SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
May 22, 1998
Date of Report (Date of earliest event reported)
ADVENT SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation)
0-26994
(Commission File Number)
94-2901952
(I.R.S. Employer Identification No.)
301 Brannan Street
San Francisco, California 94107
(Address of principal executive offices)
(415) 543-7696
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
On May 22, 1998, Advent Software, Inc., a Delaware corporation
(the "Registrant" or "Advent Software") acquired (the "Acquisition") certain
assets of Blackbaud, Inc., a South Carolina corporation ("Blackbaud") for a
total purchase price of $6,513,210 worth of Registrant's stock as priced on the
date of closing.
In connection with the Acquisition, One Million Three Hundred
Seventy-Nine Thousand Two Hundred Sixty-Eight Dollars ($1,379,268) of the
consideration payable in connection with the Acquisition (the "Escrow Amount")
was placed into escrow, to be held as security for any losses incurred by the
Registrant in the event of certain breaches by Blackbaud of covenants,
representations and warranties contained in the Asset Purchase Agreement dated
May 22, 1998 by and between the Registrant, MicroEdge, Inc., a wholly-owned
subsidiary of Advent ("MicroEdge") and Blackbaud. A copy of the Asset Purchase
Agreement is filed as Exhibit 2.1 to this report and is incorporated herein by
this reference.
The Acquisition will be treated as a purchase for financial accounting
purposes.
Item 7. Financial Statements and Exhibits.
The following financial statements and exhibits are filed as
part of this report, where indicated.
(a) Financial statements of business acquired, prepared pursuant to
Rule 3.05 of Regulation S-X:
Not applicable.
(b) Pro forma financial information required pursuant to Article 11 of
Regulation S-X:
Not applicable.
(c) Exhibits in accordance with Item 601 of Regulation S-K:
Exhibits.
2.1 Asset Purchase Agreement, dated as of May 22, 1998,
by and among Advent Software, Inc., a Delaware
corporation, MicroEdge, Inc., a New York corporation
and wholly-owned subsidiary of Advent, and Blackbaud,
Inc., a South Carolina corporation.
4.1 Form of Declaration of Registration Rights.
The Registrant agrees to supplementally furnish the Securities
and Exchange Commission with a copy of any other exhibits or
schedules upon request.
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
2.1 Asset Purchase Agreement, dated as of May 22, 1998, by and
among Advent Software, Inc., a Delaware corporation,
MicroEdge, Inc., a New York corporation and wholly-owned
subsidiary of Advent, and Blackbaud, Inc., a South Carolina
corporation.
4.1 Form of Declaration of Registration Rights.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ADVENT SOFTWARE, INC.
Dated: June 5, 1998 By: /s/ Stephanie G. DiMarco
------------------------
Stephanie G. DiMarco
Chief Executive Officer
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AND LICENSE AGREEMENT (this "Agreement") is made
and entered into as of the 22nd day of May 1998 by and between Advent Software,
Inc., a Delaware corporation ("Advent"), MicroEdge, Inc., a New York corporation
and a wholly-owned subsidiary of Advent (collectively, the "Buyer"), and
Blackbaud, Inc., a South Carolina corporation (the "Seller").
RECITALS
WHEREAS, Seller owns certain grants-management software as set forth
below; and
WHEREAS, Seller wishes to sell or license to Buyer and Buyer wishes to
purchase or license, as the case may be, from Seller, on the terms and for the
consideration hereinafter provided, all of the assets, properties and
intellectual property rights relating to the Grant Management Products (as
defined in Section 1.2(a)) as provided herein (collectively, the
"Grant-Management Product Line");
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale. Subject to the terms and conditions contained in
this Agreement, Seller agrees to sell, license, assign, transfer and deliver to
Buyer, as the case may be, and Buyer agrees to purchase and license, as the case
may be, the assets described in Section 1.2 below on the Closing Date (as
defined in Section 2.2 hereof) free and clear of all liens, pledges, charges,
claims, security interests or other encumbrances of any sort (collectively,
"Liens"), except as set forth on Schedule 3.9(b).
1.2 Description of Acquired Assets. At the Closing (as defined in
Section 2.2 hereof), Seller shall sell and deliver to Buyer, and Buyer shall
purchase and accept from Seller, all of Seller's right, title and interest in
the following:
(a) Grant-Management Products. The products listed on Schedule
1.2(a) attached hereto, including all of Seller's rights and ownership interest
therein including all intellectual property rights to (subject to Section 1.5(a)
hereunder for rights relating to the Award Software Product) (the
"Grant-Management Products"), and all technical, design, development,
installation,
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operation and maintenance information concerning the Grant-Management Products,
including object code, source code (except for the source code for the Award
Software Product (as defined in Schedule 1.2(a), which shall be deposited in
escrow in accordance with Section 9 hereof), 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 of the
Grant-Management Products as well as any other computer programs developed or
under development which are related to the Grant Management Products, and all
copies of the Grant Management Products (including revisions and updates in
process); provided, however, that all rights to the Award Grant Management
Intellectual Property shall be governed by Section 1.5(a) hereunder;
(b) Customer and Marketing Databases. All customer and marketing databases
listed on Schedule 1.2(b) attached hereto (if any);
(c) Certain Licenses and Assigned Contracts. All written
agreements, licenses, maintenance contracts, sublicenses, instruments and
undertakings relating to the Grant-Management Contracts, including Seller's
contract rights and any accrued or contingent claims of Seller for reimbursement
or refund attached or incident thereto (the "Assigned Contracts") as set forth
on Schedule 1.2(c) attached hereto; provided that (i) Buyer shall have no
obligation pursuant to any Assigned Contract which by its terms requires a
consent to assignment, unless and until such consent is obtained or Buyer and
Seller have reached a reasonable and mutually agreeable arrangement in writing
which is acceptable to Buyer with respect to such obligations in accordance with
Section 1.3 and (ii) the materials provided under this section in conjunction
with the Award Grant Management Intellectual Property shall be provided subject
to the limitations of Section 1.5(a);
(d) Trademarks, Trade Names and Brand Names. All trademarks,
trade names, brand names, trade dress, product names and other identifying marks
or packaging relating to the Grant Management Product Line listed on Schedule
1.2(d); and
(e) Seller Claims. All of Seller's claims other than accounts
receivable against any parties relating to any right, property or asset included
in the Acquired Assets, or against any party to an Assigned Contract, including
without limitation, unliquidated rights under manufacturers' and vendors'
warranties or guaranties; and
(f) Unearned Maintenance Revenue. All prepaid and collected
maintenance revenue that is unearned as of June 30, 1998 as set forth on
Schedule 1.2(f), and all unpaid, due maintenance revenue relating to any
Assigned Contract, it being agreed and understood that such unpaid, due amounts
shall be forwarded to Buyer by the 15th of the month succeeding the month in
which such payments are received.
It is provided, however, that with respect to those Acquired Assets (as herein
defined) which are delivered to Seller by remote telecommunication or other
similar method Buyer shall not take title or possession of any tangible
manifestation of such Acquired Assets; and provided further that such
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tangible manifestations to be retained by Seller shall not represent title to
intellectual property. Buyer agrees not to request to take possession of any
intangible Acquired Asset by other than remote telecommunication means unless
expressly agreed in writing by Seller.
The items, property and rights described in (a) through (f) above shall be
collectively referred to as the "Acquired Assets."
1.3 Consents and Third-Party Licenses. To Seller's knowledge, Schedule
1.3 attached hereto sets forth all material consents or licenses of third
parties required for Seller to sell, license, sublicense, assign or transfer the
Acquired Assets to Buyer. If any material consent or license identified on
Schedule 1.3 is not obtained and the transactions contemplated hereby are
consummated, Seller agrees to use its reasonable commercial efforts at Seller's
cost after the Closing Date and until such consent or license is obtained and to
cooperate with Buyer in any reasonable arrangement acceptable to Buyer (such as
subcontracting, sublicensing or subleasing) designed to provide for Buyer all of
the benefits of Seller under such Acquired Asset (including enforcement of any
such agreement for the benefit of Buyer) and any and all rights of Seller
arising out of the breach or cancellation of such Acquired Asset.
1.4 Assumption of Seller's Liabilities.
(a) Buyer shall not assume any liabilities or obligations of
Seller except for those liabilities and obligations which Buyer expressly
assumed pursuant to this Section 1.4.
(b) Effective as of the Closing, Buyer shall assume and agree
to pay, discharge or perform, as appropriate, (i) Seller's obligations under the
Assigned Contracts listed on Schedule 1.2(d) attached hereto, provided that
Buyer shall not assume any Materially Varying Obligation under any Assumed
Contract (although it shall assume the other obligations thereunder), and (ii)
all liabilities and obligations listed on Schedule 1.4 attached hereto
(collectively, the "Assumed Liabilities"). A "Materially Varying Obligation"
shall refer to any obligation (including as a result of any written amendment)
under an Assumed Contract: (A) which is materially different in terms of
features, functions or other product commitments from those set forth in the
form or forms of maintenance agreement attached hereto as Schedule 1.4(b)(x) or
the form or forms of license agreement attached hereto as Schedule 1.4(b)(y),
and (B) as to which there exists substantial evidence of commitment by Seller,
its representative or agent.
1.5 Intellectual Property License.
(a) In conjunction with the transfer and assignment of the
Acquired Assets and subject to the conditions contained herein, on the Closing
Date Seller hereby grants to Buyer a perpetual, irrevocable, royalty free,
worldwide, exclusive (including as against Seller and its affiliates) license
solely and exclusively to the Award Grant Management Intellectual Property that
relates solely and exclusively to the Award Software Product (including the
right to grant sublicenses) to develop, enhance, modify and prepare derivative
works of, and to use, perform,
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display, reproduce, have reproduced, sell and otherwise distribute, the Award
Software Product and enhancements relating solely and exclusively to the Award
Software Product and modifications thereof relating solely and exclusively to
the Award Software Product made by or for the Buyer, including modifications
delivered under the Technical Support Agreement attached hereof as Exhibit A and
any other modifications produced by Seller for Buyer's benefit; provided
however, that such license shall be subject to and shall not impair all existing
licenses of such Award Grant Management Intellectual Property or those portions
of the Award Grant Management Intellectual Property that relate to Sellers
non-Award software product assets. In conjunction with the foregoing license,
Seller agrees to execute, at Buyer's expense, such instruments and documents as
Buyer may reasonably request. "Award Grant Management Intellectual Property"
means all patents, patent applications, copyrights, trademarks, service marks,
trade names, 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 including, without
limitation, all things authored, discovered, developed, made, perfected,
improved, designed, engineered, devised, acquired, produced, conceived or first
reduced to practice by Seller or any of its employees in the course of their
employment by Seller and that relate to or are used in connection with the
activities of Award Software Product. Seller hereby grants a perpetual,
irrevocable, royalty free, worldwide, non-exclusive license to Buyer to any
Award Grant Management Intellectual Property that, while not relating solely and
exclusively to the Award Software Product, is necessary to the use of the Award
Software Product; provided, however, that such non-exclusive license shall not
include any right in Buyer to commercially exploit in any manner such Award
Grant Management Intellectual Property not solely and exclusively related to the
Award Software Product in any future products developed by Buyer.
