[EXECUTION COPY]
ASSET PURCHASE AGREEMENT Exhibit 2.1
THIS ASSET PURCHASE AGREEMENT is entered into as of April 25, 2003, by
and between THEMIS COMPUTER, a California corporation (the "Buyer"), and
XXXXXXXXXX.XXX, INC., a Nevada corporation (the "Seller").
RECITALS
A. Seller is engaged, among other things, in the business of
designing, developing, manufacturing, selling, licensing, distributing and
supporting certain products and applications listed on Schedule 1 attached
hereto (the items listed on Schedule 1 are collectively referred to herein as
the "Products" and Seller's business of designing, developing, manufacturing,
selling, licensing, distributing and supporting the Products is referred to
herein as the "SCO Business").
B. Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, (i) all intellectual property rights and assets used or held for use
by Seller in the SCO Business, (ii) certain tangible personal property,
including equipment, used or held for use by Seller in the conduct of the SCO
Business, and (iii) certain other rights, properties and assets used or held
for use by Seller in the conduct of the SCO Business, all on the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, Buyer and Seller hereby agree as follows:
1. Purchase and Sale of Assets.
1.1 Acquired Assets. Subject to the representations and warranties
of the parties hereto and the terms and conditions herein stated, on the
Closing Date (as defined herein), Seller shall sell and deliver to Buyer, and
Buyer shall purchase and acquire from Seller, all of Seller's right, title and
interest in and to all of the tangible and intangible properties, assets and
rights listed below, and wherever such properties, rights and assets may be
located (collectively, the "Acquired Assets"):
1.1.1 Tangible Personal Property. All of Seller's ownership or
lessee interest in the equipment, computer hardware and computer software
media, machinery, prototypes, engineering and pre-engineering models and
components and other tangible personal property identified on Schedule 1.1.1
attached hereto (collectively, the "Tangible Personal Property");
1.1.2 Intellectual Property. All of the Intellectual Property
listed on Schedule 1.1.2 attached hereto;
1.1.3 Contracts. All of Seller's interest in and rights under
the contracts, licenses, arrangements, understandings and purchase orders
identified in Schedule 1.1.3 attached hereto (collectively, the "Contracts");
1.1.4 Claims, Etc. Claims and causes of action, matured or
unmatured, absolute or contingent, relating to or arising out of or in
connection with or relating to the Acquired Assets, including without
limitation all of Seller's rights to recover past, present and future damages
for the breach, infringement or misappropriation, as the case may be, of the
Intellectual Property and the Contracts;
1.1.5 Books and Records. All books, records, information,
plans and business records relating to or maintained by Seller as part of or
with respect to the Acquired Assets and the business conducted by Seller with
the Acquired Assets (collectively, the "Books and Records"), (ii) all business
records relating to customers, licensees, suppliers, data providers, computer
equipment providers and service providers, (iii) all written warranties,
manuals and similar documents relating to the Tangible Personal Property and
(iv) all price lists, sales literature, marketing and sales information and
materials. The Books and Records shall not include minute book and stock
records or, except as otherwise agreed by Seller and Buyer, employee records.
1.2 Excluded Assets. The Acquired Assets shall not include any of
the assets, properties or rights of Seller's business listed in Schedule 1.2
attached hereto, including without limitation Seller's business relating to
its Integrated Access Device and Softphone products (the "IAD and Softphone
Products") (collectively, the "Excluded Assets").
1.3 Assumption of Certain Liabilities. At the Closing, Buyer shall
assume or pay and discharge only (i) the executory obligations of Seller under
the Contracts, except to the extent any such obligations arise out of or
result from Seller's breach of or default in its obligations under the
Contracts prior to the Closing and (ii) the liabilities and obligations, if
any, which are specifically identified on Scheduled 1.3 attached hereto
(collectively, the "Assumed Liabilities").
1.4 Liabilities Not Assumed. Notwithstanding anything in this
Agreement and except for the Assumed Liabilities, Buyer shall not assume or be
obligated to pay or discharge any debts, obligations or other liabilities of
Seller of any kind or description, whether matured or unmatured, whether
absolute or contingent, whether known or unknown, whenever arising and whether
or not related to the SCO Business, the Acquired Assets or the Products,
including without limitation any and all liabilities and obligations arising
out of or relating to any Excluded Assets (collectively, the "Excluded
Liabilities"). Without limiting the generality of the foregoing, the
following liabilities, obligations, costs and expenses shall be Excluded
Liabilities and shall remain the liabilities, obligations and responsibilities
of Seller:
1.4.1 Third Party Claims. Except as otherwise expressly set
forth herein, any claim made by any third party at any time (i) relating to or
arising out of (1) the SCO Business (i.e., the business conducted by Seller
with the Acquired Assets prior to the Closing, as described in Recital A
above); (2) the ownership or use of the Acquired Assets by Seller prior to the
Closing or (3) any Products or related services sold, shipped, distributed or
licensed by Seller prior to the Closing, or (ii) arising out of any act or
omission of Seller prior to the Closing based on any alleged tort, breach of
contract, proprietary rights infringement, default in performance, breach of
warranty, product defect or any other cause, together with any liabilities,
obligations, costs or expenses arising out of or relating to any such claim.
1.4.2 Debt. Any liability for indebtedness of Seller to banks,
financial institutions, shareholders, affiliates or other persons with respect
to borrowed money and including any interest payable in respect thereof.
1.4.3 Tax Liabilities. Any liability or obligation of Seller
for Taxes (as defined herein), including without limitation any liability or
obligation of Seller for sales, transfer or similar taxes attributable to this
Agreement and any liability or obligation of Seller for any income, sales,
withholding, excise, ad valorem, employee-related or other taxes (including
any income or similar tax measured by any gain derived by Seller from the
purchase and sale provided for in this Agreement), and any interest or
penalties on any taxes.
1.4.4 Employee Claims. Any liability or obligation of Seller
to any of its employees, including without limitation any employees of Seller
who become employees of Buyer at or after the Closing, or to any other person
for salary, bonuses, commissions, sick pay, vacation pay, severance payments
or other compensation or benefits of any kind with respect to work or services
performed prior to the Closing or with respect to the termination by Seller of
employees or any such other person prior to or after the Closing, regardless
of when said claim or liability is asserted.
1.4.5 Intellectual Property Infringement. Any claim against or
liability of Seller arising out of or in any way connected with any
infringement of any intellectual property or proprietary rights of third
parties arising out of the conduct of the SCO Business or the ownership of the
Acquired Assets prior to the Closing, regardless of when said claim or
liability is asserted.
1.4.6 Product Warranty and Liability Claims. Except as
expressly provided herein, any product warranty or liability claims and any
support obligations of Seller relating to the Products or the SCO Business
operated by Seller prior to the Closing, regardless of when said claims or
obligations are asserted.
1.4.7 Litigation. Any liability of Seller for any claim,
complaint, action, suit, proceeding, arbitration or litigation (pending,
threatened, contingent or otherwise) arising out of any acts, omissions or
conditions that occurred prior to the Closing, regardless of when said claim
or liability is asserted and regardless of whether such claim or liability
relates to the SCO Business, the Acquired Assets or the Products.
1.4.8 Environmental Hazards. Any liability or obligation with
respect to any and all environmental hazards, toxic clean-up or environmental
reclamation at the site(s) of Seller's SCO Business, regardless of when said
liability or obligation is asserted.
1.4.9 Contracts. Any liabilities or obligations of Seller,
regardless of when said liabilities or obligations are asserted, arising (i)
out of any breach or default on the part of Seller prior to the Closing under
any Contract or (ii) under or in connection with any "Other Contract" (as
defined herein).
1.4.10 Tort and Product Claims. Any claims against Seller,
regardless of when said claims are asserted, for (i) injury to or death of
persons (including without limitation any workers' compensation claims)
occurring prior to the Closing or (ii) damages to or destruction of property
prior to the Closing.
1.4.11 Violations of Law. Any liability or obligation arising
out of violations of law by Seller prior to the Closing, regardless of when
said liability or obligation is asserted.
2. Purchase Price; Nonrefundable Deposit .
2.1 Purchase Price. The "Purchase Price" for the Acquired Assets
shall be Nine Hundred Fifteen Thousand Dollars ($915,000), consisting of (i)
Eight Hundred Ninety Thousand Dollars ($890,000) payable by Buyer on the
Closing Date by wire transfer to an account designated by Seller not less than
three business days prior to the Closing Date (the "Closing Payment") and (ii)
Twenty-Five Thousand Dollars ($25,000) payable in accordance with Section 2.2
hereof.
2.2 Nonrefundable Deposit. On the date of execution of
this Agreement and in consideration of the agreements of Seller hereunder,
Buyer shall pay to Seller, by check (or by wire transfer if requested by
Seller and provided Seller provides wire transfer instructions to Buyer at
least three business days prior to such execution date), the nonrefundable
cash amount of Twenty-Five Thousand Dollars ($25,000).
2.3 Earn-Out Payments. Following the Closing and as additional
consideration for the Acquired Assets, Buyer shall pay to Seller certain
payments based on the Net Revenues of Buyer during the Earn-Out Period (the
"Earn-Out Payments") at the times and in the manner provided in Schedule 2.2
attached hereto.
2.4 License Agreement. At the Closing and pursuant to a License
Agreement dated as of the Closing Date between Buyer and Seller in the form of
Exhibit A attached hereto (the "License Agreement"), Buyer shall grant to
Seller a license to certain of the Products and shall agree to provide to
Seller the technical support provided for therein.
3. Closing Date . The closing ("Closing") shall take place on May 2,
2003 at the offices of Xxxxx Xxxx LLP, 000 Xxxxxxxx, Xxxxx 000, Xxxxx Xxxxxx,
Xxxxxxxxxx 00000, or at such other mutually agreeable time and date as may be
agreed between the parties. The date of the Closing shall be referred to
herein as the "Closing Date," and the Closing shall be deemed effective as of
the opening of business on the Closing Date.
4. Personal Property Taxes; Sales and Transfer Taxes . All personal
property taxes in respect of the Acquired Assets assessed for periods before
the Closing Date shall be paid by the Seller, notwithstanding that payment of
such personal property taxes may be due after the Closing Date. All personal
property taxes assessed in respect of the Acquired Assets for periods on or
after the Closing Date shall be paid by Buyer. Any such taxes assessed for a
period which begins prior to and ends after the Closing shall be apportioned
ratably between Buyer and Seller. Any sales, transfer or similar taxes
payable as a result of the purchase and sale of the Acquired Assets under this
Agreement shall be paid by Seller.
