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UNITED STATES
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
Date of Report (Date of earliest event report) June 4, 1998
----------------------------------
JDA Software Group, Inc.
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(Exact name of registrant as specified in charter)
Delaware 0-27876 86-0787377
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
11811 North Tatum Blvd., Suite 2000, Phoenix, Arizona 85028
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 404-5500
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 4, 1998, JDA Software Group, Inc. (the "Registrant"), through its
wholly-owned subsidiary, JDA Software, Inc., an Arizona corporation
("Purchaser"), completed the acquisition (the "Acquisition") of certain assets
and assumed certain liabilities of Comshare, Incorporated, a Michigan
corporation ("Comshare"), pursuant to an asset purchase agreement dated as of
June 4, 1998 by and among the Registrant, Purchaser, and Comshare ("Asset
Purchase Agreement"). A copy of the Asset Purchase Agreement and related
software license agreement are filed as Exhibits 2.1 and 2.2, respectively, to
this report and are incorporated herein by this reference.
Comshare and its subsidiaries develop, market and support client/server
decision support software applications designed to improve business analysis,
planning, reporting and decision making.
Purchaser acquired all of the material assets of Comshare that relate to
its Arthur(TM) and Boost Sales and Margin Planning Software products applicable
to the retail and consumer packaged goods industries (the "Assets"). The Assets
comprise certain software products, accounts receivable related to certain
deferred revenue, rights and benefits under assumed contracts, intellectual
property rights, intangibles, permits and business records related to the
Assets. Purchaser assumed any liability arising from the failure of current
versions of acquired software products to be year 2000 compliant, while
Comshare retained such liability with respect to all prior versions of such
products.
The purchase price for the Assets was determined through arms-length
negotiations by the parties. The consideration for the Assets was $44 Million,
of which $41 million was paid in cash at the closing and $3 million was placed
into escrow, to be held as security for any losses incurred by Purchaser in the
event of certain breaches by Comshare of covenants, representations and
warranties contained in the Asset Purchase Agreement. The source of the funds
for the consideration came from the Registrant's immediately available funds.
The Acquisition will be treated as a purchase for financial accounting
purposes. Prior to the execution of the Asset Purchase Agreement, there was no
material relationship between the Registrant, or its affiliates, and Comshare
or between any officers or directors of the Registrant, or its affiliates, and
the officers or directors of Comshare.
ITEM 5. OTHER EVENTS.
On June 4, 1998, the Registrant issued a press release announcing the
Acquisition. The press release is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
Financial statements for the business acquired as described in
Item 2 above will be filed by amendment to this Form 8-K.
(b) Pro forma financial information.
Pro Forma financial information reflecting the effect of the
business acquired as described in Item 2 above will be filed by amendment to
this Form 8-K.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
2.1 Asset Purchase Agreement dated as of June 4, 1998
by and among JDA Software Group, Inc., JDA
Software, Inc. and Comshare, Incorporated.
2.2 Software License Agreement dated as of June 4,
1998 by and between Comshare, Incorporated and
JDA Software, Inc.
99.1 Press release issued June 4, 1998.
</TABLE>
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.
JDA Software Group, Inc.
Date: June 19, 1998 By: /s/ Kristen L. Magnuson
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Kristen L. Magnuson
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
2.1 Asset Purchase Agreement dated as of June 4, 1998 by and among
JDA Software Group, Inc., JDA Software, Inc., and Comshare,
Incorporated.
2.2 Software License Agreement dated as of June 4, 1998 by and
between Comshare, Incorporated and JDA Software, Inc.
99.1 Press release issued June 4, 1998.
</TABLE>
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EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
by and among
JDA Software Group, Inc.,
a Delaware corporation
and
JDA Software, Inc.,
an Arizona corporation and a wholly-owned subsidiary of JDA Software Group,
Inc.
as "Purchaser"
and
Comshare, Incorporated,
a Michigan corporation
as "Seller"
with respect to Seller's Arthur and Boost Sales and Margin Planning Software
Products
Dated as of June 4, 1998
================================================================================
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TABLE OF CONTENTS
Article Page
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I DEFINITIONS...........................................................1
1.1. "Accounts Receivable"...........................................1
1.2. "Acquisition"...................................................1
1.3. "Affiliate".....................................................1
1.4. "Affiliate Distributor Agreements"..............................1
1.5. "Ancillary Agreements"..........................................2
1.6. "Assets"........................................................2
1.7. "Assumed Contracts".............................................2
1.8. "Assumed Liabilities"...........................................2
1.9. "Bill of Sale, Assignment and Assumption Agreement".............2
1.10. "Business Records"..............................................2
1.11. "Closing".......................................................2
1.12. "Closing Date"..................................................2
1.13. "COBRA".........................................................2
1.14. "Code"..........................................................2
1.15. "Competitor Retail Software Vendor".............................2
1.16. "Consultants"...................................................2
1.17. "Contracts".....................................................2
1.18. "Covenant Not to Compete".......................................3
1.19. "Cross-License Agreement".......................................3
1.20. "Customer License Agreements"...................................3
1.21. "Deferred Revenue"..............................................3
1.22. "Dollars" or "dollars"..........................................3
1.23. "Employee Termination Date".....................................3
1.24. "Employees".....................................................3
1.25. "Encumbrances"..................................................3
1.26. "ERISA".........................................................3
1.27. "Escrow Fund"...................................................3
1.28. "Escrow Fund Agreement".........................................3
1.29. "Exchange Act"..................................................4
1.30. "Excluded Assets"...............................................4
1.31. "Excluded Liabilities"..........................................4
1.32. "Facilities"....................................................4
1.33. "Financial Statements"..........................................4
1.34. "GAAP"..........................................................4
1.35. "Governmental Entity"...........................................4
1.36. "HSR Act".......................................................4
1.37. "Indemnifiable Losses"..........................................4
1.38. "Indemnification Claim".........................................4
1.39. "Indemnitor" and "Indemnitee"...................................4
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TABLE OF CONTENTS
Article Page
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1.40. "Intangibles"...................................................4
1.41. "Knowledge" or "Known"..........................................4
1.42. "Laws or Decrees"...............................................4
1.43. "Liability".....................................................4
1.44. "License Agreement".............................................5
1.45. "Licensed Intellectual Property"................................5
1.46. "Losses"........................................................5
1.47. "Material Adverse Change".......................................5
1.48. "Material Adverse Effect".......................................5
1.49. "Negotiation Period"............................................5
1.50. "New Purchaser Consultants".....................................5
1.51. "New Purchaser Employees".......................................5
1.52. "Permits".......................................................5
1.53. "Permitted Encumbrances"........................................5
1.54. "Person"........................................................6
1.55. "Products"......................................................6
1.56. "Purchase Price"................................................6
1.57. "SEC"...........................................................6
1.58. "Securities Act"................................................6
1.59. "Seller Intellectual Property"..................................6
1.60. "Seller Losses".................................................6
1.61. "Seller Software Programs"......................................6
1.62. "Software Programs".............................................6
1.63. "Tangible Assets"...............................................6
1.64. "Tax"...........................................................6
1.65. "Tax Return"....................................................7
1.66. "Third Party Distributor Agreements"............................7
1.67. "Third Party In-Licenses".......................................7
1.68. "Third Party Software Programs".................................7
1.69. "Transferred Intellectual Property".............................7
1.70. "Transition Distribution Agreement".............................7
1.71. "Transition Services and Facilities Agreement"..................7
1.72. "Value-Added Reseller Agreement"................................7
1.73. "Vehicle Leases"................................................7
1.74. "Year 2000 Compliant"...........................................7
II PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES................9
2.1. Purchase and Sale of Assets and Assumption of Assumed
Liabilities.....................................................9
2.2. Assets..........................................................9
2.3. Excluded Assets................................................10
2.4. Assumption of Liabilities......................................10
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TABLE OF CONTENTS
Article Page
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2.5. Purchase Price.................................................12
2.6. Escrow Fund....................................................12
2.7. Allocation.....................................................12
III THE CLOSING..........................................................12
3.1. The Closing....................................................12
IV REPRESENTATIONS AND WARRANTIES OF SELLER.............................12
4.1. Organization...................................................12
4.2. Subsidiaries...................................................13
4.3. Authorization..................................................13
4.4. No Conflicts; Consents.........................................13
4.5. Title to Assets; Entire Business...............................13
4.6. Tangible Assets................................................14
4.7. Litigation and Claims..........................................14
4.8. Compliance with Laws and Regulations; Governmental
Licenses, Etc..................................................14
4.9. Labor Matters..................................................14
4.10. Tax Matters....................................................16
4.11. Financial Statements...........................................17
4.12. Absence of Certain Changes or Events...........................17
4.13. Intellectual Property; Proprietary Rights......................18
4.14. Contracts and Arrangements.....................................20
4.15. Insurance......................................................20
4.16. Brokers........................................................20
4.17. Warranties and Service Payment Obligations.....................20
4.18. Business Records...............................................21
4.19. SEC Documents..................................................21
V REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................21
5.1. Organization and Good Standing.................................21
5.2. Power, Authorization and Validity..............................21
5.3. No Violation of Existing Agreements............................22
5.4. Compliance With Other Instruments and Laws.....................22
5.5. Litigation.....................................................22
5.6. Brokers........................................................22
5.7. HSR Act........................................................22
VI PRE-CLOSING COVENANTS OF SELLER......................................23
6.1. Advice of Changes..............................................23
6.2. Conduct of Business............................................23
6.3. Access to Information..........................................24
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TABLE OF CONTENTS
Article Page
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6.4. Satisfaction of Conditions Precedent...........................24
6.5. Exclusive Dealings.............................................24
VII PRE-CLOSING COVENANTS OF PURCHASER...................................25
7.1. Advice of Changes..............................................25
7.2. Satisfaction of Conditions Precedent...........................25
VIII MUTUAL COVENANTS.....................................................25
8.1. Regulatory Filings; Consents; Reasonable Efforts...............25
8.2. HSR Filings....................................................25
8.3. Further Assurances.............................................26
IX CONDITIONS TO CLOSING................................................26
9.1. Conditions to Each Party's Obligations.........................26
9.2. Conditions to Obligations of Seller............................27
9.3. Conditions to Obligations of Purchaser.........................28
X POST-CLOSING MATTERS.................................................30
10.1. New Purchaser Employees........................................30
10.2. New Purchaser Consultants......................................34
10.3. Affiliate and Third Party Distributor Agreements...............35
10.4. Obtaining Necessary Consents for Assignment of the Assumed
Contracts......................................................35
10.5. Covenant Not to Compete........................................35
10.6. Access to Business Records.....................................36
10.7. Confidentiality................................................37
10.8. Tax Liability and Tax Returns..................................38
10.9. French Legal Requirements......................................38
10.10.Source Code....................................................39
10.11.Communications Plan; Press Release.............................39
10.12.Transition Services............................................39
10.13.Further Assurances of Seller...................................39
10.14.Further Assurances of Purchaser................................39
10.15.Deferred Revenue...............................................39
10.16.Additional Covenants of Purchaser..............................40
10.17.Additional Covenants of Seller.................................40
XI TERMINATION OF AGREEMENT.............................................41
11.1. Mutual Consent.................................................41
11.2. Termination by Purchaser.......................................41
11.3. Termination by Seller..........................................41
11.4. Termination for Other Reasons..................................41
11.5. Notice of Termination; Effect of Termination...................42
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TABLE OF CONTENTS
Article Page
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11.6. Fees and Expenses..............................................42
XII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION..........42
12.1. Survival of Representations and Warranties.....................42
12.2. Indemnification by Seller......................................43
12.3. Indemnification by Purchaser and Parent........................45
12.4. Procedures for Indemnification.................................46
12.5. Defense of Third Party Claims..................................47
12.6. Settlement of Third Party Claims...............................48
12.7. Escrow Fund....................................................48
12.8. Escrow Period..................................................48
XIII GENERAL..............................................................48
13.1. Governing Law..................................................48
13.2. Assignment; Binding upon Successors and Assigns................48
13.3. Severability...................................................48
13.4. Entire Agreement...............................................49
13.5. Counterparts...................................................49
13.6. Expenses.......................................................49
13.7. Other Remedies.................................................49
13.8. Amendment and Waivers..........................................49
13.9. Waiver.........................................................49
13.10.Arbitration....................................................50
13.11.Notices........................................................50
13.12.Construction and Interpretation of Agreement...................51
13.13.No Joint Venture...............................................51
13.14.Absence of Third Party Beneficiary Rights......................52
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All of the following exhibits and schedules to the Asset Purchase
Agreement listed below have been omitted, except for the Exhibit A-1 License
Agreement (*) which has been incorporated as Exhibit 2.2 to this Form 8-K.
The Registrant agrees to furnish supplementally a copy of any omitted
exhibits and schedules to the Securities and Exchange Commission upon request.
EXHIBITS AND SCHEDULES
Exhibit Description
------- -----------
A-1 License Agreement*
A-2 Cross-License Agreement
A-3 Value-Added Reseller Agreement
A-4 Transition Distribution Agreement
A-5 Transition Services and Facilities Agreement
B Escrow Fund Agreement
C Bill of Sale, Assignment and Assumption Agreement
D Opinion of Gray Cary Ware & Freidenrich LLP
E Opinion of Dykema & Gossett PLLC
Schedule Title
-------- -----
Schedule 1.4 Affiliate Distributor Agreements
Schedule 1.7 Assumed Contracts
Schedule 1.15 Competitor Retail Software Vendors
Schedule 1.16 Consultants
Schedule 1.20 Customer License Agreements
Schedule 1.21 Deferred Revenue
Schedule 1.24 Employees
Schedule 1.41 Knowledge of Senior Officers of Seller
Schedule 1.53 Permitted Encumbrances
Schedule 1.55 Products
Schedule 1.61 Seller Software Programs
Schedule 1.66 Third Party Distributor Agreements
Schedule 1.67 Third Party In-Licenses
Schedule 1.68 Third Party Software Programs
Schedule 1.69 Transferred Intellectual Property
Schedule 1.73 Vehicle Leases
Schedule 2.7 Purchase Price Allocation
Schedule 4.2 Subsidiaries
Schedule 4.4 Conflicts and Required Consents
Schedule 4.7 Litigation and Claims
Schedule 4.9(a) Employee not listed on Schedule 1.24
Schedule 4.9(c) Employee Termination Matters
Schedule 4.9(d) Employment Contracts and Employee Benefits
Schedule 4.9(e) Employee Pension Benefit Plans
Schedule 4.9(f) Medical and Welfare Benefits
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Schedule 4.10(c) Tax Audits and Deficiencies
Schedule 4.11 Financial Statements
Schedule 4.13(b) Current Version of Products
Schedule 4.13(c) Intellectual Property Rights
Schedule 4.13(k) Year 2000 Compliance Problems
Schedule 4.13(l) Product Liability and Warranty Claims
Schedule 4.13(m) Program Errors
Schedule 4.14(a) Current Maintenance Customers
Schedule 4.14(c) Affiliate Distribution Arrangements
Schedule 4.17 Warranties and Service Payment Obligations
Schedule V Purchaser Disclosure Schedule
Schedule 10.1(a) Form of Offer of Employment
Schedule 10.15 Unbilled Deferred Revenue
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
June 4, 1998 by and among JDA SOFTWARE GROUP, INC., a Delaware corporation
("Parent") and JDA SOFTWARE, INC., an Arizona corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), on the one hand, and COMSHARE, INCORPORATED,
a Michigan corporation ("Seller"), on the other hand.
RECITALS
A. Seller is engaged in, among other things, the business of developing,
marketing, selling and supporting advanced technology merchandise planning
software products to customers in the retail industry and in the consumer
packaged goods industry (collectively, the "Business");
B. Seller desires to sell, assign, transfer and convey to Purchaser, and
Purchaser desires to purchase and acquire from Seller, certain of the software
products and other assets of Seller relating to the operation of the Business,
and in connection therewith, Purchaser has agreed to assume certain of the
liabilities of Seller relating to the Business, all on the terms set forth
herein (collectively, the "Acquisition").
NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth or referenced below:
1.1 "Accounts Receivable" shall mean any and all accounts receivable and
notes receivable of or amounts owing or payable to Seller as of the Closing
Date.
1.2. "Acquisition" shall have the meaning set forth in Recital A hereof.
1.3. "Affiliate" of a Person shall mean any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Person. For purposes of this definition,
"control" of a Person shall mean the ownership or control of more than fifty
percent (50%) of the voting securities of such Person or the power, by contract
or otherwise, to designate a majority of the members of the board of directors
(or in the case of unincorporated entities, persons exercising similar
functions).
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1.4. "Affiliate Distributor Agreements" shall mean those distributor and
other agreements pursuant to which Seller has granted an Affiliate distribution
rights for any Product within a particular territory listed on Schedule 1.4
attached hereto.
1.5. "Ancillary Agreements" shall mean the License Agreement, the Cross
License Agreement, the Value-Added Reseller Agreement, the Transition
Distribution Agreement and the Transition Services and Facilities Agreement, in
the forms attached hereto as Exhibits A-1 through A-5 respectively.
1.6. "Assets" shall have the meaning set forth in Section 2.2 hereof.
1.7. "Assumed Contracts" shall mean those Customer License Agreements,
Vehicle Leases and other Contracts listed on Schedule 1.7 attached hereto.
1.8. "Assumed Liabilities" shall have the meaning set forth in Section
2.4(a) hereof.
1.9. "Bill of Sale, Assignment and Assumption Agreement" shall mean that
certain Bill of Sale, Assignment and Assumption Agreement in the form attached
hereto as Exhibit C, to be executed by the parties at Closing.
1.10. "Business Records" shall mean any and all books, records, files,
drawings, documentation, data or information of Seller that have been or now are
used exclusively in the Business, the Assets or the Assumed Liabilities,
together with all customer records related to those Customer License Agreements
listed on Schedule 1.7, a copy of Seller's report regarding its software bug and
tracking system with respect to the Products and, to the extent allowed by
applicable law, all files and records related to the Employees and the
contractors.
1.11. "Closing" shall have the meaning set forth in Section 3.1 hereof.
1.12. "Closing Date" shall have the meaning set forth in Section 3.1
hereof.
1.13. "COBRA" shall mean the provisions for the continuation of health
care enacted by the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, as set forth in the Code and ERISA, and any amendments thereto and
successor provisions thereof, including any regulations promulgated under the
applicable provisions of the Code and ERISA.
1.14. "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.15. "Competitor Retail Software Vendor" shall mean (i) any software
vendor who derives 50% or more of its total revenues from the retail industry,
and (ii) those Persons listed on Schedule 1.15 attached hereto.
1.16. "Consultants" shall mean those independent contractors and other
individuals supplied by third parties who are currently providing Seller with
consulting services related to or in connection with the Business listed on
Schedule 1.16 attached hereto.
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1.17. "Contracts" shall mean all written contracts, agreements and
arrangements pursuant to which Seller enjoys any right or benefit or undertakes
any obligation related to the Business or the Products.
1.18. "Covenant Not to Compete" shall mean, collectively, the covenants of
Seller set forth in Section 10.5 hereof.
1.19. "Cross-License Agreement" shall mean that certain Cross-License
Agreement, in the form attached hereto on Exhibit A-2, to be executed by the
parties at the Closing pursuant to which the Purchaser will grant Seller certain
rights with respect to the Products in connection with Customer License
Agreements to be retained by Seller, and Seller will grant Purchaser certain
rights with respect to software products retained by Seller in connection with
Customer License Agreements to be assigned to Purchaser herewith.
1.20. "Customer License Agreements" shall mean those license agreements
entered into by Seller or its Affiliates with end users of the Products pursuant
to which Seller enjoys any right or benefit or undertakes any obligation related
to any of the Products listed on Schedule 1.20 attached hereto.
1.21. "Deferred Revenue" shall mean (i) the license fees and maintenance
revenue under those Customer License Agreements and Third Party Distributor
Agreements listed on Schedule 1.21 attached hereto that have not yet been
recognized under GAAP because outstanding obligations have not been fulfilled as
of the Closing Date; (ii) prebillings for implementation services under Assumed
Contracts that has not been recognized under GAAP because the work has not been
performed as of the Closing Date; and (iii) prebilled maintenance under Assumed
Contracts or Third Party Distributor Agreements that has not been recognized
under GAAP because the maintenance relates to the maintenance period after the
Closing Date.
1.22. "Dollars" or "dollars" shall mean the lawful currency of the United
States of America.
1.23. "Employee Termination Date" shall mean (a) with respect to any
Employee based in England or Germany, the Closing Date; (b) with respect to any
Employee based in France, the French Operative Date; or (c) with respect to any
Employee based in the United States, the later of (i) June 15, 1998, or if
applicable, (ii) the date upon which such employee has received a valid U.S.
Visa from the U.S. Department of Justice naming Purchaser as the employer of
such person.
1.24. "Employees" shall mean those employees of Seller listed on Schedule
1.24 attached hereto.
