EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AUTODESK, INC.,
AUTODESK DEVELOPMENT B.V.,
AUTODESK GmbH,
GENIUS CAD SOFTWARE GmbH, AND
DR. GEORG BAUMANN
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TABLE OF CONTENTS
Page
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Section 1- The Acquisition 9
1.1 Purchase of Assets.............................................................. 9
1.2 Retained Assets................................................................. 11
1.3 Assumption of Liabilities....................................................... 11
1.4 Risk of Loss.................................................................... 11
1.5 Consideration for Assets........................................................ 11
1.6 Allocation...................................................................... 13
1.7 Closing......................................................................... 13
1.8 Employees....................................................................... 16
Section 2 - Representations and Warranties of Genius and Dr. Baumann 17
2.1 Organization of Genius.......................................................... 18
2.2 Genius Capital Structure........................................................ 18
2.3 Subsidiaries.................................................................... 18
2.4 Authority; Consents............................................................. 18
2.5 Genius Financials............................................................... 19
2.6 No Undisclosed Liabilities...................................................... 19
2.7 No Changes...................................................................... 20
2.8 Tax and Tax Returns and Audits.................................................. 21
2.9 Restrictions on Business Activities............................................. 22
2.10 Title of Properties; Absence of Liens and Encumbrances; Condition of Equipment.. 22
2.11 Intellectual Property........................................................... 22
2.12 Assignment of Baumann Licensed Materials........................................ 24
2.13 Agreements, Contracts and Commitments........................................... 25
2.14 Interested Party Transactions................................................... 27
2.15 Governmental Authorization...................................................... 27
2.16 Litigation...................................................................... 27
2.17 Accounts Receivable............................................................. 28
2.18 Environmental Matters........................................................... 28
2.19 Brokers' and Finders' Fees; Third Party Expenses................................ 29
2.20 Labor Matters................................................................... 29
2.21 Insurance....................................................................... 29
2.22 Compliance with Laws............................................................ 29
2.23 Complete Copies of Materials.................................................... 29
2.24 Materials and Parts............................................................. 30
2.25 Inventories..................................................................... 30
2.26 No Insolvency................................................................... 30
2.27 Representations Complete........................................................ 30
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TABLE OF CONTENTS
(continued)
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Section 3 - Representations and Warranties of Autodesk................................. 31
3.1 Organization, Standing and Power................................................ 31
3.2 Authority....................................................................... 31
3.3 Consents........................................................................ 32
3.4 Cash Consideration.............................................................. 32
3.5 Non-Contravention; Consents..................................................... 32
3.6 Representations Complete........................................................ 32
3.7 No Insolvency................................................................... 32
3.8 Complete Copies of Materials.................................................... 32
3.9 Due Diligence Examination....................................................... 32
Section 4 - Conduct Prior to the Closing Date.......................................... 33
4.1 Conduct of Business of Genius and Dr. Baumann................................... 33
4.2 Special Exceptions.............................................................. 35
4.3 No Solicitation................................................................. 35
4.4 European Cartel Filings......................................................... 36
Section 5 - Additional Agreements..................................................... 36
5.1 Genius' Shareholder Approval.................................................... 36
5.2 Access to Information........................................................... 36
5.3 Confidentiality................................................................. 37
5.4 Expenses........................................................................ 37
5.5 Public Disclosure............................................................... 37
5.6 Break-Up Fee.................................................................... 38
5.7 Consents........................................................................ 39
5.8 Best Efforts.................................................................... 40
5.9 Notification of Certain Matters................................................. 40
5.10 Additional Documents and Further Assurances..................................... 40
5.11 Tax Returns..................................................................... 40
5.12 Payment of Taxes................................................................ 41
5.13 General Assignments............................................................. 41
5.14 Rental Agreement and Sub-Rental Agreement....................................... 41
5.15 License Back of Technology...................................................... 41
5.16 PowerParts Distribution Agreement............................................... 41
5.17 Independent Nature of the Independent/Supplemental Agreements................... 41
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TABLE OF CONTENTS
(continued)
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Section 6 - Conditions to the Acquisition and the Other Related Transactions...... 42
6.1 Conditions to Obligations of Each Party to Effect the Acquisition and the
Other Related Transactions................................................ 42
6.2 Additional Conditions to Obligations of Genius............................ 43
6.3 Additional Conditions to the Obligations of Autodesk...................... 44
Section 7 - Indemnity and Escrow................................................... 46
7.1 Indemnity and Escrow Fund................................................. 46
Section 8 - Termination, Amendment and Waiver...................................... 46
8.1 Termination............................................................... 46
8.2 Effect of Termination..................................................... 47
8.3 Amendment................................................................. 48
8.4 Extension; Waiver......................................................... 48
Section 9 - Post Closing Covenants................................................. 48
9.1 Discharge of Debts........................................................ 48
9.2 Payment of Taxes.......................................................... 48
9.3 Post-Closing Access to the Pre-Closing Books and Records of Genius........ 48
9.4 Retention of Source Code for the Genius Products on Closing............... 49
Section 10 - General Provisions.................................................... 50
10.1 Survival of Representations and Warranties................................ 50
10.2 Attorneys' Fees........................................................... 50
10.3 Notices................................................................... 50
10.4 Interpretation............................................................ 52
10.5 Counterparts.............................................................. 52
10.6 Entire Agreement.......................................................... 52
10.7 Severability.............................................................. 53
10.8 Equitable or Extraordinary Remedies....................................... 53
10.9 Other Remedies............................................................ 53
10.10 Governing Law and Arbitration............................................. 53
10.11 Rules of Construction..................................................... 55
10.12 Accounting Terms.......................................................... 55
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TABLE OF CONTENTS
(continued)
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10.13 Disclosure Schedules and Autodesk's Disclosure Schedules Updates
and the Effect Thereof/Exceptions......................................... 55
10.14 Successors and Assigns.................................................... 56
10.15 Delays, Omissions, Waivers................................................ 56
10.16 Monetary Conversion....................................................... 57
10.17 Apportionment of the Genius Assets Between the Autodesk Parties........... 57
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INDEX OF EXHIBITS
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EXHIBIT DESCRIPTION
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Exhibit A Indemnity Escrow Agreement
Exhibit A-1 Investment Guidelines
Exhibit A-2 Escrow Agent Fee Schedule
Exhibit B Assignment and Assumption Agreement
Exhibit C Bill of Sale and General Assignment of Assets
Exhibit D Assignment of Trademarks
Exhibit D-1 Trademark Assignment Listing
Exhibit E Assignment of Copyrights
Exhibit E-1 Copyright Assignment Listing
Exhibit F Summary Financial Information
Exhibit G Disclaimer of Dr. Baumann and Annette Baumann
Exhibit H Technology License Agreement
Exhibit I Autodesk Bundled Distribution Agreement
Exhibit J Sub-Rental Agreement
Exhibit K Rental Agreement
Exhibit L Approved Press Release(s)
Exhibit M Autodesk's Bring Down Certificate
Exhibit N Genius' Bring Down Certificate
Exhibit O Dr. Baumann's Bring Down Certificate
Exhibit P Non-Competition and Non-Solicitation Agreement
Exhibit Q Apportionment of the Genius Assets Between the Autodesk
Parties
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INDEX OF SCHEDULES
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Genius Schedule DESCRIPTION
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1.1(a) Intellectual Property
1.1(b) Genius Products
1.1(f) Fixed Assets
1.2 Retained Assets
1.2(a) Retained Tangible and Intangible Personal Property
1.3 Assumed Liabilities
1.6 Allocation
1.8 Employees
2.2 Capitalization
2.3 Subsidiaries
2.4 Governmental And Non-Governmental Third Party Consents
2.5 Genius Financials
2.6 Undisclosed Liabilities
2.7 No Changes
2.8(b) Tax Returns and Audits
2.9 Restrictions on Business Activities
2.10(a) Leased Real Property
2.10(b) Liens On Genius Assets
2.10(c) Equipment
2.11(a) Conflicts Involving Intellectual Property
2.11(b) Compensation For Intellectual Property
2.11(c) Ownership of Intellectual Property
2.11(d) Liens, Etc. On Intellectual Property
2.12(a) Copy of Documents Effecting the Assignment Of the Baumann
Licensed Materials to Genius
2.12(b) Compensation for Baumann Licensed Materials
2.12(c) Liens, Etc. On Baumann Licensed Materials
2.13 Agreements, Contracts And Commitments
2.14 Interested Party Transactions
2.15 Governmental Authorizations
2.16 Litigation
2.18 Environmental Liabilities, Disposal Sites and Capital
Expenditures
2.19 Brokers' and Finders' Fees; Third Party Expenses
2.20 Labor Matters
2.21 Insurance
2.22 Compliance With Laws
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ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into so
as to be effective on May 4, 1998 by and between Autodesk, Inc., a Delaware
corporation. The Swiss branch of Autodesk Development B.V., a Netherlands
corporation, and Autodesk GmbH, a German limited liability company, subject to
the limitations set forth below (jointly and severally "AUTODESK"), and Genius
CAD Software GmbH, a German limited liability company ("GENIUS"). Dr. Georg
Baumann, an individual and a citizen of the Federal Republic of Germany ("DR.
BAUMANN") is a signatory party to this Agreement only for the limited purposed
specified in Sections 1.7 (vi), 2.8, 2.11, 2.12, 2.23, 2.27, 5.6, 5.17, 7.1 and
10 of this Agreement, and for the purposes set forth in the other agreements
referred to specifically in those Sections, and for no other purpose whatsoever.
Autodesk GmbH is a signatory party to this Agreement only to the extent that the
provisions of this Agreement and the agreements contemplated herein, relate to
the fixed Genius Assets (as defined in Section 1.1 and Schedule 1.1(f)), the New
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Autodesk Employees (as defined in Section 1.8(a) and Schedule 1.8), the Sub-
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Rental Agreement (as described in Section 5.14 and Exhibit J) and the Rental
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Agreement (as described in Section 5.14 and EXHIBIT K). Where appropriate,
Autodesk GmbH shall be referred to as a distinct entity in this Agreement.
RECITALS
A. Genius is engaged in the business of developing and marketing software
products to third parties, including products which provide tools for mechanical
design professionals. The above activities of Genius shall be collectively
referred to as the "BUSINESS".
B. Autodesk and Autodesk's Board of Directors believe that it
is in the best interests of Autodesk and its shareholders, and Genius and its
Managing Directors believe that it is in the best interests of Genius and its
shareholders, that Autodesk acquire certain assets of, and assume certain of the
liabilities of Genius (the "ACQUISITION") in consideration of a cash payment by
Autodesk (as described in Section 1.5(a)) and the assumption by Autodesk of the
Assumed Liabilities (as described in Section 1.3). A portion of the funds
otherwise payable in cash by Autodesk in connection with the Acquisition shall
be placed in escrow, and the payment of such amount shall be contingent upon
certain events and conditions which are set forth in the Indemnity Escrow
Agreement (Exhibit A).
C. The parties hereto acknowledge that the primary purpose of
this Agreement is to transfer certain software technology developed and under
development by Genius which constitute a major component of the Genius Assets
(as defined in Section 1.1), and that the transfer of tangible personal property
such as computer diskettes, schematics and manuals contemplated hereby is
incidental to such primary purpose.
D. It is recognized by Autodesk that Genius will continue to operate as an
ongoing business and retains all ownership to the name "Genius".
Therefore, the parties agree as follows:
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SECTION 1
THE ACQUISITION
1.1 Purchase of Assets. On the terms and subject to the conditions set forth
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in this Agreement, Genius will sell, convey, transfer, assign and deliver to
Autodesk, and Autodesk will purchase and acquire from Genius on the Closing Date
(as defined in Section 1.7), all of the right, title and interest held by Genius
in and to all of the assets and properties of Genius (the "GENIUS ASSETS"),
excluding all right, title and interest in and to the assets and properties
specifically identified in Section 1.2 (the "RETAINED ASSETS"), free and clear
of all liens, pledges, charges, claims, security interests or other encumbrances
of any sort (collectively, "LIENS"). The Genius Assets shall include the
following, excluding the Retained Assets:
a) all worldwide patents, patent applications, copyrights, trademarks,
service marks, trade names, work titles, trade secrets, proprietary information,
technology rights and licenses, proprietary rights and processes, know-how,
research and development in progress, and any and all other intellectual
property of Genius to the fullest extent permitted by applicable law, including,
without limitation, all things authored, discovered, developed, made, perfected,
improved, designed, engineered, devised, acquired, produced, conceived or first
reduced to practice by Genius, any of its employees in the course of their
employment with Genius, or any third party consultants retained by Genius, that
are owned by Genius on the Closing Date and that pertain to or are used in the
Business, or that are relevant to an understanding or to the development of the
Business or to the performance by the Genius Products (as defined in Section
1.1(b) below) or their intended functions or purposes, whether tangible or
intangible, in any stage of development, and in each and every language in which
such materials have been developed or translated, including without limitation
enhancements, designs, technology, improvements, inventions, works of
authorship, formulas, processes, routines, subroutines, techniques, concepts,
object code, flow charts, diagrams, coding sheets, source code, listings and
annotations, programmers' notes, manuals, information, work papers, work product
and other materials of any types whatsoever, and all rights of any kind in or to
any of the foregoing (collectively, the "INTELLECTUAL PROPERTY") used or held
for use in the Business. All such patent applications, patents issued,
copyrights, trademarks, service marks and trade names, whether registered or
not, are listed on Schedule 1.1(a) hereto. The Intellectual Property conveyed
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to Autodesk hereby shall also include all technology previously held by Dr.
Baumann and assigned to Genius which is described in Section 2.12, including all
materials within the definition of Intellectual Property above, and which form
the foundation or originating code for the Genius Products, (as defined in
Section 1.1(b) below);
b) all worldwide rights and ownership of all existing software products of
Genius in each and every language in which such products have been developed or
translated (the "GENIUS PRODUCTS"), consisting of those listed software products
of Genius on Schedule 1.1(b), any other computer programs developed or under
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development by Genius, all copies of the Genius Products (including revisions
and updates in process), and all technical, design, development, installation,
operation and maintenance information concerning the Genius Products, including
source code, source documentation, source listings and annotations, engineering
notebooks, test data and test results, as well as all reference manuals and
support materials normally distributed to end-users and potential end-users in
connection with the distribution;
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c) all of Genius' claims against any parties relating to any right,
property or asset included in the Genius Assets, or against any party to a
Contract (as defined in Section 2.13 below), including without limitation,
unliquidated rights under manufacturers' and vendors' warranties or guaranties.
Notwithstanding the foregoing, Genius shall not assign any claims against Dr.
Baumann or Annette Baumann other than as expressly set forth in this Agreement,
nor shall Genius assign any right of offset or counterclaim which may arise
because of the defense or indemnification of Autodesk by Genius;
d) all of Genius' rights under the Contracts (as defined in Section 2.13)
effective upon receipt of whatever third party consents or approvals as may be
required under the terms of such Contracts;
e) all inventory of Genius Products wherever located, owned by Genius,
except for inventory corresponding to orders invoiced by Genius prior to
Closing:
f) the fixed Genius Assets, equipment and supplies, of Genius described on
Schedule 1.1(f) including prepayments and deposits related thereto (if any).
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Autodesk and Genius shall employ best efforts to mutually agree upon the
disposition of office supplies and other operation assets not otherwise
specifically identified on Schedule 1.1(f) in such a way as to allow Autodesk
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and Genius to continue with uninterrupted operation of their respective
businesses;
g) all customer, dealer, end user and product data relating to the Genius
Products, including customer registration databases, sales records, marketing
materials, strategic plans, internal communications, trade secrets, and other
forms of proprietary or confidential information relating to the Genius Products
worldwide whether in the possession of Genius or any of its subsidiaries or
affiliates;
h) any and all materials involved in the development, correction,
enhancement, sale, marketing, translation, support, compilation, packaging
and/or distribution of Genius Products which are not otherwise covered in the
description of Intellectual Property above;
i) a worldwide, non-exclusive royalty-free license to the order processing
software developed internally by Genius as of the Closing Date (i.e. no updates
but including bug fixes as mutually agreed) based upon the Poet database, for
Autodesk's own use for the distribution of the Genius Products only and not for
further distribution to resellers or other end users;
j) Genius' grant of a worldwide, non-exclusive, royalty free perpetual
license to use of the trade names, trademarks and work titles "GENIUS",
"GENICAD", and "IMAGINATION WORLD" solely in conjunction with the packaging,
marketing, sale, distribution and delivery of the Genius Products by Autodesk to
its customers for the currently shipping versions of the Genius Products as set
forth in Schedule 1.1(b). Other than the license granted in this Section
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1.1(j), and the trademarks, service marks and trade names assigned to Autodesk
in accordance with Exhibit D (Trademark Assignment) and Exhibit E (Copyright
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Assignment), Genius shall retain without any further restriction all rights to
the name "GENIUS"; and
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k) With regard to the Genius Assets, on Closing and delivery of the Genius
Assets to Autodesk, except as expressly set forth in the Exhibit H (Technology
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License Agreement) and except for business records which pertain to both the
Genius Assets and the Retained Assets or which are necessary to ensure
compliance with tax law and other regulatory requirements (in which case Genius
shall retain the original and Autodesk at its expense shall make a copy), Genius
and Dr. Baumann (as to the Baumann Licensed Materials) shall destroy any and all
copies of any and all of the Genius Assets in its possession, including, without
limitation, copies of the Genius Products, the Intellectual Property and all of
the materials referred to in Section 1.1(g) above.