5. Representations and Warranties of Seller . Seller represents and
warrants that each of the following (i) is true and correct on the date
hereof, (ii) shall be true and correct on the Closing Date and (iii) shall be
unaffected by any investigation heretofore or hereafter made by Buyer:
5.1 Existence and Qualification; Binding Obligations.
5.1.1 Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and is
duly qualified as a foreign corporation in, and in good standing under the
laws of, the State of Connecticut.
5.1.2 Seller has the corporate power to execute and deliver
this Agreement and the documents contemplated hereby and to carry out the
transactions hereunder and thereunder contemplated. The execution, delivery
and performance of this Agreement and the documents contemplated hereby will
not violate or breach any provision of any mortgage, trust indenture, lien,
lease, agreement, instrument, order, judgment, law, statute, regulation,
ordinance, decree or other restriction of any kind or character to which
Seller is subject or by which any properties, rights or assets of Seller are
bound. This Agreement and the documents contemplated hereby have been duly
authorized by the Seller and have been executed and delivered by, and are
valid, binding and enforceable in accordance with their terms against, Seller,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar laws relating to or affecting the rights and remedies of creditors
generally and by general principles of equity including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance, injunctive relief or other
equitable remedies, regardless of whether enforceability is considered in a
proceeding in equity or at law.
5.2 Business Locations and Business Names. Seller's principal
place of business is 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000 and is
the only location at which Seller currently conducts the SCO Business. Seller
has not conducted the SCO Business under any name other than "XXXXXXXXXX.XXX,
INC." or "LINKON CORPORATION."
5.3 Authority. Seller has completed all actions and procedures,
corporate and otherwise, and has obtained all consents or other authorizations
necessary or proper to authorize the transactions contemplated hereunder and
to enable Seller to perform all of its obligations hereunder.
5.4 Litigation. There are no judgments, suits, actions or
proceedings pending in any court of record against Seller which relate to the
Acquired Assets, the Products or the business conducted by Seller with the
Acquired Assets or which, even if they do not relate to the Acquired Assets,
the Products or such business, would adversely affect the Acquired Assets in
any manner after the Closing. To Seller's knowledge, there also are no such
threatened suits, actions or proceedings against Seller.
5.5 No Warranty Claims. There are no product warranty claims
pending or threatened against Seller with respect to the Products.
5.6 Title. Seller has good and marketable title to all of the
Acquired Assets, and good and marketable title in all of the Acquired Assets
will be transferred to Buyer at the Closing free of all liens, claims,
encumbrances and restrictions. None of the Acquired Assets is leased from a
third party.
5.7 No Restrictions. Seller has no right, claim or agreement
pertaining to the employees or consultants of Seller which would affect the
right of Buyer to employ or retain such employees or consultants, and Seller
recognizes and agrees that Buyer may employ such employees or consultants but
shall have no obligation under this Agreement or otherwise to do so.
5.8 Taxes.
5.8.1 Seller has complied with all Obligations (as hereinafter
defined) relating to Taxes arising out of, affecting or attributable to the
SCO Business or the Acquired Assets. Any noncompliance by Seller with such
Obligations will not adversely affect Buyer. Seller has not received any
notice of deficiency or assessment regarding such Taxes from any governmental
authority and there are no proposed, threatened, or actual assessments,
audits, examinations or disputes as to such Taxes currently pending. Seller
has not executed or requested any waiver of any statute of limitations, or any
extensions of the period for, the collection or assessment of any such Tax.
5.8.2 The Acquired Assets are not, and will not be, subject
to any encumbrances arising out of any unpaid Taxes of Seller, and there are
no grounds for the assertion or assessment of any Encumbrances against the
Acquired Assets in respect of any Taxes. The transactions contemplated by
this Agreement will not give rise to the creation of any encumbrances against
any of the Acquired Assets in respect of any Taxes or the assertion of any
additional Taxes against the Acquired Assets. For avoidance of doubt and not
by way of limitation, the term "encumbrance" includes any claim against Buyer
for Taxes claimed to be due from Seller under any law or regulation imposing
transferee, purchaser or successor liability for Taxes of a seller or
predecessor in business.
5.8.3 For purposes of this Agreement:
(i) "Tax" and "Taxes" include all federal, state,
local and foreign income, gains, franchise, excise, property, sales,
use, employment, license, payroll, occupation, recording, value added or
transfer taxes, governmental charges, fees, levies or assessments
(whether payable directly or by withholding), and, with respect to such
taxes, any estimated tax, interest and penalties or additions to tax and
interest on such penalties and additions to tax.
(ii) "Obligations" means and includes (i) timely
filing with the appropriate taxing authority of Returns (as hereinafter
defined) which are accurate and complete in all material respects;
(ii) timely, complete and accurate provision of information under any
law or regulation relating to information returns, statements or
schedules and (iii) timely payment of Taxes for which Seller is liable
through the date hereof, whether directly, as a result of a duty to
withhold, collect, and/or transmit Taxes imposed on other persons, as a
member of a consolidated or combined group of corporations, as a
transferee or successor, or in any other manner.
5.9 Contracts. Seller has delivered to Buyer prior to the date
hereof accurate and complete copies of all Contracts and of all other
agreements, leases, licenses and other agreements which affect or pertain to
the Acquired Assets, the SCO Business or the Licensed Products (collectively,
the "Other Contracts"). Seller is not in breach of or in default under any of
the Contracts, and no claim has been made by any other party to any of the
Contracts that such Contract is not binding and in full force and effect or
that Seller is in breach of or default under such Agreement, and there is no
basis on which such claim could reasonably be made. To Seller's knowledge, no
other party to any of the Contracts is in breach of or default under such
Contract. Attached hereto as Schedule 5.9 is a list of all Other Contracts
currently in effect. As of the Closing and except as expressly set forth in
Schedule 5.9, (i) none of the Other Contracts shall affect or pertain to the
Acquired Assets or the Licensed Products and, without limiting the generality
of the foregoing, none of the Other Contracts shall grant to any parties any
rights in or with respect to the Acquired Assets or the Licensed Products or
obligate Seller to perform any obligations with respect thereto and (ii)
Seller shall have delivered to Buyer evidence that each such Other Contract
does not affect or pertain to the Acquired Assets or, if so indicated on
Schedule 5.9, that such Other Contracts has been terminated prior to or as of
the Closing.
5.10 No Conflicts or Required Approvals. Neither the sale,
transfer, assignment or delivery of the Acquired Assets by Seller to Buyer,
the execution and delivery by Seller of this Agreement or any Ancillary
Agreement nor the performance by Seller of its obligations hereunder or
thereunder does or will (i) conflict with or result in any violation of any
provision of the articles of incorporation or bylaws of Seller, (ii) conflict
with or result in any violation of or constitute a breach of or default under
or result in acceleration of any obligation under or termination of any
provision of any indenture, evidence of indebtedness or other contract, lease,
license, franchise, permit, instrument or agreement to which Seller is a party
or by which Seller is bound, (iii) result in the creation of any lien or other
encumbrance upon any of the Acquired Assets, (iv) violate any judgment, order,
injunction, decree or award of any court, administrative agency or
governmental body against or binding upon Seller, (v) constitute a violation
by Seller of any applicable law, statute, ordinance, rule or regulation, or
(vi) require Seller to obtain any consent, approval, authorization or action
of, or to make any filing with or give any notice to any governmental or
regulatory body, agency, or other federal, state or local authority.
5.11 Intellectual Property.
5.11.1 Definition. The "Intellectual Property" listed on
Schedule 1.1.2 attached hereto includes all:
(i) tangible works of authorship, copyrights,
copyrighted works, mask works, and any renewal rights, applications and
registrations therefor;
(ii) computer software, programs, firmware and the
like (including both source and object code form);
(iii) each and every invention, conception, discovery,
improvement, design, process, method, formula, apparatus, schematic,
item of technology, data manufacturing process, supplier list, trade
secret, know-how, and all other tangible or intangible proprietary
information and materials;
(iv) all license and other rights in any third party
product, intellectual property, proprietary or personal rights,
documentation, or tangible or intangible property, including, without
limitation, the types of intellectual property and tangible and
intangible proprietary information described above; and
(v) all rights to any and all income, royalties,
damages and payments now or hereafter due and/or payable under or with
respect to any of the foregoing including, without limitation, the right
to xxx and the damages and payments for past, present and future
infringement, misappropriation and/or dilution of any of the foregoing;
(vi) patents, patent applications, including any and
all provisional, divisional, continuing, continuation,
continuation-in-part, reissue, reexamination, and foreign counterpart
applications, renewals, extensions and the like; and
(vii) trademarks, service marks, trade dress, trade
names, corporate names, fictitious business names, domain names, trade
styles, logos, product designations, and any other business identifier,
any and all goodwill associated therewith, any and all applications and
registrations therefor, and any and all renewals and extensions thereof;
which Seller owns and/or otherwise has any right, title or interest in, to or
under and that are being used in, have been used in and/or are currently under
development for use in the Products.
5.11.2 Intellectual Property Representation and Warranties.
Except as indicated on Schedule 5.11.2, Seller represents and warrants
that:
(i) Identification of Intellectual Property.
Schedule 1.1.2 contains a true, complete and accurate list of all items
of Intellectual Property, and accurately identifies, where appropriate,
one or more of the following, by country, for each item of the
Intellectual Property: title or xxxx, patent or registration number,
application filing number and date, patent or registration issue date,
and licensor, license date and licensed subject matter.
(ii) Title. Seller has good and marketable title to
and owns all worldwide right, title, and interest in, to and under the
Intellectual Property. All of the Intellectual Property, the right to
exploit and use all or any part of the Intellectual Property, and the
right to transfer, convey, assign and license any of the Intellectual
Property, are free and clear of all royalty and other obligations,
security interests, liens and encumbrances, of any kind or nature. No
individual or entity other than Seller possesses any current or
contingent rights to any of the Intellectual Property (including,
without limitation, through any escrow account). Seller has made no
commitment, agreement, license or understanding, verbally or in writing,
to any other party for the use of the Intellectual Property after the
date of this Agreement. Seller has secured from all persons who are not
employees and who have created any portion of, or otherwise have any
rights in or to, the Intellectual Property, valid enforceable written
assignments or licenses to any such intellectual property or other
rights to Seller.
(iii) Validity of Intellectual Property. The
Intellectual Property is valid and enforceable and encompasses all
proprietary rights used or held for use by Seller or necessary for the
conduct of the SCO Business as presently conducted or proposed to be
conducted.