1.25. "Encumbrances" shall mean any and all restrictions on or conditions
to transfer or assignment, claims, liabilities, liens, pledges, mortgages,
restrictions, and encumbrances of any kind, whether accrued, absolute,
contingent or otherwise affecting the Assets.
1.26. "ERISA" shall mean the Employment Retirement Income Security Act of
1974, as amended from time to time.
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1.27. "Escrow Fund" shall have the meaning set forth in Section 2.6
hereof.
1.28. "Escrow Fund Agreement" shall mean that certain Escrow Fund
Agreement, in the form attached hereto as Exhibit B, to be executed by the
parties at the Closing.
1.29. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended to date.
1.30. "Excluded Assets" shall have the meaning set forth in Section 2.3
hereof.
1.31. "Excluded Liabilities" shall have the meaning set forth in Section
2.4(c) hereof.
1.32. "Facilities" shall mean those office facilities or other real
property that are currently owned or leased by Seller or its Affiliates and used
in connection with the operation of the Business.
1.33. "Financial Statements" shall have the meaning set forth in Section
4.11(a) hereof.
1.34. "GAAP" shall mean generally accepted accounting principles, as in
effect in the United States from time to time, as supplemented by Regulation S-X
as promulgated by the SEC, as in effect from time to time, consistently applied.
1.35. "Governmental Entity" shall mean any court, or any federal, state,
municipal, provincial or other governmental authority, department, commission,
board, service, agency, political subdivision or other instrumentality.
1.36. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended from time to time.
1.37. "Indemnifiable Losses" shall have the meaning set forth in Section
12.2(a) hereof.
1.38. "Indemnification Claim" shall have the meaning set forth in Section
12.4(b) hereof.
1.39. "Indemnitor" and "Indemnitee" shall have the respective meanings set
forth in Section 12.4(a) hereof.
1.40. "Intangibles" shall mean guarantees, rights, warranties, claims,
chooses in action, causes of action, demands, rights of recovery, suits,
covenants not to compete and other rights in favor of Seller relating
exclusively to the Assets.
1.41. "Knowledge" or "Known" when used (a) with reference to Seller shall
mean the current actual Knowledge of any of the persons listed on Schedule 1.41
and (b) with reference to Purchaser, it shall mean the current actual Knowledge
of the senior officers of Purchaser.
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1.42. "Laws or Decrees" shall mean all applicable foreign, federal, state,
provincial and local laws, ordinances, rules, statutes, regulations and all
orders, writs, injunctions, awards, judgments or decrees.
1.43. "Liability" shall mean any direct or indirect liability,
indebtedness, obligation, guarantee or endorsement, whether known or unknown,
whether accrued or unaccrued, whether absolute or contingent, whether due or to
become due, or whether liquidated or unliquidated, of Seller relating to the
Business or the Assets.
1.44. "License Agreement" shall mean that certain License Agreement, in
the form attached hereto as Exhibit A-1, to be executed by the parties at the
Closing pursuant to which Seller shall grant Purchaser a non-exclusive license
to use certain of its retained Intellectual Property in connection with the
Products.
1.45. "Licensed Intellectual Property" means the Intellectual Property to
be licensed by Seller to Purchaser pursuant to the License Agreement, the
Cross-License Agreement, the Value-Added Reseller Agreement or the Transition
Distribution Agreement.
1.46. "Losses" shall mean any loss, demand, action, cause of action,
assessment, damage, liability, cost or expense, including without limitation,
interest, penalties and reasonable attorneys' and other professional fees and
expenses incurred in the investigation, prosecution, defense or settlement
thereof or in asserting any rights hereunder, but excluding any consequential
damages related thereto other than consequential damages actually awarded to a
third party as a result of a claim by such third party against a party hereto.
1.47. "Material Adverse Change" shall mean any material adverse change in
the operations, properties, financial condition, or results of operations
relating to the Business, the Assets or the Assumed Liabilities, taken as a
whole.
1.48. "Material Adverse Effect" shall mean any material adverse effect on
the operations, properties, financial condition, or results of operations
relating to the Business, the Assets or the Assumed Liabilities, taken as a
whole.
1.49. "Negotiation Period" shall have the meaning set forth in Section
12.4(d) hereof.
1.50. "New Purchaser Consultants" shall mean the Consultants who are
engaged by Purchaser from and after the Closing Date.
1.51. "New Purchaser Employees" shall mean the Employees who accept
employment with Purchaser effective from and after the Employee Termination
Date.
1.52. "Permits" shall mean any licenses, permits, authorizations,
certificates, franchises, variances, waivers, consents and other approvals from
any Governmental Entity relating to the Business or the Products.
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1.53. "Permitted Encumbrances" shall mean (a) liens for current taxes
which are not past due, and liens described in any schedule hereto which secure
Assumed Liabilities, (b) easements, covenants, rights-of-way or other similar
restrictions and imperfections of title reasonably acceptable to counsel to
Purchaser, (c) liens of mechanics, materialmen, laborers, warehousemen, carriers
and other similar common law or statutory liens arising in the ordinary course
of business which are not yet due and payable or, if due and payable, have been
adequately bonded or are being contested in good faith, (d) Customer License
Agreements, (e) Affiliate Distributor Agreements, (f) Third Party Distributor
Agreements and (g) as listed on Schedule 1.53.
1.54. "Person" shall mean an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a Governmental Entity.
1.55. "Products" shall mean those Seller Software Programs listed on
Schedule 1.55 attached hereto.
1.56. "Purchase Price" shall have the meaning set forth in Section 2.5
hereof.
1.57. "SEC" shall mean the Securities and Exchange Commission of the
United States of America.
1.58. "Securities Act" shall mean the Securities Act of 1933, as amended
to date.
1.59. "Seller Intellectual Property" shall mean all intellectual property
owned by Seller, or otherwise licensed to Seller pursuant to Third Party
In-Licenses, and used by Seller to develop, sell, market, distribute, operate or
incorporate into the Products, including, without limitation, patents, patent
applications, patent rights, trademarks, trademark applications and
registrations, trade names, service marks, service mark applications and
registrations, copyrights, copyright registrations, know-how, licenses, trade
secrets, proprietary processes and formulae, all source and object code,
algorithms, architecture, structure, display screens, layouts, processes,
inventions, development tools and all documentation and media constituting,
describing or relating to the above, including, without limitation, manuals,
memoranda and records.
1.60. "Seller Losses" shall have the meaning set forth in Section 12.3
hereof.
1.61. "Seller Software Programs" shall mean those Software Programs listed
on Schedule 1.61 attached hereto owned by Seller and incorporated into, or
required for the ordinary use of, the Products.
1.62. "Software Programs" shall mean software programs, including any
available (a) source code (in all forms), object code, program descriptions,
databases, interfaces, modifications and updates and (b) documentation relating
to the foregoing, and (c) disks, tapes and other tangible embodiments of the
foregoing.
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1.63. "Tangible Assets" shall mean those tangible assets owned or used by
Seller or its Affiliates in connection with the Business.
1.64. "Tax" shall mean any and all federal, state, territorial, local, or
foreign income, profits, gross receipts, capital gains taxes, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, business license, occupation,
value added, goods and service, alternative or add-on minimum, estimated, or
other tax or governmental charge of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not, arising from or otherwise
relating to the operation of the Business or the Assets.
1.65. "Tax Return" shall mean any return, declaration, report, estimates,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
1.66. "Third Party Distributor Agreements" shall mean those distributor
and other agreements pursuant to which Seller or any Affiliate of Seller has
granted a third party with the distribution rights for any Product within a
particular territory listed on Schedule 1.66 attached hereto.
1.67. "Third Party In-Licenses" shall mean those licenses and other
agreements with third parties related to Third Party Software Programs listed on
Schedule 1.67 attached hereto.
1.68. "Third Party Software Programs" shall mean those Software Programs
listed on Schedule 1.68 attached hereto owned by third parties and incorporated
into, or required for the ordinary use of, the Products.
1.69. "Transferred Intellectual Property" means (a) all trademarks,
service marks and trade names of Seller listed on Schedule 1.69; (b) all
copyrights in and to the Products listed on Schedule 1.69; and (c) all other
Intellectual Property owned by Seller listed on Schedule 1.69 attached hereto.
1.70. "Transition Distribution Agreement" shall mean that certain
Transition Distribution Agreement, in the form attached hereto as Exhibit A-4,
to be executed by the parties at the Closing pursuant to which Purchaser shall
grant Seller with a non-exclusive license to use certain of the Transferred
Intellectual Property in connection with Seller's continued obligations under
the Third Party Distributor Agreements.
1.71. "Transition Services and Facilities Agreement" shall mean that
certain Transition Services and Facilities Agreement, in the form attached
hereto as Exhibit A-5, to be executed by the parties at the Closing pursuant to
which Seller shall provide certain services and use of certain Facilities to
Purchaser subsequent to the Closing for a limited period of time.
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1.72. "Value-Added Reseller Agreement" shall mean that certain Value-Added
Reseller Agreement, in the form attached hereto as Exhibit A-3, to be executed
by the parties at the Closing pursuant to which Seller shall grant Purchaser the
non-exclusive right to distribute certain Seller Software Programs retained by
Seller.
1.73. "Vehicle Leases" shall mean those Vehicle leases listed on Schedule
1.73 attached hereto.
1.74. "Year 2000 Compliant" shall mean, as to any computer system software
program, the ability to (i) receive, record, store, process, calculate,
manipulate and output dates from and after January 1, 2000, time periods that
include January 1, 2000, including leap year calculations and information that
is dependent on or relates to such dates or time periods, in the same manner and
with the same accuracy, functionality, data integrity and performance as when
dates or time periods prior to January 1, 2000 are involved, (ii) able to store
and output date information in a manner that is unambiguous as to century and
(iii) able to respond to two-digit year input so as to accurately resolve any
ambiguity as to century in a disclosed, defined, pre-determined manner that is
practicable and efficient.
The following terms are defined elsewhere in the Agreement:
SECTION WHERE FIRST
TERM REFERENCED
Acquisition Recital B
Agreement Pre-Recital
Business Recital A
Confidential Information Section 10.7(a)
Continuing Employment Liabilities Section 2.4(a)(iii)
Current Version Section 4.13(b)
Date Section 11.5
Defenses and Claims Section 2.4(b)
DOJ Section 8.2
Employee Plans Section 4.9(c)
Escrow Agent Section 12.7
Escrow Period Section 12.8
Expenses Section 11.6
Expiration Date Section 6.5
Floor Section 12.2(c)(i)
French Operative Date Section 2.1
FTC Section 8.2
HSR Filings Section 8.2
Infringement Claims Section 12.2(b)(i)
Infringement Losses Section 12.2(b)(i)
JAMS Section 13.10(a)
Non-Solicitation Period Section 10.1(e)
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Parent Pre-Recital
Parent Compliance Certificate Section 9.2(a)
Purchaser Pre-Recital
Purchaser Compliance Certificate Section 9.2(a)
Purchaser Group Section 12.2(a)
Purchaser Payments Section 11.6(b)
Seller Pre-Recital
Seller Compliance Certificate Section 9.3(a)
Seller Group Section 12.3(a)
Seller Payments Section 11.6(a)
Taxation Requirements Section 4.9(e)
Third Party Claim Section 12.5
ARTICLE II
PURCHASE AND SALE OF ASSETS;
ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets and Assumption of Assumed Liabilities.
Upon the terms and subject to the conditions set forth in this Agreement,
effective as of the Closing Date:
(a) Seller agrees to sell, assign, transfer, convey and deliver to
Purchaser, and Purchaser agrees to purchase and acquire from Seller, all of
Seller's right, title and interest in and to the Assets, free and clear of all
Encumbrances except Permitted Encumbrances;
(b) Seller agrees to assign to Purchaser, and Purchaser agrees to
assume from Seller, the Assumed Liabilities; and
(c) Seller agrees to assign to Purchaser, and Purchaser shall assume
from Seller, all of Seller's rights and obligations under the Assumed Contracts,
subject to the obtaining of all necessary consents by the other parties thereto.
In connection with the Acquisition, on the Closing Date, Seller shall take
(and shall cause its Affiliates to take) any and all actions that may be
required, or reasonably requested by Purchaser, to transfer title to all of the
Assets, free and clear of all Encumbrances (except Permitted Encumbrances), to
Purchaser. Seller shall make the Assets available to Purchaser on the Closing
Date, and Seller shall further deliver to Purchaser the Bill of Sale, Assignment
and Assumption Agreement, as well as such other instruments of sale and/or
transfer as counsel to Purchaser may reasonably request (whether at or after the
Closing) to evidence and effect the Acquisition contemplated herein. Seller
agrees that, to the extent any Assets are owned or held by any Affiliate of
Seller, Seller shall also cause title to such Assets to be transferred and
assigned to Purchaser, free and clear of all Encumbrances (except Permitted
Encumbrances), on the Closing Date. Notwithstanding anything herein to the
contrary, the Acquisition will not be effective as to Assets and Employees
located in France and Assumed Contracts with customers located in France until
the date upon which all Laws and Decrees in France applicable to the
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Acquisition have been complied with by the parties (the "French Operative Date")
in at least the manner set forth in Section 10.10 hereof.
2.2. Assets. As used in this Agreement, the term "Assets" means,
collectively, all right, title and interest in and to the following:
(a) All Products;
(b) All Accounts Receivable and other rights related to the Deferred
Revenue;
(c) All rights and benefits of Seller under the Assumed Contracts;
(d) All Transferred Intellectual Property;
(e) All Intangibles;
(f) All Permits; and
(g) All Business Records
2.3. Excluded Assets. Except as provided herein or in any Ancillary
Agreement, Seller shall retain all of its right, title and interest in and to,
and Purchaser shall not acquire any interest in any asset or right of Seller
other than the Assets, including but not limited to, the following (collectively
referred to herein as the "Excluded Assets"):
(a) All cash and cash equivalents;
(b) All Accounts Receivable other than those related to the Deferred
Revenue;
(c) All Contracts other than the Assumed Contracts;
(d) All Seller Intellectual Property other than the Transferred
Intellectual Property;
(e) All Facilities;
(f) All Tangible Assets; and
(g) All rights to revenue under the Customer License Agreements or
Third Party Distributor Agreements that has not been received by Seller for
revenue recognized in accordance with GAAP as of the Closing Date.
2.4. Assumption of Liabilities.
(a) Subject to and upon the terms and conditions of this Agreement,
effective as of the Closing Date, Purchaser agrees to assume from Seller and to
pay, perform and discharge according to their terms only the following
Liabilities of Seller (the "Assumed Liabilities"):
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(i) Liabilities arising under the Assumed Contracts, including
any Liabilities arising from the failure of the Current Version or any future
version of a Product to be Year 2000 Compliant, but excluding (A) Liabilities
arising under any Assumed Contract to the extent that such Liabilities arise out
of any obligations that are not specified in writing in such Assumed Contract or
disclosed in a Schedule attached to this Agreement, and (B) any Liabilities
arising from the failure of any versions of a Product other than a Current
Version or future version to be Year 2000 Compliant except and only to the
extent that such failure is the direct result of modifications made to such
Product by Purchaser or Persons expressly authorized by Purchaser after the
Closing Date;
(ii) Liabilities with respect to the Deferred Revenue;
(iii) Liabilities with respect to the New Purchaser Employees
arising after the Closing Date, regardless of the applicable Employee
Termination Date for each such person, except as otherwise provided for
hereunder or under the Transition Services and Facilities Agreements
("Continuing Employment Liabilities"); and
(iv) Liabilities with respect to the use of the vehicles under
the Vehicle Leases after the Closing.
(b) Nothing herein shall be deemed to deprive Purchaser or any
Affiliate of Purchaser of any defenses, set-offs or counterclaims which Seller
may have had or which Purchaser or any Affiliate of Purchaser shall have with
respect to any of the Assumed Liabilities (the "Defenses and Claims"). Effective
as of the Closing, Seller agrees to assign, transfer and convey to Purchaser all
Defenses and Claims and agrees to cooperate with Purchaser (at Purchaser's
expense) to maintain, secure, perfect and enforce such Defenses and Claims,
including the execution of any documents, the giving of any testimony or the
taking of any such other action as is reasonably requested by Purchaser in
connection with such Defenses and Claims.
(c) Except as expressly set forth in Section 2.4(a) above, Purchaser
shall not assume or become liable or obligated in any way, and Seller shall
retain and remain solely liable for and obligated to pay, perform and discharge
all debts, expenses, accounts payable, contracts, agreements, commitments,
obligations, claims, suits and other liabilities of any nature whatsoever,
whether or not related to the Business or the Assets, whether known or unknown,
accrued or not accrued, fixed or contingent, current or arising hereafter,
including, without limitation, any of the following (collectively referred to
herein as "Excluded Liabilities"):
(i) Any Liability of the Seller for unpaid Taxes (with respect
to the Business, the Assets, the Employees or otherwise), or any Liability of
the Seller for Taxes arising in connection with the consummation of the
Acquisition (including any income taxes and transfer taxes); and
(ii) Any Liability related to or arising from failure of any
version of a Product, other than the Current Version or any future version of
such Product, to be Year 2000 Compliant except and only to the extent that such
failure is the direct result of modifications
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made by Purchaser or Persons expressly authorized by Purchaser after the Closing
Date, and any Liability related to or arising from failure of any Licensed
Intellectual Property licensed to end users under any Assumed Contracts to be
Year 2000 Compliant; provided, however, that Purchaser shall use reasonable
commercial efforts to assist Seller in mitigating any such Liability, including
but not limited to (A) by December 31, 1998, delivering Year 2000 Compliant
versions of Products to all of Purchaser's customers currently on maintenance
with respect to any non-Year 2000 Compliant versions of Products in replacement
thereof, together with a notice to each such customer that as of June 30, 1999,
Purchaser will stop providing support for such non-Year 2000 Compliant versions
of the Products other than telephone support, and (B) at Seller's request,
delivering Year 2000 Compliant versions of Licensed Intellectual Property (which
have been provided by Seller to Purchaser free of any royalty obligation to
Seller) to any of Purchaser's customers currently on maintenance with respect to
any non-Year 2000 Compliant version of such Licensed Intellectual Property in
replacement thereof; provided, further, that if Purchaser fails to take the
actions described in subclause (A) above, then Purchaser shall cease providing
maintenance for any non-Year 2000 Compliant versions of Products sixty (60) days
after the receipt of written request by Seller. For the avoidance of doubt, any
services Purchaser provides to customers in connection with its obligations as
set forth in subclause (A) and (B) above, other than services provided pursuant
to maintenance, shall be charged at Purchaser's then standard rates for such
services.
2.5. Purchase Price. The aggregate purchase price for the Assets is Forty
Four Million Dollars ($44,000,000), (the "Purchase Price"), which, except as
provided in Section 2.6 and subject to adjustment as herein provided, Purchaser
shall pay to Seller in immediately available funds at the Closing by wire
transfer to an account designated in writing by Seller.
2.6. Escrow Fund. On the Closing Date, Purchaser will withhold from the
Purchase Price and deposit into escrow for and on behalf of Seller the sum of
Three Million Dollars ($3,000,000) in cash (the "Escrow Fund"). Ten Thousand
Dollars ($10,000) of the Escrow Fund shall be held until the French Operative
Date, after which date such amount shall be released to Seller pursuant to the
provisions of the Escrow Fund Agreement. The remainder of the Escrow Fund shall
be held as collateral for Seller's indemnification obligations pursuant to
Article XII of this Agreement and pursuant to the provisions of the Escrow Fund
Agreement.
2.7. Allocation. Purchaser and Seller agree to allocate the Purchase Price
(and all other capitalizable costs) among the Assets for all purposes (including
financial accounting and tax purposes) in accordance with the allocation
schedule set forth on Schedule 2.7 attached hereto. Neither Purchaser nor Seller
shall take any position for purposes of any federal, state, provincial or local
income tax with respect to the allocation of the Purchase Price which is
inconsistent with such allocation. Notwithstanding anything above to the
contrary, Purchaser and Seller agree that Ten Thousand Dollars ($10,000) of the
Purchase Price shall be allocated to the Assets located in France (including
Customer License Agreements with French end users).
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ARTICLE III
THE CLOSING
3.1 The Closing. The consummation of the Acquisition will take place at a
closing to be held at the offices of Dykema Gossett PLLC, 315 East Eisenhower
Parkway, Suite 100, Ann Arbor, Michigan, 48108-3306 (the "Closing") on June 4,
1998, or at such other time or date as may be agreed to in writing by the
parties to this Agreement (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants, to Purchaser, as set forth below:
4.1. Organization. Seller is a corporation validly incorporated, validly
in existence and in good standing under the laws of the State of Michigan.
Seller is duly qualified or licensed to do business as a foreign corporation in
each state of the United States or other jurisdiction in which it is required to
be so qualified or licensed, except in states and other jurisdictions in which
the failure to be so qualified or licensed, in the aggregate, would not have a
Material Adverse Effect on Seller or the Business.
4.2. Subsidiaries. Except as listed on Schedule 4.2 attached hereto,
Seller does not own any equity interest, directly or indirectly, in any
corporation, partnership, limited liability company, joint venture, business,
trust or other entity, whether or not incorporated, which is engaged in the
Business.
