1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made and entered into as
of the 5th day of February, 2001, by and among JDA Software Group, Inc., a
Delaware corporation ("JDA" or "Buyer"), Zapotec Software, Inc., a Delaware
corporation ("Seller") and certain shareholders of Seller as listed on Exhibit
`A" hereto (individually, a "Shareholder" and collectively, the "Shareholders").
RECITALS
A. Seller owns certain assets and intellectual property known as (i)
"ProMax," which is a software application used or is useful in automating trade
allowance programs for retailers, suppliers and distributors, and (ii) "z-HUB,"
which is an on-line application used or useful in automating promotions and
advertising for businesses. The assets and intellectual property comprising
ProMax and z-HUB are set forth on Schedule 1.1(e) attached hereto. Seller's
business of designing and developing the ProMax and z-HUB applications,
providing ProMax and z-HUB applications and services to customers and other
parties, and developing, producing and marketing Seller's other applications
known as "Pro" and "ProPlus" is referred to as the "Business".
B. Buyer is willing to purchase, and Seller is willing to sell, all
rights, property and assets of Seller pertaining to the Business, on the terms
and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and subject to
the terms and conditions herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES.
1.1 Acquired Assets. On the terms and subject to the
conditions contained in this Agreement, at the Closing (as defined in Section
3.1), Seller shall convey, sell, assign, transfer, and deliver to Buyer, and
Buyer shall purchase from Seller, all of the rights (contractual and otherwise),
property and other assets of Seller of every kind and wherever located as such
property and assets exist as of Closing, which relate to, are used in or are
useful to the operation of the Business and that are listed and described on
Schedule 1.1 hereto, and including without limitation the following (all such
rights, property, and assets are referred to herein as the "Acquired Assets"):
(a) Inventories. All of Seller's owned inventories of
goods, products, supplies, and packaging materials, including but not limited to
software stored on any form of media relating to ProMax and z-HUB, and the
Seller's other applications known as Pro and ProPlus (collectively, the
"Inventories"), as of the Closing Date (as defined in Section 3.1); Schedule
1.1(a) sets forth Seller's good faith estimate after reasonable inquiry of the
Inventories by class, including an estimate of the quantity of each class, as of
the date of this Agreement;
(b) Accounts Receivable. Except for the accounts
receivables set forth in Section 8.9 of this Agreement, Seller's accounts
receivable that are owed to Seller at the time
1
2
of Closing relating to ProMax; Pro, and ProPlus,; Schedule 1.1(b) sets forth a
true, correct and complete listing and aging of the accounts receivable as of
the date of this Agreement.
(c) Unbilled Services. All proceeds owed to Seller
from work rendered by Seller relating only to ProMax, Pro, ProPlus, and z-HUB
for the benefit of certain of its customers that is currently unbilled; Schedule
1.1(c) sets forth a true, correct and complete listing of the unbilled services
as of the date of this Agreement.
(d) Equipment. The appliances, fixtures, equipment,
and other tangible personal property listed on Schedule 1.1(d);
(e) Contracts; Intangibles. All of Seller's right,
title and interest under each contract, agreement, or commitment connected with
the Business and all other intangibles used or useful in the Business
(collectively, the "Intangibles"), including without limitation (i) all
intellectual property relating to the Business, including but not limited to
ProMax, Pro, ProPlus, and z-Hub, including all patents, patent applications,
inventions, know-how, trade secrets, domain names, source code, engineering
records and other commercially valuable information maintained by Seller as
confidential, all documents containing such information, all trade names,
trademarks, trademark registrations and applications for trademark
registrations, and all copyrights, copyright registrations and applications for
copyright registrations used in the Business (collectively, "Seller's
Intellectual Property"); (ii) all contract and other rights, including without
limitation rights under purchase orders or sales orders, rights to discounts,
licenses of rights in or under any of Seller's Intellectual Property, (iii) all
goodwill of and relating to the Business; (iv) all rights, title and interest in
any claims, causes of action, matters in dispute or judicial or arbitration
proceedings that relate to Seller's Intellectual Property, and (v) all of
Seller's customer lists and supply, importation and distribution broker and
agent lists; Schedule 1.1(e) sets forth a listing of the Seller's Intangibles
and Seller's Intellectual Property as of the date of this Agreement (with a
separate detailed component listing, including any components developed by any
third party, and description of that part of the Seller's Intellectual Property
known as ProMax, Pro, ProPlus, and z-HUB); provided however that the listing of
the Intangibles and Seller's Intellectual Property on Schedule 1.1(e) does not
obligate the Buyer to perform or assume any liability or obligation under such
contract, unless: (i) such obligation or performance is listed on Schedule 1.2
attached hereto; and further, (ii) unless and until consent where necessary is
granted to the transfer of the Intangibles and Seller's Intellectual Property
listed on Schedule 1.1(e) from Seller to Buyer is granted. Promptly after the
Closing as defined herein, Buyer will use commercially reasonable efforts to
obtain all required consents with respect to all Acquired Assets.
(f) Books and Records. All books, papers, and records
in Seller's care, custody, or control relating to any or all of the Acquired
Assets or the Business or the operation of either of them, excluding the
Seller's general accounting and financial records, and including without
limitation all sales records, all maintenance records and logs, all purchase
agreements, warranties, and operating manuals with respect to any and all of the
Equipment, and all records and reports relating to (i) Seller's Intellectual
Property, or (ii) the development, testing or marketing of Seller's products or
the Inventories (collectively, the "Records"); and
2
3
(g) Permits and Licenses. Each permit, license,
consent, right, exemption, concession, authorization, certificate, order,
franchise, determination, or approval of any federal, state, or municipal
government (whether domestic or foreign), or any political subdivision thereof,
or any governmental or quasi-governmental, judicial, public or statutory
authority, department, commission, board, bureau, agency, instrumentality or
entity (each, a "Governmental Authority") required for the ownership and
operation of, or any other activity of Seller in connection with the Business
(collectively, "Governmental Approvals"), to the extent that such Governmental
Approvals are transferable by Seller. Schedule 1.1(g) sets forth Seller's good
faith listing of all Governmental Approvals, as of the date of this Agreement,
including an indication with respect to each Governmental Approval listed as to
whether such Governmental Approval is transferable by Seller.
1.2 Liabilities.
(a) The Acquired Assets shall be sold and conveyed to
Buyer free and clear of all debts, mortgages, liens, deeds of trust, security
interests, pledges, restrictions, prior assignments, charges, claims, defects in
title and encumbrances of any kind or type whatsoever (collectively, the
"Security Interests") except for (but only to the extent specifically listed on
Schedule 1.2 attached hereto): (i) liens for taxes not yet due and payable; (ii)
statutory liens, (iii)liabilities with respect to the Deferred Revenue
("Deferred Revenue" shall mean license fees, services and maintenance revenue
that have not yet been recognized under generally accepted accounting principles
("GAAP") because outstanding obligations have not been fulfilled as of the
Closing Date), and (iv) those obligations of Seller, if any, which Buyer
expressly assumes as set forth on Schedule 1.2 attached hereto. The Security
Interests referred to in the foregoing clauses (i), (ii), (iii) and (iv) are
collectively referred to herein as "Permitted Encumbrances."
(b) Buyer shall not assume or be liable for any
liability or obligation or amendment or modification thereto (whether written,
oral, implied in Seller's ordinary course of business, or required by law) that
is not specifically set forth on Schedule 1.2. Also, Buyer will not assume,
perform or cause to be performed any contractual obligation not specifically
listed on Schedule 1.2. Furthermore, after the Closing Date, Buyer shall not
assume or become responsible for any liability or obligation of Seller assumed
by Buyer under this Agreement which requires consent from any party to such
liability or obligation and such party does not provide such consent following
Buyer's reasonable efforts to obtain such consent. Seller shall retain all such
obligations and liabilities not expressly assumed by Buyer hereunder, and Seller
hereby agrees to indemnify and hold Buyer and its successors and assigns
harmless from and against any and all such liabilities in accordance with the
terms of Section 9 below.