Notwithstanding the foregoing, "Award Grant Management Intellectual Property"
shall not include (i) that portion (if any) of the Award Grant Management
Intellectual Property that contains proprietary information of Seller's
customers or (ii) third party software that prohibits the transfer of such
software as set forth in Schedule 1.5(a)(i) and Schedule 1.5(a)(ii),
respectively. Buyer acknowledges that the Award Software Product is integrated
with other intellectual property rights related to its other software programs
which are not being licensed hereunder and that Buyer's license does not extend
to, nor may Buyers exploit in any manner, any intellectual property which is not
solely and exclusively related to the Award Software Product or the Award Grant
Management Intellectual Property or is not covered in the non-exclusive license
granted above.
(b) If Buyer obtains any proprietary information of Seller's
customers as set forth in Schedule 1.5(a)(i) pursuant to this Agreement, Buyer
shall hold such information confidential, refrain from using such information
and deliver such information promptly to Seller.
(c) Seller agrees not to modify, amend or expand the
provisions of any existing Award Grant Management Intellectual Property licenses
without the prior consent of Buyer, which consent shall not be unreasonably
withheld.
(d) Buyer shall have the exclusive right to bring, direct and
control any action to enforce intellectual property rights for the Award
Software Product. Seller shall cooperate with
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Buyer, at Buyer's expense (except for the value of time of Seller's employees),
in connection with any such litigation, including without limitation by joining
as a party if necessary or appropriate and executing such documents as Buyer may
reasonably request.
ARTICLE 2
CONSIDERATION; CLOSING; POST-CLOSING ADJUSTMENT
2.1 Consideration.
(a) Payment of Purchase Price; Assumption of Assumed
Liabilities. As consideration for (i) the sale, assignment, transfer, license
and delivery of the Acquired Assets by Seller to Buyer, (ii) the agreement by
Seller to provide the transitional consulting services set forth in Section 6.4
hereof and (iii) the agreement by the Seller to provide development support as
set forth in the Technical Support Agreement attached hereto as Exhibit A,
Buyer, on the terms and conditions set forth herein, shall (x) assume the
Assumed Liabilities, (y) deliver to Seller 136,000 shares of Advent's Common
Stock (the "Buyer's Shares"), and (z) subject to the satisfaction of the revenue
targets set forth in Schedule 2.1(a), certain contingent payments set forth
therein. Buyer shall deliver to the Escrow Agent an additional 34,000 shares of
Advent's Common Stock in escrow (the "Escrow Shares") as additional
consideration to be delivered in accordance with Section 7 below as security for
Seller's indemnity obligations under Section 7 hereof and as security for
Seller's obligations under the Technical Support Agreement.
(b) Adjustment of Buyer's Shares. If, between the date of this
Agreement and the Closing Date, the outstanding shares of Buyer's Common Stock
shall have been changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, stock dividend, split-up,
combination, exchange of shares or readjustment, the number of Buyer's Shares
shall be correspondingly adjusted.
(c) Fractional Shares. No fractional shares of Buyer's Common
Stock shall be issued, but in lieu thereof Seller shall receive from Buyer an
amount of cash equal to the value of the fractional share.
2.2 Closing.
(a) Date. The Closing under this Agreement (the "Closing")
shall take place concurrently with the execution hereof at the offices of Wilson
Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California, at 10:00
A.M. Such date on which the Closing is to be held is herein referred to as the
"Closing Date."
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(b) Delivery. At the Closing:
(i) Buyer and Seller shall enter into and
deliver the Technical Support Agreement
attached hereto as Exhibit A , which
Technical Support Agreement will become
effective upon the Closing.
(ii) Subject to Section 2.2(b)(v), Buyer shall
deliver to Seller a certificate evidencing
the Buyer's Shares, or a copy of its
irrevocable letter of instruction to the
Buyer's transfer agent and acknowledgment by
such agent of Buyer's request for the
issuance of such certificate.
(iii) Buyer shall deliver to Seller an instrument
of assumption of liabilities in
substantially the form of Exhibit B hereto
by which Buyer shall assume the Assumed
Liabilities as of the Closing.
(iv) Seller shall deliver to Buyer all bills of
sale, endorsements, assignments, consents to
assignments to the extent obtained and other
instruments and documents as Buyer may
reasonably request to sell, convey, assign,
transfer and deliver to Buyer all the
Acquired Assets, including, without
limitation, a Bill of Sale and General
Assignment of Acquired Assets in
substantially the from attached hereto as
Exhibit C.
(v) Seller shall deliver to Buyer a certificate
setting forth the value of any prepaid
maintenance services not yet earned as
provided in Schedule 1.2(g), which amount is
to be paid by Seller to Buyer no later than
twenty (20) business days after the date of
effectiveness of a registration statement
for the Buyer's shares created under the
terms set forth in the Declaration of
Registration Rights attached hereto as
Exhibit F.
.
(vi) Seller shall deliver to Buyer a Trademark
Assignment in substantially the form
attached hereto as Exhibit D.
(vii) Seller shall deliver to Buyer a Copyright
Assignment in substantially the form
attached hereto as Exhibit E.
(viii) Buyer and Seller shall enter into and
deliver the Declaration of Registration
Rights attached hereto as Exhibit F, which
will become effective upon the Closing and
will provide, among other things, that Buyer
shall use commercially reasonable efforts to
file a registration statement with respect
to the Buyer's Shares promptly, but in any
event within forty-five (45) days of
Closing.
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(ix) Buyer shall deliver to Seller evidence
reasonably satisfactory to it that the
shares of Buyer Common Stock issuable to the
Seller pursuant to this Agreement and such
other shares required to be reserved for
issuance in connection with the purchase of
the Acquired Assets shall have been
authorized for listing on The Nasdaq
National Market upon official notice of
issuance.
(x) Seller shall deliver to Buyer evidence
satisfactory to it that the Seller has
obtained the consents, approvals and waivers
required from third parties relating to the
Assigned Contracts so as to assign all
rights of Seller thereunder to Buyer as of
the Closing.
(xi) Seller shall deliver to Buyer a legal
opinion in substantially the form attached
hereto as Exhibit G from Wyrick Robbins
Yates & Ponton L.L.P., legal counsel to the
Company.
(xii) Buyer shall deliver to the Company a legal
opinion in substantially the form attached
hereto as Exhibit H from Wilson Sonsini
Goodrich & Rosati, legal counsel to the
Buyer.
(xiii) Seller and Buyer shall deliver or cause to
be delivered to one another such other
instruments and documents necessary or
appropriate to evidence the due execution,
delivery and performance of this Agreement.
(c) Taking of Necessary Action; Further Action. If, at any
time after the Closing Date, any further action is necessary or desirable to
carry out the purposes of this Agreement. The officers of Seller are fully
authorized in the name Seller or otherwise to take, and will take, all such
lawful and necessary and/or desirable action.
2.3 Sales and Use Taxes. The sales, use and transfer taxes arising out
of the transfer of the Acquired Assets (the "Transfer Taxes"), shall be
determined at Closing based on the Allocation described in Section 2.4 and shall
be paid by Buyer. To the extent permitted by law, Seller and Buyer shall
cooperate fully in minimizing Transfer Taxes, which the parties hereto estimate
(based on a preliminary analysis of the assets to be transferred) to be
tax-exempt. To the extent a taxing authority provides notice to Seller of an
audit of the Transfer Taxes, Seller shall immediately notify Buyer and Buyer and
Seller shall jointly assume responsibility for such audit and each of Buyer and
Seller shall pay when due 50% of any additional Transfer Taxes (plus interest
and penalties) ultimately assessed with respect to the transactions contemplated
by this Agreement. Buyer and Seller shall have joint authority to control,
settle or defend any proposed adjustment to the Transfer Taxes and Buyer and
Seller shall cooperate fully, in the defense or settlement of any proposed
adjustment to Transfer Taxes.
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2.4 Allocation. The purchase and sale of the Acquired Assets is
intended to constitute a taxable transaction for federal income tax purposes and
the parties shall take no action inconsistent with such treatment. The Purchase
Price shall be allocated as follows: 81% to purchased software, 9% to customer
lists and 10% to a covenant not to compete. Each of the parties hereto agrees to
report this transaction as an acquisition for state and federal tax purposes in
accordance with such allocation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof as
follows:
3.1 Organization of Seller. Seller is a corporation duly incorporated
and validly existing under the laws of the State of South Carolina and has full
corporate power and authority to carry on the business of the Grants-Management
Product Line as it is now being conducted and to own the Acquired Assets. Seller
is duly qualified or licensed to do business as a foreign corporation in good
standing in every jurisdiction in which the ownership of the Acquired Assets or
the conduct of the business of the Grants-Management Product Line requires such
qualification, except where the failure to so qualify or be licensed would not
have a material adverse effect on the business or financial condition of the
Grants- Management Products.
3.2 Due Authorization. Seller has the corporate power and authority to
execute and deliver this Agreement, and each document, instrument or agreement
contemplated hereby, and to perform its obligations hereunder and thereunder.
The execution, delivery and performance of this Agreement and each document,
instrument or agreement executed pursuant to this Agreement by Seller and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action.
3.3 Due Execution and Enforceability. This Agreement, and each
document, instrument or agreement executed pursuant to this Agreement by Seller
have been duly executed and delivered by Seller, and assuming due authorization,
execution and delivery by Buyer, this Agreement and each document, instrument or
agreement executed pursuant to this Agreement by Seller constitute the legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their terms.