(iv) Protection of Intellectual Property. Seller has
taken all actions necessary to maintain, protect and defend the
Intellectual Property owned by Seller, and the owners of any
Intellectual Property licensed to Seller have taken all actions
necessary to maintain, protect and defend the Intellectual Property
subject to such licenses.
(v) Claims against Intellectual Property. There has
been no claim made against Seller asserting the invalidity, misuse or
unenforceability of any of the Intellectual Property or challenging
Seller's right to use, transfer, or ownership of, any of the
Intellectual Property, and there are no grounds for any such claim or
challenge. Seller is not aware of any infringement, misappropriation or
dilution of any of the Intellectual Property or of any claims, or facts
raising a likelihood, of infringement, misappropriation or dilution. No
loss of any of the Intellectual Property is threatened, pending or
reasonably foreseeable. The consummation of the transactions
contemplated by this Agreement will not alter, impair or extinguish any
of the Intellectual Property or the rights associated therewith.
(vi) Freedom to Operate. The use of any of the
Acquired Assets by Seller, including without limitation the use of any
or all of the Acquired Assets by Seller in the manufacture, use,
licensing, sale and/or provision of products and/or services of the SCO
Business by Seller, has not infringed or misappropriated, and does not
infringe or misappropriate, any intellectual property or proprietary
right of any other individual or entity. The use, reproduction,
modification, distribution, licensing, sublicensing, sale or any other
exercise of rights in any Intellectual Property or any other authorized
exercise of rights in or to the Intellectual Property by Seller or its
licensees does not infringe or misappropriate any intellectual property
or proprietary right of any other individual or entity. Seller owns or
has the right to use all Intellectual Property necessary (i) to use,
manufacture, market and distribute the Products and to provide the
related services previously or currently provided by Seller to other
parties (collectively, the "Customer Deliverables") and (ii) to operate
Seller's internal systems that are material to the operations of Seller
pertaining to the Acquired Assets, including without limitation,
computer hardware systems, software applications and embedded systems
(collectively, the "Internal Systems"). No third party has rights to
the copyrightable materials (including Software) incorporated in or
bundled with the Customer Deliverables. Each item of Intellectual
Property will be owned or available for use by Buyer immediately
following the Closing on substantially identical terms and conditions as
it was immediately prior to the Closing and Buyer shall have no
obligation to pay any fees, royalties or other amounts at any time in
respect of such Intellectual Property. There has been no claim or
notice, or written threat thereof, received by Seller alleging any such
infringement, violation or misappropriation, and Seller has provided to
Buyer complete and accurate copies of all written documentation in the
possession of the Seller relating to any such complaint, claim, notice
or threat. Seller has provided to Buyer complete and accurate copies of
all written documentation in Seller's possession relating to claims or
disputes known to Seller concerning any Intellectual Property. Seller
has not entered into any agreement under which the Seller is restricted,
and is not otherwise restricted, (i) from selling, licensing, providing
or otherwise distributing any Products or related services to any class
or type of customers or through any type of channel in any geographic
area or during any period of time, or (ii) from combining,
incorporating, embedding or bundling or allowing others to combine,
incorporate, embed or bundle any of its Products or related services
with those of another party.
(vii) Software. The Seller owns or has the right to
use the source code for all of the software included within the Acquired
Assets (collectively, the "Software"), and the Seller's current
employees are capable of maintaining and upgrading all Software
applications. Seller has not disclosed the source code for any of the
Software or other confidential information constituting, embodied in or
pertaining to the Software to any individual or entity, and Seller has
taken reasonable measure to prevent disclosure of such source code. The
Customer Deliverables and the Internal Systems are free from defects or
programming errors and conform to the written documentation and
specifications therefor. The Software does not contain or transmit any
"back door," "time bomb," "Trojan horse," "worm," "drop dead device,"
"virus" (as these terms are commonly used in the computer software
industry), or other software routines designed to permit unauthorized
access, to disable or erase software or data, or to perform any other
similar type of functions. No government funding or university or
college facilities were used in the development of the Software.
(viii) Employment Agreements. Seller has obtained from
each employee who performs or has performed services as part of the SCO
Business or relating to the Acquired Assets a written agreement under
which such employee is obligated to disclose and transfer to the Seller,
without the receipt by such employee of any value therefor (other than
normal salary or compensation, all of which has been paid to such
employees), any inventions, developments and discoveries which during
the period of employment with the Seller he or she makes or conceives of
either solely or jointly with others that relate to any subject matter
with which his or her work for the Seller may be concerned, or relate to
or are connected with the SCO Business, the Acquired Assets or the
Products or related services of Seller, or involve the use of the
Seller's time, material or facilities. Seller has not engaged any third
party consultants to perform services as part of or in connection with
the development or improvement of the Intellectual Property.
(ix) Trade Secrets and Confidential Information. The
Seller has obtained legally binding written agreements from all
employees and third parties with whom the Seller has shared confidential
and proprietary information of the SCO Business or relating to the SCO
Business (i) of the Seller, or (ii) received from others which the
Seller is obligated to treat as confidential, which agreements require
such employees and third parties to keep such information confidential
and contain all appropriate restrictions on the use of such information
by such employees or third parties. The Seller is not aware that any of
employee of Seller is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency,
that would interfere with his or her duties to Seller or that would
conflict with the SCO Business of the Seller.
5.12 Absence of Certain Changes. Since October 31, 2002 and except
as set forth in Schedule 5.12, Seller has diligently conducted the operations
of the SCO Business in accordance with its ordinary and usual course of
business and consistent with past practice and has not done (or other than by
this Agreement agreed to do) any of the following:
5.12.1 incurred any indebtedness, obligation or liability
(contingent or otherwise) except (i) normal trade obligations and normal and
ordinary items incurred in the ordinary course of the SCO Business and
(ii) obligations under contracts, agreements and leases entered into in the
ordinary course of the SCO Business, all of which have been disclosed to
Buyer;
5.12.2 discharged or satisfied any lien or other
encumbrance or paid any obligation or liability (fixed or contingent) of the
SCO Business, except in the ordinary course of the SCO Business or as required
by the terms thereof;
5.12.3 mortgaged, pledged or subjected to any encumbrance,
any assets, properties or rights included in the Acquired Assets;
5.12.4 sold, assigned, transferred, conveyed, leased or
otherwise disposed of any of the assets, properties or rights of the SCO
Business, except for fair consideration in the ordinary course of the SCO
Business;
5.12.5 canceled or compromised any debt or claim of the SCO
Business other than in the ordinary course of business;
5.12.6 waived or released any rights relating to the
Acquired Assets;
5.12.7 transferred, granted, disposed of or permitted to
lapse any rights with respect to any Intellectual Property, or sold licensed
or transferred any of its Intellectual Property other than in the ordinary
course of the SCO Business and consistent with past practice;
5.12.8 suffered any casualty loss or damage to the Acquired
Assets, whether or not covered by insurance;
5.12.9 entered into any other transaction, contract or
commitment with respect to the SCO Business other than in the ordinary course
of the SCO Business;
5.12.10 experienced any material adverse change, or any
occurrence or event which is reasonably likely to result in such a change or
in any material adverse effect, in the Acquired Assets or the SCO Business; or
5.12.11 agreed, whether in writing or otherwise, to take any
action described in this Section.
5.13 Employee Matters; Employee Benefits.
5.13.1 Seller has complied in all material respects with
all applicable laws and regulations relating to employment matters and
practices (collectively, "Employment Laws"), including, without limitation,
fair labor standards, wage and hour requirements, collective bargaining laws,
employment discrimination, affirmative action, withholding and other tax laws
relating to employment, and occupational health and safety requirements which
relate, directly or indirectly, to the Acquired Assets or the SCO Business.
There are no claims or controversies pending or, to the best knowledge of
Seller, threatened, between Seller, on the one hand, and any of its current or
former employees on the other hand, which relate, directly or indirectly, to
the Acquired Assets or the SCO Business. Seller is not labile for arrears or
wages, benefits, taxes, damages or penalties for failing to comply with
Employment Laws with respect to the SCO Business or the current or former
employees of that business.
5.13.2 From and after the Closing, Buyer shall not have any
obligations or liabilities to individuals, governmental authorities or others
arising out of or as a result of Seller's employment or termination of any
current or former employees of Seller prior to or after the Closing,
including, without limitation, any obligations or liabilities relating to
compensation, benefits, fringe benefits, retirement and profit-sharing plans,
deferred compensation, bonus, incentive and life insurance plans, health,
welfare and disability plans, and other employment-related or benefit-related
obligations under local, state or feral law (including without limitation the
Employee Retirement Income Security Act of 1974, as amended). Seller has no
liability or obligation to provide life, medical or other welfare benefits to
former or retired employees of the SCO Business, other than under COBRA, and
Seller has at all times complied in all respects with the applicable COBRA
continuation requirements for its welfare benefit plans and with any
applicable state statutes mandating health insurance coverage.
5.13.3 The consummation of the transactions contemplated by
this Agreement, other than by reason of actions taken by Buyer following the
Closing, will not entitle any current or former Seller employee whose
employment relates or related, directly or indirectly, to the Acquired Assets
or the SCO Business to severance pay, unemployment compensation or any other
payment, or accelerate the time of payment or vesting, or increase the amount
of any compensation due to any such current or former Seller employees.
5.14 Real Property. Seller owns no real property. The Acquired
Assets are all located at the principal offices of Seller as described in
Section 5.2 hereof.
5.15 Tangible Personal Property. The Tangible Personal Property
included in the Acquired Assets is free and clear of all encumbrances of any
kind or nature, other than the interest of lessors in any such property leased
by Seller, all of which interests have been disclosed by Seller to Buyer
hereunder. All such property is in good operating condition and repair,
normal wear and tear excepted, and is fit for its intended purpose. All
leases of such personal property are in full force and effect and constitute
valid agreements enforceable in accordance with their terms, and no event has
occurred which with notice or lapse of time or both would result in a default
thereunder.
5.16 Permits and Licenses. There are no governmental permits,
licenses, approvals or authorizations required for the ownership and use of
the Acquired Assets.
5.17 Compliance with Laws. The SCO Business and the operations of
Seller in connection therewith have at all relevant times been and are being
conducted in accordance and in compliance with all applicable laws, rules and
regulations and Seller is in material compliance with all such laws, rules and
regulations with respect to the Acquired Assets. Seller is not in violation
of, or in default under, any term or provision of its articles of
incorporation or bylaws, each as amended to date, or of any lien, indenture,
mortgage, lease, agreement, instrument, commitment or other arrangement
relating to or affecting the SCO Business or the Acquired Assets.
