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ASSET PURCHASE AGREEMENT
AMONG
NETWORK COMPUTING DEVICES, INC.,
NCD SOFTWARE CORPORATION, AS SELLERS
AND
FTP SOFTWARE, INC.,
AS BUYER
Dated as of February 20, 1996
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TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Cross Reference Table. . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Knowledge of a Party . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2. PURCHASE AND SALE OF ASSETS. . . . . . . . . . . . . . . . . . . 6
2.1 Transfer of Assets to Buyer. . . . . . . . . . . . . . . . . . . . 6
2.2 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . . 8
2.4 Purchase Price; Payment. . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 3. THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Sellers' Obligations at Closing. . . . . . . . . . . . . . . . . . 11
3.3 Buyer's Obligations at Closing . . . . . . . . . . . . . . . . . . 12
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLERS. . . . . . . . . . . . 12
4.1 Organization; Power and Standing . . . . . . . . . . . . . . . . . 12
4.2 Authorization and Enforceability.. . . . . . . . . . . . . . . . . 12
4.3 Effect of Agreement; Consents. . . . . . . . . . . . . . . . . . . 13
4.4 The Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Contracts, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Intellectual Property Rights.. . . . . . . . . . . . . . . . . . . 15
4.7 Software.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.8 Financial Information and Customer Lists . . . . . . . . . . . . . 18
4.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 19
4.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.11 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 19
4.12 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.13 Employee Benefits Plans, Etc . . . . . . . . . . . . . . . . . . . 20
4.14 AT&T Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.15 Restrictive Documents. . . . . . . . . . . . . . . . . . . . . . . 21
4.16 Relationships. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.17 No Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . 21
4.18 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.19 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . 22
4.20 Affiliated Transactions. . . . . . . . . . . . . . . . . . . . . . 22
4.21 No Insolvency. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.22 Representations Complete.. . . . . . . . . . . . . . . . . . . . . 22
4.23 Accrued Vacation Liabilities.. . . . . . . . . . . . . . . . . . . 22
4.24 Governmental Permits.. . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . . 22
5.1 Organization; Power and Standing . . . . . . . . . . . . . . . . . 23
5.2 Authorization and Enforceability . . . . . . . . . . . . . . . . . 23
5.3 Conflicts, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5 No Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . 23
ARTICLE 6. CERTAIN AGREEMENTS OF THE PARTIES . . . . . . . . . . . . . . . 24
6.1 Payment of Taxes and Other Expenses. . . . . . . . . . . . . . . . 24
6.2 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . 24
6.3 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.4 Assertion of Other Sellers' Patents Against Buyer. . . . . . . . . 25
6.5 Support Obligations. . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Cross-Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 7. CONFIDENTIALITY; NONCOMPETITION. . . . . . . . . . . . . . . . . 26
7.1 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2 Residuals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.3 Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.4 Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 8. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . 28
8.1 Conditions to Buyer's Obligations. . . . . . . . . . . . . . . . . 28
8.2 Conditions to Sellers' Obligations . . . . . . . . . . . . . . . . 29
ARTICLE 9. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Indemnification by Sellers . . . . . . . . . . . . . . . . . . . . 30
9.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . 31
9.3 Survival of Representations and Warranties.. . . . . . . . . . . . 32
9.4 Notification of Claims . . . . . . . . . . . . . . . . . . . . . . 32
9.5 Limitations on Indemnification . . . . . . . . . . . . . . . . . . 33
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ARTICLE 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.3 Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 35
10.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.6 Binding Effect; Third Parties. . . . . . . . . . . . . . . . . . 35
10.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.9 Publicity; Confidentiality . . . . . . . . . . . . . . . . . . . 36
10.10 Amendments; Waivers. . . . . . . . . . . . . . . . . . . . . . . 36
10.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 36
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of
February 20, 1996, by and among Network Computing Devices, Inc., a California
corporation ("NCD"), NCD Software Corporation, a California corporation and a
wholly-owned subsidiary of NCD ("NCD SOFTWARE") (NCD and NCD Software are
sometimes collectively referred to herein as "SELLERS"), and FTP Software, Inc.,
a Massachusetts corporation ("BUYER").
WITNESSETH:
WHEREAS, Sellers are engaged, among other things, in the business of the
development and sale of the Mariner software product (the "MARINER BUSINESS");
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to purchase
from Sellers, the Assets (as hereinafter defined), on the terms and subject to
the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 CROSS REFERENCE TABLE. The following terms are defined elsewhere in
this Agreement in the Sections set forth below and shall have the respective
meanings specified therein:
"ACCRUED EMPLOYEE LIABILITIES" Section 2.3
"ACCRUED VACATION LIABILITIES" Section 6.3(b)
"AGREEMENT" Preamble
"ASSETS" Section 2.1
"ASSUMED LIABILITIES" Section 2.3
"AT&T AGREEMENTS" Section 4.14
"BUYER" Preamble
"BUYER EMPLOYEES" Section 6.3
"CLOSING" Section 3.1
"CLOSING DATE" Section 3.1
"CONTRACTS" Section 2.1(e)
"COPYRIGHTS" Section 2.1(a)
"DISCLOSURE SCHEDULES" Article 4
"GOVERNMENTAL PERMITS" Section 4.24
"INDEMNIFIED PARTY" Section 9.4
"INDEMNIFYING PARTY" Section 9.4
"LICENSE AGREEMENT" Section 8.1(i)
"MARINER BUSINESS" Recitals
"MARINER EMPLOYEES" Section 4.12
"NCD" Preamble
"NCD SOFTWARE" Preamble
"NON-TRANSFERRED TANGIBLE PROPERTY" Section 2.1(i)
"OTHER INFORMATION" Section 2.1(f)
"PATENT APPLICATION" Section 4.6(g)
"PATENT RIGHTS" Section 2.1(b)
"PLANS" Section 4.13(b)
"PROPRIETARY INFORMATION" Section 7.1
"PURCHASE PRICE" Section 2.4
"RESIDUAL INFORMATION" Section 7.2
"SELLERS" Preamble
"SOFTWARE" Section 4.7(a)
"TANGIBLE PERSONAL PROPERTY" Section 2.1(i)
"TECHNICAL INFORMATION" Section 2.1(c)
"TRADE RIGHTS" Section 2.1(d)
"TRANSFERABLE GOVERNMENTAL PERMITS" Section 2.1(g)
1.2 OTHER DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"ACTION" shall mean any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.
"AFFILIATE" shall mean, with respect to any specified Person, any other
Person directly or indirectly controlling, controlled by or under common control
with the specified Person.
"ANCILLARY DOCUMENTS" shall mean all agreements, certificates and other
documents delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby excluding the Master Agreement and License
Agreement.
"CONTRACTUAL OBLIGATION" shall mean, with respect to any Person, any
contract, agreement, purchase order, deed, mortgage, lease, license, other
instrument, commitment, undertaking, arrangement or understanding, written or
oral, or other document, including, without limitation, any document or
instrument evidencing
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indebtedness, to which or by which such Person is a party or otherwise subject
or bound or to which or by which any property or right of such Person is
subject or bound that relates in any material way to the Mariner Business.
"DERIVATIVE WORK" shall have the meaning ascribed to it under Section 101
of the Copyright Act of 1976, as amended, 17 U.S.C. Section 101.
"ENVIRONMENTAL LAWS" shall mean any and all applicable Legal Requirements
pertaining to the environment or occupational health and safety in effect on the
date of this Agreement or on the Closing Date, including, without limitation,
the Clean Air Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended ("CERCLA"), the Federal Water
Pollution Control Act, as amended, the Resource Conservation and Recovery Act,
as amended ("RCRA"), the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Occupational Safety and Health Act, as
amended ("OSHA"), the Pollution Prevention Act, the Endangered Species Act, the
National Environmental Policy Act of 1969, the Oil Pollution Act, comparable
foreign, state and local Legal Requirements and other similar environmental or
occupational health and safety protection Legal Requirements.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" shall mean all properties and assets of Sellers that are
not included in the Assets, including, without limitation: (a) all cash and cash
equivalents, (b) all of Sellers' accounts and notes receivable, (c) the Non-
Transferred Tangible Property and (d) certain items listed on SCHEDULE 2.1(a).
"EXCLUDED LIABILITIES" shall mean all obligations, indebtedness and
liabilities of Sellers that are not expressly assumed by Buyer pursuant to
Section 2.3(a), including without limitation the obligations and liabilities
listed in Section 2.3(b).
"GOVERNMENTAL AUTHORITY" shall mean any domestic and foreign jurisdiction
in which NCD has developed or sold the Assets, any state, province, ken,
territory, county, city, municipality and any subdivision thereof, any court,
any administrative or regulatory agency, commission, department or body or other
governmental authority or instrumentality or any entity or Person exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"HAZARDOUS MATERIALS" shall mean any hazardous substance, hazardous or
solid waste, pollutant, contaminant or toxic chemical, as such terms are defined
in or regulated pursuant to CERCLA, RCRA or OSHA (each as defined in the
definition of Environmental Laws), or any applicable Legal Requirement having a
broader meaning.
3
"INTELLECTUAL PROPERTY RIGHTS" shall mean all Copyrights, Patent Rights,
Technical Information and Trade Rights.
"LEGAL REQUIREMENT" shall mean any domestic and foreign jurisdiction in
which NCD has developed or sold the Assets, state, provincial or local law,
statute, standard, ordinance, code, order, rule, regulation, resolution or
promulgation, or any order, judgment or decree of any court, arbitrator,
tribunal or other Governmental Authority, or any license, franchise, permit or
similar right granted under any of the foregoing, or any similar provision
having the force and effect of law as in effect on or prior to the Closing Date.
"LETTER OF INTENT" shall mean the letter agreement dated as of January 15,
1996 between Buyer and NCD.
"LIEN" shall mean any encumbrance, mortgage, pledge, lien, claim, option,
charge or other security interest of any kind.
"LOSSES" shall mean any and all liabilities, claims, damages, losses
(including without limitation any diminution in value), fines, penalties, fees,
obligations, payments (including, without limitation, those arising out of any
demand, assessment, settlement, judgment or compromise relating to any Action),
costs and expenses (including, without limitation, reasonable legal fees and any
and all other expenses whatsoever incurred in investigating, preparing for or
defending any Action or threatened Action).
