<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 of 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported)........April 12, 1995
EVANS & SUTHERLAND COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)
UTAH 0-8771 87-0278175
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
600 Komas Drive, Salt Lake City, Utah 84108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (801) 582-5847
Not Applicable
--------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2.
ACQUISITION OR DISPOSITION OF ASSETS
On April 12, 1995 Evans and Sutherland Computer Corporation (the
"COMPANY") completed the sale of its Design Software business to Parametric
Technology Corporation, a Massachusetts corporation, ("PTC"). The sale was
effected pursuant to an Asset Purchase Agreement dated March 1, 1995 by and
among the Company, PTC and PTC Acquisition Corporation, a subsidiary of PTC. The
aggregate purchase price of the sale was approximately $34,100,000 in cash.
The purchase price and other terms of the sale were arrived at through private
negotiations.
The Company provides the following Pro Forma Financial Information with
this filing:
- Consolidated Pro Forma Statement of Earnings for year ended December
30, 1994 (see attached Schedule 1)
- Consolidated Pro Forma Balance Sheet dated December 30, 1994 (see
attached Schedule 2)
- Notes to Consolidated Pro Forma Balance Sheet as of December 30, 1994
(see attached Schedule 3)
The unaudited consolidated pro forma statement of earnings of the Company
for the year ended December 30, 1994 (Schedule 1) is presented to show the
effects of the sale assuming the sale had occurred as of the beginning of the
year ended December 30, 1994. The unaudited consolidated pro forma balance
sheet of the Company as of December 30, 1994 (Schedule 2) gives effect to the
sale assuming the sale had occurred on that date.
The unaudited consolidated pro forma financial information does not purport
or represent what the Company's financial position or results of operations
would actually have been had the transaction in fact occurred on the dates
indicated above, nor does this information project the Company's financial
position or results of operations for any future date or period. In the opinion
of the Company's management, all adjustments necessary for a fair presentation
have been made.
The Exhibits furnished in connection with this report are as follows:
2.1 Asset Purchase Agreement dated March 1, 1995 by and between the
Company PTC and PTC's acquisition subsidiary (PTC Acquisition Corporation).
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Evans & Sutherland Computer Corporation
/s/ Gary E. Meredith
------------------------------------------
Gary E. Meredith
Vice President and Chief Financial Officer
------------------------------------------
Title
April 26, 1995
-------------------------------------------
Date
3
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SCHEDULE 1
EVANS & SUTHERLAND COMPUTER CORPORATION
CONSOLIDATED PRO FORMA STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 30, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
------------ ------------- -----------
<S> <C> <C> <C>
Net sales $ 113,090 $ (8,215) $104,875
Cost of sales 60,626 (697) 59,929
----------- ------------- -----------
Gross profit 52,464 (7,518) 44,946
Expenses:
Marketing, general, and administrative 32,874 (4,827) 28,047
Research and development 27,890 (1,865) 26,025
Restructuring charge 8,212 _ 8,212
----------- ------------- -----------
Total expenses 68,976 (6,692) 62,284
----------- ------------- -----------
Operating earnings (loss) (16,512) (826) (17,338)
----------- ------------- -----------
Other income (expense):
Interest income 2,710 - 2,710
Interest expense (1,902) - (1,902)
Gain on sale of marketable securities 4,009 - 4,009
Miscellaneous 311 - 311
----------- ------------- -----------
Earnings before income taxes and extraordinary gain (11,384) (826) (12,210)
Income tax expense (benefit) (5,825) (670) (6,495)
----------- ------------- -----------
Earnings (loss) before extraordinary gain (5,559) (156) (5,715)
Extraordinary gain from repurchase of convertible debentures 1,859 - 1,859
----------- ------------- -----------
Net earnings $ (3,700) $ (156) $ (3,856)
=========== ============= ===========
Earnings (loss) per common and common equivalent share:
Before extraordinary gain $ (0.65) $ 0.06 $ (0.71)
Extraordinary gain from repurchase of convertible debentures 0.22 - 0.22
----------- ------------- -----------
Total earnings per share $ (0.43) $ 0.06 $ (0.49)
=========== ============= ===========
Weighted average number of
shares used for per share
earnings computation: 8,563 8,563 8,563
</TABLE>
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SCHEDULE 2
EVANS & SUTHERLAND COMPUTER CORPORATION
CONSOLIDATED PRO FORMA BALANCE SHEET
DECEMBER 30, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 51,810 $ 34,100 (note 1) $ 85,910
Accounts receivable, less allowance for
doubtful accounts of $144 in historical
and pro forma 23,649 (1,724) 21,925
Inventories 26,192 (96) 26,096
Other current assets 26,535 (32) 26,503
---------- ----------- ---------
Total current assets 128,186 32,248 160,434
Property, plant, and equipment, at cost 104,466 (2,925) 101,541
Less accumulated depreciation and amortization 62,802 (1,604) 61,198
---------- ----------- ---------
Net property, plant, and equipment 41,664 (1,321) 40,343
Long-term investments 7,312 - 7,312
Other assets, net 1,578 - 1,578
---------- ----------- ---------
$178,740 $ 30,927 $209,667
========== =========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to banks $ 1,817 $ - $ 1,817
Accounts payable and accrued expenses 17,957 (297) 17,660
Customer deposits 9,182 (180) 9,002
Income taxes payable - 14,000 (note 1) 14,000
---------- ----------- ---------
Total current liabilities 28,956 13,523 42,479
Convertible subordinated debentures 20,375 - 20,375
Deferred income taxes 2,291 - 2,291
Stockholders' equity:
Common stock, $.20 par value; authorized
30,000,000 shares; issued and outstanding
8,552,106 shares at Dec. 30, 1994 1,710 - 1,710
Additional paid-in capital 2,850 - 2,850
Retained earnings 119,251 17,404 136,655
Net unrealized gain on marketable
equity securities available-for-sale 2,847 - 2,847
Cumulative translation adjustment 460 - 460
---------- ----------- ---------
Total stockholders' equity 127,118 17,404 144,522
---------- ----------- ---------
$178,740 $ 30,927 $209,667
========== =========== =========
</TABLE>
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SCHEDULE 3
EVANS & SUTHERLAND COMPUTER CORPORATION
NOTES TO CONSOLIDATED PRO FORMA BALANCE SHEET
1) Cash and short-term investments and Income taxes payable reflect as
previously discussed under ITEM 2, the receipt of cash of approximately
$34,100,000 and the expected income tax effect of the disposition of assets.
6
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
<PAGE>
EXECUTION COPY
ASSET PURCHASE AGREEMENT
dated as of
March 1, 1995
by and among
PARAMETRIC TECHNOLOGY CORPORATION,
PTC ACQUISITION CORPORATION
and
EVANS & SUTHERLAND
COMPUTER CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.................................................