4.3. Authorization. This Agreement, the Escrow Fund Agreement, the Bill of
Sale, Assignment and Assumption Agreement and all of the Ancillary Agreements
have been, or upon their execution and delivery hereunder will have been, duly
and validly executed and delivered by Seller and constitute, or will constitute,
valid and binding agreements of Seller, enforceable against Seller in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general equitable principles or the exercise
of judicial discretion in accordance with such principles. Seller has all
requisite power and authority to execute and deliver this Agreement, the
Ancillary Agreements, the Escrow Fund Agreement, and the Bill of Sale,
Assignment and Assumption Agreement, and at the time of the Closing, will have
all requisite power and authority to carry out the transactions contemplated in
this Agreement, the Ancillary Agreements, the Escrow Fund Agreement and the Bill
of Sale, Assignment and Assumption Agreement. All requisite corporate action on
the part of Seller has been taken to authorize the execution and delivery of
this Agreement, the Ancillary Agreements, the Escrow Fund Agreement, and the
Bill of Sale, Assignment and Assumption Agreement.
4.4. No Conflicts; Consents. The execution and delivery of this Agreement,
the Ancillary Agreements, the Escrow Fund Agreement and the Bill of Sale,
Assignment and
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Assumption Agreement by Seller do not, and the consummation of the transactions
contemplated herein and therein and compliance with the provisions hereof and
thereof will not, conflict with, result in a breach of, constitute a default
(with or without notice or lapse of time, or both) under or violation of, or
result in the creation of any lien, charge or Encumbrance pursuant to, (a) any
provision of any charter document of Seller, (b) any Law or Decree or (c) any
provision of any agreement, instrument or understanding to which Seller is a
party or by which Seller or any of its properties or assets is bound or
affected, nor will such actions give to any other Person or entity any interests
or rights of any kind, including rights of termination, acceleration or
cancellation, in or with respect to any of the Assets or the Assumed
Liabilities. Except as listed on Schedule 4.4 attached hereto, no consent of any
third party or any Governmental Entity is required to be obtained on the part of
Seller to permit the consummation of the transactions contemplated in this
Agreement, the Ancillary Agreements, the Escrow Fund Agreement or the Bill of
Sale, Assignment and Assumption Agreement.
4.5. Title to Assets; Entire Business. Seller has good and marketable
title to all of the Assets, free and clear of all Encumbrances except for
Permitted Encumbrances. At the Closing, Seller will sell, convey, assign,
transfer and deliver to Purchaser good and valid title and all the Seller's
right and interest in and to all of the Assets, free and clear of any
Encumbrances, except for Permitted Encumbrances.
4.6. Tangible Assets. The Tangible Assets have been maintained and
repaired by Seller in the ordinary course of business and are in such condition
and repair, reasonable wear and tear excepted, as is suitable for the purposes
for which they are presently used by the Seller.
4.7. Litigation and Claims. Except as listed on Schedule 4.7 attached
hereto, there are no claims, actions, suits, proceedings or investigations in
progress or pending before any Governmental Entity, against or relating to the
Business, the Assets or the Assumed Liabilities, nor, to Seller's Knowledge, is
there any threat thereof. Seller is not a party to or subject to any decree,
order or arbitration award (or agreement entered into in any administrative,
judicial or arbitration proceeding with any Governmental Entity) with respect to
or affecting the Business, the Assets or the Assumed Liabilities.
4.8. Compliance with Laws and Regulations; Governmental Licenses, Etc. To
Seller's Knowledge, Seller is in compliance with all applicable Laws or Decrees
with respect to or affecting the Business, the Assets or the Assumed
Liabilities, including, without limitation, Laws or Decrees relating to
anticompetitive or unfair pricing or trade practices, false advertising,
consumer protection, export or import controls, occupational health and safety,
equal employment opportunities, fair employment practices, and sex, race,
religious and age discrimination. Seller is not subject to any order, injunction
or decree issued by any Governmental Entity which could impair the ability of
Seller to consummate the transactions contemplated herein. There are no Permits
necessary or required for Purchaser to operate the Business after the Closing
Date in substantially the same manner as Seller has operated such businesses
prior to the Closing Date, except where the failure to have such a Permit would
not have a Material Adverse Effect. Neither the sale and transfer of the Assets
pursuant to this Agreement, nor Purchaser's possession and use thereof from and
after the Closing Date because
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of such sale and transfer will: (a) violate any law pertaining to bulk sales or
transfers or to the effectiveness of bulk sales or transfers as against
creditors of Seller or (b) result in the imposition of any liability upon
Purchaser for appraisal rights or other liability owing to any stockholder of
Seller.
4.9. Labor Matters.
(a) Except as set forth on Schedule 4.9(a) attached hereto, the
Employees listed on Schedule 1.24 include all Seller's current employees who
have devoted substantially all of their time during the immediately preceding
ninety (90) day period designing, developing, manufacturing, marketing, selling
or servicing the Products. The Consultants listed on Schedule 1.16 include all
the current independent contractors and other individuals who are supplied by
third parties to perform consulting services to Seller who have devoted at least
50% of their time during the immediately preceding ninety (90) day period
designing, developing, manufacturing, marketing, selling or servicing the
Products.
(b) To Seller's Knowledge, Seller is in compliance with respect to
the Employees with all currently applicable Laws or Decrees with respect to or
affecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices, and is not engaged in any unfair labor practice. Seller has not
received any written notice from any Governmental Entity and, to the Knowledge
of Seller, there has not been asserted before any Governmental Entity, any
current claim, action or proceeding to which Seller is a party relating to the
Employees and there is neither pending nor, to the Knowledge of Seller, has
there been threatened in writing, any investigation or hearing to which Seller
is a party relating to the Employees arising out of or based upon any such Laws
or Decrees. There is no pending claim against Seller relating to the Employees
under any workers' compensation plan or statute. Seller is in material
compliance with and not in material violation of any agreements and/or
arrangements with any Consultant.
(c) Except as set forth on Schedule 4.9(c) attached hereto, Seller
has not given to or received from any Employee notice of termination of
employment with an effective date on or after the Closing Date. Other than as
described on Schedule 4.9(c), the consummation of the transactions contemplated
in this Agreement will not entitle any Employee to any severance pay,
unemployment compensation or any similar type of other payment. Seller is not a
party to, bound by or obligated under any labor, collective bargaining, union or
similar agreements or arrangements with respect to the Employees. There is not
occurring or, to the Knowledge of Seller, threatened, any strike, slow-down,
picket, work stoppage or other concerted action by any union or other group of
employees or other persons against the Business. To Seller's Knowledge, (i)
there has been no union or other labor organization or attempt to organize any
of the Employees during the two (2) year period preceding the date hereof, (ii)
such an effort is not pending, and (iii) there has not been any discussions of
any sort regarding such with respect to any of the Employees.
(d) Schedule 4.9(d) contains a complete and accurate list of all of
Seller's material contracts, agreements, plans, and commitments with respect to
Employees pertaining to
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terms of employment, compensation, bonuses, profit sharing, securities
purchases, securities repurchases, options, deferred compensation arrangements
or plans, commissions, incentives, loans or loan guarantees, severance pay or
benefits, use of Business property and related matters. Schedule 4.9(d) sets
forth a complete and accurate list of all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance, pension,
profit-sharing, retirement, health, welfare, insurance, or other employee
benefit plans and agreements for the benefit of current or former Employees
which are currently maintained by Seller or by a subsidiary of Seller or with
respect to which the Seller or a subsidiary currently has or in the future may
have any material liability or obligation to contribute or to make payments
(collectively, the "Employee Plans"). Each Employee Plan that has been adopted
or maintained by Seller, whether informally or formally, for the benefit of
Employees outside the United States ("International Employee Plan") has been
established, maintained and administered in material compliance with its terms
and conditions and with the requirements prescribed by any and all Laws or
Decrees that are applicable to such International Employee Plan. Furthermore, no
International Employee Plan has unfunded liabilities, that as of the Closing,
will not be offset by insurance or fully accrued.
(e) With respect to the Business and except as set forth on Schedule
4.9(e), there are no "employee pension benefit plans", as defined in Section
3(2) of ERISA or in any similar provisions of applicable Laws or Decrees, (i) in
respect of which Seller is an "employer" or a "substantial employer", as defined
in Sections 3(5) and 4001(a)(2), respectively, of ERISA or in any similar
provisions of applicable Laws or Decrees, (ii) with respect to which Seller is a
"party in interest" within the meaning of Section 3(14) of ERISA, or (iii) in
respect to which Seller is assuming any liability or will be liable to make
contributions to or for the payment of benefits. Seller is not a party to, and
none of its operations is or has ever been covered by, (x) any pension plan
subject to Title IV of ERISA or Section 412 of the Code, (y) any "multi-employer
plan" as such term is defined in Section 3(37) or Section 4001(a)(3) of ERISA or
in any similar provisions of applicable Laws or Decrees, or (z) other pension or
retirement payment arrangement, whether or not written, involving a past or
unfunded future cost to Seller, whether or not such plan or arrangement is
covered by ERISA or any similar provisions of applicable Laws or Decrees.
(f) The Employee Plans that provide retiree medical or other retiree
welfare benefits to any persons are set forth on Schedule 4.9(f) except as may
be required by applicable Laws or Decrees. All Employee Plans are in compliance
in all material respects with the requirements prescribed by any and all
applicable Laws or Decrees with respect thereto including requirements
prescribed by statute or regulation which must be satisfied as a prerequisite to
an Employee Plan being treated as "qualified" for the tax benefits afforded by
such statute or regulation or which must be satisfied to avoid the imposition of
any tax or penalty on the trustee of an Employee Plan or on the Seller or the
Business (such requirements are collectively referred to herein as the "Taxation
Requirements") and the Seller has performed all material obligations required to
be performed by it under, is not in default under or in violation of, and has no
Knowledge of any default or violation by any other party to, any of the Employee
Plans nor Knowledge of any material claim or dispute in respect of an Employee
Plan.
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4.10. Tax Matters.
(a) Tax Returns. All Tax Returns required to be filed by the Seller
with respect to the Business have been duly filed on a timely basis, and such
Tax Returns are complete and accurate in all material respects. All Taxes owed
by the Seller with respect to the Business (whether or not shown on any Tax
Return) have been paid. No claim has ever been made by any Governmental Entity
in a jurisdiction where the Seller does not file Tax Returns that the Business
is or may be subject to taxation by that jurisdiction. There are no liens or
security interests on any of the Assets or other assets of the Business with
respect to Taxes, other than liens for Taxes not yet due and payable.
(b) Other Compliance Requirements. With respect to the Business, the
Seller has withheld and paid all Taxes required to have been withheld and paid
and complied with all information reporting and backup withholding requirements,
including maintenance of required records in respect thereto, in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(c) No Tax Audits and No Tax Deficiencies. Except as set forth in
Schedule 4.10(c), Seller's Tax Returns are not currently under audit by any
Governmental Entity, nor is any such audit pending or, to the Knowledge of
Seller, threatened (either in writing or verbally, formally or informally).
4.11. Financial Statements.
(a) Attached hereto as Schedule 4.11 are copies of (i) Seller's
audited balance sheets pertaining to the Business as of June 30, 1997 and
statements of income and cash flows pertaining to the Business for the years
ended June 30, 1996 and June 30, 1997 and (ii) Seller's audited balance sheet
pertaining to the Business as of April 30, 1998 and statements of income and
cash flows pertaining to the Business for the ten-month period then ended
(collectively, the "Financial Statements"). The Financial Statements have been
prepared in accordance with GAAP, and present fairly the financial position of
the Business as of their respective dates and the results of operations and
changes in financial position of the Business for the periods indicated.
(b) There is no material debt, liability, or obligation of any
nature pertaining to the Business, whether accrued, absolute, contingent, or
otherwise, and whether due or to become due, that is not reflected or reserved
against in the Financial Statements, except for those (i) that have been
incurred after April 30, 1998 or (ii) that are not required by GAAP to be
included in a balance sheet or the notes thereto. All debts, liabilities, and
obligations incurred after April 30, 1998 were incurred in the ordinary course
of business.
4.12. Absence of Certain Changes or Events. Since April 30, 1998, Seller
has conducted the Business in the ordinary and usual course and, without
limiting the generality of the foregoing, has not:
(a) suffered any Material Adverse Change;
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(b) suffered any damage, destruction or loss, whether or not covered
by insurance, having a Material Adverse Effect;
(c) granted any increase in the compensation payable or to become
payable by Seller to any Employee or Consultant except those occurring in the
ordinary course of business, consistent with Seller's past practices with
respect to the Business;
(d) made any change in the accounting methods or practices Seller
follows relating to the Business, whether for financial or tax purposes, or any
change in depreciation or amortization policies or rates adopted therein;
(e) granted or renewed any exclusive license or agreement with
respect to the Seller Intellectual Property used in the Products;
(f) incurred any liabilities relating to the Business except in the
ordinary course of business and consistent with past practice which would be
required to be disclosed in financial statements prepared in accordance with
GAAP;
(g) permitted or allowed any of the Assets to be subjected to any
Encumbrance of any kind (other than a Permitted Encumbrance) other than in the
ordinary course of business consistent with past practices;
(h) made any material amendment to, waived any rights under or
terminated any Contract or any other agreement which is listed on any schedule
to this Agreement;
(i) incurred any contingent liability as guarantor or otherwise with
respect to the obligations of others other than in the ordinary course,
consistent with past practices of the Business; or
(j) agreed to take any action described in this Section 4.12 or
outside of its ordinary course of business or which would constitute a breach of
any of the representations or warranties of Seller contained in this Agreement.
4.13. Intellectual Property; Proprietary Rights.
(a) Schedule 1.69 sets forth a complete and accurate list of:
(i) all registered and unregistered trademarks, service marks
and tradenames which are used exclusively in connection with the Products; and
(ii) all registered and unregistered copyrights in and to the
Products.
(b) Schedule 1.61 sets forth a complete and accurate list of all
Seller Software Programs. Listed on Schedule 4.13(b) attached hereto is the
latest commercial version of each Product that has been made generally available
by Seller (the "Current Version"). Schedules 1.67 and 1.68 set forth a complete
and accurate list of all Third Party In-Licenses and Third Party Software
Programs.
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(c) Except as listed on Schedule 4.13(c) attached hereto, the
Transferred Intellectual Property and the Licensed Intellectual Property
comprise all the material intellectual property rights necessary to conduct the
Business as conducted by Seller prior to the Closing Date; provided, however,
that the scope of the licenses granted by Seller to Purchaser pursuant to the
Ancillary Agreements is more restrictive than the scope used by Seller to
conduct the Business as of the Closing Date.
(d) No claims have been asserted against Seller (and to Seller's
Knowledge there are no claims that are likely to be asserted against Seller or
which have been asserted against others) by any person challenging Seller's use
or distribution of any Seller Intellectual Property used by Seller in the
Business or the Products (including, without limitation, technology licensed
under the Third Party In-Licenses) or challenging or questioning the validity
of, effectiveness of, or full performance by Seller of its obligations under any
license or agreement relating thereto (including, without limitation, the Third
Party In-Licenses). Seller has no Knowledge of any valid basis for any claim of
the type specified in the immediately preceding sentence relating to or
interfering with the continued enhancement and exploitation by Purchaser of any
of the Business or the Products.
(e) To Seller's Knowledge, none of the Intellectual Property
embodied in a Product, as applicable, infringes on the rights of, constitutes
misappropriation of any proprietary information or intangible or intellectual
property right of any third party.
(f) Schedule 1.4 and 1.66 set forth a complete and accurate list of
all Affiliate Distributor Agreements and Third Party Distributor Agreements,
respectively, and except as provided in such Schedules, Seller has not granted
any third party any exclusive right to manufacture, reproduce, distribute,
market or exploit any of the Business or Products.
(g) All designs, drawings, technical specifications, source code,
object code, design documents, documentation, flow charts and diagrams
incorporating, embodying or reflecting any of the Products at any stage of their
development were written, developed and created solely and exclusively by (i)
employees of Seller or (ii) third parties who assigned ownership of any and all
of their rights arising out of, related to or resulting from their development
and creative efforts to Seller in valid and enforceable agreements.
(h) Seller has at all times used commercially reasonable efforts to
protect its trade secrets used in the Business or the Products
(i) To the Knowledge of Seller, no Employee or Consultant is in
violation of any term of any employment or consulting contract, as applicable,
or any other contract or agreement relating to the relationship of any such
person with Seller any other party, because of the nature of the Business.
(j) Each person currently or formerly employed or engaged as a
consultant by Seller (including independent contractors, if any) that has or had
access to confidential information of Seller relating to the Products has
executed a confidentiality and non-disclosure agreement sufficient to protect
the trade secret status of the Transferred Intellectual Property and
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to cause the assignment to the Seller of any and all intellectual property
developed by such employees, former employees or independent consultants and
relating, directly or indirectly, to the Products. To Seller's Knowledge,
neither the execution or delivery of such agreements, nor the carrying on of the
Business as employees or consultants, as applicable, by such persons, nor the
conduct of the Business, as currently conducted, from and after the Closing
Date, will conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under any contract, covenant or instrument
under which any of such persons is obligated.
(k) Schedule 4.13(k), attached hereto, sets forth the extent to
which (i) each of the Products is Year 2000 Compliant, and (ii) each other
Seller Software Program incorporated into, or required for the ordinary use of,
any Product is Year 2000 Compliant. To its Knowledge, Seller is not using the
services or software of any third party whose systems or code are not Year 2000
Compliant where such circumstances might have a Material Adverse Effect.
(l) Except as set forth in Schedule 4.13(l), no product liability or
warranty claim with respect to any Product has been communicated to or, to the
Knowledge of Seller, overtly threatened against Seller.
(m) Attached hereto on Schedule 4.13(m) is an accurate list of all
Known material errors in any of the Products
4.14. Contracts and Arrangements.
(a) Schedules 1.20 and 1.73 hereto contain a complete and accurate
list of all Customer License Agreements and Vehicle Leases, respectively, and
Seller has delivered to Purchaser true and complete copies of all such written
Contracts (other than a limited number of Customer License Agreements entered
into in the ordinary course of business on substantially Seller's standard terms
and conditions). Schedule 4.14(a) attached hereto sets forth a true, complete
and accurate list of all customers who are currently on maintenance under the
Customer License Agreements. Seller has delivered to Purchaser an aged accounts
receivable trial balance which reflects all outstanding receivables from such
customers.
(b) To the Knowledge of Seller, each of the Assumed Contracts is
valid, binding and in full force and effect and enforceable by Seller in
accordance with its terms, except as enforcement may be limited by general
equitable principles and the exercise of judicial discretion in accordance with
such principles. Neither Seller nor, to Seller's Knowledge, any other party, is
in default under any Assumed Contract, and there are no existing disputes or
claims of default relating thereto, or any facts or conditions Known to Seller
which, if continued, will result in a default or claim of default thereunder,
which default could reasonably be expected to have a Material Adverse Effect.
(c) All written arrangements, understandings, relationships and
agreements between Seller and its Affiliates related to the Business, the Assets
or the Products (including the purchase and sale of components, supply
arrangements, distribution arrangements, and the development and design of
Products or related Seller Intellectual Property) are listed in Schedule
4.14(c).
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(d) Seller does not anticipate booking more than $218,000 of revenue
from license fees related to the Products (except for Boost Sales and Margin
Planning) during the fiscal quarter ended June 30, 1998; any such revenues in
excess of $218,000 shall be assigned or paid over to Purchaser after Closing.
4.15. Insurance. Seller currently maintains, and has at all times prior to
the date of this Agreement maintained, liability, casualty, property loss and
other insurance coverages upon the Assets and with respect to the operation of
the Business in such amounts, of such kinds and with such carriers as are
generally deemed appropriate and sufficient for companies of similar size to
Seller and engaged in similar types of business and operations.
4.16. Brokers. There is no broker, finder, investment banker or other
person, other than Arbor Partners, LLC, and Nesbitt Burns Securities, Inc.,
whose fees are to be paid by Seller, who would have any valid claim against any
of the parties to this Agreement for a commission or brokerage fee or payment in
connection with this Agreement or the transactions contemplated herein as a
result of any agreement of, or action taken by, Seller.
4.17. Warranties and Service Payment Obligations. To the Knowledge of
Seller, the Customer License Agreements and the Third Party Distributor
Agreements contain all of the written product warranties and warranty agreements
Seller has provided to any customer. Schedule 4.17 attached hereto sets forth a
complete and accurate list of all agreements pursuant to which Seller is
obligated to provide service or support services with respect to the Products.
No agreement for the sale, license, service, support or maintenance of the
Products obligates Seller to provide any material change in functionality or
other alternations in the performance of the Products or to provide new products
or technology. Schedule 4.17 sets forth all obligations of Seller with respect
to the Business that are not explicitly set forth in the Assumed Contracts.
