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Exhibit 10.2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of July 13, 1999,
by and among ServiceWare, Inc., a Pennsylvania corporation ("ServiceWare"),
Xxxxxx Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of ServiceWare ("Sub"), and Xxxxxx Group, Inc., a Delaware
corporation ("Xxxxxx").
WHEREAS, the Boards of Directors of ServiceWare, Sub and Xxxxxx deem it
advisable and in the best interests of each corporation and its respective
stockholders that ServiceWare and Xxxxxx combine in order to advance the
long-term business interests of ServiceWare and Xxxxxx;
WHEREAS, the strategic combination of ServiceWare and Xxxxxx shall be
effected by the terms of this Agreement through a transaction in which Sub will
merge with and into Xxxxxx, Xxxxxx will become a wholly owned subsidiary of
ServiceWare and the stockholders of Xxxxxx will become shareholders of
ServiceWare (the "Merger");
WHEREAS, Xxxxx Xxxxxx, Xxxxxxxxx Xxxxxx Private Equity Partners, LP,
Unterberg Harris and X.X. Xxxxxxxxx Towbin, LP (the "Xxxxxx Principal
Stockholders") hold shares of the capital stock of Xxxxxx representing, in the
aggregate, approximately 76% of the voting power of all issued and outstanding
capital stock of Xxxxxx;
WHEREAS, the Xxxxxx Principal Stockholders have agreed, pursuant to a
letter agreement in substantially the form of Exhibit A-l attached hereto (the
"Xxxxxx Principal Stockholder Agreements") to vote all the shares of capital
stock of Xxxxxx beneficially owned by them in favor of the matters included as
part of the Xxxxxx Stockholder Approval (as defined in Section 7.01 (a)) and to
be bound by the provisions of Sections 6.01(a) and 8.03 hereof;
WHEREAS, Xxxx Xxxxxx, Xxxxx Xxxxx, Poly Ventures II, L.P., Geocapital
III, L.P. and Norwest Equity Partners V (the "ServiceWare Principal
Shareholders") hold shares of capital stock of ServiceWare, representing, in the
aggregate, approximately 97% of the voting power of all issued and outstanding
capital stock of ServiceWare;
WHEREAS, the ServiceWare Principal Shareholders have agreed, pursuant
to a letter agreement in substantially the form of Exhibit A-2 attached hereto
(the "ServiceWare Principal Shareholder Agreements") to vote all the shares of
capital stock of ServiceWare beneficially owned by them in favor of the matters
included as part of the ServiceWare Shareholder Approval (as defined in Section
7.01 (a)) and to be bound by the provisions of Section 6.01(b) hereof;
WHEREAS, immediately prior to the Merger, the Articles of Incorporation
of ServiceWare shall be amended and restated as set forth in Exhibit B attached
hereto (the "ServiceWare Articles");
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NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
THE MERGER
Section 1.01 Effective Time of the Merger. Subject to the provisions of
this Agreement, a certificate of merger (the "Certificate of Merger") in such
form as is required by the relevant provisions of the Delaware General
Corporation Law ("DGCL") shall be duly prepared, executed and acknowledged by
the Continuing Corporation (as defined in Section 1.03) and thereafter delivered
to the Secretary of State of the State of Delaware, for filing, as provided in
the DGCL, as soon as practicable on or after the Closing Date (as defined in
Section 1.02). The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware or at
such time thereafter as is provided in the Certificate of Merger (the "Effective
Time").
Section 1.02 Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m., prevailing time, on a date (the "Closing Date") to be
specified by ServiceWare and Xxxxxx, which shall be no later than the second
business day after satisfaction or waiver of the latest to occur of the
conditions set forth in Article VII (other than those conditions that, by their
terms, cannot be satisfied until the Closing Date), at the offices of Xxxxxx,
Xxxxx & Xxxxxxx, LLP, One Oxford Centre, 32nd floor, Xxxxxxxxxx, XX 00000, or at
such other place as ServiceWare and Xxxxxx may agree.
Section 1.03 Effects of the Merger.
(a) At the Effective Time (i) the separate existence of Sub shall cease
and Sub shall be merged with and into Xxxxxx (Sub and Xxxxxx are sometimes
referred to below as the "Constituent Corporations" and Xxxxxx is sometimes
referred to below as the "Continuing Corporation"), (ii) the Certificate of
Incorporation of Sub in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation of the Continuing Corporation, and (iii) the
Bylaws of Sub as in effect immediately prior to the Effective Time shall be the
Bylaws of the Continuing Corporation.
(b) At and after the Effective Time, the Continuing Corporation shall
possess all the rights, privileges, powers and franchises of a public as well as
of a private nature, and be subject to all the restrictions, disabilities and
duties of each of the Constituent Corporations; and all and singular rights,
privileges, powers and franchises of each of the Constituent Corporations, and
all property, real, personal and mixed, and all debts due to either of the
Constituent Corporations on whatever account, as well as all other things in
action or belonging to each of the Constituent Corporations, shall be vested in
the Continuing Corporation, and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Continuing Corporation as they were of the Constituent
Corporations, and the title to any real estate vested by deed or otherwise, in
either of the Constituent Corporations, shall not revert or be in any way
impaired; but all rights of creditors and all liens upon any property of either
of the
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Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the Constituent Corporations shall thereafter attach
to the Continuing Corporation, and may be enforced against it to the same extent
as if such debts and liabilities had been incurred by it.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.01 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of Xxxxxx or Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Continuing
Corporation.
(b) Cancellation of Treasury Stock. All shares of common stock, par
value $.0001 per share of Xxxxxx ("Xxxxxx Common Stock"), if any, that are owned
by Xxxxxx as treasury stock shall be canceled and retired and shall cease to
exist, and no stock of ServiceWare or other consideration shall be delivered in
exchange therefor.
(c) Exchange of Xxxxxx Common Stock. At the Effective Time, except as
provided in Section 2.01(j), each issued and outstanding share of Xxxxxx Common
Stock (other than shares to be canceled in accordance with Section 2.01(b))
shall be converted into the right to receive 0.3330 (the "Conversion Number")
fully paid and nonassessable shares of common stock, no par value, of
ServiceWare ("ServiceWare Common Stock"). All such shares of Xxxxxx Common
Stock, when so converted at the Effective Time, shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the shares of
ServiceWare Common Stock to be issued in consideration therefor upon the
surrender of such certificate to ServiceWare in accordance with Section 2.02.
(d) Exchange of Xxxxxx Preferred Stock. At the Effective Time, except
as provided in Section 2.01(j), (i) each issued and outstanding share of Series
A Non-Cumulative Convertible Preferred Stock of Xxxxxx ("Xxxxxx Series A
Preferred Stock") shall be converted into the right to receive 0.3796 fully paid
and nonassessable shares of Series E Convertible Preferred Stock, par value
$1.00 per share of ServiceWare as set forth in the ServiceWare Articles
("ServiceWare Series E Preferred Stock"), and (ii) each issued and outstanding
share of Series B Non-Cumulative Convertible Preferred Stock of Xxxxxx ("Xxxxxx
Series B Preferred Stock" and, together with the Xxxxxx Series A Preferred
Stock, the "Xxxxxx Preferred Stock") shall be converted into the right to
receive 12.9042 fully paid and nonassessable shares of Series E Convertible
Preferred Stock. All such shares of Xxxxxx Preferred Stock, when so converted at
the Effective Time, shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto,
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except the right to receive the shares of ServiceWare Series E Preferred Stock
to be issued in consideration therefor upon the surrender of such certificate to
ServiceWare in accordance with Section 2.02.
(e) Warrants to Purchase Xxxxxx Common Stock. At the Effective Time,
except as provided in Section 2.01(j), each then outstanding warrant to purchase
one share of Xxxxxx Common Stock (the "Xxxxxx Common Stock Warrants") shall be
exchanged for a warrant to purchase a number of shares of ServiceWare Common
Stock equal to the Conversion Number (the "ServiceWare Common Stock Warrants")
at an exercise price equal to the exercise price of such Xxxxxx Common Stock
Warrant divided by the Conversion Number. All such Xxxxxx Common Stock Warrants,
when so exchanged at the Effective Time, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a Xxxxxx Common Stock Warrant shall cease to have any rights with
respect thereto, except the right to receive the ServiceWare Common Stock
Warrants to be issued in consideration therefor upon the surrender of such
Xxxxxx Common Stock Warrants to ServiceWare in accordance with Section 2.02.
(f) Xxxxxx Stock Options. At the Effective Time, all then outstanding
options to purchase Xxxxxx Common Stock under the Xxxxxx Group Inc. 1996 Stock
Plan (the "Xxxxxx Option Plan") shall be assumed by ServiceWare in accordance
with Section 6.07.
(g) Exchange of Warrants and Notes. At the Effective Time, except as
provided in Section 2.01(j), each $1,000 in outstanding principal amount plus
accrued and unpaid interest of subordinated promissory notes (each, a "November
Note") issued pursuant to the Note and Preferred Stock Warrant Purchase
Agreement dated as of November 30, 1998 among Xxxxxx and certain purchasers and
the related warrant to purchase 1,250 shares of Xxxxxx'x Series C Non-Cumulative
Convertible Preferred Stock (each, a "Xxxxxx Preferred Stock Warrant" and,
together with the related November Note, a "Unit") shall be exchanged for
416.2613 fully paid and nonassessable shares of Series E Convertible Preferred
Stock. All such Units, when so converted at the Effective Time, shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a Unit shall cease to have any rights with respect
thereto, except the right to receive the shares of ServiceWare Series E
Preferred Stock to be issued in consideration therefor upon the surrender of
such Unit to ServiceWare in accordance with Section 2.02.
(h) Notes. At the Effective Time, except as provided in Section
2.10(j), the notes issued by Xxxxxx on June 1, 1999 in the aggregate principal
amount of $500,000, the additional notes issued by Xxxxxx on June 25, 1999 in
the aggregate principal amount of $500,000 and the notes issued by Xxxxxx on
July 13, 1999 in the aggregate principal amount of $200,000 (collectively, the
"Working Capital Notes") will be exchanged at the rate of 277.5075, 302.7355 and
302.7355, respectively, fully paid and nonassessable shares of Series E
Convertible Preferred Stock for each $1,000 in outstanding principal amount plus
accrued and unpaid interest thereon. All such Working Capital Notes, when so
exchanged at the Effective Time, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a Working Capital Note shall cease to have any rights with respect thereto,
except the right to receive the ServiceWare Series E Preferred Stock to be
issued in consideration therefor upon the surrender of such Working Capital
Notes to ServiceWare in accordance with Section 2.02.
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(i) Escrow of Shares
(i) Escrow of Shares. Notwithstanding anything to the contrary
contained in this Article II, at the Effective Time, shares of Common Stock and
Series E Preferred Stock representing, in the aggregate, two percent of the
Fully Diluted Merger Consideration (as defined below) (the "Escrowed Shares")
issuable to each person or entity holding Xxxxxx Common Stock, Xxxxxx Preferred
Stock, Units and/or Working Capital Notes (each, an "Escrow Participant"), shall
not be delivered by ServiceWare to such Escrow Participant upon surrender of its
Xxxxxx Common Stock, Xxxxxx Preferred Stock, Units and/or Working Capital Notes
and shall instead be deposited in escrow with an escrow agent selected by
ServiceWare and reasonably satisfactory to Xxxxxx (the "Escrow Agent").
ServiceWare shall deliver into escrow, on behalf of each Escrow Participant,
certificates representing shares of ServiceWare Common Stock and ServiceWare
Series E Preferred Stock (rounded to the nearest whole share) in the proportion
that the Fully Diluted Merger Consideration issuable to such Escrow Participant
bears to the Fully Diluted Merger Consideration issuable to all Escrow
Participants (in each case without giving effect the escrow of shares pursuant
to this Section 2.01 (i)). Each certificate for Escrowed Shares shall be
registered in the name of the appropriate Escrow Participant. As a condition to
its receipt of merger consideration hereunder, each Escrow Participant shall
execute a stock power in blank with respect to each certificate for Escrowed
Shares and shall deliver such stock power to ServiceWare. ServiceWare shall
deliver to the Escrow Agent (A) two share certificates, together with signed
stock powers, with respect to the ServiceWare Common Stock deposited in escrow
on behalf of each Escrow Participant that will receive ServiceWare Common Stock
in the Merger, each representing one-half of such Escrow Participant's Escrowed
Shares of ServiceWare Common Stock and (B) two share certificates, together with
signed stock powers, with respect to the ServiceWare Series E Preferred Stock
deposited in escrow on behalf of each Escrow Participant that will receive
ServiceWare Series E Preferred Stock in the Merger, each representing one-half
of such Escrow Participant's Escrowed Shares of ServiceWare Series E Preferred
Stock. The Escrow Agent shall hold such certificates until it it is required to
deliver them pursuant to Section 2.01(i)(iii).
(ii) Delivery of Shares. In the event that the Combined
Company (as defined below) shall, from July 1, 1999 through December 31, 1999,
receive orders or binding commitments from the prospective customers of Xxxxxx
listed on Schedule 1 attached hereto ("Bookings"):
(A) in an aggregate amount equal to less than $6
million, the Escrowed Shares and related stock powers shall be delivered to
ServiceWare and canceled;
(B) in an aggregate amount equal to at least $6
million but less than $7.5 million, one-half of the number of the Escrowed
Shares deposited in escrow on behalf of each Escrow Participant (rounded to the
nearest whole share) and related stock powers shall be delivered to such Escrow
Participant, and the remaining Escrowed Shares and related stock powers shall be
delivered to the Company and canceled; or
(C) in an aggregate amount equal to $7.5 million or
more, all the Escrowed Shares and related stock powers deposited in escrow on
behalf of each Escrow Participant shall be delivered to such Escrow Participant.