1.2 Retained Assets. The parties hereto agree that Genius shall retain
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ownership of all right, title and interest in and to those assets identified on
Schedule 1.2 and Schedule 1.2(a).
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1.3 Assumption of Liabilities. Autodesk shall assume only those liabilities or
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obligations expressly identified in Schedule 1.3, and only to the extent
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identified therein (collectively "ASSUMED LIABILITIES"). Autodesk shall not
assume any other liabilities or obligations of Genius whether accrued, absolute,
contingent, matured, unmatured or other. Except as expressly set forth below in
Section 1.5(c) or Section 1.5(d), it is expressly agreed that Autodesk shall not
assume any liabilities or obligations for employment, social security, value
added, income, sales, property or other taxes incurred or accrued by Genius.
Genius will indemnify and hold Autodesk harmless from and against any and all
losses, costs, expenses, claims, liabilities, deficiencies, judgments and
damages incurred or suffered by Autodesk or any of its affiliates related to or
arising out of any liabilities or obligations of Genius including those incurred
by operation of law, except for those liabilities or obligations expressly
assumed by Autodesk in this Section 1.3 or as expressly set forth elsewhere in
this Agreement and related agreements.
1.4 Risk of Loss/Insurance. In the event any of the Genius Assets are
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unavailable for delivery to Autodesk on the Closing Date as a result of risks
for which such Genius Assets were insured by Genius, Autodesk may require Genius
to deliver to Autodesk assignments of such Genius' rights under its insurance
policies, if any, applicable to such Genius Assets and to close on that basis.
Genius hereby agrees to make such assignment of rights if Autodesk so elects.
1.5 Consideration for Assets.
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As consideration for the sale of the Assets to Autodesk (the
"CONSIDERATION"), in addition to the assumption of the Assumed Liabilities
provided by Section 1.3, Autodesk shall pay Genius as follows:
a) PAYMENT. At the Closing, on the terms and subject to the conditions
set forth in this Agreement, Autodesk shall pay to Genius by wire transfer of
next day funds (any and all documents required to be delivered at Closing under
Section 1.7(b) below shall not be deemed delivered for all purposes of this
Agreement until such funds are deposited in Genius' account and until the funds
that are required to be wired to the Escrow Agent by Autodesk pursuant to
Section 1.5(b) are deposited in the Escrow Agent's account) of the Deutschmark
equivalent of the following US dollar amounts using the Spot Exchange Rate for
that date (i.e., not any forward looking exchange rate) as published in the Wall
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Street Journal on the later of May 1, 1998, or the date three (3) Business Days
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prior to Closing ("CLOSING EXCHANGE RATE") less the amount of said cash
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portion of the Consideration which is to be held in escrow pursuant to Section
1.5(b) below:
(i) if the Closing Exchange Rate is DM 1.8100/1 US Dollar or higher,
the payment shall be equal to US-$ 68.000.000,--
(ii) if the Closing Exchange Rate is from DM 1.8100 down to 1.7838/1
US Dollar the payment shall be equal to:
US-$ 68.000.000,--
x ( 1 + ( 1.81 - Closing Exchange Rate ))
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Closing Exchange Rate
(iii) if the Closing Exchange Rate is less than DM 1.7838/1 US
Dollar: the payment shall be equal to US-$ 69.000.000.
b) Escrow Account. Five percent (5%) of the cash portion of the
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Consideration as determined above in Section 1.5 (a) shall be paid at Closing by
the wire transfer of next day funds into an escrow account which is designated
by the Escrow Agent in accordance with the terms of the Indemnity Escrow
Agreement attached hereto as Exhibit A.
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c) Value Added Tax. Autodesk shall pay to Genius the applicable German or
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other value added tax ("VAT") payable by with respect to the Acquisition and
other transactions contemplated herein no later than one (1) week before such
VAT is due and payable, provided that Genius no later than two (2) weeks before
the date such payment is due shall have submitted to Autodesk a properly
prepared invoice specifying the amounts of VAT estimated in good faith by Genius
to be due and the due date(s) for such VAT payment(s). Such invoice shall be
addressed to Faberstrasse 9 92224 Amberg, Germany. To the extent that Autodesk
or Autodesk's local subsidiary has a claim for a refund of VAT in the
jurisdiction in which the VAT was assessed, Autodesk shall have the right to
assign such claim to Genius no later than one (1) week before the above due date
in order to enable Genius to set off the claim so assigned against their
respective obligation to pay VAT. Upon request, Genius shall use its best
efforts to facilitate securing such assignment and set off. The parties shall
cooperate in using all methods available under governing law to minimize VAT
liability.
d) Other U.S. Taxes. Autodesk shall bear and pay and, if appropriate,
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shall reimburse Genius for, any sales taxes, use taxes, transfer taxes,
withholding taxes, documentary charges, recording fees or similar taxes,
charges, fees or expenses ("U.S. SALES TAXES") that may become payable in
connection with the sale of the Genius Assets to Autodesk imposed by the taxing
authority of, or a taxing authority within, the United States. Other than in
relation to the Allocation which shall be governed by the provisions of Section
1.6, the parties shall cooperate with each other to the extent reasonably
requested and legally permitted to minimize any such U.S. Sales Taxes.
e) Other German Taxes. Except as set forth in Section 1.5(c), Genius
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shall bear and pay and, if appropriate, shall reimburse Autodesk for any sales
taxes, use taxes, transfer taxes, withholding taxes, documentary charges,
recording fees or similar taxes, charges, fees or expenses imposed by the
Federal Republic of Germany that may become payable in connection
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with the sale of the Genius Assets to Autodesk ("GERMAN SALES TAXES"). Other
than in relation to the Allocation which shall be governed by the provisions of
Section 1.6, the parties shall cooperate with each other to the extent
reasonably requested and legally permitted to minimize any such German Sales
Taxes.
1.6 Preliminary Allocation. On or before Closing, Autodesk and Genius shall
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preliminarily agree on the manner in which the consideration referred to in
Section 1.5 is to be allocated among the Genius Assets (the "PRELIMINARY
ALLOCATION"), which Preliminary Allocation shall be as set forth in Schedule
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1.6; provided, however, that mutually acceptable modifications to the
Preliminary Allocation resulting from changes in Genius' financial position
since the Summary Financial Information (as defined in Section 2.5) shall be
permitted. The parties shall make best efforts to agree upon a final allocation
("FINAL ALLOCATION") within forty-five (45) days of Closing. To assist in such
allocation, Genius shall provide a summary listing of product inventory held by
Genius at Closing and a final listing of the fixed Genius Assets transferred to
Autodesk GmbH at Closing. The Final Allocation shall be conclusive and binding
upon Autodesk and Genius for all purposes, and the parties agree that all tax
returns and reports (including U.S. Internal Revenue Service ("IRS") Form 8594
if such form is required to be prepared and filed by a party hereto in
accordance with the provisions of the Code) and all financial statements shall
be prepared in a manner consistent with (and the parties shall not otherwise
file a tax return position inconsistent with) the Final Allocation unless they
are required to do so by the IRS, the laws of the Federal Republic of Germany or
any state or local taxing authority (in which case the parties shall attempt to
negotiate a mutually acceptable alternative). Both the Preliminary Allocation
and the Final Allocation shall be prepared in a manner consistent with Section
1060 of the U.S. Internal Revenue Code of 1986, as amended (the "CODE"), and the
income tax regulations promulgated thereunder.
1.7 Closing.
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a) Closing. Unless this Agreement is earlier terminated pursuant to
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Section 8.1, the closing of the Acquisition and the other transactions
contemplated by this Agreement (the "CLOSING") shall be held at Faberstrasse 9
92224 Amberg, Germany with facsimile copies to be delivered concurrently to
Autodesk, Inc., 111 McInnis Parkway, San Rafael, CA, at 9:00 a.m. Pacific
Daylight Time on the later of Monday, May 4, 1998 or the date which is two (2)
business days following satisfaction or waiver of the last of the conditions to
Closing as set forth in Section 6 hereof, or on such other time and/or date or
at such other place or places as to which the parties agree (the actual date on
which the Closing occurs is referred to herein as the "CLOSING DATE"). Upon the
conditional receipt of the Closing documents (including facsimile copies
thereof) as contemplated Section 1.5(a) and Section 1.7(b), Autodesk shall
deliver to Genius by facsimile the written confirmation of its bank(s) that they
have received unconditional and irrevocable instructions from Autodesk to wire
transfer, without condition and immediately, the cash portion of the
Consideration to Genius and the Escrow Agent in accordance with the instructions
that have been received by Autodesk from Genius and the Escrow Agent as
applicable.
b) Delivery. At the Closing, immediately prior to payment of the cash
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portion of the Consideration reflected in Section 1.5(a) above, with the
effectiveness of any such delivery being conditioned upon and subject to the
deposit of such cash portion of the Consideration in the accounts of Genius and
the Escrow Agent as contemplated by the provisions of Section 1.5(a):
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(i) Genius, Dr. Baumann and Autodesk shall deliver the Indemnity
Escrow Agreement in the form attached hereto as Exhibit A;
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(ii) Autodesk shall deliver to Genius the Assignment and Assumption
Agreement in the form attached hereto as Exhibit B by which Autodesk shall
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assume the Assumed Liabilities as of the Closing;
(iii) Genius shall deliver to Autodesk all bills of sale,
endorsements, assignments, consents to assignments to the extent obtained and
other instruments and documents as Autodesk may reasonably request to sell,
convey, assign, transfer and deliver to Autodesk good title to all the Genius
Assets free and clear of any and all Liens, including, a Bill of Sale and
General Assignment of Assets in the form attached hereto as Exhibit C and any
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other documents reasonably requested by Autodesk in a timely manner;
(iv) Genius shall deliver to Autodesk the Assignment of Trademarks in
the form attached hereto as Exhibit D;
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(v) Genius shall deliver to Autodesk the Assignment of Copyrights in
the form attached hereto as Exhibit E;
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(vi) Genius shall deliver or confirm the prior delivery of the
Summary Financial Information (Exhibit F) as defined in Section 2.5;
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(vii) Dr. Baumann shall deliver an agreement by which Dr. Baumann and
Annette Baumann, the spouse of Dr. Baumann disclaim for the benefit of Autodesk
the rights and interests of Dr. Baumann and/or Annette Baumann, if any
(including any and all rights based on marriage), in the Genius Assets, and
consent to the transfer of the Baumann Licensed Materials to Autodesk pursuant
to the provisions of this Agreement, in substantially the form attached hereto
as Exhibit G;
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(viii) Autodesk shall deliver to Genius a Technology License
Agreement for the licensing back to Genius of certain technology included in the
Genius Assets acquired from Genius under the terms of this Agreement, in the
form attached hereto as Exhibit H;
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(ix) Autodesk shall deliver to Genius the Autodesk Bundled
Distribution Agreement for the distribution of PowerParts in Europe, the Middle
East and Africa in the form attached hereto as Exhibit I;
---------
(x) Genius and Autodesk shall deliver to one another the Sub-Rental
Agreement in the form attached hereto as Exhibit J;
---------
(xi) Dr. Baumann and Autodesk shall deliver to one another the Rental
Agreement in the form attached hereto as Exhibit K;
---------
(xii) Genius and Autodesk shall deliver to one another the approved
press releases in the form attached hereto as Exhibit L;
---------
14
(xiii) Autodesk shall deliver to Genius, Autodesk's Bring Down
Certificate the form attached hereto as Exhibit M;
---------
(xiv) Genius shall deliver to Autodesk, Genius' Bring Down
Certificate in the form attached hereto as Exhibit N;
---------
(xv) Dr. Baumann shall deliver to Autodesk, Dr. Baumann's Bring Down
Certificate in the form attached hereto as Exhibit O;
----------
(xvi) Genius, Dr. Baumann and Autodesk shall deliver to one another
the Non-Competition and Non-Solicitation Agreement in the form attached hereto
as Exhibit P;
---------
(xvii) Genius shall deliver to Autodesk acceptable written evidence
of the necessary resolutions of its shareholders and an incumbency certificate,
and Autodesk shall deliver to Genius the acceptable written evidence of
necessary resolutions of its board of directors or such parties hereto shall
cause to be delivered to one another such other instruments and documents
necessary or appropriate to evidence the necessary authorization for the due
execution and delivery and performance of this Agreement;
(xviii) Upon the receipt of the documents set forth in Section
1.7(b)(i) through (xvii) above, the delivery of which shall be conditioned only
upon the subsequent actual receipt by Genius and the Escrow Agent of the cash
portion of the Consideration, Autodesk shall cause the cash portion of the
Consideration to be paid by the wire transfer of next day funds as set forth in
Section 1.5(a) and Section 1.5(b), and shall deliver to Genius written
confirmation of the wire transfers in accordance with Section 1.7(a).
c) Taking of Necessary Action; Further Action. If, at any time after the
------------------------------------------
Closing Date, any further action is necessary to carry out the purposes of this
Agreement and to vest Autodesk with full right, title and possession to all
Genius Assets, property, rights, privileges, powers and franchises of Genius as
set forth in this Agreement, and if such necessary action is consistent with the
other provisions of this Agreement and is lawful, Genius and Dr. Baumann, as
appropriate, shall promptly in their own names or otherwise take all such lawful
and necessary action.
1.8 Employees.
----------
a) A complete listing of all current Genius employees is set forth on
Schedule 1.8. The parties hereto acknowledge that as a result of the
- ------------
Acquisition and other transactions contemplated herein, pursuant to (S) 613a of
the German Civil Code, all rights and obligations under current employment
agreements relating to those portions of the Business being acquired by Autodesk
herein shall be assumed by Autodesk GmbH (such employees are identified on
Schedule 1.8 and referred to herein as "NEW AUTODESK EMPLOYEES"). Employees who
- ------------
are exclusively or principally employed in those parts of the Business not being
acquired by Autodesk shall not be affected by this Agreement (such persons are
identified on Schedule 1.8 and referred to herein as "NON-AUTODESK EMPLOYEES").
------------
The parties shall employ best efforts to ensure that the New Autodesk Employees
and the Non-Autodesk
15
Employees do not object to or challenge the disposition of current Genius
employees in the manner set forth on Schedule 1.8.
b) If any New Autodesk Employee should object in a legally enforceable
manner to the transfer of his or her employment to Autodesk GmbH, at the request
of Autodesk, Genius shall employ best efforts to make available to Autodesk GmbH
the services of such objecting employees on an exclusive work for hire basis up
to the maximum extent permitted by applicable law as agreed upon by the parties,
in which case Autodesk GmbH will reimburse Genius for the agreed upon salaries
and social security contributions as well as the cost of health/medical
insurance and /or other fringe/welfare benefits, ("COMPENSATION") incurred for
the period(s) during which such employee was engaged in activities on behalf of
Autodesk GmbH. Autodesk shall also reimburse Genius for severance expense
incurred in redeployment of such employee, up to three (3) months' Compensation.
c) If any Non-Autodesk Employee should claim in a legally enforceable
manner that he is an Autodesk GmbH employee under Civil Code 613a, at the
request of Genius, Autodesk shall employ best efforts to make available to
Genius the services of such objecting employees on an exclusive work for hire
basis up to the maximum extent permitted by applicable law as agreed upon by the
parties, in which case Genius will reimburse Autodesk GmbH for the agreed upon
Compensation incurred for the period(s) during which such employee was engaged
in activities on behalf of Genius. Genius shall also reimburse Autodesk GmbH
for severance expense incurred in redeployment of such employee, up to three (3)
months Compensation.
d) At Autodesk's request, Genius shall employ best efforts to make
available on an exclusive work for hire basis the employees of Genius and/or its
subsidiaries as expressly identified on Schedule 1.8 in order to assist Autodesk
------------
in sales and marketing.
e) Autodesk shall make available to Genius the services of the New
Autodesk Employees, who are identified in Schedule 1.8, so that Genius may
------------
fulfill its obligations to Thomas Publishing Company. Genius shall reimburse
Autodesk for the Compensation that is owing to such employees while they are
performing any such services for the benefit of Genius.
f) All work for hire performed in accordance with this Section 1.8 shall
be performed pursuant to a work for hire agreement which contain standard terms
for ownership of intellectual property, allocation of liability,
confidentiality, accessibility and other material terms.
g) Genius shall defend, hold harmless and indemnify Autodesk against any
claims or actions of employees arising prior to the Closing, or after Closing
with regard to the Non-Autodesk Employees, unless such obligation is expressly
assumed by Autodesk under Section 1.3 above or as set forth in Schedule 1.8.
