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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 reported) NOVEMBER 17, 1998
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QAD, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-22823 77-0105228
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6450 Via Real, Carpinteria, California 93013
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(Address of principal executive offices)
Registrant's telephone number, including area code (805) 684-6614
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(Former name of former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Filed as an exhibit hereto is the registrant's press release, dated
November 18, 1998, announcing that the registrant has acquired the United
Kingdom and the Netherlands software distribution operations and assets of
TRW Integrated Supply Chain Solutions. The registrant has accounted for the
acquisition as a purchase. The acquisition was financed one-third from
available cash and two-thirds in the form of promissory notes, payable to
BDM Largotim U.S. Inc., BDM Largotim Limited and Largotim Nederland B.V.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro forma Financial Information.
Not applicable.
(c) Exhibits.
2.1 Asset Purchase Agreement dated November 17, 1998.
99.1 Press release dated November 18, 1998.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
QAD INC.
(Registrant)
Date: December 4, 1998 By /s/ A.J. MOYER
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A.J. Moyer
Chief Financial Officer
(on behalf of the registrant and as
Principal Financial Officer)
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Exhibit 2.1
ASSET PURCHASE AGREEMENT
Dated as of November 17, 1998
by and among
BDM LARGOTIM LIMITED
BDM LARGOTIM HOLDINGS LIMITED
LARGOTIM NEDERLAND BV
and
BDM LARGOTIM US INC.
(Sellers)
and
QAD ENGLAND, LTD
and,
QAD EUROPE, B.V.
(Buyers)
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TABLE OF CONTENTS
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ARTICLE I. - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . .7
1.1. Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . .7
1.2. Other Defined Terms; Accounting Determinations . . . . . . . . 10
ARTICLE II. - PURCHASE AND SALE OF ASSETS. . . . . . . . . . . . . . . . 11
2.1. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . 11
2.2. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3. Post-Closing Adjustment. . . . . . . . . . . . . . . . . . . . 12
2.4. Certain Expenses . . . . . . . . . . . . . . . . . . . . . . . 12
2.5. Seller Note. . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.6. Amendment and Restatement to QAD Master Agreement. . . . . . . 13
ARTICLE III. - CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1. Signing and Closing. . . . . . . . . . . . . . . . . . . . . . 13
3.2 Deliveries at Closing. . . . . . . . . . . . . . . . . . . . . 14
3.3. Consents to Assignment . . . . . . . . . . . . . . . . . . . . 14
3.4. Further Assurances; Post-Closing Cooperation . . . . . . . . . 15
ARTICLE IV. - REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . 15
4.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2. Authorization. . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4. Litigation, Proceedings and Applicable Law . . . . . . . . . . 15
4.5. No Conflict or Violation . . . . . . . . . . . . . . . . . . . 15
4.6. Consents and Approvals . . . . . . . . . . . . . . . . . . . . 16
4.7. Intellectual Property. . . . . . . . . . . . . . . . . . . . . 16
4.8 Financial Information. . . . . . . . . . . . . . . . . . . . . 17
4.9. Absence of Certain Changes . . . . . . . . . . . . . . . . . . 17
4.10. Assets Generally . . . . . . . . . . . . . . . . . . . . . . . 18
4.11. Major Contracts. . . . . . . . . . . . . . . . . . . . . . . . 18
4.12 Existing Agreements and Business . . . . . . . . . . . . . . . 19
4.13. Warranties and Indemnities . . . . . . . . . . . . . . . . . . 20
4.14. Licenses and Permits . . . . . . . . . . . . . . . . . . . . . 20
4.15. Employees, Etc.. . . . . . . . . . . . . . . . . . . . . . . . 20
4.16. Employee Benefit and Compensation Plans. . . . . . . . . . . . 20
4.17. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.18. Compliance with Law. . . . . . . . . . . . . . . . . . . . . . 21
4.19. Products/Services. . . . . . . . . . . . . . . . . . . . . . . 21
4.20. Service Liability. . . . . . . . . . . . . . . . . . . . . . . 21
4.21. Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 21
4.22 Year 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.23 Business Year 2000 Compliance. . . . . . . . . . . . . . . . . 21
4.24 Exclusive Warranties and Representations . . . . . . . . . . . 21
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ARTICLE V. - REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . 21
5.1. Organization of Buyer. . . . . . . . . . . . . . . . . . . . . 22
5.2. Authorization. . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4. No Conflict or Violation . . . . . . . . . . . . . . . . . . . 22
5.5. Consents and Approvals . . . . . . . . . . . . . . . . . . . . 22
5.6. Litigation, Proceedings and Applicable Law . . . . . . . . . . 22
5.7. Employee Contracts . . . . . . . . . . . . . . . . . . . . . . 22
5.8. Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . 22
5.9 Buyer Year 2000 Obligation . . . . . . . . . . . . . . . . . . 22
5.10 Exclusive Warranties and Representations . . . . . . . . . . . 22
ARTICLE VI. - CERTAIN COVENANTS. . . . . . . . . . . . . . . . . . . . . 23
6.1. Covenants of Both Parties. . . . . . . . . . . . . . . . . . . 23
6.2. Seller's Covenants . . . . . . . . . . . . . . . . . . . . . . 23
6.3. Buyer's Covenants. . . . . . . . . . . . . . . . . . . . . . . 24
6.4 Employment Matters . . . . . . . . . . . . . . . . . . . . . . 24
6.5. Update of Disclosure Schedules . . . . . . . . . . . . . . . . 24
ARTICLE VII. - SPECIAL TRANSITION COVENANTS. . . . . . . . . . . . . . . 24
7.1. Assignment of Assumer Contracts. . . . . . . . . . . . . . . . 24
7.2. SI Customers . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.3. Supplier Agreements. . . . . . . . . . . . . . . . . . . . . . 25
7.4. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.5. Resignation of Employee. . . . . . . . . . . . . . . . . . . . 25
7.6. Billable Employees. . . . . . . . . . . . . . . . . . . . . . 25
7.7. Cooperation and Assistance with Customers of Distribution
Business. . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.8. Certain Contracts Unavailable. . . . . . . . . . . . . . . . . 25
7.9. Transition Services . . . . . . . . . . . . . . . . . . . . . 26
7.10. Shared Intellectual Property. . . . . . . . . . . . . . . . . 26
7.11. Shared Intellectual Property for External Use in the Systems
Integration Business. . . . . . . . . . . . . . . . . . . . 26
7.12. Trademarks. . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII. - CONDITIONS TO SELLER'S OBLIGATIONS . . . . . . . . . . . 26
8.1. Representations, Warranties and Covenants. . . . . . . . . . . 26
8.2. No Governmental Proceedings or Litigation. . . . . . . . . . . 26
8.3. Corporate Documents. . . . . . . . . . . . . . . . . . . . . . 26
8.4. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 26
8.5. Opinion of Counsel - Guarantor . . . . . . . . . . . . . . . . 26
8.6 Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . 27
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ARTICLE IX. - CONDITIONS TO BUYER'S OBLIGATIONS. . . . . . . . . . . . . 27
9.1. Representations, Warranties and Covenants. . . . . . . . . . . 27
9.2. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.3. No Governmental Proceedings or Litigation. . . . . . . . . . . 27
9.4. Corporate Documents. . . . . . . . . . . . . . . . . . . . . . 27
9.5. No Material Adverse Change . . . . . . . . . . . . . . . . . . 27
9.6. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 27
9.7 Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . 27
9.8 Concurrent Closing . . . . . . . . . . . . . . . . . . . . . . 27
9.9. Key Employees. . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE X. - ACTIONS BY PARTIES AFTER THE CLOSING. . . . . . . . . . . . 27
10.1. Books and Record . . . . . . . . . . . . . . . . . . . . . . . 28
10.2. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 28
10.3 Special Indemnification Regarding Liability Over Assumed
Contract by Customers of Seller. . . . . . . . . . . . . . . . 30
10.4 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XI. - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 31
11.1. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.2. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.3. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.4. Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . 32
11.5. Entire Agreement; Amendments and Waivers . . . . . . . . . . . 32
11.6. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.7. Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.8. Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.9. Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.10. Confidential Information . . . . . . . . . . . . . . . . . . . 33
11.11. Joint and Several Obligations. . . . . . . . . . . . . . . . . 33
11.12. Sale of Assets Only. . . . . . . . . . . . . . . . . . . . . . 33
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LIST OF EXHIBITS:
Exhibit A Assignment And Assumption Agreement
Exhibit B Non-Compete Agreement
Exhibit C Form of Sellers Notes, Guaranty Agreement and
Subordination Agreement
Exhibit D Bill Of Sale
Exhibit E Allocation Of Purchase Price
Exhibit F Opinion Of Counsel To Buyers
Exhibit G Opinion Of Counsel To Sellers
Exhibit H Sellers' Audited Financial Statements
Exhibit I Largotim Nederlands Unaudited Financial
Statements for 9 months ended December 31, 1997
Exhibit J Employment Agreements and Employee Offer Letter
Exhibit K Opinion of Counsel to Guarantor
Exhibit L Amendment and Restatement of Master SI Agreement and Distributor
Agreement
Exhibit M Sellers Disclosure Schedule
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LIST OF SCHEDULES:
Schedule 1.1 Schedule of Distribution Assets and Balance Sheet Listing
Assets
Schedule 1.1(a) Assumed Contracts/Customers
Schedule 1.1(b)(1) Assumed Liabilities
Schedule 1.1(b)(3) CPD Products
Schedule 1.1(c) Permits
Schedule 1.1(d) Personal Property
Schedule 1.1(e) GAAP/Relevant Accounting Practices
Schedule 4.7 Intellectual Property
Schedule 4.7(a) Shared Intellectual Property
Schedule 4.7(b) Shared Intellectual Property for External Use in the
Systems Integration Business
Schedule 4.8(a) Management Reporting Statements
Schedule 4.11 Major Contracts
Schedule 4.20 Service Liability
Schedule 6.4(d) Key Employees
Schedule 7.3 Supplier Contracts Not Assumed
Schedule 7.6 Employees Work Allocation
Schedule 7.8 Assumed Customers Without Contracts
Schedule 9.2 Consents
The registrant will furnish supplementally a copy of any omitted schedule or
exhibit to the commission upon request.
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "AGREEMENT") is made and entered
into as of November 17, 1998, by and among BDM LARGOTIM LIMITED, a United
Kingdom registered trading company ("LARGOTIM UK"), LARGOTIM NEDERLAND BV, a
Dutch registered trading company ("LARGOTIM NEDERLAND"), BDM LARGOTIM
HOLDINGS LIMITED, a UK registered holding and management company ("LARGOTIM
HOLDINGS") BDM LARGOTIM US INC., a Delaware corporation ("LARGOTIM US")
("LARGOTIM UK," LARGOTIM NEDERLAND, LARGOTIM HOLDINGS, LARGOTIM US,
collectively, "SELLERS"), and QAD ENGLAND, LTD., a United Kingdom registered
trading company ("QAD UK") and QAD EUROPE, B.V., a Dutch registered trading
company ("QAD EUROPE") (QAD UK and QAD Europe, collectively, "BUYERS").
RECITALS
A. Sellers have operated a combined systems integration business ("SI
BUSINESS") and a distribution business involving the distribution of Software
and services in support of the Assumed Contracts sold by an affiliate of
Buyers (the "DISTRIBUTION BUSINESS");
B. Sellers wish to retain the SI Business and to sell certain of the
assets of the Distribution Business to Buyers; and
C. Buyers wish to purchase the assets specified herein related only to
the Distribution Business and to assume certain liabilities specified herein
related only to the Distribution Business.
AGREEMENT
In consideration of the above Recitals and the representations,
warranties and covenants contained herein, the adequacy of which is hereby
acknowledged, Sellers and Buyers mutually agree as follows:
Article I.
Definitions
1.1. DEFINED TERMS. As used herein, the terms below shall have the
following meanings:
"ACCOUNTS RECEIVABLE" shall mean the amount due to Sellers, or
Buyers, as the case may be, from a customer under an Assumed Contract.
"ACTION" shall mean any action, claim, suit, arbitration, inquiry,
subpoena, discovery request, proceeding or investigation by or before any
court or grand jury, any governmental or other regulatory or administrative
agency or commission or any arbitration tribunal related to, arising out of,
or resulting from (i) the operation of the Distribution Business, (ii) the
Assets, (iii) the Assumed Contracts or (iv) the Assumed Liabilities.
"AFFILIATE" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common
control with such Person and any member, general partner, director, officer
or employee of such Person. For purposes of this definition of Affiliate,
"control" shall mean the power of one or more Persons to direct the affairs
of the Person controlled by reason of ownership of voting stock, contract or
otherwise.
"ANCILLARY AGREEMENTS" shall mean the Non-Compete Agreement, the
Assignment and Assumption Agreements, the Sellers Notes and the Amendment to
the Master Agreement, the Employment Agreements, and the Consents to
Assignment, the Guaranty Agreement, the Subordination Agreement and the
Intellectual Property Assignments.