3.4 No Conflict. The execution and delivery of this Agreement, and each
document, instrument or agreement executed pursuant to this Agreement and the
performance of Seller's obligations hereunder and thereunder, (i) are not in
violation or breach of, and will not conflict with or constitute a default
under, any of the terms of the certificate of incorporation or bylaws of Seller,
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or, except as provided in Schedule 1.2(c), any material contract, agreement or
commitment binding upon Seller or any of the Acquired Assets; and (ii) will not,
to the knowledge of Seller, conflict with or violate any applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court having jurisdiction over Seller or any of the Acquired
Assets.
3.5 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority is required to be made or obtained by
Seller in connection with the execution, delivery and performance of this
Agreement, the License and each document, instrument and agreement executed
pursuant to this Agreement.
3.6 Proprietary Rights and Ownership.
(a) Ownership. Subject to Schedule 1.2(c), Seller owns or
possesses licenses or other rights to exploit the Acquired Assets and the
intellectual property licensed as part of the Acquired Assets (collectively
referred to as "Proprietary Rights") and has the rights to sell, assign,
transfer, license and deliver, as applicable, such Proprietary Rights as
contemplated herein.
(b) No Infringement. Except (i) as set forth in Schedule 3.6
attached hereto, or (ii) to the extent that any such conflict or infringement
(or assertion thereof) would not have a material adverse effect on the value of
the Grants-Management Products or the Grants-Management Product Line to Buyer (a
"Material Adverse Effect"), the Proprietary Rights do not conflict with or
infringe, and no one has asserted to Seller that such rights conflict with or
infringe, any proprietary rights, owned, possessed or used by any third party.
There are no claims, disputes, actions, proceedings, suits or appeals pending
against Seller with respect to any Proprietary Rights (other than those, if any,
with respect to which service of process or similar notice may not yet have been
made on Seller), and to the actual knowledge of Seller, none has been threatened
against Seller. Except (i) as set forth in Schedule 3.6 or as limited in Section
1.5, or (ii) to the extent any such claim would not have a Material Adverse
Effect, there are no facts or alleged facts which would reasonably serve as a
basis for any claim that Seller does not have the right to use, free of any
rights or claims of others, all Proprietary Rights in the design, development,
manufacture, use, sale and other disposition of any or all products in the
Grants-Management Product Line and services presently being used, furnished or
sold in the conduct of the business of the Grants-Management Product Line as it
has been and is now being conducted.
(c) Effective Transfer of Necessary Rights. Except as set
forth in Schedules 1.3 and 3.6 by means of this Agreement, together with the
documents, instruments and agreements contemplated hereby, Seller will transfer
good and marketable title to all Acquired Assets and Proprietary Rights. Except
as set forth in Schedules 1.3 and 3.6, by means of the license in Section 1.5,
together with the documents, instruments and agreements contemplated thereby,
Seller will transfer to Buyer a good and valid license to the Award Grant
Management Intellectual Property and the related proprietary rights covered
thereby. Except as set forth in Schedules 1.3 and 3.6 or as limited in Section
1.5, the Acquired Assets and related Proprietary Rights sold to Buyer pursuant
to
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this Agreement, and the documents, instruments and agreements contemplated
hereby and thereby, will transfer to Buyer all necessary intellectual property
rights required by Buyer to conduct the business of Buyer as presently
conducted.
3.7 Contracts. Each of the Assigned Contracts referred to on Schedule
1.2(c) to this Agreement is a legal, binding and enforceable obligation by or
against Seller, subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar federal or state laws affecting the
rights of creditors and the effect or availability of rules of law governing
specific performance, injunctive relief or other equitable remedies (regardless
of whether any such remedy is considered in a proceeding at law or in equity).
Except as set forth in Schedule 1.2(c), Seller has not breached, violated or
defaulted in any material respect under, or received notice that it has
breached, violated or defaulted in any material respect under, any of the terms
or conditions of any agreement required to be set forth in Schedule 1.2(c). Each
Assigned Contract is in full force and effect and, except as otherwise disclosed
in Schedule 1.2(c), is not subject to any material default thereunder of which
Seller has knowledge by any party obligated to Seller pursuant thereto. Seller
has obtained all material consents, waivers and approvals of parties to any
Assigned Contract as are required to assign all rights and benefits thereunder
to Buyer as of the Closing.
3.8 Restrictions on Business Activities. Except on Schedule 3.8 or as
provided by this Agreement, there is no agreement, commitment, judgment,
injunction, order or decree binding upon Seller, the Acquired Assets or, to
Seller's knowledge, any employee of Seller, which has or could reasonably be
expected to have the effect of prohibiting or impairing in any material respect
any use by Buyer of the Acquired Assets following the Closing to the extent used
in the manner generally used prior to the Closing Date.
3.9 Title to Assets.
(a) Seller neither owns nor leases any real property relating
to the Acquired Assets.
(b) Seller has good and valid title to, or, in the case of
leased or licensed properties, valid leasehold interests in, or licenses to, all
of the Acquired Assets, free and clear of any Liens, except as reflected in
Schedule 3.9(b).
3.10 Share Acquisition Entirely for Own Account. This Agreement is made
with Seller in reliance upon Seller's representation to Buyer, which by Seller's
execution of this Agreement Seller hereby confirms, that the Buyer's Shares and
the Escrow Shares to be acquired by Seller will be acquired for investment for
Seller's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that Seller has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, Seller further represents that Seller
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to any of the shares of Buyer's Shares and the Escrow
Shares.
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3.11 Reliance Upon Seller's Representations. Seller understands that
the Buyer's Shares and the Escrow Shares are not registered under the Securities
Act on the ground that the sale provided for in this Agreement and the issuance
of securities hereunder is exempt from registration under the Securities Act
pursuant to section 4(2) thereof, and that the Company's reliance on such
exemption is based on Seller's representations set forth herein.
3.12 Receipt of Information. Seller believes it has received all the
information it considers necessary or appropriate for deciding whether to
acquire the Buyer's Shares and the Escrow Shares. Seller further represents that
it has had an opportunity to ask questions and receive answers from Buyer
regarding the business, properties, prospects and financial condition of Buyer
and to obtain additional information (to the extent Buyer possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to it or to which
it had access.
3.13 Investment Experience. Seller is experienced in evaluating and
investing in securities and acknowledges that it is able to fend for itself, can
bear the economic risk of its investment, and has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of the investment in the Buyer's Shares and Escrow Shares.
3.14 Restricted Securities. Seller understands that the Buyer's Shares
and Escrow Shares may not be sold, transferred or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in the
absence of an effective registration statement covering the Buyer's Shares and
Escrow Shares or an available exemption from registration under the Securities
Act, the Buyer's Shares and Escrow Shares must be held indefinitely. To the
extent applicable, each certificate or other document evidencing any of the
Buyer's Shares and Escrow Shares shall be endorsed with the following
restrictive legend:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED
ABSENT AN EFFECTIVE REGISTRATION THEREOF, OR EXEMPTION
THEREUNDER, UNDER SUCH ACT OR COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT."
Seller covenants that, except to the extent such restrictions
are waived by Buyer, Seller shall not transfer the shares represented by any
such certificate without complying with the restrictions on transfer described
in such legend. Seller may sell the Buyer's Shares and Escrow Shares in
compliance with Rule 144 promulgated under the Securities Act without providing
Buyer or any of its representatives an opinion of counsel regarding such sale
and with an opinion of counsel in reliance on any other exemption. Seller
agrees-to provide Buyer with notice of any sale of Buyer's Shares and Escrow
Shares no later than immediately prior to placing an order with a broker or, if
not sold through a broker, at the time of closing an agreement to sell Buyer's
Shares and Escrow Shares,
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and, to the extent practicable, Seller will use its best efforts to provide
Buyer 48 hours advance notice of any such sale.
3.15 Information Supplied. Seller has made available to Buyer all
information reasonably requested by Buyer. To Seller's knowledge, Seller has
disclosed to Buyer all information in Seller's possession related to the Grant
Management Product Line that Seller believes is material to the Grant Management
Products and that is not otherwise publicly available.
3.16 Taxes. To the extent a failure to do so would adversely affect
Buyer, the Acquired Assets or Buyer's use of the Acquired Assets, (i) Seller has
timely filed within the time the period for filing or any extension granted with
respect thereto, all federal, state, local and foreign tax returns, reports and
estimates ("Returns") which it is required to file relating or pertaining to any
and all taxes attributable to or levied upon the Acquired Assets and such
Returns are true and correct, and (ii) paid any and all taxes it is required to
pay in connection with the taxable periods to which such Returns relate. There
are (and immediately following the Closing there will be) no liens or similar
encumbrances on the Acquired Assets relating or pertaining to taxes, except with
respect to taxes not yet due and payable. Seller has no knowledge of any basis
for the assertion of any claims which, if adversely determined, would result in
a lien or other encumbrance relating or pertaining to taxes on the Acquired
Assets.
3.17 Brokers' or Finders' Fees. Seller is not a party to, or in any way
obligated under, and has no knowledge of, any contract or outstanding claim for
the payment of any broker's or finder's fee in connection with the origin,
negotiation, execution or performance of this Agreement, the nonpayment of which
could result in the placement of a lien or other encumbrance on the Acquired
Assets, or a claim against Buyer or its Affiliates.
3.18 Representations Complete. To the best knowledge of the Company,
none of the representations or warranties made by the Company, nor any statement
made in any schedule or certificate furnished by the Company pursuant to this
Agreement, contains any untrue statement of a material fact, or omits 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.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as of
the date hereof:
4.1 Organization of Buyer. Buyer is a corporation duly incorporated and
validly existing under the laws of the State of Delaware and has full corporate
power and authority to carry on its business as it is now being conducted and to
own the properties and assets it now owns.
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4.2 Due Authorization. Buyer has the corporate power and authority to
execute and deliver this Agreement and each document, instrument or agreement
contemplated hereby, including but not limited to the documents and instruments
to be delivered by it at the closing, and to perform its obligations hereunder
and thereunder. The execution, delivery and performance of this Agreement and
each document, instrument or agreement executed pursuant to this Agreement by
Buyer and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action.
4.3 Due Execution and Enforceability. This Agreement and each document,
instrument or agreement executed pursuant to this Agreement by Buyer, including
but not limited to the License, have been duly executed and delivered by Buyer,
and assuming due authorization, execution and delivery by Seller, this Agreement
and each document, instrument or agreement executed pursuant to this Agreement
by Buyer, including but not limited to the License, constitute the legal, valid
and binding obligations of Buyer, enforceable against Buyer in accordance with
their terms.
