions shall constitute an assignment or subcontract or an
agreement to assign or subcontract if such assignment or subcontract or
attempted assignment or subcontract would constitute a breach thereof or result
in the loss or diminution thereof, provided, however, that in each such case,
Seller and Buyer shall each use its reasonable commercial efforts to obtain the
consent of such other party to an assignment to Buyer. If such consent is not
obtained by the Closing Date, Seller shall cooperate with Buyer in any
arrangement designed for Buyer to perform Seller's obligations with respect to
such Asset after the Closing Date and for Buyer to receive the benefits under
any such Asset after the Closing Date, which arrangements may include
enforcement, for the account and benefit of Buyer of any and all rights of
Seller against any person or entity arising out of the breach or cancellation by
such person or entity or otherwise, all of such actions of Seller to be at the
direction and expense of Buyer.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth on a schedule to this Agreement, Seller represents
and warrants to Buyer and ASA that as of the date hereof:
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2.1 Organization of Seller.
(a) Each of PowerCerv and Subsidiary is a corporation duly
incorporated and validly existing under the laws of the State of Florida and has
full corporate power and authority to carry on the Business as it is now being
conducted and to own the Seller Assets. Each of PowerCerv and Subsidiary is duly
qualified or licensed to do business as a foreign corporation in good standing
in each state except where the failure to so qualify could not reasonably be
expected to have a material adverse effect on the financial condition, result of
operation, assets, liabilities, business or prospects of the Seller (a "Seller
Material Adverse Effect").
(b) The authorized capital stock of PowerCerv consists of (i) Fifty
Million (50,000,000) Shares of common stock, $0.001 par value per share (the
"Common Shares"), of which 1,312,315 are issued and outstanding, and (ii) Five
Million (5,000,000) shares of preferred stock, par value $0.001 per share (the
"Preferred Shares"), of which 1,022,222 are issued and outstanding. All of the
outstanding Common Shares and Preferred Shares (collectively, the "Shares") have
been duly authorized and are validly issued, fully paid and nonassessable, and
are not subject to any rights of first refusal upon sale or transfer. The
Company has no Preferred Shares reserved for issuance. As of the date hereof,
other than the 519,444 Common Shares reserved for issuance upon exercise of
outstanding options and stock option plans and the 1,022,222 Common Shares
reserved for issuance upon conversion of the outstanding Preferred Shares, there
are no Common Shares reserved for issuance or any commitments for PowerCerv to
issue Shares. There are no preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements or commitments to issue or sell any shares of
capital stock or other securities of PowerCerv or the Subsidiary or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any person a right to subscribe for or acquire from PowerCerv or the
Subsidiary, any shares of capital stock or other securities of PowerCerv or the
Subsidiary, and no securities or obligations evidencing such rights are
authorized, issued, or outstanding. PowerCerv does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the shareholders of PowerCerv on any matter. The Common
Shares constitute the only class of securities of PowerCerv or the Subsidiary
registered or required to be registered under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(c) All of the issued and outstanding shares of capital stock of
Subsidiary are owned by PowerCerv and are fully paid, nonassessable and, except
as set forth on Schedule 2.1, are not subject to any Lien. Except as set forth
on Schedule 2.1, there are no other shares of capital stock authorized, issued
or outstanding, nor are there any options, or other rights to acquire any
capital stock of Seller outstanding.
(d) Except for PowerCerv's ownership interest in Subsidiary, Seller
does not own, directly or indirectly, any ownership interest in or control any
corporation, partnership, joint venture or other entity.
2.2 Due Authorization. Each of PowerCerv and Subsidiary has all requisite
corporate power and authority to execute and deliver this Agreement, and each
document, instrument or agreement contemplated hereby, including but not limited
to the documents delivered at Closing, and to perform its obligations hereunder
and thereunder. The execution, delivery and performance of this Agreement and
each document, instrument or agreement executed pursuant to this Agreement by
each of PowerCerv and Subsidiary and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action subject only to the approval of this Agreement by shareholders
of PowerCerv at the Shareholders Meeting.
2.3 Due Execution and Enforceability. This Agreement, and each document,
instrument or agreement executed pursuant to this Agreement by PowerCerv or
Subsidiary, including but not limited to the documents delivered at Closing,
have been or will be duly executed and delivered by each of PowerCerv and
Subsidiary, and assuming due authorization, execution and delivery by Buyer, if
required, this Agreement and each document, instrument or agreement executed
pursuant to this Agreement by each of PowerCerv and Subsidiary, including but
not limited to the documents delivered at Closing, constitute the legal, valid
and binding obligations of each of PowerCerv and Subsidiary, enforceable against
each of PowerCerv and Subsidiary in accordance with their terms, subject to the
effect of applicable bankruptcy, insolvency, reorganization, moratorium or other
federal or state laws affecting the rights of creditors and the effect or
availability of rules of law governing specific performance, injunctive relief
or other equitable remedies (regardless of whether any such remedy is considered
in a proceeding at law or equity).
2.4 No Conflict. The execution and delivery of this Agreement, and each
document, instrument or agreement executed pursuant to this Agreement, including
but not limited to the documents delivered at Closing, and the performance of
Seller's obligations hereunder and thereunder, (i) are not in violation or
breach of, and will not conflict with or constitute a default under, any of the
terms of (A) the articles of incorporation or bylaws of each of PowerCerv or
Subsidiary or (B) except where the violation, breach, conflict or default would
not reasonably be expected to have a Seller Material Adverse Effect, any
contract, agreement or commitment binding upon each of PowerCerv or Subsidiary
or any of the Seller Assets,; and (ii) except for (x) obtaining the required
shareholder vote at the Shareholder Meeting (as defined in Section 5.16), (y)
the filing of a proxy statement, and (z) obtaining all required consents,
approvals, orders, and authorization as may be required under applicable federal
and state law (clauses (x) through (z), collectively, the "Required
Filings"),will not conflict with or violate any applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court having jurisdiction over Seller or any of the Seller
Assets.
2.5 Consents and Approvals of Governmental Authorities. Except for the
Required Filings, no consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority is
required to be made or obtained by Seller in connection with the execution,
delivery and performance of this Agreement and each document, instrument and
agreement executed pursuant to this Agreement.
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2.6 PowerCerv Financial Statements and Reports.
(a) The PowerCerv annual report on Form 10-KSB for the year ended
December 31, 2001 (the "PowerCerv 10-K") sets forth PowerCerv's consolidated
balance sheets and income statements as of and for the years ended December 31,
2000 and 2001, and Seller's June 30, 2002 balance sheet and income statement
(the "Seller Financials"). The Seller Financials have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated (subject to, in the case of the June 30,
2002 balance sheet and income statement, normal, recurring year-end adjustments
consistent with prior periods). The Seller Financials present fairly in all
material respects the operating results of the Business during the periods
indicated therein. June 30, 2002 is referred to herein as the "Balance Sheet
Date."
(b) All accounts receivable of Seller have arisen from bona fide
transactions by Seller in the ordinary course of its business. All accounts and
notes receivable reflected on the Seller Financials are (i) valid, genuine and
existing, (ii) subject to no defenses, setoffs or counterclaims, (iii) except as
set forth on Schedule 2.6(b)(iii), current (not more than ninety (90) days past
due) and (iv) collectible in the ordinary course of business net of any reserves
set forth in the Seller Financials. Seller has no knowledge that any customer of
Seller with an account balance is involved in voluntary or involuntary
bankruptcy proceedings or is otherwise insolvent or has notified Seller that
such customer will not pay its account.
(c) PowerCerv has made available to the Buyer each registration
statement, report, proxy statement or information statement filed with the
Securities and Exchange Commission (the "SEC") by it since December 31, 2001,
(the "Audit Date") including the PowerCerv 10-K in the form (including exhibits,
annexes, and any amendments thereto) filed with the SEC (collectively, including
any such reports filed subsequent to the date hereof, the "PowerCerv Reports").
As of their respective dates (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing), the PowerCerv
Reports complied, and any PowerCerv Reports filed with the SEC after the date
hereof will comply, as to form in all material respects with the applicable
requirements of the Exchange Act and the PowerCerv reports did not, and any
PowerCerv reports filed with the SEC after the date hereof will not, at the time
of their filing, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed PowerCerv
Report; provided however, that PowerCerv's report on Form 10-QSB for the quarter
ended June 30, 2002 has not been timely filed. PowerCerv has heretofore made
available or promptly will make available to the Buyer a complete and correct
copy of all amendments or modifications (in draft or final form) which are
required to be filed with the SEC but have not yet been filed with the SEC to
the PowerCerv Reports, agreements, documents or other instruments which
previously had been filed by PowerCerv with the SEC pursuant to the Exchange
Act.
2.7 Ownership and Transfer of Assets.
(a) Ownership. Except as set forth on Schedule 2.7(a), Seller owns all
rights, title and interest in and to the Seller Assets free and clear of any
Liens, and has the rights to sell, assign, transfer, license and deliver, as
applicable, such Seller Assets as contemplated herein.
(b) Real Property. Schedule 2.7(b) sets forth a list of all real
property currently leased by the Seller, the name of the lessor, and the date
and term of the lease and each amendment thereto. The Seller does not own any
real property. All such current leases are in full force and effect, are valid
and effective in accordance with their respective terms, and there is not, under
any of such leases, any existing default or event of default (or event which
with notice or lapse of time, or both would constitute an event of a default)
that would give rise to a material claim. To the knowledge of the Seller,
neither its operations on any such real property, nor such real property,
including improvements thereon, violate in any material respect any applicable
building code, zoning requirement, or classification, and such non-violation is
not dependent, in any instance, on so-called non-conforming use exceptions.
(c) Effective Transfer. By means of this Agreement, together with the
documents, instruments and agreements contemplated hereby, Seller will transfer
to Buyer good and marketable title to all Seller Assets, free and clear of all
Liens other than Liens set forth on Schedule 2.7. The Seller Assets sold to
Buyer pursuant to this Agreement and the documents, instruments and agreements
contemplated hereby and thereby, will transfer all necessary assets and
intellectual property rights required by Buyer to conduct the Business.
2.8 Restrictions on Business Activities. Except as set forth on Schedules
2.10(a) and 2.10(b), there is no agreement, commitment, judgment, injunction,
order or decree binding upon Seller, the Seller Assets or, to the best knowledge
of Seller, any employee of Seller, which has or could reasonably be expected to
have the effect of prohibiting or impairing in any material respect any use by
Buyer of the Seller Assets or Buyer's conduct of the Business following the
Closing in the manner generally used and conducted prior to the Closing Date.
2.9 Capital Equipment and Hard Assets. To Seller's knowledge, all tangible
assets and equipment of Seller other than those listed on Schedule 1.1(b) are in
good condition and repair, reasonable wear and tear excepted, and are adequate
for the uses to which they are being put or would be put in the ordinary course
of business consistent with Seller's prior conduct of the Business and will be
transferred to Buyer without any Liens, other than the Liens set forth on
Schedule 2.7.