"ASSETS" shall mean all of the assets and rights and goodwill
related to the Distribution Business described in SCHEDULE 1.1 to this
Agreement.
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"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean the Assignment
and Assumption Agreement in substantially the form attached as EXHIBIT A.
"ASSUMED CONTRACTS" shall mean only those Contracts listed on
SCHEDULE 1.1(a) and including all customers related to the Assumed Contracts.
"ASSUMED LIABILITIES" shall mean only the liabilities listed on
SCHEDULE 1.1(b)(1) and no other liabilities of any kind or nature.
"AUDITED FINANCIAL STATEMENTS" shall mean the audited financial
statements of Largotim UK and Largotim Nederlands for the years ended March
31, 1996 and 1997, and for Largotim UK only the audited financial statements
for the nine (9) months ended 31 December 1997, attached hereto as EXHIBIT H.
"BOOKS AND RECORDS" shall mean all records (or true and complete
copies thereof), including computerized books and records owned by each
Seller that relate primarily or exclusively to or are reasonably necessary
for the continued operation of the Distribution Business following the
Closing, including engineering information, sales and promotional literature,
manuals and data, lists of customers and suppliers, all such books and
records relating to the purchase of materials, supplies and services for the
Distribution Business, and any files relating to any Action in respect of any
Assumed Liability, but specifically excluding documents solely related to the
Sellers' legal entity such as corporate minute and stock books.
"CLOSING NET ASSET STATEMENT" shall mean the statement of the Net
Asset Value at the Closing to be agreed upon by the parties in accordance
with SECTION 2.3.
"CONSENTS TO ASSIGNMENT" shall mean the consents to assignment of
contract (in form and substance satisfactory to Buyers) pursuant to which the
contractual counterparties to each of the Assumed Contracts consents to the
assignment of the Assumed Contracts by Sellers to Buyers pursuant to this
Agreement.
"CONTRACT RIGHTS" shall mean all of each Seller's rights under
sales orders in process, utility and lease deposits, prepaid items and
expenses and rights under Assumed Contracts and other Contracts.
"CONTRACTS" shall mean any and all contracts, agreements,
arrangements, leases, mortgages, bonds, notes and other instruments and
obligations, whether or not in writing.
"CPD SOFTWARE" shall mean all versions of the complementary product
development (CPD) software products marketed by Sellers as complementary and
intrusive to the MFG/PRO Software as set forth in SCHEDULE 1.1(b)(3),
including any database definition, object code and source code, related
documentation and manuals and possible enhancements and modifications, but
excluding Sellers' non-intrusive version of its AIM (warehousing) and Procon
(Product configuration) products.
"DAMAGES" shall mean any and all costs, losses, damages, diminution
in value, liabilities, demands, claims, suits, actions, judgments, causes of
action, assessments or expenses, including interest, penalties, fines and
attorneys' fees incident thereto, incurred in connection with any Claim, and
any and all expenses incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any Claim whatsoever, and
any and all amounts paid in settlement of any Claim or litigation.
"GUARANTOR" shall mean QAD Inc., a Delaware corporation, having a
business address at 6450 Via Real, Carpinteria, California 93013 ("QAD").
"GUARANTY AGREEMENT" shall mean the Subordinated Guaranty Agreement
between Guarantor (and certain of its subsidiaries) and Largotim U.S. in
substantially the form attached hereto as EXHIBIT C.
"INTANGIBLES" shall mean all goodwill associated with the
Distribution Business or the Assets.
"INTELLECTUAL PROPERTY" shall mean all copyrights, copyright
registrations, proprietary processes,
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trade secrets, license rights, specifications, technical manuals and data,
drawings, inventions, designs, patents, patent applications, Sellers' CPD
Software and customizations, CPD Software product names (to which Sellers
claim no subsequent right to use), product information and data, know-how and
development work-in-progress, customer lists, software, business and
marketing plans and other intellectual or intangible property embodied in or
pertaining to the Distribution Business, whether pending, applied for or
issued, whether filed in the United States, or in other countries, including
the items listed in SCHEDULE 4.7, and to the extent Sellers may assign and
transfer, all things authored, discovered, developed, made, perfected,
improved, designed, engineered, acquired, produced, conceived or first
reduced to practice by any Seller or any of its employees or agents that are
embodied in, derived from or relate to the Distribution Business, in any
stage of development, including, without limitation, modifications,
enhancements, designs, concepts, techniques, methods, ideas, flow charts,
coding sheets, notes and all other information relating to the Distribution
Business; any and all design and code documentation, methodologies,
processes, trade secrets, copyrights, design information, product
information, technology, formulae, routines, engineering specifications,
technical manuals and data, drawings, inventions, know-how, techniques,
engineering work papers, and notes, development work-in-process, and other
proprietary information and materials of any kind relating to, used in, or
derived from the Assets; all computer software programs, data and associated
licenses, in each of the foregoing cases, used in connection with or
constituting a part of the Distribution Business. Intellectual Property
includes "Shared Intellectual Property" and "Shared Intellectual Property For
External Use in the Systems Integration Business," as hereinafter defined
"INTELLECTUAL PROPERTY ASSIGNMENTS" shall mean the intellectual
property assignments (in form and substance satisfactory to Buyers) to be
executed by each Seller.
"INVENTORY" shall mean all raw materials, work-in-process, finished
goods, supplies and other inventories of the Distribution Business.
"KEY EMPLOYEE" shall mean the employees listed on SCHEDULE 6.4(d).
"LEGAL REQUIREMENTS" shall mean any and all applicable (i)
international, foreign, federal, state and local laws, ordinances and
regulations and (ii) judgments, orders, writs, injunctions and decrees.
"MANAGEMENT REPORTING STATEMENT" shall mean the unaudited financial
management information for Largotim UK and Largotim Nederlands for the nine
(9) months ended 30 September 1998.
"MASTER AGREEMENT" shall mean the Master Agreement between QAD
Europe BV and Largotim Holdings Ltd. dated January 1, 1996, including all
side letters thereto and further including the Novation Agreement dated April
30, 1997 under which BDM Largotim US Inc. assumed the liabilities and rights
of Largotim Holdings Ltd., and further including the Novation Agreement dated
November 1, 1998 under which QAD Inc. assumed the liabilities and rights of
QAD Europe B.V. and also including all side letters agreed to in writing by
both parties including, but not limited to, the letters dated January 23,
1996, February 27, 1996, September 20, 1996, November 26, 1996, January 14,
1997, February 27, 1997, and three (3) letters dated April 22, 1997.
"MFG/PRO SOFTWARE" shall mean the generally available language
version(s) of the software marketed by Buyers under the "MFG/PRO" trademark,
including, but not limited to, the database definition, the object code and
source code, related documentation and manuals and possible enhancements and
modifications and the generally available new releases.
"NON-COMPETE AGREEMENT" shall mean the Non-Compete Agreement in
substantially the form attached as EXHIBIT B.
"NET ASSET VALUE STATEMENT" shall mean the Statement attached
hereto as SCHEDULE 1.1.
"OUTSIDE DATE" shall mean November 30, 1998.
"PERMITS" shall mean all permits, authorizations, consents and
approvals of any governmental entity or authority applicable to the Assumed
Assets, Liabilities and Contracts listed on SCHEDULE 1.1(c).
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"PERSON" shall mean any person or entity, whether an individual,
trustee, corporation, general partnership, limited partnership, trust,
unincorporated organization, limited liability company, business association,
firm, joint venture, governmental agency or authority or otherwise.
"PERSONAL PROPERTY" shall mean all tangible personal property and
leases of and other interests in tangible personal property of each Seller
used in connection with the Distribution Business listed on SCHEDULE 1.1(d).
"POST-CLOSING ADJUSTMENT" shall mean the adjustment to the Purchase
Price for the changes in the net value of the Assets listed on SCHEDULE 1.1
from September 30, 1998 to the Closing Date as mutually determined by the
parties.
"RECOVERY RIGHTS" shall mean all of each Seller's rights, claims,
credits, causes of action or rights of set-off against third parties relating
to the Assets, including, without limitation, unliquidated rights under
warranties.
"RELEVANT ACCOUNTING PRACTICES" shall mean the accounting practices
as reflected in Sellers' Audited Financial Statements, consistently applied
in relevant jurisdictions. The material differences between GAAP and Relevant
Accounting Practices are described in SCHEDULE 1.1(e). For the avoidance of
doubt, SOP 97-2 does not apply.
"REPRESENTATIVE" shall mean, with respect to any Person, any
officer, director, principal, attorney, employee or other agent of such
Person.
"SELLERS DISCLOSURE SCHEDULE" shall mean a schedule executed and
delivered by each Seller to Buyers, and consented to by Buyers, prior to the
date hereof, which sets forth the exceptions to the representations and
warranties contained in Article IV hereof and certain other information
called for by Article IV hereof and other provisions of this Agreement. The
Sellers Disclosure Schedule shall cross-reference to the particular Section
within this Agreement to which the description relates and shall state any
proposed exception with reasonable particularity.
"SHARED INTELLECTUAL PROPERTY" means the specific software
described in SCHEDULE 4.7(a).
"SHARED INTELLECTUAL PROPERTY FOR EXTERNAL USE IN THE SYSTEMS
INTEGRATION BUSINESS" means the specific software described in SCHEDULE
4.7(b).
"TAX" shall mean any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, environmental, customs duties, capital stock, franchise,
profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"UNAUDITED FINANCIAL STATEMENT" shall mean the draft, unaudited
financial statements of Largotim Nederlands for the nine months ended
December 31, 1997.
1.2. OTHER DEFINED TERMS; ACCOUNTING DETERMINATIONS.
(a) The following terms shall have the meanings defined for such
terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Distribution Business Recitals
Buyers' Accountants 2.4
Claim 10.2(d)(i)
Claim Notice 10.2(d)(i)
<PAGE>
Closing 3.1
Employment Agreement 4.15
Confidentiality Information 10.10
Effective Date 3.1
Employees 6.4(a)
End-User Licenses 4.11(h)
Indemnified Party 10.2(d)(i)
Indemnifying Party 10.2(d)(i)
Notice Date 10.2(d)(iii)
QAD Recitals
Purchase Price 2.2
Sellers Notes 2.5
Third Party Claim 10.2(d)(i)
VAT 2.2
Year 2000 4.24
Business Year 2000 Compliance 4.23
</TABLE>
(b) For purposes of this Agreement, (i) "including" shall mean
"including, but not limited to," "including, without limitation," and other
phrases of similar import and (ii) "hereof;" "herein," and "hereunder," and
words of similar import, refer to this Agreement as a whole (including the
Exhibits and Schedules to this Agreement) and not to any particular Section
or Article hereof.
(c) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to
Buyers hereunder shall be prepared, and all financial calculations required
to be made hereunder shall be made, in accordance with the Relevant
Accounting Practices for the differing jurisdictions of the Sellers,
consistently applied, and as reflected in the Audited Financial Statements.
Article II
Purchase and Sale of Assets
2.1. TRANSFER OF ASSETS. Pursuant to the terms and subject to the
conditions of this Agreement, in exchange for the consideration set forth in
SECTION 2.2 below, at the Closing, each Seller agrees to sell, convey,
transfer, assign and deliver to Buyers, and Buyers agree to purchase from
each Seller, the Assets, and Buyers agree to assume, without limitation, all
obligations of each Seller under or with respect to the Assumed Liabilities
and Assumed Contracts. The allocation of the Assets and the Assumed Contracts
between Buyers is set forth on EXHIBIT E.
2.2. PURCHASE PRICE. In consideration of the transfer of the Assets,
Buyers shall pay, or cause to be paid, to the order of Sellers a total
Purchase Price of US$19,180,000 and take the following actions:
(a) Buyers shall pay at Closing an amount equal to US$5,393,333;
(b) Buyers shall assume the Assumed Liabilities; and
(c) Buyers shall execute and deliver the Sellers Notes (as defined in
SECTION 2.5) in the principal amount of US$13,786,667.
(d) The payment for the Noncompete Agreement totaling US$1,500,000 to
be paid in accordance with its terms.
SUBSECTIONS (a)-(d) above shall be collectively referred to herein as the
"PURCHASE PRICE".
<PAGE>
At Closing, Buyers shall pay to Sellers by wire transfer of immediately
available funds an amount equal to the sum set forth in SECTION 2.2(a). Such
wire transfer shall be made to the account of TRW Inc., at National City
Bank, Cleveland, Ohio, ABA Routing No.: 041000124, Account Name: TRW Inc.,
Account Number: 2061085, Reference: "BDM/Largotim."
Buyers shall also pay any value added taxes ("VAT") if applicable to the
purchase of the Assets.
The parties shall use all reasonable endeavors to ensure that the sale
of the Distribution Business is deemed to be a transfer of a business as a
going concern for the purposes of the Value Added Tax Act of 1994, Sec. 49
and Schedule 4 paragraph 8(1)(a). If any VAT shall be chargeable then the
Buyers shall pay it within thirty (30) days of receipt of a valid VAT invoice
provided that the Sellers shall remain liable to discharge all VAT which is
due or falls due in respect of trading of the Distribution Business before
the Closing.