Any event or matter specified or referred to in this Agreement shall be
considered "MATERIAL", or a standard of materiality achieved with respect
thereto, if the liability or obligation of the Person affected thereby does or
would exceed $5,000 or if the event or matter would affect the operations,
business, assets or prospects of such Person by more than $5,000.
"ORGANIZATIONAL DOCUMENTS" shall mean (i) with respect to a Person that is
a corporation, the articles or certificate of incorporation, articles of
association and bylaws or other organizational and governing documents of such
Person and (ii) with respect to a Person that is a partnership, joint venture or
other entity, the partnership agreement, joint venture agreement or other
organizational and governing documents of such Person.
"PERSON" shall mean any individual, partnership, corporation, joint
venture, association, trust, estate, unincorporated organization or entity, and
any Governmental Authority.
"PRODUCTS" shall mean the Mariner software and accompanying documentation
described on SCHEDULE 1.2.
4
"TECHNOLOGY" shall mean, with respect to each Product, all technical
information whether tangible or intangible, including without limitation any:
data; designs; calculations; computer source codes (human readable format) and
executables and object codes (machine readable format); specifications; test and
installation, instructions; service and maintenance notes; technical, operating
and service and maintenance manuals; user documentation; training materials; and
other data, information and know-how; in each case which are in the possession
of, owned by or licensed to Sellers and are necessary or desirable to enhance,
develop, manufacture, assemble, service, maintain, install, operate, use or test
the Products.
1.3 KNOWLEDGE OF A PARTY. Whenever reference is made to the knowledge or
best knowledge of a party hereto, it is understood that (a) the party has made,
or caused to be made by personnel or representatives reasonably competent to
determine the accuracy thereof (and the results thereof reported to such party),
an inquiry that is reasonably appropriate to determine the accuracy of the
statement in question and (b) such term shall include the actual knowledge of
any director (other than the outside directors listed on SCHEDULE 1.3) or
officer of such party or any other management employee of such party with
substantial sole or shared operational responsibility relating to the subject
matter. If such investigation has been made, the knowledge of any employee
(other than the employee(s) making the investigation and other than the persons
described in clause (b) of the immediately preceding sentence) of a party shall
not be imputed to the party.
1.4 RULES OF CONSTRUCTION. The following rules of construction shall be
applicable for all purposes of this Agreement, unless the context otherwise
requires.
(a) The terms "HEREBY", "HEREIN", "HEREOF", "HERETO",
"HEREUNDEr" and any similar terms shall refer to this Agreement, and the
term "HEREAFTER" shall mean after, and the term "HERETOFORE" shall mean
before, the date of this Agreement.
(b) Words importing the singular number shall mean and include
the plural number and vice versa.
(c) The terms "INCLUDE", "INCLUDING" and similar terms shall be
construed as if followed by the phrase "WITHOUT BEING LIMITED TO", and the
term "OR" shall be construed in the inclusive sense.
(d) All references in this Agreement to numbered Articles,
Sections, Schedules and Exhibits are references to the Articles and
Sections of this Agreement and the Schedules and Exhibits to this Agreement
(which are and shall be deemed to be a part of this Agreement).
5
ARTICLE 2.
PURCHASE AND SALE OF ASSETS
2.1 TRANSFER OF ASSETS TO BUYER. Upon the terms, subject to the
conditions and in reliance upon the representations, warranties and covenants
set forth in this Agreement, each Seller shall, at the Closing, sell, assign,
transfer, convey and deliver to Buyer, and Buyer shall purchase from such Seller
all of Sellers' right, title and interest in and to the following (collectively,
the "ASSETS"), free and clear of any and all Liens:
(a) COPYRIGHTS. All of such Seller's worldwide rights and interests
existing on the date hereof or acquired on or prior to the Closing Date in and
to all copyrights (whether or not registered) which relate to the Products or
the Technology or are otherwise required, and all registrations, applications
for registration and licenses therefor, together with all ancillary rights
thereto, including the right to sue for damages by reason of past infringement
of any such rights (collectively, the "COPYRIGHTS"), and excluding only the
items listed on SCHEDULE 2.1(a).
(b) PATENTS. All of such Seller's worldwide rights and interests, if
any, existing on the date hereof or acquired on or prior to the Closing Date in
and to the United States patent application entitled "Integrated Network Access
User Interface System and Method," Number 08/401-183, any foreign counterparts
of such application; any patents issuing on the foregoing application; any
divisions, substitutions, re-examinations, and continuations thereof; and all
reissues, renewals and extensions thereof and licenses therefor, together with
all ancillary rights thereto, including the right to sue for damages by reason
of past infringement of any such rights (collectively, the "PATENT RIGHTS").
Continuations-in-part of the foregoing application and patents issuing on such
continuations-in-part, patents of addition, and all reissues, renewals and
extensions of such patents and patents of addition, shall also be within the
Patent Rights, to the extent the same claim subject matter was disclosed in the
foregoing application or any foreign counterparts thereof.
(c) TECHNICAL INFORMATION. All of such Seller's worldwide rights and
interests existing on the date hereof or acquired on or prior to the Closing
Date in and to all Technology and all other trade secrets and know-how which (x)
substantially relate to the Products and have ever been used by Sellers in the
Mariner Business and/or (y) are otherwise reasonably necessary for Buyer to
conduct the Mariner Business after the Closing in the manner presently conducted
by Sellers, together with all ancillary rights thereto, including the right to
sue for damages by reason of past infringement of any such rights (collectively,
the "TECHNICAL INFORMATION"). Sellers hereby grant to Buyer a worldwide,
perpetual, irrevocable, non-exclusive, fully paid, royalty free, transferable,
assignable license, including the right to sublicense, to any
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Technical Information which tangentially relates to the Product or the Mariner
Business but is not otherwise transferred to Buyer by this subsection 2.1(c).
(d) TRADEMARKS, ETC. All of such Seller's worldwide rights and
interests existing on the date hereof or acquired on or prior to the Closing
Date in and to all trademarks, common law trademarks, trade names, service
marks, common law service marks, service names, slogans and any abbreviations or
variations thereof, which relate to or are used in connection with the Products
and all goodwill associated therewith, and all registrations, applications for
registration and licenses therefor, together with all ancillary rights thereto,
including the right to sue for damages by reason of past infringement of any
such rights (collectively, the "TRADE RIGHTS") except as set forth in SCHEDULE
2.1(d). Seller hereby grants Buyer a non-exclusive, fully-paid, worldwide,
royalty free license, for six (6) months from the date of this Agreement to use
the Marathon icon as used in the Products; provided that Buyer agrees to provide
Sellers from time to time with samples of Buyer's use of such mark and to use
and reproduce such mark only in compliance with such reasonable quality
standards as Sellers may establish consistent with Sellers' current use.
(e) CONTRACTS. All claims and rights of such Seller in respect of
the Products existing on the date hereof or acquired on or prior to the Closing
Date under its contracts with licensors, licensees, manufacturers, distributors,
dealers, sales representatives and other independent sales persons, identified
on SCHEDULE 2.1(e) (such contracts are collectively referred to herein as the
"CONTRACTS") and such other contracts of the nature described above as may be
entered into prior to the Closing and which Buyer shall either (i) agree to
assume in writing after such contract has been entered into or (ii) approve in
writing in advance of such Seller's entering into such contract.
(f) OTHER INFORMATION. All of such Seller's lists of present and
former customers and suppliers, sales and marketing materials, research and
development records and tools, business plans, records and documents in any and
all formats existing on the date hereof or acquired on or prior to the Closing
Date which (x) substantially relate to the Products and have ever been used by
Sellers in the Mariner Business and/or (y) are otherwise reasonably necessary
for Buyer to conduct the Mariner Business after the Closing in the manner
presently conducted by Sellers (collectively, "OTHER INFORMATION").
(g) GOVERNMENTAL PERMITS. All of such Seller's transferable
interests in and to the licenses, permits, filings, authorizations, approvals or
indicia of authority which are listed on SCHEDULE 2.1(g) (collectively,
"TRANSFERABLE GOVERNMENTAL PERMITS").
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(h) SOFTWARE; DOCUMENTATION. All software codebases, paper and
magnetic media embodying the Products (in source code and object code formats),
and all user, technical and maintenance documentation relating to any of the
Products that are in the possession of or under the control of such Seller or
any of such Seller's agents, contractors or employees.
(i) TANGIBLE PERSONAL PROPERTY. The equipment and other personal
property owned or held by such Seller and used or held for use by ten or more of
Sellers' employees in connection with the Mariner Business, and listed on
SCHEDULE 2.1(i)(a) (the "TANGIBLE PERSONAL PROPERTY"), excluding a proportionate
amount of such equipment and other personal property should fewer than ten of
Sellers' employees accept Buyer's offer of employment listed on SCHEDULE
2.1(i)(b) (the "NON-TRANSFERRED TANGIBLE PROPERTY").
(j) GOODWILL. All goodwill associated with the Assets or the Mariner
Business.
(k) OTHER ASSETS. All other tangible and intangible assets which (x)
substantially relate to the Products and have ever been used by Sellers in the
Mariner Business and/or (y) are otherwise reasonably necessary for Buyer to
conduct the Mariner Business after the Closing in the manner presently conducted
by Sellers which are not Excluded Assets; provided that third party software
contained on hard disk drives transferred to Buyers, if any, is provided "as-
is". Sellers hereby grant to Buyer a worldwide, perpetual, irrevocable,
non-exclusive, fully paid, royalty free, transferable, assignable license,
including the right to sublicense, to any other intangible assets which
tangentially relate to the Product or the Mariner Business but are not otherwise
transferred to Buyer by this subsection 2.1(k); provided that third party
software contained on hard disk drives transferred to Buyers, if any, is
provided "as-is".
2.2 EXCLUDED ASSETS. Notwithstanding anything herein to the contrary,
Sellers shall retain all of their respective rights, title and interest in and
to, and Buyer shall acquire no interest in, the Excluded Assets except as set
forth in the License Agreement.