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(iii) Procedures. Promptly following the end of the calendar year
ending December 31, 1999 (but in any event no later than March 31, 1999),
ServiceWare shall determine the amount of Bookings. Upon making such
determination, ServiceWare shall deliver to the Escrow Agent and the
Representative a certificate of ServiceWare's Chief Executive Officer (an
"Officer's Certificate") (A) certifying (I) the amount of Bookings and (II) if
the Officer's Certificate indicates that amount of the Bookings is less than
$7.5 million reasonably detailed back-up information as to the Bookings received
(by customer and amount) and (B) directing the Escrow Agent to deliver the
Escrowed Shares in accordance with the appropriate provision of Section
2.01(i)(ii), unless the Escrow Agent receives a timely Participant Request (as
defined below). If the Officer's Certificate indicates that the amount of the
Bookings is less than $7.5 million, no later than ten days following delivery of
the Officer's Certificate, the Representative may request (a "Participant
Request") a review by ServiceWare's independent certified public accountants
(the "Accountants") of the Bookings. Upon such request, ServiceWare shall engage
the Accountants to perform such review and shall use its best efforts to cause
such Accountants to determine the amount of the Bookings in no more than 30 days
from the date of the Participant Request. The Accountants shall deliver their
preliminary report to ServiceWare and to the Representative, and shall entertain
questions from such parties with respect to such report. The final determination
of the Accountants shall be made no later than 30 days after delivery by the
Accountants of their preliminary report. The final determination of the
Accountants (the "Accountants' Determination"), which shall be delivered in
writing to ServiceWare, the Representative and the Escrow Agent, shall state the
amount of the Bookings and shall be final and binding on ServiceWare and the
Escrow Participants. If the Accountants determine that the actual amount of the
Bookings differs from the amount of Bookings as certified in the Officers'
Certificate and, as a result of such difference, the Escrow Participants would
have received fewer Escrowed Shares than they are entitled to, the cost of the
review shall be borne by ServiceWare; otherwise, the cost of the review shall be
borne by the Escrow Participants.
If the Escrow Agent does not receive a Participant Request
within 10 days after the Escrow Agent receives the Officer's Certificate, the
Escrow Agent shall deliver the Escrowed Shares and related stock powers in
accordance with the directions set forth in the Officer's Certificate. If the
Escrow Agent receives a Participant Request within 10 days after the Escrow
Agent receives the Officer's Certificate, the Escrow Agent shall retain the
Escrowed Shares and shall deliver them and the related stock powers only upon
receipt of (i) joint instructions from ServiceWare and the Representative
directing the Escrow Agent as to delivery of the Escrow Shares or (ii) receipt
of the Accountants' Determination, in which event the Escrow Agent shall deliver
the Escrowed Shares and related stock powers in accordance with the appropriate
provision of Section 2.01(i)(ii), depending on the amount of the Bookings
specified in the Accountants' Determination.
(iv) Definitions.
(A) "Fully Diluted Merger Consideration" means the aggregate
number of shares of ServiceWare Common Stock (I) issuable on conversion of
Xxxxxx Common Stock, (II) issuable on exercise of ServiceWare Common Stock
Warrants issuable in exchange for Xxxxxx Common Stock Warrants, (III) issuable
on conversion of ServiceWare Series E Preferred Stock and (IV) issuable on
exercise of options to purchase Xxxxxx Common Stock pursuant to Section 6.07.
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(B) "Combined Company" means ServiceWare, Inc. and Xxxxxx
Group, Inc., on a pro forma combined basis as if the Merger had occurred on July
1, 1999.
(v) Escrow Agent.
(A) The Escrow Agent (I) shall have no duties or
responsibilities except as expressly set forth in this Section 2.01(i), (II)
shall not be responsible in its capacity as Escrow Agent for any recitals,
statements, representations or warranties contained herein, or in any
certificate or other document referred to herein, the validity, effectiveness or
enforceability of this Agreement, or the failure of any party to perform any of
its obligations hereunder, (III) shall not be required to initiate or conduct
any litigation or collection proceedings and (IV) shall not be responsibility
for any action taken or omitted to be taken hereunder except for its gross
negligence or willful misconduct. The Escrow Agent may consult with legal
counsel and other experts selected by it in its sole discretion at the expense
of ServiceWare, and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel or
experts.
(B) The Escrow Agent shall be entitled to rely upon any
certification, notice or other communication believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper person or
entity and delivered in accordance with this Agreement. The Escrow Agent shall
not be required to take any action which shall expose it to personal liability
or which is contrary to this Agreement or applicable law.
(C) The Escrow Agent shall not be deemed to have knowledge or
notice of the occurrence of any event unless it shall have received written
notice thereof in accordance with this Agreement.
(D) ServiceWare hereby agrees to indemnify the Escrow Agent
for any and all losses, liabilities, damages, deficiencies or expenses of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Escrow Agent in its capacity as such in any way relating to or
arising out of this Agreement or the transactions contemplated hereby, including
the enforcement of any of the terms hereof. Except as expressly required herein,
the Escrow Agent shall in all cases be fully justified in failing or refusing to
act hereunder unless it shall receive further assurances to its reasonable
satisfaction from ServiceWare of its indemnification obligations hereunder and
against any and all losses, liabilities, damages, deficiencies or expenses that
may be incurred by the Escrow Agent by reason of taking or continuing to take
such action in accordance with the terms hereof.
(E) Any fees or other amounts due to the Escrow Agent in
connection with its obligations hereunder shall be paid by ServiceWare.
(j) Adjustment of Conversion Number and Conversion Rates.
(1) In the event that, between the date of execution of this
Agreement and the Closing, (i) ServiceWare issues or agrees to issue any equity
security or security convertible into or exchangeable for any equity security
resulting in a change in the number of shares of
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ServiceWare Common Stock on a fully diluted as-converted basis (other than (A)
pursuant to this Agreement, (B) the issuance of (1) warrants to PNC Bank,
National Association ("PNC") pursuant to the Second Amendment to Amended and
Restated Loan Agreement between ServiceWare and PNC (the "PNC Warrants") and (2)
warrants exercisable for not more than 28,000 shares of ServiceWare Common Stock
issuable pursuant to Convertible Demand Promissory Notes issued and to be issued
by ServiceWare for working capital financing in May, June and July 1999, (such
warrants in clauses (1) and (2) aggregating no more than 38,000 shares) and (C)
in connection with the issuance of ServiceWare's Series D Convertible Preferred
Stock and related warrants to purchase Common Stock in the ServiceWare Financing
(as defined in Section 7.01(d)), (ii) subdivides (by any stock split, stock
dividend or otherwise) its outstanding shares of any equity security into which
any security of Xxxxxx is to be converted or exchanged in the Merger into a
larger number of shares or combines such securities into a smaller number of
shares, then, in each such case, the Conversion Number and the rate of
conversion of the Xxxxxx Preferred Stock, Units and Working Capital Notes into
securities of ServiceWare shall be appropriately adjusted.
(2) The Conversion Number and the number of shares of
ServiceWare Series E Preferred Stock issuable in exchange for Xxxxxx Preferred
Stock, Units and Working Capital Notes have been determined on the basis of an
allocation that takes account of accrued and unpaid interest on the November
Notes and the Working Capital Notes through July 23, 1999. In the event that the
Effective Time occurs prior to or after July 23, 1999, the Conversion Number and
the number of shares of ServiceWare Series E Preferred Stock issuable in
exchange for Xxxxxx Preferred Stock, Units and Working Capital Notes will be
appropriately adjusted to take account of the difference in the amount of
accrued and unpaid interest on the November Notes and the Working Capital Notes.
(k) Allocation Schedule. Attached to this Agreement as Annex B
is a schedule prepared by Xxxxxx showing the allocation of the merger
consideration under this Section 2.01 among the holders of securities of Xxxxxx.
Section 2.02 Exchange of Securities.
(a) Exchange Procedures. Upon surrender to ServiceWare of a
certificate for Xxxxxx Common Stock or Xxxxxx Preferred Stock (a "Certificate")
or of any of the Units or Working Capital Notes, together with a duly executed
shareholder representation letter in substantially the form of Exhibit D
attached hereto (a "Representation Letter"), subject to Section 2.01(i), the
holder of such Certificate, Unit or Working Capital Note shall be entitled to
receive in exchange therefor a certificate representing the number of shares of
ServiceWare Common Stock or ServiceWare Series E Preferred Stock, as the case
may be, which such holder has the right to receive in respect of such
Certificate, Unit or Working Capital Note pursuant to the provisions of this
Article II. Any Certificate or Xxxxxx Preferred Stock Warrant so surrendered
shall forthwith be canceled, and any Working Capital Note or November Note so
surrendered shall forthwith be marked paid. Upon surrender to ServiceWare of a
Xxxxxx Common Stock Warrant, together with a duly executed Representation
Letter, the holder of such Xxxxxx Common Stock Warrant shall be entitled to
receive in exchange therefor a ServiceWare Common Stock Warrant exercisable for
the number of shares of ServiceWare Common Stock to which such holder is
entitled pursuant to the
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provisions of this Article II. Any Xxxxxx Common Stock Warrant so surrendered
shall forthwith be canceled. From and after the Effective Time, no interest will
accrue or be payable on any amount payable upon surrender of a Certificate, a
Xxxxxx Common Stock Warrant, a Unit or a Working Capital Note. No ServiceWare
Common Stock or ServiceWare Series E Preferred Stock will be issued to any
person or entity other than the person or entity in whose name the Certificate,
Unit or Working Capital Note surrendered for exchange is registered, and no
ServiceWare Common Stock Warrant will be issued to any person or entity other
than the person in whose name the Xxxxxx Common Stock Warrant surrendered for
exchanged is registered.
(b) Distributions with Respect to Unexchanged Shares; Voting
Rights. Notwithstanding any other provision of this Agreement, no dividends or
other distributions on shares of ServiceWare Common Stock or ServiceWare Series
E Preferred Stock shall be paid until such Certificate, Working Capital Note or
Unit is surrendered for exchange as provided herein, nor shall any ServiceWare
Common Stock Warrant to be issued in exchange for a Xxxxxx Common Stock Warrant
be exercisable until such Xxxxxx Common Stock Warrant is surrendered for
exchange as provided herein; provided that, upon surrender, the holder of any
Certificate, Working Capital Note or Unit shall be entitled to receive dividends
and distributions declared between the Effective Time and surrender on the
Serviceware Common Stock or ServiceWare Series E Preferred Stock that such
holder is entitled to receive. At the Effective Time persons shown on the books
of Xxxxxx as the record holders of Certificates, Working Capital Notes or Units
shall be entitled to vote and give and express consent with respect to that
number of shares of ServiceWare Common Stock or ServiceWare Series E Preferred
Stock issuable pursuant to this Article II upon conversion or exchange of their
Certificates, Working Capital Notes or Units at any regular or special meeting
of ServiceWare's shareholders with a record date, or by written consent dated,
after the Effective Time.
(c) Fractional Shares. No fractional shares of ServiceWare
Common Stock or ServiceWare Series E Preferred Stock or cash in lieu thereof
shall be issued or paid in the Merger, and the number of shares of ServiceWare
Common Stock or ServiceWare Series E Preferred Stock to be issued shall be
rounded to the nearest whole share. Whether or not fractional shares are
issuable shall be determined on the basis of the total number of shares of
Xxxxxx Common Stock, Xxxxxx Preferred Stock, Units and Working Capital Notes
that any holder is surrendering for exchange and the total number of shares of
ServiceWare Common Stock or ServiceWare Series E Preferred Stock issuable in
exchange.
(c) No Liability. Notwithstanding any other provision of this
Agreement, neither ServiceWare nor any other person shall be liable to any
person for any amount properly delivered to a public official upon his request
pursuant to applicable abandoned property, escheat or similar laws.
(d) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and such arrangements as ServiceWare shall reasonably
require as indemnity against any claim that may be made against it with respect
to such Certificate, ServiceWare will issue in exchange for such lost, stolen or
destroyed Certificate a
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certificate representing shares of ServiceWare Common Stock or ServiceWare Serie
E Preferred Stock, as the case may be, as issuable in respect thereof pursuant
to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXX
Xxxxxx represents and warrants to ServiceWare and Sub that the
statements contained in this Article III are true and correct as of the date
hereof and will be true and correct at the Effective Time, except as set forth
in the disclosure schedule delivered by Xxxxxx to ServiceWare on or before the
date of this Agreement (the "Xxxxxx Disclosure Schedule"). The Xxxxxx Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article III and the disclosure in any
paragraph shall be deemed to qualify all other clearly relevant paragraphs in
this Article III.
Section 3.01 Organization. Xxxxxx is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power to own, lease and operate its
property and to carry on its business as now being conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified is reasonably expected
to have a material adverse effect on its business, assets (including intangible
assets), financial condition or results of operations ("Material Adverse
Effect"). Xxxxxx does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any corporation, partnership, joint venture or other business association
or entity.
Section 3.02 Capital Structure.
(a) The Xxxxxx Disclosure Schedule sets forth (i) the authorized,
issued and outstanding capital stock of Xxxxxx, (ii) the number of shares of
each class or series of Xxxxxx capital stock issuable as of the date hereof
under outstanding warrants or other rights to purchase capital stock (other than
employee stock options referred to in clause (iii) below) or held in the
treasury of Xxxxxx (iii) the number of shares of Xxxxxx Common Stock reserved
for issuance pursuant to stock options granted and outstanding under each Xxxxxx
Option Plan, (iv) the number of shares of Xxxxxx Common Stock available for
grant under each Xxxxxx Option Plan, and (v) the amount of outstanding principal
and accrued and unpaid interest as of July 23, 1999 on the November Notes and
the Working Capital Notes. All outstanding shares of Xxxxxx Common Stock and
Xxxxxx Preferred Stock are duly authorized, validly issued, fully paid and
nonassessable. All shares of Xxxxxx Common Stock and Xxxxxx Preferred Stock
subject to issuance as specified above, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Xxxxxx
has no obligations, contingent or otherwise, to repurchase, redeem or otherwise
acquire any shares of Xxxxxx Common Stock, Xxxxxx Preferred Stock or any other
capital stock of Xxxxxx or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any entity.