Buyers shall pay Sellers the amounts of the accounts payable balances
relating to the Distribution Business shown in the Closing Net Asset
Statement and they shall not constitute Assumed Liabilities. Such payment
shall be based upon an estimate to be prepared within five (5) working days
of Closing by Sellers. Buyers will pay the estimated amount within ten (10)
working days of Closing by wire transfer as set forth above. Any difference
between estimate prepared in accordance with this paragraph and that shown
in the final agreed Closing Net Asset Statement shall be reflected in the
Post Closing Adjustment
2.3 POST-CLOSING ADJUSTMENT. Notwithstanding the foregoing provisions
of SECTION 2.2, the Purchase Price is based on the Net Asset Value as of
September 30, 1998, as shown on the Closing Net Asset Statement in SCHEDULE
1.1. After the Closing, the Net Asset Value shall be mutually determined by
the parties and the Purchase Price shall be adjusted to reflect changes in
the Net Asset Value since September 30, 1998 to the Effective Date.
If the adjustment is a negative amount, it will be applied equally to
the two installments of Sellers Notes, and if it is a positive amount,
one-third (1/3rd) shall be paid to Sellers within five (5) business days of
the agreement to the Closing Net Asset Statement, one-third (1/3rd) on the
first installment of the Sellers Notes, and the balance on the second
installment of the Sellers Notes. The Post-Closing Adjustment will be
mutually determined by Buyers and Sellers. The Sellers will prepare a draft
of the Closing Net Asset Statement and deliver the same to Buyers not later
than ten (10) business days after Closing for a month end closing or twenty
(20) business days after Closing for a mid-month closing. Unless Buyers
notify Sellers in writing within ten (10) business days of receipt of such a
draft that they do not accept it, then Buyers will be deemed to have accepted
the draft. The notice from Sellers accompanying the draft Closing Net Asset
Statement shall refer to the ten (10) business day period to approve or
reject the draft.
If within the ten (10) business days referred to above Buyers notified
Sellers in writing that they do not accept the final draft, then Sellers and
Buyers will use their best endeavors to reach an agreement upon appropriate
adjustments to the final draft.
If Sellers and Buyers are unable to reach an agreement within ten (10)
business days of the service of the written notification referred to herein
(or such longer time as Sellers and Buyers may agree), any matter in dispute
shall be referred to the decision of an independent firm of Chartered
Accountants, to be agreed upon between them or, failing such agreement, to be
selected by the President of the Institute of Chartered Accountants in
England and Wales. The decision of such Chartered Accountants, whose costs
will be paid as they shall decide, shall be binding on Buyers and Sellers.
Sellers shall provide such information and explanations relating to the
preparation of the Closing Net Asset Statement and their review of it as
Buyers may reasonably require.
2.4. CERTAIN EXPENSES.
(a) Except as otherwise set forth herein, Buyers shall not pay or
be liable for any of the following fees, expenses, taxes or liabilities
incurred by Sellers, all of which shall be borne and timely paid or cause to
be paid by Sellers:
<PAGE>
(i) the fees and expenses, if any, of any person retained by
each Seller for brokerage, financial advisory or investment banking services
or services as a finder rendered to such Seller in connection with the
proposed sale of the Assets, including, without limitation, the transactions
contemplated by this Agreement;
(ii) the fees and expenses of legal counsel, auditors and
accountants retained or employed by each Seller for services rendered to such
Seller in connection with the proposed sale of the Assets, including, without
limitation, the transactions contemplated by this Agreement; and
(iii) any income, capital gains or other tax incurred by
each Seller as a result of the consummation of the transactions contemplated
hereby.
(b) Except as otherwise set forth herein, Sellers shall not pay or
be liable for any of the following fees, expenses, taxes or liabilities
incurred by Buyers, all of which shall be borne and timely paid or cause to
be paid by Buyers:
(i) the fees and expenses, if any, of any person retained by
Buyers for brokerage, financial advisory or investment banking services or
services as a finder rendered to Buyers in connection with the proposed
purchase of the Assets, including without limitation, the transactions
contemplated by this Agreement; and
(ii) the fees and expenses of legal counsel, auditors and
accountants retained or employed by Buyers for services rendered to Buyers in
connection with the proposed purchase of the Assets, including, without
limitation, the transactions contemplated by this Agreement.
(iii) the Buyers will pay any Stamp Tax incurred by Buyers
as a result of the Transfer of Assets.
(c) If any Seller shall pay any fee, expense, tax or liability
described in SECTION 2.4(b), the amount of such payments shall be paid
promptly by Buyers to such Seller upon demand.
2.5. SELLERS NOTES. At Closing, Buyers will issue to the Sellers four
promissory notes (the "SELLERS NOTES") with a cumulative principal amount of
US$13,786,667. The Sellers Notes will be guaranteed by the Guaranty
Agreement. The form of Sellers Notes, Guaranty Agreement and Subordination
Agreement are attached hereto as EXHIBIT C.
2.6. AMENDMENT AND RESTATEMENT TO QAD MASTER AGREEMENT. Sellers will
be entitled to a commission arrangement on QAD software products, as provided
in the Amendment and Restatement to the QAD Master Agreement to be executed
by the parties and delivered at the Closing set forth below.
Article III
Closing
3.1. SIGNING AND CLOSING. The parties hereto shall execute and deliver
this Agreement by facsimile followed by exchange of manually executed
documents by a recognized courier service. The signing of documents will
constitute the "Closing." The funding of the transactions contemplated
herein (the "CLOSING") shall be held at 2:00 p.m. (PST) time on November 17,
1998, following the satisfaction or waiver of the last of the conditions to
Closing as set forth in ARTICLES VII and VIII , unless the parties hereto
otherwise agree to any earlier or subsequent time or date of closing;
PROVIDED, HOWEVER, that in no event will the Closing be extended to a time
later the Outside Date without the parties' mutual written consent. The
closing of the transactions shall be effective as of 12:01 a.m. (GMT)
effective as of November 1, 1998 (the "EFFECTIVE DATE"). Results of
operations of the portion of the Distribution Business comprised of the
Assets, subject to the Assumed Liabilities, through the accounting period at
11:59 p.m. (GMT) on the day preceding the Effective Date (whether or not a
business day) shall be included in the consolidated results of operations of
Sellers; and, after such time, operations for such portion of the
Distribution Business shall be conducted and the results thereof shall be for
the account of Buyers.
<PAGE>
3.2. DELIVERIES AT CLOSING. At the Closing the following items shall be
delivered by the parties:
(a) BY BUYERS. Buyers shall deliver an amount equal to the amount
set forth in SUBSECTION 2.2(a), in immediately available funds as provided in
SECTION 2.2, and shall deliver to Sellers:
(i) the certificates described in ARTICLE VIII;
(ii) the executed Sellers Notes and an executed counterpart of
each other Ancillary Agreement signed by Buyers and Guarantor where such
parties are parties to such Ancillary Agreement
(iii) the opinion of counsel to Buyers and the opinion of
counsel to Guarantor described in SECTIONS 8.5 and 8.6; and
(iv) such other documents and instruments as are reasonably
necessary to consummate the transactions contemplated hereby and by the
Ancillary Agreements.
(b) BY SELLERS. Sellers shall deliver to Buyers:
(i) one or more Bills of Sale, in substantially the form
attached as EXHIBIT D;
(ii) the certificates described in ARTICLE VIII;
(iii) executed counterparts of all Consents to Assignment
to the extent available at Closing.
(iv) executed counterparts of each other Ancillary Agreement;
(v) the opinion of counsel to Sellers described in SECTION
8.7;
(vi) appropriate evidence of the consent of the necessary
third parties and/or governmental authorities to the transfer and assignment
to Buyers of the Assumed Contracts and Permits identified on SCHEDULE 8.2 to
the extent available at Closing, in each case, in form and substance
reasonably satisfactory to Buyers; and
(vii) such other documents and instruments as are
reasonably necessary to consummate the transactions contemplated hereby and
by the Ancillary Agreements.
Copies of the Books and Records shall be delivered by Sellers at
the Closing.
3.3. CONSENTS TO ASSIGNMENT. Anything in this Agreement or any
Ancillary Agreement to the contrary notwithstanding, neither this Agreement
nor any Ancillary Agreement shall constitute an agreement to assign any
Contract, license, sales order, purchase order or any claim or right or any
benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a
breach thereof or in any way affect the respective rights of Buyers or any
Seller thereunder. If such consent is not obtained, or if an attempted
assignment thereof would be ineffective or would affect the rights thereunder
so that Buyers would not receive all such rights, each Seller will cooperate
with Buyers, in all reasonable respects, to provide to Buyers the benefits
under any such claim, Contract, license, sales order or purchase order,
including, without limitation, enforcement for the benefit of Buyers of any
and all rights of each Seller against a third party thereto arising out of
the breach or cancellation by such third party or otherwise; and any transfer
or assignment to Buyers of any property or property rights or any Contract or
agreement which shall require the consent or approval of any third party
shall be made subject to such consent or approval being obtained.
<PAGE>
3.4. FURTHER ASSURANCES; POST-CLOSING COOPERATION. At any time or from
time to time after the Closing, at Buyers' request and without further
consideration, each Seller shall execute and deliver to Buyers such other
instruments of sale, transfer, conveyance, assignment and confirmation,
provide such materials and information and take such other actions as Buyers
may reasonably deem necessary or desirable in order more effectively to
transfer, convey and assign to Buyers all of the Assets and Intellectual
Property and the Assumed Contracts.
Article IV.
Representations and Warranties of Each Seller
Whenever any representation or warranty made in this Agreement is
limited to or qualified by "knowledge," the representation or warranty is
limited to and qualified by the actual knowledge of Sellers based upon
Sellers' reasonable duty of inquiry in connection with making these
warranties and representations.
Except as described in the Sellers Disclosure Schedule, attached hereto
as EXHIBIT M, delivered by each Seller to Buyers and consented to by Buyers
prior to the execution of this Agreement, such Seller represents and warrants
to Buyers as of the Effective Time that:
4.1. ORGANIZATION. Such Seller is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization and has full corporate power and authority to own, lease and
operate its properties and to carry on and conduct its business, including
the Distribution Business, as it is now being conducted.
4.2. AUTHORIZATION. Such Seller has all necessary corporate power and
authority and has taken all corporate action necessary to enter into this
Agreement and each Ancillary Agreement to which it is a party, to consummate
the transactions contemplated hereby and thereby, and to perform its
obligations hereunder and thereunder. Each of this Agreement and the
Ancillary Agreements to which it is a party has been duly executed and
delivered by such Seller and is a valid and binding obligation, enforceable
against it in accordance with its respective terms subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting the rights of creditors generally and
limitations imposed by equitable principles, whether considered in a
proceeding at law or in equity and the discretion of the court before which
any proceeding therefor may be brought.
4.3. BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been conducted without the intervention
of any person or entity acting on behalf of such Seller in such a manner as
to give rise to any valid claim against Buyers for any broker's or finder's
commission, fee or similar compensation.
4.4. LITIGATION, PROCEEDINGS AND APPLICABLE LAW. There are no Actions,
suits, investigations or proceedings, at law or in equity or before or by any
governmental authority or instrumentality or before any arbitrator of any
kind, pending or, to such Seller's knowledge, threatened (a) against such
Seller which, if determined adversely against such Seller, would materially
adversely affect the Assets or the Distribution Business or (b) seeking to
delay or enjoin the consummation of the transactions contemplated hereby.
There are no outstanding orders, decrees or stipulations issued by any
federal, state, local or, international or foreign, judicial or
administrative authority in any proceeding to which such Seller is or was a
party relating to the Assets or the Distribution Business.
4.5. NO CONFLICT OR VIOLATION. Neither the execution and delivery of
this Agreement or any Ancillary Agreement nor the consummation of the
transactions contemplated hereby or thereby will result in (i) a violation of
or a conflict with any provision of the charter documents of such Seller,
(ii) a material breach or termination of, or a material default under, any
term or provision of any Assumed Contract or an event which, with notice,
lapse of time, or both, would result in any such material breach, termination
or default, or (iii) a material violation by such Seller of any Legal
Requirement or an event which with notice, lapse of time or both, would
result in such a material violation.
<PAGE>
4.6. CONSENTS AND APPROVALS. Except for those consents and filings
listed on SCHEDULE 8.2, no consent, waiver, approval or authorization of or
by, or declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by such Seller in
connection with the execution, delivery and performance of this Agreement or
any Ancillary Agreement and the consummation of the transactions contemplated
hereby or thereby.