------------
Autodesk shall defend, hold harmless and indemnify Genius against any liability
arising out of Autodesk's failure to fulfill its obligations under (S) 613a of
the German Civil Code for the period after the Closing Date.
16
SECTION 2
REPRESENTATIONS AND WARRANTIES OF GENIUS
AND DR. BAUMANN
Genius represents and warrants to Autodesk as set forth below, subject to
those exceptions that are specifically disclosed in the schedules delivered by
Genius to Autodesk (the "DISCLOSURE SCHEDULES") and dated as of the Closing
Date. Dr. Baumann, as a managing director of Genius and as a signatory party to
this Agreement, represents and warrants to Autodesk only as set forth in
Sections 2.8, 2.11, 2.12, 2.23 and 2.27 subject to those exceptions that are
specifically disclosed in the Disclosure Schedules that are delivered by Genius
to Autodesk which are dated as of or prior to the Closing Date.
For purposes of this Agreement, "MATERIAL ADVERSE EFFECT" shall be defined
as a material adverse effect on: (a) the Business (other than the portion
thereof which consist of the Retained Assets), (b) the Genius Assets, (c)
Autodesk's interest in the Genius Assets or use thereof following the Closing or
(d) the financial condition or results of operations of Genius prior to Closing.
For purposes of this Agreement, the phrases "TO THE KNOWLEDGE OF GENIUS",
"TO GENIUS' KNOWLEDGE, and/or "GENIUS HAS NO KNOWLEDGE OF" shall mean both (a)
the actual collective knowledge of Dr. Georg Baumann, Mr. Udo Siegemund and the
independently retained legal, financial and tax advisors for Genius who have
rendered material services to Genius within three (3) years of Closing, and (b)
the level of knowledge that should be held by Dr. Georg Baumann, Mr. Udo
Siegemund and such independently retained legal, financial and tax advisors for
Genius when acting as reasonable and prudent persons who are responsible for the
daily operation of a business of a similar size and nature as Genius, which
shall include facts and matters which might concern or affect the Business and
which could have been discovered through a reasonably diligent inquiry. With
regard to Dr. Baumann, acting in his capacity as an individual, the phrases "TO
DR. BAUMANN'S KNOWLEDGE", "TO THE KNOWLEDGE OF DR. BAUMANN", and/or "DR. BAUMANN
HAS NO KNOWLEDGE OF" shall mean both (c) the actual knowledge of Dr. Georg
Baumann and his independently retained legal, financial and tax advisors who
have rendered material services to Dr. Baumann within three (3) years of
Closing, and (d) the level of knowledge that should be held by Dr. Baumann and
such independently retained legal, financial and tax advisors within three (3)
years of Closing, when acting as reasonable and prudent persons acting under
similar circumstances, which shall include facts and matters concerning the
relevant affairs of Dr. Baumann which could have been discovered through a
reasonably diligent inquiry.
2.1 Organization of Genius. Genius is a limited liability company duly
----------------------
organized, validly existing and in good standing under the laws of the Federal
Republic of Germany. Genius has the legal power to own its property and to
carry on its business as now being conducted and as proposed to be conducted.
Other than by reason of its relationships with the subsidiaries identified on
Schedule 2.3, Genius is not duly qualified to do business or in good standing as
- ------------
a foreign corporation in any jurisdiction outside of the Federal Republic of
Germany, and any failure to be so qualified or in good standing will not have a
Material Adverse Effect as defined herein. Genius has delivered a true and
correct copy of its governing documents to Autodesk.
2.2 Genius Capital Structure. Genius' authorized and outstanding capital stock
------------------------
and the number
17
and type of outstanding securities carrying the right to acquire any of
Genius' capital stock are correctly stated in Schedule 2.2. All the
------------
outstanding shares of Genius' capital stock are duly authorized and validly
issued, fully paid and nonassessable. All outstanding securities carrying the
right to acquire any of Genius' capital stock issued by Genius are validly
outstanding, and the shares of Genius' capital stock reserved for issuance upon
the exercise thereof are duly authorized and, upon issuance in accordance with
the terms thereof (including due payment of the exercise price set forth
therein) will be validly issued, fully paid and nonassessable. Except as set
forth in Schedule 2.2, there are no securities of Genius issued or outstanding,
------------
and there are no options, calls, subscriptions, warrants, rights, agreements or
commitments of any character obligating Genius, contingently or otherwise, to
issue shares of its capital stock or the capital stock in any of its
subsidiaries or to register shares of its capital stock or the capital stock in
any of its subsidiaries under the Securities Act of 1933, or any other
applicable securities laws. Genius shall be affected in the future by the
contemplated reorganization which involves various persons who are directly or
indirectly affiliated with Genius and which is described in summary form in
Schedule 2.2.
- ------------
2.3 Subsidiaries. Except as set forth on Schedule 2.3, Genius does not have
------------ ------------
and has never had any subsidiaries or affiliated companies and does not
otherwise own and has never otherwise owned any shares of capital stock or any
equity or other form of direct ownership interest in, or control, directly or
indirectly, any other corporation, partnership, association, joint venture or
other business entity.
2.4 Authority; Consents. Genius has all requisite legal power and authority to
-------------------
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
legal action on the part of Genius. This Agreement, and all other agreements
necessary to consummate the Acquisition and other transactions contemplated
hereby, have been, or at the Closing will be, duly executed and delivered by
Genius and constitute, or at the Closing will constitute, the valid and binding
obligation of Genius enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy and similar laws, by general
principles of equity, or by laws restricting arbitration, regardless of whether
such enforceability is considered in equity, at law or in arbitration. Except
as set forth on Schedule 2.4, the execution and delivery of this Agreement by
------------
Genius does not, and, as of the Closing, the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any material
obligation or the loss of any material benefit under (any such event, a
"CONFLICT") (i) any provision of the governing documents of Genius or (ii) any
material mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Genius or its properties or Genius
Assets. To the knowledge of Genius, no consent, waiver, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other federal, state, county, local or
foreign governmental authority, instrumentality, agency or commission
("GOVERNMENTAL ENTITY") having jurisdiction over Genius or any non-governmental
third party, is required by or with respect to Genius in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for such consents, waivers, authorizations, filings,
approvals and registrations which are set forth on Schedule 2.4.
------------
18
2.5 Genius Financials. Schedule 2.5 sets forth Genius' audited balance sheet
----------------- ------------
and related statements of income for the period ending June 30, 1997, and
certain summary financial information (the "SUMMARY FINANCIAL INFORMATION")
consisting of a profit and loss statement, listings of accounts payable,
accounts receivable, the fixed Genius Assets and an inventory, which inventory
shall include a listing of Genius Products and other related materials of
Genius, such as storage media, user manuals, marketing brochures and the like,
indicating quantity and cost as recorded in the underlying financial records,
for the period July 1, 1997 through March 31, 1998, both of which have been
prepared on an accrual basis (collectively, the "GENIUS FINANCIALS"). The
Genius Financials have been prepared in good faith by Genius and reflect all the
adjustments which are in the opinion of Genius necessary for a fair presentation
of the financial position and operating results of Genius as of the date thereof
and for the interim period ending on such dates, subject to normal year-end
adjustments which will not be material.
2.6 No Undisclosed Liabilities. Except as set forth in Schedule 2.6, to the
-------------------------- ------------
extent the existence of any of the following would have a Material Adverse
Effect, Genius does not have any liability, indebtedness, obligation, expense,
claim, deficiency, guaranty or endorsement of any type, whether accrued,
absolute, contingent, matured, unmatured or other (whether or not required to be
reflected in Genius Financials in accordance with generally accepted accounting
principles which are in effect in the Federal Republic of Germany), which
individually or in the aggregate, (i) has not been reflected in the Summary
Financial Information, or (ii) has not arisen in the ordinary course of Genius'
business since July 1, 1997.
2.7 No Changes. Except as set forth in Schedule 2.7 or except as to the
---------- ------------
portion of the Business which consists exclusively of the Retained Assets, since
July 1, 1997 there has not occurred any:
a) transaction by Genius except in the ordinary course of business as
conducted on that date;
b) capital expenditure or capital commitment by Genius, either
individually or in the aggregate, exceeding US $100,000.00 excluding costs
relating in any way to this Agreement, the Acquisition, and/or the other
transactions that are contemplated hereby;
c) destruction of, damage to or loss of any Genius Assets that constitutes
a Material Adverse Effect;
d) labor trouble, claim of wrongful discharge or other unlawful labor
practice or action, or formation of a works council under German labor law;
e) declaration, setting aside or payment of a dividend or other
distribution with respect to the capital stock of Genius, or any direct or
indirect redemption, purchase or other acquisition by Genius of any of its
capital stock that may constitute a Material Adverse Effect;
f) other than in the ordinary course of business, increase in the salary
or other compensation payable or to become payable by Genius to any of its
officers, directors, employees or advisors, or the declaration, payment or
commitment or obligation of any kind for the payment, by Genius, of a
19
bonus or other additional salary or compensation to any such person (with any
such increase, declaration, payment, commitment or obligation being required to
be material in the case of employees or advisors);
g) acquisition, sale or transfer of any Genius Asset except in the
ordinary course of business as conducted on that date, or any change in
ownership of Genius;
h) amendment or termination of any material contract, agreement or license
to which Genius was/is a party or by which it was/is bound;
i) loan by Genius to any person or entity, incurring by Genius of any
indebtedness, guaranteeing by Genius of any indebtedness, issuance or sale of
any debt securities of Genius or guaranteeing of any debt securities of others
(other than short term loans for less than 10.000 DM that have been repaid in
their entirety, including loans to cover travel expenses);
j) waiver or release of any right or claim of Genius in excess of 5.000
DM, including any write-off or other compromise of any account receivable of
Genius;
k) the commencement or notice or, to the knowledge of Genius, threat of
commencement of any lawsuit or proceeding against or investigation of Genius or
its affairs, including the filing of any petition in bankruptcy, assignment for
the benefit of creditors, writ of attachment or similar action or process;
l) notice of any claim of ownership by a third party of Genius'
Intellectual Property or of infringement by Genius of any third party's
Intellectual Property rights;
m) issuance or sale by Genius of any of its shares of capital stock, or
securities exchangeable, convertible or exercisable therefor, or of any other of
its securities;
n) commercially significant change in product pricing, discount levels,
payment terms or royalties set or charged by Genius;
o) any event or condition of any character that has or could be reasonably
expected to have a Material Adverse Effect; or
p) negotiation or agreement by Genius or any officer or employees thereof
to do any of the things described in Sections 2.7 (a) through (o), other than
negotiations with Autodesk and its representatives regarding the Acquisition and
the other transactions contemplated by this Agreement.
2.8 Tax and Tax Returns and Audits.
------------------------------
a) Definition of Taxes. For the purposes of this Agreement, ("TAX") or,
-------------------
(collectively, "TAXES"), means any and all national, regional, state, city and
local taxes, assessments and other governmental charges, duties, impositions and
liabilities wherever levied or assessed, including taxes based upon or measured
by gross receipts, income, profits, sales, use and occupation, and
20
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, social security, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts and any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
entity.
b) Tax Returns and Audits. Except as set forth in Schedule 2.8(b):
---------------------- ---------------
(i) Genius has prepared and filed all national, regional, state,
city, local and foreign tax returns, estimates, information statements and
reports ("RETURNS") relating to any and all Taxes concerning or attributable to
Genius, the Genius Assets or Genius' business operations which it is required to
file, and such Returns were and are true and accurate in all material respects
and were completed in accordance with applicable law.
(ii) Genius (A) has paid all Taxes it is required to pay and (B) has
withheld with respect to its employees all Taxes required to be withheld.
(iii) Genius has not been delinquent in the payment of any Tax nor is
there any Tax deficiency outstanding, proposed or assessed against Genius.
(iv) No audit or other examination of any Return of Genius is
presently in progress, nor has Genius been notified of any request for such an
audit or other examination.
(v) Genius does not have any liabilities for unpaid and lawfully
collectible Taxes which have not been accrued or reserved against on the Genius
Financials, whether asserted or unasserted, contingent or otherwise, and Genius
has no knowledge of any basis for the assertion of any such liability
attributable to Genius, the Genius Assets or Genius' business operations.
(vi) There are (and as of immediately following the Closing there
will be) no Liens on the Genius Assets of Genius relating to or attributable to
Taxes.
2.9 Restrictions on Business Activities. Except as set forth in Schedule 2.9,
----------------------------------- ------------
and to the knowledge of Genius, there is no agreement, commitment, judgment,
injunction, order or decree binding upon Genius, the Genius Assets or any
employee of Genius which has or could reasonably be expected to have the effect
of prohibiting or materially impairing any use by Autodesk of the Genius Assets
following the Closing, or the conduct of the Business (other than the portion
thereof that consists of the Retained Assets) as currently conducted by Genius.
2.10 Title of Properties; Absence of Liens and Encumbrances; Condition of
--------------------------------------------------------------------
Equipment.
- ---------
a) Genius owns no real property nor has it ever owned any real property.
Schedule 2.10(a) sets forth a list of all real property currently leased by
- ----------------
Genius, the name of the lessor, the date of the lease and each amendment thereto
and, with respect to any current lease, the aggregate monthly rental and/or
other fees payable under any such lease. All such current leases are in full
force and effect, are valid and effective in accordance with their respective
terms, and to the knowledge of Genius there is not, under any of such leases,
any existing default or event of default (or event which with notice or lapse of
time, or both, would constitute a default).
21
b) Genius has good and valid title to all of the Genius Assets, except in
the case of leased properties in which case Genius holds valid leasehold
interests, free and clear of any Liens, except as reflected in Schedule 2.10(b).
----------------
Genius has full legal right and legal power to (and at the Closing will) sell,
convey, assign, transfer and deliver to Autodesk good title to all the Genius
Assets which it purports to own, free and clear of all Liens, except (i) for the
Assumed Liabilities, (ii) for statutory liens for Taxes not yet due, and (iii)
as reflected in Schedule 2.10(b).
----------------
c) The fixed assets identified as Schedule 1.1(f) are in good operating
---------------
condition, regularly and properly maintained, ordinary wear and tear excepted.
2.11 Intellectual Property.
---------------------
a) Genius owns a valid right, interest or license to use the Intellectual
Property being used or held for use to conduct the Business, and the conduct of
the Business currently does not conflict with and has not conflicted in the past
with the Intellectual Property rights of others except as disclosed on Schedule
--------
2.11(a). All Intellectual Property used or held for use in the conduct of the
- -------
Business which is owned by Genius, or to which Genius holds a valid license or
other right to use, is so owned or held free and clear of all Liens, and no
other person, including without limitation any present or former employee,
shareholder, officer or director of Genius, has any right whatsoever in such
Intellectual Property, other than non-transferable moral rights. Genius has the
right to convey the Intellectual Property being used or held for use to conduct
the Business, and such conveyance will not violate any of the Intellectual
Property rights of any other person or entity. Neither Genius nor any present
or former employee thereof has violated or, by conducting the Business in the
ordinary course would violate, any of the Intellectual Property rights of any
other person or entity. As used in this Section 2.11, Section 2.12 and Section
10.13 below, the term "BUSINESS" shall refer only to the portion of the Business
that is being acquired by Autodesk herein, and shall except therefrom that
portion of the Business which consists exclusively of the Retained Assets.
b) Except as set forth in reasonable detail in Schedule 2.11(b) (other
---------------
than end user licenses for the Genius Products), Genius does not have any
obligation to compensate any person or entity for the use in the Business of any
Intellectual Property nor has Genius granted to any person or entity any
license, option or other rights to use in any manner any such Intellectual
Property whether requiring the payment of royalties or not. Other than non-
transferable moral rights, no former or current employee, contractor or
consultant of Genius has any right whatsoever to any Intellectual Property
owned, licensed, being used or held for use by Genius in the Business. Genius
and Dr. Baumann represent and warrant that Dr. Baumann has assigned to Genius,
and Genius now holds all rights to the Baumann Licensed Materials, as defined
below in Section 2.12. Genius and Dr. Baumann represent and warrant that,
following the assignment of the Baumann Licensed Materials, Genius owns or holds
(and shall transfer to Autodesk at Closing) all worldwide exclusive, assignable
rights to all Intellectual Property necessary for the maintenance, development,
enhancement and commercial exploitation of the Genius Products.
c) Except as set forth in reasonable detail in Schedule 2.11(c), and
----------------
except for non-transferable moral rights, Genius has all right, title and
interest in and to in the Genius Products
22
and no person or entity other than Genius owns any right, title or interest in
the Genius Products including, without limitation, any right to manufacture,
use, copy, distribute or sublicense any object code or source code thereof
(other than the rights which are created by the standard end user licenses for
the Genius Products).
d) Except as set forth in reasonable detail in Schedule 2.11(d), Genius
----------------
Products are:
(i) not subject to any Liens,
(ii) not subject to any pending or, to the knowledge of Genius,
threatened challenge of infringement of the rights of others, nor to the
knowledge of Genius is there any basis for a challenge of infringement of any
such rights of others, and
(iii) to the fullest extent allowable under applicable law, freely
transferable and assignable to Autodesk and will not be rendered invalid or
adversely affected in any way by virtue of the execution, delivery and
performance of this Agreement or consummation of the Acquisition and the other
transactions contemplated hereby.