4.18. Business Records. The Business Records to be delivered to Purchaser
are complete and accurate in all material respects and accurately reflect in all
material respects all actions and transactions referred to in such Business
Records.
4.19. SEC Documents. As of their respective filing dates, Seller's annual
report on Form 10-K for the year ended June 30, 1997 (the "1997 Form 10-K"), and
Seller's quarterly reports on Form 10-Q and current reports on Form 8-K filed
since the 1997 Form 10-K, and any amendments thereto (collectively, the "SEC
Documents") complied in all material respects with the requirements of the
Exchange Act and the Securities Act, and as of their respective filing dates and
taken together, the SEC Documents contain no untrue statement of a material fact
and did not omit 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 or
superseded by a subsequently filed SEC Document. There has been no material
change in Seller's accounting policies or estimates except as described in the
notes to the financial statements of Seller included in the SEC Documents. There
has been no material adverse change in Seller's financial condition since March
31, 1998.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as otherwise set forth in the Purchaser Disclosure Schedule
provided to Seller, a copy of which is attached as Schedule V, each of Parent
and Purchaser, jointly and severally, hereby represents and warrants to Seller
that:
5.1 Organization and Good Standing. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full power and authority to carry on its businesses as now
conducted. Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of Arizona and has full power and authority to
carry on its businesses as now conducted.
5.2. Power, Authorization and Validity. Each of Parent and Purchaser has
the right, power, legal capacity and authority to enter into and perform their
respective obligations under this Agreement, the Escrow Fund Agreement and the
Ancillary Agreements to which it is or will be a party. The execution and
delivery of this Agreement, the Escrow Fund Agreement and the Ancillary
Agreements to which each of Parent and Purchaser is or will be a party have been
duly and validly approved and authorized by the board of directors of each of
Parent and Purchaser. No other authorization or approval, governmental or
otherwise, is necessary in order to enable each of Parent and Purchaser to enter
into and to perform the terms of this Agreement, the Escrow Fund Agreement or
the Ancillary Agreements on its part to be performed, except for (a) filings
under applicable securities laws and (b) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
the laws of any foreign country in which Parent or Purchaser or any of their
Affiliates conducts any business or owns any property or assets. This Agreement
is, and the Escrow Fund Agreement and each of the Ancillary Agreements, when
executed and delivered by Parent or Purchaser shall be, the valid and binding
obligations of Parent or Purchaser enforceable in accordance with their
respective terms, subject to (i) laws of general application relating to
bankruptcy, insolvency, and the relief of debtors and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
5.3. No Violation of Existing Agreements. Neither the execution and
delivery of this Agreement, the Escrow Fund Agreement or any of the Ancillary
Agreements, nor the consummation of the transactions contemplated herein or
therein will conflict with, or result in a material breach or violation of, any
provision of Parent's or Purchaser's charter documents as currently in effect,
any material instrument or contract to which Parent or Purchaser is a party or
by which Parent or Purchaser is bound, or any federal, state or local judgment,
writ, decree, order, statute, rule or regulation applicable to Parent or
Purchaser. Neither the execution and delivery of this Agreement, the Escrow Fund
Agreement or any of the Ancillary Agreements , nor the consummation of the
transactions contemplated herein or therein, will have a material adverse effect
on the operations, assets, or financial condition of Parent or Purchaser.
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5.4. Compliance With Other Instruments and Laws. Neither Parent or
Purchaser is in violation of (a) any provisions of its respective charter
documents as currently in effect or (b) in any material respect any applicable
Law or Decree.
5.5. Litigation. There is no suit, action, proceeding, claim or
investigation pending or, to either Parent's or Purchaser's Knowledge,
threatened against Parent or Purchaser before any court or administrative agency
or which questions or challenges the validity of this Agreement or any of the
Ancillary Agreements, or any of the transactions contemplated herein or therein,
which could have a Material Adverse Effect on the operations, assets or
financial condition of Parent or Purchaser.
5.6. Brokers. There is no broker, finder, investment banker or other
person, other than Morgan Stanley Dean Witter, whose fees are to be paid by
Purchaser, who would have any valid claim against any of the parties to this
Agreement for a commission or brokerage fee or payment in connection with this
Agreement or the transactions contemplated herein as a result of any agreement
of, or action taken by, Parent or Purchaser.
5.7. HSR Act. As of the Closing Date, the "Ultimate Parent Entity" of the
Purchaser, as such term is defined in the HSR Act, does not have annual net
sales or total assets of $100,000,000 or more, as determined pursuant to the HSR
Act and the regulations thereto.
ARTICLE VI
PRE-CLOSING COVENANTS OF SELLER
6.1 Advice of Changes. During the period on and from the date of this
Agreement through and including the Closing Date, Seller will promptly notify
Purchaser in writing of (a) any event occurring subsequent to the date of this
Agreement that would render any representation or warranty of Seller contained
in this Agreement, if made on or as of the date of that event or the Closing
Date, untrue or inaccurate in any material respect and (b) any Material Adverse
Change.
6.2. Conduct of Business. During the period on and from the date of this
Agreement through and including the Closing Date, Seller will conduct the
Business in the ordinary course of business consistent with past practices and
will use its reasonable commercial efforts to retain the Employees and the
Consultants, to protect and preserve the Assets, and to maintain and to preserve
intact Seller's relationships with its independent contractors, licensors,
suppliers, vendors, representatives, distributors, other customers and all
others with whom it deals, all in accordance with the ordinary course of
business consistent with past practices. During the period on and from the date
of this Agreement through and including the Closing Date, Seller will not
without the prior written consent of Purchaser:
(a) mortgage, pledge, subject to a lien, or grant a security
interest in, or suffer to exist or otherwise encumber, any of the Assets;
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(b) sell, dispose of or license any of the Assets to any Person,
except in the ordinary course of business consistent with past practices;
(c) fail to maintain the Tangible Assets in good working condition
and repair according to the standards it has maintained up to the date of this
Agreement, subject only to ordinary wear and tear;
(d) fail to pay and discharge any trade payable relating to the
Products or the Business in accordance with past practices;
(e) enter into any agreement or arrangement to pay any bonus,
increased salary, or special remuneration to any Employees or Consultants, as
applicable;
(f) change accounting methods relating to or affecting the Assets,
Assumed Liabilities or the Business;
(g) amend, terminate or waive any material rights under any Assumed
Contract, except in the ordinary course of business consistent with past
practices;
(h) waive or release any material right or claim relating to any
Assets, except in the ordinary course of business consistent with past
practices;
(i) enter into any agreements, or other obligations or commitments
relating to the Business, except on commercially reasonable terms in the
ordinary course of business consistent with past practices;
(j) fail to comply in any material respect with any Law or Decree
applicable to the Business;
(k) take any action to terminate or modify, or permit the lapse of
termination of, the present insurance policies and coverages of Seller relating
to or applicable to Seller, the Business or the Assets;
(l) incur, with respect to the Business or the Assets, any
Liabilities other than Liabilities incurred in the ordinary course of business
consistent with past practices; or
(m) agree to do any of the things described in the preceding clauses
of this Section 6.2.
6.3. Access to Information. Until the Closing, Seller will allow Purchaser
and its agents reasonable access upon reasonable notice and during normal
working hours to the Business Records and Facilities relating to the Assets and
all aspects of the Business and its financial and legal affairs. Until the
Closing, Seller shall cause its accountants to cooperate with Purchaser and its
agents in making available all financial information requested, including
without limitation the right to examine all working papers pertaining to all
Financial Statements prepared or audited by such accountants.
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6.4. Satisfaction of Conditions Precedent. Subject to Section 8.2, Seller
will use its reasonable commercial efforts to satisfy or cause to be satisfied
all the conditions precedent to the Closing hereunder, and to cause the
transactions contemplated in this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties which may be necessary or reasonably required on its
part in order to effect the transactions contemplated herein.
6.5. Exclusive Dealings. During the period on and including the date of
this Agreement through and including the Closing Date, or such earlier date as
Purchaser and Seller mutually agree to discontinue efforts to consummate the
Acquisition (the "Expiration Date"), (a) Seller will not (and it will use its
reasonable commercial efforts to assure that its officers, directors, employees
and agents do not on its behalf), without the express written consent of
Purchaser, take any action to solicit, initiate, seek, encourage, respond to or
support any inquiry, proposal or offer from, furnish any information to, or
participate in any negotiations with, any corporation, partnership, person or
other entity or group (other than discussion with Purchaser) regarding any sale,
license or other disposition (however structured) of the Assets or any portion
thereof (other than an immaterial portion thereof which is disposed of in the
ordinary course of business) to any person other than Purchaser, (b) Seller
shall terminate or suspend any such negotiations in progress as of the date
hereof and (c) Seller shall promptly (but in any event within four business
days) notify Purchaser regarding any contact by any third party regarding any
offer, proposal or written request for information regarding any such
acquisition. Seller represents and warrants that it has the legal right to
terminate or suspend any such pending negotiations and agrees to indemnify
Purchaser, its representation and agents from and against any claims by any
party to such negotiations based upon or arising out of the discussion or any
consummation of the Acquisition as contemplated in this Agreement.
ARTICLE VII
PRE-CLOSING COVENANTS OF PURCHASER
7.1 Advice of Changes. Purchaser and Parent will promptly notify Seller in
writing of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of Purchaser or Parent contained in
this Agreement, if made on or as of the date of that event or the Closing Date,
untrue or inaccurate in any material respect.
7.2. Satisfaction of Conditions Precedent. Subject to Section 7.2 of this
Agreement, Purchaser will use its reasonable commercial efforts to satisfy or
cause to be satisfied all the conditions precedent to the Closing hereunder, and
to cause the transactions contemplated herein to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents, amendments and
authorizations of third parties and to make all filings with, and give all
notices to, third parties which may be necessary or reasonably required on its
part in order to effect the transactions contemplated herein.
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ARTICLE VIII
MUTUAL COVENANTS
8.1 Regulatory Filings; Consents; Reasonable Efforts. Subject to the terms
and conditions of this Agreement, each of Seller, Purchaser and Parent shall use
its reasonable commercial efforts to (a) make all necessary filings with respect
to the Acquisition and this Agreement under the Securities Act, the Exchange Act
and applicable blue sky or similar securities laws and obtain required approvals
and clearances with respect thereto and supply all additional information
requested in connection therewith, (b) make premerger notification or other
appropriate filings with federal, state or local governmental bodies or
applicable foreign governmental agencies, if any, and, subject to Section 8.2 of
this Agreement, obtain required approvals and clearances with respect thereto
and supply all additional information requested in connection therewith, (c)
obtain all consents, waivers, approvals, authorizations and orders required in
connection with the authorization, execution and delivery of this Agreement and
the Ancillary Agreements and the consummation of the Acquisition and (d) take,
or cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated in this Agreement as promptly as practicable.
8.2. HSR Filings. Each of Seller, Purchaser and Parent shall make (or
shall cause its respective "ultimate parent entities" as defined under the HSR
Act to make) any and all required governmental filings required under the HSR
Act ("HSR Filings") with respect to the transactions contemplated in this
Agreement and the Ancillary Agreements. Neither Seller nor Purchaser shall be
obligated to respond to any inquiries or requests for additional information or
documentation from the Department of Justice ("DOJ"), the Federal Trade
Commission ("FTC") or any other Governmental Entity, as applicable. Neither
Seller, Purchaser nor Parent shall be required hereunder to divest itself of any
assets, properties or businesses, and neither Seller, Purchaser nor Parent shall
be required to consent to any modification or amendment of this Agreement if
requested by DOJ, FTC or any other Governmental Entity, as applicable. In the
event an action is instituted by DOJ, FTC or any other Governmental Entity, as
applicable, challenging the Acquisition as violative of applicable antitrust
laws or an investigation is commenced, neither Seller, Purchaser nor Parent
shall be obligated to resist or resolve such action or investigation. Each of
Seller and Purchaser will notify the other of all correspondence, filings or
communications between such party and its representatives, on the one hand, and
DOJ, FTC or any other Governmental Entity, as applicable, on the other hand,
with respect to this Agreement, the Ancillary Agreements and the transactions
contemplated herein and therein. Each of Seller, Purchaser and Parent will
furnish the other with such necessary information and reasonable assistance as
such other parties may request in connection with the preparation of the HSR
Filings. Each of Purchaser, Seller, and Parent shall, from time to time and on a
reasonably timely basis, advise the other, of its designated representatives, in
reasonable detail of the status and progress of Purchaser's or Seller's, as
applicable, HSR Filings.
8.3. Further Assurances. Except as otherwise set forth in this Agreement,
prior to and following the Closing each party to this Agreement agrees to
cooperate fully with the other party
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and to execute such further instruments, documents and agreements, and to give
such further written assurances, as may be reasonably requested by any other
party to better evidence and reflect the transactions described herein and the
Ancillary Agreements and contemplated herein and therein and to carry into
effect the intent and purposes of this Agreement.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Each Party's Obligations. The respective obligations of
each party to this Agreement to consummate the transactions to be performed by
such party at the Closing are, at the option of such party, subject to the
satisfaction at or prior to the Closing of the following conditions:
(a) No Orders. No order shall have been entered, and not vacated, by
a court or administrative agency of competent jurisdiction, in any action or
proceeding which enjoins, restrains or prohibits the Acquisition or consummation
of any other transaction contemplated herein.
(b) Permits, Authorizations and Approvals. All material permits,
authorizations, approvals and orders required to be obtained under all
applicable Laws or Decrees in connection with the transactions contemplated
herein, including but not limited to any applicable consent or termination of
any applicable waiting period under the HSR Act, shall have been obtained and
shall be in full force and effect at the Closing Date.
(c) No Litigation. There shall be no litigation pending or
threatened by any Governmental Entity or private party in which (i) an
injunction is or may be sought against the Acquisition or any other transaction
contemplated herein or (ii) relief is or may be sought against any party hereto
as a result of this Agreement and in which, in the good faith judgment of the
board of directors of each of Purchaser and Seller (relying on the advice of its
respective legal counsel), such Governmental Entity or private party has the
probability of prevailing and such relief would have a material adverse effect
upon such party.
9.2. Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions to be performed by it at the Closing are, at the
option of Seller, subject to the satisfaction at or prior to the Closing of the
following additional conditions:
(a) Representations and Warranties. All of the representations and
warranties of Parent and Purchaser set forth in ARTICLE V hereof shall be true
and correct in all material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had been made at the
Closing, and each of Parent and Purchaser shall have delivered to Seller a
certificate (the "Parent Compliance Certificate" and "Purchaser Compliance
Certificate", respectively) to such effect dated as of the Closing Date and
signed by the President or a Vice President of Parent or Purchaser,
respectively.
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(b) Performance. All of the terms, covenants and conditions of this
Agreement to be complied with and performed by Purchaser at or prior to the
Closing shall have been duly complied with and performed in all material
respects, and Parent and Purchaser shall have delivered to Seller the Parent
Compliance Certificate and the Purchaser Compliance Certificate to such effect.
(c) Payment of Purchase Price. Purchaser shall have delivered the
Purchase Price net of the Escrow Fund to Seller in accordance with Sections 2.5
and 2.6 hereof.
(d) Ancillary Agreements. Purchaser shall have executed and
delivered to Seller each of the Ancillary Agreements, each in the forms attached
hereto as Exhibits A-1 through A-5.
(e) Escrow Fund and Escrow Fund Agreement. Purchaser shall have
deposited the Escrow Fund with the Escrow Agent and shall have delivered to
Seller a copy of the Escrow Fund Agreement, in the form attached hereto as
Exhibit B executed by each of Purchaser and the Escrow Agent.
(f) Bill of Sale, Assignment and Assumption Agreement. Purchaser
shall have executed and delivered to Seller the Bill of Sale, Assignment and
Assumption Agreement, in the form attached hereto as Exhibit C.
(g) Opinion of Counsel to Purchaser. Seller shall have received from
Gray Cary Ware & Freidenrich LLP, counsel to Purchaser, an opinion dated as of
the Closing Date and substantially in the form attached hereto as Exhibit D.
(h) Fairness Opinion. Seller shall have received from Nesbitt Burns
Securities, Inc. an opinion as to the fairness of the Acquisition to Seller.
(i) Purchaser's Closing Deliverables. At the Closing, Purchaser will
deliver to Seller the following items:
(i) the Purchase Price via wire transfer in accordance with
Sections 2.5 and 2.6 hereof;
(ii) the Purchaser Compliance Certificate and Parent
Compliance Certificate in accordance with Section 9.2(a) and (b) hereof;
(iii) the executed opinion of counsel to Purchaser in
accordance with Section 9.2(g) hereof;
(iv) executed copies of the Escrow Fund Agreement, the Bill of
Sale, Assignment and Assumption Agreement and each of the Ancillary Agreements
executed by Purchaser;
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(v) a certificate, signed by the Secretary of Purchaser,
certifying as to the truth and accuracy of, and attaching copies of, all board
of directors resolutions adopted in connection with the Acquisition;
(vi) a certificate, signed by the Secretary of Parent,
certifying as to the truth and accuracy of, and attaching copies of all board
resolutions adopted in connection with the Acquisition; and
(vii) all other documents required to be delivered to Seller
by Purchaser or Parent on or before the Closing under this Agreement.
9.3. Conditions to Obligations of Purchaser. The obligations of Purchaser
to consummate the transactions to be performed by it at the Closing are, at the
option of Purchaser, subject to the satisfaction at or prior to the Closing of
the following additional conditions:
(a) Representations and Warranties. All the representations and
warranties of Seller set forth in ARTICLE IV hereof shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as if such representations and warranties had been made at the Closing,
and Seller shall have delivered to Purchaser a certificate (the "Seller
Compliance Certificate") to such effect dated as of the Closing Date and signed
by the President or a Vice President of Seller.
(b) Performance. All of the terms, covenants and conditions of this
Agreement to be complied with and performed by Seller at or prior to the Closing
shall have been duly complied with and performed in all material respects, and
Seller shall have delivered to Purchaser the Seller Compliance Certificate to
such effect.
(c) Required Consents. Any and all third party and Government Entity
consents listed on Schedule 4.4 which are required to allow the consummation of
the Acquisition and the other transactions contemplated herein shall have been
obtained and delivered to Purchaser.
(d) Opinion of Counsel to Seller. Purchaser shall have received from
Dykema Gossett PLLC, counsel to Seller, an opinion dated as of the Closing Date
and substantially in the form attached as Exhibit E hereto.
(e) Material Adverse Change. There shall have been no Material
Adverse Change from April 30, 1998, through the Closing Date.
(f) Ancillary Agreements. Seller shall have executed and delivered
to Purchaser each of the Ancillary Agreements, each in the forms attached hereto
as Exhibits A-1 through A-5.
(g) Escrow Fund Agreement. Seller shall have executed and delivered
to Purchaser the Escrow Fund Agreement in the form attached hereto as Exhibit B.
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(h) Bill of Sale, Assignment and Assumption Agreement. Seller shall
have executed and delivered to Purchaser the Bill of Sale, Assignment and
Assumption Agreement in the form attached hereto as Exhibit C.
(i) Fairness Opinion. Purchaser shall have received from Morgan
Stanley Dean Witter an opinion as to the fairness of the Acquisition to
Purchaser.
(j) Seller's Closing Deliverables. At the Closing, Seller will
deliver to Purchaser the following items:
(i) the Assets by making the Assets available to Purchaser at
their present locations;
(ii) the Seller Compliance Certificate in accordance with
Section 9.3(a) and (b) hereof;
(iii) all required third party and Government Entity consents
in accordance with Section 9.3(c) hereof;
(iv) the executed opinion of counsel to Seller in accordance
with Section 9.3(d) hereof;
(v) executed copies of the Bill of Sale, Assignment and
Assumption Agreement, the Escrow Fund Agreement and each of the Ancillary
Agreements executed by Seller;
(vi) a certificate, signed by the Secretary of Seller,
certifying as to the truth and accuracy of, and attaching copies of all board of
directors resolutions adopted in connection with the Acquisition;
(vii) all other documents required to be delivered to
Purchaser on or before the Closing Date under the provisions of this Agreement.
ARTICLE X
POST-CLOSING MATTERS
10.1 New Purchaser Employees.
(a) Employment Offers. (i) Immediately following the Closing,
Purchaser shall make offers of employment to all of the Employees at rates of
compensation and with bonus opportunities and benefits, which taken as a whole,
are no less favorable than those provided by Seller to the Employees as of the
Closing Date. Such offers of employment shall (A) be in writing substantially in
the form of Schedule 10.1(a) attached hereto, (B) provide for employment to
commence with Purchaser as of the Employee Termination Date with respect to each
such Employee, and (C) be conditioned upon such Employee's continued employment
with
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Seller or its Affiliates through the Employee Termination Date. All employment
arrangements between Purchaser and the New Purchaser Employees, will be
negotiated directly between Purchaser and such employees.