4.7. INTELLECTUAL PROPERTY.
(a) To such Seller's knowledge, such Seller either (i) owns, or
(ii) is licensed to use or (iii) is otherwise entitled to exercise pursuant
to the terms of a license or other similar agreement to use, the Intellectual
Property identified on SCHEDULE 4.7, and all rights to all that Intellectual
Property used in the Distribution Business as currently conducted or in
connection with products to be used in the Distribution Business currently
under development without any conflict or infringement of the rights of
others. As to the Intellectual Property not identified on SCHEDULE 4.7, to
such Seller's knowledge, such Seller either (i) owns, or (ii) is licensed to
use or (iii) is otherwise entitled to exercise pursuant to the terms of a
license or other similar agreement to use the Intellectual Property not
identified on SCHEDULE 4.7, and all rights to all that Intellectual Property
used in the Distribution Business as currently conducted without any conflict
or infringement of the rights of others. To such Seller's knowledge, the
source code of the CPD Software included within the Intellectual Property
constitutes a trade secret of such Seller, and is not part of the public
knowledge or literature, and such Seller has taken reasonable action to
protect such source code as a trade secret. To such Seller's knowledge, such
Seller has taken reasonable and practicable steps (including, without
limitation, Seller entering into confidentiality and non-disclosure
agreements with employees to maintain the secrecy and confidentiality of, and
its proprietary rights in, all Intellectual Property in which such Seller
claims proprietary rights, and particularly including the CPD Software, as
part of its Standard Form Employment Agreement attached as EXHIBIT J .
(b) Such Seller is not in violation in any material respect of any
license, sublicense or agreement described in SCHEDULE 4.7. As a result of
the execution and delivery of this Agreement or any Ancillary Agreement or
the performance of such Seller's obligations hereunder or thereunder, such
Seller will not be in violation in any material respect of any license,
sublicense or agreement described in SCHEDULE 4.7, or lose or in any way
impair any rights pursuant thereto.
(c) To such Seller's knowledge, no claims with respect to the
Intellectual Property (excluding code specifically created for and paid for
by a customer) have been asserted to such Seller, or, to such Seller's
knowledge, are threatened by any person, and such Seller knows of no claims
(i) to the effect that such Seller in the conduct of the Distribution
Business infringes any copyright, patent, trade secret, or other intellectual
property right of any third party or violates any license or agreement with
any third party, (ii) contesting the right of such Seller to use, sell,
license or dispose of any Intellectual Property, or (iii) challenging the
ownership, validity or effectiveness of any of the Intellectual Property.
(d) To such Seller's knowledge, there has not been and there is
not now any unauthorized use, infringement or misappropriation of any of the
CPD Software by any third party, including, without limitation, any service
provider of such Seller.
(e) To such Seller's knowledge, such Seller has not been sued or,
to such Seller's knowledge, charged as a defendant in any claim, suit, action
or proceeding that involves a claim of infringement of any patents,
trademarks, service marks, copyrights or other intellectual property rights.
To such Seller's knowledge, such Seller does not have any infringement
liability due to its conduct of the Distribution Business with respect to any
patent, trademark, service mark, copyright or other intellectual property
right of another.
(f) To such Seller's knowledge, no Intellectual Property is
subject to any outstanding order, judgment, decree, stipulation or agreement
restricting in any material manner the licensing thereof by such Seller.
However, the foregoing is subject to "shrink wrap" license restrictions.
Such Seller has not entered into any agreement to indemnify any other person
against any charge of infringement of any Intellectual Property, except in
the ordinary course of business. Such Seller has not entered into any
agreement granting any third party the right to bring infringement actions
with respect to, or otherwise to enforce rights with respect to, any
Intellectual Property.
<PAGE>
(g) Except as disclosed in the Assumed Contracts, and except for
certain existing rights of Buyers, no person has a license to use or the
right to acquire a license to use any future version of any CPD Software used
in, or sold by, the Distribution Business or any such Seller CPD Software
that is under development, and no agreement to which such Seller is a party
will restrict Buyers from charging customers for any such new version.
4.8. FINANCIAL INFORMATION. Such Seller has delivered to Buyers the
Audited Financial Statements, the Unaudited Financial Statements, Management
Reporting Statements, as listed on SCHEDULE 4.8, and Net Value Asset
Statement. The Audited Financial Statements and the Unaudited Financial
Statements have been prepared consistently for all periods presented, and in
accordance with applicable Relevant Accounting Practices to the differing
jurisdictions of Sellers. The Management Reporting Statement accurately
reflects the financial information used by the management of such Sellers to
operate the Distribution Business during the nine (9) month period ending
September 30, 1998. The Net Value Asset Statement truly presents the net
values of the Assets at September 30, 1998, valued on a consistent basis to
that used in the Audited and Unaudited Financial Statements.
4.9. ABSENCE OF CERTAIN CHANGES. Since September 24, 1998, such Seller
has conducted the Distribution Business in the ordinary course consistent
with its past practice. Without limiting the foregoing, during such period,
such Seller:
(a) has not created, incurred or assumed any obligation which in
any material way affects the Distribution Business, the Assets or Buyers'
ability to conduct the Distribution Business following the Closing in
substantially the same manner and condition as conducted by such Seller on
the date of this Agreement;
(b) has not increased the annual level of compensation of any
Employee, or increased the annual level of compensation of any person whose
total compensation from any Seller in the last preceding fiscal year exceeded
$50,000, or granted any unusual or extraordinary bonuses, benefits or other
forms of direct or indirect compensation to any Employee, officer, director
or consultant, except in amounts in keeping with past practices by formulas
or otherwise;
(c) has not increased, terminated, amended or otherwise modified
any plan for the benefit of Employees without prior written consent of Buyers;
(d) has maintained insurance coverage in amounts adequate to cover
the reasonably anticipated risks of the Distribution Business;
(e) has not sold, disposed of or encumbered any of the Assets or
licensed any Assets to any Person in the normal course of business consistent
with past practice;
(f) has not entered into any agreements or commitments relating to
the Distribution Business, except on commercially reasonable terms in the
ordinary course of business;
(g) has complied in all material respects with all laws and
regulations applicable to the Distribution Business;
(h) has not entered into any agreement with any third party for
the distribution of any of the Assets;
(i) has not changed or announced any change to the products or
services sold by the Distribution Business, except in the ordinary course of
business;
(j) has not expanded the use of the Assets within the organization
of such Seller;
(k) has operated the Distribution Business in the ordinary course
so as to use reasonable efforts to preserve the Distribution Business intact,
to keep available to Buyers the services of the Employees, and to preserve
for Buyers the goodwill of the Distribution Business's suppliers, customers
and others having business relations with it;
<PAGE>
(l) has not permitted, incurred or suffered any change in the
condition (financial or otherwise), assets, liabilities, reserves, earnings,
business or prospects of the Distribution Business, except for changes which
have not, individually or in the aggregate, been materially adverse to the
Distribution Business, and has not borrowed any funds, under existing credit
lines or otherwise, except as reasonably necessary for the ordinary operation
of the Distribution Business in a manner keeping with historical practices;
(m) made any agreement to do any of the foregoing.
4.10. ASSETS GENERALLY.
(a) SCHEDULE 1.1 includes all properties, tangible and intangible,
and only such properties, used by such Seller in operating the Distribution
Business that will be transferred to Buyers and necessary for Buyers to
operate the Distribution Business after the Effective Time in a manner
substantially equivalent to the manner in which such Seller has operated the
Distribution Business from September 26 to and through the Effective Time.
To Sellers' knowledge, and except as disclosed in the Disclosure Schedule
attached hereto, no licenses or other consents from, or payments to, any
other Person are or will be necessary for Buyers to operate the Distribution
Business and use the Assets in substantially the manner in which such Seller
has operated the same.
(b) Such Seller holds good and marketable title, license to or
leasehold interest in all of the Assets and has the complete and
unrestricted power and the unqualified right to sell, assign and deliver the
Assets to Buyers. Upon consummation of the transactions contemplated by this
Agreement, Buyers will acquire good and marketable title, license or
leasehold interest to the Assets free and clear of any Encumbrances and there
exists no restriction on the use or transfer of the Assets, except as may be
assumed hereunder by Buyers as an Assumed Liability. No Person other than
such Seller has any right or interest in the Assets, including the right to
grant interests in the Assets to third parties, except for Assets licensed or
leased from third parties which are set forth in the Sellers Disclosure
Schedule of such Seller and identified as such.
(c) None of the Assets that constitute tangible personal property
is held under any lease, security agreement, conditional sales contract,
lien, or other title retention or security arrangement.
(d) Except as provided in this Agreement, no restrictions will
exist on Buyers' right to sell, resell, license or sublicense any of the
Assets or engage in the Distribution Business, nor will any such restrictions
be imposed on Buyers as a consequence of the transactions contemplated by
this Agreement or by any agreement referenced in this Agreement.
(e) All of the tangible Assets, but explicitly excluding the CPD
Software, are in good operating condition and repair, normal wear and tear
excepted, as required for their use in the Distribution Business as presently
conducted, and conform to all applicable laws, and no notice of any violation
of any law relating to any of the Assets or Assumed Liabilities has been
received by such Seller. All CPD Software are free of material errors
consistent with warranties given to Seller's customers.
4.11. MAJOR CONTRACTS. Except as set forth in the attached
SCHEDULE 1.1(a) and SCHEDULE 4.11, to such Seller's knowledge, such Seller is
not a party to or subject to:
(a) any employment or consulting contract or other material
arrangement written or oral with any Employee;
(b) Any original equipment manufacturer agreement, distribution
agreement, sales agreement, revenue-producing agreement, volume or quantity
purchase agreement or other similar agreement relating to the Distribution
Business, or joint marketing, joint development or joint venture contract or
arrangement or any other agreement relating to the Distribution Business that
has involved or is expected to involve a sharing of profits with other
persons or provides for payments of more than $100,000 per annum (or its
equivalent amount in any other applicable currency);
<PAGE>
(c) Any lease for real or personal property used in the
Distribution Business involving payments of more than $25,000 per annum (or
its equivalent amount in any other applicable currency);
(d) Any instrument evidencing or related in any way to
indebtedness for borrowed money which results in an Encumbrance on any Asset;
(e) Any contract containing covenants purporting to limit the
freedom of such Seller directly or indirectly to distribute or otherwise
compete in any line of business in any geographic area or with any third
party;
(f) Any material agreement of indemnification in connection with
the Distribution Business;
(g) Any agreement, contract or commitment relating to capital
expenditures by such Seller primarily or exclusively for the Distribution
Business involving payments by such Seller of more than $100,000 per annum
(or its equivalent amount in any other applicable currency);
(h) Any agreement, contract or commitment relating to the license,
disposition or acquisition by such Seller of any Assets (other than
Inventory), other than nonexclusive object code end-user license grants in
the ordinary course of business without a right to distribute or sublicense
the same ("END-USER LICENSES");
(i) Any agreement providing for minimum payment or resale
obligations, ongoing support or research and development obligations, or
warranty obligations on the part of such Seller in connection with the
Distribution Business; except warranty obligations entered into in the
ordinary course of business with standard terms as described in the Sellers
Disclosure Schedule of such Seller;
(j) Any agreement for the provision of products of the
Distribution Business to any governmental entity;
(k) Any material sole or limited source supplier agreements
(written or oral with respect to the Distribution Business); or
(l) Any existing OEM agreement, distribution agreement, volume
purchase agreement, or other similar agreement relating to the Distribution
Business pursuant to which such Seller has granted or received most favored
customer provisions or exclusive marketing rights related to any product,
group of products or territory.
4.12. EXISTING AGREEMENTS AND DISTRIBUTION BUSINESS.
(a) Each material agreement, Contract, mortgage, indenture, plan,
lease, instrument, permit, concession, franchise, arrangement, license and
commitment listed on SCHEDULE 1.1(a), SCHEDULE 4.11 or SCHEDULE 6.4(a) (i) is
valid and binding on such Seller, (ii) is in full force and effect, (iii) to
such Seller's knowledge has not been materially breached by such Seller or
any other party thereto in any material manner. To such Seller's knowledge,
no party to any such Contract, agreement or instrument intends to cancel,
withdraw, modify or amend such Contract, agreement or instrument.
(b) Except as disclosed in SCHEDULE 1.1, such Seller has not
granted any third party the right to supply any products or services of the
Distribution Business to any other third party. No agreement for supply of
the products or services by such Seller obligates such Seller, and no
agreement would obligate Buyers after the Effective Time, to provide any
change in specification of such products or services or to provide new
products or services. No agreement pursuant to which such Seller has
licensed the use of any products included as an Asset to any third party
obligates such Seller to provide any change in specification in the
performance of such products or to provide new products or services.
<PAGE>
(c) After the Closing, except as disclosed in the Contracts listed
on SCHEDULE 1.1(a), Buyers will not be prevented by any act of such Seller
from changing prices charged to existing or future customers of any products
or services.