2. PURCHASE PRICE.
2.1 Purchase Price. Subject to the terms and conditions of
this Agreement, and in consideration of the transfer of the Acquired Assets to
Buyer, at the Closing Buyer shall pay the sum of One Million Two Hundred Fifty
Thousand Dollars ($1,250,000) (the "Purchase Price") as follows:
3
4
(a) Buyer shall pay to Seller in cash the sum of Six
Hundred Sixty-two Thousand Five Hundred Thirty-five Dollars and Seventy-one
Cents ($662,535.71) (the "Seller's Payment"), payable in immediately available
funds by check or wire transfer and payable in accordance with the wiring
instructions set forth on Schedule 2.1.
(b) Buyer shall pay: (i) to the law firm of Hogan &
Hartson L.L.P. the sum of Sixty-two Thousand Dollars ($62,000) (the "Hogan &
Hartson Fees") and (ii) to the law firm of Sherman & Howard L.L.C. the sum of
Twenty-eight Thousand Seven Hundred Ninety-eight Dollars and Eighty-nine Cents
($28,798.89) (the "Sherman & Howard Fees") payable in immediately available
funds by check or wire transfer and payable in accordance with the wiring
instructions set forth on Schedule 2.1.
(c) Buyer shall pay: (i) to Vignette Corporation the
sum of Six Thousand Dollars ($6,000) (the "Vignette Settlement Fee") and (ii) to
Saillant Consulting Group, LLC the sum of Forty-five Thousand Dollars ($45,000)
(the "Saillant Settlement Fee") payable in immediately available funds by check
or wire transfer and payable in accordance with the wiring instructions set
forth on Schedule 2.1.
2.2 Escrow Fund. Buyer shall withhold from the Purchase Price
the following (collectively referred to as the "Escrow Funds" and separately as
named in each subsection herein): (i) the sum of One Hundred Eighty Seven
Thousand Five Hundred Dollars ($187,500) in cash (the "First Escrow Fund") and
such First Escrow Fund shall be held as collateral for Seller's indemnification
obligations pursuant to Section 9 of this Agreement; (ii) the sum of One Hundred
Sixty-four Thousand Three Hundred Sixty-five Dollars and Forty Cents
($164,365.40) in cash (the "Second Escrow Fund") and such Second Escrow Fund
shall be held as collateral for Seller's performance and satisfaction of
Seller's obligations set forth in Section 8.5; (iii) the sum of Sixty Thousand
Dollars ($60,000) in cash (the "Third Escrow Fund") and such Third Escrow Fund
Shall be held as collateral for Seller's performance and satisfaction of
Seller's obligations set forth in Section 8.6; and (iv) the sum of Thirty Three
Thousand Eight Hundred Dollars ($33,800) in cash (the "Fourth Escrow Fund") and
such Fourth Escrow Fund Shall be held as collateral for Seller's performance and
satisfaction of Seller's obligations set forth in Section 8.4. The First Escrow
Fund shall be governed in accordance with Section 9 of this Agreement, the
Second Escrow Fund shall be governed by Section 8.5 of this Agreement, the Third
Escrow Fund shall be governed by Section 8.6 of this Agreement, and the Fourth
Escrow Fund shall be governed by Section 8.4 of this Agreement. Each of the
Escrow Funds shall accrue interest at the rate of five percent (5%) per annum in
favor of the Seller. Upon termination or payment of any of the Escrow Funds,
Buyer shall pay Seller the accrued interest earned upon such fund.
2.3 Allocation of Purchase Price. Schedule 2.3 sets forth the
allocation of the Purchase Price among the Acquired Assets, as determined in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"). Buyer and Seller shall use the allocation set forth in Schedule
2.3 in reporting the transactions contemplated by this Agreement for all
federal, state and local tax purposes.
2.4 Taxes. Any franchise, sales, purchase, or use tax payable
under the laws of the State of Delaware or of any city, county, or subdivision
thereof, or any other jurisdiction,
4
5
which may be payable as a result of the execution of this Agreement or the
consummation of the transactions contemplated hereby shall be paid by Seller,
and Buyer shall not be liable therefor.
3. CLOSING.
3.1 Closing Date. Provided that the conditions precedent to
Closing, as set forth in Sections 4 and 5, have been met, the consummation of
the purchase and sale of the Acquired Assets (the "Closing") shall take place at
the offices of Gray Cary Ware & Freidenrich LLP at 100 Congress Avenue, Suite
1440, Austin, Texas 78701, on February 2, 2001 (the "Closing Date"), at 10:00
a.m., or such other place, date, and time as may be mutually agreed by Seller
and Buyer.
3.2 Seller's Deliveries at Closing. At or prior to the
Closing, Seller shall deliver or cause to be delivered to Buyer the following
instruments and documents:
(a) an executed counterpart of the Bill of Sale,
("Bill of Sale" shall mean that certain Bill of Sale of even date herewith
entered into by and among the Buyer and the Seller);
(b) on the Closing Date and to the reasonable
satisfaction of Buyer, Seller shall permit and assist Buyer and/or its agents in
downloading and copying any and all software, data, code, and any other
electronic information which relates to the Acquired Assets and the Business;
(c) the officers' certificate described in and
required by Section 4.2;
(d) a certificate, reasonably satisfactory to Buyer,
relating to the charter documents of Seller, the incumbency and authority of
Seller's officers, and resolutions of the board of directors and of the
Shareholders with respect to the transactions contemplated by this Agreement;
(e) a certificate of good standing from the Secretary
of State of the State of Colorado and of the State of Delaware;
(f) any required consents of the Seller's board of
directors, shareholders or Governmental Authorities;
(g) prior to the Closing Date, Seller shall deliver
to Buyer copies of its monthly unaudited financial statements for each month for
the year ended December 31, 1999, and for each month for the year ended December
31, 2000; and
(h) such other instruments and documents as shall be
reasonably requested by Buyer in order to effect the transactions contemplated
hereby.
3.3 Buyer's Deliveries at Closing. At the Closing, Buyer shall deliver
or cause to be delivered to Seller the following instruments and documents:
5
6
(a) a check or wire transfer payable to Seller in the
amount of the Purchase Price except that each of the Escrow Funds shall be
withheld by Buyer as set forth in Section 2.2 of this Agreement;
(b) the officer's certificate described in and
required by Section 5.2;
(c) a secretary's certificate, reasonably
satisfactory to Seller, relating to the charter documents of Buyer, the
incumbency and authority of certain executive officers of Buyer, and resolutions
of the board of directors of Buyer with respect to the transactions contemplated
by this Agreement;
(d) such other instruments and documents as shall be
reasonably requested by Seller in order to effect the transactions contemplated
hereby.
4. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. Buyer's obligations to
pay the Purchase Price and otherwise to consummate the transactions contemplated
hereby are subject to the fulfillment to the reasonable satisfaction of Buyer at
or prior to the Closing Date of the following conditions, unless waived in
writing by Buyer, acting in its sole discretion:
4.1 Authorization. No action, suit or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would restrain, prohibit or invalidate the transactions contemplated
by this Agreement, question the legality of such transactions, or adversely
affect Buyer's right to own the Acquired Assets or operate the Business.
4.2 Representations. All representations and warranties of
Seller and Shareholders contained in this Agreement shall be true in all
respects at and as of the Closing Date. Seller shall have performed and complied
with all material covenants, obligations and conditions required by this
Agreement to be performed or complied with by Seller at or prior to Closing. At
the Closing, Seller shall deliver to Buyer an officer's certificate executed by
its President certifying as to the foregoing with respect to the Closing Date.