4.4 No Conflict. The execution and delivery of this Agreement and each
document, instrument or agreement executed pursuant to this Agreement, and the
performance of Buyer's obligations hereunder and thereunder, (i) are not in
violation or breach of, and will not conflict with or constitute a default
under, any of the terms of the articles of incorporation or bylaws of Buyer, or
any material contract, agreement or commitment binding upon Buyer or any of its
assets or properties; and (ii) will not, to the knowledge of Buyer, conflict
with or violate any applicable law, rule, regulation, judgment, order or decree
of any government, governmental instrumentality or court having jurisdiction
over Buyer or any of its assets or properties.
4.5 Consents and Approvals of Governmental Authorities. No consent,
approvals or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority is required to be made or obtained by Buyer
in connection with the execution, delivery and performance of this Agreement and
each document, instrument and agreement executed pursuant to this Agreement.
4.6 SEC Documents. Buyer has made available to Seller a true and
complete copy of Buyer's Form 10-K for the year ended December 31, 1997, and any
other statement, report, registration statement or definitive proxy statement
filed by Buyer with the SEC since December 31, 1997 to the Closing Date (the
"Buyer SEC Documents"). As of their respective filing dates, Buyer has made all
necessary SEC filings, the Buyer SEC Documents comply or will comply in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and none of the Buyer SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances in which they were made, not misleading, except to the
extent corrected by a document subsequently filed with the SEC. The financial
statements of Buyer, including the notes thereto, included in the SEC Documents
(the "Buyer Financial Statements") comply as to form in all material respects
with applicable accounting requirements and with the published rules and
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regulations of the SEC with respect thereto, have been prepared in accordance
with GAAP consistently applied (except as may be indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
and present fairly the consolidated financial position of Buyer at the dates
thereof and the consolidated results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
audit adjustments). There has been no change in Buyer accounting policies except
as described in the notes to the Buyer Financial Statements. To Buyer's
knowledge, since the most recent filing of Buyer SEC Documents, there have been
no material adverse events which have occurred with respect to the Buyer.
4.7 Shares of Common Stock. The shares of Buyer's Common Stock, when
issued and delivered to Seller or the Escrow Agent in accordance with this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
4.8 Brokers' or Finders' Fees. Buyer is not a party to, or in any way
obligated under, and has no knowledge of, any contract or outstanding claim for
the payment of any broker's or finder's fee in connection with the origin,
negotiation, execution or performance of this Agreement, the nonpayment of which
could result in the placement of a lien or other encumbrance on the Acquired
Assets, or a claim against Buyer or its affiliates.
ARTICLE 5
CERTAIN POST-CLOSING COVENANTS
5.1 Good Faith; Further Assurances. Each party, upon the request of the
other party from time to time after Closing, shall execute and deliver, and use
their reasonable efforts to cause other persons to execute and deliver, to the
other party all such further documents and instruments, and will do or use their
reasonable efforts to cause to be done such other acts, as either party may
reasonably request more completely to consummate and make effective the
transactions contemplated hereby. After the Closing Date, Seller shall endeavor
in good faith to provide, consistent with any contractual limitations, the
information required by Buyer necessary to understand and enforce the rights it
may have with respect to intellectual property under the Assigned Contracts.
5.2 Performance of Materially Varying Obligations. Seller shall perform all
Materially Varying Obligations to the reasonable satisfaction of Buyer.
5.3 Grant Management Product Support. Seller shall provide, for a
period of up to eight (8) months following the Closing telephone customer
support with the transition of the business of Grant-Management Product Line to
Buyer. Such support calls received by Buyer will be transferred to Seller for
response. Additionally, Seller will train buyer's staff to provide customer
support; provided, however, Buyer will pay all travel expenses related to such
training by Seller. If after the initial eight (8) month period, described
above, Buyer continues to require Seller to respond to such
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support calls, Buyer will pay Seller a penalty of $33,333 per month for one (1)
additional month of support.
5.4 Qualified Leads. Buyer and Seller agree to provide each other with
qualified leads for their respective businesses. A finder's fee equal to ten
percent (10%) of the initial license fees generated out of a referral from a
particular party will be awarded to such party upon collection of such fees.
Each party agrees that fifty percent (50%) of such finders fee will be paid to
the employee or employees who generated the qualified lead.
5.5 Confidentiality.
(a) Confidentiality Between the Parties. For a period of up to
two years following the Closing, Seller may disclose to Buyer information
concerning the business, properties and personnel of the Grants-Management
Products or of Seller. All such information, to the extent it would constitute
Confidential Information under that certain Advent Non-Disclosure Agreement
dated as of March 12, 1998 (the "Non-Disclosure Agreement"), shall be governed
by the terms of the Non-Disclosure Agreement. Buyer's obligation with respect to
such Confidential Information as provided in the Non-Disclosure Agreement shall
continue for a period of two years following the dates of disclosure of such
Confidential Information.
(b) Non-Disclosure of Information. For two years from the date
hereof, Seller shall not disclose to any party for the purpose of assisting such
party to manufacture or sell Grant Management Products, any of the information
regarding the Grants-Management Product Line that Seller has heretofore
maintained as confidential or proprietary; provided, however that Seller shall
not be required to treat as confidential or proprietary any information which
has become publicly known and generally available through no wrongful act of
Seller or which is required to be disclosed by Seller by law after making
commercially reasonable efforts to avoid such disclosure allowed by law.
5.6 Non-Solicitation. Buyer shall not, for a period of two years
following the Closing, solicit the employment of any Seller employee.
ARTICLE 6
NON-COMPETITION
6.1 Agreement by Seller. From and after the Closing Date, neither
Seller nor any of its more than 50% owned subsidiaries, or similarly controlled
entities, shall, during the period commencing on the Closing Date and ending on
the completion of the tenth (10th) full year after the Closing Date:
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(a) Develop, distribute, manufacture, sell or design, products
performing functions similar to the Grants-Management Product Line, or relating
to management of charitable grants or awards more generally, or grant licenses
with the purpose of assisting a third party to do any of the foregoing;
(b) Invest in or acquire any company the majority of whose
revenues are derived from the sale of Grants-Management Products if Seller's
aggregate holdings would exceed two percent (2%) of the outstanding voting
securities of such company as to a publicly-traded company, or five percent (5%)
as to a private company; and
(c) Except as Buyer may allow, permit an employee of Seller on
behalf of Seller to serve on the board of directors of any business entity the
majority of whose revenues are derived from the sale of Grants-Management
Products.
Notwithstanding the foregoing, Seller shall at any time after the fifth
anniversary of the Closing Date be entitled to acquire a company that derives
less than 50% of its revenues from the sale of Grants-Management Products. This
covenant not to compete shall terminate immediately and automatically in the
event that the Buyer shall no longer engage in any business in the commercial
market for the Grants-Management Products.
6.2 Agreement by Buyer. Buyer shall not acquire or develop a software
product to be used primarily in the fundraising or fund accounting business in
the United States, or a company which has developed such a product, for a period
of three years from the Closing Date. After the third anniversary of the Closing
Date, Buyer may acquire a company which licenses, owns or is developing such a
product or products, so long as such product or products do not account for more
than 50% of such company's revenues. After the third anniversary of the Closing
Date, Buyer shall have no such restriction.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY; ESCROW
7.1 Survival of Representations and Warranties. All of Buyer's and
Seller's representations, warranties in this Agreement or in any instrument
delivered pursuant to this Agreement (each as modified by Seller's disclosure
schedules) shall survive the Closing and continue until 5:00 p.m., California
time until the date which is fifteen (15) months following the date of this
Agreement (the "Expiration Date"). Covenants and agreements hereunder shall
survive the Closing Date.
7.2 Indemnification by Seller. Except as otherwise expressly provided
in this Article 7, Seller shall defend, indemnify and hold harmless each of
Buyer and its directors, officers and affiliates (collectively, "Seller
Indemnitees"), and shall reimburse Seller Indemnitees, for, from and
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against each and every claim, loss (which shall include any diminution in
value), liability, judgment, damage, cost and expense (including, without
limitation, interest, penalties, costs of preparation and investigation, and the
reasonable fees, disbursements and expenses of attorneys, accountants and other
professional advisors) (collectively, "Loss" or "Losses") imposed on or incurred
by Seller Indemnitees resulting from or arising out of (including without
limitation, resulting from or arising out of any claim made by any third party)
a breach of Seller's representations, warranties or covenants in this Agreement.
7.3 Indemnification by Buyer. Except as otherwise expressly provided in
this Article 7, Buyer shall defend, indemnify and hold harmless each of Seller
and its directors, officers and affiliates (collectively, "Buyer Indemnitees"),
and shall reimburse Buyer Indemnitees, for, from and against each and every Loss
imposed on or incurred by Buyer Indemnitees resulting from or arising out of
(including without limitation, resulting from or arising out of any claim made
by any third party) a breach of Buyer's representations, warranties or covenants
in this Agreement.
7.4 Notice and Defense of Third-Party Claims. If any action, claim or
proceeding shall be brought or asserted under this Article 7 against any Seller
Indemnitee or Buyer Indemnitee (each an "Indemnified Person") in respect of any
claim by a third party for which indemnity may be sought under this Article 7
from an indemnifying person or any successor thereto (the "Indemnifying
Person"), the Indemnified Person shall give prompt written notice of such action
or claim to the Indemnifying Person who shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Person and the payment of all expenses; except that any delay or failure so to
notify the Indemnifying Person shall relieve the Indemnifying Person of its
obligations hereunder only to the extent, if at all, that (A) it is prejudiced
by reason of such delay or failure, or (B) the Indemnified Person fails to give
notice of its claim. The Indemnified Person shall have the right to employ
separate counsel in any of the foregoing actions, claims or proceedings and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnified Person unless both the Indemnified
Person and the Indemnifying Person are named as parties and the Indemnified
Person shall in good faith determine that representation by the same counsel is
inappropriate. In the event that the Indemnifying Person, within thirty (30)
days after notice of any such action or claim, fails to assume the defense
thereof, the Indemnified Person shall have the right to undertake the good faith
defense of such action, claim or proceeding for the account of and at the
expense of the Indemnifying Person, subject to the right of the Indemnifying
Person to assume the defense of such action, claim or proceeding at any time
prior to the settlement, compromise or final determination thereof. Anything in
this Article 7 to the contrary notwithstanding, (a) the Indemnifying Person
shall not, without the Indemnified Person's prior written consent, settle or
compromise any action or claim or consent to the entry of any judgment with
respect to any action, claim or proceeding for anything other than money damages
paid by the Indemnifying Person, and (b) the Indemnified Party shall not settle
or compromise any action or claim or consent to the entry of any judgment,
except where the Indemnifying Person has failed to assume the defense of such
action or claim, and then only with the prior consent of the Indemnifying Party,
which shall not be unreasonably withheld. The Indemnifying Person may, without
the Indemnified Person's prior consent, settle or compromise any such action,
claim or proceeding or
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consent to entry of any judgment with respect to any such action or claim that
requires solely the payment of money damages by the Indemnifying Person.