2.12 Assignment of Baumann Licensed Materials.
----------------------------------------
a) Dr. Baumann has assigned Genius all worldwide intellectual property
rights, including (to the fullest extent allowable under applicable law)
copyrights, patents, patent applications, trademarks, trademark applications,
service marks, work titles and trade names, if any, previously held and owned by
Dr. Baumann and licensed by Dr. Baumann to Genius, which materials form the
foundation of or which are necessary for, the maintenance, development,
enhancement and commercial exploitation of the Genius Products ("BAUMANN
LICENSED MATERIALS"). Immediately prior to assignment, Dr. Baumann owned a
valid right, interest or license to use the Baumann Licensed Materials being
used or held for use to conduct the Business, and the use of the Baumann
Licensed Materials in the conduct of the Business currently and in the past does
not conflict with and has not conflicted with the intellectual property rights
of others. The Baumann Licensed Materials as now owned by Genius are so owned
or held free and clear of all Liens, and no other person, including without
limitation any present or former employee of Dr. Baumann or Genius, has any
right or interest whatsoever therein (other than non-transferable moral rights).
Dr. Baumann had the right to convey the Baumann Licensed Materials being used or
held for use to conduct the Business, and such conveyance did not previously and
will not subsequently violate any of the intellectual property rights of any
other person or entity. Neither Dr. Baumann or Genius nor any present or former
employee of Dr. Baumann or Genius has violated or, by conducting the Business in
the ordinary course would violate, any of the intellectual property rights of
any other person or entity. A true and correct copy of the document assigning
Dr. Baumann's rights to the Baumann Licensed Materials to Genius is attached to
Schedule 2.12(a).
- ----------------
b) Except as set forth in reasonable detail in Schedule 2.12(b), Dr.
---------------
Baumann does not have any obligation to compensate any person or entity for the
use of any Baumann Licensed Materials nor has Dr. Baumann granted to any person
or entity, other than to Genius prior to the assignment by Dr. Baumann to
Genius, any license, option or other rights to use in any manner any Baumann
Licensed Materials whether requiring the payment of royalties or not. No former
or current
23
employee, contractor or consultant of Dr. Baumann has any right whatsoever to
the Baumann Licensed Materials (other than non-transferable moral rights).
c) Except as set forth in reasonable detail in Schedule 2.12(c), the
----------------
Baumann Licensed Materials are:
(i) not subject to any Liens,
(ii) not subject to any pending or, to Dr. Baumann's knowledge,
threatened challenge of infringement of the rights of others, nor to Dr.
Baumann's knowledge is there any basis for a challenge of infringement of any
such rights of others, and
(iii) to the fullest extent allowable under applicable law, freely
transferable and assignable by Genius to Autodesk and will not be rendered
invalid or adversely affected in any material way by virtue of the execution,
delivery and performance of this Agreement or consummation of the Acquisition
and the other transactions contemplated hereby.
2.13 Agreements, Contracts and Commitments. Schedule 2.13 includes a list of all
------------------------------------- -------------
agreements, contracts and commitments, written or oral, to which Genius is a
party or by which it is bound, excluding all agreements, contracts or
commitments which pertain solely and exclusively to the portion of the Business
which consists of the Retained Assets, including the following (provided,
however, that no agreements, contracts or commitments representing liability in
excess of DM 5.000 individually and DM 50.000 in the aggregate need to be so
scheduled):
a) any collective bargaining agreements;
b) any bonus, deferred compensation, incentive compensation, pension,
profit-sharing or retirement plans, or any other employee benefit plans or
arrangements, (collectively "BENEFIT ARRANGEMENTS"). Each Benefit Arrangement
has been maintained and administered in material compliance with its terms and
with the requirements prescribed by any and all statutes, laws, ordinances and
regulations which are applicable to such Benefit Arrangements. No Benefit
Arrangement has unfunded liabilities that, as of the Closing Date, will not be
offset by insurance or fully accrued or reserved against in the Summary
Financial Information. Except as required by law, no condition exists that
would prevent Autodesk or any of its subsidiaries from amending or terminating
any Benefit Arrangement;
c) any employment or consulting agreement, contract or commitment with any
officer or director level employee, not terminable by Genius on thirty (30) or
fewer days notice without liability, except to the extent general principles of
wrongful termination law in the Federal Republic of Germany and other
jurisdictions may limit Genius' ability to terminate employees at will;
d) any agreement or plan, including without limitation, any stock option
plan, stock appreciation right plan or stock purchase plan, any of the benefits
of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the Acquisition and the other
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the Acquisition and the other
transactions contemplated by this
24
Agreement;
e) any agreement of indemnification or guaranty not entered into in the
ordinary course of business other than such agreements or guarantees between
Genius and any of its subsidiaries, officers or directors;
f) any agreement, contract or commitment containing any covenant limiting
the freedom of Genius to engage in any line of business or compete with any
person;
g) any outstanding agreement, contract or commitment relating to capital
expenditures and involving future obligations;
h) any agreement, contract or commitment relating to the disposition or
acquisition of Genius Assets not in the ordinary course of business or any
ownership interest in any corporation, partnership, joint venture or other
business enterprise;
i) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of money
or extension of credit, other than trade credit agreements entered into in the
ordinary course of business;
j) any joint marketing or development agreements (excluding agreements
with resellers, value added resellers or independent software vendors entered
into in the ordinary course of business that do not permit such resellers or
vendors to modify the Genius Products);
k) any distribution agreement (identifying any that contain exclusivity
provisions), including distribution agreements involving Genius' subsidiary GCS
Scandinavia AB;
l) any licenses, sublicenses, confidential disclosure, employee
proprietary information agreements, or other agreements relating to patents,
trademarks, copyrights, technical assistance, know-how, inventions, trade
secrets, and similar intellectual property arrangements;
m) any dealer, major account, sales, sales representative or marketing
agreements, including those dealer agreements involving GCS Scandinavia AB;
n) any lease for real or personal property;
o) any authorized Training Center agreements;
p) any agreement to purchase goods or services after the Closing or any
agreement to purchase goods or services prior to the Closing other than in the
ordinary course of business; or
q) any agreement to produce, market and sell products related to the
Genius Products.
Those agreements, contracts and commitments on Schedule 2.13 which are
-------------
specifically designated (the "CONTRACTS") shall be assigned by Genius to
Autodesk at the Closing effective upon receipt of whatever third party consents
or approvals as may be required under the terms of such
25
agreements, contracts or commitments.
Except for such (i) breaches, violations and defaults, (ii) alleged
breaches, violations and defaults, and (iii) events that would constitute a
breach, violation or default with the lapse of time, the giving of notice, or
both, which are noted in Schedule 2.13 or which reasonably would not be expected
-------------
to have a Material Adverse Effect, Genius has not breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted
under, any of the terms or conditions of any Contract required to be set forth
in Schedule 2.13. Each Contract is in full force and effect and, except as
-------------
otherwise disclosed in Schedule 2.13, is not subject to any default thereunder
-------------
of which Genius has knowledge by any party obligated to Genius pursuant thereto.
Genius has obtained, or will use its best efforts to obtain with the reasonable
assistance and cooperation of Autodesk prior to the Closing Date, all necessary
consents, waivers and approvals of parties to or affected by any Contract as are
required to assign all rights, interests and benefits thereunder to Autodesk as
of the Closing. Genius has marked in a manner which specifically indicates each
Contract requiring consent, waiver or approval by a contracting party other than
Genius in order that any rights, interests or benefits thereunder can be
assigned to Autodesk in accordance with the requirements of this Agreement.
2.14 Interested Party Transactions. Except as set forth on Schedule 2.14, no
----------------------------- -------------
officer, director or shareholder of Genius (nor any ancestor, sibling,
descendant or spouse of any of such persons, or any trust, partnership or
corporation in which any of such persons has or has had a material and
beneficial interest), has or has had, directly or indirectly, (i) material
interest in any entity which furnished or sold, or furnishes or sells, services
or products that Genius furnishes or sells, or proposes to furnish or sell, or
(ii) any material interest in any entity that purchases from or sells or
furnishes to Genius any goods or services or (iii) a material and beneficial
interest in any Contract set forth in Schedule 2.13.
-------------
2.15 Governmental Authorization. Schedule 2.15 accurately lists each consent,
-------------------------- -------------
license, permit, grant or other authorization issued to Genius by a Governmental
Entity (i) pursuant to which Genius currently operates or holds any interest in
any of the Genius Assets or (ii) which is required for the operation of the
Business (other than the portion of the Business which consists exclusively of
the Retained Assets) or the holding of any such interest (herein collectively
called "GENIUS AUTHORIZATIONS"), which Genius Authorizations are in full force
and effect and constitute all Genius Authorizations required to permit Genius to
operate or conduct its Business (other than the portion of the Business which
consists exclusively of the Retained Assets) or hold any interest in the Genius
Assets.
2.16 Litigation. Except as set forth in Schedule 2.16, there is no action, suit
---------- -------------
or proceeding of any nature pending or to the knowledge of Genius threatened
against Genius, Dr. Baumann, the Genius Assets or any of Genius' officers or
directors, nor, to the knowledge of Genius and Dr. Baumann, is there any basis
therefor. Except as set forth in Schedule 2.16, there is no investigation
-------------
pending or overtly threatened against Dr. Baumann (pertaining to the Genius
Assets), Genius, or any of Genius' properties or any of its officers or
directors (nor, to the knowledge of such persons or entities, is there any basis
therefor) by or before any Governmental Entity. Schedule 2.16 sets forth, with
-------------
respect to any pending or known threatened action, suit, proceeding or
investigation, the forum, the parties thereto, the subject matter thereof and
the amount of damages claimed or other
26
remedy requested. No Governmental Entity has at any time notified Genius of any
challenge or question regarding the legal right of Genius to conduct the
Business (other than the portion of the Business which consists exclusively of
the Retained Assets), including manufacturing, distribution, marketing and
selling any of its products in the present manner or style thereof.
27
2.17 Accounts Receivable.
-------------------
a) Genius has made available to Autodesk a list of all accounts receivable
of the Business of Genius (other than the portion of the Business which consists
of the Retained Assets) as of January 31, 1998 ("ACCOUNTS RECEIVABLE") along
with a range of days elapsed since invoice or from payment dates set forth in
third party agreements.
b) All Accounts Receivable of Genius arose in the ordinary course of
business and are carried at values determined in accordance with generally
accepted accounting principles consistently applied in the Federal Republic of
Germany. To the knowledge of Genius, the Accounts Receivable are collectible in
the normal course of business except to the extent of reserves therefor set
forth in the Summary Financial Information. No person has any Lien on any of
such Accounts Receivable, and no request or agreement for a material deduction
or discount has been made with respect to any of such Accounts Receivable.
2.18 Environmental Matters.
---------------------
a) Hazardous Material. As of the Closing, no substance that has been
------------------
designated by any Governmental Entity with jurisdiction to be radioactive,
toxic, hazardous or otherwise a danger to health or the environment, including,
without limitation, PCBs, asbestos, and ureaformaldehyde (a "HAZARDOUS
MATERIAL"), to the knowledge of Genius is present in, on or under any property,
including the land and the improvements, ground water and surface water thereof,
that Genius has at any time owned, operated, occupied or leased (any of which is
referred to herein as a "GENIUS FACILITY") in violation of applicable
Environmental Laws.
b) Hazardous Materials Activities. To the knowledge of Genius, at no time
------------------------------
prior to the Closing has Genius transported, stored, used, sold, disposed of,
manufactured, released or exposed its employees or others to Hazardous Materials
("HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule, regulation, treaty
or statute promulgated by any Governmental Entity with jurisdiction to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity
("ENVIRONMENTAL LAWS").
c) Permits. No environmental approvals, permits, licenses, clearances or
-------
consents ("ENVIRONMENTAL PERMITS") are necessary for the conduct of Genius'
Hazardous Material Activities.
d) Environmental Liabilities. Except as disclosed on Schedule 2.18, no
------------------------- -------------
action, proceeding, revocation proceeding, amendment procedure, writ, injunction
or claim is pending or, to the knowledge of Genius, threatened concerning or
relating to any Genius Facility, any Environmental Permit or any Hazardous
Materials Activity involving Genius. Genius is not aware of any fact or
circumstance which could involve Genius in any environmental litigation or
impose upon Genius any environmental liability.
e) Offsite Hazardous Material Disposal. To the extent required by
-----------------------------------
Environmental Laws, Genius has transferred or released Hazardous Materials only
to those disposal sites described on Schedule 2.18, and no action, proceeding,
-------------
liability or claim exists or, to the knowledge of Genius, is
28
threatened against any such listed disposal site or against or involving Genius
with respect to any transfer or release of Hazardous Materials to such disposal
sites.
f) Capital Expenditures. Except as set forth on Schedule 2.18, Genius is
-------------------- -------------
not aware of any capital expenditures which are required in order to comply with
Environmental Laws.
2.19 Brokers' and Finders' Fees; Third Party Expenses. Except as set forth on
------------------------------------------------
Schedule 2.19, Genius has not incurred, nor will it incur, directly or
- -------------
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or the Acquisition or
any other transaction contemplated hereby. Schedule 2.19 sets forth the
-------------
principal terms and conditions of any such agreement, written or oral, with
respect to such fees.
2.20 Labor Matters. Schedule 2.20 contains the following information concerning
------------- -------------
all New Autodesk Employees: date of birth, date of service commencement, other
fringe or welfare benefits, and salary and bonuses for the period from January
1, 1997 until April 30, 1998. Genius is in compliance in all material respects
with all currently applicable laws and regulations respecting employment,
discrimination in employment, terms and conditions of employment and wages and
hours and occupational safety and health and employment practices, and is not
engaged in any unfair labor practice. Genius has not received any notice from
any Governmental Entity, and to the knowledge of Genius there has not been
asserted before any Governmental Entity, any claim, action or proceeding to
which Genius is a party or involving Genius, and there is neither pending nor,
to Genius' knowledge, threatened any investigation or hearing concerning Genius
arising out of or based upon any such laws, regulations or practices. No work
stoppage or labor strike against Genius is pending, or, to the best knowledge of
Genius threatened.
2.21 Insurance. Schedule 2.21 lists all insurance policies and fidelity bonds
--------- -------------
covering the Genius Assets or the Business (other than those policies or bonds
which apply exclusively to that portion of the Business which consists of the
Retained Assets) and Genius' employees. Except as expressly set forth in
Schedule 2.21, there is no claim by Genius pending under any of such policies or
- -------------
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums payable under all such
policies and bonds have been paid, and Genius is otherwise in full compliance
with the terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage). Such policies of insurance and bonds
are of the type and in amounts customarily carried by persons conducting
businesses similar in size, type and otherwise, as relevant and material, to
those of Genius in the same locales and meet applicable governmental
requirements, if any, for such insurance. Genius has no knowledge of any
threatened termination of, or material premium increase with respect to, any of
such policies.
2.22 Compliance with Laws. To the knowledge of Genius, Genius has complied
--------------------
with, and Genius has not received any notices of violation with respect to, any
statute, law or regulation, German or foreign, applicable to Genius.
2.23 Complete Copies of Materials. Unless Genius or Dr. Baumann have advised
----------------------------
Autodesk to the contrary in writing prior to the Closing, Genius, and to the
extent applicable, Dr. Baumann, have delivered or made available a true and
complete copy of each document that has been requested by Autodesk or its
counsel from each such person in relation to this Agreement.