2.10 Intellectual Property.
(a) Except as set forth in Schedule 2.7(a): Seller owns all rights,
title and interest in and to the Intellectual Property, and the conduct of the
activities of the Business currently and in the past does not conflict with and
has not conflicted with Intellectual Property rights of others. All Intellectual
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Property used or held for use in the conduct of the activities of the Business
owned by Seller is so owned free and clear of all Liens (other than as set forth
on Schedule 2.7)and no other person, including without limitation any present or
former employee, officer or director of Seller, has any right whatsoever
therein. Neither Seller, nor to Seller's knowledge, any present or former
employee thereof, has violated or, by conducting the activities of the Business
in the ordinary course consistent with past practice would violate, any
intellectual property rights whatsoever of any other person or entity. Seller
does not have any obligation to compensate any person or entity for the use of
any Intellectual Property relating to the Seller Assets. Except for License
Agreements granted in the ordinary course of business, Seller has not granted to
any person or entity any license, option or other rights to use in any manner
any Intellectual Property whether requiring the payment of royalties or not.
(b) Except as set forth on Schedule 2.10(b): Seller owns all right,
title and interest in and to the Software. No person or entity other than Seller
owns any right, title or interest in the Software including, without limitation,
any right to manufacture, use, copy, distribute or sublicense any object code or
source code thereof. The Software is (i) not subject to any Liens (other than as
set forth on Schedule 2.7) (ii) not subject to any pending or, to Seller's best
knowledge, threatened challenge of infringement of the rights of others, nor to
the best knowledge of Seller is there any basis for a challenge of infringement
of any such rights of others, and (iii) freely transferable and assignable to
Buyer.
2.11 Contracts. Schedule 2.11 accurately lists all of the contracts to be
assigned to Buyer in connection with the Acquisition (the "Assigned Contracts").
Each of the Assigned Contracts is a legal, binding and enforceable obligation by
or against Seller, subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar federal or state laws affecting the
rights of creditors and the effect or availability of rules of law governing
specific performance, injunctive relief or other equitable remedies (regardless
of whether any such remedy is considered in a proceeding at law or in equity).
Except as set forth in Schedule 2.11, Seller has not breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted
under, any of the terms or conditions of any agreement required to be set forth
in Schedule 2.11, except for breaches, violations, or defaults which would not
reasonably be expected to have a Seller Material Adverse Effect. Except as set
forth in Schedule 2.11, each Assigned Contract is in full force and effect and
is not subject to any default thereunder of which Seller has knowledge by any
party obligated to Seller pursuant thereto. Except as set forth in Schedule
2.11, Seller has obtained all necessary consents, waivers and approvals of
parties to any Assigned Contract as are required to assign all rights and
benefits thereunder to Buyer as of the Closing.
2.12 Governmental Authorization. Schedule 2.12 accurately lists each
material consent, license, permit, grant or other authorization issued to Seller
by each court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (each a "Governmental Entity")
(a) pursuant to which Seller currently operates or holds any interest in any of
the Seller Assets or (b) which is required for the operation of the activities
of the Business or the holding of any such interest (herein collectively called
"Authorizations"), which Authorizations are in full force and effect and
constitute all Authorizations required to permit Seller to operate or conduct
the activities of the Business or hold any interest in the Seller Assets. No
Governmental Entity has at any time notified Seller of any challenge or question
regarding the legal right of Seller to manufacture, offer or sell any of the
products of the Business, including the Seller Assets, in the present manner or
style thereof.
2.13 Compliance with Applicable Laws. Seller has complied with all laws,
regulations, rules and orders (including those relating to environmental
matters) of each Governmental Entity applicable to it. Seller has not received
any written notice of any asserted violation of any such laws, regulations,
rules or orders. Seller has not received any written notice that any
investigation or review by any Governmental Entity of Seller or that any such
investigation or review is contemplated.
2.14 Taxes.
(a) Except as set forth in Schedule 2.14, Seller has (i) timely filed
within the time the period for filing or any extension granted with respect
thereto, all federal, state, local and foreign tax returns, reports and
estimates ("Returns") which it is required to file, and (ii) paid any and all
taxes ("Taxes") it is required to pay in connection with the taxable periods to
which such Returns relate. Except as set forth in Schedule 2.7(a), there are
(and immediately following the Closing there will be) no Liens or similar
encumbrances on the Seller Assets relating or pertaining to taxes, except with
respect to taxes not yet due and payable. Seller has no knowledge of any basis
for the assertion of any material claims which, if adversely determined, would
result in a Lien or other encumbrance on the Seller Assets or otherwise
materially and adversely affect Buyer or the Seller Assets. Except as set forth
in Schedule 2.14, no extension of any filing date applicable to any taxes has
been requested or granted. All deposits required by law to be made by Seller
with respect to employees' withholding taxes that have been duly made. Except as
set forth in Schedule 2.14, Seller is not delinquent in the payment of any
material Tax, assessment or governmental charge or deposit, and Seller does not
have any Tax deficiency or claim currently pending, outstanding or asserted
against it, and there is no basis for any such Tax deficiency or claim. There is
no audit currently pending regarding any Taxes and Seller has not extended the
period in which any Tax could be assessed or collected. The unpaid Taxes of
Seller do not exceed the reserve for Taxes established on the books and records
of the Seller. No Governmental entity (a "Taxing Authority") responsible for the
imposition of any Tax (domestic or foreign), has asserted jurisdiction to impose
any Taxes upon Seller.
(b) For purposes of this Agreement, "Tax" (and, with correlative
meaning, "Taxes" and "Taxable") means (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts. sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, Governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any Taxing Authority responsible
for the imposition of any such tax (domestic or foreign), (ii) any liability for
the payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group for any Taxable
period and (iii) any liability for the payment of any amounts of the type
described in (i) or (ii) as a result of any express or implied obligation to
indemnify any other person.
2.15 Brokers' or Finders' Fees. Except as disclosed in Schedule 2.15,
Seller is not a party to, or in any way obligated under, any contract or
outstanding claim for the payment of any broker's or finder's fee in connection
with the origin, negotiation, execution or performance of this Agreement, the
nonpayment of which could result in the placement of a lien or other encumbrance
on the Seller Assets, or a claim against Buyer or its affiliates.
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2.16 Material Adverse Change. Between the Balance Sheet Date and the date
hereof, (a) there has not been any change in or effect (or any development that
is reasonably likely to result in any change or effect) that has resulted in or
could reasonably be expected to result in a Seller Material Adverse Effect and
(b) Seller has not taken, and there has not occurred, any actions of a type
referred to in Section 4.1; provided, however, that none of the following shall
be deemed to constitute and none of the following shall be taken into account in
determining whether there has been or will be a Seller Material Adverse Effect:
(A) any litigation or threat of litigation filed or made after the date hereof
challenging any of the transactions contemplated herein or any shareholder
litigation filed or made after the date hereof resulting from this Agreement of
the transactions contemplated herein; or (B) the increase or decrease in the
Seller's stock price or trading volume; or (C) a decrease in the Seller's
revenues unless such revenues are less than $1.1 million for the six (6) months
ended July 31, 2002.
2.17 Litigation. Except as set forth in Schedule 2.17, there is no suit,
action or proceeding pending in connection with Seller or the Business or the
Seller Assets, in which Seller has been served, nor is there any judgment,
decree, injunction or order of any Governmental Entity or arbitrator outstanding
against Seller or the Seller Assets that would have, individually or in the
aggregate, a Material Adverse Effect. Seller has not received any written
communication threatening litigation.
2.18 Knowledge. Wherever used in this Agreement, the term "to the best of
Seller's knowledge" or any similar terms shall mean those matters of which the
Seller has actual knowledge and of which the Seller should have had knowledge
after reasonable inquiry.
2.19 Products.
(a) There are no known defects in the design or technology embodied in
any product which Seller currently markets, or has marketed in the past that
impair or are likely to impair the intended use of the product or damage any
consumer of the product or third party (their business, assets or property),
except that warranty claims may arise in the normal course of business, for
products shipped prior to the Closing, in an aggregate amount of no more than
the warranty reserves established on the most recent balance sheet of Seller.
(b) None of the computer software, computer firmware, computer
hardware (whether general or special purpose) or other similar or related items
of automated, computerized or software systems that are used or relied on by the
Seller in the conduct of its business will malfunction, will cease to function,
will generate incorrect data or will produce incorrect results when processing,
providing or receiving (i) date related data from, into and between the
twentieth (20th) and Twenty-First (21st) centuries or (ii) date-released data in
connection with any valid date in the Twentieth (20th) and Twenty-First (21st)
centuries.
(c) None of the products and services sold, licensed, rendered, or
otherwise provided by the Seller in the conduct of its business will
malfunction, will cease to function, will generate incorrect data or will
produce incorrect results when processing, providing, or receiving, (i) date
related date from, into and between the twentieth (20th) and Twenty-First (21st)
centuries or (ii) date-released data in connection with any valid date in the
Twentieth (20th) and Twenty-First (21st) centuries.
(d) The Seller has not made any representations or warranties any
representations or warranties specifically relating to the ability of any
product or service sold, licensed, rendered, or otherwise provided by the
Company in the conduct of its business to operate without malfunction, to
operate without ceasing to function, to generate correct data or to produce
correct results when processing, providing or receiving (i) date-related data
from, into and between the Twentieth (20th) and Twenty-First (21st) centuries
and (ii) date-related data in connection with any valid date in the Twenty
(20th) and Twenty-First (21st) centuries.
2.20 Undisclosed Liabilities. Except as set forth in Schedule 2.20, there
are no debts, liabilities or obligations with respect to Seller or to which the
Seller Assets are subject, liquidated, unliquidated, accrued, absolute,
contingent, or otherwise, that are not specifically identified in the Seller
Financials or the Schedules to this Agreement, other than for trade accounts
payable incurred in the ordinary course of business from the Balance Sheet Date
to the Closing Date.
2.21 Inventory. All inventory of Seller consists of items that are or upon
delivery to Buyer will be good and merchantable and of a quality and quantity
presently usable and saleable in the ordinary course of business. All such
inventory is and will be valued in accordance with generally accepted accounting
principles consistently applied as set forth in the Seller Financials.
2.22 Product Warranties and Product Liability. Seller has delivered to
Purchaser copies of its warranty policies and all outstanding warranties or
guarantees relating to any of Seller's products other than warranties or
guarantees implied by law. Seller is not aware of any claim asserting (a) any
damage, loss or injury caused by any Product, or (b) any breach of any express
or implied product warranty or any other similar claim with respect to any
Product other than standard warranty obligations (to replace, repair or refund)
made by Seller in the ordinary course of business except for those claims that,
if adversely determined against the Business, would not have a Seller Material
Adverse Effect.