4.3 Consents. On or before the Closing Date, Seller shall have
received consents from any and all third parties, including any Governmental
Authorities, which consents are reasonably necessary or desirable in connection
with Buyer's acquisition of the Acquired Assets or any other transaction
contemplated by this Agreement.
4.4 Receipt of Assignment of Intellectual Property Agreements.
On or before the Closing Date, Seller shall have received Assignment of
Intellectual Property Agreements from all officers, employees and consultants of
Seller.
4.5 Approvals. The majority of Seller's shareholders and Board
of Directors shall have approved this Agreement and the transactions
contemplated hereby.
4.6 Due Diligence Review. Buyer shall be satisfied that its
due diligence review of Seller and the Acquired Assets is complete, adequate and
satisfactory.
6
7
4.7 No Material Adverse Change. No material adverse change in
the business or financial condition of the Seller or the Acquired Assets has
occurred.
4.8 Settlement Agreements. Seller has obtained an executed
settlement agreement from each of its outstanding creditors and vendors prior to
the Closing as listed on Schedule 4.8 hereto.
4.9 Deliveries. At Closing, Seller shall have delivered to
Buyer all instruments and documents listed in Section 3.2 hereto.
4.10 Security Interests. Seller has obtained written releases
of all (i) Security Interests in the Acquired Assets as listed on Schedule 4.10
hereto and (ii) a written release from each of the Shareholders regarding all
their claims as secured creditors to the Acquired Assets of the Business.
4.11 Employee Stay-Put and Non-Compete Agreements. Jennifer
French and Monte Buckley shall enter into stay put agreements satisfactory to
Buyer. Forms of the Stay Put and Non-Compete Agreements are attached hereto as
Schedule 4.11.
4.12 Compliance with Pre-closing Covenants. Seller has
complied in all respects with all covenants contained in that certain Letter of
Intent, as amended or extended, by and between Buyer and Seller dated December
8, 2000.
5. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. Seller's obligations
to transfer the Acquired Assets to Buyer and otherwise to consummate the
transactions contemplated hereby are subject to the fulfillment to the
reasonable satisfaction of Seller, at or prior to the Closing Date, of the
following conditions, unless waived in writing by Seller, acting in its sole
discretion:
5.1 Authorization. No action, suit or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would restrain, prohibit or invalidate the transactions contemplated
by this Agreement, question the legality of such transactions, or adversely
affect Seller's right to transfer and assign the Acquired Assets to Buyer.
5.2 Representations. All representations and warranties of
Buyer contained in this Agreement shall be true in all respects at and as of the
Closing. Buyer shall have performed and complied with all material covenants,
obligations, and conditions required by this Agreement to be performed or
complied with prior to Closing by Buyer. Buyer shall deliver to Seller an
officer's certificate executed by its Chief Executive Officer, President or
Chief Financial Officer certifying as to the foregoing.
5.3 Approvals. The majority of Seller's shareholders and Board
of Directors shall have approved this Agreement and the transactions
contemplated hereby.
5.4 Approval by Board of Directors. Buyer's board of directors
shall have approved this Agreement and the transactions contemplated hereby.
7
8
5.5 Deliveries. At Closing, Buyer shall have delivered to
Seller all instruments and documents listed in Section 3.3 hereto.
6. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS. As a
material inducement to Buyer to enter into and perform its obligations under
this Agreement, Seller and each Shareholder, severally and not jointly, each as
to themselves and not Seller or any other Shareholder, hereby represents and
warrants to Buyer that, except as expressly set forth in Schedule 6 (which
indicates the specific subsection of this Section 6 to which each disclosure or
exception is made, and which disclosures and exceptions shall be deemed to be
representations and warranties as if made hereunder), the following statements
are true, accurate and complete as of the date of this Agreement. As used in
this Section 6, "Seller's knowledge" shall include the actual knowledge of the
Seller, Seller's officers and each Shareholder after reasonable inquiry.
6.1 Organization and Standing.
(a) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the States of Delaware and of
Colorado, has all requisite corporate power and authority to own, operate and
lease its properties and carry on the Business. Seller is qualified to do
business as a foreign corporation in each state and other jurisdiction where the
failure to be so qualified would have a material adverse effect on Seller, the
Business or the operation thereof.
(b) Seller has not (i) filed or had filed against it
a petition in bankruptcy or a petition to take advantage of any other insolvency
act, (ii) made an assignment for the benefit of creditors, nor (iii) consented
to the appointment of a receiver for itself or any substantial part of its
property.
(c) Seller does not own or control, directly or
indirectly, an equity interest in any subsidiary, corporation, partnership,
business, trust or other entity.
6.2 Authority; Validity; Enforceability. Seller has the
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated hereby, and to perform its
obligations hereunder. This Agreement has been duly authorized, executed, and
delivered by Seller and is a valid and legally binding obligation of Seller,
enforceable against Seller in accordance with its terms. This Agreement and
Seller's consummation of the transactions contemplated hereby have been duly
approved by the board of directors of Seller and by the requisite vote of the
shareholders.
6.3 No Conflicts.
(a) To the best of Seller's knowledge, neither
Seller's ownership and use of the Acquired Assets nor the conduct of the
Business prior to the Closing Date (i) conflicts with any material rights of any
other person, firm or corporation, or (ii) violates, conflicts with or will
result in a default, right to accelerate or loss of rights under, any term or
provision of any lien, encumbrance, mortgage, deed of trust, lease, license,
agreement, understanding law, ordinance, rule or regulation, or any order,
judgment or decree to which Seller is a party or by which it or its properties
may be bound or affected; nor will the giving of notice or passage of time
result in any such violation, conflict, default, right or loss of rights.
8
9
(b) The execution and delivery of this Agreement by
Seller and the performance and consummation by Seller of the transactions
contemplated hereby shall not (whether upon failure to give notice or the
passage of time or otherwise) result in any conflict with, breach or violation
of or default, termination or forfeiture under (i) any term or provision of
Seller's Certificate of Incorporation or Bylaws, (ii) any statute, rule,
regulation, judicial, governmental, regulatory or administrative decree, order
or judgment known to Seller to be applicable to Seller, or (iii) any contract,
agreement, lease, license, permit or other instrument to which Seller is a party
or to which any of its assets are subject, which conflict, breach, violation,
default, termination or forfeiture would (iv) have a material adverse effect on
Buyer's ownership of the Acquired Assets following the Closing, or on Seller's
indemnification obligations to Buyer pursuant to Section 9, or (v) be reasonably
likely to result in the imposition on or against Buyer of a penalty, fee,
decree, order or judgment.
(c) There is no action, suit, proceeding or
investigation pending or, to the best of Seller's knowledge, threatened against
Seller that questions the validity of this Agreement or the right of Seller to
enter into this Agreement or to consummate the transactions contemplated hereby.
6.4 No Encumbrances on the Acquired Assets. Seller has good
and marketable title to and the right to use all of the assets used in or
necessary for the operation of the Business, including without limitation the
Acquired Assets, and all of such assets are free and clear of any liens,
mortgages, pledges, security interests, licenses, encumbrances, restrictions or
adverse claims, except for any Permitted Encumbrances. To Seller's knowledge,
all of the Acquired Assets are in good operating condition and are adequate and
suitable for the purposes for which they are presently being used or intended to
be used by Seller, normal wear and tear excepted. No person other than Seller
has any direct or indirect ownership or other interest in any of the Acquired
Assets or any other assets which are used in or are useful to the operation of
the Business, other than indirect interests of shareholders of Seller arising
solely from their ownership of capital stock of Seller.
6.5 Real Property. Seller does not own, directly or
indirectly, any real property used in the operation of the Business. Seller has
valid leasehold interests and occupies such real property free and clear of all
material encumbrances. Seller does not have any direct or indirect leasehold or
subleasehold interest in any real property used in the operation of the
Business.