5.18 Insurance. All policies of fire, liability, workers'
compensation and other forms of insurance owned or held by Seller with respect
to the SCO Business or the Acquired Assets are in full force and effect and
are maintained with financially sound and reputable insurers, all premiums
with respect thereto covering all periods up to and including the Closing Date
have been paid or will be paid, and no notice of cancellation or termination
has been received with respect to any such policy. Such policies are
sufficient for compliance with all requirements of law and of all agreements
to which Seller is a party; are valid and outstanding policies; provide
insurance coverage of the type and in amounts customarily carried by persons
or entities conducting businesses or owning assets similar in type and size to
the SCO Business and the Acquired Assets. There have been no claims made for
insurance payment under any of the policies with respect to the SCO Business
or the Acquired Assets.
5.19 SCO Books and Records. The SCO Books and Records comprise all
papers and records (in paper or electronic format), other than the Excluded
Assets and other than minute books and stock records, financial statement
records and employee records, comprising, relating to or necessary for the
operation of the SCO Business or the Acquired Assets. The SCO Books and
Records are true and correct and accurately reflect in all material respects
the status of the SCO Business and the Acquired Assets.
5.20 Sufficiency of Acquired Assets. The Acquired Assets include
all of the intellectual property and intellectual property rights that are
used or held for use by Seller in, or are necessary for, the conduct of the
SCO Business, and the Tangible Personal Property includes all equipment and
other tangible personal property that is used or held for use by Seller in or
that is necessary for the conduct of the SCO Business. The Acquired Assets
are sufficient for Buyer to conduct the SCO Business immediately following the
Closing in substantially the same manner as the SCO Business is currently
conducted by Seller.
5.21 Environmental, Health and Safety Laws. With respect to the
Acquired Assets and except to the extent that any noncompliance by Seller
would adversely impact Buyer, the Acquired Assets or Buyer's use of the
Acquired Assets, Seller is in full compliance with all terms and conditions of
any required permits, licenses and authorizations, and is also in full
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
those laws or contained in any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder. Seller is not aware of, nor has Seller received notice of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans which (i) may interfere with or prevent
continued compliance, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, suit, proceeding,
hearing or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or
the emission, discharge, release or threatened release into the environment,
of any pollutant, contaminant or hazardous or toxic material or waste and (ii)
adversely impact or may adversely impact Buyer, the Acquired Assets or Buyer's
use of the Acquired Assets.
5.22 Absence of Unlawful Payments. Neither Seller nor any
director, officer, agent, employee, stockholder or other person acting on
behalf of Seller, has (i) used any corporate funds or any other funds in
connection with the SCO Business for unlawful contributions, payments, gifts
or entertainment, or made any unlawful expenditures relating to political
activity, to government officials or others or established or maintained any
unlawful or unrecorded funds in violation of any applicable law or (ii)
accepted or received any unlawful contributions, payments, gifts or
expenditures.
5.23 Reliance. The foregoing representations and warranties are
made by Seller with the knowledge and expectation that Buyer is placing, and
is entitled to place, complete reliance thereon, notwithstanding any
independent investigations conducted by or on behalf of Buyer with respect to
the SCO Business or the Acquired Assets.
5.24 No Brokers. Seller has not hired or employed, and is not
obligated to pay a fee to, any broker, finder or similar agent or
representative, or any other third party, in connection with the transaction
contemplated by this Agreement.
5.25 Full Disclosure. No representation or warranty of the Seller
in this Agreement or in any certificate to be furnished by the Seller pursuant
to this Agreement contains or will contain any untrue statement of a material
fact or omits or will omit a material fact necessary to make the statements
contained therein not misleading. There is no fact which has not been
disclosed in writing to Buyer which could reasonably be expected to have an
adverse effect on the Acquired Assets.
5.26 No Other Product or Service Warranties. Seller has made no
oral or written representations or warranties to third parties with respect to
the Products or related services of the SCO Business other than as set forth
in the standard form(s) of Seller warranties attached hereto as Schedule 5.26
and other than to the third parties identified in said Schedule 5.26. This
Section 5.26 is not intended to refer to any representations of Seller to
Buyer under this Agreement.
5.27 Consideration. Seller agrees that the consideration being
received from Buyer pursuant to this Agreement for the Acquired Assets was
negotiated between the parties on an arms'-length basis, that the
consideration is fair to Seller and its creditors and stockholders, and that
this Agreement is not being entered into, and the transactions provided for
herein are not being consummated, by Seller with the intent to delay or
defraud the creditors or stockholders of Seller.
6. Representations and Warranties of Buyer . Buyer represents and
warrants that each of the following (i) is true and correct on the date
hereof, (ii) will be true and correct on the Closing Date and (iii) shall be
unaffected by an investigation heretofore or hereafter made by the Seller:
6.1 Existence and Qualification; Binding Obligations. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California and has the corporate power to execute and
deliver this Agreement and the License Agreement and to carry out the
transactions hereunder and thereunder contemplated. The Buyer's execution and
delivery of this Agreement and the License Agreement and consummation of the
transactions required hereby and thereby will not violate any provision of any
mortgage, trust indenture, lien, lease, agreement, instrument, order,
judgment, law, statute, regulation, ordinance, decree or other restriction of
any kind or character to which Buyer is subject or by which its property is
bound. This Agreement and the License Agreement have been duly authorized,
executed and delivered by Buyer and are valid, binding and enforceable against
Buyer in accordance with their respective terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws relating to or
affecting the rights and remedies of creditors generally and by general
principles of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance, injunctive relief or other equitable remedies,
regardless of whether enforceability is considered in a proceeding in equity
of at law.
6.2 Authority. The Buyer has completed all actions and procedures,
corporate and otherwise, and has obtained all consents or other authorizations
necessary or proper to authorize the transactions contemplated hereunder and
to enable Buyer to perform all of its obligations hereunder.
7. Certain Additional Covenants.
7.1 Maintenance of the Acquired Assets Pending the Closing Date.
Seller covenants and agrees that with respect to the Acquired Assets and
the SCO Business from the date hereof to the Closing Date:
7.1.1 Seller will not take any action or fail to take any
action that will adversely affect the Acquired Assets or the SCO Business or
threaten the Acquired Assets or the SCO Business in any way.
7.1.2 The Seller will not enter into any contract or
commitment or engage in any transaction affecting the Acquired Assets or the
SCO Business or Seller's right, title, or interest therein which is not in the
usual and ordinary course of the SCO Business and consistent with past
practices and which has not first been disclosed to Buyer in writing.
7.1.3 The Acquired Assets will be used, operated and
maintained in a manner consistent with past practices.
7.1.4 The Seller will use commercially reasonable best
efforts (without making any commitments on behalf of Buyer) to preserve for
Buyer the present relationships with the customers of Seller and others having
business relations with Seller relating to the SCO Business or any of the
Acquired Assets.
7.1.5 The Seller will duly comply with all applicable laws
to the extent required for the sale and transfer of the Acquired Assets and
the performance of all other acts and things contemplated by this Agreement.
7.1.6 Seller will cause all of the Acquired Assets to be
insured against all ordinary and insurable risks and will operate, maintain
and repair all of the Acquired Assets in a careful, prudent and efficient
manner.
7.2 [INTENTIONALLY OMITTED]
7.3 Full Access. Throughout the period prior to the Closing,
Seller shall provide to Buyer and its representatives, including without
limitation the Appraiser (as defined herein): (i) access, during normal
business hours and upon reasonable notice, to all books, records, contracts,
financial and operating data, properties and assets of or relating to the SCO
Business or the Acquired Assets, including without limitation intellectual
property, proprietary rights, proprietary technologies and source codes, and
(ii) subject to Seller's prior consent, which consent shall not be
unreasonably withheld, the reasonable opportunity to consult with employees,
customers, suppliers and consultants of the SCO Business concerning the
Acquired Assets and the SCO Business. At Seller's reasonable request, Seller
may participate in any such Buyer consultations. Any examination and
investigation by Buyer of Seller, the SCO Business and/or the Acquired Assets
prior to, on or after the date of this Agreement shall not affect the
representations and warranties of Seller contained in this Agreement or any
remedy available to Buyer with respect to any breach thereof.
7.4 Covenant Not to Compete.
7.4.1 As an inducement to Buyer to enter into this Agreement
and in consideration of the payments, promises and representations of Buyer
under this Agreement, Seller agrees, for the benefit of Buyer, that for a
period of three years following the Closing Date but not including any
business activities of Seller or any "Seller Affiliate" (as such term is
defined in the License Agreement) under and in accordance with the terms of
the License Agreement (which activities shall be expressly permitted from and
after the Closing for so long as the License Agreement is in effect), neither
Seller nor any of its "Affiliates" (as defined herein and including, without
limitation, all Seller Affiliates), successors or assigns will develop any
software technology that competes with or is related to the Acquired Assets
except for business solutions developed from the public API. Seller
specifically acknowledges and agrees that the foregoing covenant is
commercially reasonable and is reasonably necessary to protect the interest
Buyer will acquire in the Acquired Assets hereunder. The foregoing covenant
will not prohibit (i) any exercise by Seller or any Seller Affiliate, anywhere
in the world, of any rights granted to Seller under the License Agreement in
accordance with the terms thereof or (ii) Seller from designing, developing,
producing, marketing, licensing selling or distributing its IAD and Softphone
Products anywhere in the world. For purposes of this Agreement, an
"Affiliate" of Seller shall mean any person or entity directly or indirectly
controlling, controlled by or under common control with such entity and, for
purposes of this definition, the term "controlling," "is controlled by," or
"is under common control with" shall mean the ownership and control, direct or
indirect, of more than 10% of the outstanding voting interests of such person
or entity.
7.4.2 It is expressly understood and agreed that although
Seller and Buyer consider the restrictions contained in this Section to be
reasonable in the context in which made, if a final judicial determination is
made that the time, territory, scope or any other restriction contained in
this Section is unreasonable or otherwise unenforceable, neither this
Agreement nor the provisions of this Section shall be rendered void, but shall
be deemed amended to such other extent as such court may judicially determine
or indicate to be reasonable, and as so modified, the restrictions contained
in this Section shall be binding and enforceable.