29
2.24 Materials and Parts. There is no actual or, to the knowledge of Genius,
-------------------
threatened shortage of materials or parts from any source which reasonably would
be expected to have a Material Adverse Effect on the portion of the Business
which is being acquired by Autodesk herein.
2.25 Inventories. All of the inventories of Genius reflected on the Summary
-----------
Financial Information and Genius' books and records on the date hereof (as
adjusted to eliminate any production costs allocated to inventory) were
purchased, acquired or produced in the ordinary and regular course of business
and in a manner consistent with Genius' regular inventory practices and are set
forth on Genius' books and records in accordance with the practices and
principles of Genius consistent with the method of treating said items in prior
periods. None of the inventory of Genius reflected on the Summary Financial
Information or on Genius' books and records as of the date hereof (as adjusted
to eliminate any production costs allocated to inventory) (in either case net of
the reserve therefor) is obsolete, defective or in excess of the needs of the
business of Genius reasonably anticipated during the next six (6) months so as
to cause a Material Adverse Effect after the Closing. The presentation of
inventory on the Summary Financial Information conforms to generally accepted
accounting principles in the Federal Republic of Germany, and such inventory is
worth its stated value or more.
2.26 No Insolvency. Genius will not be rendered insolvent by the sale, transfer
-------------
and assignment of the Genius Assets pursuant to the terms of this Agreement.
2.27 Representations Complete. None of the representations or warranties made
------------------------
by Genius and/or Dr. Baumann (as modified by the Disclosure Schedules), nor any
statement made in any Exhibit or certificate furnished by Genius or Dr. Baumann
pursuant to this Agreement, contains or will contain at the Closing Date, any
untrue statement of a material fact, or to the knowledge of Genius or Dr.
Baumann omits or will omit at the Closing Date to state 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 Genius which
reasonably would be expected to have a Material Adverse Effect that has not been
set forth in this Agreement, except those facts concerning general economic,
financial, technical, legislative, regulatory or other matters such as may
generally impact all businesses of the type operated by Genius.
30
SECTION 3
REPRESENTATIONS AND WARRANTIES OF AUTODESK
Autodesk represents and warrants to Genius as follows:
3.1 Organization, Standing and Power. Autodesk, Inc. is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, United States. Autodesk Development B.V. is a corporation duly
organized, validly existing and in good standing under the laws of the
Netherlands and qualified to do business in Switzerland as represented herein.
Autodesk GmbH is a limited liability company duly organized, validly existing
and in good standing under the laws of the Federal Republic of Germany.
Autodesk has the corporate power to own its properties and to carry on its
business as now being conducted and is duly qualified to do business and is in
good standing in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on the ability of Autodesk to consummate the
Acquisition and the other transactions contemplated hereby.
3.2 Authority. Autodesk has all requisite legal power and authority to enter
---------
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the Acquisition
and the other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Autodesk. This Agreement, and all
other agreements necessary to consummate the Acquisition and the other
transactions contemplated have been, or at the Closing, will be, duly executed
and delivered by Autodesk and constitutes, or at the Closing will constitute,
the valid and binding obligation of Autodesk, enforceable in accordance with its
terms except as such enforceability may be limited by bankruptcy or similar laws
by general principles of equity, or by laws restricting arbitration, regardless
of whether such enforceability is considered in equity, at law, or in
arbitration. Autodesk has made all public disclosures in relation to this
Agreement, the Acquisition and the other transactions that are contemplated
hereby that are required by applicable laws in a timely, lawful and responsible
manner. The execution and delivery of this Agreement by Autodesk does not, and,
as of the Closing, the consummation of the Acquisition and the other
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination cancellation or acceleration of
any material obligation or the loss of any material benefit under (i) any
provision of the governing documents of Autodesk or (ii) statute, law,
ordinance, rule or regulation applicable to Autodesk or its properties. Other
than voluntary notices to competition authorities, to the knowledge of Autodesk,
no consent, waiver, approval, or authorization of, or notice to any third party,
including without limitation any Governmental Entity, is required by or with
respect to Autodesk in connection with the execution and delivery of this
Agreement or the consummation of the Acquisition and the other transactions
contemplated hereby, other than the consent to assignment of agreements as set
forth in Schedule 2.13.
-------------
3.3 Consents. Autodesk has obtained or will obtain prior to the Closing Date
---------
all necessary consents, authorizations, approvals and orders, and shall have
made all registration, qualifications, designations, declarations or filings
with all federal, state, foreign, local or other relevant
31
governmental and other authorities which are required to be made on the part of
Autodesk in connection with the consummation of the Acquisition, as well as all
other transactions that are contemplated by this Agreement.
3.4 Cash Consideration. Autodesk currently has available, and at the Closing
------------------
Date will continue to have available, sufficient cash to enable it to perform
its obligations under this Agreement.
3.5 Non-Contravention; Consents. Neither the execution and delivery of this
---------------------------
Agreement by Autodesk, nor the consummation or performance of the Acquisition or
any of the transactions contemplated hereby by Autodesk, will (with or without
notice or lapse of time or both) contravene, conflict with or result in a
material violation of, or give any Governmental Entity or other person the right
to challenge any of such transactions or to exercise any remedy or obtain any
relief under, any federal, state, local, municipal, foreign or other law,
statute, ordinance, code, decree, rule, regulation or ruling issued, enacted,
adopted, implemented or otherwise put into effect by or under the authority of
any Governmental Entity to which Autodesk is subject or by which Autodesk is
regulated or otherwise governed. Autodesk is not and will not be required to
make any filing with or give any notice to, or to obtain any consent from, any
Governmental Entity in connection with the execution and delivery of any of this
Agreement by Autodesk or the consummation or performance of the Acquisition or
any of the other transactions contemplated hereby by Autodesk.
3.6 Representations Complete. None of the representations or warranties made
------------------------
by Autodesk, nor any statement made in any Exhibit or certificate furnished by
Autodesk pursuant to this Agreement, contains or will contain at the Closing
Date, any untrue statement of a material fact, or omits or will omit at the
Closing Date to state 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.
3.7 No Insolvency. Autodesk will not be rendered insolvent by purchase of the
-------------
Genius Assets pursuant to he terms of this Agreement.
3.8 Complete Copies of Materials. Unless Autodesk has advised Genius to the
----------------------------
contrary in writing prior to the Closing, Autodesk has delivered or made
available true and complete copies of each document that has been requested by
Genius or its counsel.
3.9 Due Diligence Examination. Autodesk will have completed its due diligence
-------------------------
examination of Genius on or prior to the Closing, including without limitation,
its financial statements and underlying accounting records, the environmental
condition of its properties, its tax status, its accounting and actuarial
methods, its assets, the general condition of its properties, its claims, its
liabilities and its operations. Autodesk agrees to disclose to Genius any
material
32
and adverse findings that were clearly disclosed and identified by Autodesk
during its due diligence examination prior to the Closing.
Section 4
CONDUCT PRIOR TO THE CLOSING DATE
4.1 Conduct of Business of Genius. During the period from the effective date
-----------------------------
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Closing Date, Genius agrees to carry on its Business (other
than the portion thereof which consists of the Retained Assets) in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted, to pay debts and Taxes when due, to pay or perform other obligations
when due, and, to the extent consistent with the continued conduct of such
Business in such manner, use all reasonable efforts consistent with past
practice and policies to preserve intact Genius' present business organizations,
keep available the services of Genius' key New Autodesk Employees and preserve
Genius' relationships with its customers, suppliers, distributors, licensors,
licensees, and others having business dealings with it, all with the goal of
preserving unimpaired the Genius Assets, including without limitation, Genius'
goodwill and the Business (other than the portion of the Business which consists
exclusively of the Retained Assets) at the Closing Date. Genius shall promptly
notify Autodesk of any event or occurrence or emergency not in the ordinary
course of business of Genius, and any event which could have a Material Adverse
Effect. Except (i) as expressly contemplated by this Agreement, (ii) for
actions related to the disclosed reorganization of Genius and persons affiliated
with it (Section 2.2 and Schedule 2.2), (iii) for actions affecting Non-Autodesk
------------
Employees, and/or (iv) as may exclusively affect the portion of the Business
which consists of the Retained Assets, Genius shall not, without the prior
written consent of Autodesk (which shall not be withheld unreasonably and shall
be given or refused promptly):
a) Enter into any commitment or transaction not in the ordinary course of
business (other than actions taken with regard to Genius by operation of law or
as required to comply with applicable law);
b) Transfer to any person or entity any rights to the Genius' Assets other
than end user license agreements to Genius Products;
c) Enter into or amend any agreements pursuant to which any other party is
granted developmental, marketing, distribution or similar rights of any type or
scope with respect to any of the Genius Products;
d) Amend or otherwise modify (or agree to do so), except in the ordinary
course of business, or violate the terms of the Contracts;
e) Commence any litigation;
f) Declare or pay any dividends on or make any other distributions whether
in cash, stock or property with respect of any of its capital stock, or split,
combine or reclassify any of its capital
33
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of capital stock of Genius, or
repurchase, redeem or otherwise acquire, directly or indirectly, any shares of
its capital stock (or options, warrants or other rights exercisable therefor);
g) Except for the issuance of shares of capital stock of Genius upon
exercise or conversion of any options or the contemplated reorganization, which
is described in Section 2.2 and Schedule 2.2, issue, deliver or sell, or
------------
authorize or propose the issuance, delivery or sale of, or purchase or propose
the purchase of, any shares of its capital stock or securities convertible into,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities;
h) Cause or permit any amendments to its governing organizational
documents;
i) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the Genius Assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to that
portion of the Business of Genius that is being acquired by Autodesk hereunder;
j) Sell, lease, license or otherwise dispose of any of the Genius Assets,
except in the ordinary course of business. With respect to the Genius Products,
Genius agrees that it shall not change materially product pricing, product
discount levels, payment terms or royalties set or charged by Genius. Genius
agrees that in the event that revenue for the Genius Products for the month of
April, 1998 exceeds the average monthly revenue for the Genius Products for the
three (3) month period from January 1, 1998 through March 31, 1998 by more than
fifty percent (50%), all revenue received by Genius which is in excess of that
threshold shall be paid in full to Autodesk within thirty (30) days of Closing.
All revenue referred to in the preceding sentence shall be net of returns, cost
of goods and other direct costs associated with the fulfillment of these orders.
k) Incur any indebtedness for borrowed money or guarantee any such
indebtedness other than in the ordinary course of business, or, issue or sell
any debt securities of Genius or guarantee any debt securities of others (other
than the Promissory Note to be delivered to Dr. Baumann by Genius for the
conveyance of the Baumann Licensed Materials);
l) Voluntarily grant any severance or termination pay (i) to any director
or officer or (ii) to any other employee except payments made pursuant to
standard written agreements outstanding on the date hereof;
m) Adopt or amend any Benefit Arrangements, or enter into any employment
contract, pay or agree to pay any special bonus or special remuneration to any
director or employee, or increase the salaries or wage rates of its employees;
n) Revalue any of its Genius Assets, including without limitation writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business;
34
o) Pay, discharge or satisfy, in an amount in excess of $10,000.00 (in any
one case) or $50,000.00 (in the aggregate), any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction of liabilities in the ordinary course of
business or liabilities reflected or reserved against in the underlying
accounting records;
p) Enter into any strategic alliance or joint marketing arrangement or
agreement other than exclusively in relation to the Retained Assets; or
q) Agree in writing or otherwise to take any of the actions described in
Sections 4.1(a) through (p) above, or take (or agree in writing to take) any
other action that would prevent Genius from performing or cause Genius not to
perform its covenants hereunder.
4.2 Special Exceptions. Notwithstanding the foregoing, Section 4.1 shall not
------------------
be construed to prevent:
a) the contemplated reorganization of Genius and persons affiliated with
it, as described in Section 2.2 and Schedule 2.2 provided that such
reorganization does not materially impact the interests of Autodesk, in the
Acquisition and the other transactions that are contemplated hereby, and is done
in a manner that is substantially consistent with the plan of reorganization
which constitutes a part of Schedule 2.2 or otherwise is done in a form and
substance reasonable acceptable to Autodesk (which acceptance shall not be
withheld unreasonably and shall be given or refused promptly); or
b) the payment, prior to Closing, of severance or bonus payments to Dr.
Baumann, Mr. Udo Siegemund and Mr. Michael Nagel pursuant to written agreements
which shall provide or otherwise assure that no liability shall be assumed by or
imposed upon Autodesk and which shall be in form and amount reasonably
acceptable to Autodesk (which acceptance shall not be withheld unreasonably and
shall be given or refused promptly).
4.3 No Solicitation. Until the earlier of (i) the Closing, and (ii) the date
---------------
of termination of this Agreement, Genius will not (nor will Genius permit any of
Genius' officers, directors, agents, representatives or affiliates to), directly
or indirectly, take any of the following actions with any third party other than
Autodesk and its designees:
a) solicit, encourage, initiate or participate in any negotiations or
discussions with respect to, any offer or proposal to acquire all or any portion
of Genius' Business and properties of Genius, whether by merger, purchase of
Genius Assets, tender offer or otherwise (other than the Retained Assets) or
capital stock, except in conjunction with the above-referenced contemplated
reorganization of Genius and persons affiliated therewith as described in
Section 2.2 and Schedule 2.2;
b) Up until a public announcement is made in accordance with Section 5.5,
and except as required by law (in the opinion of outside counsel who is mutually
acceptable to Autodesk and Genius), including fiduciary duties required by law,
disclose any information not customarily disclosed to any person other than its
attorneys, accountants or financial or tax advisors concerning
35
Genius' Business and properties (other than Retained Assets) or afford to any
person or entity access to its properties, books or records; or
c) assist or cooperate with any person to make any proposal to purchase
all or any part of Genius' capital stock or Genius Assets, other than selling
products of Genius in the ordinary course of business and except for the
reorganization of Genius which is described in Section 2.2 and Schedule 2.2.
In the event Genius shall receive any offer or proposal, directly or indirectly,
of the type referred to in clause (a) or (c) above, or any request for
disclosure or access pursuant to clause (b) above, Genius shall immediately
inform Autodesk as to any such offer or proposal.
4.4 European Cartel Filings. Autodesk and Genius, with the cooperation and
-----------------------
approval of each other (which approval shall not be withheld unreasonably and
shall be given or refused promptly), shall make all filings that are necessary,
appropriate or customarily in relation to the laws governing trade regulations
of all governmental bodies or authorities in Europe with proper jurisdiction.
SECTION 5
ADDITIONAL AGREEMENTS
5.1 Genius Shareholder Approval. As promptly as is practicable after the
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execution of this Agreement, Genius shall submit this Agreement and the
Acquisition and the other transactions contemplated hereby to its shareholders
for approval and adoption as provided by German law and Genius' governing legal
documents. Genius shall use its best efforts to solicit and obtain the written
consent, or vote at a duly convened meeting, of its shareholders sufficient to
approve the Acquisition, the other transactions contemplated hereby and this
Agreement and to enable the Closing to occur as promptly as is practicable. The
materials submitted to Genius' shareholders shall include information regarding
Genius, the terms of the Acquisition, the other transactions contemplated hereby
and this Agreement and the recommendation of the Managing Directors of Genius in
favor of the Acquisition and this Agreement, in accordance with governing law of
the Federal Republic of Germany and governing documents of Genius.
5.2 Access to Information. Except for access to the source codes of the Genius
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Products and access to the Genius's employees without Genius' prior consent,
Genius shall afford Autodesk and its accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Closing Date to (a) all of Genius' properties, books,
contracts, commitments and records, (b) the employees, customers and suppliers
of Genius, and (c) all other information concerning the business, properties and
personnel of Genius as Autodesk may reasonably request (subject to restrictions
imposed by applicable law and also subject to all applicable agreements
pertaining to confidentiality. Genius agrees to provide, in strict confidence
but without any warranty or representation except as expressly set forth in
Section 2 of this Agreement to Autodesk and its accountants, counsel and other
representatives copies of internal financial statements promptly upon request.
No information or knowledge obtained in any investigation pursuant to this
Section 5.2 shall affect or be deemed to modify any representation or
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warranty contained herein or the conditions to the obligations of the parties to
consummate the Acquisition and the other transactions contemplated hereby.