6.6 Other Liabilities. Seller does not have any liability or
obligation with respect to the Business, other than any tax liabilities which
will be paid in due course by Seller.
6.7 Material Contracts.
(a) All material agreements, contracts and
commitments, whether written or oral relating to the Business (the "Material
Contracts"), by which Seller is bound are listed on Schedule 6.7. Complete and
correct copies or originals of all written Material Contracts, together with all
exhibits, attachments, schedules and amendments thereto, have been provided to
Buyer.
9
10
(b) Each Material Contract is a valid and legally
binding obligation of Seller and, to the best of Seller's knowledge, the other
parties thereto, enforceable against Seller and, to the best of Seller's
knowledge, the other parties thereto, in accordance with its respective terms.
Seller is not and, to Seller's knowledge, no other party to any Material
Contract is in material default thereunder. Seller has not, and to the best of
Seller's knowledge no other party to any Material Contract has, performed any
act or omitted to perform any act which act or omission, with the giving of
notice or passage of time or otherwise, will become a default under any Material
Contract.
(c) Seller has not received any unliquidated
advanced, milestone or progress payment from or on behalf of any of its
customers under or with respect to any Material Contract, and there are no other
funds due or that will become due to customers on any of Seller's products.
6.8 Tax Returns. Seller has filed all required returns,
declarations, reports, claims for refund, and information returns and statements
relating to any and all federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Section 59A of
the Code), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever (collectively, "Tax
Returns"). Seller has paid all taxes indicated as due on such Tax Returns,
including any interest, penalty, or addition thereto, whether disputed or not,
except for taxes not currently due and payable.
6.9 Absence of Litigation, Orders, Judgments.
(a) There are no actions, suits or proceedings
pending or, to the best of Seller's knowledge, threatened which involve
transactions of or otherwise relate to Seller, the Business or the Acquired
Assets, at law or in equity, or before any arbitrator of any kind, or before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or other instrumentality, domestic or foreign.
(b) There are no outstanding orders, writs,
injunctions, decrees, judgments, awards, determinations or directions, which
involve transactions of or otherwise relate to Seller, the Business or the
Acquired Assets, of any court or arbitrator or under any outstanding order,
regulation or demand of any federal, state, municipal or other governmental
instrumentality, domestic or foreign.
6.10 Intellectual Property.
(a) Seller owns or has the right to use all of
Seller's Intellectual Property, without any interference or conflict with or
misappropriation or infringement of the intellectual property rights of others.
An accurate and complete description of the Seller's Intellectual Property is
set forth on Schedule 1.1(e). None of Seller's Intellectual Property is owned by
any current or former employee of Seller, nor does any such person have any
other rights in any of Seller's Intellectual Property. Seller has taken all
reasonably necessary action to
10
11
maintain and protect Seller's Intellectual Property. Each item of Seller's
Intellectual Property owned or used by Seller immediately prior to the Closing
will be owned or available for use by Buyer on identical terms and conditions
immediately subsequent to the Closing. No consent or waiver from any third party
is required in order to effect the transfer and assignment of Seller's
Intellectual Property to Buyer.
(b) To the best of Seller's knowledge, Seller has not
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any intellectual property rights of others. Neither Seller nor any
customer of Seller (with respect to ProMax and z-HUB), to Seller's knowledge,
has ever received or has had knowledge of any charge, complaint, claim, demand,
or notice alleging any such interference, infringement, misappropriation, or
conflict (including without limitation any claim that Seller must license or
refrain from using any intellectual property rights of any other person), or
that Seller's use of any of Seller's Intellectual Property constitutes unfair
competition. To the best of Seller's knowledge, no other person has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
of Seller's Intellectual Property.
(c) Seller has provided copies of any and all work
product of that certain third party known as Emerald Solutions as set forth on
Schedule 6.10(c) hereto.
6.11 Employee Matters.
(a) Schedule 6.11 lists all of the employees that
Buyer has indicated to Seller it intends to hire following the Closing (the
"Specified Employees"), including each specified employee's position and salary
with the Seller, and all of the Seller's employee benefit plans and other
arrangements available to the Specified Employees (collectively, the "Employee
Plans"). Seller has made available to Buyer complete and accurate copies of the
plan documents with respect to each of the Employee Plans (including, without
limitation, plan amendments currently under consideration, trust documents,
insurance policies or contracts, employee booklets, summary plan descriptions
and other authorizing documents, and any material employee communications).
(b) None of the Employee Plans is governed by or
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Each of the Employee Plans has at all times been operated and
administered in all material respects in accordance with its terms and all
applicable laws, including without limitation ERISA and the Code.
(c) The employment by Seller of each of the Specified
Employees is "at will," except as may be required to the contrary under
applicable law. Seller does not have any obligation with respect to any
Specified Employee (i) to provide any particular form or period of notice prior
to termination, or (ii) to pay any severance benefits in connection with the
termination of such person's employment or service. In addition, no severance
pay or termination fee or penalty will become due to any of the Specified
Employees or other service provider to Seller under any agreement, plan or
program, as a result of the consummation of this Agreement or the transactions
contemplated hereby. Seller does not owe and has not accrued any bonuses or
vacation pay or retirement benefits to any service providers, Specified
11
12
Employees, officers or former service providers, former employees or former
officers, except as set forth on Schedule 6.11.
(d) Seller is not aware of any impending resignation
by or other termination of employment of any Specified Employee.
(e) To the best of Seller's knowledge, after due
inquiry, each of the Specified Employees is either (i) a United States citizen
or has permanent residence status duly authorized and acknowledged by the United
States Immigration and Naturalization Service (the "INS"), or (ii) has provided
paperwork and documentation to support the Specified Employee's claim that he or
she is present in the United States under a current visa issued in accordance
with all of the laws, regulations and requirements of the INS, which visa
permits the holder thereof to reside in the United States and be employed by
Seller to perform the work such person is presently performing. To the best of
Seller's knowledge, there will not be any delay or impediment to Buyer offering
employment to, and employing, any of the Specified Employees immediately
following the Closing.
(f) Seller has sent all notices required under the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") to all present
and past employees, all spouses of employees and all family members of such
employees.
6.12 No Brokers, Finders. Seller has not engaged, nor is
obligated for the payment of any commission, fee or expense of, any broker or
finder in connection with the origin, negotiation or execution of this Agreement
or any of the transactions contemplated hereby. In no event will Buyer be
responsible for any commission, fee or expense relating to any broker or finder
engaged by Seller or to which Seller is obligated.
6.13 No Misstatements. The copies of all instruments,
agreements, other documents and written information delivered by or on behalf of
Seller to Buyer in connection with the Closing are and will be complete and
correct in all material respects as of the date of delivery thereof. No
representations or warranties made by Seller in this Agreement, nor any
document, written information, statement, financial statement, letter,
certificate or exhibit prepared and furnished or to be prepared and furnished by
or on behalf of Seller to Buyer in connection with the Closing, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
a material fact necessary to make the statements or facts contained herein or
therein, in light of the circumstances in which they were made, not misleading.
6.14 Consultants. Seller hereby warrants and represents that
no consultant hired by, or working under contract for Seller has any claim to
the Seller's Intellectual Property.
6.15 Unaudited Financial Statements. The unaudited financial
statements of Seller delivered to Buyer pursuant to Section 3.2(g) have been
prepared in accordance with the books and records of Seller, reflect all
material transactions, and to the knowledge of Seller's management contain no
material misstatements applicable to interim financial statements. Accordingly,
they do not include all of the information and notes required for complete
financial statements. To the knowledge of Seller's management, all material
adjustments and
12
13
reclassifications considered necessary for a fair and comparable presentation
have been included in such financial statements and are of normal recurring
nature.