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(b) Except as set forth in Section 3.02 of the Xxxxxx Disclosure
Schedule, there are no equity securities of any class of Xxxxxx, or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding. Except as set forth in Section 3.02 of the Xxxxxx
Disclosure Schedule, there are no options, warrants, equity securities, calls,
rights, commitments or agreements of any character to which Xxxxxx is a party or
by which it is bound obligating Xxxxxx to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of Xxxxxx or
obligating Xxxxxx to grant, extend, accelerate the vesting of or enter into any
such option, warrant, equity security, call, right, commitment or agreement.
Except as set forth in Section 3.02 of the Xxxxxx Disclosure Schedule, there are
no voting trusts, proxies or other agreements or understandings (including
agreements with respect to registration rights) with respect to the shares of
capital stock of Xxxxxx.
Section 3.03 Authority; No Conflict; Required Filings and Consents.
(a) Xxxxxx has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Xxxxxx, subject only to the Xxxxxx Stockholder
Approval (as defined in Section 7.01(a)). This Agreement has been duly executed
and delivered by Xxxxxx and, assuming the due authorization, execution and
delivery by ServiceWare and Sub, constitutes the valid and binding obligation of
Xxxxxx enforceable in accordance with its terms, except as such enforceability
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to creditors rights generally and (ii)
the availability of injunctive relief and other equitable remedies.
(b) The execution and delivery of this Agreement by Xxxxxx do not, and
the consummation of the transactions contemplated hereby will not, (i) conflict
with, or result in any violation or breach of any provision of the Certificate
of Incorporation or Bylaws of Xxxxxx, (ii) result in any violation or breach of,
or constitute (with or without notice or lapse of time, or both) a default (or
give rise to a right of termination, cancellation or acceleration of any
obligation) under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which Xxxxxx is a party or by which it or any of its properties or
assets may be bound, or (iii) subject to obtaining Xxxxxx Stockholder Approval
and compliance with the requirements set forth in Section 3.03(c) below,
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Xxxxxx
or any of its properties or assets, except in the case of (ii) and (iii) for any
such conflicts, violations, defaults, terminations, cancellations or
accelerations which are not reasonably expected to have a Material Adverse
Effect on Xxxxxx or on the ability of Xxxxxx to consummate the transactions
contemplated by this Agreement.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity"), is
required by or with respect to Xxxxxx in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing of the Certificate of Merger with the Delaware
Secretary of State,
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(ii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws and the laws of any foreign country and (iii) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, are not reasonably expected to have a Material Adverse Effect
on Xxxxxx.
Section 3.04 Financial Statements. Xxxxxx'x balance sheets as at
December 31, 1997 and 1998 and its statements of operations, cash flows and
shareholders' equity for the years then ended, audited and reported on by M.I.
Xxxxxxxx & Company L.L.C., independent certified public accountants for Xxxxxx,
and its unaudited interim balance sheets as at March 31, 1999 (the "Xxxxxx
Balance Sheet") and 1998 and its statements of operations, cash flows and
shareholders' equity for the periods then ended were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved ("GAAP") and fairly present the financial
position of Xxxxxx as at the respective dates and the results of its operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements (i) were or are subject to normal year-end adjustments
which were not or are not expected to be material in amount, and (ii) do not
contain footnote disclosure.
Section 3.05 No Undisclosed Liabilities. Xxxxxx does not have any
liabilities as of the date hereof, either accrued or contingent (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles), and whether due or to become due, which,
individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect on Xxxxxx, other than (i) liabilities reflected in the Xxxxxx
Balance Sheet, (ii) liabilities specifically described in this Agreement or in
the Xxxxxx Disclosure Schedule, (iii) normal or recurring liabilities incurred
since March 31, 1999 in the ordinary course of business consistent with past
practices and which are not individually or in the aggregate, material to the
business, results, operations or financial condition of Xxxxxx, (iv) borrowings
under the Transamerica Credit Documents, (v) liabilities under the Working
Capital Notes, (vi) liabilities relating to additional cash flow borrowings not
to exceed $500,000 and (vii) liabilities relating to this Agreement and the
transactions contemplated hereby.
Section 3.06 Absence of Certain Changes or Events. Since the date of
the Xxxxxx Balance Sheet, Xxxxxx has conducted its business only in the ordinary
course and in a manner consistent with past practice and, since such date, there
has not been (i) any material adverse change in Xxxxxx'x financial condition,
results of operations or business (a "Material Adverse Change"), excluding
changes in general economic conditions affecting companies generally; (ii) any
damage, destruction or loss (whether or not covered by insurance), which damage,
destruction or loss had or could be reasonably expected to have, a Material
Adverse Effect on Xxxxxx; (iii) any material change by Xxxxxx in its accounting
methods, principles or practices except as required by concurrent changes in
generally accepted accounting principles; (iv) any revaluation by Xxxxxx of any
of its assets having a Material Adverse Effect on Xxxxxx; or (v) except as
disclosed in the Xxxxxx Disclosure Schedule, any other action or event that
would have required the consent of ServiceWare pursuant to Section 5.01 of this
Agreement had such action or event occurred after the date of this Agreement and
that has or could be reasonably expected to have a Material Adverse Effect on
Xxxxxx.
Section 3.07 Taxes.
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(a) Definition of Taxes. For the purposes of this Agreement, a "Tax"
or, collectively, "Taxes," means any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) Xxxxxx has prepared and filed on a timely basis all
material federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") required to be filed relating to any and all
Taxes concerning or attributable to Xxxxxx or its operations, and such Returns
are true and correct in all material respects and have been completed in all
material respects in accordance with applicable law.
(ii) Xxxxxx (A) has paid or accrued all Taxes it is required
to pay or accrue prior to the Effective Time and (B) has withheld with respect
to its employees all federal and state income taxes, FICA, FUTA and other Taxes
required to be withheld, except (i) where any failure to make such payment,
accrual or withholding is not reasonably expected to have a Material Adverse
Effect on Xxxxxx and (ii) if Xxxxxx is contesting any such Taxes in good faith
by appropriate proceedings diligently conducted and has established such reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP.
(iii) There is no Tax deficiency outstanding or assessed or to
the knowledge of Xxxxxx proposed, against Xxxxxx that is not reflected as a
liability on the Xxxxxx Balance Sheet (except to the extent that Xxxxxx is
contesting the related Tax in good faith by appropriate proceedings diligently
conducted and has established such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP) nor has Xxxxxx executed any
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax.
Section 3.08 Title to Assets. Xxxxxx does not own any real property.
Xxxxxx has good title to all of its properties, as reflected in the Xxxxxx
Balance Sheet, except for properties and assets that have been disposed of in
the ordinary course of business since the date of the Xxxxxx Balance Sheet, free
and clear of all mortgages, liens, pledges, charges or encumbrances of any
nature, except (a) the lien of Transamerica Business Credit Corporation
("Transamerica") pursuant to the Loan and Security Agreement dated February 20,
1998, as amended, between Xxxxxx and Transamerica and related documents (the
"Transamerica Credit Documents"), (b) the lien of current taxes, payments of
which are not delinquent, (c) such encumbrances, if any, which, singly or in the
aggregate, are not reasonably expected to have a Material Adverse Effect on
Xxxxxx. All leases of all real property leased by Xxxxxx ("Xxxxxx Leases") are
valid and effective in accordance with their respective terms, and Xxxxxx is not
in default under any of such Xxxxxx Leases, except where the lack of such
validity and effectiveness or the existence of such default is not reasonably
expected to have a Material Adverse Effect on Xxxxxx.
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Section 3.09 Intellectual Property.
(a) Xxxxxx owns, or has license to or otherwise has the right to use,
all patents, trademarks, trade names, service marks, copyrights, schematics,
technology, know-how, computer software programs or code and tangible or
intangible proprietary information or material and any applications for any
patents, trademarks, trade names, service marks, copyrights or other proprietary
rights, that are used in the business of Xxxxxx (the "Xxxxxx Intellectual
Property Rights"), except where the failure to possess such rights is not
reasonably expected to have a Material Adverse Effect on Xxxxxx. Schedule 3.09
of the Xxxxxx Disclosure Schedule lists (i) all patents and patent applications
and all trademarks, registered copyrights, mask works, trade names and service
marks, which Xxxxxx considers to be material to its business and included in the
Xxxxxx Intellectual Property Rights, including the jurisdictions in which each
such Xxxxxx Intellectual Property Right has been issued or registered or in
which any such application for such issuance or registration has been filed,
(ii) all licenses, sublicenses and other agreements as to which Xxxxxx is a
party and pursuant to which any person is authorized to use any Xxxxxx
Intellectual Property Rights, which are material to the business of Xxxxxx, and
(iii) all material licenses, sublicenses and other agreements as to which Xxxxxx
is a party and pursuant to which Xxxxxx is authorized to use any third party
patents, trademarks, trade names, service marks, copyrights, mask works,
schematics, technology, know-how, computer software programs or code and
tangible or intangible proprietary information or material ("Xxxxxx Third Party
Intellectual Property Rights") which are incorporated in, are, or form a part of
any Xxxxxx product or service that is material to the business of Xxxxxx (except
for any license of generally commercially available software).
(b) Xxxxxx is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Xxxxxx Intellectual Property Rights or Xxxxxx Third Party Intellectual
Property Rights, except such breaches which do not, and are not reasonably
expected to, have a Material Adverse Effect on Xxxxxx.
(c) Xxxxxx has not been sued in any suit, action or proceeding which
involves a claim of infringement of any patents, trademarks, service marks,
copyrights or violation of any trade secret or other proprietary right of any
third party; and Xxxxxx has no knowledge that the manufacturing, marketing,
licensing or sale of its products infringes any patent, trademark, service xxxx,
copyright, trade secret or other proprietary right of any third party.
Section 3.10 Agreements, Contracts and Commitments. Xxxxxx has not
breached, or received in writing any claim or threat that it has breached, any
of the terms or conditions of any agreement, contract or commitment that is
material to the business of Xxxxxx as currently conducted ("Xxxxxx Material
Contracts") in such a manner as would permit any other party to cancel or
terminate the same or would entitle any other party to damages from Xxxxxx under
any Xxxxxx Material Contract which cancellation, termination or damages are
reasonably expected to have a Material Adverse Effect on Xxxxxx. Each Xxxxxx
Material Contract that has not expired or been terminated is in full force and
effect, and Xxxxxx is not aware of any material default thereunder by any party
obligated to Xxxxxx pursuant to such Xxxxxx Material Contract.
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Section 3.11 Litigation. There is no action, suit or proceeding, claim,
arbitration, litigation or investigation ("Action"), against Xxxxxx pending or
as to which Xxxxxx has received any written notice of assertion, or, to the
knowledge of Xxxxxx, threatened, nor, to Xxxxxx'x knowledge, is there any such
Action against any current or former affiliate of Xxxxxx as to whom Xxxxxx has
or may have an indemnification obligation, except any such Action as is not
reasonably likely to have a Material Adverse Effect and any Action as may arise
after the date hereof relating to the transactions contemplated by this
Agreement.
Section 3.12 Environmental Matters.
(a) Hazardous Material. Except as is not reasonably expected to have a
Material Adverse Effect on Xxxxxx (i) as of the date hereof, to the knowledge of
Xxxxxx, no underground storage tanks for the storage of Hazardous Material (as
defined below) are present under any property that Xxxxxx has at any time owned,
operated, occupied or leased; and (ii) as of the date hereof, no material amount
of any substance that has been designated by any Governmental Entity or by
applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
PCBs, asbestos, petroleum, urea-formaldehyde and all substances listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the United States Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated pursuant to said laws, (a
"Hazardous Material"), but excluding office and janitorial supplies, are
present, as a result of the actions of Xxxxxx or, to the knowledge of Xxxxxx,
otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water, that Xxxxxx has at any time owned,
operated, occupied or leased.
(b) Hazardous Materials Activities. At no time has Xxxxxx transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before the
Closing Date, nor has Xxxxxx disposed of, transported, sold, or manufactured any
product containing a Hazardous Material (collectively, "Hazardous Materials
Activities") in violation of any rule, regulation, treaty or statute promulgated
by any Governmental Entity to prohibit, regulate or control Hazardous Materials
or any Hazardous Material Activity, which such violation is reasonably expected
to have a Material Adverse Effect on Xxxxxx.
(c) Permits. Xxxxxx currently holds all environmental approvals,
permits, licenses, clearances and consents (the "Environmental Permits")
necessary for the conduct of any Hazardous Material Activities it conducts and
other businesses of Xxxxxx as such activities and businesses are currently being
conducted, the absence of which is reasonably expected to have a Material
Adverse Effect on Xxxxxx.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending or, to the
knowledge of Xxxxxx, threatened concerning any Environmental Permit or any
Hazardous Materials Activity of Xxxxxx other than any action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim which is
not reasonably expected to have a Material Adverse Effect on Xxxxxx. Xxxxxx is
not aware of any
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fact or circumstance which could involve Xxxxxx in any environmental litigation
or impose upon Xxxxxx any environmental liability which is reasonably expected
to have a Material Adverse Effect on Xxxxxx.
Section 3.13 Employment Matters.
(a) Definition. "Employee Plans" means all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and all bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
employee benefit plans, and all unexpired severance agreements, written or
otherwise, for the benefit of, or relating to, any current or former employee of
an entity or any trade or business (whether or not incorporated) which is a
member or which is under common control with such entity (an "ERISA Affiliate")
within the meaning of Section 414 of the Code.
(b) Schedule and Documents. Xxxxxx has set forth on Schedule 3.13 of
the Xxxxxx Disclosure Schedule a list of each Employee Plan of Xxxxxx (the
"Xxxxxx Employee Plans"). With respect to each Xxxxxx Employee Plan, Xxxxxx has
made available to ServiceWare, a true and correct copy of (i) the most recent
annual report (Form 5500) filed with the Internal Revenue Service ("IRS"), (ii)
such Xxxxxx Employee Plan, (iii) each trust agreement and group annuity
contract, if any, relating to such Xxxxxx Employee Plan and (iv) the most recent
actuarial report or valuation relating to a Xxxxxx Employee Plan subject to
Title IV of ERISA.
(c) No Liability. With respect to the Xxxxxx Employee Plans,
individually and in the aggregate, no event has occurred, and to the knowledge
of Xxxxxx, there exists no condition or set of circumstances in connection with
which Xxxxxx is likely to be subject to any liability that is reasonably likely
to have a Material Adverse Effect on Xxxxxx, under ERISA, the Code or any other
applicable law.