4.13. WARRANTIES AND INDEMNITIES. Except as disclosed in the
Contracts listed on SCHEDULE 1.1(A), to the knowledge of Sellers, there are
no other warranties and indemnities, express or implied, relating to products
sold or services rendered by such Seller, and no warranty or indemnity has
been given by such Seller which is not listed on the Sellers Disclosure
Schedule or which differs therefrom in any respect. Such Seller is in
compliance with all warranties described in the Seller Disclosure Schedule.
Such Sellers Disclosure Schedule also indicates all warranty and indemnity
claims currently pending against such Seller.
4.14. LICENSES AND PERMITS. Such Seller holds all consents,
approvals, registrations, certifications, authorizations, permits and
licenses of, and has made all filings with, or notifications to, all
governmental entities pursuant to applicable requirements of all federal,
state, local and foreign laws, ordinances, governmental rules or regulations
applicable to the Distribution Business, including, but not limited to, all
such laws, ordinances, governmental rules or regulations relating to
registration of the products of the Distribution Business and certification
of the facilities of the Distribution Business. Such Seller is in compliance
with all federal, state, local and foreign laws, ordinances, governmental
rules and regulations relating to the Distribution Business or otherwise
related to the Distribution Business, and such Seller has no reason to
believe that any consents, approvals, authorizations, registrations,
certifications, permits, filings or notifications that it has received or
made to operate the Distribution Business are invalid or have been or are
being suspended, canceled, revoked or questioned. There is no investigation
or inquiry to which such Seller is a party or, to such Seller's knowledge,
pending or threatened, relating to the Distribution Business and its
compliance with applicable foreign, state, local or foreign laws, ordinances,
governmental rules or regulations. Except as set forth in the Sellers
Disclosure Schedule of such Seller, each such consent, approval,
registration, certification, authorization, permit or license is transferable
and shall be transferred to Buyers in accordance with the terms of this
Agreement, and all such consents, approvals, registrations, certifications,
authorizations, permits and licenses are listed on SCHEDULE 1.1(c).
4.15. EMPLOYEES, ETC. All employees and consultants, of such
Seller that have had access to the Assets are parties to a written agreement
(an "EMPLOYMENT AGREEMENT") with either Largotim UK or Largotim Nederland,
under which each such person or entity (i) is obligated to disclose and
transfer to such Seller, without the receipt by such person of any additional
value therefor (other than normal salary or fees for consulting services),
all inventions, developments and discoveries which, during the period of
employment with or performance of services for such Seller, he or she makes
or conceives of either, solely or jointly with others, that relate to any
subject matter with which his or her work for such Seller in the Distribution
Business may be concerned, and (ii) is obligated to maintain an executed
employment agreement containing confidentiality provisions and maintain the
confidentiality of proprietary information of the Distribution Business. Such
employment agreements are attached hereto as EXHIBIT J. To such Seller's
knowledge, none of such Seller's employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would conflict with the Distribution Business. To
such Seller's knowledge, neither the execution nor the delivery of this
Agreement, nor the carrying on of the Distribution Business by its employees
and consultants, 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 or entities are now
obligated. It is currently not necessary nor will it be necessary for such
Seller to utilize in the Distribution Business any inventions of any of such
persons or entities made or owned prior to their employment by or affiliation
with such Seller. To such Seller's knowledge, none of such Seller's
employees that has had knowledge or access to information relating to the
Distribution Business has taken, removed or made use of any proprietary
documentation, manuals, products, materials, or any other tangible item from
his or her previous employer relating to the Assets by such previous employer
in conducting the Distribution Business.
4.16. EMPLOYEE BENEFIT AND COMPENSATION PLANS. Except as provided
in the Employment Agreement and SCHEDULE 1.1(a) and the obligation to pay the
bonus amounts which have been currently accrued on the Assumed Liabilities
and which will be paid by Buyers when due, there are no Employee Benefit
Plans of Sellers for which Buyers will be liable.
<PAGE>
4.17. TAXES. Except as otherwise provided herein, all Taxes
(including stamp duties) relating to the Distribution Business or the Assets
have been or will be paid by such Seller with respect to all periods (or
portions thereof) prior to and including the date of Closing (excluding taxes
to be paid by Buyers, if any, resulting from the Transfer of Assets). Such
Seller has not been delinquent in the payment of any Taxes relating to the
Distribution Business or the Assets and there are no pending or threatened
proceedings against such Seller with respect to such Taxes, and none of the
Assets are subject to any tax liens.
4.18. COMPLIANCE WITH LAW. The operation of the Distribution
Business has been conducted in all material respects in accordance with all
applicable laws, regulations and other requirements of governmental entities
having jurisdiction over the same.
4.19. PRODUCTS/SERVICES. Each of the products and services of the
Distribution Business sold or provided by such Seller has been designed and
developed with professional competence and in accordance with the technical
engineering practices and standards commensurate with those observed in the
computer software industry and, when used in accordance with the procedures
specified in the associated documentation, shall perform as specified therein
or as otherwise promised in connection with the sale of such product or
service.
4.20. SERVICE LIABILITY. Except as disclosed on SCHEDULE 4.20, to
such Seller's knowledge, there are no claims, actions, suits, inquiries,
proceedings or investigations pending by or against such Seller, or
threatened by or against relating to any products of the Distribution
Business.
4.21. FULL DISCLOSURE. Such Seller is not aware of any facts
pertaining to the Distribution Business or the Assets which affect the
Distribution Business or the Assets in a materially adverse manner or which
will in the future affect the Distribution Business or the Assets in a
materially adverse manner. Neither this Agreement nor any other agreement,
exhibit, schedule or officer's certificate being entered into or delivered
pursuant to this Agreement contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
continued in such document not misleading.
4.22 YEAR 2000. Provided Sellers' customers otherwise comply with the
requirements in the Assumed Contracts, Sellers represent and warrant that
their CPD Software and customizations:
(a) Handle date information accurately and without interruption
before, during and after the calendar year 2000, including, but not limited
to, accepting date input, providing date output, and performing calculations
and comparisons on dates or portions of dates;
(b) Respond to two-digit year date input in a way that resolves
the ambiguity as to the century in a disclosed, defined and predetermined
manner; and
(c) Process the year 2000 as a leap year.
Sellers make no representation or warranty with respect to any products
furnished by a third party with respect to the year 2000.
4.23 BUSINESS YEAR 2000 COMPLIANCE. Sellers represent and warrant that
Sellers owned and controlled business systems ("SELLERS SYSTEMS") that are
part of the Distribution Business will not have a material interruption of
operations due to a Year 2000 problem provided items not owned and controlled
by Sellers properly exchange date data with the Sellers Systems. Such
warranty shall remain in place up to and including one hundred eighty (180)
days following January 1, 2000.
4.24 EXCLUSIVE WARRANTIES AND REPRESENTATIONS. Except as specifically
provided herein, there are no other warranties or representations being made
by Sellers.
Article V.
Representations and Warranties of Buyers
<PAGE>
Buyers hereby represent and warrant to Sellers as of the Effective Time
as follows:
5.1. ORGANIZATION OF BUYER. Each of Buyers is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which they are domiciled.
5.2. AUTHORIZATION. Buyers have all necessary corporate power and
authority and has taken all corporate action necessary to enter into this
Agreement and each Ancillary Agreement to which it is a party, to consummate
the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. Each of this Agreement and the
Ancillary Agreements to which it is a party has been duly executed and
delivered by Buyers and is a valid and binding obligation, enforceable
against it in accordance with its terms subject to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar laws
relating to or affecting the rights of creditors generally and limitations
imposed by equitable principles, whether considered in a proceeding at law or
in equity and the discretion of the court before which any proceeding
therefor may be brought.
5.3. BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been conducted without the intervention
of any person or entity acting on behalf of Buyers in such a manner as to
give rise to any valid claim against any Seller for any broker's or finder's
commission, fee or similar compensation.
5.4. NO CONFLICT OR VIOLATION. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will result in (i) a violation of or a conflict with any provision of the
Articles of Incorporation or Bylaws of Buyers or (ii) a violation by Buyers
of any Legal Requirement or an event which with notice, lapse of time or
both, would result in such a violation.
5.5. CONSENTS AND APPROVALS. Except for consents contemplated herein, no
consent, waiver, approval or authorization of or by, or declaration, filing
or registration with, any governmental or regulatory authority, or any other
person or entity, is required to be made or obtained by Buyers in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.
5.6. LITIGATION, PROCEEDINGS AND APPLICABLE LAW. There are no actions,
suits, investigations or proceedings, at law or in equity or before or by any
governmental authority or instrumentality or before any arbitrator of any
kind, pending or, to Buyers' knowledge, threatened (a) against Buyers which,
if determined adversely against Buyers, would materially adversely affect
Buyers' ability to operate the Assets or (b) seeking to delay or enjoin the
consummation of the transactions contemplated hereby. There are no
outstanding orders, decrees or stipulations issued by any federal, state,
local or, to Buyers' knowledge, foreign, judicial or administrative authority
in any proceeding to which Buyers are or were parties which would materially
adversely affect Buyers' ability to operate the Assets.
5.7 EMPLOYEE CONTRACTS. Buyers will assume responsibility for the
Employee Contracts, assigned to Buyers as of the date of Closing, and will
incur all liability with respect to and on account of the Employee Contracts
as of the date of Closing.
5.8 CREDIT AGREEMENT Other than waivers dated September 4, 1998 and
November 17, 1998, there have been no amendments to the Credit Agreement
dated August 7, 1997 between Guarantor and Bank of America National Trust and
Savings Association since the execution of such agreement.
5.9 BUYERS YEAR 2000 OBLIGATION.. Sellers represent that Sellers are
conducting a program to assist customers of the Distribution Business to
ensure that the products and services previously provided by Sellers will
satisfy the warranty concerning the year 2000 set forth in Article 4.23
above. Buyers agree to continue to offer such program as part of the
Distribution Business after the Closing.
5.10 EXCLUSIVE WARRANTIES AND REPRESENTATIONS. Except as specifically
provided herein, there are no other warranties or representations being made
by Buyers.
<PAGE>
Article VI.
Certain Covenants
6.1. COVENANTS OF BOTH PARTIES. Buyers, on the one hand, and each
Sellers, on the other hand, each covenant to the other that:
(a) NOTICE. Each party shall give prompt written notice to each
other party to this Agreement if an event occurs which makes it reasonably
likely that a condition to the Closing set forth in ARTICLE VII or ARTICLE
VIII will not be satisfied as of the Closing; PROVIDED, HOWEVER, that the
giving of any such notice shall not excuse such party's performance hereunder.
(b) REASONABLE BEST EFFORTS. The parties shall negotiate in good
faith and shall use their reasonable best efforts to fulfill all conditions
to Closing set forth in this Agreement in order to consummate the
transactions contemplated hereby by the Closing.
(c) FURTHER ASSURANCES. Both before and after the Closing, each
party will cooperate in good faith with the other and will take all
appropriate action and execute any documents, instruments or conveyances of
any kind which may be reasonably necessary or advisable to carry out any of
the transactions contemplated hereunder. From and after the Closing, each
Seller will promptly refer all inquiries with respect to the ownership of the
Assets to Buyers and execute such documents as Buyers may reasonably request
from time to time to evidence transfer of the Assets to Buyers, and Buyers
will execute such documents as each Seller may reasonably request from time
to time to evidence assumption of the Assumed Liabilities.
(d) ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Assets in a manner agreed to by Buyers and Sellers.
EXHIBIT F attached hereto sets forth the amount of the Purchase Price
allocable to the various Assets.
(e) COOPERATION. Each party will request its relevant management
to fully cooperate with each entity to transition the Distribution Business
including reasonable assistance to complete the transfer of Assets for a
period of three hundred and sixty (360) days from the date of Closing and
each party will bear its own costs in connection therewith, except as
provided in Article VII hereof.
6.2. SELLERS COVENANTS. Each Seller covenants to Buyers that:
(a) ACCESS BY BUYERS. Such Seller shall allow Buyers and its
Representatives, at Buyers' own expense during regular business hours and
accompanied by such Seller and its Representatives if such Seller so desires,
to inspect the Assets and to inspect the Books and Records, including
information with respect to current costs, prices, financial information
(including inventory, fixed assets and accruals) and promotional and
marketing information and such other matters as Buyers may reasonably request
in order to conduct its due diligence examination. All such information
shall be provided to Buyers in such form as such information may presently
exist or be readily available and, except as specifically provided in ARTICLE
IV to the contrary, without representation or warranty as to the accuracy or
completeness thereof.
(b) CONDUCT OF DISTRIBUTION BUSINESS. Except as contemplated by
this Agreement and the nature of the transaction contemplated hereby, without
the prior written consent of Buyers, such Seller shall operate the
Distribution Business in the ordinary course in a manner consistent with the
manner in which it is operating on the date hereof. Specifically, and
without intending to limit the foregoing in any manner, such Seller shall not
take any action or suffer or pursuit any circumstances that would result in a
breach of SECTION 4.9 hereof.
(c) CONSENTS. Such Seller shall assist Buyers to obtain all
applicable Permits, consents, approvals and agreements of, and to give all
notices and make all filings with, any third parties and governmental
authorities as may be necessary to authorize, approve or permit the full and
complete sale, conveyance, assignment or transfer of the Assets and the
Distribution Business.