7.5 No Solicitation.
7.5.1 During the three-year period following the Closing
Date and except for any exercise by Seller or any Seller Affiliate of Seller's
rights under the License Agreement in accordance with the terms thereof,
neither Seller nor any Affiliate (including without limitation Seller
Affiliates) shall in any manner, directly or indirectly, solicit, raid,
interfere with, induce or contact, or attempt to solicit, raid, interfere
with, induce or contact, (a) any person or entity that is a customer of
Buyer's SCO Business to terminate or alter its customer relationship with
Buyer's SCO Business or to become a customer of any other person or entity for
the purpose of obtaining Competitive Products or (b) any person or entity that
is a licensee, licensor, distributor or supplier of or developer for Buyer's
SCO Business to terminate its relationship with Buyer's SCO Business or to
become a licensee, licensor, distributor, supplier of or developer for any
other person or entity that designs, develops, produces, licenses, sells or
distributes Competitive Products. The foregoing restriction shall not apply
with respect to (1) activities of Seller as part of its IAD and Softphone
Business and/or its relationship with any persons or entities (including
without limitation with Wizcom UK Ltd., EcsNet, S.r.L., XxxxxxXxxx.xxx "BB
Group," Colo Central Corporation, Flow-Line Communications Ltd. and NewChip,
SrL) in the course of Seller's exercise of its rights under and in accordance
with the terms of the License Agreement or (2) Seller's recommending,
specifying or installing third party Competitive Products as part of Seller's
business that does not otherwise violate the restrictions in this Article 7 or
the terms and conditions of the License Agreement. For purposes of this
Agreement, "Competitive Products" (i) shall mean products, services or
technology which is competitive with the products, services or technology of
the business conducted by Buyer with the Acquired Assets after the Closing
("Buyer's SCO Business"), including without limitation products and services
under design or development by Seller as of the Closing Date although not yet
commercialized or not generally available and (ii) shall include without
limitation, any SIP gateway, class 5 feature set, unified messaging or network
management products, services or technology for use with any of the products,
services of technology of Buyer's SCO Business.
7.5.2 For a period of two years following the Closing Date,
neither Seller nor any of its Affiliates (including without limitation Seller
Affiliates), successors or assigns will seek to entice, induce or in any
manner influence any employee to leave his or her employment with Buyer or not
accept employment with Buyer.
7.6 Confidential Information.
7.6.1 "Confidential Information" shall mean (i) any
information disclosed by a party, including present employees, third party
contractors or agents of that party (the "Disclosing Party"), to the other
party (the "Receiving Party") and which such Disclosing Party has marked as
confidential or has otherwise identified as being confidential or, if
disclosed verbally, which such Disclosing Party has indicated is confidential;
provided, however, that Confidential Information shall exclude information
that the Receiving Party can demonstrate: (i) was independently developed by
the Receiving Party without any use of or reference to the Disclosing Party's
confidential information; (ii) becomes known to the Receiving Party, without
restriction, from a source (other than the Disclosing Party) that had a right
to disclose it without breach of this Agreement or any other contractual
obligation; (iii) was in the public domain at the time it was disclosed or
enters the public domain through no act or omission of the Receiving Party; or
(iv) was rightfully known to the Receiving Party, without restriction, at the
time of disclosure; and provided further, that after the Closing, confidential
information that has been disclosed by Seller relating to the SCO Business,
the Acquired Assets or the Assumed Liabilities shall be deemed the
confidential information of Buyer for purposes of this Agreement.
7.6.2 The Receiving Party shall treat as confidential all of
the Disclosing Party's Confidential Information. Without limiting the
foregoing, the Receiving Party shall use at least the same degree of care
which it uses to prevent the disclosure or improper or illegal use of its own
confidential information of like importance, but in no event with less than
reasonable care, to prevent the disclosure or improper or unauthorized use of
the Disclosing Party's Confidential Information. In the event either party is
required to disclose the other party's Confidential Information pursuant to
applicable law or regulation, or the order or requirement of a governmental
entity, the party required to disclose such information shall provide prompt
notice thereof to the other party to allow such party the opportunity to
obtain a protective order or similar protection.
7.6.3 From and after the Closing, the provisions of this
Section 7.6 shall not apply to or restrict in any manner Buyer's use of any
Confidential Information of Seller that relates to any of the Acquired Assets,
the Assumed Liabilities or the SCO Business.
7.7 Remedies. Seller hereby acknowledges that the SCO Business is
unique and that Buyer and its successors and assigns will suffer irreparable
and continuing harm to the extent that any of the foregoing covenants is
breached and that legal remedies would be inadequate in the event of any such
breach. Accordingly, Seller agrees that, in the event of a breach of any of
the covenants contained in this Article 7, Buyer shall, in addition to any
other rights and remedies available under law and in equity, have the right
and remedy to have the provisions of this Article 7 specifically enforced by
any court having jurisdiction.
7.8 Tax Matters.
7.8.1 Seller will report as part of its federal, state and
other Tax returns and reports of Seller the transactions and results of the
operations of the SCO Business and the Acquired Assets up to the Closing, and
Seller shall pay any and all Taxes attributable thereto. Seller shall also
pay and be responsible for any and all sales, transfer and similar Taxes
arising out of the purchase and sale of the Acquired Assets hereunder.
7.8.2 Buyer will report as part of its federal, state and
other Tax returns and reports of Buyer the transactions and results of the
operations of the Buyer's SCO Business and the Acquired Assets after the
Closing, and Buyer shall pay any and all Taxes attributable thereto.
7.8.3 To the extent any payment of Taxes made by Seller or
Buyer is attributable to the Acquired Assets and is made for a taxable period
commencing prior to Closing and ending thereafter, the non-paying party shall
promptly reimburse the paying party upon receipt of a copy of the filed Tax
return to the extent any payment made by such paying party relates to that
portion of the taxable period ending on or before or on or after, as
applicable, the Closing Date, which amount shall be determined and prorated on
a per diem basis; provided, however, that in no event shall the non-paying
party be responsible for any penalties, interest or the like resulting from
any failure by the paying party to timely or correctly file any such Tax
returns.
7.8.4 Each party shall (i) provide the other with such
assistance as may reasonably be required in connection with the preparation of
any Tax return or the conduct of any audit or other examination by any taxing
authority or in connection with judicial or administrative proceedings
relating to the Acquired Assets and any liability for Taxes and (ii) retain
and provide the other with all records or other information that may be
relevant to the preparation of any Tax returns, or the conduct of any audit or
examination, or other proceeding relating to Taxes and/or the Acquired Assets.
Seller shall retain all documents, including prior years' Tax returns,
supporting work schedules and other records or information with respect to all
sales, use and employment Tax returns and shall not destroy or otherwise
dispose of any such records for six years after the Closing without the prior
written consent of Buyer.
7.9 Notification of Certain Matters. Seller shall give prompt
written notice to Buyer of (i) the occurrence, or failure to occur, of any
event, which occurrence or failure would be likely to cause any representation
or warranty of the Seller contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Closing Date, (ii) any failure of Seller to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by Seller
under this Agreement, (iii) any material claims, actions, proceedings or
investigations commenced or threatened, involving or affecting, directly or
indirectly, all or any of the Acquired Assets, and (iv) any material adverse
change in the condition (financial or otherwise), operations, prospects,
assets or liabilities of the SCO Business or the occurrence of an event known
to the Seller which, so far as reasonably can be foreseen at the time of its
occurrence, would result in any such change.
7.10 Payments Received. Seller and Buyer each agree that after the
Closing they will hold and will promptly transfer and deliver to the other,
from time to time as and when received by them, any cash, checks with
appropriate endorsement (using their best efforts not to convert such checks
into cash), or other property that they may receive on or after the Closing
which properly belongs to the other party, including without limitation any
insurance proceeds, and will account to the other for all such receipts.
7.11 SCO Business Inquiries. For a period of six months after the
Closing, Seller shall promptly forward to Buyer any orders for goods or
services, and any business inquiries, received by Seller or any affiliate of
Seller, to the extent such orders or inquiries are for products or services
associated with the Acquired Assets (other than inquiries which relate to
Seller's exercise of its rights under and in accordance with the terms of the
License Agreement), including but not limited to orders and business inquiries
received through employees, distributors and sales representatives and whether
received by mail, by email, by telephone, by fax or by any other means.
7.12 Employee Matters.
7.12.1 Seller acknowledges that Buyer prior to the Closing
may offer at-will employment to certain employees of the SCO Business whose
names are set forth on Schedule 7.12.1 (the "Offered Employees"). Seller
will encourage the Offered Employees to accept the offers of employment with
Buyer and will not take any action to discourage the Offered Employees from
accepting such offers. Seller further agrees that, effective as of the
Closing, the employment of all Offered Employees who have accepted employment
with Buyer shall be deemed terminated as of the Closing, provided that any and
all agreements with Seller or its affiliates concerning confidentiality,
assignment of works and nonsolicitation shall remain in full force and effect
and shall survive the termination of each such person's employment with Seller
in accordance with the terms thereof and, to the extent appropriate, shall be
assigned to Buyer. None of the confidentiality and use restrictions set forth
in any such agreements shall be deemed to restrict any such persons'
disclosure or use of information in the course of their employment by Buyer
and in accordance with the terms and conditions of their employment by Buyer.
7.12.2 As of the Closing, Seller shall pay to all Offered
Employees who accept employment with Buyer as of the Closing any and all
liabilities relating to or arising out of their employment with Seller prior
to the Closing or the termination of that employment, including without
limitation any payments and benefits due to such Continuing Employees as
accrued salary, vacation pay, bonus, commissions, reimbursable business
expenses or other forms of compensation.
7.12.3 Seller agrees that Seller shall be responsible for
the payment of all compensation and employment and employment termination
liabilities and obligations due to any employees of the SCO Business arising
out of or in connection with the employees' employment with Seller or the
termination thereof.
7.12.4 Seller shall retain and be solely responsible for
all liabilities arising under, resulting from or relating to the benefit plans
of Seller or Seller's employment or termination of its employees (including
employees of the SCO Business), whether incurred before, on or after the
Closing (collectively, "Benefits Liabilities"), including without limitation
all Benefits Liabilities to Offered Employees who become employees of Buyer at
the Closing and to all employees of the SCO Business who are not hired by
Buyer as part of the transactions contemplated hereby. Buyer shall not be
responsible for any such Benefits Liabilities.
7.12.5 Nothing in this Section shall be construed to
entitle any Offered Employee to continue his or her employment with Buyer for
any period of time.