(d) Contributions. With respect to the Xxxxxx Employee Plans,
individually and in the aggregate, (i) as of March 31, 1999, there are no funded
benefit obligations for which contributions have not been made or properly
accrued and there are no unfunded benefit obligations which have not been
accounted for by reserves, or otherwise properly footnoted in accordance with
generally accepted accounting principles, on the financial statements of Xxxxxx,
and (ii) the Xxxxxx Disclosure Schedule describes any funded or unfunded benefit
obligations which have arisen since March 31, 1999, which obligations referred
to in clause (i) or (ii) above are reasonably likely to have a Material Adverse
Effect on Xxxxxx.
(e) Certain Agreements. Except as set forth in Schedule 3.13 of the
Xxxxxx Disclosure Schedule and except as provided for in this Agreement, Xxxxxx
is not a party to any oral or written (i) union or collective bargaining
agreement, (ii) agreement with any officer or other key employee of Xxxxxx or
any of its Subsidiaries, the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a transaction involving
Xxxxxx of the nature contemplated by this Agreement, (iii) agreement with any
officer of Xxxxxx providing any term of employment or compensation guarantee
extending for a period longer than one year from the date hereof or for the
payment of compensation in excess of $25,000 per annum, or (iv) agreement or
plan, including
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any stock option plan, stock appreciation right plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
(f) Employee Relations. There are no significant controversies pending
or, to the knowledge of Xxxxxx, threatened between Xxxxxx and any
representatives of its employees. To the knowledge of Xxxxxx, there are no
organizational efforts presently being made involving any employees of Xxxxxx.
There are no proceedings now pending or threatened against Xxxxxx before the
National Labor Relations Board, any state department of labor, any state
commission on human rights, the Equal Employment Opportunity Commission or any
other local, state or federal agencies having jurisdiction over employee rights,
except for any of the foregoing which would not have a Material Adverse Effect
on Xxxxxx.
Section 3.14 Compliance With Laws. Xxxxxx has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which are not reasonably expected to have a
Material Adverse Effect on Xxxxxx.
Section 3.15. Year 2000 Compliant. Except as set forth on the Xxxxxx
Disclosure Schedule, all equipment, software and systems (including without
limitation those developed pursuant to the license dated September 24, 1996
between Xxxxxx and Xxxxx Xxxxxx (the "Xxxxxx License")) of, or used, by Xxxxxx,
whether internally or for sale or license to third parties, that store, process
or present date information, including without limitation those sold or licensed
to others for use in, or used internally in, designing, manufacturing, ordering,
costing and billing, are Millennium Compliant in all material respects;
provided, however, that with respect to (a) equipment, software and systems
manufactured or developed by third parties and used by Xxxxxx, Xxxxxx is relying
solely on representations of such third parties (which Xxxxxx has no reason to
believe are false) that such equipment, software or system is Millennium
Compliant, supplemented, in certain cases, by internal tests (which tests may,
at most, indicate Millennium Compliant status of the tested software in a
controlled test environment, and such tests may indicate Millennium Compliant
Status for items that are not Millennium Compliant), and (b) software
manufactured or developed by Xxxxxx, Xxxxxx is relying on internal tests
conducted by Xxxxxx of its standard test suite. Notwithstanding the foregoing,
the current standard application suite of software manufactured or developed by
Xxxxxx, when used in its current environments and in the current shipping
version, is Millennium Compliant in all material respects. "Millennium
Compliant" means such equipment, software and systems each has the ability to
provide all of the following functions: (i) accurately process all date
information whether before, during or after January 1, 2000, including,
without limitation, accepting date input, providing accurate date output and
performing accurate calculation involving dates or portions of dates;
(ii) function accurately, efficiently and without interruption before,
during and after January 1, 2000 without any change in operations, or in
any input or output procedures; (iii) accurately process date input in a
way that does not create any ambiguity as to century; (iv) accurately store,
retrieve and process date information in a manner that does not create any
ambiguity as to century; and (v) accurately present all date output
information in a manner that does not create any
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ambiguity as to century. Xxxxxx estimates that the aggregate unpaid cost to
become Millennium Compliant will be less than $150,000, including costs
associated with the replacement of computerized systems, hardware and equipment
Section 3.16. Disclosure. No representation or warranty of Xxxxxx in
this Agreement or any certificate, schedule, statement, document or instrument
furnished or to be furnished to ServiceWare pursuant hereto or in connection
herewith, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact required to be stated herein or
therein or necessary to make any statement herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SERVICEWARE AND SUB
ServiceWare and Sub jointly and severally represent and warrant to
Xxxxxx and to each person or entity that will receive ServiceWare Common Stock,
ServiceWare Series E Preferred Stock, ServiceWare Common Stock Warrants or
vested options to purchase ServiceWare Common Stock in the Merger (a "Xxxxxx
Holder") that the statements contained in this Article IV are true and correct
as of the date hereof and will be true and correct at the Effective Time, except
as set forth in the disclosure schedule delivered by ServiceWare to Xxxxxx on or
before the date of this Agreement (the "ServiceWare Disclosure Schedule"). The
ServiceWare Disclosure Schedule shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Article IV and the
disclosure in any paragraph shall be deemed to qualify all other clearly
relevant paragraphs in this Article IV.
Section 4.01 Organization. ServiceWare and each of its Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has all requisite corporate power
to own, lease and operate its property and to carry on its business as now being
conducted, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to be so qualified
is reasonably expected to have a Material Adverse Effect on ServiceWare and its
Subsidiaries, taken as a whole. Except for Sub, ServiceWare does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity. As used in this Agreement, the
word "Subsidiary" means, with respect to any party, any corporation, other
organization, whether incorporated or unincorporated, of which (i) such party or
any other Subsidiary of such party is a general partner (excluding partnerships,
the general partnership interests of which held by such party or any Subsidiary
of such party do not have a majority of the voting interest in such partnership)
or (ii) at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
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Section 4.02 Capital Structure.
(a) The ServiceWare Disclosure Schedule sets forth (i) the authorized,
issued and outstanding capital stock of ServiceWare and Sub, (ii) the number of
shares of each class and series of capital stock of ServiceWare issuable as of
the date hereof under outstanding warrants or other rights to purchase capital
stock of ServiceWare (other than the employee stock options referred to in
clause (iii) below) or held in the treasury of ServiceWare, (iii) the number of
shares of ServiceWare Common Stock reserved for issuance pursuant to stock
options granted and outstanding under ServiceWare's Amended and Restated Stock
Option Plan (the "ServiceWare Option Plan"), and (iv) the number of shares of
ServiceWare Common Stock available for grant under each ServiceWare Option Plan.
There are no outstanding warrants, options or other rights to purchase capital
stock of Sub, nor is any capital stock of Sub available for grant under the
ServiceWare Option Plan. All outstanding shares of capital stock of ServiceWare
and Sub are, and all shares to be issued in the Merger will be, duly authorized,
validly issued, fully paid and nonassessable. All shares of ServiceWare capital
stock subject to issuance as specified above, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Neither
ServiceWare nor Sub has any obligations, contingent or otherwise, to repurchase,
redeem or otherwise acquire any shares of capital stock of ServiceWare or Sub or
to provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any entity, except as provided in ServiceWare's
Amended and Restated Articles of Incorporation as in effect on the date hereof.
(b) Except as set forth in Section 4.02 of the ServiceWare Disclosure
Schedule, there are no equity securities of any class of ServiceWare, or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding. Except as set forth in Section 4.02 of the
ServiceWare Disclosure Schedule, there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any character to which
ServiceWare is a party or by which it is bound obligating ServiceWare to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock of ServiceWare or obligating ServiceWare to grant, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. Except for the Stockholders
Agreement dated as of April 24, 1996 among ServiceWare and certain of its
shareholders, the Registration Rights Agreement dated dated as of April 24, 1996
among ServiceWare and certain of its shareholders, there are no voting trusts,
proxies or other agreements or understandings (including agreements with respect
to registration rights) with respect to the shares of capital stock of
ServiceWare.
Section 4.03 Authority; No Conflict; Required Filings and Consents.
(a) Each of ServiceWare and Sub have all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of ServiceWare and Sub, subject
only to the ServiceWare Shareholder Approval (as defined in Section 7.01(a)).
This Agreement has been duly executed and delivered by ServiceWare and Sub and,
assuming the due authorization, execution and delivery by Xxxxxx, constitutes
the valid and binding obligation of ServiceWare and
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Sub, enforceable in accordance with its terms, except as such enforceability may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors rights generally and (ii) the
availability of injunctive relief and other equitable remedies.
(b) The execution and delivery of this Agreement by ServiceWare and Sub
do not, and the consummation of the transactions contemplated hereby will not,
(i) conflict with, or result in any violation or breach of any provision of the
Articles of Incorporation or Bylaws of ServiceWare or the Certificate of
Incorporation or Bylaws of Sub, (ii) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, contract or other agreement, instrument or obligation to which
ServiceWare or Sub is a party or by which either of them or any of their
properties or assets may be bound, or (iii) subject to obtaining the ServiceWare
Shareholder Approval and compliance with the requirements set forth in Section
4.03(c) below, conflict with or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to ServiceWare or any of its Subsidiaries or any of their properties
or assets, except in the case of (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations which are not
reasonably expected to have a Material Adverse Effect on ServiceWare and its
Subsidiaries, taken as a whole, or on the ability of ServiceWare and Sub to
consummate the transactions contemplated by this Agreement.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to ServiceWare or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the ServiceWare Articles with
the Pennsylvania Secretary of the Commonwealth, (ii) the filing of the
Certificate of Merger with the Delaware Secretary of State, (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws and the laws
of any foreign country and (iv) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, are not reasonably
expected to have a Material Adverse Effect on ServiceWare and its Subsidiaries,
taken as a whole.
Section 4.04 Financial Statements. ServiceWare's consolidated balance
sheets as at December 31, 1997 and 1998 and its consolidated statements of
operations, cash flows and shareholders' equity for the years then ended,
audited and reported on by Ernst & Young, independent certified public
accountants for ServiceWare, and its unaudited interim consolidated balance
sheets as at March 31, 1999 (the "ServiceWare Balance Sheet") and 1998 and its
consolidated statements of operations, cash flows and shareholders' equity for
the periods then ended were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved and fairly present the financial position of ServiceWare and its
Subsidiaries as at the respective dates and the results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements (i) were or are subject to normal year-end adjustments
which were not or are not expected to be material in amount, and (ii) do not
contain footnote disclosure.
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Section 4.05 No Undisclosed Liabilities. ServiceWare and its
Subsidiaries do not have any liabilities as of the date hereof, either accrued
or contingent (whether or not required to be reflected in financial statements
in accordance with generally accepted accounting principles), and whether due or
to become due, which, individually or in the aggregate, are reasonably likely to
have a Material Adverse Effect on ServiceWare and its Subsidiaries, taken as a
whole, other than (i) liabilities reflected in the ServiceWare Balance Sheet,
(ii) liabilities specifically described in this Agreement or in the ServiceWare
Disclosure Schedule, (iii) normal or recurring liabilities incurred since March
31, 1999 in the ordinary course of business consistent with past practices and
which are not individually or in the aggregate, material to the business,
results, operations or financial condition of ServiceWare and its Subsidiaries,
taken as a whole and (iv) liabilities relating to this Agreement, the
transactions contemplated hereby and the ServiceWare Financing (as defined in
Section 7.01(d).
Section 4.06 Absence of Certain Changes or Events. Since the date of
the ServiceWare Balance Sheet, ServiceWare has conducted its business only in
the ordinary course and in a manner consistent with past practice and, since
such date, there has not been (i) any Material Adverse Change affecting
ServiceWare and it Subsidiaries, taken as a whole, excluding changes in general
economic conditions affecting companies generally; (ii) any damage, destruction
or loss (whether or not covered by insurance), which damage, destruction or loss
had or could be reasonably expected to have, a Material Adverse Effect on
ServiceWare and its Subsidiaries, taken as a whole; (iii) any material change by
ServiceWare in its accounting methods, principles or practices except as
required by concurrent changes in generally accepted accounting principles; (iv)
any revaluation by ServiceWare of any of its assets having a Material Adverse
Effect on ServiceWare and its Subsidiaries, taken as a whole, or (v) except as
disclosed in the ServiceWare Disclosure Schedule, any other action or event that
would have required the consent of Xxxxxx pursuant to Section 5.02 of this
Agreement had such action or event occurred after the date of this Agreement and
that has or could be reasonably expected to have a Material Adverse Effect on
ServiceWare and its Subsidiaries, taken as a whole.
Section 4.07 Taxes.
(a) Tax Returns and Audits.
(i) ServiceWare has prepared and filed on a timely basis all
material Returns required to be filed relating to any and all Taxes concerning
or attributable to ServiceWare or its operations, and such Returns are true and
correct in all material respects and have been completed in all material
respects in accordance with applicable law.
(ii) ServiceWare (A) has paid or accrued all Taxes it is
required to pay or accrue prior to the Effective Time and (B) has withheld with
respect to its employees all federal and state income taxes, FICA, FUTA and
other Taxes required to be withheld, except (i) where any failure to make such
payment, accrual or withholding is not reasonably expected to have a Material
Adverse Effect on ServiceWare and its Subsidiaries, taken as a whole, and (ii)
if ServiceWare is contesting any such Taxes in good faith by appropriate
proceedings diligently conducted and has established such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP.
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(iii) There is no Tax deficiency outstanding or assessed or to
ServiceWare's knowledge proposed, against ServiceWare that is not reflected as a
liability on the ServiceWare Balance Sheet (except to the extent that
ServiceWare is contesting the related Tax in good faith by appropriate
proceedings diligently conducted and has established such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP) nor
has ServiceWare executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.