7.5 Limitation of Remedies. Each of Buyer and Seller acknowledges and
agrees that absent fraud its sole and exclusive remedy with respect to any and
all claims relating to the subject matter of this Agreement shall be pursuant to
the indemnification and (only in the case of Buyer) the escrow provisions set
forth in this Article 7. In furtherance of the foregoing, each of Buyer and
Seller hereby waives, absent fraud by the other, any and all rights, claims and
causes of action it may have against the other arising under or based upon any
Federal, state or local statute, law, ordinance, rule or regulation (including,
without limitation, any such relating to environmental matters or arising under
or based upon common law or otherwise).
7.6 Minimum; Maximum. Notwithstanding the other provisions of this
Article 7 and absent fraud, neither party shall be required to indemnify the
other unless all claims individually or in the aggregate of one party for
indemnification, either actual or reasonably estimable, exceed a minimum amount
of $50,000. If the claims of one party exceed such minimum, that party may seek
indemnification for its entire claim, including such minimum amount.
Notwithstanding the other provisions of this Article 7 and absent fraud, the
maximum amount payable by Seller for all claims of indemnification shall consist
of the value of 34,000 shares on the Closing Date plus the value of all shares
released from escrow to settle claims under the Technical Support Agreement),
and the maximum amount payable by Buyer for all claims of indemnification other
than for failure to deliver the Buyer shares and the Escrow Shares in connection
with the Closing shall consist of the value of 34,000 shares on the Closing
Date.
7.7 Escrow Arrangements.
(a) Escrow Fund. Within one business day of the Closing, Buyer
shall deposit into an escrow account (the "Escrow Account"), in respect of a
portion of the purchase price, 34,000 Shares of Buyer Common Stock (i) to be
released in accordance with the terms hereof and of the Technical Support
Agreement and (ii) as partial security for the indemnity obligations of Seller
hereunder. The Escrow Amount will be deposited with U.S. Bank Trust National
Association (or other institution acceptable to Buyer and Seller) as Escrow
Agent (the "Escrow Agent"), such deposit to constitute an escrow fund (the
"Escrow Fund") to be governed by the terms set forth herein and at Buyer's cost
and expense. The Escrow Fund shall be available as security for the indemnity
obligations of Seller set forth in this Article 7 and for security for Seller's
breaches as defined in the Technical Support Agreement and shall constitute
Buyer's initial remedy with respect to such indemnity obligations and such
breaches. Buyer may not receive any funds from the Escrow Fund unless and until
Officer's Certificates (as defined in paragraph (d) below) identifying Losses,
the aggregate amount of which exceed $50,000, have been delivered to the Escrow
Agent as provided in paragraph (e); in such case, Buyer may recover from the
Escrow Fund the total of its Losses, including the first $50,000.
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(b) Escrow Period; Distribution upon Termination of Escrow
Periods. Subject to the following requirements, the Escrow Fund shall be in
existence immediately following the Closing and shall terminate at 5:00 p.m.,
California time, on the fifteen (15) month anniversary of the Closing Date (the
"Escrow Period") and the Escrow Agent shall endorse such shares in blank and
deliver such shares immediately to Seller; provided that the Escrow Period shall
not terminate with respect to such amount (or some portion thereof), that
together with the aggregate amount remaining in the Escrow Fund is necessary in
the reasonable judgment of Buyer, subject to the objection of Seller and the
subsequent arbitration of the matter in the manner provided in Section 7.7(f)
hereof, to satisfy any unsatisfied claims concerning facts and circumstances
existing prior to the termination of such Escrow Period specified in any
Officer's Certificate delivered to the Escrow Agent in good faith prior to
termination of such Escrow Period. As soon as all such claims have been
resolved, the Escrow Agent shall deliver to Seller the remaining portion of the
Escrow Fund not required to satisfy such claims.
(c) Protection and Investment of Escrow Fund. The Escrow Agent
shall hold and safeguard the Escrow Fund during the Escrow Period, shall treat
such fund as a trust fund in accordance with the terms of this Agreement and not
as the property of Buyer and shall hold and dispose of the Escrow Fund only in
accordance with the terms hereof.
(d) Claims Upon Escrow Fund.
(i) With respect to claims of Losses under
Section 7.2, upon receipt by the Escrow Agent at any time on or before the last
day of the Escrow Period of a certificate signed by any officer of Buyer (an
"Officer's Certificate"): (A) stating that Buyer has paid or properly accrued or
reasonably anticipates that it will have to pay or accrue Losses, (B) specifying
in reasonable detail the individual items of Losses included in the amount so
stated, the date each such item was paid or properly accrued, or the basis for
such anticipated liability, and the nature of the misrepresentation, breach of
warranty or covenant to which such item is related, and (C) specifying the
requested total amount to be delivered by the Escrow Agent to Buyer utilizing
the formulas set forth below, the Escrow Agent shall, subject to the provisions
of Section 7.7(e) hereof, deliver to Buyer out of the Escrow Fund, as promptly
as practicable, an amount held in the Escrow Fund equal to such Losses, based
upon the value of the Escrow Shares as determined by the closing price as listed
in the Wall Street Journal of Buyer Common Stock on the date of delivery to the
Escrow Agent of the Officer's Certificate describing such Losses and as rounded
to the nearest whole share.
(ii) With respect to claims under Section
7.7(a)(i), upon receipt by the Escrow Agent of an Officer's Certificate (A)
stating that Seller has breached the provisions of this Section and the Support
Agreement, (B) specifying in reasonable detail the nature of such breach, and
(C) specifying the requested total amount to be delivered by the Escrow Agent to
Buyer utilizing the formulas set forth in this section, the Escrow Agent shall,
subject to the provisions of Section 7.7(e), deliver to Buyer out of the Escrow
Fund, as promptly as practicable, an amount determined by the following formula:
(I) If corrections of each category of defect set forth below are not made in
the number of business days after Advent reports such defect to Blackbaud set
forth opposite such
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category, the Escrow Agent shall deliver to Buyer shares from the Escrow Fund
having a value equal to the number of licenses impacted by the defect as
determined by a report, whether oral, written, or by e-mail, from a licensee
multiplied by 20% of the license fee paid by such impacted licensees as rounded
to the nearest whole share:
Low Status Defects 24 business days
Medium Status Defects 33 business days
High Status Defects 31 business days
Critical Status Defects 13 business days
(iii) In addition, if corrections of each category of
defect set forth below are
still not made in the number of business days (cumulative from the date Advent
reports such defect to Blackbaud, rather than incremental) set forth opposite
such category, the Escrow Agent, upon receipt of a new Officer's Certificate
setting forth the same informational requirements listed above in Section
7.7(d)(i), shall also deliver to Buyer additional shares from the Escrow Fund
having a value equal to the number of licenses impacted and reported by
Licensees by the defect multiplied by 20% of the license fee paid by such
impacted licensees (it being understood that such additional penalty shall bring
the total cumulative penalty to 40% of the licensee fee paid by the impacted
customers, and that having such defects outstanding during the period triggering
such additional penalty shall be referred to herein as the "Extra Penalty
Phase") as rounded to the nearest whole share:
High Status Defects 36 business days
Critical Status Defects 18 business days
(iv) For purposes of this Section, defect is deemed
to be closed when Seller
sends a correction to any customer reporting a defect. Buyers acknowledged that
defects which are not related to Seller software such as defects resulting from
a combination of the software interacting with specific hardware, operating
systems, network systems, etc. are not defects for which claims will be made
under the Escrow Agreement.
(e) Objections to Claims. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such certificate
shall be delivered to Seller and for a period of ten (10) days after actual
receipt by seller of such certificate, the Escrow Agent shall make no delivery
to Buyer of any Escrow Amounts pursuant to Section 7.7(d) hereof unless the
Escrow Agent shall have received written authorization from Seller to make such
delivery. After the expiration of such ten (10) day period, the Escrow Agent
shall make delivery of funds from the Escrow Fund in accordance with Section
7.7(d) hereof, provided that no such payment or delivery may be made if Seller
shall object in a written statement to the claim made in the Officer's
Certificate, and such statement shall have been delivered to the Escrow Agent
prior to the expiration of such ten (10) day period.
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(f) Resolution of Conflicts; Arbitration.
(i) In case Seller shall so object in writing to
any claim or claims made in any Officer's Certificate, Seller and Buyer shall
attempt in good faith to agree upon the rights of the respective parties with
respect to each of such claims. If Seller and Buyer should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be
entitled to rely on any such memorandum and distribute amounts from the Escrow
Fund in accordance with the terms thereof.
(ii) If no such agreement can be reached after good
faith negotiation, either
Buyer or Seller may demand arbitration of the matter unless the amount of the
damage or loss is at issue in pending litigation with a third party, in which
event arbitration shall not be commenced until such amount is ascertained or
both parties agree to arbitration; and in either such event the matter shall be
settled by arbitration conducted by three arbitrators. Buyer and Seller shall
each select one arbitrator, and the two arbitrators so selected shall select a
third arbitrator. The arbitrators shall set a limited time period and establish
procedures designed to reduce the cost and time for discovery while allowing the
parties an opportunity, adequate in the sole judgment of the arbitrators, to
discover relevant information from the opposing parties about the subject matter
of the dispute. The arbitrators shall rule upon motions to compel or limit
discovery and shall have the authority to impose sanctions, including attorneys'
fees and costs, to the extent as a court of competent law or equity, should the
arbitrators determine that discovery was sought without substantial
justification or that discovery was refused or objected to without substantial
justification. The decision of a majority of the three arbitrators as to the
validity and amount of any claim in such Officer's Certificate shall be binding
and conclusive upon the parties to this Agreement, and notwithstanding anything
in Section 7.7(e) hereof, the Escrow Agent shall be entitled to act in
accordance with such decision and make or withhold payments out of the Escrow
Fund in accordance therewith. Such decision shall be written and shall be
supported by written findings of fact and conclusions which shall set forth the
award, judgment, decree or order awarded by the arbitrators.