2.3 ASSUMPTION OF LIABILITIES.
(a) Buyer shall assume from Sellers and agrees to pay, perform or
discharge, as appropriate, the following liabilities and obligations
(collectively, the "ASSUMED LIABILITIES"): (1) Sellers' obligations listed on
SCHEDULE 2.3(a)(1); (2) except as provided in Section 2.3(b)(1), Sellers'
obligations arising or to be performed after the Closing under the Contracts and
the Transferable Governmental Permits, but only to the extent the Contracts and
the Transferable Governmental Permits are assigned to Buyer pursuant to this
Agreement; and (3) all obligations of Sellers to the Buyer
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Employees for accrued sick pay, sabbaticals, bonuses and Accrued Vacation
Liabilities, which amounts for each Buyer Employee are listed on SCHEDULE
2.3(a)(2) (collectively, the "ACCRUED EMPLOYEE LIABILITIES"), provided that the
aggregate amount of such Accrued Employee Liabilities as of the Closing Date
shall be deducted from the purchase price for the Assets pursuant to Section
2.4 hereof.
(b) Buyer shall assume and be subject to no liabilities or
obligations of Sellers except for the Assumed Liabilities to be assumed by Buyer
pursuant to Section 2.3(b). Set forth below are certain liabilities or
obligations that, without limitation, are expressly not assumed by Buyer and are
included in the Excluded Liabilities:
(1) all liabilities or obligations arising from any breach or default
outstanding at the Closing Date under any Contract or resulting from any
event occurring before the Closing Date which, with the giving of notice or
the lapse of time, or both, would constitute a breach or default under any
Contract;
(2) all obligations, indebtedness and liabilities of Sellers to any
shareholder of any Seller or any of such shareholder's Affiliates;
(3) all obligations, indebtedness and liabilities (other than the
Accrued Employee Liabilities to be assumed by Buyer pursuant to Section
2.3(a)) of Sellers to their current or former employees relating to their
employment with Sellers or resulting from the termination of their
employment with Sellers;
(4) other than as set forth in Section 6.1, any liability or
obligation of Sellers for income, franchise, transfer, sales, use and other
taxes;
(5) other than as set forth in Section 6.1, any liability of Sellers
for the unpaid taxes of any Person including taxes imposed on Sellers, as a
transferee or successor, by contract, or otherwise;
(6) any liability or obligation of Sellers for taxes relating to
Seller's business, whether or not incurred prior to the Closing;
(7) any liability or obligation of Sellers to indemnify any Person
(including any Seller) by reason of the fact that such Person was a
director, officer, employee or agent of any Seller or was serving at the
request of such entity as a partner, trustee, director, officer, employee,
or agent of another entity;
(8) subject to the provisions of Article 9, any liability or
obligation of Sellers arising as a result of any legal or equitable action
or judicial or administrative proceeding initiated at any time in respect
of anything done,
9
suffered to be done or omitted to be done by Sellers or any of their
directors, officers, employees or agents;
(9) any liability of Sellers for costs and expenses incurred by them
in connection with this Agreement and the transactions contemplated hereby;
(10) any liability or obligation of Sellers incurred by them in
connection with the making or performance of this Agreement;
(11) any liability or obligation of Sellers for products manufactured
or services rendered by Sellers prior to the Closing Date other than
obligations under the Contracts included in the Assumed Liabilities;
(12) any liability or obligation of Sellers arising out of any Plan
established or maintained by Sellers or to which any Seller contributes or
any liability for the termination of any such Plan;
(13) other than the Accrued Employee Liabilities, any liability or
obligation of Sellers for making payments or providing benefits of any kind
to their respective employees or former employees, including without
limitation, (A) as a result of the sale of the Assets or as a result of the
termination by either Seller of any employees, (B) any obligation to
provide former employees of Sellers so-called COBRA continuation coverage,
(C) any liability or obligation in respect of medical and other benefits
for existing and future retirees, and (D) any liability or obligation in
respect of work-related employee injuries or worker's compensation claims;
(14) any liability of Sellers pertaining to their business and arising
out of or resulting from noncompliance prior to the Closing Date with any
Legal Requirement, including without limitation, Environmental Laws;
(15) any liability or obligation of Sellers under any leases,
contracts, or agreements not listed on SCHEDULE 2.1(e), including without
limitation the AT&T Agreements; and
(16) any liability or obligation of Sellers arising out of (a) any
Hazardous Materials existing at any real property owned, leased, or used by
the Sellers, at or prior to the Closing, or (b) the use, storage,
manufacture, processing, emission, discharge, disposal, sale, or exposure
of any person to a Hazardous Material in connection with Sellers' business
(including without limitation, Sellers' hardware business) or real property
owned or leased by either Seller, without limit as to point of time,
knowledge or amount.
10
2.4 PURCHASE PRICE; PAYMENT. The aggregate purchase price for the Assets
shall be $9,850,000 minus the sum of (a) the aggregate amount of the Accrued
Employee Liabilities as of the Closing Date as set forth on the
SCHEDULE 2.3(a)(2), (b) $50,000 to be used by Buyer to fund bonuses to be
distributed to Buyer Employees as determined by Buyer in its sole discretion,
(c) the aggregate amount of the value of the Non-Transferred Tangible Property
as set forth on SCHEDULE 2.1(i)(b), and (d) the aggregate license fees of
$2,500,000 payable by Sellers under the License Agreement (the "PURCHASE
PRICE"). The Purchase Price shall be paid by Buyer to Sellers at the Closing by
bank or cashier's check made payable to NCD or, at NCD's option, by wire
transfer of immediately available funds to such account as NCD shall have
designated to Buyer in writing at least two business days prior to the Closing
Date.
ARTICLE 3.
THE CLOSING
3.1 TIME AND PLACE. The closing of the transactions contemplated by
Article 2 of this Agreement (the "CLOSING") shall take place at 10:00 a.m.,
local time, on February 20, 1996 at the offices of Gray Cary Ware & Freidenrich,
Professional Corporation, 400 Hamilton Avenue, Palo Alto, California 94301, or
at such other time and place as the parties hereto may agree. The date on which
the Closing actually takes place is sometimes referred to herein as the "CLOSING
DATE."
3.2 SELLERS' OBLIGATIONS AT CLOSING. At the Closing, each Seller shall:
(a) execute and deliver to Buyer (i) a bill of sale and conveyance,
in substantially the form of EXHIBIT A, (ii) an assignment and assumption
agreement, in substantially the form of EXHIBIT B, (iii) one or more assignments
of the Copyrights, in substantially the form of EXHIBIT C, (iv) one or more
assignments of the trademarks included in the Trade Rights and registrations
therefor, in substantially the form of EXHIBIT D, and (v) the assignments of the
patent application included in the Patent Rights and registrations therefor, if
any, in substantially the form of EXHIBIT E;
(b) execute and deliver to Buyer such other instruments of
conveyance, assignment and transfer, in form and substance reasonably
satisfactory to Buyer, as shall be effective to vest in Buyer all rights and
interests in, and good and marketable title to, the Assets including, without
limitation, assignments of Copyrights and Trade Rights and registrations
therefor and applications for registration thereof in countries other than the
United States and written assignments of the Contracts;
(c) deliver to Buyer all documents, opinions, certificates, consents,
undertakings and assignments required to be delivered to Buyer pursuant to
Section 8.1;
11
(d) deliver to Buyer physical possession of all copies (except as
licensed under the License Agreement) of all media embodying the Products and
Technology, including magnetic media embodying source code and object code
formats of the Software; and
(e) execute and deliver to Buyer a receipt for the Purchase Price.
3.3 BUYER'S OBLIGATIONS AT CLOSING. At the Closing:
(a) Buyer shall deliver to Sellers the Purchase Price;
(b) Buyer shall execute and deliver to Sellers an assignment and
assumption agreement, in substantially the form of EXHIBIT B; and
(c) Buyer shall deliver to Sellers all documents, opinions,
certificates, consents and undertakings required to be delivered to Sellers
pursuant to Section 8.2.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLERS
In order to induce Buyer to purchase the Assets and assume the Assumed
Liabilities, Sellers, jointly and severally, hereby represent and warrant to
Buyer except as specifically set forth on the schedules corresponding to the
section number of such representation which schedules are provided to Buyer at
least five days prior to the Closing and which are updated as of the Closing
(collectively the schedules are referred to as the "DISCLOSURE SCHEDULES") as
follows:
4.1 ORGANIZATION; POWER AND STANDING. Each of NCD and NCD Software is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. NCD owns all of the outstanding shares of NCD
Software. Each Seller has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement and each Ancillary Document to
which it is a party and to consummate the transactions contemplated hereby and
thereby, and each Seller has all requisite power and authority to own, lease or
otherwise use the Assets and to carry on its business as now being conducted.
Each Seller is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of its business or assets makes such qualification necessary, except where the
failure to be so qualified or licensed would not have a material adverse effect
on the Assets or such Seller's ability to perform its obligations hereunder.
12
4.2 AUTHORIZATION AND ENFORCEABILITY. The execution, delivery and
performance by each Seller of this Agreement and each Ancillary Document to
which it is a party and the consummation by each Seller of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of such Seller and its shareholders. This
Agreement has been duly executed and delivered by each Seller and constitutes
and, upon execution and delivery by each Seller of each Ancillary Document to
which it is a party, each such Ancillary Document shall constitute, a legal,
valid and binding obligation of each Seller, enforceable against each Seller in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general equitable principles.
4.3 EFFECT OF AGREEMENT; CONSENTS.
(a) CONFLICTS, ETC. Neither the execution and delivery by either
Seller of this Agreement or any Ancillary Document to which it is a party nor
the consummation by either Seller of the transactions contemplated hereby or
thereby does or will (i) conflict with or violate any provision of any
Organizational Document of either Seller, (ii) constitute, result in or give
rise to, nor has any other event occurred nor does any other condition exist
which, whether through the giving of notice or the lapse of time or otherwise,
does or will constitute, result in or give rise to, except where it would not
have a material adverse effect on the Assets or such Seller's ability to perform
its obligations hereunder, (A) a breach of or a default under (1) any
Contractual Obligation or (2) any contract, agreement, purchase order, deed,
mortgage, lease, license, other instrument, commitment, undertaking, arrangement
or understanding to which it is a party, (B) any right of termination,
cancellation or acceleration under any such Contractual Obligation, (C) the
imposition of any Lien upon or the forfeiture of, or the impairment of the value
or usefulness of, or the arising of any cause of action with respect to, any of
the Assets or (D) any other right or cause of action under any such Contractual
Obligation or (iii) violate or give rise to any violation or default, except
where it would not have a material adverse effect on the Assets or such Seller's
ability to perform its obligations hereunder, under any Legal Requirement.