5.3 Confidentiality. Each of the parties hereto hereby agrees to keep such
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information or knowledge obtained in any investigation pursuant to Section 5.2,
or pursuant to the negotiation and execution of this Agreement or the
effectuation of the Acquisition and the other transactions contemplated hereby,
confidential; provided, however, that the foregoing shall not apply to
information or knowledge which (a) a party can demonstrate was already lawfully
in its possession prior to the disclosure thereof by the other party, (b) is
generally known to the public and did not become so known through any violation
of law or this Agreement, (c) became known to the public through no fault of
such party, (d) is later lawfully acquired by such party from other sources, (e)
is required to be disclosed by order of court or government agency with subpoena
powers (after the other affected party or parties are given as much advanced
notice thereof as is reasonably possible in order to permit them to obtain a
protective order or other appropriate relief) or (f) which is disclosed in the
course of any litigation between any of the parties hereto. This provision,
however, shall supplement, but shall not supersede or otherwise modify, the
terms and provisions of the Reciprocal Confidentiality Agreement dated January
12, 1998, as thereafter modified on February 11, 1998, between Genius and
Autodesk.
5.4 Expenses. Whether or not the Acquisition is consummated, all fees and
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expenses incurred in connection with the Acquisition and the other transactions
contemplated hereby including, without limitation, all legal, accounting,
financial advisory, consulting and all other fees and expenses of third parties
("THIRD PARTY EXPENSES") incurred by a party in connection with the negotiation
and effectuation of the terms and conditions of this Agreement and the
Acquisition and the other transactions contemplated hereby, shall be the
obligation of the respective party incurring such fees and expenses.
5.5 Public Disclosure. Unless otherwise required by law (in which case the
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disclosing party shall employ best efforts to provide the other parties hereto
with as much notice as possible under applicable law of the requirement of
disclosure and the content of the disclosure) or by this Agreement, prior to the
Closing Date, no disclosure (whether or not in response to an inquiry) of the
subject matter of or Acquisition and the other transactions contemplated by this
Agreement shall be made unilaterally by Genius or Autodesk, unless approved by
the other party prior to any such release (which approval shall not be withheld
unreasonably and shall be given or refused promptly). Notwithstanding this
Section 5.5 or anything else in this Agreement, the parties hereto agree that
Autodesk and Genius may publicly disclose this Agreement and the transactions
contemplated hereby not earlier than May 4, 1998. Such disclosure may be in the
form of the issuance of the press release(s) substantially as set forth in
Exhibit L ("APPROVED PRESS RELEASE(S)"), as well as providing question and
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answer documents and other verbal and written information which is substantially
consistent with the "APPROVED PRESS RELEASE(S)". Autodesk shall make best
efforts to provide Genius and Dr. Baumann with as much notice as possible of the
intended date of such public disclosure. Each party shall designate,
concurrently with the execution of this Agreement, a primary contact person for
resolving issues regarding the party's disclosure or confidentiality obligations
under this Agreement as well as other issues which may arise as a result of the
public disclosure of the Acquisition and the other transactions contemplated
hereby in accordance with the provisions of this Section 5.5. Until further
notice, Dr. Baumann shall be such
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primary contact person for Genius and himself, and Stephen Murphy shall be such
primary contact person for Autodesk. Prior to any public announcement, the
parties shall agree to contact, in strict confidence and in advance, certain
persons or entities, such as Thomas Publishing Company and the employees of
Genius, in a manner that is mutually acceptable to Genius and Autodesk.
5.6 Break-Up Fee. In the event that this Agreement is terminated or the
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Closing does not occur, for any reason(s) other than for the reasons set forth
below in Sections 5.6(a) through (c), inclusive, and following the public
disclosure of this Agreement or the Acquisition for any reason whatsoever other
than an unauthorized and intentional public disclosure by Genius in violation of
the provisions of Section 5.5 hereof, then Autodesk shall be obligated to pay
Genius on demand a sum, as liquidated damages and not as a penalty, equal to
five percent (5%) of what would have been the cash portion of the Consideration
as of May 4, 1998 ("Break-up Fee"). No Break-up Fee shall be due and owing if
this Agreement is terminated, or Closing does not occur, for any of the
following reasons:
a) Material Adverse Effect. The occurrence or existence of a Material
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Adverse Effect under Sections 2.1 2.2, 2.8, 2.11, 2.12, 2.13 (except for third
party consents), 2.15 or 2.16; or
b) Intervention by a Governmental Entity. The inability of the parties to
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close the Acquisition and the other transactions referenced herein due to actual
or overtly threatened injunction or prohibition by a Governmental Entity; or
c) Material Breach of Special Obligations by Genius or Dr. Baumann. A
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material breach by Genius and/or Dr. Baumann of his, its or their obligations
under Section 1.7 which are for the benefit of Autodesk and which is not cured
within twenty (20) Business Days after written notice thereof from Autodesk.
For the purposes of this Section 5.6 only, the definition of "Material
Adverse Effect" shall not include those factors concerning general economic or
financial conditions or technical, legislative or regulatory changes (other than
as set forth in Section 5.5(b)) which generally impact all business of the type
operated by Genius.
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Genius and Autodesk agree that based upon the circumstances now existing,
known and unknown, it would be impractical or extremely difficult to establish
Genius' damage by reason of the termination of this Agreement or the non-
occurrence of the Closing other than for the specially negotiated exceptions
which are set forth above in Sections 5.6(a) through (c), inclusive.
Accordingly, Autodesk and Genius agree that it would be reasonable at such time
to award Genius "liquidated damages" equal to the amount of the Break-up Fee in
lieu of damages and in order to fairly compensate it for the damages that Genius
will likely suffer under such circumstances.
Autodesk and Genius acknowledge and agree that the amount of the Break-up
Fee is reasonable as liquidated damages and shall be Genius' sole and exclusive
remedy in lieu of any and all other relief, right or remedy, at law or in
equity, to which Genius might otherwise be entitled by reason of the termination
of this Agreement or the non-occurrence of the Closing other than for the
specially negotiated exceptions which are set forth above; provided, however,
notwithstanding the foregoing and consistent with the provisions of Section 10.8
hereof, Genius may seek to cause Autodesk to specifically perform its duties,
obligations, agreements, covenants and other commitments pursuant to the terms
and provisions of this Agreement in lieu of, or as an alternative to, its
seeking any damages from Autodesk under this Section 5.6.
Upon Genius' receipt of the Break-up Fee from Autodesk, Genius and Dr.
Baumann do forever waive and release Autodesk, its directors, officers,
employees, agents, permitted assigns, successors and affiliates, and Autodesk
does forever waive and release Genius, its directors, officers, employees,
agents, permitted assigns, successors and affiliates and Dr. Baumann, his heirs,
legatees, devises, permitted assigns, successors and agents from any and all
liability arising out of or relating to this Agreement, the related agreements
(other than the Reciprocal Confidentiality Agreement dated January 12, 1998, as
modified on February 11, 1998) and the Acquisition and the other transactions
contemplated therein, other than the obligations set forth in Sections 2.4,
2.19, 3.2, 3.5, 5.3, 5.4 and 5.5 of this Agreement. Genius, Dr. Baumann and
Autodesk each acknowledges that their respective legal counsel has advised him
or it, and that he or it is familiar with, the provisions of Section 1542 of the
California Civil Code which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
Being aware of said Code section, Genius expressly waives and relinquishes
any rights or benefit it may have thereunder, as well as under any other state
or federal statutes or common law principle of similar effect.
5.7 Consents. Genius shall use its best efforts, with the reasonable
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cooperation and assistance of Autodesk, to obtain all necessary consents,
waivers and approvals under any of the Contracts as may be required in
connection with the Acquisition and the other transactions contemplated hereby,
so as to transfer to Autodesk all rights of Genius thereunder as of the Closing.
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5.8 Best Efforts. Subject to the terms and conditions provided in this
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Agreement, each of the parties hereto shall use its best efforts to take
promptly, or cause to be taken, all actions, and to do promptly, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations: to consummate and make effective the Acquisition and the other
transactions that are contemplated hereby, to obtain all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to remove any injunctions or other impediments or delays, legal or
otherwise, in order to consummate and make effective the Acquisition and the
other transactions contemplated by this Agreement for the purpose of securing to
the parties hereto the benefits contemplated by this Agreement; provided that
except as contemplated in this Agreement and related documents, neither Genius
nor Autodesk shall be required to agree to any divestiture by it or any of its
subsidiaries or affiliates of shares of capital stock or of any business, Genius
Assets or Retained Assets, as applicable, or other property of it or its
subsidiaries or affiliates, or the imposition of any material and adverse
limitation on the ability of any of them to conduct their businesses or to own
or exercise control of such Genius Assets or Retained Assets, as applicable, or
any other properties and stock.
5.9 Notification of Certain Matters. Each party hereto shall give prompt
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notice to the other parties hereto of (i) the occurrence or non-occurrence of
any event, the occurrence or non-occurrence of which is likely to cause any
representation or warranty by such party as set forth in this Agreement to be
untrue or inaccurate at or prior to the Closing Date, and (ii) any failure of
such party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.9 shall not limit or otherwise affect
any remedies available to the party receiving such notice.
5.10 Additional Documents and Further Assurances. Each party hereto, at the
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request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be reasonably
necessary for effecting completely the consummation of this Agreement and the
Acquisition and the other transactions that are contemplated hereby.
5.11 Tax Returns. Genius shall be responsible for and pay when due (i) all of
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Genius' Taxes attributable to or levied or imposed upon the Genius Assets
relating or pertaining to the period (or that portion of any period) ending on
or prior to the Closing Date (other than as expressly provided to the contrary
in Sections 1.5(c) and Section 1.5(d)) and (ii) all Taxes attributable to,
levied or imposed upon, or incurred in connection with the Genius' business
operations relating or pertaining to the period (or that portion of any period)
ending on or prior to the Closing Date (other than as expressly provided to the
contrary in Sections 1.5(c) and Section 1.5(d)). Genius shall continue to
timely file within the time period for filing, or any extension granted with
respect thereto, all of Genius' Tax Returns required to be filed in connection
with the Genius Assets and any portion of any such Tax Returns connected
therewith shall be true and correct and completed in accordance with applicable
laws. Autodesk shall be responsible for and shall pay when due all of
Autodesk's Taxes attributable to or levied or imposed upon the Genius Assets
and/or business operations pertaining thereto in any way, relating or pertaining
to the period (or that portion of any period) occurring after the Closing Date
(other than as expressly provided to the contrary in Sections 1.5(c) and Section
1.5(e)).
5.12 Payment of Taxes. As of the Closing, Genius shall have (i) paid all Taxes
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it is required to
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pay as of such time and (ii) withheld with respect to its employees all Taxes
required to be withheld as of such time.
5.13 General Assignments. Genius shall employ its best efforts to secure the
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assignment of, and Autodesk shall thereon assume all rental agreements, software
licenses, software development, major accounts, ATC, dealer and distribution
agreements, and acquire or assume other rights and obligations related to the
development, enhancement, packaging, translation, compilation, marketing, sale,
distribution and delivery of the Genius Products to end users, as well as all
other Contracts and other agreements relating to the ownership, use, enjoyment
or possession of the Genius Assets after the Closing. All such assignments
shall contain, wherever possible, an unconditional and complete release of
Genius from any and all liabilities and other responsibilities with respect to
such agreements following their assignment to Autodesk. This Section 5.13 shall
apply to those Contracts which are to be assigned to Autodesk in accordance with
Schedule 2.13 or as otherwise expressly set forth in this Agreement.
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5.14 Rental Agreement and Sub-Rental Agreement. On or before Closing, Autodesk
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shall enter into a sub-rental agreement with Genius which shall be in the form
of Exhibit J to occupy a portion of the current office space of Genius in
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Amberg, Germany. Upon expiration of such sub-rental agreement, Autodesk shall
enter into a rental agreement, which shall be consistent with the provisions of
the agreement that is in the form of Exhibit K, with Dr. Baumann for the use and
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occupation of office space which Dr. Baumann agrees to use his best efforts to
develop in Amberg, Germany.
5.15 License Back of Technology. Concurrently with the Closing, Autodesk shall
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grant back to Genius a license to certain parametric technology and other
technology in accordance with Exhibit H. Genius shall also retain the related
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licenses from D-Cubed, Ltd. and Spatial Technology.
5.16 PowerParts Distribution Agreement. Concurrent with Closing, Autodesk shall
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execute and deliver an agreement with Genius which shall be in the form of
Exhibit I to distribute the PowerParts product in a bundle with specified
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products of Autodesk.
5.17 Independent Nature of the Independent/Supplemental Agreements. Each of the
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independent agreements, which is referenced in this Agreement
("INDEPENDENT/SUPPLEMENTAL AGREEMENTS"), shall be and constitute separate and
independent agreements between the parties hereto and, as such, shall be
enforceable independently in accordance with their respective terms, provisions
and conditions. Any such Independent/Supplemental Agreements, all of which
shall be effective after the Closing, shall survive the Closing and thereafter
shall be in full force and effect without any reference to the other documents
executed concurrently herewith, unless such terms, provisions and conditions of
this Agreement are specifically incorporated, in specified part, into such
Independent/Supplemental Agreements by a separate written agreement other than
this Agreement.
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SECTION 6
CONDITIONS TO THE ACQUISITION
6.1 Conditions to Obligations of Each Party to Effect the Acquisition and the
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Other Related Transactions. The respective obligations of each party to this
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Agreement to effect the Acquisition and the other transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing Date of
the following conditions:
a) Shareholder Approval. The Agreement, the Acquisition and the other
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transactions contemplated hereby shall have been approved and adopted by the
requisite vote of the shareholders of Genius.
b) No Injunctions or Restraints; Illegality. No temporary restraining
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order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Acquisition or any other transactions contemplated hereby
shall be in effect, nor shall any proceeding brought by an administrative agency
or commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Acquisition, or any such other transactions
contemplated hereby, which makes the consummation of the Acquisition or any
other transaction illegal.
c) Legal Requirements. All legal requirements for the valid consummation
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by Autodesk and Genius of the Acquisition and any and all other transactions
which are contemplated by this Agreement shall have been fulfilled; all
authorizations, consents and approvals of all governmental authorities required
to be obtained in order to permit the consummation of the Acquisition and any
and all other transactions which are contemplated by this Agreement shall have
been obtained.
d) Indemnity Escrow Agreement. Genius and Autodesk shall have executed
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and delivered the Indemnity Escrow Agreement (as defined in Section 7.1 of this
Agreement) in the form attached hereto as Exhibit A, and such Indemnity Escrow
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Agreement shall be in full force and effect.
e) Non-Competition and Non-Solicitation Agreement. Autodesk, Genius and
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Dr. Baumann shall have executed and delivered the Non-Competition and Non-
Solicitation Agreement in the form attached hereto as Exhibit P.
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f) Assumption/Assignment Agreement. Autodesk and Genius shall have
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executed and delivered the Assignment and Assumption Agreement in the form
attached hereto as Exhibit B.
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g) Key Employees. Messrs. Udo Siegemund, Stefan Duda, Frank Lippold,
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Robert Graf, Norman Roith and Peter Hummel shall have signed employment
contracts with Autodesk GmbH conditioned upon Closing.
6.2 Additional Conditions to Obligations of Genius. The obligations of Genius
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to consummate and effect this Agreement and the other transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, any of which may be waived, in writing,
exclusively by Genius:
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a) Representations, Warranties and Covenants. The representations and
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warranties of Autodesk in this Agreement shall be true and correct on and as of
the Closing Date as though such representations and warranties were made on and
as of such time, and Autodesk shall have performed and complied with all
covenants, obligations and conditions of this Agreement required to be performed
and complied with by Autodesk as of the Closing Date.
b) Certificate of Autodesk. Genius shall have been provided with a
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certificate in the Form of Exhibit M duly executed on behalf of Autodesk by its
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duly authorized officer(s) to the effect that, as of the Closing Date:
(i) all representations and warranties made by Autodesk in this
Agreement are true and complete; and
(ii) all covenants, obligations and conditions of this Agreement to
be performed by Autodesk on or before such date have been so performed.
c) Claims. There shall not have occurred any claims (whether or not
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asserted in litigation) which may materially and adversely affect the
consummation of the Acquisition and the other transactions that are contemplated
hereby or the Business or financial condition of Genius or Autodesk.
d) No Injunctions or Restraints on Retained Assets. No temporary
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restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
provision challenging Genius' proposed sale of the Genius Assets, or limiting or
restricting Genius' conduct or operation of the portion of the Business which
constitutes the Retained Assets following the Acquisition shall be in effect,
nor shall any proceeding brought by an administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, which
seeks any of the foregoing, be pending.
e) Autodesk's Corporate Action. All corporate approvals required by law
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or by this Agreement with respect to this Agreement, the Acquisition and any and
all other transactions which are related to this Agreement shall have been taken
by Autodesk.
f) Autodesk Bundled Distribution Agreement. Genius and Autodesk shall
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have executed and delivered the Autodesk Bundled Distribution Agreement in the
form of Exhibit I hereto.