Section 4.08 Title to Assets. Neither ServiceWare nor any of its
Subsidiaries owns any real property. ServiceWare and its Subsidiaries have good
title to all of their properties, as reflected in the ServiceWare Balance Sheet,
except for properties and assets that have been disposed of in the ordinary
course of business since the date of the ServiceWare Balance Sheet, free and
clear of all mortgages, liens, pledges, charges or encumbrances of any nature,
except (a) the lien of PNC pursuant to the Amended and Restated Loan Agreement
dated as of September 3, 1998, as amended, between ServiceWare and PNC and
related documents (the "PNC Credit Documents"), (b) the lien of current taxes,
payments of which are not delinquent, (c) such encumbrances, if any, which,
singly or in the aggregate, are not reasonably expected to have a Material
Adverse Effect on ServiceWare. All leases of all real property leased by
ServiceWare or any of its Subsidiaries ("ServiceWare Leases") are valid and
effective in accordance with their respective terms, and ServiceWare or such
Subsidiary is not in default under any of such ServiceWare Leases, except where
the lack of such validity and effectiveness or the existence of such default is
not reasonably expected to have a Material Adverse Effect on ServiceWare and its
Subsidiaries, taken as a whole.
Section 4.09 Intellectual Property.
(a) ServiceWare owns, or has license or otherwise has the right to use,
all patents, trademarks, trade names, service marks, copyrights, schematics,
technology, know-how, computer software programs or code and tangible or
intangible proprietary information or material and any applications for any
patents, trademarks, trade names, service marks, copyrights or other proprietary
rights, that are used in the business of ServiceWare (the "ServiceWare
Intellectual Property Rights"), except where the failure to possess such rights
is not reasonably expected to have a Material Adverse Effect on ServiceWare and
its Subsidiaries, taken as a whole. Schedule 4.09 of the ServiceWare Disclosure
Schedule lists (i) all patents and patent applications and all trademarks,
registered copyrights, mask works, trade names and service marks, which
ServiceWare considers to be material to its business and included in the
ServiceWare Intellectual Property Rights, including the jurisdictions in which
each such ServiceWare Intellectual Property Right has been issued or registered
or in which any such application for such issuance or registration has been
filed, (ii) all licenses, sublicenses and other agreements as to which
ServiceWare is a party and pursuant to which any person is authorized to use any
ServiceWare Intellectual Property Rights, which are material to the business of
ServiceWare, and (iii) all material licenses, sublicenses and other agreements
as to which ServiceWare is a party and pursuant to which ServiceWare is
authorized to use any third party patents, trademarks, trade names, service
marks, copyrights, mask works, schematics, technology, know-how, computer
software programs or code and tangible or intangible proprietary information or
material ("ServiceWare Third Party Intellectual Property Rights") which are
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incorporated in, are, or form a part of any ServiceWare product or service that
is material to the business of ServiceWare (except for any license of generally
commercially available software).
(b) ServiceWare is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the ServiceWare Intellectual Property Rights or ServiceWare Third Party
Intellectual Property Rights, except such breaches which do not, and are not
reasonably expected to, have a Material Adverse Effect on ServiceWare and its
Subsidiaries, taken as a whole.
(c) ServiceWare (i) has not been sued in any suit, action or proceeding
which involves a claim of infringement of any patents, trademarks, service
marks, copyrights or violation of any trade secret or other proprietary right of
any third party; and (ii) has no knowledge that the manufacturing, marketing,
licensing or sale of its products infringes any patent, trademark, service xxxx,
copyright, trade secret or other proprietary right of any third party.
Section 4.10 Agreements, Contracts and Commitments. ServiceWare has not
breached, or received in writing any claim or threat that it has breached, any
of the terms or conditions of any agreement, contract or commitment that is
material to the business of ServiceWare as currently conducted ("ServiceWare
Material Contracts") in such a manner as would permit any other party to cancel
or terminate the same or would entitle any other party to damages from
ServiceWare under any ServiceWare Material Contract which cancellation,
termination or damages would reasonably be expected to have a Material Adverse
Effect on ServiceWare and its Subsidiaries, taken as a whole. Each ServiceWare
Material Contract that has not expired or been terminated is in full force and
effect, and ServiceWare is not aware of any material default thereunder by any
party obligated to ServiceWare pursuant to such ServiceWare Material Contract.
Section 4.11 Litigation. There is no Action against ServiceWare pending
or as to which ServiceWare has received any written notice of assertion, or, to
ServiceWare's knowledge, threatened, nor, to ServiceWare's knowledge, is there
any such Action against any current or former affiliate of ServiceWare as to
whom ServiceWare has or may have an indemnification obligation, except any such
Action as is not reasonably likely to have a Material Adverse Effect and any
Action as may arise after the date hereof relating to the transactions
contemplated by this Agreement.
Section 4.12 Environmental Matters.
(a) Hazardous Material. Except as is not reasonably expected to have a
Material Adverse Effect on ServiceWare and its Subsidiaries, taken as a whole,
(i) as of the date hereof, to the knowledge of ServiceWare, no underground
storage tanks for the storage of Hazardous Materials are present under any
property that ServiceWare or any of its Subsidiaries has at any time owned,
operated, occupied or leased; and (ii) as of the date hereof, no material amount
of any substance that has been designated by any Governmental Entity or by
applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
any Hazardous Material, but excluding office and janitorial supplies, are
present, as a result of the actions of ServiceWare or any of its Subsidiaries
and, to the knowledge of ServiceWare,
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otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water, that ServiceWare or any of its
Subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. At no time has ServiceWare or any
of its Subsidiaries transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in violation
of any law in effect on or before the Closing Date, nor has ServiceWare or any
of its Subsidiaries conducted any Hazardous Materials Activities in violation of
any rule, regulation, treaty or statute promulgated by any Governmental Entity
to prohibit, regulate or control Hazardous Materials or any Hazardous Material
Activity, which such violation is reasonably expected to have a Material Adverse
Effect on ServiceWare and its Subsidiaries, taken as a whole.
(c) Permits. ServiceWare currently holds all Environmental Permits
necessary for the conduct of any Hazardous Material Activities which it or any
of its Subsidiaries may conduct and other businesses of ServiceWare and its
Subsidiaries as such activities and businesses are currently being conducted,
the absence of which is reasonably expected to have a Material Adverse Effect on
ServiceWare and its Subsidiaries, taken as a whole.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending or, to the
knowledge of ServiceWare, threatened concerning any Environmental Permit or any
Hazardous Materials Activity of ServiceWare or any of its Subsidiaries other
than any action, proceeding, revocation proceeding, amendment procedure, writ,
injunction or claim which is not reasonably expected to have a Material Adverse
Effect on ServiceWare and its Subsidiaries, taken as a whole. ServiceWare is not
aware of any fact or circumstance which could involve ServiceWare or any of its
Subsidiaries in any environmental litigation or impose upon ServiceWare or any
of its Subsidiaries any environmental liability which is reasonably expected to
have a Material Adverse Effect on ServiceWare and its Subsidiaries taken as a
whole.
Section 4.13 Employment Matters.
(a) No Liability. With respect to the Employee Plans of ServiceWare
(the "ServiceWare Employee Plans"), individually and in the aggregate, no event
has occurred, and to the knowledge of ServiceWare, there exists no condition or
set of circumstances in connection with which ServiceWare is likely to be
subject to any liability that is reasonably likely to have a Material Adverse
Effect on ServiceWare and its Subsidiaries, taken as a whole, under ERISA, the
Code or any other applicable law.
(b) Contributions. With respect to the ServiceWare Employee Plans,
individually and in the aggregate, (i) as of March 31, 1999, there are no funded
benefit obligations for which contributions have not been made or properly
accrued and there are no unfunded benefit obligations which have not been
accounted for by reserves, or otherwise properly footnoted in accordance with
generally accepted accounting principles, on the financial statements of
ServiceWare and (ii) the ServiceWare Disclosure Schedule describes any funded or
unfunded benefit obligations which have
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arisen since March 31, 1999, which obligations referred to in clause (i) or (ii)
above are reasonably likely to have a Material Adverse Effect on ServiceWare and
its Subsidiaries, taken as a whole.
(c) Employee Matters. ServiceWare is not party to any union or
collective bargaining agreement. There are no significant controversies pending
or, to the knowledge of ServiceWare, threatened between ServiceWare and any
representatives of its employees. To the knowledge of ServiceWare, there are no
organizational efforts presently being made involving any employees of
ServiceWare. There are no proceedings now pending or threatened against
ServiceWare before the National Labor Relations Board, any state department of
labor, any state commission on human rights, the Equal Employment Opportunity
Commission or any other local, state or federal agencies having jurisdiction
over employee rights, except for any of the foregoing which would not have a
Material Adverse Effect on ServiceWare and its Subsidiaries, taken as a whole.
Section 4.14 Compliance With Laws. Each of ServiceWare and its
Subsidiaries has complied with, is not in violation of, and has not received any
notices of violation with respect to, any federal, state or local statute, law
or regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for failures to comply or violations which are
not reasonably expected to have a Material Adverse Effect on ServiceWare and its
Subsidiaries, taken as a whole.
Section 4.15. Year 2000 Compliant. Except as set forth on the
ServiceWare Disclosure Schedule, all equipment, software and systems of, or
used, by ServiceWare, whether internally or for sale or license to third
parties, that store, process or present date information, including without
limitation those sold or licensed to others for use in, or used internally in,
designing, manufacturing, ordering, costing and billing, are Millennium
Compliant in all material respects; provided, however, that with respect to
equipment, software and systems manufactured or developed by third parties and
used by ServiceWare, ServiceWare is relying solely on representations of such
third parties that such equipment, software or system is Millennium Compliant.
ServiceWare has prepared a plan to become Millennium Compliant, which plan (i)
identifies the business systems of or used by ServiceWare (whether internally or
for sale or license to third parties), including computer software, computer
systems and other equipment within information systems infrastructure, financial
and administrative systems, process control and manufacturing operating systems
and significant vendors and customers, that are susceptible to system failures
or processing errors as a result of the Year 2000 or century date change issues,
and (ii) involves the actual remediation and replacement of such business
systems. ServiceWare estimates that the aggregate unpaid cost to become
Millennium Compliant will be less than $100,000, including costs associated with
the replacement of computerized systems, hardware and equipment.
Section 4.16. U.S. Real Property Holding Corporation. ServiceWare is
not now and has never been a "United States Real Property Holding Corporation",
as defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
Section 4.17. Section 1202 Stock Qualification. As of the Closing and
taking into account the Merger, (i) ServiceWare will be a "qualified small
business" within the meaning of Section 1202(d) of the Code, (ii) the shares of
ServiceWare to be issued in connection with the Merger shall
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qualify as "qualified small business stock" within the meaning of Section
1202(c) of the Code and (iii) ServiceWare will meet the active business
requirements of Section 1202(e) of the Code. The parties acknowledge that there
are no final treasury regulations promulgated under Section 1202 of the Code,
and the foregoing representation is based on ServiceWare's reasonable
interpretation of Section 1202 as it is currently written.
Section 4.18. Disclosure. No representation or warranty of ServiceWare
in this Agreement or any certificate, schedule, statement, document or
instrument furnished or to be furnished to ServiceWare pursuant hereto or in
connection herewith, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated herein
or therein or necessary to make any statement herein or therein not misleading.
ARTICLE V
CONDUCT OF BUSINESS
Section 5.01 Covenants of Xxxxxx. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement and the Effective Time, Xxxxxx agrees (except to the extent that
ServiceWare shall otherwise consent in writing), to carry on its business in the
usual, regular and ordinary course in substantially the same manner as
previously conducted, to pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform other obligations when due,
and to use all reasonable efforts consistent with past practices and policies to
preserve intact its present business organization, keep available the services
of its present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it, to the end that its goodwill and ongoing businesses
be substantially unimpaired at the Effective Time. Xxxxxx shall promptly notify
ServiceWare of any event or occurrence not in the ordinary course of its
business (including without limitation the filing of any Action against it or
the receipt by it of any threat in writing of any Action relating to this
Agreement and the transactions contemplated hereby). Except as expressly
contemplated by this Agreement, Xxxxxx shall not, without the prior written
consent of ServiceWare:
(a) Accelerate, amend or change the period of exercisability of options
or restricted stock granted under any employee stock plan or authorize cash
payments in exchange for any options granted under any of such plans except as
required by the terms of such plans or any related agreements in effect as of
the date of this Agreement;
(b) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to its Intellectual Property Rights, other than in
the ordinary course of business consistent with past practices;
(c) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its
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capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of such
party, or purchase or otherwise acquire, directly or indirectly, any shares of
its capital stock;
(d) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any shares of its
capital stock or securities convertible into shares of its capital stock, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities, other than shares of Xxxxxx Common Stock or Xxxxxx
Preferred Stock issuable pursuant to its existing stock option plans, warrants
or rights (which options, warrants or rights are outstanding on the date
hereof);
(e) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or in any other manner, any business or any corporation, partnership,
association or other business organization or division, or otherwise acquire or
agree to acquire any assets otherwise than in the ordinary course of business;
(f) Directly or indirectly sell, lease, license or otherwise dispose of
any of its properties or assets except in the ordinary course of business;
(g) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary or
wages of employees in accordance with past practice, (ii) increase or agree to
increase the compensation payable or to become payable to officers or grant any
additional severance or termination pay to or enter into any employment or
severance agreements with, such officers, (iii) grant any severance or
termination pay to, or enter into any employment or severance agreement, with
any employee, except in the ordinary course of business consistent with
practices or policies currently in effect, (iv) enter into any collective
bargaining agreement, (v) establish, adopt, enter into or amend any bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, trust, fund, policy or arrangement for the benefit of any directors,
officers or employees except as contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of such party or any of its Subsidiaries or
guarantee any debt securities of others, other than indebtedness incurred under
the terms existing on the date hereof under the Transamerica Credit Documents,
indebtedness incurred by Xxxxxx to meet its working capital requirements and
indebtedness contemplated by that certain letter agreement dated April 29, 1999
between Xxxxxx and X. X. Xxxxxxxxx Towbin Capital Partners I L.P.;
(i) Make or commit to make any capital or other extraordinary
expenditures;
(j) Amend or propose to amend its Certificate of Incorporation or
Bylaws; or
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(k) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (j) above, or any action which is reasonably
likely to make any of its representations or warranties contained in this
Agreement untrue or incorrect in any material respect on the date made (to the
extent so limited) or as of the Effective Time.