ARTICLE II
PURCHASE AND SALE
SECTION 2.01 Purchase and Sale...........................................
2.02 Excluded Assets.............................................
2.03 Assumption of Liabilities...................................
2.04 Excluded Liabilities........................................
2.05 Assignment of Contracts and Rights..........................
2.06 Purchase Price..............................................
2.07 Closing.....................................................
2.08 Purchase Price Adjustment...................................
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER
SECTION 3.01 Corporate Existence and Power...............................
3.02 Corporate Authorization.....................................
3.03 Governmental Authorization..................................
3.04 Non-Contravention...........................................
3.05 Required Consents...........................................
3.06 Financial Statements........................................
3.07 Absence of Certain Changes..................................
3.08 Properties..................................................
3.09 Sufficiency of Purchased Assets.............................
3.10 Title to Purchased Assets...................................
3.11 No Undisclosed Material Liabilities.........................
3.12 Litigation..................................................
3.13 Material Contracts..........................................
3.14 Licenses and Permits........................................
3.15 Insurance...................................................
3.16 Compliance with Laws........................................
3.17 Proprietary Right...........................................
3.18 Employees...................................................
3.19 Warranty or Other Claims....................................
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3.20 Finders' Fees...............................................
3.21 Environmental Compliance....................................
3.22 Interested Party Transactions...............................
3.23 Accounts Receivable.........................................
3.24 Representations.............................................
3.25 Subsidiaries................................................
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
SECTION 4.01 Organization and Existence..................................
4.02 Corporate Authorization.....................................
4.03 Governmental Authorization..................................
4.04 Non-Contravention...........................................
4.05 Finders' Fees...............................................
4.06 Litigation..................................................
4.07 Required Consents...........................................
4.08 Representations.............................................
ARTICLE V
COVENANTS OF SELLER
SECTION 5.01 Conduct of the Business.....................................
5.02 Access to Information.......................................
5.03 Notices of Certain Events...................................
5.04 Noncompetition..............................................
5.05 Confidentiality.............................................
5.06 Trademarks; Trade names.....................................
5.07 No Negotiation with Third Parties...........................
5.08 Continuation of Certain Services and
MIS Support................................................
5.09 Transfer of Purchased Assets by Subsidiaries................
5.10 Seller's Guaranty of Subsidiaries' Performance..............
5.11 Certain Consents............................................
ARTICLE VI
COVENANTS OF BUYER
SECTION 6.01 Confidentiality.............................................
6.02 Noncompetition..............................................
6.03 Hired Employees' Vacation Pay...............................
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ARTICLE VII
MUTUAL COVENANTS
SECTION 7.01 Best Efforts; Further Assurances...........................
7.02 Certain Filings............................................
7.03 Public Announcements.......................................
ARTICLE VIII
TAX MATTERS
SECTION 8.01 Tax Definitions............................................
8.02 Tax Matters................................................
8.03 Tax Cooperation; Allocation of Taxes.......................
ARTICLE IX
EMPLOYEE BENEFITS
SECTION 9.01 Employee Benefits Definitions..............................
9.02 ERISA Representations......................................
9.03 Employees and Consultants..................................
9.04 Seller's Employee Benefit Plans............................
9.05 No Third Party Beneficiaries...............................
ARTICLE X
CONDITIONS TO CLOSING
SECTION 10.01 Conditions to the Obligations of Each Party................
10.02 Conditions to Obligation of Buyer..........................
10.03 Conditions to Obligations of Seller........................
ARTICLE XI
SURVIVAL INDEMNIFICATION
SECTION 11.01 Survival...................................................
11.02 Indemnification............................................
11.03 Limitations on Liabilities.................................
11.04 Procedures; No Waiver......................................
ARTICLE XII
TERMINATION
SECTION 12.01 Grounds for Termination....................................
12.02 Effect of Termination......................................
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.01 Notices....................................................
13.02 Amendments; No Waivers.....................................
13.03 Expenses...................................................
13.04 Successors and Assigns.....................................
13.05 Governing Law..............................................
13.06 Counterparts; Effectiveness................................
13.07 Entire Agreement...........................................
13.08 Captions...................................................
13.09 Legal Proceedings..........................................
13.10 No Partnership or Joint Venture............................
Exhibit A -- Purchased Assets
Exhibit B -- Patent Assignment and Grant-Back License Agreement
Exhibit C -- Patent License Agreement
Exhibit D -- Form of Assumption Agreement
Exhibit E -- Form of Bill of Sale
Schedule I Hired Employees
iv
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ASSET PURCHASE AGREEMENT
AGREEMENT dated as of March 1, 1995 by and among Parametric Technology
Corporation ("Parent"), a Massachusetts corporation, and PTC Acquisition
Corporation ("Buyer"), a Massachusetts corporation wholly-owned by Parent, and
Evans & Sutherland Computer Corporation, a Utah corporation ("Seller").
WITNESSETH:
WHEREAS, Seller is engaged through its "Design Software Division" in the
development, design, manufacture, sale, service, support, marketing and update
and enhancement of computer graphics design software for the CAD/CAM systems
market (collectively, the "Business");
WHEREAS, Buyer desires to acquire substantially all of the assets of the
Business from Seller, and Seller desires to sell such assets to Buyer, upon the
terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the Parties agree as
following:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
(a) The following terms, as used herein, have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person.
"Ancillary Agreements" means the Assignment and Assumption Agreement, Bill
of Sale, Patent Assignment and Grant-Back License Agreement in substantially the
form attached as Exhibit B hereto, Patent License Agreement in substantially the
form attached as Exhibit C hereto, Transition and Services Agreement and Lease.
"Assigned Contracts" means the contracts and agreements relating to the
Business which are listed or described on Exhibit A hereto.
"Balance Sheet" means the unaudited balance sheet of the Business as of
February 3, 1995 found in Schedule 3.06(a) of the Disclosure Schedule.
"Balance Sheet Date" means February 3, 1995.
"Business", as defined above, shall mean and include the Business as
conducted as a division of Seller and its Subsidiaries prior to the Closing.
<PAGE>
"Buyer" means PTC Acquisition Corporation; and as used herein such term
shall be deemed to include jointly and severally with PTC Acquisition
Corporation, unless expressly provided to the contrary, the Parent; except that
Article IV shall make explicit reference to both Buyer and Parent.
"Closing Date" means the date of the Closing.
""HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Key Customers" means the customers of Seller whose contracts with Seller
are identified in Item 4 of Schedule 3.05 of the Disclosure Schedule and Items
2, 10, 11, 12, 18, 20, 23, 29, 33, 34 and 35 of Schedule 3.17(e) of the
Disclosure Schedule.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest (other than purchase money security interests arising
in the ordinary course of business), restriction or encumbrances of any kind in
respect of such asset.