(iii) Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. Any such
arbitration shall be held in San Francisco under the rules then in effect of the
American Arbitration Association. For purposes of this Section 7.7(f), in any
arbitration hereunder in which any claim or the amount thereof stated in the
Officer's Certificate is at issue, the arbitrator shall have the discretion to
name one party the Non-Prevailing Party. In the event one party is designated
the Non-Prevailing Party to an arbitration, that party shall pay its own
expenses, the fees of each arbitrator, the administrative costs of the
arbitration and the expenses, including without limitation, reasonable
attorneys' fees and costs, incurred by the other party to the arbitration. In
the event a Non-Prevailing Party is not designated, each party shall bear its
own expenses and the remaining costs and expenses shall be split evenly between
the parties.
(g) Third-Party Claims. In the event Buyer becomes aware of a
third-party claim which Buyer believes may result in a demand against the Escrow
Fund, Buyer shall notify Seller of such claim, and Seller shall be entitled, at
its expense, to participate in any defense of such claim.
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Buyer shall have the right in its sole discretion to settle any such claim;
provided, however, that except with the consent of Seller, no settlement of any
such claim with third-party claimants shall alone be determinative of the amount
of any claim against the Escrow Fund. In the event that Seller has consented to
any such settlement, Seller shall have no power or authority to object under any
provision of this Article 7 to the amount of any claim by Buyer against the
Escrow Fund with respect to such settlement.
(h) Escrow Agent's Duties.
(i) The Escrow Agent shall be obligated only for
the performance of such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the Escrow Agent may
receive after the date of this Agreement which are signed by an officer of Buyer
and Seller, and may rely and shall be protected in relying or refraining from
acting on any instrument reasonably believed to be genuine and to have been
signed or presented by the proper party or parties. The Escrow Agent shall not
be liable for any act done or omitted hereunder as Escrow Agent while acting in
good faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of such
good faith.
(ii) The Escrow Agent is hereby expressly authorized
to comply with and
obey orders, judgments or decrees of any court of law, notwithstanding any
notices, warnings or other communications from any party or any other person to
the contrary. In case the Escrow Agent obeys or complies with any such order,
judgment or decree of any court, the Escrow Agent shall not be liable to any of
the parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(iii) The Escrow Agent shall not be liable in any
respect on account of the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or papers
deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the
expiration of any rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent.
(v) In performing any duties under the Agreement
, the Escrow Agent shall not be liable to any party for damages, losses, or
expenses, except for gross negligence or willful misconduct on the part of the
Escrow Agent. The Escrow Agent shall not incur any such liability for (A) any
act or failure to act made or omitted in good faith, or (B) any action taken or
omitted in reliance upon any instrument, including any written statement or
affidavit provided for in this Agreement that the Escrow Agent shall in good
faith believe to be genuine, nor will the Escrow Agent be liable or responsible
for forgeries, fraud, impersonations, or determining the scope of any
representative authority. In addition, the Escrow Agent may consult with the
legal counsel in
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connection with Escrow Agent's duties under this Agreement and shall be fully
protected in any act taken, suffered, or permitted by him/her in good faith in
accordance with the advice of counsel. The Escrow Agent is not responsible for
determining and verifying the authority of any person acting or purporting to
act on behalf of any party to this Agreement.
(vi) If any controversy arises between the parties to
this Agreement, or with
any other party, concerning the subject matter of this Agreement, its terms or
conditions, the Escrow Agent will not be required to determine the controversy
or to take any action regarding it. The Escrow Agent may hold all documents and
Escrow Fund, and may wait for settlement of any such controversy by final
appropriate legal proceedings or other means as, in the Escrow Agent's
discretion, the Escrow Agent may be required, despite what may be set forth
elsewhere in this Agreement. In such event, the Escrow Agent will not be liable
for damage. Furthermore, the Escrow Agent may at its option, file an action of
interpleader requiring the parties to answer and litigate any claims and rights
among themselves. The Escrow Agent is authorized to deposit with the clerk of
the court all documents and amounts held in escrow, except all cost, expenses,
charges and reasonable attorney fees incurred by the Escrow Agent due to the
interpleader action and which the parties jointly and severally agree to pay.
Upon initiating such action, the Escrow Agent shall be fully released and
discharged of and from all obligations and liability imposed by the terms of
this Agreement.
(vii) The parties and their respective successors and
assigns agree jointly
and severally to indemnify and hold Escrow Agent harmless against any and all
losses, claims, damages, liabilities, and expenses, including reasonable costs
of investigation, counsel fees, and disbursements that may be imposed on Escrow
Agent or incurred by Escrow Agent in connection with the performance of its
duties under this Agreement, including but not limited to any litigation arising
from this Agreement or involving its subject matter.
(viii) The Escrow Agent may resign at any time upon
giving at least thirty
(30) days written notice to the parties; provided, however, that no such
resignation shall become effective until the appointment of a successor escrow
agent which shall be accomplished as follows: the parties shall use their best
efforts to mutually agree on a successor escrow agent within thirty (30) days
after receiving such notice. If the parties fail to agree upon a successor
escrow agent within such time, the Escrow Agent shall have the right to appoint
a successor escrow agent authorized to do business in the State of California.
The successor escrow agent shall execute and deliver an instrument accepting
such appointment and it shall, without further acts, be vested with all the
estates, properties, rights, powers, and duties of the predecessor escrow agent
as if originally named as escrow agent. The Escrow Agent shall be discharged
from any further duties and liability under this Agreement.
(i) Fees. All fees of the Escrow Agent for performance of its
duties hereunder shall be paid by Buyer. It is understood that the fees and
usual charges agreed upon for services of the Escrow Agent shall be considered
compensation for ordinary services as contemplated by this Agreement. In the
event that the conditions of this Agreement are not promptly fulfilled, or if
the
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Escrow Agent renders any service not provided for in this Agreement, or if the
parties request a substantial modification of its terms, or if any controversy
arises, or if the Escrow Agent is made a party to, or intervenes in, any
litigation pertaining to this escrow or its subject matter, the Escrow Agent
shall be reasonably compensated for such extraordinary services and reimbursed
for all costs, attorney's fees, and expenses occasioned by such default, delay,
controversy or litigation. Buyer promises to pay these sums upon demand.
ARTICLE 8
SOURCE CODE ESCROW
Within three business days of Closing, Buyer shall deposit into a
source code escrow (the "Source Code Escrow") the source code and supporting
documentation for the Award Grant Management Software as set forth in Section
1.5(a), including all technical, design, installation, operation and maintenance
information (if any) concerning the Award Software Product, including object
code, source code, test data and test results and updates of the above as they
become available, as well as all reference manuals and support materials
normally distributed to end-users and potential end-users in connection with the
distribution of the Award Software Product unless otherwise previously provided
to Buyer pursuant to Sections 1.2(a) and 1.5(a), (collectively, the "Award
Source Code"). The Source Code Escrow shall be in existence immediately
following the Closing and shall terminate at 5:00 p.m. California time on the
fifteen (15) month anniversary of the Closing Date and shall be governed by the
provisions of the Source Code Escrow Agreement attached hereto as Exhibit I.
Upon termination of the Source Code Escrow, the Award Source code shall be
released from escrow and returned to Seller, unless it has been previously
released to Buyer in accordance with the terms of this Article 8. The Award
Source Code will be released from the Source Code Escrow to Buyer upon receipt
by Escrow Agent of a certificate signed by any officer of Buyer (an "Escrow
Officer's Certificate") stating that one of the following two conditions has
occurred: (i) an aggregate of three or more High Status Defects and/or Critical
Status Defects (as such terms are defined in the Technical Support Agreement)
are simultaneously outstanding in the Extra Penalty Phase, or (ii) any one High
Status Defect or Critical Status Defect is outstanding for, and unresolved
after, 60 days. At the time of delivery of any Escrow Officer's Certificate, a
duplicate copy of such certificate shall be delivered to Seller and for a period
of ten (10) days after receipt by Seller, the Escrow Agent shall make no
delivery to Buyer of the Award Source Code unless the Escrow Agent shall have
received written authorization from Seller to make such delivery. Any such
dispute under this Article 8 shall be handled in accordance with the arbitration
provisions of Section 7.7(f). The fees of the Escrow Agent for the performance
of its duties hereunder shall be paid by Buyer.
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ARTICLE 9
PAYMENT OF EXPENSES
Except as specifically set forth otherwise in this Agreement, each of
Buyer and Seller shall each pay its own fees and expenses incurred incident to
the preparation and carrying out of the transactions herein contemplated
(including legal, accounting and travel).
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Closing Date:
(a) by mutual written consent of Seller and Buyer; or
(b) by either Buyer or Seller if (i) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of this Agreement or (ii) there shall be any action taken,
or any statute, rule, regulation or order enacted, promulgated or
issued or deemed applicable to this Agreement by any governmental
authority which would make consummation of such transactions illegal.
10.2 Effect of Termination. In the event of termination of this
Agreement by either Seller or Buyer as provided in Section 10.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of the parties hereto or their respective officers or directors except as
set forth in Section 5.1 and Article 9.
10.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
10.4 Extension; Waiver. At any time prior to the Closing Date, Buyer or
Seller, by such corporate action as shall be appropriate, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (ii) waive any inaccuracies
in the representations and warranties made by the other party 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 if set forth in an instrument in writing signed on behalf of such
party.
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<PAGE>
ARTICLE 11
GENERAL
11.1 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the other shall be in writing and delivered
personally or sent by certified mail, postage prepaid, by telecopy, or by
overnight courier service, as follows:
Buyer: Advent Software, Inc.
301 Brannan Street
San Francisco, California 94107
Attention: Irv Lichtenwald
Telephone No.: (415) 543-7696
Facsimile No.: (415) 777-0794
with a copy to: Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Mark A. Bertelsen
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
Seller: Blackbaud, Inc
4401 Belle Oaks Drive
Charleston, SC 29405-8530
Attention: Tim Smith
Telephone No.: (803) 740-5400
Facsimile No.: (803) 740-5412
with a copy to: Wyrick Robbins Yates & Ponton L.L.P.