2.23 Labor Relations. Except as set forth on Schedule 2.23: Seller has not
failed to comply in any material respect with any applicable federal, state, and
local laws, rules, and regulations relating to employment or employment
termination, and all applicable laws, rules and regulations governing payment of
minimum wages and overtime rates, and the withholding and payment of taxes from
compensation of employees, which could reasonably be expected to have a Seller
Material Adverse Effect. There are no labor controversies pending or, to the
8
knowledge of the Seller, threatened between Seller and any of its employees or
former employees or any labor union or other collective bargaining unit
representing any of the employees. Seller has never entered into a collective
bargaining agreement or other labor union contract relating to the Business and
applicable to the employees. There are no written employment or separation
agreements, or oral employment or separation agreements other than those
establishing an "at-will" employment relationship between Seller and any of its
employees. Seller does not maintain any employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
2.24 Certain Payments. Seller has not and no person directly or indirectly
on behalf of Seller has made or received any payment that was not legal to make
or receive.
2.25 Customers and Suppliers. Seller is neither aware nor has any reason to
believe that any of Seller's ten largest customers and ten largest suppliers
during the twelve months ended December 31, 2001 determined on the basis of both
revenues and bookings during such period) has terminated, or intends to
materially reduce or terminate, the amount of its business with Seller, and
Seller has no reason to believe that such termination or alteration would occur
as a result of the consummation of this Agreement.
2.26 Approval and Recommendation. The Board of Directors of PowerCerv, at a
meeting duly called and held, has, subject to the terms and conditions set forth
herein, (i) determined that this Agreement and the transactions contemplated
hereby are fair to and in the best interests of PowerCerv its shareholders (ii)
approved this Agreement and the transactions contemplated hereby, and (iii)
resolved to recommend that the shareholders of PowerCerv approve and adopt this
Agreement. The Board of Directors of PowerCerv has reviewed the opinion of
Capitalink, L.C., financial advisor to the Board of Directors of PowerCerv (the
"Financial Advisor"), that, as of the date of this Agreement, the consideration
to be received pursuant to this Agreement is fair to the shareholders of
PowerCerv from a financial point of view (the "Fairness Opinion"). The Company
has been authorized by the Financial Advisor to permit, subject to the prior
review and consent by the Financial Advisor (such consent not to be unreasonably
withheld), the inclusion of the Fairness Opinion (or a reference thereto) in the
Proxy Statement (as defined below).
2.27 Environmental Matters.
(i) The term "Environmental Laws" means any Federal, state, local or
foreign statute, treaty, ordinance, rule, regulation, policy, permit, consent,
approval, license, judgment, order, decree or injunction relating to: (A)
Releases (as defined in 42 U.S.C. (S) 9601(22)) or threatened Releases of
Hazardous Material (as hereinafter defined) into the environment, (B) the
generation, treatment, storage, presence, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material, (C) natural
resources, or (D) the environment. The term "Hazardous Material" means (1)
hazardous substances (as defined in 42 U.S.C. (S) 9601(14)), (2) petroleum,
including crude oil and any fractions thereof, (3) natural gas, synthetic gas
and any mixtures thereof, (4) asbestos and/or asbestos containing materials, (5)
PCBs or materials containing PCBs, and (6) radioactive materials.
(ii) During the period of ownership or operation by the Seller of any
of its current or previously owned or leased properties, there have been no
Releases of Hazardous Material by the Seller in, on, under or affecting such
properties or any surrounding site, and the Seller has not disposed of any
Hazardous Material in a manner that has led, or could reasonably be anticipated
to lead to a Release, except in each case for those which individually or in the
aggregate would not have a Seller Material Adverse Effect. Except as set forth
on Schedule 2.27, to the knowledge of the executive officers of the Seller,
there have been no Releases of Hazardous Material in, on, under or affecting
such properties or any surrounding site by any other party except for those
which individually on in the aggregate would not have a Seller Material Adverse
Effect. To the knowledge of the executive officers of the Seller no third party
property is contaminated with any Hazardous Substances that may subject the
Seller to liability under any Environmental Laws. The Seller has not received
any written notice of, or entered into any order, settlement or decree relating
to: (A) any violation of any Environmental Laws or the institution or pendency
of any suit, action, claim, proceeding or investigation by any governmental
entity or any third party in connection with any alleged violation of
Environmental Laws, (B) the response to or remediation of Hazardous Material at
or arising from any of the Seller's properties. The properties currently owned
or operated by the Seller possess all material permits, licenses, authorizations
and approvals required under applicable Environmental Laws with respect to the
conduct of business thereat, and are in compliance with all Environmental Laws,
except where instances of noncompliance would not, individually or in the
aggregate, be reasonable likely to have a Material Adverse Effect.
(iii) To the knowledge of the Seller there are no circumstances or
conditions involving the Seller or its employees that could reasonably be
expected to result in any material claims, liability or investigations under any
Environmental Law or relating to Hazardous Substances arising out of the
ownership, operation, management of all or any portion of a facility, or out of
the arrangement for the treatment, transportation, or disposal of, or ownership
or possession or choice of the treatment, storage or disposal facility for, any
material with respect and to the extent to the Seller provided services before
the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND ASA
Buyer and ASA, jointly and severally, represent and warrant to Seller as
follows:
3.1 Organization, Standing and Power. Each of Buyer and ASA is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of Buyer and ASA has the corporate power to own
its properties and to carry on its business as now being conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified would have a material adverse effect on its
ability to consummate the transactions contemplated hereby.
9
3.2 Authority. Each of Buyer and ASA has all requisite corporate power and
authority to execute and deliver this Agreement, and each document, instrument
or agreement contemplated hereby, including, but not limited to the documents
delivered at Closing, and to perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement, and each document, instrument or
agreement executed pursuant to this Agreement by Buyer and ASA and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Buyer and ASA.
3.3 Due Execution and Enforceability. This Agreement, and each document,
instrument or agreement executed pursuant to this Agreement by Buyer and ASA,
including but not limited to the documents delivered at Closing, have been duly
executed and delivered by Buyer and ASA, and assuming due authorization,
execution and delivery by each of PowerCerv and Subsidiary, if required, this
Agreement and each document, instrument or agreement executed pursuant to this
Agreement by Buyer and ASA, including but not limited to the documents delivered
at Closing, constitute the legal, valid and binding obligations of Buyer and
ASA, enforceable against Buyer and ASA in accordance with their terms, subject
to the effect of applicable bankruptcy, insolvency, reorganization, moratorium
or other federal or state laws affecting the rights of creditors and the effect
or availability of rules of law governing specific performance, injunctive
relief or other equitable remedies (regardless of whether any such remedy is
considered in a proceeding at law or equity).
3.4 No Conflict. The execution and delivery of this Agreement, and each
document, instrument or agreement executed pursuant to this Agreement, including
but not limited to the documents delivered at Closing, and the performance of
Buyer's and ASA's obligations hereunder and thereunder, (i) are not in violation
or breach of, and will not conflict with or constitute a default under, any of
the terms of the certificate of incorporation or bylaws of Buyer or ASA or any
contract, agreement or commitment binding upon Buyer or ASA, or (ii) will not
conflict with or violate any applicable law, rule, regulation, order or degree
of any government, governmental instrumentality or court having jurisdiction
over Buyer or ASA.
3.5 Consents and Approvals of Government Authorities. No consent, approval
or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority is required to be made or obtained by Buyer
or ASA in connection with the execution, delivery and performance of this
Agreement and each document, instrument and agreement executed pursuant to this
Agreement.
3.6 Financing. ASA has funds in the aggregate sufficient to perform its
obligations under this Agreement.
ARTICLE IV
CONDUCT PRIOR TO THE CLOSING DATE
4.1 Conduct of Business. During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Closing Date, Seller agrees that it will (except to the extent that Buyer shall
otherwise consent in writing with such consent not being unreasonably withheld
or delayed) carry on its business in the usual, regular and ordinary course in
substantially the same manner as conducted since January 1, 2002, to pay its
debts and Taxes when due, to pay or perform other obligations when due, and, to
the extent consistent with such business, use all reasonable efforts consistent
with past practice and policies to preserve intact Seller's present business
organizations, keep available the services of its present officers and key
employees and preserve their relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it,
all with the goal of preserving unimpaired the Seller Assets, including without
limitation, goodwill of the Business at the Closing Date. Seller shall promptly
notify Buyer of any event or occurrence or emergency not in the ordinary course
of business, and any event which could have a Material Adverse Effect. Except as
expressly contemplated by this Agreement, without the prior written consent of
Buyer, which consent shall and be unreasonably withheld or delayed, Seller shall
not, except in the ordinary course of business consistent with past practice
since January 1, 2002, until the earlier of the termination of this Agreement or
the Closing Date, do any of the following:
(a) Enter into any commitment or transaction not in the ordinary
course of business;
(b) Transfer to any person or entity any rights to the Seller Assets
other than the granting of end-user Software licenses;
(c) Enter into or amend any agreements pursuant to which any other
party is granted marketing, distribution or similar rights of any type or scope
with respect to any products of Seller;
(d) Amend or otherwise modify (or agree to do so), or materially
violate the terms of the agreements set forth or described in any of the
Schedules hereto;
(e) Commence any litigation;
(f) Acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate;
10
(g) Sell, lease, license or otherwise dispose of any of its properties
or Seller Assets other than the granting of end-user Software licenses;
(h) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities of Seller or guarantee any
debt securities of others;
(i) Adopt or amend any employee benefit plan, or enter into any
employment contract, pay or agree to pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
of its employees;
(j) Revalue any of the Seller Assets, including without limitation
writing down the value of inventory or writing off notes or accounts receivable;
(k) Enter into any strategic alliance or joint marketing arrangement
or agreement;
(l) Enter into any license agreement with respect to any intellectual
property of any third party for the purpose of its use with the Intellectual
Property;
(m) Hire or fire any employees (and notice of all such hirings or
firings shall be given to Buyer);
(n) Declare or pay any dividend or distribution to the shareholders of
PowerCerv or purchase, redeem or otherwise acquire or commit to acquire,
directly or indirectly, any shares of capital stock of PowerCerv;
(o) Amend the certificate of incorporation or by-laws of either
PowerCerv or Subsidiary; or
(p) Agree in writing or otherwise to take any of the actions described
in Sections 4.1(a) through (o) above, or take (or agree in writing to take) any
other action that would prevent Seller from performing or cause Seller not to
perform its covenants hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Access to Information. Seller shall afford Buyer and its accountants,
counsel and other representatives, full access during normal business hours upon
reasonable prior notice during the period prior to the Closing Date to (a) all
of Seller's properties, books, contracts, commitments and records, (b) the
employees, customers and suppliers of Seller and (c) all other information
concerning the business, properties and personnel (subject to restrictions
imposed by applicable law) of Seller as Buyer may reasonably request. Seller
agrees to maintain and retain any and all information regarding its business
operations on or prior to the Closing Date necessary for Buyer to calculate the
availability to it of future tax credits for research activities under Section
41 of the Code. Seller agrees to provide to Buyer and its accountants, counsel
and other representatives copies of internal financial statements as promptly as
practicable upon request. Buyer shall conduct its investigation of Seller in
such a manner so as not to unreasonably interfere with Seller's conduct of the
Business. No information or knowledge obtained in any investigation pursuant to
this Section 5.1 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Acquisition.