6.16 Accounts Receivable and Customer Agreements. Seller has
not collected, accepted, nor received any accounts receivable except as set
forth on Schedule 1.1(b) attached hereto and Seller has not entered into any
customer agreements nor delivered any software other than as set forth in the
"Zapotec Client List" on Schedule 6.6 attached hereto. Notwithstanding anything
to the contrary in this Agreement, Seller and the Shareholders make no
representations or warranties regarding the collection or collectability of any
of Seller's accounts receivable.
7. REPRESENTATIONS AND WARRANTIES OF BUYER. As a material inducement to
Seller to enter into and perform its obligations under this Agreement, Buyer
hereby represents and warrants to Seller that the following statements are true,
accurate and complete as of the date of this Agreement.
7.1 Organization and Standing.
(a) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) Buyer has not (i) filed or had filed against it a
petition in bankruptcy or a petition to take advantage of any other insolvency
act, (ii) admitted in writing its inability to pay its debts generally, (iii)
made an assignment for the benefit of creditors, (iv) consented to the
appointment of a receiver for itself or any substantial part of its property, or
(v) generally committed any act of insolvency (including the failure to pay
obligations as they become due) or bankruptcy.
7.2 Authority, Validity; Enforceability. Buyer has the
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated hereby, and to perform its
obligations hereunder. This Agreement has been duly authorized, executed, and
delivered by Buyer and is a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. This Agreement and
Buyer's consummation of the transactions contemplated hereby have been duly
approved by Buyer's Board of Directors.
7.3 No Conflicts.
(a) The execution and delivery of this Agreement by
Buyer and the performance and consummation by Buyer of the transactions
contemplated hereby shall not (whether upon failure to give notice or the
passage of time or otherwise) result in any conflict with, breach or violation
of or default, termination or forfeiture under (i) any term or provision of
Buyer's Articles of Incorporation or Bylaws, (ii) any statute, rule, regulation,
judicial, governmental, regulatory or administrative decree, order or judgment
known to Buyer to be applicable to Buyer, or (iii) any contract, agreement,
lease, license, permit or other instrument to which Buyer is a party or to which
any of its assets are subject, which conflict, breach, violation, default,
termination or forfeiture would have a material adverse effect on (x) Buyer's
ability to pay to Seller the Purchase price or any additional payments that
become due and payable to
13
14
Seller, (y) Buyer's employment of the Specified Employees, or (z) satisfaction
of Buyer's indemnification obligations to Seller pursuant to Section 9.
(b) There is no action, suit, proceeding or
investigation pending or, to the best of Buyer's knowledge, threatened against
Buyer that questions the validity of this Agreement or the right of Buyer to
enter into this Agreement or to consummate the transactions contemplated hereby.
7.4 No Brokers, Finders. Buyer has not engaged, nor is it
obligated for the payment of any commission, fee or expense of, any broker or
finder in connection with the origin, negotiation or execution of this Agreement
or any of the transactions contemplated hereby. In no event will Seller be
responsible for any commission, fee or expense relating to any broker or finder
engaged by Buyer or to which Buyer is obligated.
7.5 Diligence. Buyer has been afforded the opportunity to
conduct, to its satisfaction, diligence regarding the Acquired Assets and the
Business of the Seller.
8. COVENANTS SURVIVING THE CLOSING.
8.1 Further Assurances. From time to time, at the request of
any of the parties hereto, and without further consideration, the non-requesting
party or parties shall execute such documents and instruments and do or cause to
be done such further acts and things as may be reasonably necessary or desirable
to effect more fully the transfer and assignment of the Acquired Assets, to put
Buyer in possession of the Acquired Assets, or to effect any other transactions
contemplated by this Agreement, including but not limited to Seller providing
Buyer with access to whichever accounting and financial records it deems
necessary to own, use and operate the Acquired Assets.
8.2 No Solicitation of Employees. For a period of three (3)
years after the Closing Date, Seller, including the Shareholders, shall not,
directly or indirectly, in any capacity whatsoever, recruit or solicit, or
assist any other person or party in recruiting or soliciting any employee of
Buyer, including but not limited to the Specified Employees, or induce or
attempt to induce or assist any other person or entity in inducing or attempting
to induce any such employee to terminate or alter his or her relationship with
Buyer.
8.3 Confidentiality.
(i) Buyer will keep all Seller Confidential
Information (as defined herein) in strict confidence, and Seller and each
Shareholder will keep all Buyer Confidential Information (as defined herein) in
strict confidence. Neither Buyer nor Seller nor any Shareholder will disclose
Confidential Information (as defined herein) to others, or take or use
Confidential Information for its own purposes or the purposes of others;
provided, however, that each of Buyer, Seller and each Shareholder may disclose
Confidential Information to its respective attorneys, accountants, financial
advisers, partners and affiliates (Buyer and each Shareholder may disclose
Seller Confidential Information as applicable to this Agreement and the Acquired
Assets to the extent required by the U.S. Securities and Exchange Commission,
the Securities Act of 1933, as amended or the Securities Exchange Act of 1934,
as amended and any rules or regulations promulgated thereby or thereunder,
including Regulation FD) that need to
14
15
know the specific Confidential Information so disclosed, are informed by the
disclosing party of the confidential and proprietary nature of the Confidential
Information, and agree to keep the Confidential Information confidential and not
to disclose the Confidential Information to any other person without the prior
written consent of the non-disclosing party.
(ii) "Buyer Confidential Information" shall consist
of any information, whether written (including information that is stored on
machine-readable media) or oral, regarding Buyer, its assets, its business or
the operation thereof, that previously has not been publicly released by a duly
authorized representative of Buyer, including but not limited to proprietary
information, trade-secrets, know-how, documents, competitive and market
analyses, computer software or software listings, proposals, reports, marketing
plans or research, development plans or information, pricing information, vendor
lists, illustrations, concepts and ideas and sources of such technical and
business information. "Seller Confidential Information" shall consist of any
information, whether written (including information that is stored on
machine-readable media) or oral, regarding Seller generally or its business, the
Acquired Assets, the Business or the operation thereof, that previously has not
been publicly released by a duly authorized representative of Seller, including
but not limited to proprietary information, trade-secrets, know-how, documents,
competitive and market analyses, computer software or software listings,
proposals, reports, marketing plans or research, development plans or
information, pricing information, vendor lists, illustrations, concepts and
ideas and sources of such technical and business information. "Confidential
Information" when used with respect to Buyer's obligations hereunder shall refer
to Seller Confidential Information and, when used with respect to Seller's
obligations hereunder, shall refer to Buyer Confidential Information. In
addition, "Confidential Information" shall include the existence and content of
this Agreement and any past and future negotiations with respect to the
transactions contemplated hereby. "Confidential Information" shall not include
information and/or data which the receiving party can establish (a) has become
publicly known through no violation of an obligation of non-disclosure by any
person or entity; (b) was obtained by the receiving party from a third party
through no violation of an obligation of non-disclosure by any person or entity;
(c) was independently developed without any use or reference to Confidential
Information and through no violation of an obligation of non-disclosure by any
person or entity; (d) has been approved for public disclosure in writing by the
disclosing party; (e) following the Closing, was intentionally furnished by the
disclosing party to a third party without similar restrictions on disclosure,
except in the case of a transfer of all rights therein to such third party; (f)
has been disclosed pursuant to a requirement of law, but only to the extent such
disclosure is required; or (g) as evidenced by written records, was in the
possession of the receiving party prior to the Closing through no violation of
an obligation of non-disclosure by any person or entity.