7.13 Payment of Unassumed Liabilities; Third Party Claims.
Following the Closing, Seller shall timely pay or otherwise cause to be
timely discharged, without cost or expense to Buyer, each and every liability
and obligation of Seller incurred prior to the Closing (or to which Seller
becomes subject after the Closing if such liability or obligation arises out
of Seller's use of the Acquired Assets prior to the Closing) that (i) relates,
directly or indirectly, to the Acquired Assets; (ii) is not expressly assumed
or discharged by Buyer pursuant to this Agreement; and (iii) if not so paid or
discharged, would adversely affect Buyer's ownership or use of the Acquired
Assets after the Closing. In the event that Seller in good faith disputes
any such liability or in the event any third party makes any claim covered by
Section 1.4.1 hereof, Seller shall act diligently and in good faith to resolve
or contest such matter and, in the interest, among other things, of preserving
the goodwill, business reputation and/or prospects acquired by Buyer
hereunder, Seller shall resolve such claim in a reasonable manner so as not to
adversely affect the Buyer Business or the Acquired Assets. In the event that
Seller does not act diligently and in good faith to resolve or contest such
dispute or claim, Buyer may, in the interest of preserving the goodwill,
business reputation or prospects acquired by Buyer hereunder, resolve such
dispute or claim in any reasonable manner, provided that nothing contained in
this Section or contained elsewhere in this Agreement shall be construed as
obligating Buyer to resolve any such dispute or claim and Buyer's election to
act or not act shall be in Buyer's sole discretion. Seller shall be liable to
Buyer for all costs reasonably incurred by Buyer in resolving any such dispute
or claim. No action taken by or election not to act by Buyer under this
Section shall be construed as: (a) an assumption by Buyer of any liability for
third party claims or any other liability whatsoever; (b) a waiver of any of
Buyer's rights under this Agreement (including, but not limited to, any right
to indemnity); or (c) a release of Seller from any warranty or obligation of
indemnity.
7.14 Consents. Seller and Buyer shall each use its commercially
reasonable efforts to obtain, or cause to be obtained, at the earliest
practicable date and prior to the Closing Date, all consents of all third
parties and governmental authorities (and shall make all required filings with
governmental authorities) necessary to authorize, approve or permit the full
and complete consummation of all the transactions contemplated hereby,
including without limitation the transfer and assignment to Buyer of the
Acquired Assets, including, without limitation, the rights under the Contracts
included therein. In the event Seller cannot, after using commercially
reasonable efforts, obtain any third party consent required for the assignment
or transfer of any Acquired Assets, Seller shall, if requested by Buyer and
provided Buyer elects to consummate the purchase of the Acquired Assets
hereunder notwithstanding the lack of such consent, use commercially
reasonable efforts to establish an arrangement reasonably satisfactory to
Buyer under which Buyer would obtain, after Closing, the benefits of such
rights or under which Seller would enforce or obtain for the benefit of Buyer
any and all claims, rights and benefits of Seller thereunder.
7.15 Third Party Consents. With respect to any Contract, including
without limitation any software license agreement, for which any consent by or
notification or payment to any third party is necessary in order to assign or
otherwise transfer the Contract to Buyer at the Closing, Seller shall take or
cause to be taken, at Seller's sole cost and expense, such actions and make
such payments as may be required to cause the Contract to be assigned or
otherwise transferred to Buyer at the Closing. If required by the third
party, Seller shall obtain, at its sole cost and expense, a novation thereof
to Buyer that shall cause Buyer to be entitled to obtain all rights under the
Contract. In the event that any required consent or novation has not been
obtained prior to Closing, Seller shall thereafter, at its sole cost and
expense, (i) expeditiously cause such novation or consent to be obtained;
(ii) hold the Contract in trust from the Closing Date until the appropriate
consent or novation is obtained and (iii) establish an arrangement reasonably
satisfactory to Buyer under which Buyer will obtain, after Closing, the
claims, rights and benefits of the Contract and will assume the corresponding
liabilities and obligation thereunder in accordance with this Agreement.
7.16 Additional Assets. Buyer shall also purchase from Seller, and
Seller shall sell, transfer and assign to Buyer, at the Closing, all of the
personal property assets listed on Schedule 7.16 attached hereto
(collectively, the "Additional Assets"). Buyer shall pay to Seller at the
Closing, by check or wire transfer in the manner provided in Section 2.1
hereof, the purchase price of Ten Thousand Dollars ($10,000) for the
Additional Assets, which payment shall be in addition to the Closing Payment.
7.17 Covenants Regarding Syrinx and Microphase.
7.17.1 Syrinx Judgment Lien. Prior to the Closing, Seller
shall arrange for the satisfaction and removal of, or in the event such
satisfaction and removal has already occurred, shall obtain reasonably
satisfactory evidence of the satisfaction and removal of, that certain
judgment lien of Syrinx Speech Systems Pty. Ltd. as evidenced by the
Certificate of Judgment Lien on Personal Property, No. CV-99-0358989S, filed
in the Superior Court, Judicial District of Fairfield, Bridgeport,
Connecticut, on August 6, 1999, in the amount of $802,500.
7.17.2 Microphase Corporation. Prior to the Closing,
Seller shall obtain the written consent of Microphase Corporation, a creditor
of Seller, to the sale of the Acquired Assets to Buyer as provided herein.
Such consent shall be in a form that is reasonably satisfactory to Buyer and
shall include, without limitation, Microphase's agreement not to (1) challenge
Buyer's right, title and interest in or to the Acquired Assets following the
Closing or (2) claim any right, title or interest in or to the Acquired Assets
or Buyer's SCO Business following the Closing.
7.18 Use of Office Space and Equipment.
7.18.1 Seller agrees to sublease to Buyer the space
currently occupied and used by the Offered Employees (the "Office Space") in
its existing condition, subject to the terms, covenants and conditions set
forth in this Section 7.18. The Office Space shall specifically consist of
(i) the office currently occupied and used by Xxxxx Xxxxxx and Xxxxxxx Xxxx,
(ii) the office currently occupied and used by Xxxx Xxxxxx and (iii) the space
currently occupied and used by Xxxxxx Xxxx. All of the Office Space is
located at Seller's premises at 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx
00000 (the "Premises"). Seller acknowledges and agrees that Buyer shall
occupy and use the Office Space following the Closing for the conduct of
Buyer's SCO Business and for other uses reasonably relating to such
activities. The term of the sublease shall commence on the Closing Date and
shall expire at the close of business on the date that is five business days
following Buyer's notice to Seller of termination of the sublease; provided,
however, that the sublease shall in any event terminate 30 days after the
Closing unless the parties have otherwise agreed in writing. Buyer shall pay
to Seller as rent for the Office Space the amount of $200 per day on a full
gross service basis, and Buyer shall in no event be liable for any taxes,
insurance, common area maintenance expenses or utilities charged against or
allocable to the Office Space or for any other charges, costs or expenses
payable by Seller under Seller's lease with its lessor (the "Master Lease"),
it being the express agreement of Buyer and Seller that the fixed rent
includes all of such costs, charges and expenses including, without
limitation, charges relating to janitorial, security, telephone and Internet
services, all of which shall be provided to the Office Space during the term
of the sublease. Buyer shall not be responsible or liable for any
maintenance, upkeep, repair or replacement of any part of the Office Space,
all of which shall be and remain the responsibility of Seller and/or its
lessor, excluding only the repair of any damage to the Office Space resulting
from the actions of Buyer. During the term of the sublease, Seller shall
maintain in effect all insurance required to be maintained by Seller under the
Master Lease. Each of Buyer and Seller shall indemnify the other and save the
other harmless from and against all liability, loss, costs, damages and
expenses (including attorneys' fees) suffered by such other party as a
consequence of any act or omission caused by the indemnifying party, its
agents, contractors, employees or invitees and, in the case of Seller,
Seller's breach of or default under the Master Lease.
7.18.2 Use of Seller's Laboratory and Equipment. Seller
agrees that during the term of the sublease, Buyer shall be entitled to use,
at no additional charge, (i) the photocopy machine, fax machine, server,
workstations, router, firewall, CSU/DSU and switch located at the Seller's
premises as of the date of this Agreement and (ii) as reasonably necessary or
appropriate for the conduct of Buyer's SCO Business, the laboratory facilities
located at the Premises. Buyer shall also be permitted to use, during the
term of the sublease and at no additional charge, any assets of Seller that
were used by the Offered Employees prior to the Closing and that are not being
acquired by Buyer hereunder.
7.19 Other Contracts. Seller shall terminate or amend each of the
Other Contracts so that, as of the Closing, none of the Other Contracts (i)
grants to any parties any rights in or with respect to the Acquired Assets or
the Licensed Products or (ii) obligates Seller to perform any obligations
relating thereto, provided that if so indicated on Schedule 5.9 with respect
to any Other Contract, Seller shall be obligated to terminate rather than
amend the Other Contract. Seller shall also deliver to Buyer prior to or at
the Closing evidence reasonably satisfactory to Buyer that all amendments and
terminations required under this Section 7.19 have been effected.
8. Conditions Precedent to Buyer's Obligations . Each and every
obligation of Buyer to be performed in connection with the Closing on the
Closing Date shall be subject to the satisfaction of the following conditions:
8.1 Representations and Warranties True as of the Closing Date. The
representations and warranties made by the Seller in this Agreement
shall be true on and as of the Closing Date with the same effect as though
such representations and warranties had been made or given on and as of the
Closing Date.
8.2 No Change. Neither the Acquired Assets nor the SCO Business
shall have been adversely affected or threatened to be adversely affected in
any significant way.
8.3 Compliance with Agreement. The Seller shall have performed and
complied with all of its obligations under this Agreement which are to be
performed or complied with it prior to or on the Closing Date.
8.4 Opinion of Counsel for the Seller. The Buyer shall have
received from Xxxxxx and Xxxxxxx, Ltd. a written opinion, dated as of the
Closing Date, addressed to Buyer, in the form attached as Exhibit B hereto.
8.5 Third Party Consents. Seller shall have delivered to Buyer
written consents to assignment of any third parties to the Contracts, if
required by the terms thereof.
8.6 Release of Liens. Seller shall have delivered to Buyer the
written release, in the form and substance satisfactory to Buyer and its
counsel, of any Encumbrances relating to or affecting the Acquired Assets,
including, without limitation, evidence in such form as shall reasonably be
satisfactory to Buyer of the satisfaction of the Syrinx Judgment Lien.
8.7 Approval of this Agreement. This Agreement and the
transactions contemplated hereby shall have been approved by Seller's Board of
Directors in accordance with all applicable requirements of law and the
articles of incorporation and bylaws of Seller, and Seller shall have
delivered evidence, in a form reasonably satisfactory to Buyer and its legal
counsel, of the taking of such actions by Seller's Board of Directors.
8.8 License Agreement. The Seller shall have executed and
delivered to Buyer the License Agreement.
8.9 General Assignment, Assumption Agreement and Xxxx of Sale.
Seller shall have executed and delivered to Buyer a General Assignment,
Assumption Agreement and Xxxx of Sale in the form of Exhibit C attached
hereto.