<PAGE>
6.3. BUYERS' COVENANTS. Buyers covenant to each Seller that:
(a) CUSTOMER SUPPORT. As of and following the Closing, Buyers
shall be responsible for providing, and shall provide, customer and technical
support as is consistent with the prior operation of the Distribution
Business and in accordance with all terms of sale to each customer of the
Distribution Business, whether the customer exists as of the Closing or
becomes a customer after the Closing.
6.4. EMPLOYMENT MATTERS.
(a) EMPLOYEES. Effective as of the Closing, the Contracts for
employees identified on SCHEDULE 1.1(a) hereof (the "EMPLOYEES") will be
assigned to Buyers.
(b) JURISDICTION. Sellers and Buyers agree that the laws of the
applicable jurisdiction in which the Employees are employed will apply to
this transaction.
(c) OBLIGATIONS. Buyers shall be responsible for all obligations
to Employees listed on SCHEDULE 1.1(a) occurring after the Effective Time as
set forth in the Employee Agreements and Offer Letter attached as EXHIBIT J.
(d) KEY EMPLOYEES. The Sellers acknowledge the "Key Employee"
status of those persons listed on SCHEDULE 6.4(d).
(e) NO THIRD PARTY BENEFICIARY RIGHTS. Except as set forth in the
Employee Contracts and Employee Offer Letter attached hereto as EXHIBIT J,
nothing contained in this Agreement shall confer upon any Employee any right
with respect to continuance of employment by Buyers, nor shall anything
herein interfere with the right of Buyers to terminate the employment of any
of the Employees at any time, with or without cause. No provision of this
Agreement shall create any third party beneficiary rights in any Employee,
any beneficiary or dependents thereof, with respect to the compensation,
terms and conditions of employment and benefits that may be provided to any
Employee by Buyers or under any benefit plan which Buyers may maintain.
6.5. UPDATE OF DISCLOSURE SCHEDULES Prior to Closing, such Seller
shall deliver to Buyers updated SCHEDULES 1.1(c) and 1.1(d) to the Sellers
Disclosure Schedule of such Seller to reflect changes to the operations or
condition of the Distribution Business between the date hereof and Closing.
Such updated Schedules shall include an acknowledgment that the Distribution
Business was operated during such period in compliance with the terms of
SECTION 6.2(c).
Article VII.
Special Transition Covenants
Buyers and Sellers agree that, in order to facilitate a prompt closing
and transition of the Distribution Business, the following steps will be
taken:
7.1 ASSIGNMENT OF ASSUMED CONTRACTS. The consent to the assignment of
Assumed Contracts had not been made a condition to Closing and each party
agrees to use reasonable efforts to cooperate in securing an assignment of
those Assumed Contracts subsequent to Closing and not later than one hundred
twenty (120) days (the "CONSENT PERIOD") from and after the Closing. The
responsibility for securing the consent to the assignment will be a joint
effort of Sellers and Buyers. Parties shall agree on form of Consent.
Sellers, at their option, may endeavor to secure a novation of the Assumed
Contracts. Sellers will remain the nominal billing entity and will support
the collection of Accounts Receivable to be transmitted to Buyers without
charge to Buyers.
Buyers shall be entitled to the benefits of such Assumed Contracts after
the Closing Date to the extent that Sellers may provide Buyers with such
benefits without violating the terms of such Assumed Contracts. Buyers agree
to perform at their sole expense all of the obligations of Sellers to be
performed under such Assumed Contracts, the benefit of which Buyers are
receiving after the Closing Date.
<PAGE>
In the event, despite the exercise of reasonable efforts, Buyers and
Sellers are unable to secure a consent to the assignment of an Assumed
Contract during the Consent Period, Buyers shall perform, on behalf of
Sellers, on a subcontract basis, the obligations of Sellers, and Sellers will
transfer payments received from customers to Buyers without charge to Buyers.
Buyers further agree that they will not expand any of the Assumed Contracts,
but may extend them if the customer requires this as a condition to
consenting to the assignment. Buyers further agree to enter into a new
contract with customers upon completion of the existing contracts.
7.2 SI CUSTOMERS. Sellers and Buyers agree to use their reasonable
efforts to cause Sellers' existing SI customers with QAD MFG/PRO Software
licenses to sign a license agreement directly with Buyers or such other
affiliated company of Buyers as appropriate. In the event a customer refuses
to execute a replacement license with QAD, Sellers agree not to extend the
existing license.
7.3 SUPPLIER AGREEMENTS. For those supplier agreements specifically
identified as not being transferred to Buyers, as listed on SCHEDULE 7.3,
and, to the extent the suppliers are required to support the Assumed
Contracts, as listed on SCHEDULE 1.1(a) hereto, Sellers agree to act as
subcontractor to Buyers at actual costs paid to Supplier for a maximum period
of one hundred twenty (120) days from Closing. Buyers will enter into new
contracts with these Suppliers as soon as reasonably possible at which point
Sellers' obligations will cease.
Until securing consent to the assignment of the Supplier Agreements to
be transferred to Buyers listed on SCHEDULE 1.1(a), Sellers will act as a
subcontractor to Buyers. Sellers will bill Buyers for the actual costs paid
to Supplier incurred by Sellers for this service.
7.4 INSURANCE. Where consent is required for the transfer of any of
the Personal Property listed on SCHEDULE 1.1(d) hereof, Sellers will retain
insurance on these items until consent to the transfer has been obtained.
Buyers' interest will be noted on the policy. The costs associated with such
insurance will be billed to Buyers and any proceeds due from claims under the
insurance will be for the benefit of Buyers.
7.5 RESIGNATION OF EMPLOYEE. For a period of three (3) months after
the Closing Date, if an Employee, other than a Key Employee, resigns from one
party and is subsequently employed by the other party, the employing party
will pay a compensation amount equivalent to three (3) months of salary to
the other party within thirty (30) days of employment. Key Employees may not
be employed by the other party for one (1) year from the Closing except upon
written consent of the other party.
7.6 BILLABLE EMPLOYEES. For a nine (9) month period, each party will
subcontract to the other party for assistance of billable employees requested
support on existing SI Business and Distribution Business. Availability of
Employees identified in SCHEDULE 7.6 will not be unreasonably withheld.
Payment to the providing party by the receiving party will be at eighty
percent (80%) of the amount paid by the customer (or either (i) 80% of the
listed billable rate of Employees identified on SCHEDULE 7.6, or (ii) the
current agreed rate under existing written contracts between the parties or
their affiliates), which will be paid within thirty (30) days from the date
of invoice .
7.7 COOPERATION AND ASSISTANCE WITH CUSTOMERS OF THE DISTRIBUTION
BUSINESS. If requested by Buyers, such Sellers shall agree to take
reasonable cooperative steps to enable those customers of such Sellers who
are customers of the Distribution Business to become customers of Buyers in
their operation of the Distribution Business following the Closing.
7.8 CERTAIN CONTRACTS UNAVAILABLE. Sellers represent that there are
certain Contracts which are listed on SCHEDULE 7.8 for which no copies have
been delivered to Buyers by Sellers. The parties agree that Sellers shall
take the action set forth on SCHEDULE 7.8 associated with each Contract in
order to provide Buyers with an appropriate Contract within one hundred and
twenty (120) days of the Closing, the terms of which Contracts shall be
consistent with those entered into in the ordinary course of business of
Sellers. In the event that Sellers fail to provide any such Contract, Buyers
shall have the option to refuse to accept the assignment of such Contract.
<PAGE>
7.9 TRANSITION SERVICES. The parties recognize that there will be a
period after the Closing when one party may require the service of the other
party in order to continue to operate their respective businesses until the
given party is able to perform such service itself. Examples of such
services may include, but are not limited to, the use of certain offices,
production of payroll or invoices, use of telecommunications services and
other such services related to the ordinary operation of the business. The
parties agree that each party shall provide such services to the other party
upon the reasonable request of the other party and in return for reasonable
compensation. However, a party shall not be obligated under this Article
to provide such services for more than one hundred and eighty (180) days
after the Closing. The parties agree to enter appropriate agreements within
a reasonable time after the Closing to reflect the terms under which one
party agrees to provide such services to the other party, including the
reasonable compensation to be paid for providing such service.
7.10 SHARED INTELLECTUAL PROPERTY. Buyers grant to Sellers a
royalty-free non-exclusive license to use the Shared Intellectual Property
provided that it does not sell, contract or license these rights to others,
in connection with its SI Business.
7.11 SHARED INTELLECTUAL PROPERTY FOR EXTERNAL USE IN THE SYSTEMS
INTEGRATION BUSINESS. Buyers grant to Sellers a royalty-free non-exclusive
license to use the Shared Intellectual Property for External Use in the
Systems Integration Business.
7.12 TRADEMARK. The name and trademark "Largotim," and "BDM Largotim"
are not Assets to be transferred to Buyers under this Agreement, provided,
however, Buyers shall have the right to continue to use the name "Largotim"
as existing on inventories and in other contexts until one hundred eighty
(180) days from the Closing, provided that Buyers shall notify customers for
products that it sells after the Closing that Buyers are the seller of such
products and further provided that Buyers maintain the existing level of
quality with respect to any product sold under the "Largotim" and/or "BDM
Largotim" trademarks, the entire right, title and interest to which
trademarks are the property of TRW Inc.
Article VIII.
Conditions to Sellers' Obligations
The obligations of each Seller to consummate the transactions provided
for hereby are subject to the satisfaction of or waiver by such Seller, on or
prior to the Closing, of each of the following conditions:
8.1. REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of Buyers contained in this Agreement shall be true and correct in
all material respects as of the Effective Time, and Buyers shall have
performed in all material respects all agreements and covenants required
hereby to be performed by it prior to or at the Closing.
8.2. NO GOVERNMENTAL PROCEEDINGS OR LITIGATION. No suit, action or
other legal or administrative proceeding by any governmental authority or any
other party or entity shall have been instituted and remain unresolved which
questions the validity or legality of the transactions contemplated hereby.
8.3. CORPORATE DOCUMENTS. Such Seller shall have received from Buyers
resolutions adopted by the board of directors of Buyers approving this
Agreement, the Ancillary Agreements to which it is a party and the
transactions contemplated hereby and thereby, certified as true and correct
by its corporate director. Each Seller's board of directors shall have
approved this Agreement, the Ancillary Agreement and all such transactions.
Such Seller shall have received from the Guarantor resolutions adopted by the
Board of Directors approving the Guaranty Agreement, certified as true and
correct by its Corporate Secretary.
8.4. OPINION OF COUNSEL. Such Seller shall have received the favorable
opinion of counsel to Buyers, substantially in the form attached hereto as
EXHIBIT F.
8.5 OPINION OF COUNSEL - GUARANTOR. Buyers shall cause Guarantor to
deliver a favorable opinion of counsel to Guarantor in the form attached
hereto as EXHIBIT K.
<PAGE>
8.6. ANCILLARY AGREEMENTS. Each of the Ancillary Agreements shall have
been duly and validly executed and delivered by the parties hereto and such
agreements shall remain in full force and effect.
Article IX.
Conditions to Buyers' Obligations
The obligations of Buyers to consummate the transactions provided for
hereby are subject to the satisfaction of or waiver by Buyers, on or prior to
the Closing, of each of the following conditions:
9.1. REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of each Seller contained in this Agreement shall be true and
correct in all material respects as of the Effective Time, and each Seller
shall have performed in all material respects all agreements and covenants
required hereby to be performed by it prior to or at the Closing.
9.2. CONSENTS. All consents, waivers, approvals and authorizations of
or by, and declarations, filings and registrations with, governmental or
regulatory authorities, lenders, lessors and other parties or entities and
required in connection with the transfer by each Seller of the Assets to
Buyers as contemplated hereby shall have been obtained or made, except those
items in SCHEDULE 9.2.
9.3. NO GOVERNMENTAL PROCEEDINGS OR LITIGATION. No suit, action or
other legal or administrative proceeding by any governmental authority or any
other party or entity shall have been instituted and remain unresolved which
questions the validity or legality of the transaction contemplated hereby and
which could reasonably be expected to materially and adversely affect the
right or ability of Buyers to own, operate or possess the Assets after the
Effective Time.
9.4. CORPORATE DOCUMENTS. Buyers shall have received from each Seller
resolutions adopted by its board of directors approving this Agreement, the
Ancillary Agreements and the transactions contemplated hereby and thereby,
certified as true and correct by its corporate secretary or assistant
secretary. Buyers' boards of directors shall have approved this Agreement,
the Ancillary Agreements and all such transactions. Guarantor's board of
directors shall have approved this Agreement and any Ancillary Agreement to
which it is a party.
9.5. NO MATERIAL ADVERSE CHANGE. There shall not have occurred any
material adverse change in the Distribution Business or the condition of the
Assets from September 30, 1998 to the Closing.