(ii) Seller agrees to use its reasonable commercial efforts to
retain each Employee up to the Employee Termination Date and assist Purchaser in
securing the employment of each of the Employees after the Closing. Seller shall
not transfer any Employee to an assignment unrelated to the Business prior to
Closing without the prior written consent of Purchaser. Seller shall notify
Purchaser promptly if, notwithstanding the foregoing, any Employee terminates
his or her employment with Seller prior to the Employee Termination Date or
submits his or her resignation to terminate employment effective after the
Employee Termination Date. Seller shall terminate the employment of each
Employee immediately upon the Employee Termination Date with respect to such
Employee, and Seller shall not pay any severance to any Employee so terminated
unless required to do so by law and except as disclosed on Schedule 4.9(c). All
obligations of Seller with respect to each Employee through the Employee
Termination Date, including obligations for salary, sales commissions, bonus
compensation, payroll taxes, contributions to pension plans and all other
Employee Plans, fringe benefits, and vacation pay, shall remain the sole
obligations of Seller, subject to the reimbursement obligations of Purchaser
under the Transition Services and Facilities Agreements.
(b) Employment Taxes. (i) Seller shall be solely responsible for any
withholding or employment Taxes with respect to all Employees, including New
Purchaser Employees, through the applicable Employee Termination Date, which
accrue or become payable during the period of such person's employment or
service with Seller or arise out of the termination of such person's employment
or service with Seller, including any termination arising out of such person
becoming employed by Purchaser. Seller shall be solely responsible for filing
all employee related Tax Returns with respect to such persons attributable to
periods of employment or service with Seller. Seller shall provide Purchaser
with access to all books and records and copies of all Tax filings related to
employment Taxes paid with respect to any New Purchaser Employees for the period
from January 1, 1998 through the applicable Employee Termination Date.
(ii) Purchaser shall be solely responsible for any withholding
or employment Taxes with respect to any of the New Purchaser Employees following
the applicable Employee Termination Date, which accrue or become payable during
the period of such person's employment or service with Purchaser, or arise out
of the termination of such person's employment or service with Purchaser.
Purchaser shall be responsible for filing all tax returns with respect to such
persons attributable to periods of employment or service with Purchaser.
(c) Compensation; Contractual Obligations. (i) Seller shall be
solely liable for and obligated to pay and shall indemnify and hold Purchaser
and its Affiliates harmless from any and all liabilities with respect to (A) any
of Seller's obligations under this Section 10.1, (B) any claims or obligations
arising out of the employment of any person by Seller, whether for salary,
wages, bonuses, commissions, severance, accrued vacation, vacation pay, sick pay
or
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otherwise, (C) mortgage assistance provided to any Employee, or (D) any claim
by any Employee arising out of the Acquisition.
(ii) Should any New Purchaser Employee at the time of
acceptance of Purchaser's employment offer, elect to roll over up to 55 hours of
paid vacation benefits accrued with Seller, Purchaser shall make such paid
vacation benefits available for use at any time after the applicable Employee
Termination Date; provided, however, to the extent required by applicable law,
the parties agree that New Purchaser Employees located in England, Germany or
France shall be entitled to roll over all paid vacation benefits accrued with
Seller up to the applicable Employer Termination Date. Seller shall pay
Purchaser the amount of any such rollover vacation benefits with respect to any
New Purchaser Employee within fifteen (15) days after the end of the month
during which the Employee Termination Date occurred for such New Purchaser
Employee; provided, further, that such amount may be offset against amounts owed
by Purchaser under the Transaction Services and Facilities Agreement.
(iii) Purchaser shall recognize service with Seller or its
Affiliates by Employees for purposes of vacation accrual and for purposes of
eligibility and vesting under Purchaser's 401(k) Plan.
(iv) Each New Purchaser Employee shall be eligible to
participate in all benefit plans of Purchaser immediately upon hiring.
(d) Seller Employee Plans.
(i) With respect to Employees based in the United States: (A)
Seller agrees that it will comply with COBRA after the Employee Termination Date
with respect to all Employees who are qualified beneficiaries who had a
qualifying event as of or prior to the applicable Employee Termination Date,
including with respect to New Purchaser Employees, who are entitled to elect
COBRA coverage under Seller's Employee Plans that provide medical coverage
within the meaning of Section 213(d) of the Code or that are subject to COBRA,
or as otherwise may be required by applicable law, and (B) Purchaser is not
intended to be and is not a successor employer to Seller for any purpose,
including with respect to COBRA, and no benefit plan sponsored or maintained by
Purchaser is intended to be and no such plan shall be a successor plan to any
Seller Employee Plan. The Seller and Purchaser intend that no COBRA obligations
will arise with respect to the Seller's Code Section 125 Plan with respect to
New Purchaser Employees whose Code Section 125 health and/or dependent care
accounts are transferred to Purchaser pursuant to (iii) below.
(ii) Pursuant to the Provisions of Code Section 401(k)(10)(A)
(ii) and the Regulations promulgated thereunder, and other relevant provisions
of the Code, as soon as administratively feasible after the end of the calendar
quarter immediately following the applicable Employee Termination Date, Seller
shall provide each New Purchaser Employee who is a participant in Seller's
Profit Sharing Plan, the option to take a distribution of such employee's Profit
Sharing Plan assets, which assets may then be (i) rolled over to an Individual
Retirement Account, (ii) rolled over to another employer's tax-qualified
retirement plan or (iii) distributed directly to such employee.
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(iii) With respect to each New Purchaser Employee, Seller will
transfer to Purchaser within fifteen (15) days after the end of the month during
which the Employee Termination Date occurred with respect to such employee
assets equal to the amount that the employee had contributed through salary
reduction to the Seller's Health Care Reimbursement Program and/or the Seller's
Dependent Care Reimbursement Program under the Seller's Code Section 125 Plan,
from January 1, 1998 through the applicable Employee Termination Date, less any
reimbursements paid to the employee for claims incurred in 1998 ("the Code
Section 125 Transfer").
Upon Purchaser's receipt of the Code Section 125
Transfer, each New Purchaser Employee will immediately begin participating in a
Health Care Reimbursement Program and/or Dependent Care Reimbursement Program
maintained by Purchaser ("Purchaser Code Section 125 Plan") for the remainder of
the 1998 calendar year, subject to the following conditions: (a) new Purchaser
Employees are not permitted to change the amount they previously elected to
contribute to their health and/or dependent care reimbursement accounts for the
1998 calendar year solely because of the Code Section 125 Transfer. Employees
may change elections to the extent permitted by Purchaser and Code section 125
and the regulations thereunder; (b) each New Purchaser Employee will be credited
with an opening account balance equal to such employee's current account balance
in the Seller's Health Care Reimbursement Program and/or the Seller's Dependent
Care Reimbursement Program; (c) Purchaser will deduct from each such employee's
pay on a pre-tax basis the amount which the employee previously elected to
contribute to the Seller's Health Care Reimbursement Program and/or the Seller's
Dependent Care Reimbursement Program; (d) Purchaser will reimburse each such
employee for unreimbursed, eligible dependent care expenses incurred during the
1998 calendar year, up to the amount actually credited to the employee's
dependent care reimbursement account; (e) Purchaser will reimburse each such
employee for unreimbursed, eligible health care expenses up to the full amount
elected for contribution for the 1998 calendar year (less any reimbursements
previously paid), even if the amount actually credited to the employee's health
care reimbursement account does not cover the expense; (f) any amounts remaining
in the health and dependent care reimbursement accounts under the Purchaser's
Code Section 125 Plan after the grace period for submitting claims for the 1998
calendar year will revert to Purchaser; and (g) Seller shall be responsible for
health care and/or dependent care claims submitted by New Purchaser Employees on
or before the Employee Termination Date. Purchaser shall be responsible for any
health care and/or depending care claims submitted after the Employee
Termination Date, including those claims for expenses that may have been
incurred prior to the Employee Termination Date but for which no claim has been
submitted.
(iv) Seller shall be responsible for any liability for claims
filed with respect to any Employee eligible for coverage, reimbursement and/or
benefits under the terms of any Employee Plan maintained by Seller, provided
such liability (A) accrued or became payable during the period of such person's
employment or service with Seller, (B) accrued or became payable as a result of
such person's employment or service with Seller, or (C) arose out of the
termination of such person's employment with Seller. This provision shall not
apply to liability for claims with respect to amounts transferred under the Code
Section 125 Transfer.
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(v) Seller shall be responsible for any liability for all
accrued benefits with respect to any former or current Employee who, as a result
of their employment or service with Seller, was a participant in any Employee
Plan maintained by Seller. This provision shall not apply to liability for
accrued benefits with respect to amounts transferred under the Code Section 125
Transfer. Seller shall treat all New Purchaser Employees as having completed the
1998 Fiscal Year as an employee for purposes of determining eligibility for
employer fixed contributions under the Seller's Profit Sharing Plan.
(vi) Seller shall be responsible for making all payments to
New Purchaser Employees pursuant to commission or incentive programs or plans
for periods ending on or before May 31, 1998. For each New Purchaser Employee
who was eligible for payments from Seller pursuant to a commission or incentive
programs or plans for the fiscal quarter or the fiscal year ended June 30, 1998,
Purchaser shall make such payments on or before July 31, 1998. With respect to
any such bonuses or commissions based up revenues from such fiscal quarter or
fiscal year, Seller shall promptly reimburse Purchaser for the amount of such
payments based upon revenue recognized by Seller during the relevant period, and
Purchaser shall be responsible for the amount of such payments based upon
revenue recognized by Purchaser during the relevant period. With respect to any
discretionary bonuses, Seller and Purchaser shall cooperate to pay such bonuses
in accordance with Seller's past practices, and Seller shall promptly reimburse
Purchaser for its proportionate share of such bonuses based upon the time during
the relevant period that each employee was employed by Seller. With respect to
any such reimbursements to be paid by Seller to Purchaser, Seller shall have the
right to offset against such reimbursement the amount of draws advanced by
Seller to any New Purchaser Employee for the relevant period in excess of what
Seller is responsible for with respect to such employee as determined hereunder.
(e) No Solicitation or Hiring of Former Employees. (i) Seller
acknowledges that the value of the Acquisition to Purchaser is dependent in
large part upon the hiring of the Employees and the retention of the know how
related to the ongoing Business which is strictly in the possession of such
persons. Accordingly, Seller agrees that, for a period of two (2) years after
the Closing Date (the "Non-Solicitation Period"), it shall not, and shall cause
its subsidiaries and Affiliates not to, without first obtaining the written
consent of Purchaser, which consent may be withheld for any reason, hire or
attempt to hire, directly or indirectly, solicit or attempt to solicit any
Employee or any other person who is employed by Purchaser or its subsidiaries or
Affiliates to leave his or her employer or to become an employee of Seller or
any of its subsidiaries or Affiliates.
(ii) Purchaser acknowledges that Seller has provided Purchaser
with access to certain of its employees and retention of such employees (other
than the Employees) by Seller as a material component of the Acquisition.
Accordingly, except as contemplated by this Agreement, Purchaser agrees that,
during the Non-Solicitation Period, it shall not, and shall cause its
subsidiaries and Affiliates not to, without first obtaining the written consent
of Seller, which consent may be withheld for any reason, hire or attempt to
hire, directly or indirectly, solicit or attempt to solicit any person who is
employed by Seller or its subsidiaries or Affiliates
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to leave his or her employer or to become an employee of Purchaser or any of its
subsidiaries or Affiliates.
(iii) In the event a New Purchaser Employee commences
employment with Seller, or an employee of Seller (other than a New Purchaser
Employee) commences employment with Purchaser during the Non-Solicitation
Period, the Seller or Purchaser, as the case may be, shall pay the other party
an amount equal to two (2) times such person's annual salary. The parties
acknowledge and agree respectively, that (x) the damages to either party in the
event that any employee of such party leaves his or her employment and
thereafter commences employment or engagement with the other party during the
nonsolicitation period would be difficult to measure accurately, (y) the payment
set forth in the immediately preceding sentence will constitute liquidated
damages in such event and (z) such payments set forth in the immediate preceding
sentence are not excessive or punitive and are in no way intended as penalty.
(f) No Rights Conferred Upon Employees. Nothing in this Agreement
shall confer any rights or remedies on any Employee (including without
limitation any New Purchaser Employee) and no person (including without
limitation any New Purchaser Employee) shall be a person's beneficiary with
respect to any provision in this Agreement.
10.2. New Purchaser Consultants.
(a) Seller shall be solely responsible for and obligated to pay, and
shall indemnify and hold Purchaser and any Affiliates thereof harmless from, any
and all liabilities with respect to New Purchaser Consultants for (A) payment
for services which were supplied to Seller by such persons on or prior to the
Closing Date, (B) filing all tax returns required with respect to such services,
and (C) withholding or employment Taxes or benefits under any Employee Plan
which accrue or become payable with respect to such services as a result of a
determination by an appropriate Government Entity that such individual is
Seller's employee under applicable law.
(b) Purchaser shall be solely responsible for and obligated to pay,
and shall indemnify and hold Seller and any Affiliates thereof harmless from,
any and all liabilities with respect to independent contractors or other
individuals provided by third parties whom Purchaser or any Affiliate thereof
engages to supply services for (A) payment for services which are provided to
Purchaser or any Affiliate thereof by such persons after the Closing Date, (B)
filing all tax returns required with respect to such services, and (C)
withholding or employment Taxes or benefits under any of Purchaser's Employee
Plans which accrue or become payable with respect to such services as a result
of a determination by an appropriate Government Entity that such individual is
Purchaser's employee under applicable Law.
10.3. Affiliate and Third Party Distributor Agreements. Pursuant to the
terms of the Transition Distribution Agreement, Seller shall use reasonable
commercial efforts to take such actions as are necessary to effectuate the
removal of all Affiliate Distributor Agreements and Third Party Distributor
Agreements from the list of Permitted Encumbrances.
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10.4. Obtaining Necessary Consents for Assignment of the Assumed
Contracts. After the Closing Date, Seller shall use reasonable commercial
efforts to obtain any and all consents necessary for the effective assignment to
and assumption by Purchaser of the Assumed Contracts. All such consents shall be
in writing in a form reasonably acceptable to counsel to Purchaser and executed
counterparts thereof shall be delivered promptly to Purchaser. Seller shall not
agree to any modification of any Assumed Contract in the course of obtaining any
such consent, where such modification would materially [or] adversely effect
Purchaser's ability to continue the Business as heretofore conducted. To the
extent permitted by applicable law, until such consents are obtained by Seller,
such Assumed Contracts shall be held, as and from the Closing Date, by Seller in
trust for Purchaser and the covenants and obligations thereunder (related to the
Assets or Amended Liabilities) shall be performed by Purchaser in Seller's name
and all benefits and obligations existing thereunder (related to the Assets or
Assumed Liabilities) shall be for Purchaser's account (provided, however, that
such performance by Purchaser shall be contingent on the passing of all such
benefits of such Assumed Contracts to Purchaser). Seller shall take or cause to
be taken such actions in its name or otherwise as Purchaser may reasonably
request so as to provide Purchaser with the benefits of the Assumed Contracts
(as they relate to the Assets) and to effect collection of money or other
consideration to become due and payable under the Assumed Contracts, and Seller
shall promptly pay over to Purchaser all money or other consideration received
by it in respect to all Assumed Contracts (as they relate to the Assets). As of
and from the Closing Date, Seller authorizes Purchaser, to the extent permitted
by applicable law and the terms of the Assumed Contracts, at Purchaser's
expense, to perform all the obligations and receive all the benefits of Seller
under the Assumed Contracts (as they relate to the Assets or the Assumed
Liabilities) and appoints Purchaser its attorney-in-fact to act in its name and
on its behalf with respect thereto.
10.5. Covenant Not to Compete.
(a) For a period of five (5) years from the Closing Date, Seller
covenants and agrees that it will not engage in the business of developing,
marketing, selling or supporting (i) merchandise planning software products to
customers in the retail or consumer packaged goods industries or (ii) AIM star
schema data structure specifically designed for merchandise planning; provided,
however, that Purchaser agrees that Seller may sell or license its other
products without such restriction.
(b) For a period of two (2) years from the Closing Date, Seller
covenants and agrees that it will not directly or indirectly enter into any
relationship, including without limitation any relationship involving the
transfer, sale, license, assignment or other transaction involving, non-retail
components of AIM or Comshare Decision (or other software products similar to
Performance Analysis) with any Competitor Retail Software Vendor, unless and
until, with respect to a given entity, such entity becomes an Affiliate of a
third party entity (as a result of merger, acquisition or otherwise) that itself
is not a Competitor Retail Software Vendor. To the full extent of its legal
right to do so, Seller shall require its Affiliates to comply with the foregoing
provisions.
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(c) To the fullest extent allowed under applicable law, the
restrictions set forth in this Section 10.5 shall be effective within all
cities, counties and states of the United States, and all other countries in
which Seller has engaged in licensing or sales activities or otherwise conducted
business or selling or licensing efforts during the two (2) year period ending
on the Closing Date.
(d) Nothing contained in this Section 10.5 shall prohibit Seller
from owning up to one percent (1%) of the outstanding shares of any class of
equity securities of a corporation engaged in any such prohibited activity whose
securities are listed on a national securities exchange or quoted daily in the
over-the-counter listings of The Wall Street Journal.
(e) Seller agrees that the terms and time period provided for, and
the geographical area encompassed by, the covenants contained in this Section
10.5 are necessary and reasonable in order to protect Purchaser in the conduct
of the Business and the utilization of the Assets, tangible and intangible,
including the goodwill of Seller relating to the Business, acquired pursuant to
this Agreement.
(f) If any court having jurisdiction at any time hereafter shall
hold any provision or clause of this Section 10.5 to be unreasonable as to its
scope, territory or term, and if such court in its judgment or decree shall
declare or determine that scope, territory or term which such court deems to be
reasonable, then such scope, territory or term, as the case may be, shall be
deemed automatically to have been reduced or modified to conform to that
declared or determined by such court to be reasonable.
(g) It is expressly agreed that monetary damages would be inadequate
to compensate Purchaser for any breach by Seller of Seller's covenants as set
forth in this Section 10.5 and, accordingly, that in the event of any breach or
threatened breach by Seller of any such covenant, Purchaser will be entitled to
seek and obtain preliminary and permanent injunctive relief in any court of
competent jurisdiction, in addition to any other remedies at law or in equity to
which Purchaser may be entitled.
10.6. Access to Business Records. From and after the Closing Date,
Purchaser shall use ordinary care to maintain the Business Records acquired by
it pursuant hereto and, damage by fire or other casualty or accident excepted,
shall not for a period of six (6) years after the Closing Date destroy or
dispose of any such Business Records unless it shall first have notified Seller
of its intention to do so and shall have afforded Seller an opportunity to take
possession thereof. Seller shall have the right to retain an archive copy of the
Business Records. Similarly, from and after the Closing Date, Seller shall use
ordinary care to maintain Seller's copy of the Business Records are of any
records relating to the Business not transferred to Purchaser and, damage by
fire or other casualty or accident excepted, shall not for a period of six (6)
years after the Closing Date destroy or dispose of any such records unless it
shall first have notified Purchaser of its intention to do so and shall have
afforded Purchaser an opportunity to take possession thereof. From and after the
Closing Date, each party shall afford the other access to all preclosing
Business Records and other information acquired or retained by it pursuant
hereto, including data processing information, upon reasonable notice during
ordinary business hours for all reasonable
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business purposes, and each party shall permit the other party to make copies of
any such records and retain possession of such copies. Each of Purchaser and
Seller shall use reasonable care to maintain the confidentiality of the Business
Records in the possession of such party pursuant to the terms and subject to the
conditions set forth in the Confidentiality Agreement.
10.7. Confidentiality.
(a) Definition. As used in this Agreement, the term "Confidential
Information" shall mean any trade secrets and other confidential or proprietary
business, technical, personnel or financial information, in written, graphic,
oral or other tangible or intangible forms, including but not limited to
specifications, samples, records, data, computer programs, drawings, diagrams,
models, customer names, business or marketing plans, studies, analysis,
projections and reports, communications by or to attorneys (including
attorney-client privileged communications), memos and other materials prepared
by attorneys or under their direction (including attorney work product), and
software systems and processes. Any information which is not readily available
to the public shall be considered to be a trade secret and confidential and
proprietary, even if it is not specifically marked as such, unless the
disclosing party ("Disclosing Party") advises the other party ("Recipient")
otherwise in writing.
(b) Non-Disclosure Obligation. Each Party shall treat as
confidential all Confidential Information of the Disclosing Party and shall not
disclose any such Confidential Information conveyed to the Recipient from any
source prior to the Closing. It is expressly understood and agreed that any such
Confidential Information conveyed to Recipient is intended for the Recipient's
internal use only to perform Recipient's obligations hereunder, and shall be
protected by the Recipient with the same diligence, care, and precaution (but in
no event less than reasonable care) that the Recipient uses to protect its own
Confidential Information. Both parties agree not to disclose the specific
contents or provisions of this Agreement without the prior express written
consent of the other party, except as required under applicable law or stock
exchange requirements. Either party may disclose Confidential Information of the
other party to third parties provided that: (i) the disclosure of such
Confidential Information is pursuant and necessary to the performance of the
Recipient's obligations under this Agreement, and (ii) such third party agrees
to be bound by the provisions of this Section 10.7.