(b) APPROVALS, CONSENTS, ETC. Except as set forth on SCHEDULE 4.3
and except where it would not have a material adverse effect on the Assets or
such Seller's ability to perform its obligations hereunder, no approval,
consent, waiver, authorization or other order of, and no notice to or
declaration, filing, registration, qualification or recording with, any
Governmental Authority or other Person is required to be obtained or made by or
on behalf of either Seller in connection with the execution, delivery or
performance of this Agreement or any Ancillary Document to which it is a party
or the consummation of the transactions contemplated hereby or thereby.
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4.4 THE ASSETS.
(a) TITLE TO THE ASSETS. Sellers have and will deliver to Buyer, at
the Closing, good and marketable title to all of the Assets. With respect to
the third party software located on personal computers being transferred to
Buyer, the Patent Rights and Trade Rights such representation is made to the
best knowledge of Sellers. The Assets are not subject to any Liens except as set
forth in SCHEDULE 4.4(a). As of the Closing, all of the Assets will be located
at the premises listed on SCHEDULE 4.4(a) hereof.
(b) LIABILITIES. The Assets are not subject to any liabilities or
other obligations, absolute, accrued, contingent or otherwise, other than those
described in SCHEDULE 4.4(b). After giving effect to the consummation of the
transactions contemplated hereby, the Assets will not be subject to, nor will
Buyer have, any liabilities or other obligations, absolute, accrued, contingent,
or otherwise, relating to the Assets other than (i) the Assumed Liabilities and
(ii) liabilities created by Buyer, if any.
(c) TAXES. After giving effect to the consummation of the
transactions contemplated hereby, the Assets will not be subject to, nor will
Buyer have, any liability in respect of any taxes under any Legal Requirement
arising from or relating to the ownership, possession, operation or use of the
Assets or the operation of the Mariner Business prior to the Closing.
4.5 CONTRACTS, ETC. SCHEDULE 4.5 contains a true and complete list of all
of the Contractual Obligations (including the Contracts listed on SCHEDULE
2.1(e)), to which either of the Sellers is a party that are in writing and a
description of all such oral Contractual Obligations. Sellers have delivered to
Buyer a true and complete copy of each of the Contractual Obligations listed on
SCHEDULE 4.5 that are in writing, each as in effect on the date hereof and as it
will be in effect at the Closing, including without limitation all amendments
and supplements thereto and all waivers thereunder. Each of the Contracts
listed on SCHEDULE 2.1(e) is valid, binding and enforceable in accordance with
its terms, and each Seller that is a party thereto and, to the best knowledge,
of Sellers, each other party thereto is in compliance therewith, and there is
not under any of the Contracts any existing default, event of default or event
which, with notice or the lapse of time, or both, would constitute a default or
event of default, nor to the best knowledge of Sellers do there exist any other
facts or circumstances which Sellers, reasonably expect to result in a default
or event of default. There has been no notice of termination or threatened
termination with respect to any of the Contracts, whether or not termination is
permitted by the terms thereof.
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4.6 INTELLECTUAL PROPERTY RIGHTS.
(a) COPYRIGHTS. Sellers have delivered to Buyer true and complete
copies of all copyrighted material covered by all Copyrights as well as the
certificates of registration for all such Copyrights which are registered, if
any.
(b) PATENT RIGHTS. Sellers have delivered to Buyer true and complete
copies of the patent application embodying the Patent Rights.
(c) TECHNOLOGY AND TECHNICAL INFORMATION. Sellers have delivered to
Buyer true and complete copies of all such Technology and Technical Information
embodied in tangible media which is necessary to conduct the Mariner Business as
presently conducted by Sellers.
(d) TRADE RIGHTS. Sellers have delivered to Buyer true and complete
copies of all registration applications evidencing those Trade Rights which
constitute trademarks and service marks.
(e) OTHER INFORMATION. Sellers have delivered to Buyer true and
complete copies of all such Other Information embodied in tangible media which
is necessary to conduct the Mariner Business as presently conducted by Sellers.
(f) INTELLECTUAL PROPERTY RIGHTS. Sellers have provided Buyer with
copies of documents and other materials embodied in tangible media containing or
in which are embodied all copyrights, patent rights, inventions, trade names,
trademarks and service marks related to the Products, none of which are
registered, and all applications therefor that are pending or in the process of
preparation and all licenses and other agreements allowing Sellers to use all
copyrights, patent rights, inventions, trade secrets, trade names, trademarks
and service marks of other Persons in connection with the Products.
(g) OWNERSHIP AND TITLE.
(i) TRADE RIGHTS, COPYRIGHTS AND TECHNICAL INFORMATION. Except
as set forth on SCHEDULE 4.6(g), Sellers are the sole and exclusive
owners of all right, title and interest in the Trade Rights,
Copyrights and Technical Information. Sellers have not infringed, and
are not now infringing, on any trade secret or copyright belonging to
any other Person. To the best knowledge of Sellers, Sellers have not
infringed, and are not now infringing, on any trade name, trademark or
service mark belonging to any other Person. Except as set forth in
SCHEDULE 4.6(g), Sellers have not received any notice or other
communication alleging, that Sellers have infringed, or are now
infringing, on any trade name, trademark,
15
service mark, trade secret or copyright belonging to any other
Person. Except as set forth in SCHEDULE 4.6(g), neither Seller is a
party to any license, agreement or arrangement, whether as a
licensor, licensee or otherwise, with respect to any Trade Rights,
Technical Information or Copyrights, or any applications for any of
the foregoing. Sellers own and hold adequate licenses, or other
rights to use, all Trade Rights, Technical Information and
Copyrights necessary for the Mariner Business as now conducted by
them and to the best knowledge of Sellers that use does not, and
will not, conflict with, infringe on or otherwise violate any rights
of third parties.
(ii) PATENT RIGHTS. Sellers are the sole owner of the U.S.
patent application named Integrated Network Access User Interface
System and Method, Serial No. 08/401,183 (the "PATENT APPLICATION").
The Patent Application is awaiting action by the U.S. Patent Office.
Except as set forth in SCHEDULE 4.6(g), to the best knowledge of
Sellers, the manufacture, use, importation or sale of the Products
have not infringed and are not now infringing any patent or other
right belonging to any Person. Sellers have not received any notice or
other communication alleging, and Sellers have no reason to believe,
(a) that the Patent Application is not valid and in full force or that
it is subject to any filing, prosecution or other similar fees or
actions falling due within one hundred twenty (120) days after the
Closing Date; (b) that the manufacture, use, importation or sale of
the Products violate or infringe on any patent or any proprietary or
personal right of any Person. Neither Seller is a party to any
license, agreement or arrangement, whether as licensee, licensor or
otherwise, with respect to the Patent Application.
(iii) TECHNOLOGY AND TECHNICAL INFORMATION.
(A) The specific location of Technical Information is set
forth in SCHEDULE 2.1(c).
(B) Sellers are the sole owner of the Technical
Information, free and clear of any liens, encumbrances,
restrictions or legal or equitable claims of others.
Sellers have taken all reasonable security measures to
protect the secrecy, confidentiality and value of the
Technical Information and any of its employees and any other
Persons who, either alone or in concert with others,
developed, invented, discovered, derived, programmed or
designed these secrets, or who have knowledge of or access
to information relating to them, have entered into
agreements
16
that these secrets are proprietary to Sellers and not to
be divulged or misused. Neither Seller has received any
notice or other communication alleging, and neither has
any reason to believe, (x) that either Seller does not
have the right and authority to use the Technical
Information or (y) that such use will conflict with,
infringe on or violate any patent or other rights of any
other Person. Except as noted on SCHEDULE 2.1(C), neither
Seller is a party to any license agreement or any other
arrangement, whether as licensee, licensor or otherwise,
with respect to any of the Technical Information.
(C) To the best knowledge of Sellers, the Technical
Information is not part of the public knowledge, or
literature, nor has it been used, divulged or appropriated
for the benefit of any past or present employees or other
Persons, or to the detriment of Sellers.
4.7 SOFTWARE.
(a) IDENTIFICATION. SCHEDULE 4.7(a) lists the most current
embodiment of all the computer software which is incorporated in the Products or
otherwise used by Sellers in, and material to, the conduct of the Mariner
Business related to the Assets, excluding commercially available third-party
software (collectively, the "SOFTWARE"). Sellers have delivered to Buyer true
and complete copies of the most current embodiment of the source code and object
code formats of the Software and the most current revisions to all user and
technical documentation related to the Software.
(b) PERFORMANCE. EXCEPT AS OTHERWISE PROVIDED HEREIN, THE SOFTWARE
IS PROVIDED AS IS, AND SELLERS DISCLAIM ALL WARRANTIES WITH RESPECT TO ITS
PERFORMANCE, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSES.
(c) ENHANCEMENTS, NEW PRODUCTS. Except as disclosed on SCHEDULE
4.7(c), neither of the Sellers nor any employee, contractor or agent of either
Seller has (i) developed or assisted in the development of enhancements of the
Software except for enhancements included in the Software as delivered to Buyer
pursuant to this Agreement or (ii) assisted in the development by any other
Person of any computer program based on the Software or any part thereof.
(d) DEVELOPMENT. No employee or subcontractor of either Seller is,
or to the best knowledge of Sellers, is now expected to be, in default under any
term of
17
any employment contract, agreement or arrangement relating to the Products or
any noncompetition agreement, contract or restrictive covenant relating to the
Products or their development or exploitation. Except as otherwise expressly
disclosed in SCHEDULE 4.7(d): (x) each of the Products (i) was made by an
employee of a Seller in the course of such employee's employment by such
Seller, (ii) constitutes a "work made for hire" of Sellers within the meaning
of the Copyright Act of 1976, as amended, or (iii) has been validly assigned to
Sellers; and (y) all works of authorship contained within the Products were
created within the United States.
(e) TITLE. Except as otherwise expressly disclosed in SCHEDULES
2.1(a), (c) or (d), all right, title and interest in and to the Software is
owned by Sellers, free and clear of all Liens, contingent or otherwise, and
Sellers' right, title and interest in and to the Software is fully transferable
to Buyer. Neither of the Sellers has any obligation to compensate any Person
for the development, use, sale or exploitation of the Software. Except as
described on SCHEDULE 2.1(e), neither of the Sellers has granted to any other
Person (i) any license, option or other rights to develop, use, sell or exploit
in any manner the Software, whether requiring the payment of royalties or not,
(ii) any license with respect to the source code(s) for any of the Software or
(iii) any paid-up license with respect to any of the Software or Products or
portions thereof. SCHEDULE 2.1(e) contains a true and complete list of the
aggregate amount of prepaid royalties, if any, that have been paid to Sellers
under each Contract, on a Contract by Contract basis.