"Material Adverse Effect" means a material adverse affect on the business,
assets, condition (financial or otherwise) or results of operations of the
Business.
"Parties" means Parent, Buyer and Seller; "Party" means Parent, Buyer or
Seller.
"Person" means an individual, corporation, partnership, association, trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
"Proprietary Rights" means all proprietary rights listed on Schedule 3.17
of the Disclosure Schedule or Exhibit A hereto.
"Retained Technology" means all Proprietary Rights owned or licensed by
Seller or any Affiliate of Seller (and all future changes in respect thereof),
or which they or any of them have any right to use, that are used in the
Business but are not included among the Purchased Assets.
"Seller" means Evans & Sutherland Computer Corporation.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Accounting Referee 2.08
Apportioned Obligations 8.08
Assumed Liabilities 2.03
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Base Net Worth 2.08
Basket 11.03
Business Preamble
Buyer Health Plan 9.04
Closing 2.07
Closing Balance Sheet 2.08
Closing Net Worth 2.08
Code 8.01
Contract Rights 2.01
Conveyance Documents 2.07
Disclosure Schedule Article III
Employee Plans 9.01
Environmental Laws 3.21
Environmental Liabilities 3.21
ERISA 9.01
ERISA Affiliate 9.01
Exchange 6.04
Excluded Liabilities 2.04
Final Net Worth 2.08
GAAP 3.06
Hazardous Substance 3.21
Hired Consultant 9.03
Hired Employee 9.03
Indemnified Party 11.04
Indemnifying Party 11.04
Lease 5.08
Loss 11.02
Multiemployee Plan 9.01
Non-Covered Employees 9.04
Permits 3.14
Post-Closing Tax Period 8.01
Pre-Closing Tax Period 8.01
Purchased Assets 2.01
Purchase Price 2.06
Release 3.21
Required Consent 3.05
Seller Tradenames 5.06
Subsidiaries 3.25
Subsidiary Agreements 5.10
Tax 8.01
Vacation Payout Amount 2.03
ARTICLE II
PURCHASE AND SALE
2.01. Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, Buyer agrees to purchase from Seller and Seller agrees to sell,
transfer, assign and
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deliver, or cause to be sold, transferred, assigned and delivered, to Buyer at
Closing, free and clear of all Liens, except to the extent such Lien constitutes
an Assumed Liability, all of the assets, properties and business, other than the
Excluded Assets, of every kind and description, wherever located, real, personal
or mixed, tangible or intangible, owned, used or held for use in the conduct of
the Business by Seller or any Affiliate of Seller as the same shall exist on the
Closing Date (the "Purchased Assets") as specified and listed in Exhibit A
hereto, and including, without limitation the following assets:
(i) all rights under all Assigned Contracts (collectively, the
"Contract Rights");
(ii) all rights, claims, credits, causes of action or rights of set-
off against third parties relating to the Purchased Assets or the Business,
including, without limitation, unliquidated rights under any manufacturers'
and vendors' warranties;
(iii) the obligations that Seller is required to perform for customers
with respect to the customer deposits deducted from the Purchase Price
pursuant to section 2.06(a); and
(iv) all goodwill associated with the Business and the Purchased
Assets.
2.02. Excluded Assets. Buyer expressly understands and agrees that the
following shall be excluded from the Purchased Assets: (a) all of Seller's
contracts that are not Assigned Contracts, (b) work-in-process dedicated solely
to such contracts, (c) the Retained Technology, (d) Seller's accounting software
and support, (e) a telephone system and (f) Seller's servers connected to the
Internet (the "Excluded Assets"); provided that Buyer shall have received a
license to use such Retained Technology pursuant to the Patent License Agreement
and the right to use the Excluded Assets described in (d), (e) and (f) pursuant
to the transition and services agreement described in Section 5.09.
2.03. Assumption of Liabilities. Except as otherwise provided in Section
2.04, and upon the terms and subject to the conditions of this Agreement, Buyer
agrees, effective at the time of Closing, to assume the following liabilities of
the Business (the "Assumed Liabilities"):
(i) all liabilities accrued on the Balance Sheet, but only to the
extent so accrued;
(ii) all liabilities arising out of or relating primarily to the
Business, and incurred in the ordinary course of Business since the Balance
Sheet Date, but only to the extent listed on the Closing Balance Sheet or
Section 2.03 of the Disclosure Schedule;
(iii) all liabilities and obligations of Seller arising under the
Assigned Contracts (other than liabilities or obligations attributable to
any failure by Seller to comply with the terms thereof);
(iv) all warranty claims, expenses or obligations, whether existing,
contingent or inchoate, of Seller in respect of products sold or services
rendered by the Business through the Closing Date, but only to the extent
of the reserve therefore shown on the Balance Sheet;
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(v) Seller's obligation to provide accrued but unused vacation time as
of the Closing Date to the Hired Employees, the cash value of which (the
"Vacation Payout Amount") is to be certified by Seller in writing on the
Closing Date, and is payable by Buyer within 30 days of the Closing Date;
(vi) Seller's obligation to provide accumulated sick leave of the
Hired Employees, but only a maximum of ten (10) days with respect to each
Hired Employee; and
(vii) Seller's obligation to provide severance pay with respect to
employees not listed on Schedule I.
2.04. Excluded Liabilities. Notwithstanding any provision in this Agreement
or any other writing to the contrary, Buyer is assuming only the Assumed
Liabilities and is not assuming any other liability or obligation of Seller, its
Subsidiaries or any Affiliate of Seller or its Subsidiaries (or any predecessor
owner of all or part of its business and assets) of whatever nature whether
presently in existence or arising or asserted hereafter. All such other
liabilities and obligations shall be retained by and remain obligations and
liabilities of Seller and its Subsidiaries (all such liabilities and obligations
not being assumed being herein referred to as the "Excluded Liabilities").
Without limiting the foregoing, all of the following shall be Excluded
Liabilities for the purposes of this Agreement:
(i) except to the extent of the reserve therefor on the Balance Sheet,
any obligation or liability for Tax arising from or with respect to the
Purchased Assets or the operation of the Business which is incurred in or
attributable to any Pre-Closing Tax Period;
(ii) except to the extent provided in Article IX and Section 2.03(v),
any liabilities or obligations relating to employee benefits or
compensation arrangements existing as of the end of the day on the day
preceding the Closing Date, including, without limitation, (A) any
liabilities or obligations under any of Seller's employee benefit
agreements, plans or other arrangements listed on Schedule 3.18(b) of the
Disclosure Schedule and (B) any obligations arising out of Seller's
termination of the employment or consultancy of any Hired Employee or Hired
Consultant;
(iii) any Environmental Liability;
(iv) any liability or obligation relating to an Excluded Asset; and
(v) except as otherwise provided in Section 2.03, any liability or
obligation relating to product returns or allowances, any liability or
obligation with respect to any and all products sold by Seller before the
Closing, and any liability or obligation relating to damages claimed and
established by customers of the Business arising out of or based upon
actions or omissions of Seller prior to the Closing.