(c) Exceptions to Confidentiality Obligation. No party shall have
any obligation with respect to disclosure and use of information to the extent
such information:
(i) Is or becomes generally available to the public other than
as a consequence of a breach of an obligation of confidentiality by the
Recipient;
(ii) Is made public by the Disclosing Party;
(iii) Is independently developed by Recipient;
(iv) Is received from a third party independent of either
party without breaching an obligation of confidentiality; or
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(v) Is required to be disclosed by operation of law.
(d) Injunctive Relief. Both parties agree that it would be extremely
difficult to measure the amount of damages to the other party from a breach or a
threatened breach of any covenant contained in this Section 10.7, and that money
damages would be an inadequate remedy, and that in such event the damaged party
shall be entitled to temporary and permanent injunctive relief to restrain the
other party from such breach or threatened breach. In the event that any
covenant made in this Section 10.7 shall be more restrictive than permitted by
applicable law, it shall be limited to the extent which it is permitted. Nothing
in this Section 10.7 shall be construed as preventing either party from pursuing
any and all remedies available for a breach or threatened breach of a covenant
made in this Section 10.7, including the recovery of monetary damages from the
other party (and/or its employees).
(e) Ownership of Confidential Information. Except as otherwise
provided for in this Agreement, Recipient agrees that all Confidential
Information acquired by Recipient's personnel, by Recipient or its employees,
subcontractors or agents hereunder shall be and shall remain the Disclosing
Party's exclusive property
10.8. Tax Liability and Tax Returns. Seller shall pay all Taxes arising
from or relating to the transactions contemplated in this Agreement, including
but not limited to any sales, use, GST, VAT or other similar Tax. The Seller
will be responsible for the preparation and filing of all Tax Returns for Taxes
accrued for any period ending on or before the Closing Date. The Seller will
make all payments required with respect to any such Tax Return; provided,
however, that Purchaser will reimburse Seller concurrently therewith to the
extent any payment the Seller is making relates to the Taxes accrued for any
period commencing after the Closing Date. The Purchaser will be responsible for
the preparation and filing of all Tax Returns for Taxes accruing after the
Closing Date. The Purchaser will make all payments required with respect to any
such Tax Return; provided, however, that Seller will reimburse Purchaser
concurrently therewith to the extent any payment the Purchaser is making relates
to the Taxes accrued for any period ending on or before the Closing Date.
10.9. French Legal Requirements. The parties shall undertake all steps
necessary to implement the terms and conditions of this Agreement in compliance
with French Laws and Decrees and to observe all legal requirements thereunder,
including but not limited to causing their respective French Affiliates to
execute such agreements and transfer documents as required by, and in such form
as complies with, French Laws and Decrees.
10.10. Source Code. After the Closing Date, Seller shall cooperate with
Purchaser and use reasonable commercial efforts to locate all copies of the
Source Code for each of the Products and prepare a definitive list setting forth
the location and the Person who is in possession of each such copy. The parties
agree to place a copy of the Source Code for each of the Products with an
independent third party to be held in escrow indefinitely. The selection of such
third party will be subject to the approval of each party, which approval shall
not be unreasonably withheld. Seller shall be responsible for all costs and
expenses related to such Source Code escrow.
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10.11. Communications Plan; Press Release. Purchaser and Seller shall use
their respective reasonable commercial efforts to carry out the communications
plan as agreed to between the parties as of the date of this Agreement with
respect to communications to their respective customers, suppliers, employees,
investors and strategic partners concerning the transactions contemplated
hereby. Upon the Closing, Purchaser and Seller shall issue separate press
releases concerning the Acquisition, which press releases shall be approved as
to form and content by each party, which approvals shall not be unreasonably
withheld.
10.12. Transition Services. From and after the Closing Date, Seller shall
provide Purchaser with transition services and facilities in accordance with the
terms of the Transition Services and Facilities Agreement.
10.13. Further Assurances of Seller. Seller shall at any time or from time
to time after the Closing Date, at the request of Purchaser and without further
consideration, execute and deliver to Purchaser such instruments of transfer,
conveyance and assignment in addition to those delivered pursuant to Sections
2.1 and 9.3 hereof, provide such material and information and take such other
actions as Purchaser may reasonably deem necessary or desirable in order more
effectively to assign, transfer, convey and vest title in Purchaser, and to put
Purchaser in possession and operating control of, the Assets, and to assist
Purchaser in exercising all rights with respect thereto, including but not
limited to obtaining any and all required consents of third parties which Seller
has not obtained as of the Closing Date and taking all necessary action to
register the copyrights in and to all of the Products.
10.14. Further Assurances of Purchaser. Purchaser shall, from time to time
at the request of Seller, and without further consideration, execute and deliver
such instruments of assumption, and take such other action, as may be reasonably
necessary to effectively confirm the assumption by Purchaser of the Assumed
Liabilities.
10.15. Deferred Revenue.
(a) Seller will pay Purchaser the cash collected by Seller related
to Deferred Revenue less (i) related royalties payable by Purchaser to Seller
under any Ancillary Agreement and (ii) related agency finders fees under
existing Third Party Distribution Agreements. Payment for cash amounts collected
on or before Closing shall be made within fifteen (15) days after the Closing
Date, and payment for cash amounts collected after the Closing shall be made
within fifteen (15) days after the end of the month in which the cash was
collected and may be offset against payments owed by Purchaser under the
Transition Services and Facilities Agreement.
(b) Purchaser will pay Seller the cash collected by Purchaser
related to (i) Accounts Receivable (other than those listed on Schedule 1.21)
and (ii) revenue recognized by Seller but unbilled as of the Closing Date
related to the transactions listed on Schedule 10.15. Payment will be made
within fifteen (15) days after the end of the month in which the cash was
collected.
(c) Seller will continue its collection efforts related to Accounts
Receivable for Deferred Revenue through July 31, 1998. At Seller's request,
Purchaser will cease providing
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maintenance to any customer that has an outstanding Account Receivable as of
that date. If Purchaser subsequently reinstates maintenance for such customer
within twelve (12) months of the Closing Date and collects amounts due for past
maintenance service provided by Seller, Purchaser will pay Seller for Seller's
pro-rata share of the maintenance revenue for the period prior to the Closing
Date. Nothing in the forgoing will prohibit Purchaser from reinstating
maintenance service for a previously delinquent customer or from providing
maintenance pursuant to a valid written agreement to any previously delinquent
customer. Purchaser will use reasonable commercial efforts to collect past due
fees from customers and to charge previously delinquent customers a
reinstatement fee to reinstate maintenance in order to collect past due amounts
on behalf of Seller.
(d) Each party shall make available to the other party the records
reasonably necessary to enable that party to verify the accuracy of the payments
made under this section.
10.16. Additional Covenants of Purchaser. After the Closing, Purchaser
shall use reasonable commercial efforts to do the following:
(a) Complete consulting and implementation services obligations and
work in process under any Assumed Contract as of the Closing Date;
(b) Commercially released Arthur Assortment Planning;
(c) Take the actions necessary to ensure that the Current Version
and future versions of the Products are Year 2000 Compliant; and
(d) Take the actions described in Section 2.4(c)(ii).
(e) Upon receipt of thirty (30) day written notice from Seller,
provide an account of revenues generated from sales of Assortment Planning to
Seller; provided, however, that such obligation shall not extend for sales
beyond June 30, 1999.
10.17. Additional Covenants of Seller. After the Closing, Seller shall:
(a) Within ninety (90) days after Closing, deliver to Purchaser
true, correct and complete copies of any and all Customer License Agreements not
delivered to Purchaser on or before the Closing; and
(b) Receive and hold in trust for Purchaser any Assets received by
or remaining in the possession of Seller after the Closing, including without
limitation, any amounts of money or other consideration received by Seller from
end users of the Products under the Assumed Contracts, which amounts Seller
shall pay over and deliver to Purchaser promptly upon receipt thereof.
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ARTICLE XI
TERMINATION OF AGREEMENT
11.1 Mutual Consent. This Agreement may be terminated at any time before
the Closing Date, by the mutual written consent of Purchaser and Seller,
approved by their respective boards of directors.
11.2. Termination by Purchaser. This Agreement may be terminated at any
time before the Closing Date by Purchaser upon written notice to Seller,
specifying the basis for such termination, if (a) Seller shall have breached in
any material respect any of its respective covenants or agreements contained in
this Agreement, (b) any representation or warranty of Seller contained in this
Agreement or in any certificate, schedule or exhibit delivered by Seller
pursuant to this Agreement shall have become materially inaccurate or (c) the
Closing shall not have occurred on or before June 30, 1998 because a condition
to Purchaser's obligations to close set forth in Section 9.1 or 9.3 of this
Agreement shall not have been fulfilled; provided, however, that Purchaser's
action or failure to act has not been a principal cause of or resulted in the
failure of such condition and such action or failure to act by Purchaser
constitutes a breach of this Agreement.
11.3. Termination by Seller. This Agreement may be terminated at any time
before the Closing Date by Seller upon written notice to Purchaser, specifying
the basis for such termination, if (a) Purchaser shall have breached in any
material respect any of its covenants or agreements contained in this Agreement,
(b) any representation or warranty of Purchaser contained in this Agreement or
in any certificate, schedule or exhibit delivered by Purchaser pursuant to this
Agreement shall have become materially inaccurate, or (c) the Closing shall not
have occurred on or before June 30, 1998 because a condition to Seller's
obligations to close set forth in Section 9.1 or 9.2 of this Agreement shall not
have been fulfilled; provided, however, that Seller's action or failure to act
has not been a principal cause of or resulted in the failure of such condition
and such action or failure to act by Seller constitutes a breach of this
Agreement.
11.4. Termination for Other Reasons. This Agreement may be terminated at
any time before the Closing Date by either Purchaser or Seller if a court of
competent jurisdiction or other Governmental Entity shall have issued a final
order, decree or ruling, or taken any other action, or failed to grant its
consent, having the effect of permanently restraining, enjoining or otherwise
prohibiting the Acquisition, and all appeals with respect to such order or
action have been exhausted or the time for appeal of such order, decree, ruling,
action or consent shall have expired; provided, however, that the right to
terminate this Agreement under this Section 11.4 shall not be available to any
party hereto which has not complied with its obligations under Section 8.3
hereof.
11.5. Notice of Termination; Effect of Termination. Any termination of
this Agreement pursuant to Section 11.1 or Section 11.4 above will be effective
immediately upon the delivery of written notice by the terminating party to the
other party to this Agreement in accordance with Section 13.11 of this
Agreement. Any termination of this Agreement pursuant to Section 11.2 or Section
11.3 above will be effective upon the date (the "Date") five (5) days after the
delivery of
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written notice by the terminating party to the other parties to this Agreement
in accordance with Section 13.11 of this Agreement, unless prior to the Date
such material breach of a covenant or agreement made by the nonterminating
party, such inaccuracy of a representation or warranty made by the
nonterminating party and/or such failure of a condition to the terminating
party's obligations to close has been cured. In the event of the termination of
this Agreement pursuant to Section 11.1 through Section 11.4 of this Agreement,
this Agreement shall be of no further force or effect, and no party to this
Agreement shall have any liability to any other party with respect to this
Agreement; provided, however, that (a) this Section 11.5, Section 11.6 and
ARTICLE XIII (General) shall survive the termination of this Agreement, (b) such
termination of this Agreement shall not affect the respective obligations of the
parties set forth in the Confidentiality Agreement, all of which obligations
shall survive the termination of this Agreement in accordance with the terms and
conditions set forth in the Confidentiality Agreement and (c) no party to this
Agreement shall be relieved from liability for any material and willful (i)
inaccuracy of any representation and warranty made by such party in this
Agreement or in any certificate, schedule or exhibit delivered pursuant to this
Agreement or (ii) breach of any covenant or agreement made by such party set
forth in this Agreement. Nothing herein shall be deemed to require any party to
terminate this Agreement rather than to proceed with the Closing if a condition
precedent to the obligations of such party to close has not been fulfilled.
11.6. Fees and Expenses. Each party to this Agreement shall pay amounts
payable in respect of legal, accounting and financial advisory services provided
by outside advisors and other out-of-pocket expenses incurred incident to the
negotiation, preparation and carrying out of this Agreement, the Escrow Fund
Agreement, the Ancillary Agreements and the transactions contemplated herein and
therein (with respect to each party, "Expenses") whether or not the transactions
contemplated in this Agreement are consummated. Notwithstanding the foregoing,
Purchaser shall pay all fees and expenses due or payable or to be payable to
Arthur Andersen LLP in connection with the audit and preparation and delivery of
the Financial Statements. If this Agreement is terminated pursuant to Section XI
of this Agreement, then each party to this Agreement shall pay its own Expenses.
ARTICLE XII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
12.1 Survival of Representations and Warranties. The representations and
warranties made by Seller and Purchaser herein, or in any certificate, schedule
or exhibit delivered pursuant hereto, shall in no manner be limited by any
investigation of the subject matter thereof made by or on behalf of either party
or by the waiver or satisfaction of any condition to closing and shall survive
the Closing and continue in full force and effect for a period of:
(a) The longer of (i) one (1) year from the Closing Date or (ii) the
period from the Closing Date until thirty (30) days after the expiration of the
applicable statutes of limitation, in the case of the representations and
warranties in Sections 4.5 and 4.10 and all other
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representations and warranties in Article IV to the extent that they relate to
title or free and clear ownership of the Assets or to Tax Matters; and
(b) Two (2) years from the Closing Date in the case of
representations and warranties that are not specified in sub-paragraph (a)
above; provided, however, that the representations and warranties set forth in
Sections 4.1, 4.3, 5.1 and 5.2 of this Agreement shall survive for an unlimited
period of time.
The obligations of Seller to indemnify members of the Purchaser Group (as
defined below) for any Indemnifiable Losses is subject to the condition that
Seller shall have received an Indemnification Claim for all Indemnifiable Losses
for which indemnity is sought on or before the expiration date for the
applicable representation or warranty set forth in Section 12.1(a) or (b). The
obligation of Purchaser to indemnify members of the Seller Group for Seller
Losses is subject to the condition that Purchaser shall have received an
Indemnification Claim for all Seller Losses for which indemnity is sought on or
before the expiration date for the applicable representation set forth in
Section 12.1(a) or (b).
12.2. Indemnification by Seller.
(a) Matters Other Than Intellectual Property Infringement.
Subject to the terms and conditions of this ARTICLE XII, Seller
agrees to indemnify, defend and hold harmless Purchaser, its stockholders,
officers, directors, employees and attorneys, all subsidiaries and affiliates of
Purchaser, and the respective officers, directors, employees and attorneys of
such entities (all such persons and entities being collectively referred to as
the "Purchaser Group") from, against, for and in respect of any and all Losses
asserted against, relating to, imposed upon or incurred by Purchaser and/or any
other member of the Purchaser Group by reason of, resulting from, based upon or
arising out of any of the following (collectively, "Indemnifiable Losses"):
(i) the breach, inaccuracy, untruth or incompleteness of any
representation or warranty of Seller contained in or made pursuant to this
Agreement or any certificate or Schedule delivered by Seller in connection
herewith;
(ii) the breach or nonperformance of any covenant or agreement
of Seller contained in or made pursuant to this Agreement, the Escrow Fund
Agreement, or any of the Ancillary Agreements except for the Value-Added
Reseller Agreement.
(iii) any Excluded Liability; or
(iv) any breach by Seller of this ARTICLE XII;
provided, however, that in the event a Loss shall be covered by both Section
12.2(a) and 12.2(b), the provisions of Section 12.2(b) shall control.
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(b) Indemnification for Intellectual Property Infringement.
(i) Seller agrees to indemnify, defend and hold harmless
Purchaser Group from, against, for and in respect of any and all Losses asserted
against, relating to, imposed upon or incurred by Purchaser and/or any other
member of the Purchaser Group by reason of, resulting from, based upon or
arising out any of the following ("Infringement Losses"): any claim (an
"Infringement Claim") that a Product developed by (A) Purchaser subsequent to
the Closing Date infringes the intellectual property rights (including, without
limitation, patents, copyrights, trade secrets, software, technology, know-how
or processes) of any third party, to the extent that such infringement is
attributable to Seller Intellectual Property, or (B) Seller prior to the Closing
Date infringes or misappropriates the intellectual property rights (including,
without limitation, patents, copyrights, trade secrets, software, technology,
know-how or processes) of any third party; provided, however, that Seller shall
not so indemnify, defend and hold harmless Purchaser from and against Losses
resulting from trademark infringement.
(ii) Seller shall not be required to indemnify the Purchaser
Group with respect to (A) the use of the Intellectual Property by Purchaser with
one or more products or services not provided by Seller to the extent that there
would have been no infringement absent the use of such other product or service,
(B) infringement claims arising from modifications to a Product made by
Purchaser, or (C) use of a Product in ways other than as designed or marketed by
Seller prior to the Closing Date. (iii) The indemnities set forth in Section
12.2(b)(i) will be subject to the following conditions and limitations:
(A) All demands by Purchaser for defense and
indemnification by Seller shall be made within the applicable statute of
limitations; and
(B) If Seller has provided Purchaser notice of an actual
or probable Infringement Claim, Purchaser shall, at Seller's request and
expense, make such modifications to the Products as may be required to avoid the
infringement; provided, however, that the specific steps to be taken and the
corresponding time frames shall be determined through good faith negotiation and
mutual agreement.
(c) (i) Seller shall not be required to indemnify Purchaser and/or
any other member of the Purchaser Group for any Indemnifiable Losses under
Section 12.2(a) or Infringement Losses under Section 12.2(b) until the aggregate
amount of all such Indemnifiable Losses and Infringement Losses shall exceed Two
Hundred Fifty Thousand Dollars ($250,000) (the "Floor"); provided, however, that
if the aggregate amount of Indemnifiable Losses and Infringement Losses shall
exceed the Floor, Seller shall indemnify Purchaser only for Indemnifiable Losses
and Infringement Losses in excess of the Floor, subject to the further
limitations set forth in this ARTICLE XII. In no event shall the aggregate
liability for all Indemnifiable Losses and Infringement Losses exceed Five
Million Dollars ($5,000,000).
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(ii) The provisions of Sections 12.2(c)(i) above shall not
limit, in any manner, Seller's obligation to indemnify members of the Purchaser
Group for any breach of any covenant or agreement of Seller to be performed by
Seller following the Closing Date, including but not limited to, Seller's
obligation to perform and discharge all Excluded Liabilities and Seller's
obligations arising out of the Covenant Not to Compete, the Escrow Fund
Agreement or the Ancillary Agreements.
(iii) Purchaser and its Affiliates hereby acknowledge and
agree that, from and after the Closing, their sole remedy with respect to any
and all Indemnification Losses and Infringement Losses, respectively, shall be
pursuant to the indemnification provisions set forth in this Article XII. In
furtherance of the foregoing, Purchaser and its Affiliates hereby waive, from
and after the Closing, to the fullest extent permitted by law, any and all other
rights, claims and causes of action they may have against Seller or its
Affiliates relating to any misrepresentation in or breach of any representation
or warranty or nonfulfillment of any covenant, agreement or other obligation as
described in Section 12.2; provided, however, that nothing contained in this
Article XII shall limit, in any manner, any remedy at law or in equity which
Purchaser or any of its Affiliates shall be entitled against Seller under
Section 10.7(d) or as a result of willful fraud or intentional misrepresentation
by Seller.
12.3. Indemnification by Purchaser and Parent.
(a) Subject to the terms and conditions of this ARTICLE XII,
Purchaser and Parent, jointly and severally agree to indemnify, defend and hold
harmless Seller, its stockholders, officers, directors, employees and attorneys,
all subsidiaries and affiliates of Seller, and the respective officers,
directors, employees and attorneys of such entities (all such persons and
entities being collectively referred to as the "Seller Group") from, against,
for and in respect of any and all Losses asserted against, relating to, imposed
upon or incurred by Seller and/or any other member of the Seller Group by reason
of, resulting from, based upon or arising out of any of the following
(collectively, "Seller Losses"):
(i) the breach, inaccuracy, untruth or incompleteness of any
representation or warranty of Purchaser or Parent contained in or made pursuant
to this Agreement or any certificate or Schedule delivered by Purchaser or
Parent in connection herewith;
(ii) the breach or nonperformance of any covenant or agreement
of Purchaser or Parent contained in or made in pursuant to this Agreement, the
Escrow Fund Agreement or the Ancillary Agreements except the Value-Added
Reseller Agreement;
(iii) any Assumed Liability, or
(iv) any and all Losses imposed upon or incurred by Seller
arising out Purchaser's or Parent's infringing conduct relating to the Products
subsequent to the Closing Date; provided that Purchaser and Parent will not be
obligated to indemnify Seller under this Section for any liability arising from
Seller's misconduct.