5.2 Confidentiality. Each of the parties hereto hereby agrees to keep such
information or knowledge obtained in any investigation pursuant to Section 5.1,
or pursuant to the negotiation and execution of this Agreement or the
effectuation of the transactions contemplated hereby, confidential; provided,
however, that the foregoing shall not apply to information or knowledge which
(a) a party can demonstrate was already lawfully in its possession prior to the
disclosure thereof by the other party, (b) is generally known to the public and
did not become so known through any violation of law or this Agreement, (c)
became known to the public through no fault of such party, (d) is later lawfully
acquired by such party from other sources, (e) is required to be disclosed by
order of court or government agency with subpoena powers or (f) which is
disclosed in the course of any litigation between any of the parties hereto.
5.3 Expenses. Whether or not the Acquisition is consummated, all fees and
expenses incurred in connection with the Acquisition including, without
limitation, all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties ("Transaction Expenses") incurred by Seller
in connection with the negotiation and effectuation of the terms and conditions
of this Agreement and the transactions contemplated hereby, shall be the
obligation of and paid by Seller. Buyer shall pay for all of its Transaction
Expenses.
5.4 Public Disclosure. Unless otherwise required by law or this Agreement,
prior to the Closing Date, no disclosure (whether or not in response to an
inquiry) of the subject matter of this Agreement shall be made by Seller or
Buyer unless approved by the other party.
5.5 Consents. Seller shall use its reasonable efforts to obtain any
consents as may be required by the Assigned Contracts in connection with the
Acquisition so as to transfer to Buyer all rights of Seller thereunder as of the
Closing.
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5.6 Reasonable Commercial Efforts. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto shall use its reasonable
commercial efforts to take promptly, or cause to be taken promptly, all actions,
and to do promptly, or cause to be done promptly, all things necessary, proper
or advisable under applicable laws and regulations: to consummate and make
effective the transactions contemplated hereby, to obtain all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to remove any injunctions or other impediments or delays, legal or
otherwise, in order to consummate and make effective the transactions
contemplated by this Agreement for the purpose of securing to the parties hereto
the benefits contemplated by this Agreement.
5.7 Notification of Certain Matters. Seller shall give prompt notice to
Buyer, and Buyer shall give prompt notice to Seller, of (i) the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which is likely
to cause any representation or warranty of Seller or Buyer, respectively,
contained in this Agreement to be untrue or inaccurate at or prior to the
Closing Date, and (ii) any failure of Seller or Buyer, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.7 shall not limit or otherwise affect any remedies
available to the party receiving such notice.
5.8 Additional Documents and Further Assurances; No Interference.
(a) Each party hereto, at the request of another party hereto, shall
execute and deliver such other instruments and do and perform such other acts
and things as may be reasonably necessary or desirable for effecting completely
the consummation of this Agreement and the transactions contemplated hereby.
(b) Following the Closing, ASA agrees to assist PowerCerv, at
PowerCerv's expense, in PowerCerv's collection of any Accounts Receivable which
are included in the Excluded Assets. ASA shall provide such assistance at
mutually agreeable hourly rates.
5.9 Tax Returns. Except for any Taxes which are expressly included in the
Assumed Liabilities, Seller shall be responsible for and pay when due (i) all of
Seller's Taxes attributable to or levied or imposed upon the Seller Assets
relating or pertaining to the period (or that portion of any period) ending
prior to the Closing Date and (ii) all Taxes attributable to, levied or imposed
upon, or incurred in connection with the Seller's business operations prior to
the Closing Date. Seller shall continue to timely file within the time period
for filing, or any extension granted with respect thereto, all Returns required
to be filed in connection with the Seller Assets and any portion of any such
Returns connected therewith shall be true and correct and completed in
accordance with applicable laws.
5.10 Payment of Taxes. As of the Closing, Seller shall have (a) paid all
Taxes it is required to pay as of such time and which are not being disputed by
Seller in good faith pursuant to appropriate proceedings, and (b) withheld with
respect to its employees, and paid to the appropriate taxing authority, all
federal and state income taxes, FICA, FUTA and other Taxes required to be
withheld as of such time. Except for any Taxes which are expressly included in
the Assumed Liabilities, all Taxes that become due or payable with respect to
Seller's operation of the Business prior to the Closing Date shall be the
responsibility of and shall be paid by Seller on a timely basis, and Seller
shall be entitled to all tax benefits or credits arising out of such pre-closing
operations.
5.11 Employees. At least (10) days prior to the Closing, Buyer shall
provide a written list to Seller setting forth any employees of Seller to whom
Buyer does not intend to make offers of employment.
5.12 Use of Name. Following the Closing Date, neither PowerCerv nor
Subsidiary shall use the name "PowerCerv" or any variation thereof in connection
with any enterprise software business, including but not limited to the
development, marketing, sole licensing or service of enterprise software.
5.13 Cooperation and Records Retention. Seller and Buyer shall (a) each
provide the other with such assistance as may reasonably be requested by them in
connection with the preparation of any tax return, statement, report, form or
other document (hereinafter collectively a "Tax Return"), or in connection with
any audit or other examination by any taxing authority or any judicial or
administrative proceedings relating to liability for taxes, (b) until the fifth
anniversary of the Closing Date, each retain and provide the other, with any
records or other information which may be relevant to any such Tax Return, audit
or examination, proceeding or determination, or any other reasonable business
purpose or any other legal proceeding, and (c) each provide the other with any
final determination of any such audit or examination, proceeding or
determination that affects any amount required to be shown on any Tax Return of
the other for any period.
5.14 No Solicitation. Until the earlier of (a) the Closing or (b) the
termination of this Agreement, each of PowerCerv and Subsidiary will not, and
PowerCerv and Subsidiary shall each use its best efforts to cause all of their
respective officers, directors, stockholders, agents, representatives and
affiliates not to, directly or indirectly take any of the following actions with
any party other than Buyer and its designees:
(i) solicit, encourage, initiate or participate in any negotiations or
discussions with respect to any offer or proposal to acquire all or any portion
of the Business or the Seller Assets or any capital stock of Seller;
(ii) disclose any information not customarily disclosed to any person
other than its attorneys or financial advisors concerning Seller's business and
properties or afford to any person or entity access to its properties, books or
records;
(iii) assist or cooperate with any person to make any proposal to
purchase all or any part of the Seller Assets or Business or capital stock of
each of PowerCerv and Subsidiary, other than selling products of Seller in the
ordinary course of business; or
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(iv) enter into any agreement with any person providing for the
acquisition of all or any portion of the Business, the Seller Assets or any
capital stock of the each of PowerCerv and Subsidiary.
Nothing herein shall prohibit PowerCerv's Board of Directors from taking
and disclosing to its shareholders a position with respect to an unsolicited
tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange
Act; provided, however, that in the event that the position so taken and
disclosed (a "Tender Offer Position") is not an unqualified opposition to the
unsolicited tender offer, then PowerCerv may only take and disclose such
position if, simultaneously with such action, PowerCerv terminates this
Agreement pursuant to Section 8.1(f). Notwithstanding the provisions of this
Section 5.14, if an unsolicited Alternative Proposal (as defined herein) shall
be received by the PowerCerv Board of Directors, then, to the extent the
PowerCerv Board of Directors believes in good faith that such Alternative
Proposal is reasonably capable of being consummated and would, if consummated,
be reasonably likely to result in a transaction more favorable to its
shareholders than the transaction contemplated by this Agreement (any such more
favorable Alternative Proposal being referred to in this Agreement as a
"Superior Proposal") and the PowerCerv Board of Directors determines in good
faith and upon the advice of its legal counsel that it could reasonably be
deemed necessary for the PowerCerv Board of Directors to further entertain and
consider the Superior Proposal in order to comply with its fiduciary duties to
shareholders under applicable law, PowerCerv may furnish information and afford
access to the properties, books, or records of PowerCerv or Subsidiary to the
party making such Superior Proposal and engage in negotiations with such party,
and such actions shall not be considered a breach of this Section 5.14 or any
other provisions of this Agreement; provided that in any event PowerCerv shall
notify Buyer of the receipt of a Alternative Proposal and shall notify Buyer of
any such determination by the PowerCerv Board of Directors and PowerCerv shall
deliver to Buyer a true and complete copy of the Alternative Proposal (or
summary of any oral proposal) received from such third party and all documents
containing or referring to non-public information of PowerCerv that are supplied
to such third party. An Alternative Proposal shall mean any offer or proposal
for a merger or other business combination involving the Seller or the
acquisition of 20% or more of the Seller's outstanding capital stock or a
significant portion of the Seller's assets other than the transactions
contemplated by this Agreement.
The parties agree that irreparable damage would be caused to Buyer in the
event the provisions of this Section 5.14 were not performed in accordance with
their specific terms or were otherwise breached. Seller hereby agrees that in
the event of any such breach or threatened breach, Buyer shall be entitled to
injunctive relief and to specifically enforce the provisions of this Section
5.14 in any court having competent jurisdiction, in addition to any other remedy
which Buyer may have at law or equity.
5.15 Filings; Other Actions; Notification. PowerCerv shall as promptly as
practicable, following the execution of this Agreement with the assistance and
cooperation of Buyer, prepare and file with the SEC, a proxy statement and any
required amendment or supplement thereto (the "Proxy Statement"), which shall
include the recommendation of the Board of Directors of PowerCerv that
shareholders of PowerCerv vote in favor of the approval and adoption of this
Agreement and the written opinion of the Financial Advisor that the
consideration to be received by the Seller pursuant to this Agreement is fair
from a financial point of view. PowerCerv and Buyer shall use all reasonable
efforts to have the Proxy Statement respond to any comments made by the SEC with
respect to the preliminary Proxy Statement as promptly as practicable after
receipt of such comments, and promptly thereafter mail the Proxy Statement to
the shareholders of PowerCerv. PowerCerv will notify the Buyer promptly upon the
receipt of any comments from the SEC or its staff in connection with the filing
of, or amendments or supplements to, the Proxy Statement. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Proxy Statement, PowerCerv will promptly inform the Buyer of such occurrence.
PowerCerv will provide the Buyer and its counsel a reasonable opportunity to
review and comment on the Proxy Statement and any amendment or prior to filing
such with the SEC. The Seller will cause the Proxy Statement to be mailed to its
shareholders at the earliest practicable time.