4101 Lake Boone Trail, Suite 300
Raleigh, NC 27607
Attention: Larry E. Robbins
Telephone No.: (919) 781-4000
Facsimile No.: (919) 781-4865
or to such other persons as may be designated in writing by the parties, by a
notice given as aforesaid. Any such notice shall be deemed given when delivered
personally, four days after being sent certified mail, postage prepaid, or the
next business day if delivered by telecopy or overnight courier service.
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<PAGE>
11.2 Headings. The headings of the several sections of this Agreement
are inserted for convenience of reference only and are not intended to affect
the meaning or interpretation of this Agreement.
11.3 Counterparts. This Agreement may be executed in counterparts, and
when so executed each counterpart shall be deemed to be an original, and said
counterparts together shall constitute one and the same instrument.
11.4 Binding Nature. This Agreement shall be binding upon and inure to
the benefit of the parties hereto. No party may assign or transfer any rights
under this Agreement, except that Buyer may assign this Agreement, the License
and any document, instrument or agreement executed pursuant to this Agreement to
a successor to substantially all of its business in connection with a change in
the jurisdiction of incorporation of Buyer.
11.5 Merger. Except as set forth in the License and the other
documents, instruments or agreements executed in connection with this Agreement,
this Agreement and the schedules referred to herein (a) set forth the entire
understanding between the parties, (b) supersede all previous written or oral
negotiations, commitments, understandings and agreements relating to the subject
matter hereof (except the agreements regarding confidential information referred
to in Section 5.4 hereof) and (c) merge all prior and contemporaneous
discussions between the parties relating to the subject matter hereof. No party
shall be bound by any definition, condition, representation, warranty or
covenant or provision other than as contained herein or contemplated hereby.
11.6 Bulk Sales. The parties hereto agree that the transactions
contemplated hereby are not subject to the bulk transfer provisions of the
California Commercial Code.
11.7 Incorporation of Schedules. All schedules attached hereto are by
this reference incorporated herein and made a part hereof for all purposes as if
fully set forth herein.
11.8 Applicable Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of California as applied to
contracts entered into solely between residents of, and to be performed entirely
in, such state.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, and the parties
have each signed this Agreement, all as of the date first above written.
ADVENT SOFTWARE, INC.
By:
Name:
Title:
MICROEDGE, INC.
By:
Name:
Title:
BLACKBAUD, INC.
By:
Name:
Title:
ESCROW AGENT
By:
Name:
Title:
[Signature Page to Asset Purchase Agreement]
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<PAGE>
EXHIBIT A
Technical Support Agreement
Advent Software, Inc., a Delaware corporation ("Advent"), MicroEdge,
Inc., a New York corporation and a wholly-owned subsidiary of Advent
(collectively, the "Buyer"), and Blackbaud, Inc., a South Carolina corporation
("Seller") agree as follows, effective as of this 22nd day of May, 1998:
Seller shall be responsible for responding to customers of Buyer that
report defects in the current version of Award(TM) ("Award") during the period
of fifteen (15) months from the date hereof (the "Support Period"); provided,
however, that Seller will not be obligated to add, enhance or otherwise change
any functionality that exists in the then-current working version of Award
unless necessary to correct or work around a defect.
Response to customer reports of defects in Award will be made in the
following order:
1. Buyer Customer Support will first attempt to replicate the
defect. The defect must be replicated in order to be
identified as a valid defect.
2. Buyer Customer Support and Seller Product Development will
agree upon classification of the defect according to the
following categories of severity:
Low/Cosmetic Status Defects
Defects involving a visual inconsistency or design flaw,
including defects in which the functionality of the system may
be affected but not compromised. Examples are typographical
errors, color/graphic inconsistencies, Windows(TM) commands
that respond to keyboard but not mouse.
Medium Status Defects
Defects resulting in incorrect functionality that may
interrupt a task but that cause no damage to the system or
data. For example, activating the "Print" command instead
cancels the print process, but the data remains intact and the
system continues to operate.
High Status Defects
Defects that threaten the integrity of the software or data
and/or cause erroneous results. Examples are run time errors,
incorrect calculations, or errors in core functionality.
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Critical Status Defects
Defects that destroy or corrupt data, or incapacitate core
functionality, e.g., database corruption.
3. Seller will allocate programming resources to correct defects
based on the classifications defined above in order of
importance. For example, Critical Status Defects take
precedence over all others; other defects follow in order of
severity.
4. Seller will be deemed to have corrected a defect at the time
the correction is received by any Licensee reporting a defect.
If a defect classified as high or critical will take several days to
correct, Seller will regularly report progress to Buyer Customer Support. These
support personnel can then relate the appropriate status message to the
customer. In these cases, Seller/Buyer staff may offer workarounds where
applicable. During the Support Period, Seller will maintain (a) two programmers
responsible for the technical maintenance of Award and (b) a product support
manager who will be the customer support contact point for Seller and will be
responsible for Seller's customer support of Award.
Buyer acknowledges that defects often result not from software but from
a combination of the software interacting with specific hardware, operating
systems, network systems, etc., and that Seller does not guaranty the correction
of defects.
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<PAGE>
IN WITNESS WHEREOF, this Technical Support Agreement has been executed
effective as of the date first set forth above:
ADVENT SOFTWARE, INC.
By:
Name:
Title:
BLACKBAUD, INC.
By:
Name:
Title:
MICROEDGE, INC.
By:
Name:
Title:
[Signature Page to Technical Support Agreement]
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<PAGE>
ASSET PURCHASE AGREEMENT
BY AND AMONG
ADVENT SOFTWARE, INC.
MICROEDGE, INC.
AND
BLACKBAUD, INC.
Dated as of May 22, 1998
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<PAGE>
TABLE OF CONTENTS
(continued)
Page
TABLE OF CONTENTS
Page
ARTICLE 1 - PURCHASE AND SALE OF ASSETS........................................1
1.1 Purchase and Sale............................................1
1.2 Description of Acquired Assets...............................1
1.3 Consents and Third-Party Licenses............................3
1.4 Assumption of Seller's Liabilities...........................3
1.5 Intellectual Property License................................3
ARTICLE 2 - CONSIDERATION; CLOSING; POST-CLOSING ADJUSTMENT....................5
2.1 Consideration................................................5
2.2 Closing......................................................5
2.3 Sales and Use Taxes..........................................7
2.4 Allocation...................................................8
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SELLER...........................8
3.1 Organization of Seller.......................................8
3.2 Due Authorization............................................8
3.3 Due Execution and Enforceability.............................8
3.4 No Conflict..................................................8
3.5 Consents and Approvals of Governmental Authorities...........9
3.6 Proprietary Rights and Ownership.............................9
3.7 Contracts...................................................10
3.8 Restrictions on Business Activities.........................10
3.9 Title to Assets.............................................10
3.10 Share Acquisition Entirely for Own Account..................10
3.11 Reliance Upon Seller's Representations......................11
3.12 Receipt of Information......................................11
3.13 Investment Experience.......................................11
3.14 Restricted Securities.......................................11
3.15 Information Supplied........................................12
3.16 Taxes.......................................................12
3.17 Brokers' or Finders' Fees...................................12
3.18 Representations Complete....................................12
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TABLE OF CONTENTS
(continued)
Page
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF BUYER...........................12
4.1 Organization of Buyer.......................................13
4.2 Due Authorization...........................................13
4.3 Due Execution and Enforceability............................13
4.4 No Conflict.................................................13
4.5 Consents and Approvals of Governmental Authorities..........13
4.6 SEC Documents...............................................13
4.7 Shares of Common Stock......................................14
4.8 Brokers' or Finders' Fees...................................14
ARTICLE 5 - CERTAIN POST-CLOSING COVENANTS....................................14
5.1 Good Faith; Further Assurances..............................14
5.2 Performance of Materially Varying Obligations...............15
5.3 Grant Management Product Support............................15
5.4 Qualified Leads.............................................15
5.5 Confidentiality.............................................15
5.6 Non-Solicitation............................................15
ARTICLE 6 - NON-COMPETITION...................................................16
6.1 Agreement by Seller.........................................16
6.2 Agreement by Buyer..........................................16
ARTICLE 7 - SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNITY; ESCROW ...................................................17
7.1 Survival of Representations and Warranties..................17
7.2 Indemnification by Seller...................................17
7.3 Indemnification by Buyer....................................17
7.4 Notice and Defense of Third-Party Claims....................17
7.5 Limitation of Remedies......................................18
7.6 Minimum; Maximum............................................18
7.7 Escrow Arrangements.........................................18
ARTICLE 8 - SOURCE CODE ESCROW................................................24
ARTICLE 9 - PAYMENT OF EXPENSES...............................................25
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<PAGE>
TABLE OF CONTENTS
(continued)
Page
ARTICLE 10 - TERMINATION, AMENDMENT AND WAIVER................................25
10.1 Termination.................................................25
10.2 Effect of Termination.......................................25
10.3 Amendment...................................................26
10.4 Extension; Waiver...........................................26
ARTICLE 11 - GENERAL..........................................................26
11.1 Notices.....................................................26
11.2 Headings....................................................27
11.3 Counterparts................................................27
11.4 Binding Nature..............................................27
11.5 Merger......................................................27
11.6 Bulk Sales..................................................27
11.7 Incorporation of Schedules..................................27
11.8 Applicable Law..............................................28
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SCHEDULES
Schedule 1.2(a) Grant Management Products
Schedule 1.2(b) Customer and Marketing Databases
Schedule 1.2(c) Certain Licenses and Assigned Contracts
Schedule 1.2(d) Trademarks, Trade Names and Brand Names
Schedule 1.2(f) Unearned Maintenance Revenue
Schedule 1.3 Third Party Consents and Licenses
Schedule 1.4 Assumed Liabilities
Schedule 1.5(a) Intellectual Property Not Related to Award Software Product
Schedule 1.5(a)(i) Proprietary Customer Information
Schedule 1.5(a)(ii) Third Party Software Prohibitions
Schedule 3.6 Proprietary Rights and Ownership
Schedule 3.8 Restrictions on Business Activities
Schedule 3.9(b) Title to Assets
EXHIBITS
Exhibit A Technical Support Agreement
Exhibit B Assignment and Assumption Agreement
Exhibit C Bill of Sale and General Assignment of Assets
Exhibit D Assignment of Trademarks
Exhibit E Assignment of Copyrights
Exhibit F Declaration of Registration Rights
Exhibit G Form of Opinion of Counsel to Seller
Exhibit H Form of Opinion of Counsel to Buyer
Exhibit I Source Code Escrow Agreement
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EXHIBIT 4.1
ADVENT SOFTWARE, INC.