2.05. Assignment of Contracts and Rights. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any Purchased Asset or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment thereof, without
consent of a third party thereto, would constitute a
5
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breach or other contravention thereof or in any way adversely affect the rights
of Buyer or Seller thereunder. Seller and Buyer will use their best efforts (but
without any payment of money by Seller or Buyer) to obtain the consent of the
other Parties to any such Purchased Asset or claim or right or any benefit
arising thereunder for the assignment thereof to Buyer as Buyer may request. If
such consent is not obtained, or if an attempted assignment thereof would be
ineffective or would adversely affect the rights of Seller thereunder so that
Buyer would not in fact receive all such rights. Seller and Buyer will cooperate
in a mutually agreeable arrangement under which Buyer would obtain the benefits
and assume the obligations thereunder in accordance with this Agreement,
including subcontracting, sublicensing, or subleasing to Buyer, or under which
Seller would enforce for the benefit of Buyer, with Buyer assuming Seller's
obligations, any and all rights of Seller against a third party thereto. Seller
will promptly pay to Buyer when received all monies received by Seller under any
Purchased Asset or any claim or right or any benefit arising thereunder, except
to the extent the same represents an Excluded Asset.
2.06. Purchase Price.
(a) The purchase price for the Purchased Assets (the "Purchase Price") is
(i) $34,500,000 in cash, less (A) fifty percent (50%) of the Vacation Payout
Amount, (B) the aggregate amount of the customer deposits reflected on the
Closing Balance Sheet, and (C) the out-of-pocket fees and expenses incurred by
Buyer, including without limitation legal fees and expenses up to a maximum of
$5,000, in connection with the Subsidiary Agreements, with the Purchase price
being subject to adjustment as provided in Section 2.08, and (ii) the assumption
of the Assumed Liabilities. The Purchase Price shall be paid as provided in
Section 2.07.
2.07. Closing. The closing (the "Closing") of the purchase and sale of the
Purchased Assets and the assumption of the Assumed Liabilities hereunder shall
take place at the offices of Testa, Hurwitz & Thibeault in Boston, Massachusetts
as soon as possible, but in no event later than 5 business days after
satisfaction of the conditions set forth in Article X, or at such other time or
place as Buyer and Seller may agree. At the Closing,
(a) Buyer shall pay the Purchase Price by a wire transfer of same day funds
to an account designated by Seller.
(b) Seller and Buyer shall enter into an Assumption Agreement substantially
in the form attached hereto as Exhibit D and a Bill of Sale substantially in the
form attached hereto as Exhibit E and Seller shall deliver to Buyer such deeds,
endorsements, consents, assignments and other good and sufficient instruments of
conveyance and assignment (the "Conveyance Documents") as the Parties and their
respective counsel shall deem reasonably necessary or appropriate to vest in
Buyer all right, title and interest in, to and under the Purchased Assets.
(c) Seller and Buyer shall enter into the Ancillary Agreements to be
entered into at Closing.
(d) Without prejudice to Buyer's rights under Section 10.02, Seller shall
deliver to Buyer revisions to the Disclosure Schedule updating the information
shown, thereon to the Closing Date.
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(e) Seller and Buyer shall also execute and deliver all such instruments,
documents and certificates as may be reasonably requested by the other Party
that are necessary, appropriate or desirable for the consummation at the Closing
of the transactions contemplated by this Agreement.
2.08. Purchase Price Adjustment.
(a) Subsidiary Agreements. The Purchase Price will be reduced by the amount
of the aggregate purchase price set forth in the Subsidiary Agreements.
(b) General. As an adjustment to the Purchase Price, Seller agrees to pay
Buyer the amount, if any, by which Base Net Worth exceeds Final Net Worth and
Buyer agrees to pay Seller the amount, if any, by which Final Net Worth exceeds
Base Net Worth; provided that no such amount shall be payable unless the
difference between Base Net Worth and Final Net Worth is greater than $200,000.
(c) Definitions. The following terms, as used herein, have the following
meanings:
"Base Net Worth" means $1,217,694, which amount represents the accounts
receivable on the Balance Sheet less the accounts payable on the Balance Sheet.
"Closing Balance Sheet" means a balance sheet for the Business as of the
Closing Date that (x) fairly presents the financial position of the Business as
at the close of business on the date immediately preceding the Closing Date on a
basis consistent with the presentation in the Balance Sheet, (y) includes line
items substantially consistent with those used in the preparation of the Balance
Sheet and (z) is prepared in accordance with the Seller's accounting convention
for intra-company operations, consistently applied, and with respect to accounts
receivable and payables, in accordance with GAAP as if the Business were a
stand-alone business. In the event of a conflict between the accounting policies
and procedures used in the preparation of the Balance Sheet and GAAP, GAAP shall
prevail.
"Closing Net Worth" means the accounts receivable of the Business as of the
close of business on the Closing Date determined in accordance with GAAP applied
on a basis consistent with those used in the preparation of the Closing Balance
Sheet, less the accounts payable of the Business as of the close of business on
the Closing Date determined in accordance with GAAP applied on a basis
consistent with those used in the preparation of the Closing Balance Sheet.
"Final Net Worth" means Closing Net Worth (i) as shown in Seller's
calculation delivered pursuant to Section 2.08(d) if no notice of disagreement
with respect thereto is delivered by Buyer pursuant to Section 2.08(e) or (ii)
if such a notice of disagreement is delivered, as resolved by the Parties
pursuant to Section 2.08(f).
(d) Preparation of Closing Balance Sheet. As promptly as practicable after
the Closing Date, Seller will cause the Closing Balance Sheet to be prepared. As
promptly as practicable, but no later than 45 days after the Closing Date,
Seller will cause the Closing Balance Sheet to be delivered to Buyer.
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(e) Disagreement by Buyer. If Buyer disagrees with Seller's calculation of
Closing Net Worth, Buyer may, within 20 days after delivery of the documents
referred to in Section 2.08(d), deliver a notice to Seller disagreeing with such
calculation and setting forth Buyer's calculation of such amount. Any such
notice of disagreement shall specify those items or amounts as to which Buyer
disagrees, and Buyer shall be deemed to have agreed with all other items and
amounts contained in the Closing Balance Sheet and the calculation of Closing
Net Worth delivered by Seller pursuant to Section 2.08(d). Seller shall provide
Buyer reasonable access to Seller's working papers relating to the Closing Net
Worth calculation.