(f) PROTECTION OF PROPRIETARY NATURE OF SOFTWARE. Except as
disclosed in SCHEDULE 2.1(e) AND SCHEDULE 4.7(f), Sellers have kept secret and
have not disclosed the source code(s) for the Software owned by Sellers to any
Person other than certain employees and subcontractors of Sellers. Sellers have
taken all reasonable and appropriate measures to protect the confidential and
proprietary nature of the Software, including, without limitation, the use of
confidentiality agreements with all of their employees and subcontractors having
access to the Software source code and all object code copies of the Software
distributed to third parties (other than employees and subcontractors) have been
subject to licenses consistent with reasonable industry practice, including
(except for an immaterial number of beta and demonstration copies) prohibitions
on decompilation and reverse engineering. To the best knowledge of Sellers,
there have been no patents or copyrights applied for or registered for any part
of the Software other than as expressly disclosed in the Schedules.
4.8 FINANCIAL INFORMATION AND CUSTOMER LISTS.
(a) The gross revenue information for the Mariner Business for the
year ended December 31, 1995 and the period ended as of the Closing is attached
hereto as SCHEDULE 4.8(a), was prepared in accordance with the books and records
of
18
Sellers on a basis consistent with Sellers' past practice and fairly represents
in all material respects the sales data for the Mariner Business for the
periods presented.
(b) The Customer List attached hereto as SCHEDULE 4.8(b) lists all
customers of the Mariner Business known to Sellers that have purchased Products
from either Seller for the year ended December 31, 1995 and the period ended as
of the Closing.
(c) SCHEDULE 4.8(C) is a schedule of backlog for the Products.
4.9 COMPLIANCE WITH LAWS. The conduct of the Mariner Business by Sellers
is in compliance in all material respects with, and the use, operation,
ownership and possession of the Assets as presently used, operated, owned and
possessed by Sellers, except where it would not have a material adverse effect
on the Assets or such Seller's ability to perform its obligations hereunder,
have not and do not violate any applicable Legal Requirement, nor has either
Seller received any notice that it is not in compliance with any such Legal
Requirement.
4.10 LITIGATION. Except as disclosed in SCHEDULE 4.10, there is no Action
pending or, to the best knowledge of Sellers, threatened (nor, to the best
knowledge of Sellers, does any reasonable factual basis exist therefor) (a)
against either Seller or any of the Assets, (b) against any Affiliate of either
Seller and involving any of the Assets or (c) which seeks rescission of, seeks
to enjoin the consummation of or questions the validity of this Agreement or any
of the transactions contemplated hereby. No judgment, decree or order of any
Governmental Authority or any arbitrator has been issued against (a) either
Seller or (b) to the best knowledge of Sellers, any Person other than Sellers
that, in the case of this clause (b), could have an adverse effect on any of the
Assets.
4.11 ENVIRONMENTAL MATTERS. As a result of the transactions contemplated
by this Agreement and the License Agreement, Buyer shall be subject to no
liability arising from Sellers' conduct, duty to act or failure to act at or
prior to the Closing under any Environmental Laws.
4.12 EMPLOYEE MATTERS. With respect to Sellers' employees who are or were
involved in the Mariner Business (the "MARINER EMPLOYEES"):
(a) Neither of the Sellers is a party to any collective bargaining
agreements.
(b) Sellers have withheld all amounts required by any Legal
Requirement, contract or agreement to be withheld from the wages of all current
and
19
former Mariner Employees and are not liable for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing.
(c) There are no pending unfair labor practice charges or
discrimination complaints relating to race, color, national origin, sex, sexual
orientation, religion, age, marital status, ancestry, disability, status as a
Vietnam-era or a special disabled veteran, or status in any group protected by
federal, state or local law against any Seller before any Governmental
Authority nor, to the best knowledge of Sellers, does any basis therefor exist.
(d) SCHEDULE 4.12(d) sets forth the annual salary for each Mariner
Employee as of January 15, 1996. Since such date, Sellers have not agreed to
increase the salary or other compensation payable to or to become payable to any
of its employees or, except as set forth in SCHEDULE 4.12(d), declared, paid or
committed to pay any bonus or other additional salary or compensation to any
Person except for bonuses earned by such Mariner Employees in 1995 which were
paid by Sellers to such Mariner Employees no earlier than January 31, 1996 and
no later than the Closing Date.
(e) There are no disputes or controversies existing between either
Seller, on the one hand, and any of the Mariner Employees, on the other, which
has had or is reasonably likely to have a material adverse effect upon the
Assets or the Mariner Business nor, to the best knowledge of Sellers, does any
basis therefor exist. None of the Mariner Employees is represented by a labor
union and, to the best knowledge of Sellers', there is no labor organizing
activity presently pending by or among any such Mariner Employees.
4.13 EMPLOYEE BENEFITS PLANS, ETC.
(a) Sellers have not maintained or contributed to any "pension plan"
as defined in the Employment Pension Plans Act or any "employee pension plan" as
defined in Section 3(2) of ERISA.
(b) SCHEDULE 4.13 lists all (i) "employee benefit plans", as defined
in Section 3 of ERISA, maintained or contributed to by either Seller, (ii)
"employee welfare plans", as defined in Section 3 of ERISA, maintained or
contributed to by either Seller and (iii) all employment, compensation and
consulting contracts, and bonus, deferred compensation, excess benefits,
pension, retirement, profit sharing, stock bonus, stock option, stock purchase,
life and health insurance, hospitalization, savings, holiday, vacation,
severance pay, sick pay, sick leave, disability, dependent care assistance,
death benefit, tuition refund, service award, company car, scholarship,
relocation, patent awards, fringe benefits and other contracts or practices of
either Seller or any of its Affiliates providing employee or executive benefits
to any of the Mariner Employees
20
of Sellers (the items described in the preceding clauses (i), (ii) and (iii)
are collectively referred to herein as "PLANS").
(c) Buyer will not become liable for any past, present or future
benefit under or any other obligation under or otherwise with respect to any
Plan by virtue of the transactions contemplated hereby, either under the terms
of any Plan or by operation of any applicable Legal Requirement.
(d) No facts exist which would give any Person the right under any
applicable Legal Requirement to assert a Lien upon any of the Assets to secure
liabilities in connection with any Plan.
4.14 AT&T AGREEMENTS. There exist no obligations required to be fulfilled
by Buyer to AT&T Corp. as of the Closing nor will any such obligations exist at
any time in the future under the Software License and Development Agreement
dated January 31, 1995 between AT&T Corp. and NCD or Amendment No. 1 dated
September 1, 1995 to such agreement (collectively referred to as the "AT&T
AGREEMENTS") and, except through any act or omission of Buyer, Buyer will not as
a result of the consummation of the transactions contemplated hereby or
otherwise, assume, or otherwise become subject to any liability under, the AT&T
Agreements.
4.15 RESTRICTIVE DOCUMENTS. Neither of the Sellers is subject to, or a
party to, any Lien, lease, license, sublicense, permit, agreement, contract,
instrument, judgment or decree, or any other restriction of any kind or
character, which materially adversely affects the Assets or the Mariner Business
as presently conducted by Sellers.
4.16 RELATIONSHIPS. Sellers' current relationships with the Mariner
Employees and the suppliers, distributors, dealers, sales representatives,
customers and others having business relationships with Sellers, related to the
Mariner Business, are good, and neither of Sellers has any knowledge,
information or belief of any actual, pending or threatened termination,
cancellation or limitation of, or any materially adverse modification or change
in, the business relationship of Sellers with any of such Persons including,
without limitation, as a result of the transactions contemplated hereby.
4.17 NO BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting
on behalf either Seller or any Affiliate of either Seller is, or shall be,
entitled to any commission or broker's or finder's fees from either Seller or
from any Affiliate of either Seller in connection with any of the transactions
contemplated hereby.
4.18 INSURANCE. SCHEDULE 4.18 sets forth all existing insurance policies
held by either Seller specifically relating to the Mariner Business, Assets or
Mariner Employees. Each such policy is in full force and effect, is with
responsible insurance carriers and is in an amount and scope customary for
Persons engaged in businesses
21
and having assets similar to those of Sellers. All claims arising under such
policies and all premiums that are due and payable thereunder have been paid in
full.
4.19 BOOKS AND RECORDS. All of the books, records and accounts included
in the Assets are in all material respects accurate and complete and maintained
in accordance with good business practice.
4.20 AFFILIATED TRANSACTIONS. Except as disclosed on SCHEDULE 4.20,
neither of the Sellers is party to or bound by any contract or agreement with
any of its shareholders or any of its Affiliates relating to the Mariner
Business.
4.21 NO INSOLVENCY. Neither Seller will be rendered insolvent by the sale,
transfer and assignment of the Assets pursuant to the terms of this Agreement.
4.22 REPRESENTATIONS COMPLETE. None of the representations or warranties
made by Sellers (as modified by the Disclosure Schedule), nor any statement made
in any Exhibit or certificate furnished by either Seller pursuant to this
Agreement, contains any untrue statement of a material fact, or, to the best
knowledge of Sellers, omits any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made not misleading. There is no fact, circumstance or condition of any
kind or nature whatsoever known to either Seller which reasonably would be
expected to have a material adverse effect on either Seller or the Assets that
has not been set forth in this Agreement, except those facts concerning general
economic, legislative, regulatory or other matters such as may generally impact
all businesses of the type operated by Sellers.
4.23 ACCRUED VACATION LIABILITIES. SCHEDULE 2.3(a) sets forth a true and
complete list of all Accrued Vacation Liabilities as of the Closing Date.
4.24 GOVERNMENTAL PERMITS. SCHEDULE 4.24 is a complete list of all of the
licenses, permits, filings, authorizations, approvals or indicia of authority by
any Governmental Authority required for the Mariner Business as presently
conducted by the Sellers, including the Transferable Governmental Permits
(collectively, "GOVERNMENTAL PERMITS").