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g) Technology License Agreement. Genius and Autodesk shall have executed
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and delivered the Technology License Agreement in the form of Exhibit H hereto.
h) Sub-Rental Agreement. Autodesk and Genius shall have executed and
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delivered the Sub-Rental Agreement in the form attached hereto as Exhibit J.
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i) Rental Agreement. Autodesk and Dr. Baumann shall have executed and
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delivered the Rental Agreement in the form attached hereto as Exhibit K.
6.3 Additional Conditions to the Obligations of Autodesk. The obligations of
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Autodesk to
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consummate and effect this Agreement and the Acquisition and the other
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, exclusively by Autodesk:
a) Representations, Warranties and Covenants. The representations and
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warranties of each Genius and Dr. Baumann in this Agreement shall be true and
correct on and as of the Closing Date as though such representations and
warranties were made on and as of such time, and Genius shall have performed and
complied with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by them as of the Closing Date.
b) Certificate Of Genius. Autodesk shall have been provided with a
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certificate in the form of Exhibit N hereto duly executed on behalf of Genius by
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a Managing Director to the effect that, as of the Closing Date:
(i) all representations and warranties made by Genius in this
Agreement are true and complete; and
(ii) all covenants, obligations and conditions of this Agreement to
be performed by Genius on or before such date have been so performed.
c) Certificate of Dr. Baumann. Autodesk shall have been provided also
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with a certificate in the form of Exhibit O hereto duly executed by Dr. Baumann
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to the effect that, as of the Closing Date all representations and warranties
made by Dr. Baumann in this Agreement are true and complete.
d) Claims. There shall not have occurred any claims (whether or not
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asserted in litigation) which may materially and adversely affect the
consummation of the Acquisition and the other transactions that are contemplated
hereby or the Business, the Genius Assets or financial condition of Genius or
Autodesk.
e) Third Party Consents. Genius shall have employed best efforts, with
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the reasonable cooperation of Autodesk, to obtain any and all consents, waivers,
and approvals required from third parties relating to the Contracts so as to
assign all rights of Genius thereunder to Autodesk as of the Closing shall have
been obtained. Notwithstanding the foregoing, Autodesk may elect to waive the
requirement set forth in this Section 6.3(e) with respect to one or more
Contracts; in which case Genius shall be relieved of the obligation and no
liability shall attach to Genius for the failure to secure such consents,
waivers, and approvals.
f) No Injunctions or Restraints on Conduct of Business. No temporary
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restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
provision challenging Autodesk's proposed Acquisition of the Genius Assets, or
limiting or restricting Autodesk's conduct or operation of the portion of the
Business which is to be acquired by it in the Acquisition, or its own business
following the Closing of the Acquisition shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending.
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g) No Material Adverse Changes. There shall not have occurred any
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material adverse change in the Business, the Genius Assets or the results of
operations or financial condition of Genius.
h) Third Party Rights. No third party shall have any right of any nature
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whatsoever (including, without limitation, any right to receive royalty
payments) in respect of any of the Genius Assets which will cause a Material
Adverse Effect, except rights to use Genius Products pursuant to licenses
granted by Genius in the ordinary course of business.
i) Material Adverse Effect. No other event shall have occurred prior to
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Closing which is likely to have a Material Adverse Effect after the Closing.
j) Summary Financial Information. Genius shall deliver to Autodesk not
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later than three (3) days prior to Closing the Summary Financial Information
which shall constitute Exhibit F hereto and must be in form and content
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reasonably acceptable to Autodesk. Not later than three (3) days prior to
Closing, Genius shall deliver to Autodesk, without any warranty or
representation whatsoever, Genius' good faith projection of certain summary
financial information consisting of a profit and loss statement, listings of
accounts payable, accounts receivable, the fixed Genius Assets and an inventory,
which inventory shall include a listing of Genius Products and other related
materials of Genius, such as storage media, user manuals, marketing brochures
and the like, indicating quantity and cost as recorded in the underlying
financial records of Genius as of the Closing Date ("CLOSING SUMMARY FINANCIAL
INFORMATION") and shall deliver a final version of same within fifteen (15)
Business Days after Closing, both of which must in form and content reasonably
acceptable to Autodesk, and which shall be accurate and complete in all material
respects and which may be relied upon by Autodesk (which obligation shall
survive Closing).
k) Bill of Sale/General Assignment. Autodesk and Genius shall have
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executed and delivered the Bill of Sale and General Assignment of Assets in the
form of Exhibit C hereto.
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l) Trademark Assignment. Autodesk and Genius shall have executed and
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delivered the Assignment of Trademarks in the form of Exhibit D hereto.
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m) Copyright Assignment. Autodesk and Genius shall have executed and
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delivered the Assignment of Copyrights in the form of Exhibit E hereto.
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n) Baumanns' Disclaimer and Assignment Document. Dr. Baumann and Annette
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Baumann, his spouse, shall have executed and delivered the Disclaimer of Dr.
Georg Baumann and Annette Baumann in the form of Exhibit G hereto, as well as a
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copy of any document memorializing the assignment by Dr. Baumann to Genius of
the Baumann Licensed Materials which is not part of or referenced in Schedule
2.12(a) hereto and which must be in form and content reasonably acceptable to
Autodesk.
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SECTION 7
INDEMNITY AND ESCROW
7.1 Indemnity and Escrow Fund. At the Closing Date, Autodesk shall deposit
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into escrow, by means of a wire transfer on the Closing Date of next day funds
into a designated account of the Escrow Agent, five percent (5%) of the cash
portion of the Consideration (the "ESCROW FUND"). The Escrow Fund and the
related defense and indemnification obligations of Genius and Dr. Baumann, as
well as the independent defense and indemnification obligations of Autodesk,
shall be governed by the terms of the Indemnity Escrow Agreement in the form
attached hereto as Exhibit A (the "INDEMNITY ESCROW AGREEMENT"). Payment to
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Genius and/or Autodesk of amounts from the Escrow Fund, as well as the
satisfaction of the respective obligations of defense and indemnification of
Autodesk, Genius or Dr. Baumann, shall be contingent upon the occurrence or
nonoccurrence of those certain events and circumstances which are set forth in
the Indemnity Escrow Agreement and otherwise shall be governed by the terms,
provisions and conditions of such agreement.
SECTION 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the Acquisition and the
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other transactions contemplated hereby may be abandoned at any time prior to the
Closing Date only for the following reasons:
a) by mutual consent of Dr. Baumann, Genius and Autodesk;
b) by Autodesk or Genius if: (i) the Closing has not occurred by May 4,
1998; (ii) there shall be a final nonappealable order of court with appropriate
jurisdictional authority in effect preventing the consummation of the
Acquisition or any other material transactions contemplated hereby; or (iii)
there shall be any statute, rule, regulation or order enacted, promulgated,
issued or reasonably deemed applicable to the Acquisition or any other material
transactions contemplated hereby by any Governmental Entity that would make
consummation of the Acquisition or any other material transactions contemplated
hereby illegal;
c) by Autodesk (or by Genius to the extent that the condition described in
phrase (i) of this Section 8.1 (c) could adversely and materially affect Genius)
if there shall be any action taken, or any statute, rule, regulation or order
enacted, promulgated, issued or reasonably deemed applicable to the Acquisition
or any other material transactions contemplated hereby by any governmental
entity, which would: (i) prohibit Autodesk's ownership or operation of all or a
part of the portion of the Business that is to be acquired by Autodesk pursuant
hereto or of the Genius Assets, or (ii) compel Autodesk to dispose of or hold
separate all or a portion of the Business which is to be acquired by it
hereunder or the Genius Assets or the other businesses of Autodesk as a result
of the Acquisition or any other transactions contemplated hereby;
d) by Autodesk if it is not in material breach of its obligations under
this Agreement and there has been a material breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of
Genius and/or Dr. Baumann and such breach has not been cured within twenty (20)
Business Days after written notice to Genius and/or, as applicable, Dr. Baumann
46
(provided that, no cure period shall be required for a breach which by its
nature cannot be cured);
e) by Genius if it is not in material breach of its obligations under this
Agreement and there has been a material breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of Autodesk and
such breach has not been cured within twenty (20) Business Days after written
notice to Autodesk (provided that, no cure period shall be required for a breach
which by its nature cannot be cured); or
f) by Genius if there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated, issued or deemed applicable to the
Acquisition or any other transactions contemplated hereby by any Governmental
Entity, which would: (i) prohibit Genius' ownership or operation of all or part
of the portion of the Business which consists of the Retained Assets, or (ii)
compel Genius to dispose of all or a portion of the Business which pertains to
the Retained Assets as a result of the Acquisition or any other material
transactions contemplated hereby.
The term "BUSINESS DAY", as used in this Agreement shall mean all days in
which the mails are regularly delivered in both the state of California and the
Federal Republic of Germany and in which commercial banks are open regularly for
business in both the state of California and the Federal Republic of Germany;
8.2 Effect of Termination. In the event of termination of this Agreement as
---------------------
provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Autodesk or Genius, or their
respective officers, directors or shareholders, or of Dr. Baumann provided that
each party shall remain liable for any breaches of this Agreement prior to its
termination; and provided further that, the provisions of Sections 5.3, 5.4,
5.5, 5.6 and Article 10 of this Agreement shall remain in full force and effect
and survive any termination of this Agreement. In the event of any such
termination, each party hereto shall return promptly to the other party hereto,
or with the approval of such other party, certify the destruction of, all
written documentation and other information which is delivered or otherwise
given in tangible or electronic form.
8.3 Amendment. This Agreement may be amended by the parties hereto at any time
---------
by execution of an instrument in writing signed on behalf of each of the parties
hereto.
8.4 Extension; Waiver. At any time prior to the Closing Date, Autodesk on the
-----------------
one hand, and Genius and/or, as applicable, Dr. Baumann, on the other hand, may,
to the extent legally allowed, (i) extend the time for the performance of any of
the obligations of the other party or parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party or parties
contained herein or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party or parties.
47
SECTION 9
CERTAIN POST-CLOSING COVENANTS
9.1 Discharge of Debts. From and after the Closing Date, Genius shall promptly
------------------
and fully satisfy and discharge all of its indebtedness and any other
liabilities and obligations then due and all such other indebtedness,
liabilities and obligations as they become due as related to Genius' Assets
which were incurred on or prior to the Closing Date, except for the Assumed
Liabilities, or any liabilities specifically imposed upon by Autodesk by the
provisions of this Agreement or any other related agreement which is referenced
herein, and such liabilities and obligations as Genius shall be contesting in
good faith. From and after the Closing Date and to the extent that Genius is or
could be affected adversely thereby, Autodesk shall promptly and fully satisfy
and discharge all of its indebtedness and any other liabilities and obligations
then due and all such other indebtedness, liabilities and obligations as they
become due which are related in any way to Genius' Assets after the Closing
Date, as well as all Assumed Liabilities, except for such liabilities and
obligations as Autodesk shall be contesting in good faith and except for any
liabilities specifically imposed upon by Autodesk by the provisions of this
Agreement or any other related agreement which is referenced herein.
9.2 Payment of Taxes. Other than as set forth in Sections 1.5(c) and 1.5 (d),
----------------
hereof, Genius shall pay all Taxes, which pertain to the Genius Assets and which
are incurred but not paid prior to Closing, in a timely manner and in accordance
with applicable legal requirements. Genius and Autodesk each shall pay, after
the Closing and in a timely manner, all Taxes required to be paid by them after
the Closing as required by the other provisions of this Agreement and/or as a
consequence of this Agreement, the Acquisition or any other transactions that
are contemplated by this Agreement. Autodesk and Genius agree that they shall
effect the delivery and transfer by electronic means of those Genius Assets
which are capable of electronic transfer.
9.3 Post-Closing Access to the Pre-Closing Books and Records of Genius. At all
------------------------------------------------------------------
times subsequent to the Closing and for as long as a party hereto specifies a
reasonable basis therefor (as examples only and not in limitation, a tax audit,
the assertion of a claim, or the involvement of such party in relevant
litigation, arbitration or governmental proceedings), each party hereto shall
afford the other parties hereto and their accountants, legal counsel and other
representatives with full, convenient, reasonable and complete access, during
all normal business hours subsequent to the Closing Date, to (and shall thereby
cause such party to provide to such other parties and their representatives) all
of the pre-Closing books and records of Genius held by such party and shall
furnish all information that may be reasonably requested subsequent to the
Closing in relation to this Agreement, the Acquisition, the other transactions
that are contemplated herein or hereby, or the conduct of the Business prior to
the Closing. Such other parties may, however, seek to impose reasonable
restrictions upon such accessibility by the requesting party to protect its, his
or their legitimate interests in trade secrets or other forms of proprietary and
confidential information. Unless the parties hereto agree otherwise, all books
and records, which are described in this Section 9.3, shall be maintained in a
reasonably accessible manner and in accordance with applicable German and
California laws for a minimum period of ten (10) years following the Closing.
Such records may be destroyed by the custodial party if the other party does not
object to such destruction within ninety (90) days after his, its or their
receipt of written notice of an intent to destroy such documents.
9.4 Retention of Source Code for the Genius Products on Closing. Genius shall
-----------------------------------------------------------
deliver on
48
Closing, in a sealed container, and Autodesk shall retain in such unopened and
sealed container for a period of five (5) years following Closing, a duplicate
of the source code for the Genius Products as they existed as of the date of
Closing ("Snap Shot of the Source"). Genius may request that the Snap Shot of
the Source be produced solely for the following purposes:
a) to assist Genius in the defense of a claim made against Genius which
concerns or relates to the condition of the Genius Products as they existed on
or before Closing, provided that under no circumstances shall the Snap Shot of
the Source be voluntarily disclosed to any third party, including a judge,
court, arbitrator or any other party, and Genius shall provide Autodesk with as
much notice as is possible in the event of an official or judicial request for
the Snap Shot of the Source, and shall assist Autodesk, in a manner consistent
with Genius' interests, in securing a protective order to prelude or limit the
disclosure of the Snap Shot of the Source; or
b) In the event of a dispute arising in this Agreement regarding the
condition of the Genius Products as they existed on or before Closing; provided
that in this case, the parties agree that the Snap Shot of the Source shall not
be disclosed to any third party other than the trier of fact or law, in
accordance with arbitration or judicial proceedings involving Autodesk and one
or more of the parties hereto.
The Snap Shot of the Source shall be maintained in its original condition
and in strict confidence by Genius at all times and shall not be used for any
purpose whatsoever other than as expressly authorized in this Section 9.4. The
rights and obligations set forth in this Section 9.5 may not be assigned, sold,
or otherwise conveyed by Genius under any circumstances, without the written
consent of Autodesk, such consent not to be unreasonably withheld and shall be
promptly given or refused (the reorganization disclosed in Section 2 expressly
consented to by Autodesk as it relates to this Section 9.4). Genius shall not
make any copies of the Snap Shot of the Source, and shall promptly return same
immediately after it is no longer needed for the purposes set forth in this
Section 9.4.
SECTION 10
GENERAL PROVISIONS
10.1 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties of Genius Dr. Baumann, and Autodesk as set forth in Sections 2 and 3
of this Agreement shall survive the Acquisition and the other transactions
contemplated herein and shall remain in effect and enforceable for the periods
which are provided in Section 2 of the Indemnity Escrow Agreement.
10.2 Attorneys' Fees. In the event of any arbitration or any action at law or
---------------
suit in equity in relation to this Agreement (including all post-Closing matters
and/or obligations), the Prevailing Party (as defined below), in addition to all
other relief or sums to which it may be granted or entitled, may call upon the
non-Prevailing Party to pay a reasonable sum for its attorneys' fees and to pay
all other costs and expenses that have been incurred by the Prevailing Party
(including, without limitation, expert witness fees and costs, travel time and
associated costs, copying costs, deposition costs, exhibit costs, fees and costs
on appeal, fees and costs associated with execution on any judgment or order,
special transcript costs, and the appointment of a special master or discovery
49
referee), either directly or indirectly, in connection with said arbitration,
action or suit, which sum shall be determined by the arbitrators in their
proceedings or by the court in such litigation or in a separate action brought
for that purpose. "PREVAILING PARTY" shall mean, for purposes of this Section
10.2, the party who substantially obtains or defeats the relief sought, as the
case may be, whether by compromise, settlement, judgment, or the abandonment by
the other party of its claim of Loss or Losses (as defined in the Indemnity
Escrow Agreement which is attached hereto as Exhibit A) or other claim or
---------
claims, or its defense as defined by the court arbitrator or equivalent
tribunal. The award of attorney's fees to a Prevailing Party shall be computed
in accordance with the fee schedule, if any, of any court or the rules of any
provider or sponsor of the forum for an arbitration. Should either party incur
attorneys' fees in order to enforce the terms and conditions of this Agreement,
including post-Closing covenants, whether or not a legal action is instituted,
the party not in default shall be similarly entitled to reimbursement of such
attorneys' fees and costs, in addition to any other remedies either party may
have at law or in equity. Moreover, such Prevailing Party shall be entitled to
recover any and all post-award or, if applicable, post-judgment costs, expenses,
and attorneys' fees which are incurred in relation to the appeal of, or
enforcing, any award in arbitration or any judgment relating to this Agreement,
and such right of such Prevailing Party shall survive, and is not to be merged
into, any such award or judgment.