(f) Dispute Resolution. If a notice of disagreement shall have been
delivered by Buyer pursuant to Section 2.08(e), the Parties shall, during the 20
days following such delivery, use their best efforts to reach agreement on the
disputed items or amounts in order to determine the amount of Final Net Worth.
If the Parties do not reach agreement within that period, they shall attempt to
reach agreement on the matter in accordance with the provisions of Section
13.09. If the Parties do not reach agreement pursuant to Section 13.09, they
shall promptly thereafter cause a firm of independent nationally recognized
accountants mutually acceptable to Buyer and Seller (the "Accounting Referree")
promptly to review this Agreement and the disputed items or amounts for the
purpose of calculating Final Net Worth as to which Buyer has disagreed. The
Accounting Referee shall deliver to Parent and Seller, as promptly as
practicable, a written report setting forth such calculation. Such report shall
be final and binding upon the Parties. The cost of such review and report shall
be borne (i) by Parent if Seller's calculation of Closing Net Worth is closer to
Final Net Worth than Parent's calculation thereof, (ii) by Seller if the reverse
is true, and (iii) otherwise equally by Parent and Seller.
(g) Cooperation. The Parties agree that they will, and agree to cause their
respective independent accountants to, cooperate and assist in the preparation
of the Closing Balance Sheet and the calculation of Closing Net Worth referred
to in this Section 2.08, including, without limitation the making available to
the extent necessary of books, records, work papers and personnel.
(h) Time of Payment. Any payment pursuant to this Section 2.08 shall be
made at a mutually convenient time and place (i) within 30 days after Seller's
delivery of the documents referred to in Section 2.08(d) if no notice of
disagreement with respect to Closing Net Worth is delivered by Seller or (ii) if
a notice of disagreement with respect to Closing Net Worth is so delivered then
within 10 days after the earlier of (a) agreement of Parent and Seller pursuant
to Section 2.08(d) or (f) with respect to Closing Net Worth, or (B) delivery of
the calculation of Closing Net Worth by the Accounting Referee pursuant to
Section 2.08(f).
(i) Method of Payment. Any payment pursuant to this Section 2.08 shall be
made by delivery by Seller, or Buyer, as the case may be, of a wire transfer of
same day funds to Buyer or Seller, as the case may be, or by causing such
payments to be credited to such account of Seller or Buyer as may be designated
by Seller or Buyer. The amount of any payment to be made pursuant to this
Section 2.08 shall bear interest from and including the Closing Date to but
excluding the date of payment at a rate per annum equal to the rate publicly
announced from time to time by the First National Bank of Boston as its Base
Rate in Boston, Massachusetts in effect from time to time during the period from
the Closing Date to the date of payment. Such interest shall be payable at the
same time as the payment to which it relates
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and shall be calculated daily on the basis of a year of 365 days and the actual
number of days for which due.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that, except as set forth on
the Disclosure Schedule attached hereto (the "Disclosure Schedule"):
3.01. Corporate Existence and Power. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on the
Business as now conducted. Seller is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities make such
qualification necessary.
3.02. Corporate Authorization. The execution, delivery and performance by
Seller of this Agreement and each of the Ancillary Agreements, and the
consummation by Seller of the transactions contemplated hereby and thereby are
within Seller's corporate powers and have been duly authorized by all necessary
corporate action on the part of Seller. This Agreement and each of the Ancillary
Agreements constitute valid and binding agreements of Seller, enforceable
against Seller in accordance with their respective terms except to the extent
that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and general principles of equity, regardless of
whether considered in a proceeding in equity or at law (the "Bankruptcy
Exception").
3.03. Governmental Authorization. The execution, delivery and performance
by Seller of this Agreement and each of the Ancillary Agreements do not require
any action by or in respect of, or filing with, any governmental body, agency,
official or authority other than compliance with any applicable requirements of
the HSR Act.
3.04. Non-Contravention. The execution, delivery and performance by Seller
of this Agreement and each of the Ancillary Agreements do not and will not (i)
contravene or conflict with the corporate charter or bylaws of Seller, (ii)
assuming compliance with the HSR Act, contravene or conflict with or constitute
a violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Seller, the Purchased Assets or the
Business, (iii) assuming the receipt of all Required Consents, constitute a
default under or give rise to any right of termination, cancellation or
acceleration of any right or obligation of Seller or to a loss of any benefit
relating to any of the Purchased Assets or the Business to which Seller is
entitled under any provision of any agreement, contract or other instrument
binding upon Seller or by which any of the Purchased Assets is or may be bound
or any Permit or (iv) result in the creation or imposition of any Lien on any
Purchased Asset.
3.05. Required Consents. To Seller's best knowledge, Schedule 3.05 of the
Disclosure Schedule sets forth each agreement, contract or other instrument
binding upon Seller or any Permit, in each case relating to the Business and
requiring a consent as a result of the
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execution, delivery and performance of this Agreement and the Ancillary
Agreements or the consummation of the transactions contemplated hereby and
thereby (each such consent, a "Required Consent").
3.06. Financial Statements. The Balance Sheet set forth in Schedule 3.06(a)
of the Disclosure Schedule fairly presents the financial position of the
Business (including the Subsidiaries) as of the Balance Sheet Date. Such Balance
Sheet was prepared in accordance with the Seller's accounting convention for
intra-company operations, consistently applied, and with respect to receivables,
payables and accruals, the Balance Sheet is accounted for in accordance with
United States generally accepted accounting principles ("GAAP") as if the
Business were a stand-alone business. During the twelve-month periods ended
December 31, 1993 and December 31, 1994, the Business had revenues of $6,000,056
and $8,215,000, respectively, which revenues have been determined in accordance
with the Seller's accounting convention for intra-company operations,
consistently applied, and with respect to accounts receivable and payables, in
accordance with GAAP as if the Business were a stand-alone business. Set forth
in Schedule 3.06(b) of the Disclosure Schedule is a list of the customers of the
Business and the amount of revenues attributable to such customers during such
1993 and 1994 periods.