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF BUYER
In order to induce Sellers to enter into and perform this Agreement and to
sell and transfer the Assets, Buyer hereby represents and warrants to Sellers as
follows:
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5.1 ORGANIZATION; POWER AND STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts. Buyer has all requisite power and authority to
execute, deliver and perform its obligations under this Agreement and each
Ancillary Document to which it is a party and to consummate the transactions
contemplated hereby and thereby.
5.2 AUTHORIZATION AND ENFORCEABILITY. The execution, delivery and
performance by Buyer of this Agreement and each Ancillary Document to which it
is a party and the consummation by Buyer of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of Buyer and its shareholders. This Agreement has been duly executed and
delivered by Buyer and constitutes, and, upon execution and delivery by Buyer of
each Ancillary Document to which it is party, such Ancillary Document shall
constitute, a legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general equitable principles.
5.3 CONFLICTS, ETC. Neither the execution and delivery by Buyer of this
Agreement or any Ancillary Document to which it is a party nor the consummation
by Buyer of the transactions contemplated hereby or thereby does or will (i)
conflict with or violate any provision of any Organizational Document of Buyer,
(ii) constitute, result in or give rise to, nor has any other event occurred nor
does any other condition exist which, whether through the giving of notice or
the lapse of time or otherwise, does or will constitute, result in or give rise
to, except where it would not have a material adverse effect on the Buyer's
ability to perform its obligations hereunder, a breach of or a default under any
material contract, agreement, deed, mortgage, lease, license, other instrument,
commitment, undertaking, arrangement or understanding to which Buyer is a party,
or (iii) violate or give rise to any violation or default, except where it would
not have a material adverse effect on the Buyer's ability to perform its
obligations hereunder, under any Legal Requirement applicable to Buyer.
5.4 CONSENTS. No approval, consent, waiver, authorization or other order
of, and no notice to or declaration, filing, registration, qualification or
recording with, any Governmental Authority or other Person is required to be
obtained or made by or on behalf of Buyer in connection with the execution,
delivery or performance of this Agreement or any Ancillary Document to which it
is a party or the consummation of the transactions contemplated hereby or
thereby.
5.5 NO BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting
on behalf of Buyer or any of its Affiliates is, or shall be, entitled to any
commission or broker's or finder's fees from Buyer or from any of its Affiliates
in connection with any of the transactions contemplated hereby.
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ARTICLE 6.
CERTAIN AGREEMENTS OF THE PARTIES
6.1 PAYMENT OF TAXES AND OTHER EXPENSES. Buyer shall pay any sales or use
taxes which may be imposed on the acquisition by Buyer of the Assets pursuant to
this Agreement; PROVIDED, HOWEVER, that Sellers shall pay any sales or use taxes
which may be imposed on the transactions contemplated by this Agreement as a
result of any other transactions involving Sellers. Each of Buyer and Sellers
shall prepare and file, and shall cooperate with the others with respect to the
preparation and filing of, any returns and other filings related to any such
taxes as may be required by applicable Legal Requirements. Buyer and Sellers
shall pay all of their own expenses relating to the transactions contemplated by
this Agreement, including, without limitation, the fees and expenses of their
respective attorneys, accountants, financial advisors or other representatives.
6.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
in its entirety among the Assets in accordance with the allocation set forth on
SCHEDULE 6.2, which SCHEDULE 6.2 shall be reasonably agreed upon by Sellers and
Buyer and attached to this Agreement within one month from the Closing Date.
Buyer and Sellers shall file all information and tax returns (and any amendments
thereto) in a manner consistent with the allocation set forth in SCHEDULE 6.2.
If, contrary to the intent of the parties as expressed in this Section 6.2, any
taxing authority makes or proposes an allocation different from that contained
in SCHEDULE 6.2, Buyer and Sellers shall cooperate with each other in good faith
to contest such taxing authority's allocation (or proposed allocation);
PROVIDED, HOWEVER, that, after consultation with all parties adversely affected
by such allocation (or proposed allocation), any other party hereto may file
such protective claims or returns as may reasonably be required to protect its
interests. Each party requesting cooperation shall reimburse the cooperating
party for its reasonable out-of-pocket expenses incurred in rendering such
cooperation.
6.3 EMPLOYEE MATTERS.
(a) Buyer shall offer employment, commencing as of the Closing, to
certain of the Mariner Employees as it shall choose in its sole discretion.
Buyer shall have no obligation whatsoever regarding any of the Mariner Employees
not chosen for employment by Buyers. Offers to the Mariner Employees shall
include cash compensation packages substantially similar to the levels of cash
compensation currently received by such employees and such employees shall be
accorded benefits Buyer normally makes available to its employees (including
participation is Buyer's stock incentive plans), in all cases without credit for
service with Sellers. Sellers shall render all reasonable assistance to
encourage such employees to accept such offers in accordance with their terms.
The Mariner Employees to whom Buyer extends an offer
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of employment and who accept Buyer's employment offer are referred to as "BUYER
EMPLOYEES."
(b) Prior to the Closing Date, Sellers and Buyer shall have offered
in writing to each of the Buyer Employees the option to either:
(i) be credited by Buyer, effective as of the Closing, with all
or a portion, as such employee elects in writing, of the actual number of days
of such employee's accrued and unused vacation time as of the Closing (not to
exceed a maximum of 10 days), in which case (A) NCD shall pay Buyer at the
Closing (pursuant to a reduction in the purchase price for the Assets under
Section 2.4 hereof) an aggregate amount sufficient to pay out each such employee
in full for the full amount of such employee's accrued vacation to be so
credited (determined based upon such Buyer Employee's salary with NCD or NCD
Software); (B) Buyer will credit such employee with such amount of accrued and
unused vacation ("ACCRUED VACATION LIABILITIES"); and (C) NCD shall pay such
employee in full for all of such employee's accrued and unused vacation time in
excess of 10 days; or
(ii) accept a cash payment in lieu of carrying forward all or any
portion of such employee's accrued and unused vacation time, in which case NCD
shall pay such employee in full for all such accrued and unused vacation with
respect to which the employee elects to accept a cash payment.
(c) Each Buyer Employee must have delivered to Buyer and NCD written
notice of such employee's election with respect to the foregoing options
regarding accrued vacation time at least 5 business days before the Closing or
such employee will be deemed to have chosen the option set forth in
subparagraph 6.3(b)(ii) above.
(d) On or promptly after the Closing Date, NCD shall settle with or
pay to each Buyer Employee all salaries, commissions, bonuses and other amounts
that are or may become payable to or receivable by such Buyer Employee for all
periods prior to the Closing.
6.4 ASSERTION OF OTHER SELLERS' PATENTS AGAINST BUYER. Sellers agree that
as to any Sellers' patent or patent application based on technology contained in
or directly or indirectly related to the Products as of the date of Closing and
the items listed on SCHEDULE 2.1(a), neither Seller will assert such patent
against Buyer's manufacture, use, sale, or importation of the Technology.
6.5 SUPPORT OBLIGATIONS. After the Closing, Sellers agree to provide
third level technical support to Buyer as follows: (i) Sellers shall conduct one
training class conducted at Buyer's facilities in Andover, Massachusetts for up
to ten engineers (and
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Buyer shall pay the reasonable travel expenses of Seller's trainer in
connection with the training session) and (ii) Sellers shall provide
sufficient, knowledgeable technical staff to answer technical support questions
about the Products for three months from the Closing Date.
6.6 CROSS-GUARANTEE. Except as may be limited by Article 9 hereof, NCD
and NCD Software jointly, severally and unconditionally guarantee all of the
obligations of the other under this Agreement, the License Agreement and the
Ancillary Documents to Buyer and shall promptly fulfill any obligation or pay
any amount that is required under the Agreement, the License or the Ancillary
Documents that is not fulfilled, paid or handled by the other for any reason,
subject to any defenses of the entity whose performance is guaranteed.
ARTICLE 7.
CONFIDENTIALITY; NONCOMPETITION
Sellers acknowledge that, having sold to Buyer the Assets relating to the
Mariner Business and all of the goodwill associated therewith, the success of
Buyer in conducting the Mariner Business (after giving effect to the sale and
transfer to Buyer at the Closing of the Assets) depends upon both the absence of
competition from Sellers as specified herein and the continued preservation of
the confidentiality of certain information possessed by Sellers, that an absence
of such competition as specified herein and the preservation of the
confidentiality of such information is an essential premise of the bargain among
Sellers and Buyer, and that Buyer would be unwilling to enter into this
Agreement in the absence of this Article 7. Accordingly, Sellers hereby agree
with Buyer as follows:
7.1 CONFIDENTIALITY. Sellers acknowledge that the Assets shall, upon the
Closing, become the exclusive property of Buyer. Sellers hereby acknowledge and
agree that all proprietary and confidential information included within the
Assets (collectively, the "PROPRIETARY INFORMATION") shall, upon the Closing,
become confidential and proprietary trade secrets of Buyer which are of
substantial value to Buyer. Each Seller agrees that it will not, and will use
its best efforts, consistent with industry practice, to assure that its
employees, contractors, agents or Affiliates do not, at any time from and after
the Closing, directly or indirectly, without the prior written consent of Buyer,
disclose or use in any way any Proprietary Information, whether such information
is now existing or hereafter arising; PROVIDED, HOWEVER, that such information
shall not include any information known generally to the public (other than as a
result of disclosure in violation hereof by either Seller or any of their
employees, contractors, agents or Affiliates) made available by Buyer hereafter
to others without restriction on confidentiality, independently developed by
Sellers after the Closing
26
without violation of the restriction in Section 7.3, or which constitutes
Residual Information (as defined below); PROVIDED, FURTHER, that the provisions
of this Section 7.1 shall not prohibit any disclosure required by law in
connection with any final judicial or administrative order. Except as otherwise
agreed to in writing by Buyer, Sellers shall not create or attempt to create or
permit others to attempt to create, on Sellers' behalf, the Software or any
part thereof. Each Seller agrees to promptly notify Buyer if such party
becomes aware of any unauthorized possession or use of any Proprietary
Information.
7.2 RESIDUALS. Use by Sellers' engineers of information which relates to
the Mariner Business and which such engineers recall from memory (without any
special effort to memorize any such information) from their prior involvement
with the Mariner Business ("RESIDUAL INFORMATION") shall not be deemed a
misappropriation of trade secrets of Buyer so long as the individuals involved
have not had access, subsequent to the Closing, to materials containing Buyer
trade secrets including any engineering notebooks or other similar notes or
materials.