(iii) If disclosure of Confidential Information by
either party is compelled by deposition, interrogatory, subpoena, civil
investigative demand or similar legal process, the party so compelled shall give
prompt notice to the other party so that such party may seek an appropriate
protective order and/or take any other action. In the event that a protective
order is not obtained, or that a party waives compliance with the agreements
contained herein, the other party (a) may disclose to the tribunal or other
person the specific Confidential Information or other information that, in the
written opinion of counsel for such disclosing party (a copy of which shall be
promptly delivered to the non-disclosing party), the disclosing party is
15
16
legally required to disclose, and (b) will exercise best efforts to obtain
assurance that confidential treatment will be accorded to any such disclosed
Confidential Information.
(iv) In the event that this Agreement is not
consummated, Buyer shall return to Seller, and Seller shall return to Buyer,
within ten (10) business days following such termination, any and all written
Confidential Information of the other party, including any copies thereof; and
neither Buyer nor Seller shall disclose or use for its own purposes any
Confidential Information of the other party for a period of three (3) years
following such termination.
(v) The parties acknowledge that it would be
difficult to measure damage to one party from any breach of any of the
agreements contained in this Section 8.3, that injury to a party from any such
breach would be difficult to calculate, and that money damages therefore would
be an inadequate remedy for any such breach. Accordingly, if one party breaches
any of the agreements in this Section 8.3, the non-breaching party shall be
entitled, in addition to any other remedies they may have, to equitable relief,
including injunctions, specific performance or other appropriate orders to
restrain any such breach, without showing or proving any actual damage
sustained.
(vi) Communications; Publicity; Notices. No
communications, press releases, public announcements or publicity shall be made
by either party concerning this Agreement or the transactions contemplated
hereby prior to the Closing; provided, that either party may make any disclosure
of information that is required by applicable law or regulation or as set forth
under Section 8.3(i), and further provided, Seller consents to Buyer issuing a
press release regarding the consummation of the transactions contemplated by the
Agreement following the Closing.
8.4 Settlement of Certain Obligations. No later than ninety
(90) days following the Closing Date, Seller or the Shareholders shall pay off,
settle and satisfy the obligations under the contracts entered into with (i) RHI
Consulting, (ii) ConsultNet, and (iii) Excel Professional Services, and provide
to Buyer an executed Settlement and Assignment Agreement from each of the
aforementioned parties in a form reasonably satisfactory to the Buyer. If after
ninety (90) days following the Closing Date, Seller has not satisfied its
obligations under this Section 8.4, then Buyer may, without any further notice
to Seller or the Shareholders, and without complying with the provisions of
Section 9 hereto, use the cash known as the Fourth Escrow Fund to satisfy
Seller's obligations hereunder. If at any time during the 90 days from the date
hereof or thereafter, Seller (and not Buyer) shall have satisfied its
obligations under this Section 8.4 with respect to any vendor listed above to
the reasonable satisfaction of Buyer, then Buyer upon receiving a written
request from Seller, within five (5) days, shall pay Seller in cash the amount
of (i) $17,100 with respect to RHI Consulting, (ii) $13,300 with respect to
ConsultNet, and (iii) $3,400 with respect to Excel Professional Services.
8.5 Specified Employee Payments. No later than ten (10) days
following the Closing Date, Seller shall have paid the obligations payable to
the Specified Employees in the amounts set forth on Schedule 6.11, including any
and all withholding taxes related to such payments (the "Specified Employee
Payments"). If after ten (10) days following the Closing Date, Seller has not
satisfied its obligations under this Section 8.5, then Buyer may, without any
16
17
further notice to Seller or the Shareholders, and without complying with the
provisions of Section 9 hereto, use the cash known as the Second Escrow Fund to
satisfy Seller's obligations hereunder. If at any time during the ten (10) days
from the date hereof or thereafter, Seller (and not Buyer) shall have satisfied
its obligations under this Section 8.5 to the reasonable satisfaction of Buyer,
then Buyer, upon receiving a written request from Seller shall within five days
pay to Seller the cash know as the Second Escrow Fund.
8.6 WebMethods Agreement. Seller and Buyer agree that Buyer
shall have up to nine months to determine if the technical components, licenses
and other applicable information (collectively, the "webMethods Intellectual
Property") contained in, and the subject of, the webMethods Professional
Services Agreement dated July 7, 2000 is necessary for Buyer's use of the
Acquired Assets. If Buyer determines in its sole discretion that it wants to
acquire the webMethods Intellectual Property, then Buyer, without any further
notice to Seller or the Shareholders and without complying with the provisions
of Section 9 hereto, may use the cash known as the Third Escrow Fund to acquire
the rights to the webMethods Intellectual Property. Upon Buyer's acquisition of
the webMethods Intellectual Property, it shall provide to Seller a written
receipt of Buyer's payment to webMethods for the webMethods Intellectual
Property. If within nine (9) months from the date hereof Buyer does not
determine in its sole discretion to acquire the webMethods Intellectual
Property, then it shall pay the cash known as the Third Escrow Fund to Seller
within 5 days from the date that is nine (9) months from the date hereof.
8.7 Equipment Lease Payment. At the Closing and in addition to
the Purchase Price, Buyer shall pay to Seller in cash the sum of Seven Thousand
Seven Hundred Ninety-Two Dollars ($7,792) (the "Equipment Lease Payment"),
payable in immediately available funds by check or wire transfer and payable in
accordance with the wiring instructions set forth on Schedule 2.1. Within three
days of Closing, Seller shall use the cash known as the Equipment Lease Payment
to pay Seller's obligations for the month of February, 2001 under the "Lease
Agreements" as set forth on Schedule 6.7 attached hereto, and provide Buyer with
a receipt of such payment.
8.8 Payroll and Related Obligations. At the Closing and in
addition to the Purchase Price, Buyer shall pay to Seller the obligations
payable to the Seller's employees for the five business days included in the
period from January 29, 2001 through February 2, 2001 in the amount of Twenty
Thousand Five Hundred Sixty-nine Dollars and Forty-nine Cents ($20,569.49) as
set forth on Schedule 6.11 attached hereto (the "Payroll Expenses"), payable in
immediately available funds by check or wire transfer and payable in accordance
with the wiring instructions set forth on Schedule 2.1, and Seller shall pay the
Payroll Expenses immediately after the Closing.
8.9 Additional Accounts Receivable. After the Closing, Buyer
shall make commercially reasonable efforts to (i) enter into maintenance and
service agreements with the parties listed on Schedule 8.9 attached hereto, and
(ii) obtain release agreements which release Seller from its obligations to such
parties. Seller shall hold on behalf of Buyer any current accounts receivable
and related cash and related amounts received from such parties after the
Closing with respect to such accounts receivable (the "Accounts Receivable
Funds"). Seller shall transfer and deliver to Buyer all amounts held as the
Accounts Receivable Funds upon Buyer entering into the agreements listed in (i)
and (ii) above, and providing verification thereof to
17
18
Seller. In the event Buyer is unable to enter into satisfactory agreements with
the parties listed on Schedule 8.9, Buyer shall not be liable for any liability
or obligation to any of the parties listed on Schedule 8.9. In the event Buyer
enters into the agreements listed in (i) above, Buyer will transfer to Seller,
within three (3) days of receipt thereof, thirteen percent (13%) of all amounts
collected under such agreements attributable to the delivery or provisioning of
ProMax (or any derivative thereof).
9. INDEMNIFICATION.
9.1 Survival of Representations, Warranties and Covenants. The
representations and warranties, covenants and other agreements set forth in this
Agreement shall survive the consummation of the transactions contemplated hereby
for the duration of the Indemnification Period (as defined in Section 9.6).