DECLARATION OF REGISTRATION RIGHTS
This Declaration of Registration Rights ("Declaration") is made as of
the Closing Date (as defined in the Agreement) by Advent Software, Inc., a
Delaware corporation ("Buyer"), for the benefit of Blackbaud, Inc., a South
Carolina corporation (the "Seller"), acquiring shares of Common Stock of Buyer
pursuant to that certain Asset Purchase Agreement dated as of May [22], 1998
(the "Agreement"), between Buyer and the Company.
1. Definitions. As used in this Declaration:
a. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
b. "Securities Act" means the Securities Act of 1933, as
amended.
c. "Form S-3" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the Commission which similarly permits inclusion or
incorporation of substantial information by reference to other documents filed
by Buyer with the Commission.
d. "Holder" means: (i) Seller, for so long as such holder
continues to hold such shares, or (ii) a transferee of Registrable Securities by
a Holder, to whom registration rights under this Declaration are assigned
pursuant to Section 9 of this Declaration.
e. "Registrable Securities" means for each Holder the shares
of Buyer Common Stock issued to such Holder pursuant to the Agreement, together
with all other shares of Buyer Common Stock issued in respect thereof (by way of
stock split, dividend or otherwise), and for all Holders the aggregate of all
Registrable Securities held by all such Holders. Registrable Securities shall
include any shares of Buyer Common Stock transferred by a Holder pursuant to
Section 9 hereof to any person, provided that such transferee agrees to be bound
by the terms of this Declaration.
f. "SEC" means the Securities and Exchange Commission.
Capitalized terms not otherwise defined herein have the meanings given
to them in the Agreement.
2. Registration. Buyer shall use its commercially reasonable efforts to
cause the Registrable Securities to be held by each Holder following the
Acquisition to be registered under the Securities Act so as to permit the resale
thereof, and in connection therewith shall use all commercially reasonable
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<PAGE>
efforts to prepare and file with the SEC promptly after Closing, and shall use
its commercially reasonable efforts to cause to become effective by not later
than July 30, 1998, a registration statement on Form S-3 or on such other form
as is then available under the Securities Act covering the Registrable
Securities; provided, however, that each Holder shall provide all such
information and materials to Buyer and take all such action as may be required
in order to permit Buyer to comply with all applicable requirements of the SEC
and to obtain any desired acceleration of the effective date of such
registration statement. Such provision of information and materials is a
condition precedent to the obligations of Buyer pursuant to this Declaration.
Buyer shall not be required to effect more than one (1) registration under this
Declaration. The offering made pursuant to such registration shall not be
underwritten.
3. Postponement of Registration. Notwithstanding Section 2 above, Buyer
shall be entitled to postpone the declaration of effectiveness of the
registration statement prepared and filed pursuant to Section 2 for a reasonable
period of time, but not in excess of thirty (30) calendar days after the
applicable deadline, if the Board of Directors of Buyer, acting in good faith,
determines that there exists material nonpublic information about Buyer which
the Board does not wish to disclose in a registration statement (due to the fact
that such disclosure may not be in the best interests of Buyer or Buyer's
stockholders) which information would otherwise be required by the Securities
Act to be disclosed in the registration statement to be filed pursuant to
Section 2 above.
4. Obligations of Buyer. Subject to the limitations of Sections 3, 5
and 11, Buyer shall (i) keep the registration statement filed in accordance with
Section 2 hereof effective until the earlier of (A) sixty (60) days after the
date of effectiveness of that registration statement or (B) such time as all
Registrable Securities have been sold hereunder; (ii) prepare and file with the
SEC such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all securities proposed to be registered in such registration statement;
(iii) furnish to each Holder such number of copies of any prospectus (including
any preliminary prospectus and any amended or supplemented prospectus) in
conformity with the requirements of the Securities Act, and such other
documents, as each Holder may reasonably request in order to effect the offering
and sale of the shares of the Registrable Securities to be offered and sold, but
only while Buyer shall be required under the provisions hereof to cause the
registration statement to remain current; and (iv) use its commercially
reasonable efforts to register or qualify the shares of the Registrable
Securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions as each Holder shall reasonably request (provided
that Buyer shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such jurisdiction where it has not been qualified).
5. Selling Procedures. Any sale of Registrable Securities pursuant to
the registration statement filed in accordance with Section 2 hereof shall be
subject to the following conditions and procedures:
a. Stockholder Notice: The selling Holder shall provide
written notice ("Stockholder Notice") to Buyer no less than five (5) business
days prior to such Holder's intended sale.
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Within five (5) business days of receipt of the Stockholder Notice, Buyer will
inform such Holder in writing if the registration statement and final prospectus
then on file with the SEC is current and otherwise complies with the Securities
Act such that sales may be made thereunder. Beginning immediately upon receipt
of notice from Buyer that the registration statement is current and complies
with the Securities Act, such Holder shall then have ten (10) business days to
sell the Registrable Securities proposed to be sold, unless the notice from
Buyer specifies that no sale may be made until the date of intended sale, as
specified in the Stockholder Notice, in which case the Holders must wait until
the date of the intended sale to make such sale and Holder shall have ten (10)
business days thereafter to make such sale. After such ten (10) day period, the
seller shall once again comply with the procedures set forth in this Section 5.a
prior to any further sales;
b. Updating the Prospectus: If Buyer informs the selling
Holder that the registration statement or final prospectus then on file with the
SEC is not current or otherwise does not comply with the Securities Act, Buyer
shall use commercially reasonable efforts to provide to the selling Holder a
current prospectus that complies with the Securities Act on or before the date
of the intended sale of the Registrable Securities as disclosed in the
Stockholder Notice; provided, however, that for a period of not more than ninety
(90) days (or any number of lesser periods which total not more than ninety (90)
days) during any twelve-month period, Buyer shall have the right to delay the
preparation of a current prospectus that complies with the Securities Act
without explanation to such Holder;
c. Blackout Periods: Holders who become employees of Buyer
agree to be bound by Buyer's Insider Trading Policy as such may be in effect
from time to time for so long as such Holders remain employees of Buyer;
d. General: Notwithstanding the foregoing, Buyer shall notify
each Holder (i) of any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of the registration
statement for amendments or supplements to the registration statement or related
prospectus or for additional information relating to the registration statement,
(ii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose, (iii) of the
receipt by Buyer of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, or (iv) of the happening of any event which makes
any statement made in the registration statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in the
registration statement or prospectus so that, in the case of the registration
statement, it will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of the prospectus, it
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. In such event,
Buyer may suspend use of the prospectus on written notice to each Holder, in
which case each Holder shall not dispose of Registrable Securities covered by
the registration statement or prospectus until copies of a supplemented or
amended prospectus are distributed to the Holders or until the Holders are
advised in writing by Buyer that the use of the applicable prospectus may be
resumed. Buyer shall use its commercially reasonable efforts to ensure
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that the use of the prospectus may be resumed as soon as practicable. Buyer
shall use its commercially reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of the registration statement, or the lifting
of any suspension of the qualification (or exemption from qualification) of any
of the securities for sale in any jurisdiction, at the earliest practicable
moment. Buyer shall, upon the occurrence of any event contemplated by clause
(iv), prepare a supplement or post-effective amendment to the registration
statement or a supplement to the related prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
such prospectus will not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
6. Availability of Form S-3. Buyer represents that it is currently
eligible to utilize Form S-3 and agrees that, for a period of one (1) year from
the Closing, Buyer will not intentionally take any action which would preclude
Buyer's eligibility to use Form S-3.
7. Expenses. Buyer shall pay all of the out-of-pocket expenses
incurred, other than underwriting or selling discounts and commissions, in
connection with the registration of Registrable Securities pursuant to this
Declaration, including, without limitation, all SEC, National Association of
Securities Dealers, Inc. and blue sky registration and filing fees, printing
expenses, transfer agents' and registrars' fees, and the reasonable fees and
disbursements of Buyer's outside counsel and independent accountants.
8. Reports Under Securities Exchange Act of 1934. Buyer agrees to:
a. use all commercially reasonable efforts to file with the SEC in a timely
manner all reports and other documents required of Buyer under the Securities
Act and the Exchange Act; and
b. furnish to each Holder forthwith upon request (i) a written
statement by Buyer that it has complied with the reporting requirements of the
Securities Act and the Exchange Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time that it so
qualifies), (ii) a copy of the most recent annual or quarterly report of Buyer
and (iii) such other information as may be reasonably requested in availing each
Holder of any rule or regulation of the SEC which permits the selling of any
such securities pursuant to Form S-3.
9. Assignment of Registration Rights. The rights of a Holder pursuant
to this Declaration may be assigned by a Holder to a transferee of Registrable
Securities only if: (a) Buyer is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee and a
copy of a duly executed written instrument in form reasonably satisfactory to
Buyer pursuant to which such transferee assumes all of the obligations and
liabilities of its transferor hereunder, agrees itself to be bound hereby and
provides Buyer with such reasonable information as Buyer may request to permit
the transferee to sell such Registrable Securities pursuant to the registration
statement filed in accordance with Section 2 hereof, and (b) immediately
following such transfer, the disposition of such Registrable Securities by the
transferee is restricted under the Securities Act.
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10. Amendment of Registration Rights. The Holders of a majority of the
Registrable Securities then outstanding may, with the consent of Buyer, amend
the registration rights granted hereunder.
11. Termination. The registration rights set forth in this Declaration
shall terminate with respect to a Holder (and the shares held by such Holder
shall cease to constitute Registrable Securities) upon the date which is one
year following the Closing of the Acquisition.
12. Obligations of Holders. By exercising any rights hereunder, each
Holder shall be deemed to assume all obligations of a Holder hereunder as though
such Holder were a signatory hereto. Buyer may require Holders to execute an
instrument whereby such Holders expressly assume all obligations of Holders
hereunder as a condition precedent to any obligations of Buyer hereunder.
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