7.3 NONCOMPETITION.
(a) Sellers agree not to develop, take any steps toward developing,
or market for one year following the Closing Date, for any Microsoft Windows
platform, a stand-alone: (i) browser or (ii) single application that enables
more than four of the following functions: Telnet, mail, Gopher, FTP, chat and
browser; provided that Sellers may market third party products that fall within
clauses (i) or (ii) above, if necessary in Seller's reasonable judgment to meet
specific customer requirements not satisfied by the most current version of the
Product offered by Buyer. Prior to any such marketing, however, Sellers shall
consult with Buyer to determine whether such customer requirements can be
satisfied with the current version of the Product offered by Buyer. Sellers,
upon written notification to Buyer, may remove the restrictions set forth in
this Section 7.3(a); provided that Sellers' right to distribute and sell binary
code as set forth in Section 2.3 of the License Agreement and Sellers' right to
remove restrictions on use of source code set forth in Section 2.2 of the
License Agreement shall be terminated, effective as of such notification.
(b) Notwithstanding Sellers' right to remove the restrictions set
forth in Section 7.3(a), Sellers agree that, for a period of one year from the
Closing, such Seller will not cause its engineers who were involved in the
development of the Products to develop for Sellers or their Affiliates products
that fall within Section 7.3(a) above.
7.4 ENFORCEMENT. Each of the parties hereto acknowledges and agrees that,
because the legal remedies of the other parties may be inadequate in the event
of a breach of, or other failure to perform, any of the covenants and
obligations set forth in this Article 7, any such other party may, in addition
to obtaining any other remedy or
27
relief available to it (including, without limitation, consequential and other
damages at law), enforce this Article 7 by injunction, specific performance and
other equitable remedies.
ARTICLE 8.
CONDITIONS TO CLOSING
8.1 CONDITIONS TO BUYER'S OBLIGATIONS. Buyer and Sellers agree to
simultaneously execute the Agreement and to consummate the transactions
contemplated hereby. The obligations of Buyer to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, or waiver by
Buyer, at or before the Closing, of each of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) All
representations and warranties of Sellers contained in this Agreement shall be,
in all material respects, true and correct at and as of the Closing, and each
Seller shall have performed, in all material respects, all agreements and
covenants required hereby to be performed by such Person prior to or at the
Closing in accordance with this Agreement, and (ii) Buyer shall have received
at the Closing, from each Seller, a certificate, dated the Closing Date and
signed by a senior executive officer of such Person, to the effect that the
conditions set forth in subsection (i) above have been satisfied.
(b) CONSENTS AND RELEASES. All consents, approvals, waivers and
releases from all Governmental Authorities and other Persons necessary to permit
Sellers and Buyer to effect the transactions contemplated by this Agreement
shall have been obtained and shall be reasonably satisfactory in form and
substance to Buyer and its counsel.
(c) CORPORATE ACTION. Buyer shall have received from each Seller a
copy, certified as true and complete by its Secretary or comparable officer, of
all resolutions adopted by the board of directors of such party authorizing and
approving the execution, delivery and performance of this Agreement and the
Ancillary Documents and consummation of the transactions contemplated hereby and
thereby.
(d) AGREEMENTS WITH EMPLOYEES. Buyer shall have entered into
employment arrangements with such Mariner Employees as Buyer deems necessary,
upon terms satisfactory to Buyer and its counsel.
(e) NO LITIGATION OR INJUNCTIONS. No action or proceeding shall have
been instituted or threatened before or by any Governmental Authority to
restrain or prohibit any of the transactions contemplated hereby, no preliminary
or permanent
28
injunction or other order by any court of competent jurisdiction in the United
States which prevents the consummation of the transactions contemplated hereby
or which adversely affects the right of Buyer to own the Assets or to operate
the Mariner Business of Sellers, shall have been issued and remain in effect,
and no Legal Requirement shall have been enacted by any Governmental Authority
that makes the consummation of the transactions contemplated hereby illegal.
(f) PROCEEDINGS. All proceedings taken at or prior to the Closing in
connection with the transactions contemplated by this Agreement, and all
documents incident hereto, shall be satisfactory in form and substance to Buyer
and its counsel, and Buyer shall have received copies of all such documents and
other evidences as it or its counsel may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
(g) OPINION OF COUNSEL. Sellers shall have furnished Buyer with
favorable opinions, dated the Closing Date, of their counsel in substantially
the form of EXHIBIT F.
(h) CERTIFICATES. Buyer shall have received such other certificates
of the officers of Sellers and others to evidence compliance with the conditions
set forth in this Section 8.1 as may be reasonably requested by Buyer.
(i) LICENSE AGREEMENT. Sellers shall have executed and delivered to
Buyer a License Agreement substantially in the form of EXHIBIT G (the "LICENSE
AGREEMENT").
8.2 CONDITIONS TO SELLERS' OBLIGATIONS. The obligations of Sellers to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, or waiver by Sellers, at or prior to the Closing, of each of the
following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) All
representations and warranties of Buyer contained in this Agreement shall be, in
all material respects, true and correct at and as of the Closing, and Buyer
shall have performed, in all material respects, all agreements and covenants
required hereby to be performed by Buyer prior to or at the Closing in
accordance with this Agreement and (ii) Sellers shall have received at the
Closing from Buyer a certificate, dated the Closing Date and signed by a senior
executive officer of Buyer, to the effect that the conditions set forth in
subsection (i) above have been satisfied.
(b) CONSENTS AND RELEASES. All consents, approvals, waivers and
releases from all Governmental Authorities and other Persons necessary to permit
Sellers and Buyer to effect the transactions contemplated by this Agreement
shall have
29
been obtained and shall be reasonably satisfactory in form and substance to
Sellers and their counsel.
(c) CORPORATE ACTION. Sellers shall have received from Buyer a copy,
certified as true and complete by its Clerk, of all resolutions adopted by the
board of directors of Buyer authorizing and approving the execution, delivery
and performance of this Agreement and the Ancillary Documents and the
consummation of the transactions contemplated hereby and thereby.
(d) NO LITIGATION OR INJUNCTIONS. No action or proceeding shall have
been instituted or threatened before or by any Governmental Authority to
restrain or prohibit any of the transactions contemplated hereby, no preliminary
or permanent injunction or other order by any court of competent jurisdiction in
the United States which prevents the consummation of the transactions
contemplated hereby shall have been issued and remain in effect, and no Legal
Requirement shall have been enacted by any Governmental Authority that makes the
consummation of the transactions contemplated hereby illegal.
(e) PROCEEDINGS. All proceedings taken at or prior to the Closing in
connection with the transactions contemplated by this Agreement, and all
documents incident hereto, shall be satisfactory in form and substance to
Sellers and their counsel, and Sellers shall have received copies of all such
documents and other evidences as they or their counsel may reasonably request in
order to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
(f) OPINION OF COUNSEL. Buyer shall have furnished Sellers with a
favorable opinion, dated the Closing Date, of its General Counsel in
substantially the form of EXHIBIT H.
(g) CERTIFICATES. Sellers shall have received such other
certificates of the officers of Buyer and others to evidence compliance with the
conditions set forth in this Section 8.2 as may be reasonably requested by
Sellers.
(h) LICENSE AGREEMENTS. Buyer shall have executed and delivered to
Sellers the License Agreement.
ARTICLE 9.
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLERS. Sellers, jointly and severally, hereby
agree to indemnify and hold Buyer and its Affiliates and the officers,
directors, employees,
30
agents and representatives of Buyer and its Affiliates, and any person claiming
by or through any of them, harmless from, against and in respect of the
following:
(a) Losses arising from or related to the ownership or operation of
the Mariner Business associated with the Assets, or the ownership, possession,
operation or use of the Assets, by Sellers at or prior to the Closing, other
than Losses arising from or related to the Assumed Liabilities;
(b) the Excluded Liabilities and Losses arising from or related to
any of the Excluded Liabilities;
(c) Losses arising from or related to the ownership, possession,
operation or use of the Excluded Assets;
(d) Losses arising from or related to any breach of or inaccuracy in
any representation or warranty made by or on behalf of either Seller in this
Agreement or in any Ancillary Document, whether or not such breach or inaccuracy
was or should have been known by Buyer;
(e) Losses arising from or related to any breach or violation by
either Seller of any of its covenants and agreements contained in this Agreement
or in any Ancillary Document;
(f) Losses arising from or related to any of the matters described on
SCHEDULE 9.1.
9.2 INDEMNIFICATION BY BUYER. Buyer hereby agrees to indemnify and hold
Sellers and their Affiliates and the officers, directors, employees, agents and
representatives of each of Sellers and their Affiliates, and any person claiming
by or through any of them, harmless from, against and in respect of the
following:
(a) Losses arising from or related to the ownership, possession,
operation or use by Buyer of the Assets after the Closing;
(b) The Assumed Liabilities and Losses arising from or related to any
of the Assumed Liabilities;
(c) Losses arising from or related to any breach of or inaccuracy in
any representation or warranty made by or on behalf of Buyer in this Agreement
or in any Ancillary Document, whether or not such breach or inaccuracy was or
should have been known by Sellers; and
31
(d) Losses arising from or related to any breach or violation by
Buyer of any of its covenants and agreements contained in this Agreement or in
any Ancillary Document.
9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of each Seller contained
herein or in any Ancillary Document shall survive the Closing for a period of
two years from the Closing Date, except that:
(i) all representations and warranties that relate to federal,
state and local taxes, including, without limitation, the
representations and warranties set forth in Section 4.4(c), shall
survive until the expiration of the applicable statutes of
limitations for such taxes (including any extensions thereof);
and
(ii) all representations and warranties that relate to
environmental matters, including, without limitation, the
representations and warranties set forth in Section 4.11, shall
be perpetual;
PROVIDED, HOWEVER, that representations and warranties with respect to which a
claim is made within the applicable survival period shall survive until such
claim is finally determined and paid.
(b) The representations and warranties of Buyer made in this
Agreement or in any Ancillary Document shall survive the Closing for a period of
two years following the Closing Date; PROVIDED, HOWEVER, that representations
and warranties with respect to which a claim is made within such period shall
survive until such claim is finally determined and paid.
(c) No claim for indemnification may be made pursuant to this
Article 9 with respect to a representation or warranty after the expiration of
the applicable survival period, other than claims based on fraud.