8.10 Satisfactory Due Diligence Results. Buyer shall have
completed to its satisfaction, as determined by Buyer in its sole discretion,
such additional due diligence investigation of the Acquired Assets as Buyer
may reasonably deem necessary or appropriate, and the results of such
investigation shall be satisfactory to Buyer, as determined by Buyer in its
sole discretion.
8.11 Certificate of Seller. Buyer shall have received a
certificate, validly executed by an executive officer of Seller for and on its
behalf, to the effect that:
(i) All representations and warranties made by
Seller in this Agreement were true and correct on the date of this
Agreement and are true and correct on and as of the Closing Date.
(ii) All obligations under this Agreement to be
performed or complied with by Seller prior to or on the Closing Date
have been so performed or complied with.
8.12 Certificate of Secretary of Seller. Buyer shall have received
a certificate, validly executed by the Secretary or an Assistant Secretary of
Seller, certifying as to (i) the terms and effectiveness of the articles of
incorporation and the bylaws of Seller, (ii) the valid adoption of resolutions
of the Board of Directors of Seller approving this Agreement and the
consummation of the transactions contemplated hereby and (iii) the incumbency
of the officers executing this Agreement or any of the ancillary agreements to
which Seller is a party.
8.13 Fairness Opinion. Buyer shall have received a fairness
opinion, satisfactory to Buyer in its sole discretion, from a third party
appraiser (the "Appraiser").
8.14 Data Connection Limited. Seller shall have paid to Data
Connections Limited, or shall pay to Data Connections concurrently with the
Closing, all amounts owed as of such date by Seller to Data Connections
Limited and, in the event such amounts are paid prior to the Closing, Seller
shall provide evidence to Buyer of such payment.
8.15 Other Contracts. Seller shall have delivered to Buyer
evidence, in form and substance reasonably satisfactory to Buyer, that the
Other Contracts have been amended or terminated as required by Section 7.19
hereof.
9. Conditions Precedent to the Seller's Obligations . Each and every
obligation of the Seller to be performed on the Closing Date shall be subject
to the satisfaction of the following conditions:
9.1 Representations and Warranties True as of the Closing Date.
The representations and warranties made by Buyer in this Agreement shall be
true on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the Closing
Date.
9.2 License Agreement. The Buyer shall have executed and delivered
to Seller the License Agreement.
9.3 General Assignment, Assumption Agreement and Xxxx of Sale.
Buyer shall have executed and delivered to Seller the Assignment and Xxxx
of Sale.
9.4 Compliance with Agreement. The Buyer shall have performed and
complied with all of its other obligations under this Agreement which are to
be performed or complied with by it prior to or on the Closing Date.
9.5 Certificate of Buyer. Seller shall have received a
certificate, validly executed by an executive officer of Buyer for and on its
behalf, to the effect that:
(i) All representations and warranties made by Buyer
in this Agreement were true and correct on the date of this Agreement
and are true and correct.
(ii) All obligations under this Agreement to be
performed or complied with by Buyer prior to or on the Closing Date have
been so performed or complied with.
9.6 Certificate of Secretary of Buyer. Seller shall have received
a certificate, validly executed by the Secretary or an Assistant Secretary of
Buyer, certifying as to (i) the terms and effectiveness of the articles of
incorporation and the bylaws of Buyer, (ii) the valid adoption of resolutions
of the Board of Directors of Buyer approving this Agreement and the
consummation of the transactions contemplated hereby, and (iii) the incumbency
of the officers executing this Agreement or any of the ancillary agreements to
which Buyer is a party.
10. Indemnification and Resolution of Disputes.
10.1 Indemnification of Buyer. Seller hereby agrees to indemnify
and hold Buyer, its affiliates, successors, assigns, and the shareholders,
directors, officers, employees, representatives, and agents of each of them
(collectively, the "Buyer Indemnified Parties") harmless from, against and in
respect of, and waives any claim for contribution or indemnity with respect
to, any and all claims, losses, damages, liabilities, expenses or costs,
including attorneys' fees and expenses (collectively, "Losses"), plus interest
from the date incurred through the date of payment at the prime lending rate
as published from time to time in the Wall Street Journal for the applicable
period (in all, "Indemnified Losses"), incurred or to be incurred by any of
them (a) resulting from or arising out of any breach or violation of the
representations, warranties, covenants or agreements of Seller contained in
this Agreement, or in any exhibit, statement, schedule, certificate,
instrument or document delivered pursuant hereto, including provisions of this
Section, (b) resulting from or arising out of, or alleged to result from or
arise out of, any liability or obligation not expressly assumed by Buyer
hereunder or (c) arising out of the enforcement of this Agreement by Buyer.
10.2 Indemnification of Seller. Buyer hereby agrees to indemnify
and hold Seller, its affiliates, successors, assigns, and the shareholders,
directors, officers, employees, representatives, and agents of each of them
(collectively, the "Seller Indemnified Parties") harmless from, against and in
respect of, and waives any claim for contribution or indemnity with respect
to, any and all Indemnified Losses incurred or to be incurred by any of them
(a) resulting from or arising out of any breach or violation of the
representations, warranties, covenants or agreements of Buyer contained in
this Agreement, or in any exhibit, statement, schedule, certificate,
instrument or document delivered pursuant hereto, including provisions of this
Section, (b) resulting from or arising out of, or alleged to result from or
arise out of, any liability or obligation expressly assumed by Buyer hereunder
or (c) arising out of the enforcement of this Agreement by Seller.
10.3 Set-off Rights. In addition to such other rights, powers and
remedies that Buyer may have under law or at equity, Buyer shall be entitled
to set-off any amounts owed by the Buyer to the Seller under this Agreement or
the License Agreement, including without limitation any Earn-Out Payments owed
by Buyer to Seller hereunder, against any amounts owed by Seller to Buyer
Indemnified Parties, or any of them, pursuant to this Article 10, provided
Buyer determines in good faith that it is entitled to indemnification under
this Article 10. In the event of any such set-off, Buyer shall notify Seller
in writing of the set-off, which written notice shall specify the amount of
the set-off and describe in reasonable detail the basis for the set-off.
10.4 Participation in Litigation. In the event any suit or other
proceeding is initiated against a Buyer Indemnified Party or a Seller
Indemnified Party with respect to which Buyer or Seller, as applicable,
alleges that the other party hereto may be obligated to indemnify an
Indemnified Party hereunder, the indemnifying party shall be entitled to
participate in such suit or proceeding, at its expense and by counsel of its
choosing, provided that (a) such counsel is reasonably satisfactory to the
other party hereto, and (b) the Indemnified Party shall retain primary control
over such suit or proceeding. Such counsel shall be afforded access to all
information pertinent to the suit or proceeding in question. Buyer shall not
settle or otherwise compromise any such suit or proceeding without the prior
consent of Seller, which consent shall not be unreasonably withheld.
10.5 Claims Procedure. In the event from time to time any
Indemnified Party believes that it or any other Indemnified Party has or will
suffer any Losses for which Seller or Buyer, as applicable (in either case,
the "Indemnifying Party"), is obligated to indemnify an Indemnified Party
hereunder, Buyer or Seller (or the Buyer Indemnified Party or Seller
Indemnified Party, as applicable) shall promptly notify the Indemnifying Party
in writing of the matter, specifying therein the reason why the Indemnified
Party believes that the Indemnifying Party is or will be obligated to
indemnify, the amount, if liquidated, to be indemnified, and the basis on
which the Indemnified Party has calculated such amount; if not yet
liquidated, the notice shall so state; provided, however, that the right of a
person to be indemnified hereunder shall not be adversely affected by a
failure to give such notice unless, and then only to the extent that, the
Indemnifying Party is prejudiced thereby. The Indemnifying Party shall pay
any amount to be indemnified hereunder not more than five days after receipt
of notice from the Indemnified Party of the liquidated amount to be
indemnified.
10.6 Tax Indemnification. In addition to any other indemnification
granted herein and notwithstanding the survivability or limits, if any, of any
representation contained herein or the absence of any representation herein,
Seller agrees to indemnify, defend and hold harmless each of the Buyer
Indemnified Parties from and against all loss, liability, including Seller's
liability for its own taxes or its liability, if any (for example, by reason
of transferee liability or application of Treas. Reg. Section 1.1502-6) for
taxes of others, damage or reasonable expense (including but not limited to
reasonable attorneys' fees and expenses) (collectively, "Costs") payable with
respect to taxes claimed or assessed against any of the Indemnified Parties or
the Acquired Assets (i) for any taxable period ending on or before the Closing
Date and (ii) for any tax resulting from any breach or violation of the
representations, warranties, covenants or agreements of the Seller contained
in this Agreement, or in any exhibit, statement, schedule, certificate,
instrument or document delivered pursuant hereto, including provisions of this
Section 10. Seller also agrees to indemnify, defend and hold harmless each of
the Indemnified Parties from and against any and all Losses sustained in a tax
period of such Buyer Indemnified Party ending after the Closing Date arising
out of the settlement or other resolution of a proposed tax adjustment which
relates to a tax period ending on or before the Closing Date.
11. Termination.
11.1 Right to Terminate. This Agreement may be terminated:
11.1.1 at any time prior to the Closing Date by the mutual
written consent of the parties hereto;
11.1.2 on or after May 15, 2003 by Buyer, effectively
immediately upon the giving of written notice to Seller, if on such date any
of the conditions set forth in Article 8 shall not have been satisfied, unless
the reason that the Closing has not occurred results primarily from any breach
by Buyer of any of its representations, warranties or covenants under this
Agreement;
11.1.3 on or after May 15, 2003 by Seller, effectively
immediately upon the giving of written notice to Buyer, if on such date any of
the conditions set forth in Article 9 shall not have been satisfied, unless
the reason that the Closing has not occurred results primarily from any breach
by Seller of any of its representations, warranties or covenants under this
Agreement; and
11.1.4 at any time prior to the Closing Date by either
party, effective immediately upon the giving of written notice to the other
party, in the event such other party is in material breach of or default under
this Agreement and such breach or default has continued unremedied for a
period of ten days after its receipt of written notice thereof from the
non-breaching party.
11.2 Other Remedies Available. The termination rights under
Section 11.1 shall be in addition to, and not in lieu of, any other legal or
equitable remedy which the terminating party may have for or in respect of any
breach of the obligations hereunder or failure to satisfy a condition to its
obligations hereunder by the other party.