9.6. OPINION OF COUNSEL. Buyers shall have received from each Seller
the favorable opinion of counsel to such Seller, substantially in the form
attached hereto as EXHIBIT G, and satisfactory in form and scope to Buyers.
9.7. ANCILLARY AGREEMENTS. Each of the Ancillary Agreements shall have
been duly and validly executed and delivered by the parties hereto and such
agreements shall remain in full force and effect.
9.8. CONCURRENT CLOSING. Each Seller shall be ready, willing and able
to consummate the transactions contemplated hereby in accordance with this
Agreement.
9.9 KEY EMPLOYEES. Eighty percent (80%) of the Key Employees listed
on SCHEDULE 6.4(d), including those designated as "essential" will have
agreed to be employed by Buyers prior to the Closing.
Article X.
Actions by Parties After the Closing
<PAGE>
10.1. BOOKS AND RECORDS. From and after the Closing, each party
agrees that it will cooperate with and make available to the other party and
its Representatives, subject to SECTION 11.11, during normal business hours
upon prior written request specifying the need therefor, all Books and
Records, information and employees (without substantial disruption of
employment) relating to the Systems Integration and/or Distribution Business
which are reasonably necessary or useful in connection with any tax inquiry,
audit, investigation or dispute, any litigation or investigation or any other
reasonable business purpose. The party requesting any such Books and
Records, information or employees shall bear all of the out-of-pocket costs
and expenses (including attorneys' fees, but excluding reimbursement for
salaries and employee benefits) reasonably incurred in connection with
providing such Books and Records, information or employees.
10.2. INDEMNIFICATION.
(a) BY SELLER. Except to the extent provided in SECTION 10.3 as to
customers of the Distribution Business, from and after the Effective Time and
subject to the limitations set forth in SECTION 10.2(e), each Seller shall
indemnify, save and hold harmless Buyers and their Affiliates, and its
respective Representatives, from and against any and all Damages caused by,
arising out of, asserted against resulting from or incurred or suffered by
Buyers or any of their Affiliates or Representatives in connection with (i)
any misrepresentation or breach of any representation or warranty by any
Seller in or pursuant to this Agreement or any Ancillary Agreement, (ii) the
non-fulfillment of any covenant or agreement made by any Seller in or
pursuant to this Agreement or any Ancillary Agreement, (iii) the failure by
any Seller to satisfy all of the conditions precedent referred to in SECTION
3.2(b) (notwithstanding any waiver by Buyers of any such conditions
precedent, or (iv) failure to secure the consents to the assignments of the
Assumed Contracts unless Sellers continue to perform certain Assumed
Contracts for the benefits of Buyers.
(b) BY BUYERS. Except to the extent provided in SECTION 10.3 as to
customers of the Distribution Business, from and after the Effective Time and
subject to the limitations set forth in SECTION 10.2(e)(iii), Buyers shall
indemnify and save and hold harmless each Seller and its Affiliates, and
their respective Representatives, from and against any and all Damages caused
by, arising out of, asserted against, resulting from or incurred or suffered
by such Seller or any of its Affiliates or Representatives in connection with
(i) any misrepresentation or breach of any representation or warranty by
Buyers in this Agreement or any Ancillary Agreement, (ii) the non-fulfillment
of any covenant or agreement made by Buyers in or pursuant to this Agreement
or any Ancillary Agreement, (iii) any of the Assumed Liabilities, and (iv)
the ownership of the Assets from and after the Effective Time to the extent
such Damages arise out of transactions, events or inaction of Buyer occurring
on or after the Effective Time.
(c) LIMITATION AS TO INDEMNIFIED PARTIES' OWN NEGLIGENCE. The
respective obligations of the Indemnifying Parties under PARAGRAPHS (a) and
(b) above to provide indemnification shall be terminated, modified or abated
as appropriate if the underlying claim giving rise to Damages for which such
indemnification is provided hereunder (i) would not have arisen but for a
voluntary act which (A) is carried out by the Indemnified Party after Closing
otherwise than in the ordinary course of business or (B) is carried out at
the request of, or with the approval, concurrence or assistance of the
Indemnified Party or (ii) is based, in whole or in part, on the negligence or
willful misconduct of the party seeking indemnification. For purposes of
this SECTION 10.2(c), "voluntary" shall mean an act other than any act which
is required to be taken by law or which, if taken, would constitute prudent
business practice.
(d) NOTICE OF AND DEFENSE OF THIRD PARTY CLAIMS.
(i) For the purpose of this ARTICLE X, the term "INDEMNIFYING
PARTY" when used in connection with a particular Claim shall mean the party
having an indemnification obligation pursuant to this ARTICLE X, and the term
"INDEMNIFIED PARTY" when used in connection with a particular Claim shall
mean the persons having the right to be indemnified pursuant to this ARTICLE
X. Each party agrees that as promptly as practical under the circumstances
after it becomes aware of facts or circumstances giving rise to a claim by it
for indemnification pursuant to this ARTICLE X (a "CLAIM"), including the
filing of any lawsuit or enforcement action by any third party (a "THIRD
PARTY CLAIM"), such party will provide notice thereof in writing (a "CLAIM
NOTICE") to the Indemnifying Party with respect to such Claim specifying in
reasonable detail the nature and specific basis to the extent then known by
the Indemnified Party for such Claim and to the extent feasible the estimated
amount of Damages attributable thereto;
<PAGE>
PROVIDED, HOWEVER, that the failure of any Indemnified Party to give timely
notice shall not affect its rights to indemnification hereunder except to the
extent that the Indemnifying Party demonstrates Damage, including inability
to assert rights, defenses or counterclaims, caused by such failure.
(ii) With respect to Third Party Claims, after such notice the
Indemnifying Party shall be entitled, if it so elects, to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing to the effect
that the Indemnifying Party will indemnify the Indemnified Party from and
against the Damages caused by the Third Party Claim and (B) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently.
The Indemnified Party shall cooperate in all reasonable respects with the
Indemnifying Party and such attorneys in the investigation, trial and defense
of any lawsuit or action with respect to any such Third Party Claim and any
appeal arising therefrom, including the filing in the Indemnified Party's
name of appropriate cross claims and counterclaims. The Indemnified Party
may, at its own cost, participate in any investigation, trial and defense of
such Third Party Claim controlled by the Indemnifying Party and any appeal
arising therefrom. If the Indemnified Party joins in any such Third Party
Claim, the Indemnifying Party shall have full authority to determine all
action to be taken with respect thereto; PROVIDED, HOWEVER, that the
Indemnifying Party will not (y) consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim or (z) be liable
for any settlement of any such Third Party Claim without, in each instance,
the Indemnified Party's express written consent, which shall not be
unreasonably withheld. At any time after the commencement of defense of any
such Third Party Claim, the Indemnifying Party may request the Indemnified
Party to agree in writing to the abandonment of such contest or to the
payment or compromise by the Indemnifying Party of any such Third Party
Claim, whereupon such action shall be taken unless the Indemnified Party
determines that the contest should be continued and so notifies the
Indemnifying Party in writing within fifteen (15) days of such request from
the Indemnifying Party. If the Indemnified Party determines that the contest
should be continued, the Indemnifying Party shall be liable hereunder only to
the extent of the lesser of (y) the amount which the other party(ies) to the
contested Third Party Claim had agreed to accept in payment or compromise as
of the time the Indemnifying Party made its request therefor to the
Indemnified Party or (z) such amount for which the Indemnifying Party may be
liable with respect to such Third Party Claim by reason of the provisions
hereof.
(iii) If the Indemnifying Party shall object to any Claim pursuant
to this Agreement, the Indemnifying Party shall give written notice of such
objection to the Indemnified Party within 20 days after the date of the Claim
Notice is given to the Indemnifying Party (the "NOTICE DATE"). If the
Indemnifying Party does not give notice of an objection within 20 days after
the Notice Date, or shall have agreed within such 20 day period that such
Claim should be paid, the Indemnifying Party shall, promptly cause to be
transferred to the Indemnified Party an amount equal to that set forth in the
Notice of (or such lesser amount agreed in writing by the Indemnified Party
and the Indemnifying Party).
(iv) In case the Indemnifying Party shall object in writing to any
claim or claims by the Indemnified Party, the Indemnifying Party and the
Indemnified Party shall attempt in good faith for thirty (30) days thereafter
to agree upon the rights of the respective parties with respect to each of
such claims. If the Indemnifying Party and the Indemnified Party should so
agree, a memorandum setting forth such agreement shall be prepared and signed
by both parties and the Indemnifying Party shall pay to the Indemnified Party
such agreed upon amount. If no such agreement can be reached after good
faith negotiation, either the Indemnified Party or the Indemnifying Party
may, by written notice to the other, demand arbitration of the matter unless
the amount of the damage or loss is at issue in pending litigation with a
third party, in which event, arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in either
such event the matter shall be settled by the dispute resolution procedures
set forth in SECTION 10.4 hereof.
(v) Payments by an Indemnified Party of amounts for which such
Indemnified Party is indemnified hereunder shall not be a condition precedent
to recovery. Each Seller's obligation to indemnify Buyers, and Buyers'
obligation to indemnify each Seller, shall not limit any other rights,
including, without limitation, rights of contribution, which either party may
have under statute or common law.
<PAGE>
(e) LIMITATION ON REPRESENTATIONS AND WARRANTIES. The representations
and warranties of each Seller contained in ARTICLE IV and the representations
and warranties of Buyers contained in ARTICLE V shall survive the Closing and
terminate two (2) years after the Closing. No action can be brought with
respect to any breach of any representation or warranty on the part of either
party under this Agreement, including under the provisions of SECTION
10.2(a)(i) and 10.2(b)(i), unless a Claim Notice specifying the breach of the
representation and warranty forming the basis of such Claim has been
delivered to the party alleged to have breached such representation and
warranty prior to the termination date, if any, of such representation and
warranty described above. There shall be no claim made by an Indemnified
Party until such claim exceeds $200,000. Each party's total aggregate
liability to the other under this ARTICLE shall not exceed the amount paid by
Buyers.
(f) OFFSET. Buyers may withhold and set off against any amount
otherwise due each Seller any amount as to which any Seller is obligated to
pay Buyers pursuant to this Agreement or any Ancillary Agreement, including
any indemnity obligation of any Seller arising under this Agreement, if
authorized by the arbitrator in accordance with SECTION 10.4 of this
Agreement.
(g) NO PERSONAL LIABILITY. No individual Representative of any party
shall be personally liable for any Damages under the provisions of this
SECTION 10.2 or any other provision of this Agreement; PROVIDED, HOWEVER,
nothing herein shall relieve any party of any liability to make any payment
expressly required to be made by such party pursuant to this Agreement or of
any obligation under any Ancillary Agreement.
(h) TAX EFFECT OF PAYMENTS. The amount of any payments required to be
made under this ARTICLE X shall be reduced by the amount of any tax or
insurance benefit actually received by (including by refund or by reduction
of or offset against taxes otherwise payable) the recipient by reason of the
payment or incurrence by such recipient of the item for which the indemnity
is being sought. Each party shall notify the other of such receipt of any
such tax or insurance benefits.
10.3 SPECIAL INDEMNIFICATION REGARDING LIABILITY OVER ASSUMED CONTRACT
BY CUSTOMERS OF SELLERS. In consideration of Sellers' warranties and
representations that Sellers have no known claims other than disclosed in any
Disclosure Schedule with respect to any Assumed Contract or customer
regarding an Assumed Contract, Buyers will indemnify, save and hold harmless
each Sellers and their Affiliates and their respective representatives from
and against any and all damages caused by, arising out of, asserted or
resulting from or suffered by any said Sellers in connection with claims of
customers pursuant to the Assumed Contracts, whether such claims were created
before or existing after the Closing and subject to the following provisions
and only to the extent that such claims arise from, or relate to, the action,
or failure to act, by Sellers prior to the Closing:
(a) Each party will mutually cooperate with the other party in
resolving any customer issues, all at their own expense;
(b) Buyers shall not make a claim against Sellers under this
Article unless the damages for a single claim exceed seventy-five thousand
dollars ($75,000) or, in the event the damages for any single claim does not
exceed seventy-five thousand dollars ($75,000), the damages for all such
claims exceeds seven hundred fifty thousand dollars ($750,000).
(c) These indemnifications shall last for a period of two (2)
years from the Closing and shall not include any claims solely and
exclusively related to MFG/PRO Software, which will be the sole
responsibility of Buyers.
10.4. ARBITRATION. Any and all disputes arising out of or in
connection with the negotiation, execution, or interpretation of this
Agreement shall be finally settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association by
arbitrators familiar with the software industry. The arbitration will be
held in the City of Los Angeles, California, on consecutive business days.
The award rendered shall be final and binding upon the parties. Judgment on
any award may be entered in any court having jurisdiction over the parties or
their assets. The costs of the arbitration shall be shared equally by the
parties. Each party will pay their own attorneys' fees and costs. The
arbitration shall be conducted in the English language.