9.4 NOTIFICATION OF CLAIMS. A party seeking indemnification under this
Article 9 (an "INDEMNIFIED PARTY") shall, promptly after the receipt of notice
of the assertion of any claim or commencement of any Action (but in no event
later than 10 days prior to the date any response or answer is due in any
proceeding) in respect of which indemnity may be sought from a party against
whom an indemnity obligation is asserted pursuant to this Article 9 (an
"INDEMNIFYING PARTY") on account of the indemnity agreement contained above,
notify the Indemnifying Party in writing of the receipt of such claim or the
commencement of such Action. The omission of an Indemnified Party so to notify
an Indemnifying Party of any such claim or Action shall not relieve the
32
Indemnifying Party from any liability in respect of such claim or Action which
it may have to the Indemnified Party (except, however, that the Indemnifying
Party shall be relieved of liability to the extent that the failure so to notify
(a) shall have caused prejudice to the defense of such claim or Action or (b)
shall have increased the costs or liability of the Indemnifying Party by reason
of the inability or failure of the Indemnifying Party (because of the lack of
prompt notice from the Indemnified Party) to be involved in any investigations
or negotiations regarding any such claim or Action), nor shall it relieve the
Indemnifying Party from any other liability which it may have to the Indemnified
Party. In case any such claim shall be asserted or Action commenced against an
Indemnified Party and it shall notify the Indemnifying Party thereof, the
Indemnifying Party shall be entitled to participate in the negotiation or
administration thereof and, to the extent it may wish, to assume the defense
thereof with counsel reasonably satisfactory to the Indemnified Party, and,
after notice from the Indemnifying Party to the Indemnified Party of its
election so to assume the defense thereof, which notice shall be given within 30
days of its receipt of such notice from such Indemnified Party, the Indemnifying
Party shall not be liable to the Indemnified Party hereunder for any legal or
other expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof other than reasonable costs of investigation. If an
Indemnifying Party does not wish to assume the defense, conduct or settlement of
any claim or Action, the Indemnified Party shall not settle such claim or Action
without the written consent of the Indemnifying Party, which consent shall not
be unreasonably withheld or delayed.
9.5 LIMITATIONS ON INDEMNIFICATION.
(a) Except for claims made for breaches of Sellers' representations
and warranties set forth in Sections 4.4(a), 4.6(b), 4.6(g)(excluding Trade
Rights), 4.7(d), 4.7(e) and 4.11 for which there shall be no limit on
indemnification payments under this Article 9, Sellers shall not be liable for
indemnification payments to Buyer under this Article 9 to the extent such
aggregate indemnification payments by Sellers exceed the Purchase Price. Buyer
shall not be liable for indemnification payments to Sellers to the extent such
aggregate indemnification payments by Buyer exceed $2,500,000.
(b) No Indemnifying Party shall be liable to any Indemnified Party
(i) in respect of any individual claim involving Losses of less than $25,000, or
(ii) until the aggregate amount of all Losses under all individual claims
aggregate $75,000 (the "Threshold Amount"); PROVIDED, HOWEVER, when such Losses
reach the Threshold Amount the Indemnifying Party shall be liable to the
Indemnified Party for all Losses, including the Threshold Amount.
33
ARTICLE 10.
MISCELLANEOUS
10.1 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party hereto without the prior
written consent of the other parties hereto, except that Buyer may assign any of
its rights hereunder to any of its Affiliates provided that Buyer guaranties the
obligations of such Affiliate(s) hereunder.
10.2 NOTICES. Unless otherwise provided herein, any notice, request,
instruction or other document or communication to be given hereunder by any
party to the others shall be in writing and shall be deemed given when delivered
personally or mailed by certified or registered mail, postage prepaid (such
mailed notice to be effective on the date which is three business days after the
date of mailing), sent by telefax (such notice sent by telefax to be effective
when sent, if confirmed), or sent by a nationally recognized overnight courier
(such notice to be effective on the next business day after the date when sent)
as follows:
If to Sellers, addressed to:
Network Computing Devices, Inc.
350 North Bernardo Avenue
Mountain View, California 94043-5007
Fax No.: (415) 961-7711
Attention: General Counsel
Copy to:
Dennis C. Sullivan, Esq.
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Fax No.: (415) 327-3699
If to Buyer, addressed to:
FTP Software, Inc.
100 Brickstone Square, 5th Floor
Andover, Massachusetts, U.S.A. 01810
Fax No.: (508) 684-6162
Attention: General Counsel
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Copy to:
Allen L. Morgan, Esq.
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Fax No.: (415) 493-6811
or to such other address as any party hereto may designate as to itself by
written notice to the other parties hereto.
10.3 CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with domestic substantive laws of the State of California, without
regard for any choice or conflict of laws rule or principle that would result in
the application of the domestic substantive law of any other jurisdiction,
except that, with respect to matters of law concerning the internal corporate
affairs of any party to this Agreement, the laws of the jurisdiction of
formation of such party shall govern.
10.4 ENTIRE AGREEMENT. This Agreement, the License Agreement and the
Master Agreement contain the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties hereto with respect to such subject matter, including the Letter of
Intent, except for those certain nondisclosure agreements described in Section
10.9.
10.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.6 BINDING EFFECT; THIRD PARTIES. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the parties hereto
(including, without limitation, any employee or stockholder of Sellers) or, as
applicable, their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities (including, without limitation, any right
of employment), or otherwise constitute any other Person a third party
beneficiary, under or by reason of this Agreement.
10.7 SEVERABILITY. If any one or more of the provisions contained in this
Agreement or in any other agreement or instrument referred to herein shall, for
any reason, be held by a court of competent jurisdiction to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or other such agreement
or instrument.
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10.8 HEADINGS. The Section headings are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
10.9 PUBLICITY; CONFIDENTIALITY.
(a) Each of the parties hereto shall consult with the others before
issuing any press release or otherwise making any public statements with respect
to this Agreement or any of the transactions contemplated hereby and shall not
issue any such press release or make any such public statement except as all of
the parties hereto may mutually agree or to the extent required by applicable
law or the applicable rules of any stock exchange or securities association.
(b) Each Seller agrees that all information obtained by it regarding
Buyer prior to the date hereof and from and after the date hereof is and shall
be subject to those certain nondisclosure agreements between Buyer and NCD
effective as of August 1, 1995, all of the provisions of which are hereby
incorporated herein by reference.
10.10 AMENDMENTS; WAIVERS. This Agreement may not be amended or
modified except by an instrument in writing signed by all of the parties
hereto. Any of the provisions of this Agreement may be waived in writing by the
party or parties entitled to the benefits thereof. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver by such party of any subsequent breach. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
10.11 FURTHER ASSURANCES. At any time and from time to time, each
party hereto, without further consideration, shall take such further action and
execute and deliver such further instruments and documents as may be reasonably
requested by any other party or parties in order to carry out the provisions and
purposes of this Agreement and to transfer possession of all rights and
interests in and title to the Assets, including, without limitation, by
executing one or more further assignments covering any of the Assets
constituting Intellectual Property Rights in form acceptable for recordation.
The parties hereto acknowledge and agree that the remedy at law for any breach
of this Section 10.11 would be inadequate, and hereby agree that temporary and
permanent injunctive and other relief, including specific performance, may be
granted without proof of actual damage or inadequacy of legal remedy, and
without the need for posting any bond, in any proceedings which may be brought
to enforce any of the provisions of this Section 10.11.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf by their respective representatives, thereunto
duly authorized, as of the date first above written.
FTP SOFTWARE, INC. NETWORK COMPUTING DEVICES, INC.
By: /S/ DOUGLAS F. FLOOD By: /s/ JACK BRADLEY
--------------------------------- -------------------------------------
Name: Douglas F. Flood Name: JACK BRADLEY
------------------------------ -----------------------------------
Title: Senior Vice President Title: CHIEF EXECUTIVE OFFICER
----------------------------- -----------------------------------
NCD SOFTWARE CORPORATION
By: /s/ JACK BRADLEY
-------------------------------------
Name: JACK BRADLEY
-----------------------------------
Title: CHIEF EXECUTIVE OFFICER
----------------------------------
EXHIBITS
- - --------
Exhibit A -- Form of Bill of Sale and Conveyance to Buyer
Exhibit B -- Form of Assignment and Assumption Agreement
Exhibit C -- Form of Assignment of Copyrights
Exhibit D -- Form of Assignment of Trademarks
Exhibit E -- Form of Assignment of Patent Rights
Exhibit F -- Form of Opinion of Counsel to Sellers
Exhibit G -- Form of License Agreement
Exhibit H -- Form of Opinion of Counsel to Buyer
SCHEDULES
- - ---------
Schedule 1.2 -- Products
Schedule 1.3 -- Outside Directors
Schedule 2.1(a) -- Certain Excluded Assets
Schedule 2.1(d) -- Exceptions to Trade Rights
Schedule 2.1(e) -- Contracts
Schedule 2.1(g) -- Transferable Governmental Permits
Schedule 2.1(i)(a) -- Tangible Personal Property
Schedule 2.1(i)(b) -- Non-Transferred Tangible Personal Property
Schedule 2.3(a)(1) -- Assumed Liabilities
Schedule 2.3(a)(2) -- Accrued Employee Liabilities
Schedule 4.3 -- Sellers' Consents and Approvals
Schedule 4.4(a) -- Liens and Location of Assets
Schedule 4.4(b) -- Certain Liabilities
Schedule 4.5 -- Contractual Obligations
Schedule 4.6(g) -- Ownership and Title
Schedule 4.7(a) -- Software
Schedule 4.7(c) -- Certain Enhancements
Schedule 4.7(d) -- Certain Development Matters
Schedule 4.7(f) -- Disclosure of Source Code(s)
Schedule 4.8(a) -- Net Revenue Information
Schedule 4.8(b) -- Customer Lists
Schedule 4.8(c) -- Backlog
Schedule 4.10 -- Litigation
Schedule 4.12(d) -- Current Annual Salary for Each Mariner
Employee of Sellers and Related Matters
Schedule 4.13 -- Employee Benefit Plans
Schedule 4.18 -- Insurance Policies
Schedule 4.20 -- Affiliated Transactions
Schedule 4.24 -- Governmental Permits
Schedule 6.2 -- Allocation of Purchase Price
Schedule 9.1 -- Certain Indemnification Obligations of Sellers
2