3.07. Absence of Certain Changes. Since the Balance Sheet Date, Seller has
conducted the Business in the ordinary course consistent with past practices,
and there has not been:
(a) any material adverse change with respect to the Purchased Assets or the
Business or any event, occurrence, development or state of circumstances or
facts that could reasonably be expected to result in a material adverse change,
other than any such change that results from any current customer of Seller
limiting or terminating its purchases from Seller as a result of the
transactions contemplated herein;
(b) any incurrence, assumption or guarantee by Seller of any indebtedness
for borrowed money with respect to the Business, except for purchase money
security interests incurred in the ordinary course of business and involving
property or assets with an aggregate value of no more than $50,000;
(c) any creation or other incurrence of any Lien on any Purchased Asset,
except for purchase money security interests incurred in the ordinary course of
business and involving property or assets with an aggregate value of no more
than $50,000;
(d) any damage, destruction or other casualty loss (whether or not covered
by insurance), with an aggregate value in excess of $50,000, affecting the
Business or any Purchased Asset;
(e) except with Parent's prior written consent, any material transaction,
contract, agreement or other instrument entered into, or commitment made, by
Seller relating to the Business or any Purchased Asset (including the
acquisition or disposition of any assets other than sales of inventory in the
normal course of business) or any relinquishment by Seller of any material
contract or other material right;
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(f) any change in any method of accounting or accounting practice by Seller
with respect to the Business;
(g) any (i) grant of any severance or termination pay to any Hired
Employee, (ii) entering into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
Hired Employee, (iii) increase in benefits payable under existing severance or
termination pay policies or employment agreements with respect to any Hired
Employee or (iv) increase in compensation, bonus or other benefits payable to
any Hired Employee;
(h) any labor dispute or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Business, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees; or
(i) any adoption or amendment of any employee benefit plan which changes
any benefit accruing or provided to any of the Hired Employees.
3.08. Properties.
(a) Schedule 3.08(a) of the Disclosure Schedule describes in reasonable
detail all personal property with a value of $1,000 or more used in the Business
and included in the Purchased Assets, including but not limited to machinery,
equipment, furniture, vehicles, and other trade fixtures and fixed assets, and
any Liens thereon, specifying in the case of leases or subleases which are
listed on Schedule 3.08(b) of the Disclosure Schedule, the name of the lessor or
sublessor, the lease term and basic annual rent.
(b) (i) The Seller has good, valid and indefeasible title to, all
Purchased Assets (whether real, personal, tangible or intangible) reflected
on the Balance Sheet or acquired after the Balance Sheet Date.
(ii) All leases of personal property used in the Business are in good
standing and are valid, binding and enforceable in accordance with their
respective terms, and there does not exist under any such lease of personal
property any default by Seller or, to Seller's knowledge, by any other
Party, or any event that, with notice or lapse of time or both, would
constitute a default by Seller or, to Seller's knowledge, any other Party.
(iii) The machinery and equipment included in the Purchased Assets are
in good operating condition and repair (reasonable wear and tear excepted)
and, to the extent Seller is responsible for the maintenance thereof, have
been reasonably maintained consistent with standards generally followed in
the industry (giving due account to the age and length of use of same,
ordinary wear and tear excepted).
(c) No Purchased Asset is subject to any Lien or to any ownership or
economic interest on any other Person.
(d) There are no facts known to Seller which would have a Material Adverse
Effect.
3.09. Sufficiency of Purchased Assets. The Purchased Assets and the rights
granted to Buyer in the Retained Technology constitute, and on the Closing Date
will constitute, all of
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the assets or property used or held for use in the Business and required for the
full and uninterrupted operation of the Business as currently conducted, other
than Excluded Assets.
3.10. Title to Purchased Assets. Upon consummation of the transactions
contemplated hereby, Buyer will have acquired good and valid title in and to, or
a valid leasehold interest in, each of the Purchased Assets, free and clear of
all Liens and free and clear of any interest of any third parties.
3.11. No Undisclosed Liabilities. There are no liabilities of the Business
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in such a
liability, other than:
(i) liabilities disclosed or provided for in accordance with the
Seller's accounting convention for intra-company operations, consistently
applied, and with respect to accounts receivable and payables, in accordance
with GAAP as if the Business were a stand-alone business in the Balance
Sheet;
(ii) liabilities incurred in the ordinary course of business consistent
with past practice since the Balance Sheet Date, which in the aggregate do
not exceed $50,000; and
(iii) liabilities disclosed in the Disclosure Schedule.
3.12. Litigation. There is no action, suit, investigation or proceeding
pending or, to the knowledge of Seller, threatened against the Business or any
Purchased Asset before any court or arbitrator or any governmental body, agency
or official, or any action, suit, investigation or proceeding that in any manner
challenges or seeks to prevent, enjoin, alter or delay the transactions
contemplated hereby.
3.13. Material Contracts.
(a) With respect to the Business, Seller is not a Party to or subject to:
(i) any lease or related series of leases providing for annual rental
of $10,000 or more in the aggregate;
(ii) any contract for the purchase of materials, supplies, goods,
services, equipment or other assets providing for payments by Seller of, or
pursuant to which the Seller has incurred in the aggregate, $10,000 or more;
(iii) any sales, distribution or other similar agreement providing for
the sale by Seller of materials, supplies, goods, services, equipment or
other assets that provides for payments to Seller of, or pursuant to which
Seller and its Subsidiaries received in the aggregate, $10,000 or more;
(iv) any partnership, joint venture or other similar contract
arrangement or agreement;
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(v) any contract relating to indebtedness for borrowed money or the
deferred purchase price of property (whether incurred, assumed, guaranteed
or secured by an asset), except contracts relating to indebtedness incurred
in the ordinary course of business in an amount not exceeding $10,000;
(vi) any license agreement or franchise agreement, other than software
product licenses in the ordinary course of business described in Section
3.17(e);
(vii) any agency, dealer, distributor, sales or marketing
representative or other similar agreement;
(viii) any agreement, contract or commitment that limits the freedom of
the Business to compete in any line of business or with any Person or in any
area or to own, operate, sell, transfer, pledge or otherwise dispose of or
encumber any Purchased Asset or that would so limit or purport to limit the
freedom of the Buyer after the Closing Date; or
(ix) any other agreement, contract or commitment not made in the
ordinary course of business.
(b) Each Assigned Contract is a valid and binding agreement of Seller and
is in full force and effect, and Seller nor, to Seller's knowledge, any other
Party thereto, is in default under the terms of any such Contract, nor has any
event or circumstance occurred that, with notice or lapse of time or both, would
constitute any event of default thereunder with respect to Seller or, to
Seller's knowledge, any other Party thereto.
3.14. Licenses and Permits. Schedule 3.14 of the Disclosure Schedule
correctly describes each license, franchise, permit or other similar
authorization required by any federal, state or local authority or governmental
agency to be maintained in connection with the Business, together with the name
of the government agency or entity issuing such license or permit (the
"Permits"). Such Permits are valid and in full force and effect and are
transferable by Seller and will not be terminated or impaired or become
terminable as a result of the transactions contemplated hereby. Upon
consummation of such transactions, Buyer will have all right, title and interest
in all the Permits.