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(b) Purchaser shall not be required to indemnify Seller and/or any
other member of the Seller Group for any Seller Losses until the aggregate
amount of all Seller Losses under all individual Indemnification Claims shall
exceed Two Hundred Fifty Thousand Dollars ($250,000) (the "Floor"); provided,
however, that if the aggregate amount of all Indemnification Losses in respect
of such Indemnification Claims shall exceed the Floor, then Purchaser shall
indemnify Seller only for Seller Losses in respect of such Indemnification
Claims in excess of the Floor, subject to the further limitations set forth in
this Article XII. In no event shall the aggregate liability for all Seller
Losses exceed Five Million Dollars ($5,000,000).
(c) The provisions of Section 12.3(b) above shall not limit, in any
manner, Purchaser's obligation to indemnify members of the Seller Group for any
breach of any covenant or agreement of Purchaser to be performed by Purchaser
following the Closing, including, without limitation, Purchaser's obligation to
perform and discharge all Assumed Liabilities, and to perform Purchaser's
obligations arising under the Escrow Fund Agreement and the Ancillary
Agreements.
(d) Seller and the Affiliates hereby acknowledge and agree that,
from and after the Closing, their sole remedy with respect to any and all Seller
Losses shall be pursuant to the indemnification provisions set forth in this
Article XII. In furtherance of the foregoing, Seller and its Affiliates hereby
waive, from and after the Closing, to the fullest extent permitted by law, any
and all other rights, claims and causes of action they may have against
Purchaser or its Affiliates relating to any misrepresentation in or breach of
any representation or warranty or nonfulfillment of any covenant, agreement or
other obligations described in Section 12.2; provided, however, that nothing
contained in this Article XII shall, limit, in any manner, any remedy at law or
in equity which Seller or any of its Affiliates shall be entitled against
Purchaser under Section 10.7(d) or as a result of willful fraud or intentional
misrepresentation by Purchaser.
12.4. Procedures for Indemnification.
(a) As used in this ARTICLE XII, the term "Indemnitor" means the
party against whom indemnification hereunder is sought, and the term
"Indemnitee" means the party seeking indemnification hereunder.
(b) A claim for indemnification hereunder (an "Indemnification
Claim," including for these provisions, an Infringement Claim) shall be made by
Indemnitee by delivery of a written notice to Indemnitor requesting
indemnification and specifying the basis on which indemnification is sought in
reasonable detail (and shall attach relevant documentation related to the
Indemnification Claim), the amount of the asserted Indemnifiable Losses or
Seller Losses, as the case may be, and, in the case of a Third Party Claim,
containing (by attachment or otherwise) such other information as Indemnitee
shall have concerning such Third Party Claim.
(c) If the Indemnification Claim involves a Third Party Claim, then
the procedures set forth in Section 12.5 hereof shall be observed by Indemnitee
and Indemnitor.
(d) If the Indemnification Claim involves a matter other than a
Third Party Claim (as defined below), Indemnitor shall have thirty (30) days to
object to such
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Indemnification Claim by delivery of a written notice of such objection to
Indemnitee specifying in reasonable detail the basis for such objection. Failure
to timely so object shall constitute a final and binding acceptance of the
Indemnification Claim by Indemnitor, and the Indemnification Claim shall
thereafter be paid by Indemnitor in accordance with Section 12.4(e) hereof. If
an objection is timely delivered by Indemnitor and the dispute is not resolved
within twenty (20) business days from the delivery of such objection (the
"Negotiation Period"), such dispute shall be resolved by arbitration in
accordance with the provisions of Section 13.10 hereof.
(e) Upon determination of the amount of an Indemnification Claim,
whether by (i) an agreement between Indemnitor and Indemnitee, (ii) an
arbitration award or (iii) a final judgment (after expiration of all periods for
appeal of such judgment) or other final nonappealable order, Indemnitor shall
pay the amount of such Indemnification Claim by check or wire transfer within
ten (10) days of the date such amount is determined.
12.5. Defense of Third Party Claims. Should any claim be made, or suit or
proceeding (including, without limitation, a binding arbitration or an audit by
any taxing authority) be instituted against Indemnitee which, if prosecuted
successfully, would be a matter for which Indemnitee is entitled to
indemnification under this Agreement (a "Third Party Claim"), the obligations
and liabilities of the parties hereunder with respect to such Third Party Claim
shall be subject to the following terms and conditions:
(a) Indemnitee shall give Indemnitor written notice of any such
claim promptly after receipt by Indemnitee of notice thereof. Any delay in
giving notice hereunder which does not materially prejudice Indemnitor, shall
not affect Indemnitee's rights to Indemnification hereunder. Indemnitor may, at
its option, (i) undertake control of the defense thereof by counsel of its own
choosing reasonably acceptable to Indemnitee or (ii) decline to assume control
of but participate in the defense thereof provided that such participation by
Indemnitee shall be at its own expense. Indemnitee may participate in the
defense through its own counsel at its own expense. The assumption of the
defense of any Third Party Claim by Indemnitor shall not be an acknowledgment by
Indemnitor that such Third Party Claim is subject to indemnification under the
provisions of this ARTICLE XII and that such provisions are binding on
Indemnitor. If, however, Indemnitor fails or refuses to undertake the defense of
such Third Party Claim within ten (10) days after written notice of such claim
has been delivered to Indemnitor by Indemnitee, Indemnitee shall have the right
to undertake the defense, compromise and, subject to Section 12.6, settlement of
such Third Party Claim with counsel of its own choosing. In the circumstances
described in the preceding sentence, Indemnitee shall, promptly upon its
assumption of the defense of such Third Party Claim, make an Indemnification
Claim as specified in Section 12.4(b) which shall be deemed an Indemnification
Claim that is not a Third Party Claim for the purposes of the procedures set
forth herein. Failure of Indemnitee to furnish written notice to Indemnitor of a
Third Party Claim shall not release Indemnitor from Indemnitor's obligations
hereunder, except to the extent Indemnitor is prejudiced by such failure.
(b) Indemnitee and Indemnitor shall cooperate with each other in all
reasonable respects in connection with the defense of any Third Party Claim,
including making
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available records relating to such claim and furnishing employees of Indemnitee
as may be reasonably necessary for the preparation of the defense of any such
Third Party Claim or for testimony as witness in any proceeding relating to such
claim.
12.6. Settlement of Third Party Claims. Unless Indemnitor has failed to
fulfill its obligations under this ARTICLE XII, no settlement by Indemnitee of a
Third Party Claim shall be made without the prior written consent by or on
behalf of Indemnitor, which consent shall not be unreasonably withheld or
delayed. If Indemnitor has assumed the defense of a Third Party Claim as
contemplated by Section 12.4(a), no settlement of such Third Party Claim may be
made by Indemnitor without the prior written consent by or on behalf of
Indemnitee, which consent shall not be unreasonably withheld or delayed. In the
event of any dispute regarding the reasonableness of a proposed settlement, the
party that will bear the larger financial loss resulting from such settlement
shall make the final determination in respect thereto, which determination shall
be final and binding on all involved parties.
12.7. Escrow Fund. On the Closing Date, the Escrow Fund shall be deposited
by Purchaser with Harris Bank as escrow agent (the "Escrow Agent"), and the
Escrow Fund shall be governed by and administered according to the terms and
conditions of this Agreement and the Escrow Fund Agreement. Each of Purchaser
and Seller acknowledges and agrees that the Escrow Fund is not Purchaser's sole
and exclusive remedy or source of satisfaction for Seller's indemnification
obligations pursuant to this ARTICLE XII.
12.8. Escrow Period. The period commencing on the Closing Date and ending
on the second anniversary of the Closing Date shall be referred to as the
"Escrow Period."
ARTICLE XIII
GENERAL
13.1 Governing Law. It is the intention of the parties hereto that the
laws of the State of Arizona (irrespective of its choice of law principles)
shall govern the validity of this Agreement, the construction of its terms, and
the interpretation and enforcement of the rights and duties of the parties
hereto.
13.2. Assignment; Binding upon Successors and Assigns. Neither of the
parties hereto may assign any of its rights or obligations hereunder without the
prior written consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that Purchaser may assign its rights
under this Agreement (a) to any majority-owned subsidiary of Purchaser, provided
that Purchaser guarantees the obligations of such subsidiary hereunder or (b) to
any successor of Purchaser through any merger or consolidation, or purchase of
all or substantially all of Purchaser's stock or all or substantially all of
Purchaser's assets. This Agreement will be binding upon and inure to the benefit
of the parties hereto and their respective permitted successors and assigns.
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13.3. Severability. If any provision of this Agreement, or the application
thereof, shall for any reason and to any extent be held to be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall be interpreted so as best to
reasonably effect the intent of the parties hereto. The parties further agree to
replace such invalid or unenforceable provision of this Agreement with a valid
and enforceable provision which will achieve, to the extent possible, the
economic, business and other purposes of the invalid or unenforceable provision.
13.4. Entire Agreement. This Agreement and the exhibits and schedules
hereto, constitute the entire understanding and agreement of the parties hereto
with respect to the subject matter hereof and thereof and supersede all prior
and contemporaneous agreements or understandings, inducements or conditions,
express or implied, written or oral, between the parties with respect hereto.
13.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
13.6. Expenses. Subject to Section 11.6, the parties shall each pay their
own Expenses incurred incident to the negotiation, preparation and carrying out
of this Agreement and the transactions contemplated herein, whether or not the
transactions contemplated herein are consummated.
13.7. Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy shall not preclude the exercise of any other.
13.8. Amendment and Waivers. Any term or provision of this Agreement may
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed to constitute
a waiver of any other default or any succeeding breach or default.
13.9. Waiver. Each party hereto may, by written notice to the others: (a)
waive any of the conditions to its obligations hereunder or extend the time for
the performance of any of the obligations or actions of the others, (b) waive
any inaccuracies in the representations of the others contained in this
Agreement or in any documents delivered pursuant to this Agreement, (c) waive
compliance with any of the covenants of the others contained in this Agreement
or (d) waive or modify performance of any of the obligations of the others. No
action taken pursuant to this Agreement, including without limitation any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, condition or agreement contained herein. Waiver of the breach of any
one or more provisions of this Agreement shall not be deemed or construed to be
a waiver of other breaches or subsequent breaches of the same provisions.
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13.10. Arbitration.
(a) If any dispute relating to this Agreement arises between the
parties, and no agreement relating to such dispute can be reached after good
faith negotiation, either Purchaser or Seller may, by written notice to the
other, demand arbitration of the matter unless the amount of the 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 one arbitrator. Purchaser and Seller shall agree on the arbitrator,
provided that if Purchaser and Seller cannot agree on such arbitrator, either
Purchaser or Seller can request that the Judicial Arbitration and Mediation
Services ("JAMS") select the arbitrator. The arbitrator 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 arbitrator, to discover relevant information from the opposing
parties about the subject matter of the dispute. The arbitrator shall rule upon
motions to compel or limit discovery and shall have the authority to impose
sanctions, including attorneys' fees and costs, to the same extent as a court of
competent law or equity, should the arbitrator determine that discovery was
sought without substantial justification or that discovery was refused or
objected to without substantial justification. Subject to the foregoing, the
arbitration shall proceed under the rules of the American Arbitration
Association. The decision of the arbitrator shall be written, shall be in
accordance with applicable law and with this Agreement, and shall be supported
by written findings of fact and conclusion of law which shall set forth the
basis for the decision of the arbitrator. The decision of the arbitrator as to
the validity and amount of any claim shall be binding and conclusive upon the
parties to this Agreement.
(b) Judgment upon any award rendered by the arbitrator may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Chicago, Illinois under the commercial rules then in effect of the American
Arbitration Association. The non-prevailing party to an arbitration shall pay
its own expenses, the fees of the arbitrator, any administrative fee of JAMS,
and the expenses, including attorneys' fees and costs, reasonably incurred by
the other party to the arbitration.
13.11. Notices. All notices and other communications hereunder will be in
writing and will be deemed given (a) upon receipt if delivered personally (or if
mailed by registered or certified mail), (b) the day after dispatch if sent by
overnight courier, (c) upon dispatch if transmitted by telecopier or other means
of facsimile transmission (and confirmed by a copy delivered in accordance with
clause (a) or (b)), properly addressed to the parties at the following
addresses:
Seller: Comshare Incorporated
595 Briarwood Circle
Ann Arbor, Michigan 48108
Attention: President
Facsimile No. (734) 994-4140
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with copies to: Dykema Gossett
315 East Eisenhower Parkway, Suite 100
Ann Arbor, Michigan 48108-3306
Attention: Janet Neary, Esq.
Facsimile No. (734) 214-7696
Parent or Purchaser: JDA Software Group, Inc.
JDA Software, Inc.
11811 North Tatum Blvd., Suite 2000
Phoenix, Arizona 85028
Attention: Karen Nagle, Esq., General Counsel
Facsimile No. (602) 404-5520
with a copy to: Gray Cary Ware & Freidenrich
100 Congress Avenue, Suite 1440
Austin, Texas 78701
Attention: Paul Hurdlow, Esq.
Facsimile No.: (512) 457-7070
Either party may change its address for such communications by giving
notice thereof to the other party in conformity with this Section.
13.12. Construction and Interpretation of Agreement.
(a) This Agreement has been negotiated by the parties hereto and
their respective attorneys, and the language hereof shall not be construed for
or against either party by reason of it having drafted such language.
(b) The titles and headings herein are for reference purposes only
and shall not in any manner limit the construction of this Agreement, which
shall be considered as a whole.
(c) As used in this Agreement, any reference to any state of facts,
event, change or effect being "material" with respect to any entity means a
state of facts that is material to the current or expected condition (financial
or otherwise), properties, assets, liabilities, business, operations or
prospects of such entity. Whenever the term "enforceable in accordance with its
terms" or like expression is used in this Agreement, it is understood that
excepted therefrom are any limitations on enforceability under applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting the enforcement of creditor's rights.
13.13. No Joint Venture. Nothing contained in this Agreement shall be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party shall have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to
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each other. No party shall have any power or authority to bind or commit any
other. No party shall hold itself out as having any authority or relationship in
contravention of this Section.
13.14. Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor shall be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner of any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof shall be personal solely between the parties
to this Agreement.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
June 4, 1998.
"PURCHASER" "SELLER"
JDA SOFTWARE, INC. COMSHARE, INCORPORATED,
an Arizona corporation a Michigan corporation
By:______________________________ By:______________________________
Brent W. Lippman Dennis G. Ganster
Chief Executive Officer President
"PARENT"
JDA SOFTWARE GROUP, INC,
a Delaware corporation
By:______________________________
Brent W. Lippman
Chief Executive Officer
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<PAGE> 1
EXHIBIT 2.2
SOFTWARE LICENSE AGREEMENT
This Software License Agreement ("Agreement") is entered into as of
June 4, 1998 ("Effective Date") by and between Comshare, Incorporated, a
Michigan corporation, having its principal place of business at 555 Briarwood
Circle, Ann Arbor, Michigan 48108 ("Licensor"), and JDA Software, Inc., an
Arizona corporation having its principal place of business at 11811 N. Tatum
Blvd., Suite 2000, Phoenix, Arizona 85028 ("Licensee").
WHEREAS, Licensor has sold and conveyed certain software products and
other assets of Licensor to Licensee under a separate Asset Purchase Agreement
dated June 4, 1998 (the "Asset Purchase Agreement");
WHEREAS, Licensor owns or otherwise has the rights to certain software
which is useful with and adds value to, the software products sold to Licensee;
and
WHEREAS, Licensee desires to obtain the right to use, modify,
reproduce, distribute, publicly display and publicly perform such software as
part of Licensee's normal course of business and pursuant to the terms and
conditions of this Agreement, and Licensor is willing to grant such license.
NOW, THEREFORE, in consideration of the foregoing and the covenants set
forth below, the parties agree as follows:
1. DEFINITIONS.
1.1 "AIM Software" shall mean the computer software programs identified
in Section 1 of Schedule A attached hereto, in object code and source code form,
programmer's comments, any related documentation, including user documentation
provided with such software, and any error corrections, updates or upgrades
thereto made available to Licensee under this Agreement.
1.2 "Decision Software" shall mean the computer software programs
identified in Section 2 of Schedule A attached hereto, in object code and source
code form, programmer's comments, any related documentation, including user
documentation provided with such software, and any error corrections, updates or
upgrades thereto made available to Licensee under this Agreement.
1.3 "Supporting Software" shall mean the computer software programs
identified in Section 3 of Schedule A attached hereto, in object code form, any
related documentation, including user documentation provided with such software,
and any error corrections, updates or upgrades thereto made available to
Licensee under this Agreement.
1.4 "Licensed Software" shall mean collectively, AIM Software, Decision
Software and Supporting Software.
1.5 "Acquired Products" shall mean the computer software programs
acquired by Licensee pursuant to, and listed on Schedule 1.55 of the Asset
Purchase Agreement.
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2. GRANT OF RIGHTS.
2.1 AIM Software License. Licensor hereby grants to Licensee a
royalty-free, fully paid-up, non-exclusive, irrevocable, perpetual, worldwide
unrestricted license to execute, modify, reproduce, publicly display, publicly
perform and prepare derivative works of the AIM Software.
2.2 Decision Software License. Licensor hereby grants to Licensee a
royalty-free fully paid-up, non-exclusive, irrevocable, perpetual, worldwide
license to execute, modify, reproduce, publicly display, publicly perform and
prepare derivative works of the Decision Software. For two years from the
Effective Date of this Agreement, Licensee's rights under this Section 2.2 shall
be restricted to use (i) by customers in the retail market only in conjunction
with product(s) owned by Licensee (including, but not limited to, the Acquired
Products); or (ii) by customers in the consumer packaged goods industry in
conjunction with Boost Sales and Margin Planning. After such time period,
Licensee's use of the Decision Software shall be unrestricted.
2.3 Supporting Software License. Licensor hereby grants to Licensee a
royalty-free, fully paid-up, non-exclusive, irrevocable, perpetual, worldwide
license to use, modify, execute, reproduce, publicly display and public perform
the Supporting Software for the sole purpose of allowing Licensee to utilize,
commercialize, market and license the Acquired Products to end users.
2.4 Distribution of Software. Licensor hereby grants to Licensee the
right to sell, market, exploit and distribute the Licensed Software, including
any derivative works created under the licenses granted in Section 2.1 ("AIM
Software License"), Section 2.2 ("Decision Software License") and Section 2.3
("Supporting Software License"), directly through any means or media now known
or hereafter invented indirectly or through subdistributors, resellers, other
third party distributors and Licensee's usual channels of distribution, subject
to the restrictions set forth in Section 2.2 for the Decision Software and any
applicable restrictions set forth in the Transition Distribution Agreement
attached as Exhibit A-4 to the Asset Purchase Agreement.
2.5 Delivery. Licensor agrees to deliver the Licensed Software to
Licensee on the Effective Date by making it available to Licensee at its present
location.
2.6 Trademark. Licensee may market the Licensed Software under a
trademark of its choice. Licensee is granted no rights to use any Licensor
trademark or trade name.
3. MAINTENANCE.
3.1 Support for Licensed Software. Licensee agrees that it shall
provide technical support for Licensed Software to all channel partners and
end-users. Licensee shall ensure that all questions regarding the use or
operation of any software marketed by Licensee are addressed to and answered by
Licensee, and Licensee will not represent to any third party that Licensor is
available to answer any customer questions directly. Licensor shall refer to
Licensee any customer service questions relating to Licensed Software
distributed by Licensee.
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<PAGE> 3
3.2 Licensor Maintenance Obligations. Licensor shall have no
responsibility to provide any maintenance services (including but not limited to
updates, enhancements, error corrections or bug fixes) with respect to the
Licensed Software except as provided in this Section 3.2. Licensor shall provide
to Licensee at no charge: (i) the next release of the Architect Component of the
AIM Software (the "Architect") presently scheduled for June 30, 1998, and (ii)
the next major release of the Architect subsequent to the release described in
subsection (i) above.
3.3 Additional Support. During the first year of this Agreement,
Licensor shall provide to Licensee, without cost and for a period not to exceed
six (6) months, assistance relating to the Architect, as follows: Up to three
(3) qualified individuals employed or contracted by Licensee may receive
orientation and training concerning the Architect at Licensor's headquarters of
the same type as if they were new employees of Licensor. The training shall be
conducted by those employees of Licensor who are primarily responsible for the
development of the Architect and shall not unreasonably interfere with
Licensor's normal business operations.
4. SOURCE CODE ESCROW. Within thirty (30) days after the Effective Date of this
Agreement, Licensor shall deposit the source code for the AIM Software and the
Decision Software with a third party escrow agent under terms and conditions
mutually agreeable by both Licensor and Licensee. Licensee shall thereafter have
thirty (30) days to inspect and verify such deposit is an accurate
representation of the AIM Software and the Decision Software. In the event a
dispute arises between the parties as to whether certain software was sold to
Licensee as part of the Acquired Products under the Asset Purchase Agreement or
licensed to Licensee as part of the AIM Software under this Agreement or with
respect to the parties' relative responsibilities for infringement or other
obligations, the parties hereby agree that the software escrowed pursuant to
this section is a complete copy of the AIM Software and the Decision Software
and constitutes that portion of the software to which Licensor retains title and
ownership and may be used to settle any dispute between the parties.