Article XI.
<PAGE>
Miscellaneous
11.1. TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated or abandoned at any time prior to the Closing:
(a) by the mutual written agreement of Buyers and Sellers;
(b) by the written notice from either Buyers to all Sellers or
from all Sellers to Buyers if the Closing shall not have occurred on or prior
to the Outside Date;
(c) by any party if a final nonappealable judgment has been
entered against such party or any of its Affiliates restraining, prohibiting,
or declaring illegal the consummation of this Agreement or the transactions
contemplated hereby or which imposes or awards damages which would have a
material adverse effect on the economic benefits contemplated hereby;
(d) by Buyers if there is:
(i) a material breach of any representation or warranty
set forth in ARTICLE IV or any covenant or agreement to be complied with or
performed by any Seller pursuant to the terms of this Agreement, Buyers has
notified such Seller of the material breach, and the material breach has
continued without cure for a period of fifteen (15) days after the notice of
the material breach;
(ii) the failure of a condition set forth in ARTICLE IX to
be satisfied (and such condition is not waived in writing by Buyers) on the
Closing (unless the failure results primarily from Buyers themselves
breaching any representation, warranty, or covenant contained in this
Agreement);
(e) by Sellers if there is:
(i) a material breach of any representation or warranty set
forth in ARTICLE V or any covenant or agreement to be complied with or
performed by Buyers pursuant to the terms of this Agreement, Sellers have
notified Buyers of the material breach, and the material breach has continued
without cure for a period of fifteen (15) days after the notice of the
material breach; or
(ii) the failure of a condition set forth in ARTICLE VIII to
be satisfied (and such condition is not waived in writing by Sellers) on or
prior to the Closing (unless the failure results primarily from any Sellers
themselves breaching any representation, warranty, or covenant contained in
this Agreement).
Notwithstanding the above, a party shall not be allowed to exercise any
right of termination pursuant to this SECTION 11.1 if the event giving rise
to the termination right shall be due to the failure of such party seeking to
terminate this Agreement to perform or observe in any material respect any of
the covenants or agreements set forth to be performed observed by such party.
If this Agreement is terminated as permitted under this SECTION 11.1, such
termination shall be without liability of or to any party to this Agreement,
or any Representative or such party; PROVIDED, HOWEVER, if such termination
shall result from the willful failure of any party to fulfill a condition to
the performance of any other party or from a material and willful breach by
any party of this Agreement, then such party shall be fully liable for any
and all damages sustained or incurred by the other party or parties in
connection with such failure or breach.
11.2. ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by Buyers without the prior written
consent of Sellers or by any Seller without the prior written consent of
Buyers PROVIDED, HOWEVER, that Buyers shall have the right to assign its
rights under this Agreement, including the right to acquire the Assets and
the Distribution Business, to any of its Affiliates; PROVIDED, FURTHER,
HOWEVER, that any such assignment shall not relieve in any manner whatsoever
Buyers of any of their obligations hereunder. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, and no other person shall
have any right, benefit or obligation hereunder.
<PAGE>
11.3. NOTICES. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by either party to the
other shall be in writing and delivered by telecopy or other facsimile (with
receipt acknowledged), delivered personally or mailed by certified mail,
postage prepaid, return receipt requested (such mailed notice to be effective
on the date such receipt is acknowledged or refused), as follows:
If to any Seller, addressed to:
TRW Systems & Information
Technology Group
One Federal Systems Park Drive
Fairfax, VA 22033
Attn: Mark Silverman
Telephone: (703) 803-5033
Facsimile: (703) 803-5372
If to Buyers, addressed to:
[Name of Buyer]
c/o QAD Inc.
6450 Via Real
Carpinteria, CA 93013
Attn: A.J. Moyer
Telephone: (805) 684-6614
Fax : (805) 565-4210
With a copy to:
Nida & Maloney, P.C.
800 Anacapa Street
Santa Barbara, CA 93101
Attn: Joe Nida, Esq.
Telephone: (805) 568-1151
Fax: (805) 568-1955
or to such other place and with such other copies as either party may
designate as to itself by written notice to the other.
11.4. CHOICE OF LAW. This agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State of
California.
11.5. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement,
together with all exhibits and schedules hereto, constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No supplement, modification or
waiver of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
11.6. EXPENSES. Except as otherwise specified in this Agreement, each
party hereto shall pay its own legal, accounting, out-of-pocket and other
expenses incident to this Agreement and to any action taken by such party in
preparation for carrying this Agreement into effect.
11.7. INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
<PAGE>
respect, then to the maximum extent permitted by law, such provision or
provisions shall be judicially reformed consistent with the parties'
intentions so as to be valid, legal and enforceable to the maximum extent
possible and such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
11.8. TITLES. The titles, captions or headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.9. PUBLICITY. Unless otherwise required by law, no party shall
issue any press release or make any public statement regarding the
transactions contemplated hereby, without the prior approval of the other
party. The parties have agreed to the form of a joint press release
announcing the transaction contemplated hereby. If it is determined that any
press release or public statement regarding the transactions contemplated
hereby is required by law, the party required to make such disclosure will
(i) notify the other party five (5) days in advance of such disclosure, (ii)
coordinate with the other party regarding the content of such disclosure,
(iii) disclose only such information as is required by law to be disclosed
and (iv) request confidential treatment for such disclosure. Sellers and
Buyers shall consult with each other regarding any mutual press release which
the parties believe is necessary or desirable to issue with respect to the
transactions contemplated by this Agreement.
11.10. CONFIDENTIAL INFORMATION.
(a) Each party will use the other's Proprietary Information (as
defined below) solely in furtherance of the parties' mutual objectives under
this Agreement and not for any other purpose, and such information will be
kept confidential by the receiving party and will not be disclosed to any
other person or entity, provided that the receiving party may disclose such
information to its employees, but only on a "need-to-know" basis. Without
limiting the foregoing, the receiving party will, at a minimum, protect the
disclosing party's Proprietary Information in the same manner as it would
protect similar information of its own. A receiving party will not use a
disclosing party's Proprietary Information in any way detrimental to the
disclosing party. A receiving party will be responsible for any breach of
this Agreement by it or its employees.
(b) For purposes of this Agreement, "Proprietary Information"
means this Agreement and its terms, including the Purchase Price, and any
information which a disclosing party has disclosed or may disclose to a
receiving party relating to the disclosing party's business, including,
without limitation, know-how, formulas, processes, ideas, inventions (whether
or not patentable), schematics and other technical, business, financial,
customer and product development plans, but excluding information which (a)
is already in the receiving party's possession, but only if such information
is not subject to another confidentiality obligation to the disclosing
party, (b) becomes generally available to the public other than as a result
of disclosure by the receiving party or its employees, or (c) becomes
available to the receiving party on a non-confidential basis from a source
other than the disclosing party, but only if such source is not subject to a
confidentiality obligation to the disclosing party with respect thereto.
(c) Promptly upon termination of this Agreement, a party will
return to the other party all of its Proprietary Information, without
retaining any copies or extracts thereof, and will destroy all notes relating
thereto; provided, however, that each party may retain a legal archive copy
that is segregated from engineering files of the party and is used only to
monitor compliance with this Agreement.
11.11 JOINT AND SEVERAL OBLIGATIONS. The obligations of each Seller
and of each Buyer under this Agreement and each Ancillary Agreement shall be
joint and several.
11.12. SALE OF ASSETS ONLY. This Agreement constitutes a sale of
certain assets of Sellers only and is not a sale of any stock in any entity
comprising any Seller.
[Signatures on following page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers thereunto
duly authorized, in multiple originals, all as of the day and year first above
written.
SELLERS: BUYERS:
BDM LARGOTIM LIMITED, QAD ENGLAND, LTD.
a United Kingdom registered trading company a UK registered trading company
By:_______________________________ By:____________________________
Name: Name:
Title: Title:
LARGOTIM NEDERLAND BV, a Dutch QAD EUROPE,
B.V., a Dutch registered trading company
registered trading company
By:_______________________________ By:____________________________
Name: Name:
Title: Title:
BDM LARGOTIM US INC.,
a Delaware corporation
By:_______________________________
Name:
Title:
BDM LARGOTIM HOLDINGS LIMITED,
a UK registered trading company
By:_______________________________
Name:
Title:
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
For more information, contact:
Ina McGuinness David Claus
QAD Investor Relations QAD Public Relations
(805) 566-4445 (805) 566-6015
[email protected] [email protected]
QAD ACQUIRES EUROPEAN DISTRIBUTION BUSINESS FROM TRW
CARPINTERIA, Calif. - November 18, 1998: QAD Inc. (NASDAQ: QADI) today
announced it has acquired the UK and the Netherlands software distribution
operations and assets of TRW Integrated Supply Chain Solutions (formerly
known as BDM Largotim) for $20.7 million, comprised of $6.9 million in cash
and a two-year promissory note. QAD expects the acquisition to be accretive
to earnings.
This transaction allows QAD and TRW to capitalize more effectively on
their core competencies, and will strengthen their joint efforts as they move
forward. QAD will continue to focus on software development, sales and
services, while TRW will leverage its worldwide presence as a key systems
integrator for all QAD applications.
QAD's acquisition of the TRW distribution business brings more than 200
employees from QAD's largest distributor of MFG/PRO enterprise software in
Europe under the QAD name. These employees are trained in implementation,
support, education and training services. David Redwood, 55, who founded
Largotim in 1979, joins QAD as vice president of Europe, Middle East and
Africa.
The purchase also includes the acquisition of products complementary to
QAD applications including embedded Warehousing, Time Phased Availability
Check, Multi Level Pegging, Tool Management, Euro Accounting, Payroll and
Personnel. In addition, TRW granted QAD worldwide distribution rights for
TRW's PROCON, an MFG/PRO product configurator, and AIM, an MFG/PRO
non-embedded warehousing product.
QAD Chief Executive Officer Karl F. Lopker said, "Bringing the largest
of QAD's distributor operations into QAD represents a significant milestone
for us in terms of how we will address our European, Middle East and African
markets. We are pleased to have added to our skilled distribution staff and
strong management team as we further strengthen our global operations. At
the same time, we look forward to our enhanced relationship with TRW which
now will become a worldwide systems integrator for our entire suite of QAD
applications."
"TRW will become a global QAD systems integrator for MFG/PRO and On/Q
applications," stated David L. Patterson, vice president and general manager
of TRW ISCS. "This sale sharpens our focus on providing systems integration
services across the supply chain to mid-sized and large enterprises. We will
continue to expand our systems integration business on a global scale and we
look forward to continuing to work closely with QAD application
implementations."
Note to Investors
This press release contains certain forward-looking statements made
under the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. A number of risks and uncertainties could cause actual
results to differ materially from those in the forward-looking statements.
These risks include evolving demand for the company's software products and
products that operate with the company's products, the publication of
opinions by industry analysts about the company, its products and technology,
the entry of new competitors and their technological advances, delays in
localizing the company's products for new markets, delays in sales as a
result of
<PAGE>
lengthy sales cycles; changes in operating expenses, pricing, timing of new
product releases, the method of product distribution or product mix; and
general economic factors. In addition, revenue and earnings in the
enterprise resource planning (ERP) software industry are subject to
fluctuations and the growth rates recently experienced by the company do not
necessarily represent future operating results. For a more detailed
description of the risk factors associated with the company and the
enterprise resource planning industry, please refer to the company's Annual
Report or Form 10-K for the fiscal year ended January 31, 1998.
About TRW ISCS
TRW Integrated Supply Chain Solutions provides total supply chain
solutions from management consulting, to enterprise resource planning,
manufacturing execution systems, and logistics execution solutions. The ISCS
business spans the supply chain continuum, serving manufacturing,
distribution and transportation clients in a wide range of industry sectors
including: automotive, semiconductor manufacturing, consumer packaged goods,
pharmaceuticals and medical, electronics, aerospace and defense, third-party
logistics, grocery, retail, apparel, and wholesale distribution. For further
information, please visit http://www.trw.com/supplychain.
About QAD
Founded in 1979, QAD is a leading provider of ERP and extended supply
chain management software to multinational companies of all sizes, with
special focus on the mid-market. Available in 26 languages and able to
support multiple currencies, QAD software helps speed business processes for
more than 300,000 licensed users at more than 4,000 licensed sites in more
than 80 countries. Ideal for distributed operations, QAD's MFG/PRO software
is specifically designed for global manufacturers in the following
industries: automotive, consumer products, food and beverage, industrial,
electronics, and medical. QAD revenues for the fiscal year ended January 31,
1998, totaled $170 million.
For more information about QAD, telephone +1 805 684 6614, or visit the
QAD web site at http://www.qad.com. To receive any of QAD's press releases
via facsimile, contact 1 800 356-0747, or outside the U.S. contact +1 213
253-5647.
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QAD is a trademark and MFG/PRO-Registered Trademark- is a registered trademark
of QAD Inc. All other products or company names herein may be trademarks of
their respective owners.