5.16 Meeting. PowerCerv will take, in accordance with applicable law and
its certificate of incorporation and bylaws, all action necessary to convene a
meeting of holders of its Shares (the "Shareholder Meeting") as promptly as
practicable after the Proxy Statement is available for mailing, to consider and
vote upon the approval of this Agreement. The Proxy Statement shall include a
statement that the Board of Directors of PowerCerv approved this Agreement and
recommended that the shareholders of PowerCerv vote in favor of this Agreement,
and PowerCerv shall use all reasonable and customary efforts to solicit such
approval, subject to the right of PowerCerv's Board of Directors to withdraw or
modify its recommendation to the extent it determines in good faith and upon the
advice of its legal counsel that such action is necessary to comply with its
fiduciary duties under applicable law; provided, however, that:
(a) The PowerCerv Board of Directors may only withdraw its
recommendation if, simultaneously with such withdrawal, PowerCerv terminates
this Agreement pursuant to Section 8.1(f); and
(b) In the event that the PowerCerv Board of Directors modifies its
recommendation and the shareholders of PowerCerv do not approve the Acquisition
at the Shareholder Meeting prior to December 31, 2002, then PowerCerv shall pay
to ASA the Termination Payment [as defined in Section 8.1(f)].
5.17 Cincom . In the event that during the six month period following the
Closing, Buyer enters into a license or other agreement with Cincom Systems,
Inc. ("Cincom"), on terms satisfactory to Buyer in its sole discretion, pursuant
to which Cincom licenses or otherwise obtains the rights to use or acquires any
portion of the Software, then Buyer shall pay, as additional consideration for
the Seller Assets, 60% of all Net License Fees received by Buyer from Cincom
during the six (6) month period following the Closing. For purposes of this
Section 5.17, "Net License Fees" shall mean license or similar fees actually
received by Buyer, net of all expenses incurred by Buyer in entering into and
fulfilling Buyer's obligations pursuant to such agreement with Cincom, all
determined on the cash basis of accounting.
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ARTICLE VI
CONDITIONS TO THE ACQUISITION
6.1 Conditions to Obligations of Each Party to Effect the Acquisition. The
respective obligations of each party to this Agreement to effect the Acquisition
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Acquisition shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Acquisition, which makes the consummation of the Acquisition illegal.
6.2 Additional Conditions to Obligations of Seller. The obligations of
Seller to consummate and effect this Agreement and the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, any of which may be waived, in writing,
exclusively by Seller:
(a) Representations, Warranties and Covenants. The representations and
warranties of Buyer in this Agreement shall be true and correct in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of such time, and Buyer shall have performed and
complied in all material respects with all covenants, obligations and conditions
of this Agreement required to be performed and complied with by it as of the
Closing Date.
(b) Certificate of Buyer. Seller shall have been provided with a
certificate duly executed on behalf of Buyer to the effect that, as of the
Closing Date:
(i) all representations and warranties made by Buyer in this
Agreement are true and complete in all material respects; and
(ii) all covenants, obligations and conditions of this Agreement
to be performed by Buyer on or before such date have been so performed in all
material respects.
(c) Governmental Approvals. Any and all consents, waivers and
approvals required from any governmental entity deemed necessary by Seller to
effect the Acquisition shall have been timely obtained.
(d) Legal Opinion. Seller shall have received the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Green, P.C., counsel to the Buyer and ASA, in form and
substance reasonably satisfactory to Seller and its counsel, regarding the legal
existence and authority of the Buyer and ASA, and the due authorization,
execution and delivery by, and enforceability of, the Agreement with respect to
the Buyer and ASA .
(e) No Material Adverse Changes. There shall not have ocurred any
material adverse change in the business of the Buyer.
6.3 Additional Conditions to the Obligations of Buyer. The obligations of
Buyer to consummate and effect this Agreement and the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, any of which may be waived, in writing,
exclusively by Buyer:
(a) Representations, Warranties and Covenants. The representations and
warranties of Seller in this Agreement shall be true and correct in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of such time, and Seller shall have performed and
complied in all material respects with all covenants, obligations and conditions
of this Agreement required to be performed and complied with by them as of the
Closing Date.
(b) Certificate of Seller. Buyer shall have been provided with a
certificate executed on behalf of each of PowerCerv and Subsidiary by its Chief
Executive Officer to the effect that, as of the Closing Date:
(i) all representations and warranties made by Seller in this
Agreement are true and complete in all material respects; and
(ii) all covenants, obligations and conditions of this Agreement
to be performed by Seller on or before such date have been so performed in all
material respects.
(c) Claims. There shall not have occurred any claims (whether or not
asserted in litigation) which may materially and adversely affect the
consummation of the transactions contemplated hereby or the Business, the Seller
Assets or financial condition of Seller or Buyer.
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(d) Third Party Consents. Seller shall have obtained and provided
Buyer any and all consents, waivers, and approvals required from third parties
relating to the Assigned Contracts so as to assign all rights of Seller
thereunder to Buyer as of the Closing, except such consents, waivers and
approvals, the failure of which to obtain would not constitute a Seller Material
Adverse Effect.
(e) Governmental Approvals. Any and all consents, waivers and
approvals required from any governmental entity deemed necessary by Buyer to
effect the Acquisition shall have been timely obtained.
(f) No Injunctions or Restraints on Conduct of Business. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
provision challenging Buyer's proposed acquisition of the Seller Assets, or
limiting or restricting Buyer's conduct or operation of the Business (or its own
business) following the Acquisition shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending.
(g) No Material Adverse Changes. Since the date of this Agreement
there shall not have occurred any event or development that would reasonable be
expected to have a Seller Material Adverse Effect, provided, however, that none
of the following shall be deemed to constitute and none of the following shall
be taken into account in determining whether there has been or will be a Seller
Material Adverse Effect: (A) any litigation or threat of litigation filed or
made after the date hereof challenging any of the transactions contemplated
herein or any shareholder litigation filed or made after the date hereof
resulting from this Agreement or the transactions contemplated herein; or (B)
the increase or decrease in the Seller's stock price or trading volume; or (C) a
decrease in the Seller's revenues unless such revenues are less than $1.1
million for the two fiscal quarters prior to the Closing; provided, however,
that if Buyer does not notify Seller within three (3) business days of Seller
notifying Buyer that such revenues were less than $1.1 million for the two
fiscal quarters prior to the Closing, that Buyer does not intend to consummate
the transactions contemplated by this Agreement, then the Buyer shall be deemed
to have waived the closing condition set forth in this Section 6.3(g)(C).
(h) Employment and Non-competition Agreements. The individuals listed
on Schedule 6.3 (h) must have agreed to become employees of Buyer on mutually
agreeable terms.
(i) Third Party Rights. No third party shall have any right of any
nature whatsoever (including, without limitation, any right to receive royalty
payments) in respect of any of the Seller Assets, except as stated in Schedule
6.3(i).
(j) Shareholder Approval. The shareholders of PowerCerv shall have
approved the Acquisition at the Shareholder Meeting.
(k) Agreement Not to Compete. Seller shall have entered into an
Agreement Not to Compete with Buyer in the form attached hereto as Exhibit F.
(l) No Claims. There shall not have occurred any claims (whether or
not asserted in litigation) which may materially and adversely affect the
consummation of the transactions contemplated hereby, the Seller Assets or the
Business.
(m) Legal Opinion. Buyer shall have received the opinion of Broad and
▇▇▇▇▇▇, counsel to the Seller, in form and substance reasonably satisfactory to
Buyer and its counsel, regarding the legal existence and authority of the
Seller, and the due authorization, execution and delivery by, and enforceability
of, the Agreement with respect to the Seller .
(n) Pledge Agreement. The Stockholder shall have consented to the
assignment by PowerCerv to ASA of the Stockholder Note and the Stock Pledge and
Security Agreement and Escrow Agreement, each dated as of August 31, 2001
between PowerCerv and Stockolder, on terms acceptable to ASA; provided, however,
that if the Stockholder does not so consent, then Buyer shall have the right to
reject the Stockholder Note and treat the Stockholder Note as an Excluded Asset.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY AND ESCROW
7.1 Survival of Representations and Warranties. Seller's and Buyer's
respective representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Acquisition and continue
until six (6) months following the Closing Date (the "Expiration Date").
7.2 Seller Indemnity.
(a) Seller Indemnity. Seller agrees to defend, indemnify and hold
Buyer, ASA and their respective officers, directors and affiliates (the
"Indemnified Parties") harmless against all claims, losses, liabilities,
damages, deficiencies, costs and expenses, including reasonable attorneys' fees
and expenses of investigation, (hereinafter individually a "Loss" and
collectively "Losses") incurred by Buyer, ASA or their respective officers,
directors, or affiliates directly or indirectly which exceed in the aggregate
$20,000, as a result of (i) any inaccuracy or breach of a representation or
warranty of Seller contained in this Agreement, or (ii) any failure by the
15
Company to perform or comply with any covenant contained in this Agreement, or
(iii) any amount due under the Stockholder Note which is not paid when due. For
purposes of this Agreement, "Indemnity Matter" shall mean any matter for which
any Indemnified Party is entitled to indemnification pursuant to this Section
7.2(a). With respect to claims for Losses, Buyer may not set-off the amount of
such Losses against amounts due pursuant to the Note as provided in Section 7.6,
unless and until Officer's Certificates (as defined in paragraph (b) below)
identifying Losses in the aggregate exceeding $20,000 (the "Basket Amount") have
been delivered to the Seller as provided in paragraph (e) below, in which case
Buyer shall be entitled to recover only those Losses exceeding the Basket
Amount. The Basket Amount shall not apply to the Purchase Price Adjustment.
(b) Claims. Subject to subsection (c) below, ten (10) days after
receipt by the Seller at any time on or before the Expiration Date of (X) a
certificate signed by any officer of Buyer (an "Officer's Certificate"): (i)
stating that Buyer has paid or properly accrued or reasonably anticipates that
it will have to pay or accrue Losses with respect to an Indemnity Matter, and
(ii) specifying in reasonable detail the individual items of Losses included in
the amount so stated, the date each such item was paid or properly accrued, or
the basis for such anticipated liability, and the nature of the
misrepresentation, breach of warranty or covenant to which such item is related,
and (iii) a request that the Seller deliver to Buyer the relevant dollar amount,
or (Y) the Purchase Price Adjustment Notice, the Seller shall deliver to Buyer
within five (5) days, the dollar amount with a value equal to such Losses or as
set forth in the Purchase Price Adjustment Notice, but only to the extent that
such amounts have not been set-off against the Note pursuant to Section 7.6.
(c) Objections to Claims. Seller may object in a written statement to
the claim made in any Officer's Certificate or Purchase Price Adjustment Notice,
provided such statement shall have been delivered to the Buyer prior to the
expiration of the ten (10) day period following Seller's receipt of such
certificate or notice; and further provided that any objection to the Purchase
Price Adjustment Notice may object solely to the proper preparation of the
Closing Balance Sheet in the form set forth in Schedule 1.3, the Seller
acknowledging and agreeing that the Seller may not object to Buyer's rejection
of specific assets or liabilities pursuant to Section 1.1 and 1.3, which shall
be in Buyer's sole discretion.
(d) Resolution of Conflicts; Arbitration.
(i) In case Seller shall object in writing to any claim or claims
made in (A) any Officer's Certificate or (B) the Purchase Price Adjustment
Notice, Seller and Buyer shall attempt in good faith to agree upon the rights of
the respective parties with respect to each of such claims. If Seller and Buyer
should so agree, a memorandum setting forth such agreement shall be prepared and
signed by both parties.