3.15. Insurance. Seller has furnished to Buyer a list on Schedule 3.15 of
the Disclosure Schedule of, and true and complete copies of all insurance
policies and fidelity bonds covering the Purchased Assets, the Business and
operations of the Business and its employees, if any.
3.16. Compliance with Laws. Seller are not in violation of, and to Seller's
knowledge is not under investigation with respect to, and has not been
threatened to be charged with or given notice of any violation of, any law,
rule, ordinance or regulation, or judgment, order or decree (other than any
Environmental Law) entered by any court, arbitrator or governmental authority,
domestic or foreign, applicable to any of the Purchased Assets or the conduct of
the Business.
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3.17. Proprietary Rights.
(a) Schedule 3.17 of the Disclosure Schedule sets forth a list of all
Proprietary Rights used or held for use in the Business, specifying as to each,
as applicable: (i) the nature of such Proprietary Right; (ii) the owner or
owners of such Proprietary Right; (iii) all Persons other than Seller who have
an ownership or economic interest in such Proprietary Right; (iv) the
jurisdictions by or in which such Proprietary Right is recognized without regard
to registration or has been issued or registered or in which an application for
such issuance of registration has been filed, including the respective
registration or application numbers; and (v) licenses, sublicenses and other
agreements as to which Seller or any of its Affiliates is a Party and pursuant
to which any Person is authorized to use such Proprietary Right (other than
software product licenses in the ordinary course of business described in
Section 3.17(e) below), including the identity of all Parties thereto, a
description of the nature and a subject matter thereof, the applicable royalty
and the term thereof.
(b) Seller owns, or is licensed to use, all Proprietary Rights. Seller is
the sole and exclusive owner or licensee of, with all right, title and interest
in and to (free and clear of any Liens or other interests), the Proprietary
Rights, and has sole and exclusive rights (and is not contractually obligated to
pay any compensation to any third party in respect thereof) to the use thereof
and the material covered thereby in connection with the services or products in
respect of which Proprietary Rights are being used. No claims with respect to
the Proprietary Rights have been asserted or, to the knowledge of Seller, are
threatened by any Person (i) to the effect that the manufacture, sale, licensing
or use of any product as now used, sold or licensed or proposed for use, sale or
license by the Seller in connection with the Business infringes on any
copyright, patent, trade mark, service mark or trade secret of any third party,
(ii) against the use by Seller of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software programs and
applications used in the Business as currently conducted or as proposed to be
conducted by Seller, (iii) challenging the ownership, validity or effectiveness
of any of the Proprietary Rights, or (iv) that any Person other than the Seller
has any ownership or economic interest in any of the Proprietary Rights. All
trademarks, service marks and copyrights held by Seller and which relate to the
Business are valid and subsisting in the jurisdictions in which they are
registered. To the knowledge of Seller, there is no unauthorized use,
infringement or misappropriation of any of the Proprietary Rights which in any
way affects the Business by any third party, including any employee or former
employee of the Business. In connection with Seller's conduct of the Business,
there is not any infringement liability (choate or inchoate) with respect to, or
infringement or violation by, Seller of any patent, trademark, service mark,
copyright, trade secret or other proprietary right of another Person. No
Proprietary Right or product of the Business is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting in any manner the
sale or licensing thereof by Seller. There is no outstanding order, judgment,
decree or stipulation binding on the Business of Seller, and Seller is not a
Party to or bound by any agreement restricting the sale or license of the
products of the Business. Seller has not entered into any agreement to indemnify
any other Person against any charge or infringement of any of the Proprietary
Rights. Each current and former employee of or consultant to Seller relating to
the Business has signed a proprietary information agreement substantially in
Seller's standard form as certified by Seller and delivered to Buyer.
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(c) There is not, nor has there been at any time during the past three
years, pending or, to the knowledge of Seller, threatened any action, suit,
investigation or proceeding (or any basis therefor) contesting the validity,
ownership or right to use, sell or otherwise dispose of any Proprietary Right or
alleging infringement arising therefrom, nor has Seller learned that any Person
is or has been in the past asserting that any ownership, use, license,
production, development, manufacture, marketing, distribution, lease, sale or
other disposition of any of its products or services by the Business conflicts
or will conflict with the right of any other Person.
(d) To Seller's best knowledge, none of the former or present employees,
consultants, officers or directors of Seller owns, directly or indirectly, or
has any other right or interest in, or claim to, in whole or in part, the
Business or any of the Proprietary Rights or Purchased Assets.
(e) Each customer to whom Seller has delivered a copy of any software
product containing any Proprietary Rights has executed and delivered to Seller a
license agreement for the use thereof. A copy of each such agreement is set
forth in Schedule 3.17(e), and a copy of Seller's current form of license
agreement is set forth in Item 34 of Schedule 3.17(e) (the "Base License
Agreement"). Each such license agreement is in full force and effect according
to its terms and, to Seller's knowledge, the licensee thereunder is not in
default under the terms of such license agreement nor has any event or
circumstance occurred that, with notice or a lapse of time or both, would
constitute any event of default thereunder with respect to such licensee.
(f) Seller has the right to license the Retained Technology to Buyer that
is to be licensed to Buyer pursuant to the Patent License Agreement or with
respect to the Retained Technology being licensed to Buyer pursuant to the
Patent License Agreement. With respect to the Retained Technology, there is not
any infringement liability (choate or inchoate) with respect to, or infringement
or violation by, Seller of any patent, trademark, service mark, copyright, trade
secret or other proprietary right of another Person.
3.18. Employees. Schedule 3.18(a) and 3.18(b) of the Disclosure Schedule
sets forth a true and complete list of (a) the names, titles, annual salaries
and other compensation of all employees of Seller who are engaged in the
Business and are to be offered employment by Buyer prior to the Closing and (b)
the wage rates for non-salaried employees of the Business (by classification).
None of such employees has indicated to the appropriate Person at Seller under
Seller's current policies and procedures that he or she intends to resign or
retire as a result of the transactions contemplated by this Agreement.
3.19. Warranty or Other Claims. There are no existing or, to the knowledge
of Seller, threatened, claims against Seller for products, parts or services
used in the Business which are defective or fail to meet any applicable warranty
or other term or provision, except for non-material amounts of product returns
in the ordinary course of business. Except as described in the preceding
sentence, no claim has been asserted and is currently outstanding against Seller
for renegotiation or price redetermination of any business transaction with
respect to the Business, nor is there any basis upon which any such claim could
be based. The warranty reserve as shown on the Balance Sheet has been
established in conformity with GAAP consistent with the conduct of the Business
during the prior one-year period.
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3.20. Finders' Fees. There is no investment banker, broker, finder or other
intermediary which is or will be entitled to any fee or commission from Buyer or
any of its Affiliates upon consummation of the transactions contemplated by this
Agreement.