12. Miscellaneous.
12.1 Notice. Any notices given under this Agreement shall be
deemed to be effectively given when delivered personally, or sent by a
commercial courier that guarantees overnight delivery, or sent by certified,
registered or express mail, postage prepaid, and shall be deemed given when so
delivered, or if mailed, two days after the date of mailing, to the address of
such Party set forth below (or to such other address as either Party may from
time to time specify in writing pursuant to the notice provisions hereof):
If to the Seller XxxxxxXxxx.xxx, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: President
If to Buyer: Themis Computer
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: President
With a copy to: Xxxxx Xxxx LLP
000 Xxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
12.2 Survival of Representations, Warranties, Covenants,
Liabilities, and Indemnification. The completion of the sale hereunder shall
not terminate any of the covenants, representations, warranties, liabilities
or indemnification of the parties under this Agreement, and the same shall
continue and survive after the Closing Date.
12.3 Entire Agreement. This Agreement and the agreements
and documents delivered pursuant to this Agreement, including without
limitation the License Agreement, supersedes all prior or contemporaneous
negotiations or understandings, whether written or oral, between the parties
hereto and contains the entire understanding and agreement between them. It
may be modified only by a writing duly executed by each of the parties hereto
or their permitted successors or assigns.
12.4 Third Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended or shall be construed to create any rights in, or
confer any benefits upon, any person or entity other than Buyer, the Seller
and the Indemnified Parties.
12.5 Successors and Assigns and Counterparts. Neither party may
assign this Agreement or any of its rights, duties or obligations hereunder
(including without limitation rights and duties of performance) to any third
party or entity, and this Agreement may not be involuntarily assigned or
assigned by operation of law, without the prior written consent of the other
party in each instance, except that Buyer may transfer all of its rights,
duties and obligations under this Agreement as "Buyer" to any affiliate of
Buyer. Any prohibited assignment shall be null and void. This Agreement and
all the provisions thereof shall be binding upon and inure to the benefit of
each of the parties hereto and, except as otherwise provided herein, their
respective legal successors and permitted assigns. This Agreement may be
executed in counterparts, each of which shall be deemed an original but which
together shall constitute but one and the same instrument.
12.6 Governing Law. This Agreement and all rights and obligations
of the parties shall be governed, construed and interpreted under and pursuant
to the laws of the State of California, without reference to the choice of law
rules.
12.7 Negotiated Transaction. The provisions of this Agreement were
negotiated by the parties hereto, and this Agreement shall be deemed to have
been drafted by both of the parties hereto, notwithstanding any presumptions
at law to the contrary.
12.8 Further Assurances. The Seller agrees that it shall execute
and deliver or cause to be executed and delivered from time to time such
instruments, documents, agreements, consents and assurances and take such
other actions as Buyer reasonably may require to more effectively convey,
transfer to and vest in Buyer and to put Buyer in possession of the Acquired
Assets. This Section 12.8 is not intended to, and does not, enlarge Buyer's
substantive rights under this Agreement, but is merely intended to ensure that
Buyer receives title to and possession of the Acquired Assets that are being
sold to Buyer under this Agreement.
12.9 Professional Fees and Costs. Except as expressly provided
herein, the Seller and Buyer shall each bear their own costs in connection
with this acquisition, including, but not limited to, attorneys' and
accountants' fees, without regard to whether the purchase of Acquired Assets
is consummated.
12.10 Cooperation with Respect to Records. The Seller agrees
to cooperate to give access to all SCO Business records of Seller that are not
included within the Books and Records but to which Buyer may reasonably
require access following the Closing. Such records shall be retained for
seven years after the Closing Date.
12.11 Non-Disclosure of Agreement. Without the prior written
consent of Buyer, which consent shall not be unreasonably withheld or delayed,
Seller will not disclose or reveal to any third person or entity the terms of
or existence of this Agreement, except for such disclosure as may be required
by the rules and regulations promulgated by the Securities and Exchange
Commission (the "SEC"). At least three business days in advance of any such
SEC filing, Seller shall provide any such proposed disclosure to Buyer for its
review and comment; provided, however, that if such three-day notice is not
reasonably practicable under the circumstances, Seller shall provide notice as
soon as practicable prior to the filing and in any event within 24 hours prior
to such filing. In the case of notice that is less than three days, Seller
shall confirm with the President of Buyer prior to the filing that the
President has received such notice.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the date first written above.
XXXXXXXXXX.XXX, INC.
By:/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx,
President
THEMIS COMPUTER
By:/s/Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx,
President
INDEX OF SCHEDULES
Schedule 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Products
Schedule 1.1.1 . . . . . . . . . . . . . . . . . Tangible Personal Property
Schedule 1.1.2 . . . . . . . . . . . . . . . . . . . .Intellectual Property
Schedule 1.1.3 . . . . . . . . . . . . . . . . . . . . . . . . . .Contracts
Schedule 1.2 . . . . . . . . . . . . . . . . . . . . . . . .Excluded Assets
Schedule 1.3 . . . . . . . . . . . . . . . . . . . . . .Assumed Liabilities
Schedule 2.2 . . . . . . . . . . . . . . . . . . . . . . .Earn-Out Payments
Schedule 5.9 . . . . . . . . . . . . . . . . . . . . . . . .Other Contracts
Schedule 5.11.2 Certain Exceptions to Intellectual Property Representations
Schedule 5.12. . . . . . . . . . . . . . . . . . . . . . . .Certain Changes
Schedule 5.26. . . . . . . . . . . . . . . . . . . . . . . . . . Warranties
Schedule 7.12.1. . . . . . . . . . . . . . . . . . . . . .Offered Employees
Schedule 7.16. . . . . . . . . . . . . . . . . . . . . . .Additional Assets
INDEX OF EXHIBITS
Exhibit A. . . . . . . . . . . . . . . . . . . . Form of License Agreement
Exhibit B. . . . . . . . . . . . Form of Opinion of Counsel for the Seller
Exhibit CForm of General Assignment, Assumption Agreement and Xxxx of Sale
EXHIBIT A
[Form of License Agreement]
EXHIBIT B
[Form of Legal Opinion of Seller's Counsel]
EXHIBIT C
GENERAL ASSIGNMENT, ASSUMPTION AGREEMENT
AND XXXX OF SALE
This General Assignment, Assumption Agreement and Xxxx of Sale ("Xxxx of
Sale") is entered into pursuant to that certain Asset Purchase Agreement dated
as of ___________, 2003 (the "Agreement") between Themis Computer, a
California corporation ("Assignee"), and XxxxxxXxxx.xxx, Inc., a Nevada
corporation ("Assignor"). All capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the
Agreement.
Assignor, for valuable consideration, the receipt and sufficiency of
which are hereby expressly acknowledged, hereby transfers, conveys, assigns
and delivers to Assignee all of Assignor's right, title and interest in and to
the Acquired Assets, including without limitation, (i) the Tangible Personal
Property, all as identified on Schedule 1.1.1 attached hereto and incorporated
herein by this reference, (ii) the Intellectual Property, all as identified on
Schedule 1.1.2 attached hereto and incorporated herein by this reference,
(iii) the Contracts, all as identified on Schedule 1.1.3 attached hereto and
incorporated herein by this reference, (iv) the claims and causes of action,
matured or unmatured, absolute or contingent, relating to or arising out of or
in connection with or relating to the Acquired Assets, including without
limitation all of Assignor's rights to recover past, present and future
damages for the breach, infringement or misappropriation, as the case may be,
of the Intellectual Property and the Contracts, (v) the Books and Records, all
business records relating to customers, licensees, suppliers, data providers,
computer equipment providers and service providers, all written warranties,
manuals and similar documents relating to the Tangible Personal Property, and
all price lists, sales literature, marketing and sales information and
materials, and (vi) the Additional Assets, all as identified on Schedule
7.16attached hereto and incorporated herein by this reference.
Notwithstanding anything herein to the contrary, this Xxxx of Sale shall not
transfer, convey, assign or deliver to Assignee any right, title or interest
in or to the Excluded Assets.
Assignee hereby assumes and is obligated to pay and discharge only
(i) the executory obligations of Assignor under the Contracts, except to the
extent any such obligations arise out of or result from Assignor's breach of
or default in its obligations under the Contracts prior to the Closing and
(ii) the liabilities and obligations, if any, which are specifically
identified on Scheduled 1.3 attached hereto and incorporated herein by this
reference. Except for the Assumed Liabilities, Assignee is not assuming and
is not obligated to pay or discharge any debts, obligations or other
liabilities of Assignor, including without limitation any of the Excluded
Liabilities.
At any time and from time to time after the date hereof, Assignor shall
execute and deliver or cause to be executed and delivered such instruments,
documents, agreements, consents and assurances and take such other actions as
Assignee reasonably may require to more effectively convey, transfer to and
vest in Assignee and to put Assignee in possession of the Acquired Assets.
This Xxxx of Sale shall be binding upon and enforceable against Assignor
and its successors and permitted assigns and shall inure to the benefit of and
be enforceable by Assignee and its successors and permitted assigns. The
terms, provisions and conditions of this Xxxx of Sale may be amended only by
agreement in writing of both parties. No waiver of any provision nor consent
to any exception to the terms of this Xxxx of Sale or any agreement
contemplated hereby will be effective unless in writing and signed by the
party to be bound and then only to the specific purpose, extent and instance
so provided.
No failure on the part of either party to exercise or delay in
exercising any right hereunder will be deemed a waiver thereof, nor will any
single or partial exercise preclude any further or other exercise of such or
any other right.
This Xxxx of Sale is executed and delivered pursuant to the Agreement
and is subject to the representations, warranties, covenants, terms,
conditions and other provisions of the Agreement. All representations,
warranties, agreements and indemnities of Assignor with respect to the
Acquired Assets set forth in the Agreement will continue in effect as provided
therein and will not be deemed to be amended, modified, terminated or
superseded by or merged with this Xxxx of Sale.
If any provision of this Xxxx of Sale is held to be unenforceable for
any reason, it will be adjusted rather than voided, if possible, to achieve
the intent of the parties. All other provisions of this Xxxx of Sale will be
deemed valid and enforceable to the extent possible. This Xxxx of Sale shall
be governed by and construed in accordance with the laws of the State of
California, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
This Xxxx of Sale may be executed in counterparts, which shall be
considered one and the same agreement and shall become effective when a
counterpart has been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same counterpart.
* * *
IN WITNESS WHEREOF, the undersigned have executed this General
Assignment, Assumption Agreement and Xxxx of Sale as of the date first set
forth above.
Assignor:
XXXXXXXXXX.XXX, INC.
By:/s/Xxxxxx X. Xxxxxxx
Print Name: Xxxxxx X. Xxxxxxx
Title: President
Assignee:
THEMIS COMPUTER
By:/s/Xxxxxxx X. Xxxxxx
Print Name: Xxxxxxx X. Xxxxxx
Title: President