(ii) If no such agreement can be reached within twenty (20) days
of Buyer's receipt of Seller's objection, then such dispute shall be submitted
for arbitration unless the amount of the damage or Loss is at issue in pending
litigation with a third party, in which event arbitration shall not be commenced
until such amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration conducted by one
arbitrator mutually agreeable to Buyer and Seller. In the event that within
thirty (30) days after submission of any dispute to arbitration, Buyer and
Seller cannot mutually agree on one arbitrator, Buyer and Seller shall each
select one arbitrator, and the two arbitrators so selected shall select a third
arbitrator. The arbitrator or arbitrators, as the case may be, shall set a
limited time period and establish procedures designed to reduce the cost and
time for discovery while allowing the parties an opportunity, adequate in the
sole judgement of the arbitrator or majority of the three arbitrators, as the
case may be, to discover relevant information from the opposing parties about
the subject matter of the dispute. The arbitrator or a majority of the three
arbitrators, as the case may be, shall rule upon motions to compel or limit
discovery and shall have the authority to impose sanctions, including attorneys'
fees and costs, to the extent as a competent court of law or equity, should the
arbitrators or a majority of the three arbitrators, as the case may be,
determine that discovery was sought without substantial justification or that
discovery was refused or objected to without substantial justification. The
decision of the arbitrator or a majority of the three arbitrators, as the case
may be, as to the validity and amount of any claim in such Officer's Certificate
or Purchase Price Adjustment Notice shall be binding and conclusive upon the
parties to this Agreement. Such decision shall be written and shall be supported
by written findings of fact and conclusions which shall set forth the award,
judgment, decree or order awarded by the arbitrator(s).
(iii) Judgment upon any award rendered by the arbitrator(s) may
be entered in any court having jurisdiction. Any such arbitration shall be held
in Boston, Massachusetts, under the rules then in effect of the American
Arbitration Association. The arbitrator(s) shall determine how all expenses
relating to the arbitration shall be paid, including without limitation, the
respective expenses of each party, the fees of each arbitrator and the
administrative fee of the American Arbitration Association.
7.3 Buyer Indemnity. Buyer shall indemnify and hold Seller and its
officers, directors and affiliates (the "Seller Parties") harmless against all
Losses incurred by them directly or indirectly which exceed in the aggregate
$20,000 as a result of (i) any inaccuracy or breach of a representation or
warranty or Buyer contained in this Agreement, or (ii) any failure by Buyer to
perform or comply with any covenant contained in this Agreement.
7.4 Third Party Claims. In the event that a party seeking indemnity
pursuant to this Agreement ("Indemnitee") shall become aware of a third-party
claim with respect to any matter as to which the other party ("Indemnitor") has
agreed to indemnify Indemnitee under the provisions of this Agreement (a "Third
Party Claim"), Indemnitee shall give notice thereof in writing to Indemnitor
together, in each instance, with a statement of such information respecting such
Third Party Claim as Indemnitee shall then have. Upon notice by Indemnitor of
its request to contest a Third Party Claim delivered to Indemnitee within twenty
(20) calendar days from the date of receipt by Indemnitor of notice of the Third
Party Claim, Indemnitor, may assume the right to contest and defend by all
appropriate legal or other proceedings the Third Party Claim with respect to
which it has been called upon to indemnify Indemnitee under the provisions of
this Agreement. If Indemnitor assumes such defense, Indemnitee shall have the
right to participate in, but not control, the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by Indemnitor.
If Indemnitor shall have assumed the defense of any claim, Indemnitee shall not
admit any liability with respect to, or settle, compromise or discharge, such
claim without Indemnitor's prior written consent. In no event may Indemnitee
settle any claim without the written consent of Indemnitor.
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7.5 Limitation. Notwithstanding anything else in this Agreement, (a) except
as provided herein, no claim for indemnification may be made by an Indemnified
Party more than six (6) months following the Closing Date and (b) the maximum
amount of losses for which Seller shall be liable pursuant to Section 7.2 shall
be equal to the Purchase Price (as adjusted pursuant to Section 1.3).
7.6 Right of Set-Off. Buyer shall have the right to set-off against and
deduct from any amounts due to Seller pursuant to the Note, the amount of any
claims for indemnification which are the subject of any Officer's Certificate,
and the amount of any decrease in the Purchase Price set-forth in the Purchase
Price Adjustment Notice, and the principal balance of the Note shall be adjusted
to reflect the amounts set-off against the Note (the "Adjusted Principal
Balance"); provided, however, that in the event that Seller objects in writing
to any claim or notice in accordance with the provisions of Section 7.2(c),
then, upon the resolution of any such dispute pursuant to Section 7.2(d), Buyer
shall pay to Seller, without interest, any amount deducted from any amounts due
to Seller in excess of the amount determined to be owed to Buyer pursuant to
Section 7.2. Such excess amount, if any, shall be payable upon the later of the
Maturity Date (as defined in the Note) or ten (10) days following the resolution
of such dispute pursuant to Section 7.2(d).
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. Except as provided in Section 8.2 below, this Agreement
may be terminated and the Acquisition abandoned at any time prior to the Closing
Date:
(a) by mutual consent of Seller and Buyer;
(b) by Buyer or Seller if: (i) through no fault of the terminating
party, the Closing has not occurred by December 31, 2002; (ii) there shall be a
final nonappealable order of a federal or state court in effect preventing
consummation of the Acquisition; or (iii) there shall be any statute, rule,
regulation or order enacted, promulgated, issued or deemed applicable to the
Acquisition by any Governmental Entity that would make consummation of the
Acquisition illegal;
(c) by Buyer if there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated, issued or deemed applicable to the
Acquisition by any Governmental Entity, which would: (i) prohibit Buyer's
ownership or operation of all or a material portion of the Business or the
Seller Assets, or (ii) compel Buyer to dispose of or hold separate all or a
portion of the Business or the Seller Assets or other businesses or Seller
Assets of Buyer as a result of the Acquisition;
(d) by Buyer if it is not in material breach of its obligations under
this Agreement and there has been a material breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of
Seller and such breach has not been cured within ten (10) business days after
written notice to Seller (provided that, no cure period shall be required for a
breach which by its nature cannot be cured);
(e) by Seller if it is not in material breach of its obligations under
this Agreement and there has been a material breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of Buyer
and such breach has not been cured within ten (10) business days after written
notice to Buyer (provided that, no cure period shall be required for a breach
which by its nature cannot be cured).
(f) by Seller or Buyer, if Seller's Board of Directors (i) takes a
Tender Offer Position pursuant to Section 5.14 which is not an unqualified
opposition to an unsolicited tender offer, or (ii) withdraws or modifies its
recommendation pursuant to Section 5.16; provided however, in the event that
this Agreement is terminated by either Seller or Buyer pursuant to this Section
8.1(f), the Company shall pay to the Buyer within two (2) business days after
such termination, an amount equal to (x) all of the Buyer's expenses incurred in
connection with this Agreement and the transactions contemplated hereby, and (y)
a termination fee of $59,000 (collectively, the "Termination Payment"). The
Seller acknowledges that the agreements contained in this Section 8.1(f) are an
integral part of the transactions contemplated by this Agreement and that,
without these agreements, the Buyer would not enter into this Agreement;
accordingly, if the Seller fails to pay the amounts required pursuant to Section
8.1(f) when due, the Seller shall pay to the Buyer its costs and expenses
(including attorneys' fees) in connection with Buyer's collection of such
amounts from Seller, together with interest at the rate of 18% per annum from
the date such payment was required to be made.
8.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Buyer or Seller, or their
respective officers, directors or stockholders, provided that each party shall
remain liable for any breaches of this Agreement prior to its termination; and
provided further that, the provisions of Sections 5.2, 5.3, 5.4 and Article X of
this Agreement shall remain in full force and effect and survive any termination
of this Agreement.
8.3 Amendment. This Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed on behalf of each of the
parties hereto.
17
8.4 Extension; Waiver. At any time prior to the Closing Date, Buyer on the
one hand, and Seller, on the other, may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations of the other party
or parties hereto, (ii) waive any inaccuracies in the representations and
warranties made to such party or parties contained herein or in any document
delivered pursuant hereto, and (iii) waive compliance with any of the agreements
or conditions for the benefit of such party contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party or
parties.
ARTICLE IX
CERTAIN POST-CLOSING COVENANTS
9.1 Schedule. Buyer and Seller agree that the matters set forth on Schedule
9 shall be completed following the Closing as set forth therein.
ARTICLE X
GENERAL PROVISIONS
10.1 Attorneys' Fees. Subject to the provision of Section 7.2, if any party
to this Agreement brings an action against another party to this Agreement to
enforce its rights under this Agreement, the prevailing party in such action
shall be entitled to recover its reasonable costs and expenses, including
attorneys' fees and costs incurred in connection with such action, including the
appeal of such action.
10.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via telecopy (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Buyer or ASA , to:
ASA International, Ltd.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Green, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to PowerCerv or Subsidiary to:
PowerCerv Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Broad and ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, Esquire
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
10.3 Interpretation. When a reference is made in this Agreement to
Schedules or Exhibits, such reference shall be to a Schedule or Exhibit to this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
18
10.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart. Delivery of an executed counterpart
of this Agreement by facsimile shall be equally as effective as delivery of a
manually executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by facsimile also shall deliver a
manually executed counterpart of this Agreement, but the failure to deliver a
manually executed counterpart shall not affect the validity, enforceability or
binding effect of this Agreement.
10.5 Entire Agreement. This Agreement and the Schedules and Exhibits
hereto: (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof; (b) are not intended to confer upon any other person any rights or
remedies hereunder, unless expressly provided otherwise; and (c) shall not be
assigned by operation of law or otherwise except as otherwise specifically
provided; provided, however, that Buyer may assign this Agreement to either (i)
a subsidiary of Buyer or ASA or (ii) any other party so long as the assignee
agrees in writing to be bound by all of Buyer's obligations hereunder.
10.6 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
10.7 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
10.8 Governing Law and Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. The parties agree that, subject to the provisions
of Section 7.2(g) hereof, the courts of the Commonwealth of Massachusetts and
the federal courts located therein shall have exclusive jurisdiction over the
resolution of any disputes between the parties, and each party waives any
objections based on jurisdiction, venue, forum non conviens or similar matters,
and consents to service of process as provided by the rules of the Commonwealth
of Massachusetts.
10.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
10.10 No Additional Representations. The Buyer acknowledges that neither
the Seller nor any other person or entity acting on behalf of Seller or any
affiliate of Seller, has made any representation or warranty, express or
implied, as to the accuracy or completeness of any information regarding the
Business of the Seller except as expressly set forth in this Agreement or as and
to the extent required by this Agreement to be set forth in Schedules hereto.
IN WITNESS WHEREOF, Buyer, ASA, PowerCerv, Subsidiary and Eastern Bank have
caused this Agreement to be signed by their duly authorized respective officers,
all as of the date first written above.