Section 5.02 Covenants of ServiceWare. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement and the Effective Time, ServiceWare agrees as to itself and its
Subsidiaries (except to the extent that Xxxxxx shall otherwise consent in
writing) to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform other obligations when due, and to use all reasonable efforts
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
key employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it,
to the end that its goodwill and ongoing businesses be substantially unimpaired
at the Effective Time. ServiceWare shall promptly notify Xxxxxx of any event or
occurrence not in the ordinary course of its business (including without
limitation the filing of any Action against it or the receipt by it of any
threat of any Action relating to this Agreement and the transactions
contemplated hereby). Except as expressly contemplated by this Agreement,
ServiceWare shall not, without the prior written consent of Xxxxxx:
(a) Accelerate, amend or change the period of exercisability of options
or restricted stock granted under any employee stock plan or authorize cash
payments in exchange for any options granted under any of such plans except as
required by the terms of such plans or any related agreements in effect as of
the date of this Agreement;
(b) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to its Intellectual Property Rights, other than in
the ordinary course of business consistent with past practices;
(c) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock of such party, or purchase or otherwise acquire,
directly or indirectly, any shares of its capital stock, except for the
declaration of accrued dividends on ServiceWare's Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock (so long as the holders thereof
have previously agreed to receive payment of such dividends in ServiceWare
Common Stock);
(d) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any shares of its
capital stock or securities convertible into shares of its capital stock, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities, except as contemplated by this Agreement, in connection
with the ServiceWare Financing or as required by ServiceWare's existing stock
option plans, by the PNC
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Warrants or in connection with indebtedness incurred by ServiceWare to meet its
working capital requirements;
(e) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or in any other manner, any business or any corporation, partnership,
association or other business organization or division, or otherwise acquire or
agree to acquire any assets otherwise than in the ordinary course of business;
(f) Directly or indirectly sell, lease, license or otherwise dispose of
any of its properties or assets except in the ordinary course of business;
(g) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary or
wages of employees in accordance with past practice, (ii) increase or agree to
increase the compensation payable or to become payable to officers or grant any
additional severance or termination pay to or enter into any employment or
severance agreements with, such officers, (iii) grant any severance or
termination pay to, or enter into any employment or severance agreement, with
any employee, except in the ordinary course of business consistent with
practices or policies currently in effect, (iv) enter into any collective
bargaining agreement, (v) establish, adopt, enter into or amend any bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, trust, fund, policy or arrangement for the benefit of any directors,
officers or employees except as contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of such party or any of its Subsidiaries or
guarantee any debt securities of others, other than indebtedness incurred under
the terms existing on the date hereof under the PNC Credit Documents and
indebtedness incurred by ServiceWare to meet its working capital requirements;
(i) Make or commit to make any capital or other extraordinary
expenditures;
(j) Amend or propose to amend its Articles of Incorporation or Bylaws,
except as contemplated by this Agreement;
(k) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (j) above, or any action which is reasonably
likely to make any of its representations or warranties contained in this
Agreement untrue or incorrect in any material respect on the date made (to the
extent so limited) or as of the Effective Time.
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ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01 No Solicitation. From and after the date hereof until the
earlier of the termination of this Agreement and the Effective Time:
(a) Xxxxxx agrees that neither it nor any of its shareholders, officers
or directors shall, and Xxxxxx shall cause its employees, agents and
representatives (including, without limitation, any investment banking, legal or
accounting firm retained by it and any individual member or employee of the
foregoing) (each, an "Agent") not to, (a) initiate, solicit or seek, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its stockholders
or any of them) with respect to a merger, acquisition, consolidation,
recapitalization, liquidation, dissolution or similar transaction involving, or
any purchase of all or any substantial portion of the assets or any equity
securities of, Xxxxxx or any of its subsidiaries (any such proposal or offer
being hereinafter referred to as a "Xxxxxx Acquisition Proposal"), or (b) engage
in any negotiations concerning, or provide any confidential information or data
to, or have any substantive discussions with, any person relating to a Xxxxxx
Acquisition Proposal, or (c) otherwise cooperate in any effort or attempt to
make, implement or accept a Xxxxxx Acquisition Proposal. Xxxxxx and its
stockholders and Agents shall immediately cease and cause to be terminated any
existing activities, including discussions or negotiations with any parties,
conducted heretofore with respect to any Xxxxxx Acquisition Proposal and shall
take the necessary steps to inform the individuals and entities referred to in
the first sentence hereof of the obligations undertaken in this Section 6.01(a).
Xxxxxx shall notify ServiceWare immediately if any inquiries, proposals or
offers related to a Xxxxxx Acquisition Proposal are received by, any
confidential information or data is requested from, or any negotiations or
discussions related to a Xxxxxx Acquisition Proposal are sought to be initiated
or (subject to any outstanding confidentiality obligations of Xxxxxx) continued
with, it or any individual or entity referred to in the first sentence of this
Section 6.01(a). Notwithstanding the foregoing, this provision shall not
eliminate the ability of Xxxxxx to seek outside financing to meet its working
capital needs (subject to the provisions of Section 7.02(g) and to the
understanding that in no event shall the percentage of the post-Merger fully
diluted as converted ownership of ServiceWare, as provided in Article II, be
adjusted as a result of any equity component of such outside financing).
(b) ServiceWare agrees that neither it nor any of its stockholders,
officers or directors shall, and ServiceWare shall cause its Agents not to, (a)
initiate, solicit or seek, directly or indirectly, any inquiries or the making
or implementation of any proposal or offer (including, without limitation, any
proposal or offer to its stockholders or any of them) with respect to a merger,
acquisition, consolidation, recapitalization, liquidation, dissolution or
similar transaction involving, or any purchase of all or any substantial portion
of the assets or any equity securities of, ServiceWare or any of its
subsidiaries (any such proposal or offer being hereinafter referred to as a
"ServiceWare Acquisition Proposal"), or (b) engage in any negotiations
concerning, or provide any confidential information or data to, or have any
substantive discussions with, any person relating to a ServiceWare Acquisition
Proposal, or (c) otherwise cooperate in any effort or attempt to make, implement
or accept a ServiceWare Acquisition Proposal. Neither ServiceWare nor any of its
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Agents is currently engaged in any activities, discussions or negotiations with
any parties with respect to a ServiceWare Acquisition Proposal (except for the
Merger and the ServiceWare Financing). ServiceWare shall notify Xxxxxx
immediately if any inquiries, proposals or offers related to a ServiceWare
Acquisition Proposal are received by, any confidential information or data is
requested from, or any negotiations or discussions related to a ServiceWare
Acquisition Proposal are sought to be initiated with, it or any individual or
entity referred to in the first sentence of this Section 6.01(b).
Notwithstanding the foregoing, this provision shall not eliminate the ability of
ServiceWare to seek outside financing to meet its working capital needs.
Section 6.02 Access to Information. Upon reasonable notice and subject
to applicable laws, Xxxxxx and ServiceWare shall afford to the officers,
employees, accountants, counsel and other representatives of the other, access,
during normal business hours during the period prior to the earlier of the
termination of this Agreement and the Effective Time, to all its properties,
books, contracts, commitments and records. During the period prior to the
earlier of the termination of this Agreement or the Effective Time, Xxxxxx and
ServiceWare shall furnish promptly to the other all information concerning its
business, properties and personnel as the other may reasonably request. The
parties acknowledge that they are bound by the provisions of the Confidentiality
Agreement previously entered into between ServiceWare and Xxxxxx (the
"Confidentiality Agreement") . No information or knowledge obtained in any
investigation pursuant to this Section 6.02 shall affect or be deemed to modify
a representation or warranty of Xxxxxx or ServiceWare contained in this
Agreement or the conditions to the obligations of the parties to consummate the
Merger.
Section 6.03 Stockholders' Meetings. Xxxxxx, ServiceWare and Sub each
shall call a meeting of its respective stockholders or solicit a written consent
of its respective stockholders to be held or executed as promptly as practicable
after the execution and delivery of this Agreement for the purpose of obtaining
the Xxxxxx Stockholder Approval and the ServiceWare Stockholder Approval (each
as defined in Section 7.01(a)).
Section 6.04 Legal Conditions to Merger. Each of ServiceWare and Xxxxxx
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the Merger and will
promptly cooperate with and furnish information to each other in connection with
any such requirements imposed upon any of them or any of their Subsidiaries in
connection with the Merger. Each of ServiceWare and Xxxxxx will, and will cause
its Subsidiaries to, take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other third party,
required to be obtained or made by ServiceWare, Xxxxxx or any of their
Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement.
Section 6.05 Public Disclosure. ServiceWare and Xxxxxx shall consult
with each other before issuing any press release or otherwise making any public
statement with respect to the Merger or this Agreement and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by law.
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Section 6.06 Tax-Free Reorganization. ServiceWare and Xxxxxx shall
each use its best efforts to cause the Merger to be treated as a reorganization
within the meaning of Section 368(a) of the Code.
Section 6.07 Stock Plans and Other Employee Benefit Matters.
(a) At the Effective Time, (i) ServiceWare shall assume and become the
sponsor of the Xxxxxx Option Plan (the "Assumed Option Plan"), (ii) the names of
the Assumed Option Plan shall be changed to reflect the ServiceWare name, (iii)
except as provided in Section 2.01(j), there shall be substituted a number of
shares of ServiceWare Common Stock equal to the Conversion Number for each share
of Xxxxxx Common Stock available at the Effective Time under the Assumed Option
Plan for future option grants and (iv) except as provided in Section 2.01(j),
each outstanding option to purchase shares of Xxxxxx Common Stock (a "Xxxxxx
Stock Option") under the Xxxxxx Option Plan, whether vested or unvested, shall
be deemed to constitute an option to acquire a number of shares of ServiceWare
Common Stock equal to the Conversion Number (a "ServiceWare Stock Option") for
each share of Xxxxxx Common Stock subject to such Xxxxxx Stock Option, at an
exercise price equal to the exercise price per share of Xxxxxx Common Stock
divided by the Conversion Number. The ServiceWare Stock Options shall each vest
in accordance with the vesting schedules applicable to the corresponding Xxxxxx
Stock Options and shall be incentive stock options or non-qualified stock
options as shall correspond to the applicable Xxxxxx Stock Option.
(b) As soon as practicable after the Effective Time, ServiceWare shall
deliver to the participants in Xxxxxx Option Plan appropriate notice setting
forth such participants' rights pursuant thereto and the grants pursuant to
Xxxxxx Option Plan shall continue in effect on the same terms and conditions,
except as set forth above.
(c) ServiceWare shall take all corporate action necessary at or prior
to the Effective Time to reserve for issuance 4 million shares of ServiceWare
Common Stock, which shall include a sufficient number of shares of ServiceWare
Common Stock for delivery under the Assumed Option Plan plus an additional
240,000 shares for issuance of new stock options to be granted to former Xxxxxx
employees under the terms of the ServiceWare Plan.
(d) Each Xxxxxx employee shall receive full credit for his service as a
full-time employee of Xxxxxx under any employee benefit plan or arrangement of
ServiceWare for purposes of eligibility to participate in any such plan or
arrangement and, where applicable, for purposes of determining the extent to
which the employee's benefit under such plan or arrangement is vested.
Section 6.08 Brokers or Finders. Each of ServiceWare and Xxxxxx
represents, as to itself, its Subsidiaries and its affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement,
except that ServiceWare is obligated to pay a brokers' fee of no more than
$250,000 to PNC.
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Section 6.09 Indemnification.
(a) From and after the Effective Time, ServiceWare and the Continuing
Corporation shall, indemnify, defend and hold harmless each person who is as of
the date hereof, an officer or director of Xxxxxx (the "Indemnified Parties")
against, and shall advance the expenses of each Indemnified Party with respect
to, all losses, claims, damages, costs, expenses (including reasonable
attorneys' fees), liabilities or judgments or amounts that are paid in
settlement with the approval of the indemnifying party (which approval shall not
unreasonably be withheld or delayed) of or in connection with any claim, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is or was a director or
officer of Xxxxxx, pertaining to any matter existing or occurring at or prior to
the Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time, including without limitation the transactions contemplated by
this Agreement ("Indemnified Liabilities"), to the full extent a corporation is
permitted under the DGCL to indemnify and advance expenses to its own directors
or officers, as the case may be, provided that neither ServiceWare nor the
Continuing Corporation shall be liable for any settlement of any claim effected
without its written consent (which consent shall not be unreasonably withheld or
delayed). Any Indemnified Party wishing to claim indemnification under this
Section 6.09, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify ServiceWare and the Continuing Corporation,
and shall deliver to ServiceWare and the Continuing Corporation the undertaking
contemplated by Section 145(e) of the DGCL. The Indemnified Parties as a group
shall only be entitled to be represented by one law firm to represent them as a
group with respect to each such matter unless there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the positions of any two or more Indemnified Parties.
(b) The provisions of this Section 6.09 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and representatives.
Section 6.10 Additional Agreements; Reasonable Efforts. Subject to the
terms and conditions of this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the Xxxxxx Stockholder Approval and the ServiceWare
Shareholder Approval, including cooperating fully with the other party. In case
at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement or to vest the Continuing
Corporation with full title to all properties, assets, rights, approvals,
immunities and franchises of either of the Constituent Corporations, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
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ARTICLE VII
CONDITIONS TO MERGER
Section 7.01 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction, or waiver by Xxxxxx and
ServiceWare, on or prior to the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement, the Merger and the allocation
of the consideration payable in the Merger among the holders of capital stock of
Xxxxxx, Xxxxxx Common Stock Warrants, Units and Working Capital Notes shall have
been approved and adopted by the affirmative vote of such holders of Xxxxxx
Common Stock, Xxxxxx Preferred Stock and other securities issued by Xxxxxx as
may be required under the governing instruments of Xxxxxx, any other applicable
agreements and applicable law (including, if necessary, through amendment of the
Certificate of Incorporation of Xxxxxx) (the "Xxxxxx Stockholder Approval"). The
Merger shall have been approved by ServiceWare as the sole stockholder of Sub,
and the issuance of shares of ServiceWare Common Stock pursuant to the Merger
and adoption of the ServiceWare Articles shall have been approved by the
affirmative vote of such holders of ServiceWare Common Stock and outstanding
series of preferred stock of ServiceWare ("ServiceWare Preferred Stock") as may
be required under the governing instruments of ServiceWare and by applicable law
(such approvals by the shareholders of Sub and the ServiceWare being referred to
as the "ServiceWare Shareholder Approval").