10.3 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of completed transmission)
to the parties as follows:
50
If to Autodesk:
Richard Purtle, Esq.
Corporate Counsel
Autodesk, Inc.
111 McInnis Parkway
San Rafael, CA 94903
Fax: (415) 507-6126
Phone: (415) 507-6745
With a Copy to:
Prof. Dr. Peter Chrocziel
Bruckhaus Westrick Heller Lober
Taunusanlage 11
D-60329 Frankfurt, Germany AM Main
Phone: 49-69-27-30-80
Fax: 49-69-23-26-64
If to Genius:
Dr. Georg Baumann
Managing Director
Genius CAD Software GmbH
Faberstrasse 9 92224
Amberg, Germany
Phone: 49-96-21-470772
Fax: 49-96-21-470773
With a Copy to:
John A. Harkavy, Esq.
Aiken, Kramer & Cummings, Incorporated
111 Broadway, Suite 1500
Oakland, CA 94607
Phone (510) 834-6800
Fax (510) 834-9017
And:
Herrn Dr. Fritz-Eckehard Kempter
Dr. Kempter & Gierlinger
Barer Str. 48, I.
80799 Munchen
Phone 49-89-288-258
Fax 49-89-284-532
51
10.4 Interpretation. When a reference is made in this Agreement to Schedules or
--------------
Exhibits, such reference shall be to a Schedule or Exhibit to this Agreement
unless otherwise indicated. Each instance in this Agreement of the words
"INCLUDE," "INCLUDES" and "INCLUDING" shall be deemed to be followed by the
words "WITHOUT LIMITATION". The table of contents and headings contained in
this Agreement are for reference purposes only and shall not be construed to
affect the meaning or interpretation of this Agreement. The words "HEREIN",
"HEREOF" and "HEREUNDER" and other words of similar import refer to this
Agreement as a whole and not to any particular Section, Schedule, Exhibit or
other subdivision. Similarly, the words "THEREIN", "THEREOF" and "THEREUNDER"
and other words of similar import refer to a particular agreement or other
instrument as a whole and not to any particular segment, part, paragraph,
subparagraph or other subdivision. Any reference to a statute includes and
refers to the statute itself, as well as to the rules and regulations made and
duly promulgated pursuant thereto, and all amendments made thereto and in force
currently from time to time and any statutes, rules or regulations thereafter
duly made, enacted and/or promulgated, as may be appropriate, and/or any other
governmental actions thereafter duly taken from time to time having the effect
of supplementing or superseding such statutes, rules and/or regulations. The
language in all parts of this Agreement shall be in all cases construed simply,
fairly, equitably and reasonably, according to its plain meaning and not
strictly for or against one or more of the parties hereto. When required by the
context, whenever the singular number is used in this Agreement, the same shall
include the plural, and the plural shall include the singular; the masculine
gender shall include the feminine and neuter genders and vice versa; the word
"PERSON" shall include individuals, governmental agencies and entities,
corporations, partnerships (general and limited), limited liability companies,
or other entities or forms of association.
10.5 Counterparts. This Agreement may be executed in one or more counterparts,
------------
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other party, it being understood that all parties need not
sign the same counterpart. The German translation of this document has been
provided for convenience only, may not be executed and shall not be construed as
an enforceable agreement. The parties agree that facsimile copies shall be
deemed to be the equivalent of an original of such document.
10.6 Entire Agreement. This Agreement, the Schedules and Exhibits hereto, and
----------------
the Indemnity Escrow Agreement and all other agreements which are referenced
particularly herein as being in force and effect after the Closing between any
two (2) or more parties hereto: (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof excluding the Reciprocal Confidentiality
Agreement between Autodesk and Genius dated January 12, 1998 as amended on
February 11, 1998; (b) are not intended to confer upon any other person any
rights or remedies hereunder, unless expressly provided otherwise; and (c) shall
not be assigned by operation of law or otherwise except as otherwise
specifically provided.
10.7 Severability. In the event that any provision of this Agreement or the
------------
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of
52
this Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
10.8 Equitable or Extraordinary Remedies. Each party hereto acknowledges that
-----------------------------------
in the event of a breach of this Agreement by the other party, monetary damages
will be inadequate, in which case the injured party shall be entitled to seek
special, equitable or extraordinary relief, such as injunction or specific
performance.
10.9 Other Remedies. Except as otherwise provided herein or in the Indemnity
--------------
Escrow Agreement, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy.
10.10 Governing Law and Arbitration. This Agreement shall be governed in all
-----------------------------
respects by and shall be construed under the laws of the State of California,
United States, as such laws are applied to contracts between California
residents entered into and to be performed entirely within such state and
without any consideration of conflicts of law principles. The parties hereto
expressly exclude the application of the United Nations Convention on Contracts
for the International Sale of Goods. All disputes arising in connection with
this Agreement shall be finally settled under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce in Paris by three (3)
arbitrators appointed in accordance with the said Rules. Arbitration shall take
place in Frankfurt, Germany, and shall be held in the English language (however
testimony and other evidence in German or other languages will be permitted as
long as the party, who is offering such testimony, provides a qualified English
translator). The determination of the arbitrators shall be final, binding, non-
appealable and enforceable in any jurisdiction in accordance with its terms.
In modification and supplementation of such Rules of Conciliation and
Arbitration of the International Chamber of Commerce and to the extent that such
rules do not prohibit any such modification and supplementation by persons who
elect voluntarily to be bound by such rules as so modified and supplemented, the
parties hereto agree that any conciliation or arbitration pursuant to such rules
shall be subject to the following understandings of the parties hereto:
a) The Prevailing Party shall be awarded his, her or its attorneys'
fees and all other costs and expenses that have been incurred by such Prevailing
Party in conjunction with any arbitration, and the non-Prevailing Party shall
pay, directly or indirectly as a reimbursement or otherwise, such fees, costs
and expenses of the Prevailing Party. Unless the non-Prevailing Party can prove
by clear and convincing evidence that any fees, costs and/or expenses were
incurred unreasonably and unnecessarily by a Prevailing Party, all actually paid
or invoiced attorneys' fees, expert and non-expert witness costs and expenses,
and all other actually paid or invoiced out-of-pocket costs and expenses (legal
and non-legal) of the Prevailing Party shall be awarded to such Prevailing Party
and shall be paid, borne by or otherwise become ultimately the exclusive
obligation of the non-Prevailing Party.
b) There shall be three (3) arbitrators for each arbitration. Each
party to an arbitration or, if applicable, each independent group of parties
with substantially similar interests
53
or acting in concert as contemplated by the provisions of this Agreement, shall
be entitled to select an arbitrator from a list of six (6) candidates, who are
nationals of any country or countries that such party may designate, which is to
be provided by the Court of Arbitration of the International Chamber of
Commerce. The third arbitrator shall be a national of a country in which no
party resides and shall be selected by the two (2) arbitrators who have been
designated by such parties. If either or both of such parties do not designate
an arbitrator or arbitrators or if such two (2) arbitrators do not designate a
third arbitrator in a timely manner, the Court of Arbitration of the
International Chamber of Commerce shall appoint such arbitrator(s). The third
arbitrator shall act as the chairman of any such arbitration.
c) The arbitrators shall not be entitled to appoint their own experts
and shall rely solely upon the expert testimony which is provided by the parties
under circumstances where such experts are subject to cross-examination.
d) In any such arbitration involving the establishment of a "MONETARY
AMOUNT" (whether as damages, a value or otherwise), each independent party to
such arbitration, or, if applicable, each independent group of parties with
substantially similar interests or acting in concert as contemplated by the
provisions of this Agreement, who will be affected directly by the decision of
the arbitrators as to such Monetary Amount, shall submit to such arbitrators a
specific and unqualified amount which is deemed by it or them, as appropriate,
to represent such Monetary Amount, and the arbitrators must resolve any and all
disputes regarding such Monetary Amount by selecting, without any deviation or
compromise, one of the amounts so submitted to them as the Monetary Amount.
e) The parties in any such arbitration shall be entitled to undertake
expanded discovery, to the maximum extent permissible and possible and in a
manner that is similar to the discovery that is permissible under the provisions
of Title 9 of Part 3 of the Code of Civil Procedure of the State of California,
United States of America, including Section 1283.05 thereof, and that type of
expanded discovery shall be applicable to all matters which are to be or are
arbitrated pursuant to this Agreement. The arbitrators shall be entitled to
grant any and all extraordinary remedies and equitable relief, such as specific
performance and injunctive relief. The arbitrators shall determine whether a
dispute is subject to arbitration hereunder and shall resolve any and all
matters relating to discovery.
f) No arbitration, arising out of, or relating to, this Agreement
shall include, by consolidation or joinder or in any other manner, any
additional person who is not a party to this Agreement except for the Escrow
Agent, who is identified in Exhibit A hereto, and except by a written consent,
---------
containing a specific reference to this Agreement and the signatures of all
affected parties to this Agreement and all parties to the proposed arbitration
proceeding. Any such written consent to arbitration involving an additional
party or parties shall not constitute consent to the arbitration of any other
dispute not described therein.
g) This agreement to arbitrate and any agreement to arbitrate with an
additional party or parties, which is duly consented to by all parties
concerned, shall be specifically enforceable under the prevailing arbitration
law.
54
h) In no event shall the demand for arbitration be made after the
date when the institution of legal or equitable proceedings based on such claim,
dispute or other matter in question under the governing law and/or the
provisions of this Agreement, would be barred by the applicable statute of
limitations or the relevant provisions of this Agreement.
10.11 Rules of Construction. The parties hereto agree that they have been
---------------------
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement will be construed
against the party drafting such agreement.
10.12 Accounting Terms. Unless this Agreement provides to the contrary, all
----------------
accounting terms, which are not otherwise defined herein, shall have the same
meanings assigned to them by, and the amounts attributed to those terms shall be
computed in accordance with, generally accepted accounting principles as may be
established and published, from time to time, by the relevant governmental
entity and/or professional association in the country in which the pertinent
financial statements are prepared or in which the other event or occurrence
takes place.
10.13 Disclosure Schedules' and Autodesk's Disclosure Schedules' Updates and
----------------------------------------------------------------------
the Effect Thereof/Exceptions. The provisions of this Section 10.13 shall take
- -----------------------------
precedence over and govern any conflicting provision(s) of Section 8.4. The
disclosing parties hereto shall promptly disclose to the other parties hereto if
any material information contained in their representations and warranties is
incomplete or is no longer correct as of all times after the date hereof until
the Closing Date; provided however that any such disclosure or correction shall
not affect the rights of the parties hereto as provided hereinafter in this
Section 10.13. Any update of the Disclosure Schedules, as applicable, by the
disclosing parties hereto after the date hereof, which constitutes a change in
the representations and warranties of such disclosing party(ies), may be (but
need not be) waived for purposes of Section 6.2(a) and/or Section 6.3(a), as
appropriate, and if so waived, shall also constitute a waiver for all purposes
of such section or sections. The consummation of the Closing shall be deemed to
be, and shall itself constitute, an actual and a deemed waiver of and by all
parties hereto for all purposes of Section 6.2(a) and/or Section 6.3(a), as
appropriate, of the effect of all updates that are made to the Disclosure
Schedules after the date hereof but prior to or on the Closing Date and also
shall constitute an actual and a deemed waiver of and by all parties hereto of
all of its rights under, and for all purposes of, Section 2 and/or Section 3, as
appropriate, in relation to any matters that are so disclosed by the updated
and/or modified Disclosure Schedules on or prior to the Closing Date. Any such
update of the Disclosure Schedules by the disclosing parties hereto shall not
allow this Agreement to be terminated unless the provisions of Section 8.1
provide to the contrary.
Notwithstanding anything else in this Section 10.13 or elsewhere in this
Agreement, Autodesk does not waive any claim, cause of action or legal right
arising out of or relating to those items identified below, despite the fact
that such item may be disclosed or partially disclosed in the Disclosure
Schedules. All claims of the type identified in this Section 10.13 shall be
governed by terms of the Indemnity Escrow Agreement:
a) all claims of damages directly arising out of or relating to the
license, proposed license, or the failure of Genius to procure an appropriate
license with DIN Software GmbH to
55
the extent that such action or inaction precludes Autodesk from continuing to
operate such Business in a manner that is substantially consistent with past
operations of the Business by Genius or requires Autodesk to pay additional
compensation in order for Autodesk to do so;
b) all claims arising out of or relating to the European patent claim #
EPO-910-594-B1 of Patrick Megard and Serge Farve;
c) all claims arising out of the relationship between Genius and Thomas
Publishing Company;
d) all claims directly arising out of or relating to the Confidentiality
and Non-Competition Agreement dated January 21, 1998, between Genius and
Mechanical Dynamics, Inc., to the extent that Autodesk is precluded from
continuing to operate such Business in a manner that is substantially consistent
with past operations of the Business by Genius or to the extent Autodesk is
required to pay compensation in order to so conduct the Business; and
e) all claims which relate to or arising out of matters which were
disclosed on the Disclosure Schedules, which disclosures contained material
inaccuracies or omissions of material facts as of the Closing Date. By way of
example, if Genius has disclosed a distributorship agreement, but has failed to
disclose that such distributorship agreement is exclusive as of the Closing
Date, there would be no waiver of any claim arising out of such distributorship
agreement.
10.14 Successors and Assigns. Except as otherwise expressly provided herein or
----------------------
in the related agreements specifically to the contrary, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, permitted assigns, heirs, legatees, devisees, and legal
or personal representatives. This Agreement may not be assigned without the
consent of the other party hereto, such consent not to be unreasonably withheld
and which shall be granted or refused promptly.
10.15 Delays, Omissions, Waivers. Other than to the extent that it is provided
--------------------------
to the contrary by the other provisions of this Agreement, no delay or omission
to exercise any right, power or remedy accruing to any party hereto upon any
breach or default of any other party hereto shall impair any right, power or
remedy of a non-defaulting party nor shall it be construed to be a waiver of any
such breach or default, or acquiescence therein or thereto, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default by any party hereto be deemed to be a waiver of any
other breach or default theretofore or thereafter occurring. Other than to the
extent that it is provided to the contrary by the other provisions of this
Agreement, no waiver of any breach or of any condition, covenant or agreement
herein shall constitute a continuing waiver or a waiver of any subsequent breach
of the same or any other condition, covenant or agreement. Other than to the
extent that it is provided to the contrary by the other provisions of this
Agreement, any waiver, permit, consent or approval of any kind or character on
the part of any party of any breach or default under this Agreement, or any
waiver on the part of any party of any terms, provisions or conditions of this
Agreement, must be in writing and signed by the waiving party and shall be
effective only to the extent specifically set forth in such writing.
56
10.16 Monetary Conversion. All references in Sections 2 and 4 hereof to
-------------------
amounts in U.S. Dollars shall be converted into their DM equivalents at the Spot
Exchange Rate as published in The Wall Street Journal on the effective date
-----------------------
hereof.
10.17 Apportionment of the Genius Assets between the Autodesk Parties.
----------------------------------------------------------------
Autodesk, Inc., Autodesk Development B.V. and Autodesk GmbH agree that the
Genius Assets shall be divided between them in the manner set forth on Exhibit
Q, effective concurrently with Closing. This Section 10.17 shall not affect the
responsibilities, liabilities and obligations of Autodesk as set forth in this
Agreement and in the related agreements.
57
IN WITNESS WHEREOF, Autodesk and Genius have caused this Agreement to be
signed by their duly authorized respective officers, and Dr. Baumann is signing
this Agreement individually for the limited purposes specified particularly
herein, all as of the effective date first written above.
AUTODESK, INC. GENIUS CAD SOFTWARE GmbH
By: /s/ Dominic Gallello By: /s/ Dr. Georg Baumann
-------------------- -------------------------
Dominic Gallello, Dr. Georg Baumann,
Vice President Managing Director
AUTODESK DEVELOPMENT B.V.
By: /s/ Mike Sutton By: /s/ Dr. Georg Baumann
--------------------- -------------------------
Mike Sutton Dr. Georg Baumann, as an individual only
Directeur for the purposes set forth in this
Agreement
AUTODESK GmbH
By: /s/ Eric Herr
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Eric Herr
Managing Director
58