[Signatures appear on the following page]
19
PCV ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
WITH RESPECT TO ARTICLES III AND VII ONLY:
ASA INTERNATIONAL, LTD.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President & Treasurer
POWERCERV CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
POWERCERV TECHNOLOGIES CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
20
EXHIBIT A
PROMISSORY NOTE
$90,000
__________, 2002
FOR VALUE RECEIVED, the undersigned, PCV Acquisition, Inc. a Delaware
corporation ("Maker"), promises to pay to PowerCerv Corporation ("Payee"), the
principal amount of Ninety Thousand Dollars ($90,000), plus interest thereon at
a fixed rate equal to __ percent (__%) per annum [the minimum applicable federal
rate]. Interest shall in all cases be calculated on the basis of actual days
elapsed and a 365 day year.
All outstanding principal and accrued interest hereunder shall be due and
payable on or before __________, 2003 (the "Maturity Date").
Any payments, including any prepayments, received by Payee on account of
this Note prior to demand or acceleration shall be applied first, to any costs,
expenses or charges then owed Payee by Maker, second, to accrued and unpaid
interest, and third, to the unpaid principal balance, in inverse order of their
maturities. Any payments so received after demand or acceleration shall be
applied in such manner as Payee may, in its sole discretion, determine.
Payee, at its option, may declare the entire unpaid balance of this Note
and all accrued and unpaid interest thereon to be immediately due and payable
without demand, notice or protest (which are hereby waived) upon the occurrence
of any one or more of the following events (each, an "Event of Default"): (a)
the failure to pay principal or interest of this Note within fifteen (15) days
of written notice from Payee to Maker given after the due date of such payment;
or (b) an assignment for the benefit of creditors by, or the filing of a
petition under bankruptcy, insolvency or debtor's relief law by or against,
Maker (and in the case of the filing of an involuntary petition against Maker,
if the proceeding commenced by such filing is not dismissed within ninety (90)
days of such filing).
No delay or omission by Payee in exercising or enforcing any of Payee's
powers, rights, privileges or remedies hereunder shall operate as a waiver
thereof on that occasion or on any other occasion. No waiver of any default
hereunder shall operate as a waiver of any other default hereunder, nor as a
continuing waiver.
Maker will pay on demand all costs and expenses of collection, including
reasonable attorneys' fees incurred or paid by Payee in enforcing this Note on
default.
This Note shall be binding upon Maker and each endorser and guarantor
hereof and upon their respective heirs, successors, assigns and representatives,
and shall inure to the benefit of Payee and its successors, endorsees and
assigns. This Note may not be amended except by an instrument in writing signed
by Maker and Payee.
This Note is being delivered pursuant to that certain Asset Purchase
Agreement dated as of October 1, 2002 by and among Maker, Payee, ASA
International Ltd., and PowerCerv Technologies Corporation (the "Purchase
Agreement"), and is subject to the terms and conditions of the Purchase
Agreement, including but not limited to the right of set-off set forth in
Article VII thereof.
This Note shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, Maker has caused this Note to be executed as of the
date first written above.
PCV ACQUISTION, INC.
By: ______________________________
ASA International Ltd. hereby guarantees the obligations of PCV
ACQUISITION, INC. pursuant to this Note.
ASA INTERNATIONAL LTD.
By: _______________________________
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT is made, executed and delivered as
of the __ day of ______, 2002 by and between PCV Acquisition, Inc., a Delaware
corporation (the "Buyer"), and PowerCerv Corporation, a Florida corporation
("PowerCerv"), and PowerCerv Technologies Corporation (the "Subsidiary", and
together with PowerCerv, the "Seller").
W I T N E S S E T H
WHEREAS, by ▇▇▇▇ of Sale being executed and delivered by the Seller to the
Buyer simultaneously herewith pursuant to an Asset Purchase Agreement between
the Seller, the Buyer, and ASA International Ltd., dated October 1, 2002 (the
"Agreement"), the Seller is selling, conveying, assigning, transferring and
delivering to the Buyer or its assignee all of the Seller Assets (capitalized
terms used but not otherwise defined herein shall have the meanings set forth in
the Agreement), for the consideration, in the amount and upon the terms and
subject to the conditions contained in the Agreement; and
WHEREAS, in consideration therefor, the Agreement requires that the Buyer
undertake to assume and to agree to perform, pay or discharge the Assumed
Liabilities.
NOW, THEREFORE,
1. The Seller hereby sells, conveys, assigns, transfers and delivers the
Seller Assets and in consideration of such sale, conveyance, assignment,
transfer and delivery, the Buyer hereby undertakes, assumes and agrees to
perform, to the extent not heretofore performed, the Assumed Liabilities, as
described in Section 1.1(c) of the Agreement.
2. The assumption by the Buyer of an obligation of the Seller shall not be
construed to defeat, impair or limit, in any way, any rights, or remedies of the
Buyer to contest or dispute in good faith the validity or amount thereof.
3. Other than as specifically set forth above, the Buyer assumes no
liability of the Seller of any kind, character or description, including without
limitation, liabilities based on tort, contract or other claims.
4. Buyer agrees to defend, indemnify and hold Seller, and its directors,
officers, stockholders, agents, employees or consultants, harmless against and
in respect of any loss, cost, expense (including expenses of investigation),
claim, liability, deficiency, judgment or damage, including reasonable legal and
accounting fees and expenses incurred by Seller, its officers, directors,
stockholders, agents, employees or consultants, by reason of Buyer's failure to
satisfy or discharge in a timely manner any of the Assumed Liabilities. This
provision does not affect Buyer's rights and remedies, including without
limitation Buyer's indemnification rights pursuant to the Agreement.
5. This Agreement shall be enforceable against and inure to the benefit of
the successors and assigns of the Buyer and shall be enforceable against and
inure to the benefit of the successors and assigns of the Seller.
6. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts without regard to its conflicts of law
rules.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the Buyer and the Seller as of the date first
above written to be effective as of the ___ day of _______, 2002.
PCV ACQUISITION, INC.
By: _____________________________
Attest:
By: ________________________________
POWERCERV CORPORATION
By:
-------------------------------
Attest:
By: ______________________________
POWERCERV TECHNOLOGIES CORPORATION
By:
--------------------------------
Attest:
By: ________________________________
EXHIBIT C
▇▇▇▇ OF SALE AND GENERAL ASSIGNMENT OF ASSETS
KNOW ALL MEN AND WOMEN BY THESE PRESENTS THAT:
PowerCerv Corporation, a Florida corporation and PowerCerv Technologies
Corporation (collectively, "Seller"), pursuant to that certain Asset Purchase
Agreement dated as of October 1, 2002 (the "Agreement"), by and between the
Seller and PCV Acquisition, Inc., a Delaware corporation ("Buyer"), and ASA
International Ltd., for and in consideration of good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, does hereby grant,
bargain, sell, convey, transfer, assign, set over and deliver to Buyer, its
successors and assigns, all of Seller's right, title and interest in and to all
of the Seller Assets. Capitalized terms used but not otherwise defined herein
shall have the meanings set forth in the Agreement.
TO HAVE AND TO HOLD all of the properties, assets and rights granted and
transferred hereby, with the appurtenances thereof, unto Buyer, its successors
and assigns forever, for their own use and benefit.
For the consideration aforesaid, Seller hereby constitutes and appoints
Buyer, its successors and assigns, the true and lawful attorney or attorneys of
Seller, with full power of substitution, for Seller and in its name and stead,
or otherwise, but on behalf and for the benefit of Buyer, its successors and
assigns, to demand and receive from time to time, any and all properties hereby
given, granted, bargained, sold, assigned, transferred, conveyed, set over,
confirmed and delivered and give receipts and releases for and in respect of the
same and any part thereof, and from time to time to institute and prosecute in
the name of Seller or otherwise, but for the benefit of Buyer, its successors
and assigns, any and all proceedings at law, in equity or otherwise, which
Buyer, its successors or assigns, may deem proper in order to collect, assert or
enforce any claim, right or title of any kind in and to the properties hereby
given, granted, bargained, sold, assigned, transferred, set over, conformed,
delivered or conveyed, and to defend or compromise any or all actions, suits or
proceedings in respect of any said properties and do all such acts and things in
relation thereto as Buyer, its successors and assigns, shall deem advisable,
Seller hereby declaring that the appointment made and the powers hereby granted
are coupled with an interest and are and shall be irrevocable by Seller in any
manner and for any reason.
Seller for itself and its successors and assigns, does hereby covenant with
Buyer, its successors and assigns, that Seller and its successors and assigns
will do, execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered all such further acts, deeds, bills of sale,
transfers, assignments and conveyances, powers of attorney, conveying and
confirming unto Buyer, its successors and assigns, all and singular, the
properties hereby granted, sold, assigned, transferred, conveyed and delivered
as Buyer, its successors or assigns, shall reasonably require, provided,
however, that the Buyer, its successors and assigns shall prepare all necessary
documentation in conformity with the terms and conditions of the Agreement at
Buyer's expense.
This ▇▇▇▇ of Sale and General Assignment of Assets may be executed in one
or more counterparts, each of which shall be an original, but which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, PCV Acquisition, Inc., PowerCerv Corporation and
PowerCerv Technologies Corporation have each caused this instrument to be signed
in its name by its duly authorized officer to be effective as of the ___day of
__________, 2002.
PCV ACQUISITION, INC.
By: ___________________________________
POWERCERV CORPORATION
By: ___________________________________
POWERCERV TECHNOLOGIES CORPORATION
By: ___________________________________
BO:82961.9
CERTIFICATION
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF _________________ )
On this ____ day of __________ 2002, before me, the undersigned, a Notary
Public for the Commonwealth of Massachusetts, personally appeared
________________________, personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person who executed the foregoing instrument
as _________________ ___________ of the corporation named therein, and
acknowledged to me that he executed the same as his voluntary act on behalf of
such corporation with authority to do so for the purposes therein set forth.
---------------------------------------
Notary Public
My Commission expires: ___________________
EXHIBIT D
ASSIGNMENT OF TRADEMARKS
WHEREAS, PowerCerv Corporation, and PowerCerv Technologies Corporation,
each of which is a Florida corporation having its principal place of business at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (collectively
"Assignor"), and the owners of the trademarks/service marks as listed on
Schedule A attached hereto; and
WHEREAS, PCV Acquisition, Inc., a Delaware corporation, having its
principal place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
("Assignee"), is desirous of acquiring said trademarks/service marks together
with the good will of the business with which said trademark/service marks are
used and which are symbolized by said marks and any and all registrations and
applications for registration of said marks;
NOW, THEREFORE, be it known that for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Assignor, Assignor
has, subject to the penultimate paragraph hereof, assigned and by these
presents, does hereby sell, transfer, convey and assign unto Assignee the entire
right, title, and interest in and to said marks, all registrations and all
applications for registration of said marks, including without limitation the
right to recover for past infringement of said marks, and the good will of the
business in connection with which said marks are used and which are symbolized
by said marks.