5. WARRANTY.
5.1 Warranty of Title. Licensor represents and warrants it is the owner
of the Licensed Software except as identified in Section 3 of Schedule A and has
complete and lawful authority to grant Licensee the rights hereunder.
5.2 Warranty of Escrow Deposit. Licensor represents and warrants the
software deposited in escrow in accordance with Section 4 of this Agreement is
identical to the AIM Software and the Decision Software delivered under Section
2.5 of this Agreement.
5.3 Disclaimer. EXCEPT AS SPECIFICALLY WARRANTED ABOVE, LICENSOR MAKES
NO OTHER WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE WITH RESPECT TO
ANY SUCH MATERIALS, AND LICENSOR SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
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<PAGE> 4
6. PROPERTY RIGHTS.
6.1 Property Rights. Licensee acknowledges and agrees that Licensor
owns all right, title, and interest in the AIM Software and Decision Software
now or hereafter subject to this Agreement. Licensor acknowledges and agrees
that Licensee owns all right, title, and interest in any derivative software
developed by Licensee from the AIM Software and Decision Software now or
hereafter subject to this Agreement and Licensor has no right or license to such
derivative works.
6.2 Indemnity. Licensor shall defend and indemnify Licensee, at
Licensor's expense, against any claim or suit against Licensee based on (i) an
alleged infringement of a copyright or United States or European Community
patent; or (ii) a misappropriation of a trade secret of a third party arising
out of, relating to or resulting from the use of the Licensed Software, and
Licensor shall pay all (a) costs; (b) settlements; or (c) judgments finally
awarded provided that Licensor has the right solely to control the defense of
the Litigation, Licensee takes such actions and gives Licensor all necessary
assistance, at Licensor's expense, as Licensor may reasonably request and
Licensee gives Licensor prompt written notice of any claim. If a judgment is
obtained against Licensee's use of any part of the Licensed Software or if
Licensor considers that there is a likelihood of the claim of infringement
succeeding, it shall, at its option and expense, modify or substitute the
Licensed Software or obtain the right for Licensee to continue use. Licensor
shall have no obligation to defend and indemnify under this section, and
Licensee shall defend and indemnify Licensor on the same terms, to the extent
that the claim or liability is based upon modification of the Licensed Software
not made by or through Licensor. This Section states Licensor's entire liability
for infringement with respect to the AIM Software or Decision Software.
7. LIMITATION OF LIABILITY. Except as may be provided otherwise in Section 6.2,
IN NO EVENT SHALL LICENSOR HAVE ANY LIABILITY FOR INCIDENTAL, CONSEQUENTIAL, OR
SPECIAL DAMAGES INCLUDING, WITHOUT LIMITATION, LOST REVENUES OR PROFITS.
8. CONFIDENTIAL INFORMATION.
8.1 Definition. As used in this Agreement, the term "Confidential
Information" shall mean any information disclosed by one party to the other
pursuant to this Agreement which is in written, graphic, machine readable or
other tangible form and is marked "Confidential".
8.2 General. Each party shall treat as confidential all Confidential
Information of the other party, shall not use such Confidential Information
except as expressly set forth herein or otherwise authorized in writing, shall
implement reasonable procedures to prohibit the disclosure, unauthorized
duplication, misuse or removal of the other party's Confidential Information and
shall not disclose such Confidential Information to any third party except as
may be necessary and required in connection with the rights and obligations of
such party under this Agreement, and subject to confidentiality obligations at
least as protective as those set forth herein. Without limiting the foregoing,
each of the parties shall use at least the same procedures and degree of care
which it uses to prevent the disclosure of its own confidential information of
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<PAGE> 5
like importance to prevent the disclosure of Confidential Information disclosed
to it by the other party under this Agreement, but in no event less than
reasonable care.
8.3 Exceptions. Notwithstanding the above, neither party shall have
liability to the other with regard to any Confidential Information of the other
which: (i) was generally known and available in the public domain at the time it
was disclosed or becomes generally known and available in the public domain
through no fault of the receiver; (ii) was known to the receiver at the time of
disclosure; (iii) is disclosed with the prior written approval of the
disclosure; (iv) was independently developed by the receiver without any use of
the Confidential Information; (v) becomes known to the receiver from a source
other than the disclosure without breach of this Agreement by the receiver and
otherwise not in violation of the discloser's rights; or (vi) was in response to
a valid order by a court or other governmental body, was otherwise required by
law, or was necessary to establish the right of either party under this
Agreement.
8.4 Remedies. If either party breaches any of its obligations with
respect to confidentiality and unauthorized use of Confidential Information
hereunder, the other party shall be entitled to seek equitable relief to protect
its interest therein, including but not limited to injunctive relief, as well as
money damages.
9. MISCELLANEOUS.
9.1 Governing Law. It is the intention of the parties hereto that the
laws of the State of Arizona (irrespective of its choice of law principles)
shall govern the validity of this Agreement, the construction of its terms, and
the interpretation and enforcement of the rights and duties of the parties
hereto.
9.2 Assignment; Binding upon Successors and Assigns. Neither of the
parties hereto may assign any of its rights or obligations hereunder without the
prior written consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that (a) Licensee may assign its
rights under this Agreement to any majority-owned subsidiary of Licensee,
provided that Licensee guarantees the obligations of such subsidiary hereunder
or (b) either party may assign its rights or obligations to any successor
through any merger or consolidation, or purchase of all or substantially all of
the party's stock or all or substantially all of the assets related to the
Products (in the case of Licensee) or the Licensed Software (in the case of
Licensor). This Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns.
9.3 Severability. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be held to be
invalid or unenforceable, the remainder of this Agreement and the application of
such provision to other persons or circumstances shall be interpreted so as best
to reasonably effect the intent of the parties hereto. The parties further agree
to replace such invalid or unenforceable provision of this Agreement with a
valid and enforceable provision which will achieve, to the extent possible, the
economic, business and other purposes of the invalid or unenforceable provision.
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9.4 Entire Agreement. This Agreement, the Schedules hereto, and the
documents referenced herein, constitute the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof and thereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between the
parties with respect hereto.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
9.6 Arbitration.
(a) If any dispute relating to this Agreement arises between
the parties, and no agreement relating to such dispute can be reached after good
faith negotiation, either Licensee or Licensor may, by written notice to the
other, demand arbitration of the matter unless the dispute is at issue in
pending litigation with a third party, in which event arbitration shall not be
commenced until such dispute is resolved or both parties agree to arbitration;
and in either such event the matter shall be settled by arbitration conducted by
one arbitrator. Licensee and Licensor shall agree on the arbitrator, provided
that if Licensee and Licensor cannot agree on such arbitrator, either Licensee
or Licensor can request that the Judicial Arbitration and Mediation Services
("JAMS") select the arbitrator. The arbitrator 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
arbitrator, to discover relevant information from the opposing parties about the
subject matter of the dispute. The arbitrator shall rule upon motions to compel
or limit discovery and shall have the authority to impose sanctions, including
attorneys' fees and costs, to the same extent as a court of competent law or
equity, should the arbitrator determine that discovery was sought without
substantial justification or that discovery was refused or objected to without
substantial justification. Subject to the foregoing, the arbitration shall
proceed under the rules of the American Arbitration Association. The decision of
the arbitrator shall be written, shall be in accordance with applicable law and
with this Agreement, and shall be supported by written findings of fact and
conclusion of law which shall set forth the basis for the decision of the
arbitrator. The decision of the arbitrator as to the validity and amount of any
claim shall be binding and conclusive upon the parties to this Agreement.
(b) Judgment upon any award rendered by the arbitrator may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Chicago, Illinois under the commercial rules then in effect of the American
Arbitration Association.
9.7 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy shall not preclude the exercise of any other.
9.8 Waiver. No action taken pursuant to this Agreement, including
without limitation any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the
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party taking such action of compliance with any representation, warranty,
condition or agreement contained herein. Waiver of the breach of any one or more
provisions of this Agreement shall not be deemed or construed to be a waiver of
other breaches or subsequent breaches of the same provisions.
9.9 Notices. All notices and other communications hereunder will be in
writing and will be deemed given (a) upon receipt if delivered personally (or if
mailed by registered or certified mail), (b) the day after dispatch if sent by
overnight courier, (c) upon dispatch if transmitted by telecopier or other means
of facsimile transmission (and confirmed by a copy delivered in accordance with
clause (a) or (b)), properly addressed to the parties at the following
addresses:
Licensor: Comshare, Incorporated
555 Briarwood Circle
Ann Arbor, Michigan 48108
Attention: President
Facsimile No. (734) 997-4140
Parent or Licensee: JDA Software Group, Inc.
JDA Enterprise, Inc.
11811 North Tatum Blvd., Suite 2000
Phoenix, Arizona 85028
Attention: Karen Nagle, Esq.
General Counsel
Facsimile No. (602) 404-5520
Either party may change its address for such communications by giving
notice thereof to the other party in conformity with this section.
9.10 Construction and Interpretation of Agreement.
(a) This Agreement has been negotiated by the parties hereto and their
respective attorneys, and the language hereof shall not be construed for or
against either party by reason of it having drafted such language.
(b) The titles and headings herein are for reference purposes only and
shall not in any manner limit the construction of this Agreement, which shall be
considered as a whole.
9.11 No Joint Venture. Nothing contained in this Agreement shall be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party shall have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to each other. No party shall have any power or authority to bind or
commit any other. No party shall hold itself out as having any authority or
relationship in contravention of this Section.
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9.12 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor shall be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner of any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof shall be personal solely between the parties
to this Agreement.
* * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by duly authorized officers or representatives as of the date first above
written.
LICENSOR LICENSEE
COMSHARE, INCORPORATED JDA SOFTWARE, INC.
By:_____________________________________ By:_________________________________
Dennis G. Ganster Brent W. Lippman
President Chief Executive Officer
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SCHEDULE A
LICENSED SOFTWARE
Section 1: AIM Software
Architect
Non-retail Portions of Arthur Information Manager:
Loader Aggregator
Structure Engine
Section 2: Decision Software
MMT
CS Client
Decision Access Module, including, but not limited to:
EQL
MMT Router
FTE
Administrator application
Decision Desktop Container:
includes Grid value-added features, Assortment Data Source,
EQL.OCX and Channel.OCX, which comprise all of the material
components, functions and features of Decision Desktop
Container required for development and operation Arthur
Assortment Planning.
Section 3: Supporting Software
None
10
<PAGE> 1
EXHIBIT 99.1
JDA SOFTWARE ACQUIRES COMSHARE'S ARTHUR RETAIL
Acquisition Adds Market Leader in Strategic Planning Solutions
PHOENIX, ARIZ. - JUNE 4, 1998 - JDA(R) SOFTWARE GROUP, INC. (NASDAQ: JDAS), an
international provider of enterprise retail solutions, announced today its
acquisition of the ARTHUR(R) RETAIL BUSINESS UNIT from COMSHARE(R), INC.
(NASDAQ:CSRE - news), a leading supplier of financial analytic applications for
management planning and control. JDA purchased Arthur Retail, the market leader
in strategic merchandise management software applications, for $44 million in
cash. Arthur Retail, will now operate as JDA Arthur, a division of JDA Software,
Inc. which is a wholly-owned subsidiary of JDA Software Group, Inc.
ACQUISITION KEY STRATEGY FOR JDA GROWTH
According to JDA CEO BRENT W. LIPPMAN, the Company has targeted acquisitions as
a key strategy for building upon its integrated, enterprise retail solution with
complementary products. The Arthur acquisition represents an aggressive move to
further the Company's standing as the leading global provider for the retail
industry.
"Since 1985, we have been very successful at delivering mission-critical
transaction processing systems to retailers around the world," commented
Lippman. "By expanding our analytical offering with the Arthur Enterprise Suite,
we are positioning ourselves to better help our clients proactively manage their
business and find new ways to optimize their revenue sources. And, in today's
increasingly competitive environment, retailers who want to thrive must provide
their knowledge workers with innovative tools, such as the Arthur planning and
decision support products."
JDA TO LEVERAGE EXPANDED CLIENT BASE
In addition to expanding its product line with a new set of functions, JDA
acquired Arthur Retail to gain its more than 240 referenceable customers
including retail giants Wal-Mart, The Limited and Service Merchandise. JDA now
has approximately 540 retail clients in more than 30 countries, reinforcing its
position as the largest retail ERP vendor in the world. This expanded client
base has provided JDA with a wealth of opportunities.
"We have an impressive win ratio in licensing newly developed JDA products, such
as Win/DSS and Retail IDEAS, to our existing clients," commented Lippman. "With
approximately 9% of JDA's merchandising clients currently using Arthur products
and 13% of the Arthur clients using JDA products, the acquisition has
essentially created hundreds of new cross selling opportunities."
Lippman also noted that JDA has increased its competitiveness in winning
business with new prospects, in particular soft lines retailers, that are
dependent upon the detailed planning information that Arthur products can
provide.
GREG MORRISON TO LEAD JDA ARTHUR
Leading JDA Arthur will be five-year JDA veteran, GREGORY MORRISON, who formerly
served as the Company's vice president of Latin American operations. In his new
role as managing director of JDA Arthur, Morrison will continue to report to JDA
CEO Lippman. Reporting to Morrison will be many of the key executives from
Arthur Retail, including PETER CHARNESS, who will serve as vice president of
Arthur Retail product development and marketing
<PAGE> 2
JDA plans to extend employment offers to Arthur employees worldwide. JDA expects
to gain approximately 115 Arthur associates specialized in retail applications
bringing the Company's staff to more than 1,000 associates operating from 22
worldwide offices.
JDA Arthur will be headquartered in Ann Arbor, Michigan and the division will
maintain a presence in all cities where JDA Arthur staff is currently located.
In cities where there are duplicate JDA and JDA Arthur offices, JDA will
consider merging the offices for greater efficiency and staff development.
EXPANDED SOLUTION PROVIDES INCREASED VALUE FOR CLIENTS
Morrison noted that JDA Arthur would provide new benefits for Arthur retail
clients. "In addition to our exclusive focus on the retail industry, JDA Arthur
clients can continue to expect the highest caliber of products and services to
help them maintain their competitive edge," commented Morrison. "With JDA's
strong development, services and support organizations, we plan to enhance and
expand upon the Arthur Enterprise Suite to keep pace with technology advances
and market demands."
JDA intends to provide a seamless integration among its systems and the Arthur
Enterprise Suite. In addition, the Arthur products will continue to be available
as stand-alone packages, similar to JDA's practice with its existing products.
ABOUT THE ARTHUR ENTERPRISE SUITE
The Arthur Enterprise Suite is the first truly complete set of retail decision
support applications that enables retailers to successfully focus the whole
organization on strategic decision making. The Suite enables the retailer to
review results, plan future seasons, and react swiftly to actual performance as
necessary. The Suite integrates the critical business processes of planning,
assortment planning, allocation, tracking and performance analysis to ensure
that retailers can focus on the resources and factors that result in both
satisfied customers and maximum profits.
The Suite includes six core components: Arthur Planning, the market-leading
merchandise planning application; Arthur Allocation, a tool for product and
store allocation decision making; Arthur Assortment Planning, a tool for
determining store assortments; Arthur Information Manager (AIM), an optimized
database to power the integrated suite; Arthur Performance Analysis, an
enterprise decision support tool which JDA (as a VAR) may distribute to the
retail industry; and Boost Sales and Margin Planning, a merchandise planning
tool for the consumer packaged goods industry.
For the ten months ended April 30, 1998, the Arthur Retail Business Unit had
total revenue of $18 million. The Oracle version of Arthur Planning, as well as
Arthur Allocation, Arthur Assortment Planning and Arthur Information Manager are
still under development and are planned for release over the next twelve months.
Of the $44 million purchase price, approximately $39 million is expected to be
charged to operations by JDA in its second quarter ending June 30, 1998 for an
accounting write-off (before related tax benefits) related to JDA Arthur
in-process research.
COMSHARE TO FOCUS ON FINANCIAL APPLICATIONS
The acquisition has enabled Comshare to refine its strategy to focus on
financial applications for management planning and control.
"With Comshare's sharpened focus on financial applications for management
planning and control, we are pleased that a company like JDA, dedicated to the
retail industry, has purchased the Arthur
<PAGE> 3
products," said DENNIS GANSTER, COMSHARE'S PRESIDENT AND CEO. "The Arthur
products are an excellent fit with JDA's offerings, and I am confident that our
customers will receive the best service and support possible."
ABOUT COMSHARE
Comshare is a leading provider of financial applications for management planning
and control, including financial consolidation and reporting, enterprise
budgeting, and performance measurement. These complete client/server and
Web-based analytic applications are based on an open architecture, utilizing
market-leading databases, such as Microsoft SQL Server, Oracle, and Arbor
Essbase. Comshare's applications incorporate innovative data visualization and
Guided Analysis(TM) capabilities designed to improve decision-making for
enhanced competitiveness and improved profitability. A strong customer
orientation, application expertise, and commitment to the best technologies have
made Comshare one of the top 100 independent software companies, with customers
around the world, many of which are Fortune 500 and Financial Times Top 1000
companies. Comshare, Inc. is a Microsoft Certified Solution Provider. For more
information, call 1-800-922-7979, e-mail [email protected], or visit Comshare's
Web site at http://www.comshare.com.
ABOUT JDA SOFTWARE GROUP, INC.
JDA Software Group, Inc. (NASDAQ:JDAS) is a global provider of integrated
retail software products and professional services for more than 540 clients
worldwide. Designed to Optimize the Retail Enterprise, JDA's solution addresses
the requirements for the entire retail supply chain: from the corporate level
with merchandising, financial, and data warehouse systems; to the distribution
level with warehouse management and logistics systems; and finally to the store
level with point-of-sale and back-office applications. Founded in 1985, JDA
employs more than 1,000 associates. With headquarters in Phoenix, Arizona, the
company has operations in major cities throughout the United States as well as
international offices in Canada, the United Kingdom, France, Germany, Mexico,
Brazil, Chile, South Africa, Singapore, and Australia. For more information,
refer to JDA's Web site at http://www.jda.com.
CONFERENCE CALL INFORMATION
The Company will host a conference call today at 4:30 p.m. EDT to discuss its
acquisition of the Arthur Retail Business Unit. The following telephone numbers
can be used for anyone interested in participating: U.S. and Canadian callers
can dial 1-800-230-1951. Anyone interested in hearing a replay of the Arthur
Retail Business Unit announcement conference call can dial the following numbers
through June 17, 1998: U.S. and Canadian callers, 1-800-475-6701; international
callers, (320) 365-3844, access code: 392578.
END
This press release contains forward-looking statements that are made in reliance
upon the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements include statements regarding JDA's
future acquisitions, product development and financial strategies, opportunities
created by the transaction, and future product quality. Future events may
involve risks and uncertainties, among which are uncertainties related to the
final development and market acceptance of proposed new products, the ability to
complete acquired products under development and integrate new products into
existing JDA products, the effectiveness of sales and marketing programs to
promote and distribute new products, actions by competitors which could affect
sales, pricing and profitability of the Company's products, management of
product transition, international sales, the ability of the Company to attract
and train the skilled personnel required to implement its products, general
market conditions and
<PAGE> 4
other risks detailed in the prospectuses relating to the Company's recently
completed public offering, and which are and will be detailed from time to time
in SEC reports filed by the Company.
It is expected that the Company will grow internally and through strategic
acquisitions in order, among other things, to expand the breadth and depth of
its product suite and to build its professional services organization. The
Company continually evaluates potential acquisitions of complementary
businesses, products and technologies, including those which could be material
in size and scope.
Acquisitions involve a number of special risks, including diversion of
management's attention to the assimilation of the operations and personnel of
acquired businesses, and the integration of acquired businesses, products and
technologies into the Company's business and product offerings. Achieving the
anticipated benefits of any acquisition will depend, in part, upon whether the
integration of the acquired business, products or technology is accomplished in
an efficient and effective manner, and there can be no assurance that this will
occur. The difficulties of such integration may be increased by the necessity of
coordinating geographically disparate organizations, the complexity of the
technologies being integrated, and the necessity of integrating personnel with
disparate business backgrounds and combining different corporate cultures. The
inability of management to successfully integrate any acquisition the Company
may pursue, and any related diversion of management's attention, could have a
material adverse effect on the business, operating results and financial
condition of the Company. Moreover, there can be no assurance that any products
acquired will gain acceptance in the Company's markets, or that the Company will
obtain the anticipated or desired benefits of such acquisitions. Any acquisition
pursued or consummated by the Company could result in potentially dilutive
issuances of equity securities, the incurrence by the Company of debt and
contingent liabilities, amortization of goodwill and other intangibles,
purchased research and development expense, other acquisition-related expenses
and the loss of key employees, any of which items could have a material adverse
effect on the Company's business, operating results and financial condition.
Maureen N. Tuskai
Marketing Communications Manager
JDA Software Group
PH: 602.308.3233
FAX: 602.404.5520
EMAIL: [email protected]