9.2 Indemnification by Seller and Shareholders.
(a) Subject to Section 9.6, Seller and each
Shareholder, severally and not jointly, shall indemnify, defend and hold
harmless Buyer from and against, and shall reimburse Buyer against and in
respect of, any and all claims, charges, suits, demands, losses, costs,
expenses, obligations, liabilities, damages, remedies, interest, penalties and
reasonable attorneys' fees and expenses (collectively, "Losses"), that Buyer
shall incur or suffer and that arise from (i) any breach or inaccuracy of any of
Seller's or any Shareholder's representations and warranties contained in
Section 6; (ii) any failure by Seller or Shareholders to perform or comply with
any covenant or agreement contained in this Agreement or any Exhibit or Schedule
to this Agreement; or (iii) any other liabilities or obligations of Seller other
than those expressly assumed by Buyer pursuant to this Agreement that Buyer
becomes obligated to pay.
(b) No due diligence or other investigation made by
or on behalf of Buyer with respect to Seller, the Acquired Assets or the
Business shall be deemed to affect Buyer's reliance on the representations,
warranties, covenants and agreements made by Seller or any Shareholder herein,
and shall not be deemed to be a waiver of Buyer's rights to indemnity or
reimbursement as herein provided.
9.3 Indemnification by Buyer. Subject to Section 9.6, Buyer
shall indemnify, defend and hold harmless Seller from and against, and shall
reimburse Seller against and in respect of, any and all Losses, that Seller
shall incur or suffer and that arise from (a) any breach or inaccuracy of any of
Buyer's representations and warranties contained in Section 7; (b) any failure
by Buyer to perform or comply with any covenant or agreement contained in this
Agreement or any Exhibit or Schedule to this Agreement; (c) Buyer's ownership,
use or operation of the Acquired Assets after the Closing (other than Losses for
which Seller would be required to indemnify or reimburse Buyer under Section
9.2); (d) any liability or obligation expressly assumed by Buyer pursuant to
this Agreement including without limitation, any liability assumed under Section
1.2; (e) any claim for technical support and/or maintenance obligations made by
those parties to the contracts listed as "Excluded Contracts" on Schedule 1.1(e)
attached hereto, or (f) any claim arising under the Statements of Work dated
April 6, 2000 and May 22, 2000 which relate to and arise under the Saillant
Vendor Service Agreement, dated April 6, 2000.
18
19
9.4 Claims for Indemnification.
(a) A party seeking indemnification hereunder (the
"Indemnitee") shall give to the party from which indemnification is sought (the
"Indemnitor") written notice (a "Claim Notice") of any claim which is subject to
the indemnity obligations set forth in this Agreement, with sufficient
promptness so as not to prejudice the Indemnitor's interests in respect of such
claim and any obligation of indemnity arising therefrom. The Claim Notice shall
set forth, to the best of the Indemnitee's knowledge, all facts and other
information with respect to the claim, including without limitation the
anticipated amount of Losses or reasonable estimate thereof. The failure to give
prompt notice shall not affect the rights of the Indemnitee to indemnity
hereunder, except to the extent that such failure either shall have materially
prejudiced the Indemnitor in the defense of such claim or shall have materially
increased the amount of the obligation of the Indemnitor. The Indemnitor
receiving a Claim Notice may object to such Claim Notice by delivering written
notice of such objection to the Indemnitee within fifteen (15) days after
receipt of the applicable Claim Notice. If the Indemnitor does not timely object
to a Claim Notice in accordance with paragraph (b) of this Section 9.4, the
Indemnitor shall, within thirty (30) days after receipt of the Claim Notice,
either (i) pay the amount of the claim set forth in the Claim Notice, if a
monetary amount is involved, in accordance with this Section 9, or (ii) if a
claim of a third party is involved, have the right to assume the defense of such
claim. The Indemnitor shall have the exclusive right to conduct and control,
through counsel of its own choosing, the defense of any such claim or any action
arising therefrom; provided, that in conducting the defense of any such claim or
action, the Indemnitor shall, and shall cause its counsel to, consult with the
Indemnitee and counsel, if any, selected by it, and shall keep such counsel, if
any, and the Indemnitee fully advised of the progress thereof. If the Indemnitor
fails or refuses to assume the defense and control of the defense of any such
claim or action, then the Indemnitee shall conduct and control such defense;
provided, that in conducting the defense of any such claim or action, the
Indemnitee shall, and shall cause its counsel to, consult with the Indemnitor
and counsel, if any, selected by it, and shall keep such counsel, if any, and
the Indemnitor fully advised of the progress thereof. So long as the Indemnitor
is conducting the defense of any third party claim in accordance with this
Section 9.4(a), (i) the Indemnitee may retain separate co-counsel at its sole
cost and expense and participate in the defense of the third party claim, (ii)
the Indemnitee will not consent to the entry of any judgment or enter into any
settlement with respect to the third party claim without the prior written
consent of the Indemnitor (such consent not to be withheld unreasonably) and
(iii) the Indemnitor will not consent to the entry of any judgment or enter into
any settlement with respect to the third party claim without the prior written
consent of the Indemnitee (such consent not to be withheld unreasonably and such
consent not to be withheld at all if the judgment or settlement contains a full
release reasonably satisfactory to the Indemnitee.)
(b) An Indemnitor may object to a Claim
Notice by delivering written notice to the Indemnitee (an "Objection") within
fifteen (15) days after the receipt of the applicable Claim Notice. If an
Objection has been made, the Indemnitor shall not be required to make any
payments under this Section 9 until such Objection is resolved under the terms
of this paragraph (b) of Section 9.4. Once an Objection has been made, the
Indemnitor and Indemnitee shall attempt in good faith to agree upon the rights
of the respective parties with respect to the claim or claims relating to the
Claim Notice. Any such agreement shall be set forth in a written memorandum
signed by both parties. If the parties cannot come to such agreement within
fifteen
19
20
(15) days after receipt by the Indemnitee of the Objection, the matter shall be
resolved by submission to arbitration in Scottsdale, Arizona. Except as
specifically provided in this paragraph (b), such matter shall be resolved in
accordance with the commercial arbitration rules of the American Arbitration
Association then in effect (the "AAA Rules"), by a single arbitrator mutually
selected by the Indemnitor and Indemnitee. The arbitrators shall be governed by
and shall apply the substantive law of the State of Arizona and the Federal
Rules of Evidence in making their determination, and such determination shall be
conclusive and binding upon the Indemnitor and Indemnitee. Any judgment upon an
award rendered by the panel of arbitrators may be entered in any court having
jurisdiction over the subject matter thereof. If any party initiates an action
(other than arbitration under this section 9.4) asserting claims subject to
arbitration under this Section 9, and another party successfully stays or
dismisses such action and/or compels arbitration of said claims, the party
filing said action shall pay the other party's costs and expenses reasonably
incurred in seeking such stay, dismissal and/or compelling arbitration,
including reasonable attorney's fees.
9.5 Settlements. Except as otherwise provided in Section
9.4(a), no settlement of any claim for which indemnification is sought hereunder
shall be made without the prior written consent of both the Indemnitor and the
Indemnitee, which consent shall not be unreasonably withheld or delayed.
9.6 Limitations. Not withstanding anything to the contrary in
this Agreement: No claim for indemnification shall be made by an Indemnitee
under this Section 9, unless and until the aggregate of all Losses subject to
indemnification exceeds $25,000, and then Losses include the entire $25,000.
(a) The aggregate liability of either party to the
other party shall be the Net Proceeds as determined and in accordance with
Section 9 (d) below.
(b) The indemnification obligations provided under
this Section 9 shall not apply to any Losses which are incurred or imposed after
October 31, 2001 and the representations and warranties hereunder shall expire
on October 31, 2001 (the period starting on the Closing Date and ending on
October 31, 2001 being the "Indemnification Period").
(c) Absent the commission of fraud by any of the
parties in connection with the transactions contemplated by this Agreement, the
foregoing indemnification provisions in this Section 9 will be the exclusive
remedy for any breach of the representations and warranties set forth in this
Agreement.