Assignor hereby covenants and represents that the execution, delivery and
performance of this Trademark Assignment by Assignor has been duly and validly
authorized by all necessary corporate action and this Trademark Assignment has
been duly and validly executed and delivered by Assignor and constitutes a valid
and legally binding agreement of Assignor, enforceable against Assignor in
accordance with its terms. The execution, delivery and performance of this
Trademark Assignment does not conflict with, result in a breach of, or
constitute a default under any applicable law, judgment, order, injunction,
decree, rule or regulation, or ruling of any court or governmental
instrumentality, or the articles of incorporation, bylaws or resolutions of the
Board of Directors of Assignor, or conflict with, constitute grounds for
termination of or result in a breach of or constitute a default under any
agreement, instrument, license or permit to which Assignor is or will be
subject.
Assignor hereby further covenants and agrees that Assignor will communicate
to Assignee, its successors, legal representatives and assignees, any facts
known to Assignor respecting said marks, and at Assignee's sole expense testify
in any legal proceeding, sign all lawful papers, execute all applications for
registration, make all rightful oaths, and generally do everything possible to
aid the said Assignee, its successors, legal representatives and assigns, to
obtain and enforce proper protection for said marks in all countries.
Assignor and Assignee agree that, notwithstanding any other provision of
this Trademark Assignment, this Trademark Assignment shall be effective on and
after _________, 2002.
IN WITNESS WHEREOF, this Assignment of Trademarks is executed at Boston,
Massachusetts, this ____ day of ____________, 2002.
POWERCERV CORPORATION
By: ___________________________________
ATTEST:
By: ___________________________________
POWERCERV TECHNOLOGIES CORPORATION
By: ___________________________________
ATTEST:
By: ___________________________________
CERTIFICATION
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF _________________ )
On this ____ day of __________ 2002, before me, the undersigned, a Notary
Public for the Commonwealth of Massachusetts, personally appeared
________________________, personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person who executed the foregoing instrument
as _________________ ___________ of the corporation named therein, and
acknowledged to me that he executed the same as his voluntary act on behalf of
such corporation with authority to do so for the purposes therein set forth.
---------------------------------------
Notary Public
My Commission expires: ___________________
SCHEDULE A to Assignment of Trademarks
EXHIBIT E
ASSIGNMENT OF COPYRIGHTS
WHEREAS, PowerCerv Corporation, and PowerCerv Technologies Corporation,
each of which is a Florida corporation having its principal place of business at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (collectively,
"Assignor"), owns all right, title and interest in original works (whether
regarded as literary works or computer programs under applicable law) relating
to certain products designed and manufactured by Assignor, including, but not
limited to, those listed on Schedule A attached hereto (collectively, the
"Work");
WHEREAS, PCV Acquisition, Inc., a Delaware corporation having its principal
place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ("Assignee"),
desires to obtain the entire right, title, and interest in, to and under the
Work including the copyright(s) thereof;
NOW, THEREFORE, for good and valuable consideration paid by the Assignee to
the Assignor simultaneously herewith, pursuant to that certain Asset Purchase
Agreement dated as of October 1, 2002 (the "Agreement"), receipt of which is
hereby acknowledged by the Assignor, and for other good and valuable
consideration, the said Assignor, subject to the penultimate paragraph hereof;
Assignor hereby assigns, transfers and sets over unto the Assignee the
entire right, title, and interest in and to the Work, the entire right, title
and interest in and to any and all statutory or common law copyrights or
copyright registrations covering the Work, including: any and all renewals and
extensions of those copyrights that may be secured under the laws now or
hereafter in force in the United States and throughout the world; any and all
causes of action heretofore accrued in the Assignor's favor for infringement of
the aforesaid copyright(s); and any and all rights, including but not limited
to, the rights to reproduce the Work in copies or other embodiment; to prepare
derivative works based upon the Work; to distribute copies or other embodiments
of the Work to the public by sale or other transfer of ownership, or by rental,
lease or lending; to perform the Work publicly; and to display the Work
publicly;
To have and to hold the same unto the Assignee, its successors, legal
representatives and assigns, for and during the existence of all copyright(s)
and any and all renewals and extensions thereof absolutely and forever; and
Assignor hereby authorizes and requests the Register of Copyrights of the United
States, and any official of any country or countries foreign to the United
States, and any official of any country or countries foreign to the United
States, whose duty it is to issue copyright registrations or similar indicia of
copyright, to issue such copyright, registrations for said Work to Assignee, its
successors, legal representatives and assigns.
Assignor hereby covenants and represents that the execution, delivery and
performance of this Copyright Assignment by Assignor has been duly and validly
authorized by all necessary corporate action and this Copyright Assignment has
been duly and validly executed and delivered by Assignor and constitutes a valid
and legally binding agreement of Assignor, enforceable against Assignor in
accordance with its terms. The execution, delivery and performance of this
Copyright Assignment does not conflict with, result in a breach of, or
constitute a default under, any applicable law, judgment, order, injunction,
decree, rule or regulation, or ruling of any court or governmental
instrumentality, or the articles of incorporation, bylaws or resolutions of the
Board of Directors of Assignor, or conflict with, constitute grounds for
termination of or result in a breach of or constitute a default under any
agreement, instrument, license or permit to which Assignor is or will be
subject.
Assignor hereby covenants and agrees that Assignor shall forthwith upon
Assignee's written request and at Assignee's sole expense take any and all steps
and execute, acknowledge, and deliver to the Assignee any and all further
instruments and assurances necessary or expedient in order to vest the aforesaid
Work and copyright(s) and causes of action more effectively in the Assignee.
Assignor hereby further covenants and agrees that Assignor will communicate
to the Assignee, its successors, legal representatives and assigns, any facts
known to Assignor respecting said Work and said copyright(s), and at Assignee's
sole expense testify in any legal proceedings, sign all lawful papers, execute
all copyright applications and copyright renewal applications, make all rightful
oaths, and generally do everything possible to aid the said Assignee, its
successors, legal representatives and assigns, to obtain and enforce proper
copyright protection for said Work in all countries.
Assignor hereby constitutes and appoints the Assignee its true and lawful
attorney-in-fact with full power of substitution, in Assignor's name and stead,
but for the Assignee's benefit, to take any and all steps (including proceeding
at law, in equity or otherwise), and to execute, acknowledge and deliver any and
all instruments and assurances necessary or expedient in order to vest the
aforesaid Work and copyright(s) and causes of action more effectively in the
Assignee, or to protect the same, or to enforce any claim or right of any kind
with respect thereto. The Assignor hereby declares that the foregoing power is
coupled with an interest and is irrevocable.
Assignor and assignee agree that, notwithstanding any other provision of
this Copyright Assignment, this Copyright Assignment shall be effective on and
after ___________, 2002.
IN WITNESS WHEREOF, this Assignment of Copyrights is executed at Boston,
Massachusetts, this ___ day of ____________, 2002.
POWERCERV CORPORATION
By:___________________________________
ATTEST:
By:
---------------------------------------
POWERCERV TECHNOLOGIES CORPORATION
By:___________________________________
ATTEST:
By:
---------------------------------------
CERTIFICATION
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF SUFFOLK )
On this ____ day of __________, 2002, before me, the undersigned, a Notary
Public for the Commonwealth of Massachusetts, personally appeared
________________________, personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person who executed the foregoing instrument
as __________________ __________________ of the corporation named therein, and
acknowledged to me that he executed the same as his voluntary act on behalf of
such corporation with authority to do so for the purposes therein set forth.
--------------------------------------
Notary Public
My Commission expires:
----------------------------
SCHEDULE A to Assignment of Copyrights
EXHIBIT F
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (the "Agreement") is made and entered into
as of _________ by and between PCV Acquisition, Inc., a Delaware corporation
("Buyer") and PowerCerv Corporation and PowerCerv Technologies Corporation, each
a Florida corporation (collectively, "Seller"). This Agreement is being entered
into pursuant to Section 6.3(k) of that certain Asset Purchase Agreement of even
date by and among Buyer, ASA International, Inc. ("ASA"), and Seller (the
"Purchase Agreement"), and the consideration contained therein applies for this
Agreement. Capitalized terms used but not otherwise defined herein shall have
the meanings set forth in the Purchase Agreement.
Seller agrees that for a period of four (4) years from the date hereof,
Seller shall not directly or indirectly:
(a) Call upon, divert, influence or solicit, or attempt to call upon,
divert, influence or solicit any employee or customer of Buyer or
ASA;
(b) Divulge any names and addresses of any information concerning any
employee or customer of Buyer or ASA;
(c) Disclose any information or knowledge relating to Buyer or ASA,
including Buyer's or ASA's methods of conducting business, to any
person, persons, firms, corporations, or other entities
unaffiliated with Buyer or ASA for any reason or for any purpose
whatsoever;
(d) Carry on, or own, manage, operate, control, be employed by, at
any level, participate in or be connected in any manner with any
person, firm or corporation which carries on, business in direct
competition with Buyer or ASA. For the purpose of this agreement,
the term "in direct competition" shall mean any person, firm or
corporation selling business enterprise software.
Seller further agrees that for a period of two (2) years form the date
hereof, Seller shall not hire nor solicit for employment nor induce to cease
employment with Buyer or ASA, any employee of Buyer or ASA.
The restrictive covenants contained herein are intended to apply throughout
the world.
Seller acknowledges that the restrictions contained herein, in view of the
nature of the business in which Buyer or ASA is engaged, are reasonable and
necessary in order to protect the legitimate interests of Buyer or ASA, and that
any violation thereof could result in irreparable injuries to Buyer or ASA.
Seller acknowledges that, in the event of a breach or threatened breach of the
restrictions herein, Buyer shall be entitled to obtain from any court of
competent jurisdiction, preliminary and permanent injunctive relief restraining
Seller from any violation of the foregoing.
Nothing herein shall be construed as prohibiting Buyer or ASA from pursuing
any other remedies available for such breach or threatened breach, including
recovery of damages and an equitable accounting of all earnings, profits and
other benefits arising from such violation, from Seller.
Seller acknowledges its intention that Buyer or ASA shall have the broadest
possible protection of the value of the business of Buyer or ASA in the trade
area set forth above consistent with public policy, and it will not violate the
intent of the parties if any court of competent jurisdiction should determine,
in an appropriate decree, that, consistent with established precedent of the
forum state, the public policy of such state requires a more limited restriction
in geographical area or duration of the aforesaid covenant.
This Agreement shall be enforceable against and inure to the benefit of the
successors and assigns of the Buyer or ASA and shall be enforceable against and
inure to the benefit of the successors and assigns of the Seller.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts without regard to its conflicts of law
rules.
This Agreement may be executed in one or more counterparts, each of which
shall be an original, but which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, PCV Acquisition, Inc. PowerCerv Corporation and
PowerCerv Technologies Corporation have each caused this instrument to be signed
in its name by its duly authorized officer to be effective as of the date first
above written.
PCV ACQUISITION, INC.
By:___________________________________
POWERCERV CORPORATION
By:___________________________________
POWERCERV TECHNOLOGIES CORPORATION
By: ___________________________________