(b) Certificates of Amendment. The Certificate of Amendment relating to
the ServiceWare Articles and the Certificate of Amendment to the Certificate of
Incorporation of Xxxxxx, if included as part of the Xxxxxx Stockholder Approval,
shall have been filed with the Secretary of State of the State of Delaware.
(c) 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 or regulatory restraint or prohibition
preventing the consummation of the Merger or limiting or restricting
ServiceWare's conduct or operation of the business of ServiceWare after the
Merger shall have been issued, nor shall there be any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger illegal.
(d) ServiceWare Financing. Contemporaneously with the Effective Time,
ServiceWare shall have completed the equity financing (the "ServiceWare
Financing") contemplated by a Series D Convertible Preferred Stock and Common
Stock Warrant Purchase Agreement in substantially the form attached hereto as
Exhibit E, and shall have entered into a Shareholders' Agreement in
substantially the form attached hereto as Exhibit F (which includes provisions
pursuant to which the parties thereto agree to vote their shares of ServiceWare
to elect a director nominated by the Xxxxxx Holders holding voting securities of
ServiceWare ) (the "Shareholders' Agreement) and a Registration Rights Agreement
in substantially the form attached hereto as Exhibit G (the "Registration Rights
Agreement").
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(e) Consulting and Employment Arrangements. ServiceWare shall have
entered into a Compensation, Consulting and Severance Agreement with Xxxxx
Xxxxxx in substantially the form attached hereto as Exhibit H and shall have
entered into employment arrangements with Xxxxx Xxxxxxx satisfactory to
ServiceWare and to each such employee.
Section 7.02 Additional Conditions to Obligations of ServiceWare and
Sub. The obligations of ServiceWare and Sub to effect the Merger are subject to
the satisfaction of each of the following conditions, any of which may be waived
in writing exclusively by ServiceWare and Sub:
(a) Representations and Warranties. The representations and warranties
of Xxxxxx set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, except for (i) changes
contemplated by this Agreement and (ii) where the failure to be true and correct
would not have a Material Adverse Effect on Xxxxxx or a material adverse effect
upon the consummation of the transactions contemplated hereby; and ServiceWare
shall have received a certificate signed on behalf of Xxxxxx by the chief
executive officer of Xxxxxx to such effect.
(b) Performance of Obligations of Xxxxxx. Xxxxxx shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date; and ServiceWare shall have
received a certificate signed on behalf of Xxxxxx by the chief executive officer
of Xxxxxx to such effect.
(c) Approvals. The authorizations, consents, orders or approvals of
third parties and any Governmental Entity, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity set forth on
Sections 3.03(b) and 3.03 (c) of the Xxxxxx Disclosure Schedule (other than that
of Transamerica) shall have been filed, occurred or been obtained.
(d) Blue Sky Laws. ServiceWare shall have received all state securities
or "Blue Sky" permits and other authorizations necessary to issue shares of
ServiceWare Common Stock pursuant to the Merger.
(e) Dissenters' and Appraisal Rights. The period for the assertion of
dissenters' and appraisal rights by stockholders of Xxxxxx shall have expired,
and no holders of Xxxxxx Common Stock or Xxxxxx Preferred Stock shall have
perfected or preserved such rights in connection with the Merger.
(f) Transfer of Intellectual Property. Xxxxx Xxxxxx shall have
transferred to Xxxxxx all his right, title and interest in and to "System and
Method for Representing and Retrieving Knowledge in an Adaptive Cognitive
Network," U. S. Patent Serial No. 5,787,234, and the trademarks "TOP OF MIND"
and "COGNITIVE PROCESSOR," Trademark Register No. 1,919,047 (which is the only
intellectual property right of any kind owned by Xxxxx Xxxxxx and used or
currently contemplated to be used in the business of Xxxxxx), free and clear of
any liens, charges or encumbrances, pursuant to an assignment in substantially
the form of Exhibit I attached hereto
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(subject to a License Agreement between ServiceWare and Xxxxx Xxxxxx in
substantially the form of Exhibit J attached hereto (the "License")).
(g) Repayment of Indebtedness. Xxxxxx shall have repaid all of its
indebtedness for borrowed money, except that Xxxxxx may have outstanding up
working capital debt in an amount not to exceed the borrowing base under the
Transamerica Credit Documents and secured as provided therein.
(h) Termination of Certain Agreements. Except as provided in Article
II, all voting trusts, proxies and other agreements or understandings (including
registration rights agreements) with respect to the capital stock of Xxxxxx
shall have been terminated in writing pursuant to instruments reasonably
satisfactory to ServiceWare.
(i) Non-Competition Agreement. Xxxxx Xxxxxx shall have executed and
delivered a Non-Competition Agreement in substantially the form attached hereto
as Exhibit K.
(j) Opinion of Counsel. ServiceWare shall have received the favorable
opinion of Golenbock, Eiseman, Assor & Xxxx as to the matters set forth in
Exhibit L (subject to customary exceptions and qualifications reasonably
satisfactory to counsel for ServiceWare).
(k) Appointment of Representative. The Xxxxxx Holders shall have
appointed the persons identified on Annex A or other Xxxxxx Holders reasonably
satisfactory to ServiceWare to serve as their representatives (collectively, the
"Representative") for purposes of this Agreement, and the Representative shall
have agreed to serve in accordance with the procedures set forth in Annex A.
Section 7.03 Additional Conditions to Obligations of Xxxxxx. The
obligation of Xxxxxx to effect the Merger is subject to the satisfaction of each
of the following conditions, any of which may be waived, in writing, exclusively
by Xxxxxx:
(a) Representations and Warranties. The representations and warranties
of ServiceWare and Sub set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the extent
such representations speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, except for, (i) changes contemplated
by this Agreement and (ii) where the failure to be true and correct would not
have a Material Adverse Effect on ServiceWare and its Subsidiaries, taken as a
whole, or a material adverse effect upon the consummation of the transactions
contemplated hereby; and Xxxxxx shall have received a certificate signed on
behalf of ServiceWare by the chief executive officer of ServiceWare to such
effect.
(b) Performance Of Obligations of ServiceWare and Sub. ServiceWare and
Sub shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and
Xxxxxx shall have received a certificate signed on behalf of ServiceWare by the
chief executive officer of ServiceWare to such effect.
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(c) License. ServiceWare and Xxxxx Xxxxxx shall have executed and
delivered the License.
(d) Termination of Certain Agreements. Except for the Articles, the
Shareholders' Agreement, the Registration Rights Agreement, the agreements
relating to the purchase and sales of the ServiceWare Preferred Stock, the PNC
Warrants and the warrants to purchase common stock issued in connection with
indebtedness incurred by ServiceWare to meet its working capital requirements,
all voting trusts, proxies and other agreements or understandings (including
registration rights agreements) with respect to the capital stock of ServiceWare
shall have been terminated in writing pursuant to instruments reasonably
satisfactory to Xxxxxx.
(e) Opinion of Counsel. Xxxxxx shall have received the favorable
opinion of Xxxxxx, Xxxxx & Bockius LLP as to the matters set forth in Exhibit M
(subject to customary exceptions and qualifications reasonably satisfactory to
counsel for Xxxxxx).
(f) Approvals. The authorizations, consents, orders or approvals of
third parties and any Governmental Entity, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity set forth on
Sections 4.03(b) and 4.03 (c) of the ServiceWare Disclosure Schedule shall have
been filed, occurred or been obtained.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time by written notice by the terminating party to the
other party under the circumstances set forth below:
(a) by mutual written consent of ServiceWare and Xxxxxx; or
(b) by either ServiceWare or Xxxxxx if the Merger shall not have been
consummated by August 31, 1999 (provided that the right to terminate this
Agreement under this Section 8.01(b) shall not be available to any party whose
failure to fulfill any material obligation under this Agreement has been a cause
of or has resulted in the failure of the Merger to occur on or before such
date); or
(c) by either ServiceWare or Xxxxxx if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger; or
(d) by Xxxxxx, if, at the stockholders' meetings of ServiceWare and Sub
(including any adjournment or postponement) the ServiceWare Shareholder Approval
shall not have been obtained, or by ServiceWare if at the Xxxxxx stockholders'
meeting (including any adjournment or
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postponement), the Xxxxxx Stockholder Approval shall have not been obtained
(subject to ServiceWare's rights under the Principal Stockholder Agreements).
Section 8.02 Effect of Termination; Survival. In the event of
termination of this Agreement as provided in Section 8.01, this Agreement shall
immediately become void and there shall be no liability or obligation on the
part of ServiceWare, Xxxxxx, Sub or their respective officers, directors,
stockholders or affiliates, except as set forth in Section 8.03 and further
except to the extent that such termination results from the wilful breach by a
party of any of its representations, warranties or covenants set forth in this
Agreement or in any Xxxxxx Principal Stockholder Agreement or ServiceWare
Principal Shareholder Agreement; provided that, the provisions of Section 8.03
of this Agreement and the Confidentiality Agreement shall remain in full force
and effect and survive any termination of this Agreement.
Section 8.03 Fees and Expenses. Except as set forth in this Section
8.03, each of ServiceWare and Xxxxxx shall bear its own expenses, including the
fees and disbursements of investment bankers, counsel and accountants, incurred
in connection with this Agreement and the transactions contemplated hereby;
provided, however, that if a Closing occurs the Xxxxxx Principal Stockholders
shall be responsible for paying any fees and expenses of Xxxxxx incurred in
connection with this Agreement and the transactions contemplated hereby other
than reasonable fees and expenses of Golenbock, Eiseman, Assor & Xxxx, of M. I.
Xxxxxxxx & Company L.L.C. and of Xxxx Xxxxxx ; and provided further that if this
Agreement is terminated by ServiceWare or Xxxxxx by reason of a material breach
hereof by the other or, in the case of a termination by ServiceWare by reason of
a material breach hereof or of any Xxxxxx Principal Stockholder Agreement by a
Xxxxxx Principal Stockholder, or, in the case of a termination by Xxxxxx by
reason of a material breach hereof or of any ServiceWare Principal Shareholder
Agreement by a ServiceWare Principal Shareholder, the breaching party shall pay
the reasonable legal and accounting expenses incurred to the date of termination
by the terminating party in connection with this Agreement and the transactions
contemplated hereby.
Section 8.04 Amendment. This Agreement may be amended by the parties
hereto at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Xxxxxx or of ServiceWare, but,
after any such approval, no amendment shall be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of Xxxxxx and ServiceWare.
Section 8.05 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto may, to the extent legally allowed, (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions 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 a written instrument signed by or on behalf of such
party.
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ARTICLE IX
INDEMNIFICATION
Section 9.01. Indemnification by Xxxxxx Holders. By accepting
consideration in the Merger, on the terms and subject to the conditions set
forth herein, each Xxxxxx Holder agrees to defend, indemnify and hold harmless
ServiceWare and the Continuing Corporation in accordance with this Article IX in
the event that, following the Closing Date, ServiceWare or the Continuing
Corporation suffers, sustains, incurs or becomes subject to any loss, liability,
damage or deficiency (including without limitation penalties and reasonable
attorneys' fees, but not including special or consequential damages (including
lost profits)) arising out of any inaccuracy of any representation of Xxxxxx or
any breach of any warranty or covenant of Xxxxxx contained in this Agreement
arising from a bona fide, third party claim asserted on or prior to March 31,
2001 to the extent attributable to matters having an origin prior to the Closing
Date (such loss, liability, damage or deficiency being hereinafter referred to
as a "Covered ServiceWare Loss").
Section 9.02. Indemnification by ServiceWare. ServiceWare shall defend,
indemnify and hold harmless each Xxxxxx Holder in accordance with this Article
IX in the event that, following the Closing Date, such Xxxxxx Holder suffers,
sustains, incurs or becomes subject to any loss, liability, damage or deficiency
(including without limitation penalties and reasonable attorneys' fees, but not
including special or consequential damages (including lost profits)) arising out
of any inaccuracy of any representation of ServiceWare or Sub or any breach of
any warranty or covenant of ServiceWare or Sub contained in this Agreement
arising from a bona fide, third party claim asserted on or prior to March 31,
2001 to the extent attributable to matters having an origin prior to the Closing
Date (such loss, liability, damage or deficiency being hereinafter referred to
as a "Covered Xxxxxx Loss").
Section 9.03 Manner of Indemnification.
(a) Any indemnification payment made by the Xxxxxx Holders to
ServiceWare may be made, at the option of each Xxxxxx Holder, in cash or by the
delivery to ServiceWare of an aggregate number of shares of ServiceWare Common
Stock having a Fair Market Value (as defined below), or of ServiceWare Series E
Preferred Stock convertible into ServiceWare Common Stock having a Fair Market
Value, equal to the amount of the Covered ServiceWare Loss. Each Xxxxxx Holder
shall contribute cash or shares of ServiceWare Common Stock and/or ServiceWare
Series E Preferred Stock in such proportion (the "Indemnification Percentage")
as (i) the total aggregate number of shares of ServiceWare Common Stock issued
to such Xxxxxx Holder in the Merger and into which ServiceWare Series E
Preferred Stock issued to such Xxxxxx Holder in the Merger is convertible bears
to (ii) the total aggregate number of shares of ServiceWare Common Stock issued
to all Xxxxxx Holders in the Merger and into which ServiceWare Series E
Preferred Stock issued to all Xxxxxx Holders in the Merger is convertible. If a
Xxxxxx Holder holds both ServiceWare Series E Preferred Stock and ServiceWare
Common Stock, such Xxxxxx Holder shall first contribute ServiceWare Series E
Preferred Stock prior to contributing ServiceWare Common Stock.