(d) The obligations of any of the Shareholders to
indemnify Buyer under this Section 9 shall not exceed, in the case of any such
Shareholder, the sum of (x) the actual amount received by such Shareholder out
of the Purchase Price as a result of the transactions contemplated by this
Agreement, less (y) the sum of any amounts paid in good faith by such
Shareholder (i) on account of any liability or obligation of Seller, (ii) to
facilitate the payment of any such liabilities or obligations of Seller (even if
such expenses are incurred after the Closing), or (iii) in connection with
defending claims brought against such Shareholder in its capacity as a director
and/or a secured creditor of the Company (such sum being the "Net Proceeds"),
provided, however, that neither Seller nor any Shareholder knows of any payments
20
21
Seller owes to any Shareholder, or to any related party of Shareholder, in an
aggregate amount which exceeds $50,000 other than those amounts owed by Seller
to the Shareholders as evidenced by the security interests listed on Schedule
4.10 attached hereto, on the date hereof. To facilitate the determination of
"Net Proceeds" hereunder, Seller and the Shareholders agree to provide to Buyer
an accounting and itemization of the amounts paid by Seller and/or the
Shareholders under this Section 9.6(d), if Buyer submits a claim under this
Section 9. In addition, the maximum amount of Losses payable by a single
Shareholder under this Section 9 shall not exceed the amount of such Losses,
multiplied by a fraction, the numerator of which is the Net Proceeds received by
such Shareholder and the denominator is the Net Proceeds received by all of the
Shareholders, as determined as of any date on which Losses are paid.
(e) All indemnification payments under this Section 9
shall be deemed adjustments to the Purchase Price.
(f) Amounts needed to cover any indemnification
claims resolved in favor of Buyer under this Section 9 during the
Indemnification Period will be paid to Buyer first out of the cash comprising
the First Escrow Fund, escrowed pursuant to Section 2.2 of this Agreement and in
accordance with the terms of this Section 9. Seller and each of the Shareholders
will have several personal liability for any additional amounts not covered by
the First Escrow Fund needed to cover such claims in accordance with this
Section 9, which amounts will be paid directly to Buyer. At the end of the
Indemnification Period amounts that may be needed to cover pending
indemnification claims made by Buyer, in accordance with the provisions of this
Section 9, will be retained in the First Escrow Fund until such claims are
resolved, and any excess of such retained amounts on deposit in the First Escrow
Fund will be distributed to Seller immediately. Nothing in this Section 9 will
be construed to limit Buyer's right to indemnification to amounts on deposit in
the First Escrow Fund. Any disputes concerning the First Escrow Fund will be
settled by arbitration as provided in Section 9.4(b).
(g) Notwithstanding any other provision of this
Agreement, in no event will any party be entitled to recover any consequential,
indirect, punitive or exemplary damages, or damages attributable to lost
profits.
10. MISCELLANEOUS.
10.1 Amendment. The parties hereto may amend this Agreement at
any time or from time to time, but only by written instrument duly authorized
and executed by each of them.
10.2 Waiver. No waiver of any term, provision, or condition of
this Agreement, whether by conduct or otherwise, in any one of more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such term, provision, or condition or of any other term, provision, or condition
of this Agreement.
10.3 Severability. If any one or more of the provisions
contained in this Agreement is held for any reason to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof and this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
21
22
10.4 Entire Agreement. This Agreement, together with the
Schedules and Exhibits attached hereto, represents the entire agreement between
the parties with respect to the subject matter hereof and supersedes any and all
prior agreements, understandings and discussions with respect thereto from Buyer
to Seller.
10.5 Successors; Assigns. Neither party shall, without the
prior express written consent of the other party, which consent shall not be
unreasonably withheld or delayed, assign this Agreement in whole or in part,
provided, however, that this Agreement may be assigned by Buyer without Seller's
consent in the event of a merger, tender offer, sale of assets or similar
transaction in which Buyer is not the surviving entity. All terms and provisions
of this Agreement shall be binding upon and inure to the benefit of and be
enforceable by and against the respective successors and permitted assigns of
the parties hereto. Nothing in this Agreement, expressed or implied, is intended
to confer upon any person, other than the parties hereto and their respective
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement.
10.6 Notices. All notices to a party shall be addressed to
such party at the address or facsimile set forth below or to such other place as
may be designated by written notice to the other party. Notice shall be deemed
received (a) immediately upon being delivered, when delivered by hand; (b) upon
receipt of confirmation, when sent by facsimile with the original thereof sent
by first-class mail, postage prepaid; (c) three (3) business days after being
sent by certified mail, postage prepaid, return receipt requested; or (d) upon
receipt of proof of delivery, when delivered by a private courier. For purposes
hereof, the addresses of the parties shall be as follows:
Seller: Zapotec Software, Inc.
1726 Cole Boulevard, Suite 250
Golden, Colorado 80401
Attention: President
Facsimile: (303) 216-2086
With a copy to: Charles Dill
General Partner
Gateway Associates
8000 Maryland Avenue
Suite 1190
St. Louis, MO 63105
Buyer: JDA Software Group, Inc.
General Counsel
14400 North 87th Street
Scottsdale, Arizona 85260-3649
Telephone: (480) 308-3000
Facsimile: (480) 308-4268
22
23
With a copy to: Gray, Cary, Ware & Freidenrich LLP
100 Congress Avenue, Suite 1440
Austin, Texas 78701
Attention: Paul E. Hurdlow
Telephone: (512) 457-7000
Facsimile: (512) 457-7070
10.7 Governing Law; Jurisdiction. This Agreement shall in all
respects be construed, enforced, and given effect according to the laws of the
State of Delaware without reference to principles of conflicts of laws. Each of
the parties hereby submits to the exclusive jurisdiction and venue of the state
and federal courts in and for the State of Delaware for purposes of any legal or
equitable action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court, except as provided in Sections 9.4 and 9.6(f).
Each of the parties hereby waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought.
10.8 Captions; Headings. The captions and headings in this
Agreement are for convenience and reference purposes only and shall not be
considered a part of or affect the construction or interpretation of any
provision of this Agreement.
10.9 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Facsimile
signatures will be deemed to be original signatures for all applicable purposes.
10.10 Fees and Expenses. Except as set forth in this Section
10.10, each party to this Agreement shall pay amounts payable in respect of
legal, accounting and financial advisory services provided by outside advisors
and other out-of-pocket expenses incurred incident to the negotiation,
preparation and carrying out of this Agreement, the transactions and other
agreements and documents contemplated herein and therein (with respect to each
party, "Expenses") whether or not the transactions contemplated in this
Agreement are consummated.
10.11 General Terms. As used in this Agreement, the terms
"herein," "herewith," and "hereof" are references to this Agreement and
references to a "Section," "subsection," "Exhibit," or "Schedule" shall mean a
Section, subsection, Exhibit, or Schedule of this Agreement, unless the context
requires otherwise. All references to a given agreement, instrument or other
document shall be a reference to that agreement, instrument or other document as
modified, amended, supplemented and restated through the date as of which such
reference is made, and reference to a law includes any amendment or modification
thereof. Any references to this Agreement shall include the Exhibits and
Schedules hereto.
[Signature Page Follows]
23
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth in the Preamble hereto.
JDA Software Group, Inc.,
a Delaware corporation
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
Zapotec Software, Inc.
a Delaware corporation
By:
--------------------------------------------------
Name: Jennifer French
Title: President
-----------------------------------------------------
Jennifer French
Gateway Associates/Charlie Dill
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
Wolf Ventures/David Wolf
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
Greenwood Gulch Ventures/Don Rosenkrans
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
[Signature Page to Asset Purchase Agreement]
24
25
JVB Private Equity, LLC
By:
-------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
[Signature Page to Asset Purchase Agreement]
25