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(b) Any indemnification payment made by ServiceWare to the Xxxxxx
Holders shall be made by the issuance by ServiceWare to the Xxxxxx Holders of
(i) an aggregate number of shares of ServiceWare Common Stock having a Fair
Market Value equal to the amount of the Covered Xxxxxx Loss plus (ii) such
number of shares of ServiceWare Common Stock as shall be equitably required to
eliminate the dilutive effects of the issuance of shares provided for in the
preceding clause (i). Any such payment shall be allocated among the Xxxxxx
Holders in accordance with each Xxxxxx Holder's Indemnification Percentage.
(c) Payment shall be made under this Article IX when either (i)
ServiceWare and the Representative agree as to the amount of the Covered
ServiceWare Loss or Covered Xxxxxx Loss, as the case may be or (ii) the amount
of the Covered ServiceWare Loss or Covered Xxxxxx Loss, as the case may be,
shall have been finally determined by a court of competent jurisdiction with no
appeal taken or with the time for appeal having passed. If a Covered ServiceWare
Loss has occurred for which payment is required pursuant to the preceding
sentence, ServiceWare shall so notify the Xxxxxx Holders in writing specifying
(x) the number of shares of ServiceWare Common Stock and ServiceWare Series E
Preferred Stock required to be delivered by each Xxxxxx Holder if the entire
amount as to which ServiceWare is entitled to indemnification hereunder were to
be paid in ServiceWare Common Stock and ServiceWare Series E Preferred Stock and
(y) the cash payment required to be made by each Xxxxxx Holder if the entire
amount as to which ServiceWare is entitled to indemnification hereunder were to
be paid in cash, and each Xxxxxx Holder shall make such payment, in cash or
through the surrender of ServiceWare Common Stock or ServiceWare Series E
Preferred Stock within 10 days after delivery of such notice. If, within such
10-day period, ServiceWare has not received the entire payment from each Xxxxxx
Holder in cash or through the surrender of ServiceWare Common Stock or
ServiceWare Series E Preferred Stock, ServiceWare may treat the shares of
ServiceWare Common Stock and ServiceWare Series E Preferred Stock equivalent to
the amount for which cash payment was not made and held by each Xxxxxx Holder to
the extent he or it did not pay in cash or through surrender of such shares as
being no longer outstanding for any purpose at such time.
(d) "Fair Market Value" means: (i) if the ServiceWare Common Stock is
listed on a national securities exchange reporting a closing trade price, the
average of the closing trade prices for the ServiceWare Common Stock on the
principal such exchange on which the ServiceWare Common Stock is listed reported
by Bloomberg Financial Markets ("Bloomberg") for the ten trading days preceding
the date of determination, (ii) if the ServiceWare Common Stock is not listed on
a securities exchange reporting a closing trade price, but is traded in the
over-the-counter market, the last closing bid price of the ServiceWare Common
Stock reported by Bloomberg (or if no closing bid price is reported by
Bloomberg, the average of the bid prices of any market makers for the
ServiceWare Common Stock as reported in the "pink sheets" by the National
Quotation Bureau, Inc.) for the ten trading days preceding the date of
determination, or (iii) if the ServiceWare Common Stock is not listed on a
national securities exchange or in the over-the-counter market, the amount
resulting by dividing (a) the highest price for which ServiceWare could be sold
as a going concern to an independent third party, assuming a reasonable time (up
to 12 months) to accomplish such sale, by (b) the number of shares of
ServiceWare Common Stock then outstanding on an as converted basis and taking
into account outstanding ServiceWare Common Stock Warrants and vested options to
purchase ServiceWare Common Stock (net of the exercise price therefor). In order
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to determine the Fair Market Value under clause (iii) above, ServiceWare and the
Representative, shall use their best efforts to reach an agreement on the Fair
Market Value. If such parties are unable to reach an agreement within a
reasonable amount of time (not to exceed 30 business days), such parties will
use their best efforts to agree upon the selection of an independent appraiser
or investment banking firm within 20 business days after giving of notice that
requires a determination of Fair Market Value. Such appraiser or investment
banking firm will have 20 business days in which to determine the Fair Market
Value, and its determination will be final and binding on all parties concerned.
All costs of such determination shall be borne by the party (ServiceWare or the
Xxxxxx Holders) that proposed a fair market value furthest from the Fair Market
Value determined by the appraiser or investment banking firm.
Section 9.04 Threshold and Cap. ServiceWare shall not be entitled to
any indemnification under Section 9.01, and the Xxxxxx Holders shall not be
entitled to indemnification under Section 9.02, (i) unless the amount of all
Covered ServiceWare Losses or Covered Xxxxxx Losses, respectively, exceeds
$250,000 (calculated on a cumulative and not a per item basis, and, as to
Covered Xxxxxx Losses, calculated as to all Xxxxxx Holders) and then only with
respect to the excess over such $250,000 or (ii) in excess of the Fair Market
Value of the aggregate number of shares of ServiceWare Common Stock and
ServiceWare Series E Preferred Stock issued or issuable in connection with the
Merger (the "Maximum Recovery Amount").
Section 9.05 Amount of Indemnification.
(a) The amount of any Covered ServiceWare Losses or Covered Xxxxxx
Losses shall be determined (i) net of any benefit (including any tax benefit if
and when actually realized as an offset by any tax burden resulting from the
matter for which a claim is asserted or from the indemnification; provided,that
no indemnified party shall be required solely for the purpose of realizing a
benefit to take any tax position that could have an adverse effect on such
indemnified party if taken and (ii) net of any amounts recovered or recoverable
in respect thereof or in connection therewith under any one or more policies of
insurance maintained by ServiceWare or the Continuing Corporation, on the one
hand, or a Xxxxxx Holder, on the other hand, as the case may be, or any third
party by or on behalf of (x) ServiceWare or the Continuing Corporation (or their
successors or assigns) in the case of a Covered ServiceWare Loss or (y) a Xxxxxx
Holder (or its successor or assigns) in the case of a Covered Xxxxxx Loss
(b) Neither ServiceWare nor any Xxxxxx Holder shall be entitled to any
indemnity for any Covered ServiceWare Loss or Covered Xxxxxx Loss, as the case
may be, to the extent that the existence of such loss, the breach of covenant or
warranty or the falsity of the representation upon which such loss would be
based is disclosed in the Xxxxxx Disclosure Schedule (in the case of a Covered
ServiceWare Loss) or the ServiceWare Disclosure Schedule (in the case of a
Covered Xxxxxx Loss) or which is disclosed in a written notice furnished to the
indemnified party prior to the Closing; provided, however, that any such
misrepresentation or breach of warranty or covenant so disclosed after the
execution and delivery of this Agreement and prior to the Closing shall not
affect the right of ServiceWare or Xxxxxx, as the case may be, to elect not to
close the transactions contemplated by this Agreement to the extent provided in
Article VII hereof (it being understood and agreed that if, despite such right
of the ServiceWare or Xxxxxx to elect not to close by reason
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of the misrepresentation or breach so disclosed, ServiceWare or Xxxxxx
nevertheless elects to close, thereby waiving such misrepresentation or breach,
ServiceWare or the Xxxxxx Holder, as the case may be, shall thereafter have no
indemnity right by reason of any such misrepresentation or breach of warranty or
covenant).
(c) In the event that the effect of any misrepresentation of Xxxxxx or
ServiceWare or any breach of warranty or covenant of Xxxxxx or ServiceWare
contained in this Agreement or any document executed and delivered pursuant
hereto is that the amount of assets of Xxxxxx or ServiceWare has been overstated
or the amount of liabilities of Xxxxxx or ServiceWare has been understated as of
the end of any fiscal period, the Covered ServiceWare Losses or Covered Xxxxxx
Losses, as the case may be, caused by such overstatement or understatement shall
in no event exceed the net amount of such overstatement and/or understatement,
without adjustment for estimated impacts on future earnings.
(d) In the event of any Covered ServiceWare Loss, the Xxxxxx Holders
shall be entitled to credit or offset against any such liability an amount equal
to (i) any windfall and other contingent assets of Xxxxxx, and the amount of any
windfall reduction of non-cancellable contractual obligations payable by Xxxxxx
(without a corresponding loss of benefit) resulting from an occurrence prior to
the Closing Date, which in any such case is not recorded as an asset or
liability on the Xxxxxx Balance Sheet and in respect of which ServiceWare or the
Continuing Corporation derives a financial benefit after the Closing Date, and
(ii) the net overstated liabilities of Xxxxxx. In the event of any Covered
Xxxxxx Loss, ServiceWare shall be entitled to credit or offset against any such
liability an amount equal to (i) any windfall and other contingent assets of
ServiceWare, and the amount of any windfall reduction of non-cancellable
contractual obligations payable by ServiceWare (without a corresponding loss of
benefit) resulting from an occurrence prior to the Closing Date, which in any
such case is not recorded as an asset or liability on the ServiceWare Balance
Sheet and in respect of which ServiceWare or the Continuing Corporation derives
a financial benefit after the Closing Date, and (ii) the net overstated
liabilities of ServiceWare.
(e) It is specifically understood and agreed that in the event a
misrepresentation or breach of warranty or covenant is discovered by ServiceWare
or a Xxxxxx Holder after the Closing, the remedy of the ServiceWare or such
Xxxxxx Holder, as the case may be, shall be limited to the indemnity forth in
this Article IX and such party shall not be entitled to a rescission of this
Agreement or any other damages.
Section 9.06. Notice and Defense. If at any time ServiceWare shall
receive notice of any Covered ServiceWare Loss, ServiceWare shall promptly give
written notice thereof to the Representative, and if at any time any Xxxxxx
Holder shall receive notice of any Covered Xxxxxx Loss, such Xxxxxx Holder shall
promptly give written notice thereof to the Representative and to ServiceWare;
provided that a delay in giving notice shall only relieve the indemnifying party
of liability to the extent such indemnifying party suffers actual prejudice
because of the delay. Any such notice shall set forth with reasonable
specificity (i) the basis under this Agreement, and the facts that otherwise
form the basis, of such claim, (ii) an estimate of the amount of such claim
(which estimate shall not be conclusive of the final amount of such claim) and
an explanation of the calculation of such estimate, including a statement of any
significant assumptions employed therein,
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and (iii) the date on and manner in which the party delivering such notice
became aware of the existence of such claim. With respect to any claim giving
rise to a Covered ServiceWare Loss, ServiceWare shall have the right, but not
the obligation to participate at its own expense in a defense of such claim by
counsel of its own chosing, but the Representative shall be entitled to control
the defense; provided, however, that the Representative shall not, without the
consent of ServiceWare, which consent shall not unreasonably be withheld,
settle, compromise, pay or discharge the same except by order of a court of
competent jurisdiction. With respect to any claim giving rise to a Covered
Xxxxxx Loss, the Representative shall have the right, but not the obligation to
participate at the expense of the Xxxxxx Holders in a defense of such claim by
counsel of its own chosing, but ServiceWare shall be entitled to control the
defense; provided, however, that ServiceWare shall not, without the consent of
the Representative, which consent shall not unreasonably be withheld, settle,
compromise, pay or discharge the same except by order of a court of competent
jurisdiction. If the indemnified party does not consent to any bona fide
settlement or compromise proposed by the indemnifying party, the indemnifying
party shall be liable for indemnification hereunder only to the lesser of the
final judgment against the indemnified party or the amount proposed to be paid
in the settlement.
ARTICLE X
MISCELLANEOUS
Section 10.01 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, by
facsimile (which is confirmed) or mailed by registered certified mail (return
receipt requested) 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 ServiceWare or Sub, to
ServiceWare, Inc.
000 Xxxxxxxxx Xxx.
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
Fax: 000-000-0000
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
One Oxford Center, 32nd floor
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esquire
Fax: 000-000-0000
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(b) if to Xxxxxx, to
Xxxxxx Group, Inc.
Four Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Fax:
with a copy to
Golenbock, Eiseman, Assor & Xxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X. Xxxx
Fax: 000-000-0000
Section 10.02 Interpretation. When a reference is made in this
Agreement to Articles, Sections, such reference shall be to an Article or a
Section of 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. Whenever
the words "include," "includes" or "including" are used in this Agreement they
shall be deemed to be followed by the words "without limitation." The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available.
Section 10.03 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 10.04 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Sections 6.09 and 9.02, are
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
Section 10.05 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to any applicable conflicts of law.
Section 10.06 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned (whether by operation of
law or otherwise) by Xxxxxx without the prior written consent of ServiceWare or
by ServiceWare or Sub without the prior written consent of Xxxxxx. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
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IN WITNESS WHEREOF, ServiceWare, Sub and Xxxxxx have caused this Agreement to be
signed by their respective officers thereunto, duly authorized as of the date
first written above.
SERVICEWARE, INC.
By:
------------------------------------
Title:
---------------------------------
XXXXXX ACQUISITION CORPORATION
By:
------------------------------------
Title:
---------------------------------
XXXXXX GROUP, INC.
By:
------------------------------------
Title:
---------------------------------
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EXHIBITS AND SCHEDULES
Exhibit
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A-1 Form of Xxxxxx Principal Stockholder Agreement
A-2 Form of ServiceWare Principal Shareholder Agreement
B Amended and Restated Articles of Incorporation of ServiceWare
C [Reserved]
D Form of Xxxxxx Holders' Representation Letter
E Series D Convertible Preferred Stock Purchase Agreement
F Shareholders' Agreement of ServiceWare
G Registration Rights Agreement of ServiceWare
H Consulting Agreement between ServiceWare and Xxxxx Xxxxxx
I Assignment of Patent from Xxxxx Xxxxxx to ServiceWare
J License Agreement between ServiceWare and Xxxxx Xxxxxx
K Noncompetition Agreement
L Opinion of Golenbock, Eiseman, Assor & Xxxx
M Opinion of Xxxxxx, Xxxxx & Bockius LLP
Schedules
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1 Schedule of Projected Xxxxxx Bookings
Xxxxxx Disclosure Schedule
ServiceWare Disclosure Schedule
Annexes
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A Xxxxxx Representatives
B Allocation Schedule
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