3.21. Environmental Compliance.
(a) Environmental Definitions. The following terms, as used herein, have
the following meanings:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Environmental Laws" means any and all foreign, federal, state and local
statutes, laws (including common or case law), regulations, ordinances, rules,
judgments, judicial decisions, orders, decrees, codes, plans, injunctions,
permits, grants, franchises, licenses, agreements, or governmental restrictions,
relating to the environment or to emissions, discharges or releases of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic, radioactive or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic, radioactive or hazardous substances or wastes or the clean-up
or other remediation thereof.
"Environmental Liabilities" means all liabilities arising in connection
with or in any way relating to the Purchased Assets or Seller's use or ownership
thereof, whether vested or unvested, contingent or fixed, actual or potential,
which (i) arise under Environmental Laws or arise in connection with any matter
disclosed or required to be disclosed in the Disclosure Schedule and (ii) arise
from actions occurring or conditions existing before the Closing Date.
"Hazardous Substance" means any toxic, caustic or otherwise hazardous
substance, including petroleum, its derivatives, by-products and other
hydrocarbons, regulated under Environmental Laws.
"Release" has the meaning specified in 42 U.S.C. (S)9601(22).
(b) Environmental Representations.
(i) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty
has been assessed and no investigation or review is pending, or to Seller's
knowledge, threatened by any governmental or other entity (A) with respect
to any alleged violation by Seller of any Environmental Law in connection
with the conduct of the Business, (B) with respect to any alleged failure by
Seller to have any environmental permit, certificate, license, approval,
registration or authorization required in connection with the conduct of the
Business or (C) with respect to any generation, treatment,
storage, recycling, transportation or disposal or Release of any hazardous
substance generated by the Business or the Purchased Assets.
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(ii) In connection with the operation of the Business, (A) Seller has
not handled any Hazardous Substance, other than as a user of such Hazardous
Substances, on the property to be leased by Seller to Buyer (the "Leased
Property"); (B) no polychlorinated biphenyls or urea formaldehyde is or has
been present at the Leased Property; (C) no asbestos is or has been present
at the Leased Property; (D) there are no underground storage tanks for
Hazardous Substances, active or abandoned, at the Leased Property; (E) no
Hazardous Substance has been released at or under the Leased Property and
(F) no Hazardous Substance has been released or is present, in a reportable
or threshold planning quantity, where such a quantity has been established
by statute, ordinance, rule, regulation or order, at, on or under the Leased
Property.
(iii) In connection with the operations of the Business, Seller has not
transported or arranged for the transportation (directly or indirectly) of
any Hazardous Substance to any location which is listed or proposed for
listing on the National Priorities List promulgated under CERCLA, or on any
similar state list or which is the subject of Federal, state or local
enforcement actions or other investigations which may lead to claims against
Buyer for clean-up costs, remedial work, damages to natural resources or for
personal injury claims, including, but not limited to, claims under CERCLA.
(iv) No oral or written notification of a Release of a Hazardous
Substance has been filed by or on behalf of Seller with respect to the
Business and no property now or previously owned or leased by Seller with
respect to the Business is listed or, to Seller's knowledge, proposed for
listing, on the National Priorities List promulgated pursuant to CERCLA or
on any similar state list of sites requiring investigation or clean-up.
(v) There are no environmental Liens on any of the Purchased Assets,
and no governmental actions have been taken or are in process that could
subject any of such Purchased Assets to such Liens. Seller would not be
required to place any notice or restriction relating to the presence of
Hazardous Substances at any property used in connection with the operation
of the Business in any deed to such property.
(vi) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or which are in the possession
of Seller in relation to the Leased Property in connection with the
operation of the Business which have not been delivered to Buyer prior to
the date hereof.
3.22. Interested Party Transactions. To Seller's knowledge, no officer,
director, or Affiliate of the Seller, has or has had, directly or indirectly,
(i) an interest in any entity which furnished or sold, or furnishes or sells,
services or products which Seller furnishes or sells, or proposes to furnish or
sell, relating to the Purchased Assets or the Business, (ii) any interest in any
entity which purchases from or sells or furnishes to the Seller, any goods or
services relating to the Purchased Assets or the Business, or (iii) a beneficial
interest in any contract or agreement relating to the Purchased Assets or the
Business.
3.23. Accounts Receivable. Schedule 3.23 of the Disclosure Schedule sets
forth a true and complete list of the accounts receivable of the Business as of
the Balance Sheet Date. No receivables on the books of the Business on the
Closing Date shall remain uncollected by Buyer,
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using commercially reasonable collection efforts (but without, among other
things, the commencement of legal proceedings for this purpose) on the date
ninety (90) days after the Closing Date due to the alleged unsatisfactory or
non-performance of Seller of its obligations that gave rise to such receivable.
3.24. Representations. No representation or warranty by Seller set forth in
this Agreement, and no statement contained in any exhibit or schedule hereto or
any certificate or writing delivered in connection with this Agreement and the
transactions contemplated herein contains any untrue statement of a material
fact, or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
3.25. Subsidiaries. Schedule 3.25 of the Disclosure Schedule sets forth a
complete list of all Affiliates of the Seller that hold any Purchased Assets or
that are otherwise engaged in the Business and that are transferring and
assigning to Buyer any Purchased Assets (the "Subsidiaries").
3.26. Customers. Seller has no knowledge as of the date of this Agreement
that any current customer of Seller intends to limit its future purchases in
any material respect as a result of the transactions contemplated by this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
4.01. Organization and Existence. Each of Parent and Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
4.02. Corporate Authorization. The execution, delivery and performance by
Parent and Buyer of this Agreement and each of the Ancillary Agreements, and the
consummation by Parent and Buyer of the transactions contemplated hereby and
thereby, are within the corporate powers of Parent and Buyer and have been duly
authorized by all necessary corporate action on the part of Parent and Buyer.
This Agreement and each of the Ancillary Agreements to which Parent and Buyer
are a Party constitute valid and binding agreements of Parent and Buyer,
enforceable against them in accordance with their terms, subject to the
Bankruptcy Exception.
4.03. Governmental Authorization. The execution, delivery and performance
by Parent and Buyer of this Agreement and each of the Ancillary Agreements
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority other than (i) compliance with any applicable
requirements of the HSR Act and (ii) compliance with any applicable regulatory
approvals.
4.04. Non-Contravention. The execution, delivery and performance by Buyer
and Parent of this Agreement and each of the Ancillary Agreements do not and
will not (i) contravene or conflict with the corporate charter or bylaws of
Buyer or Parent, (ii) assuming
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compliance with the HSR Act, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Buyer or Parent, (iii) constitute a
default under or give rise to any right of termination, cancellation or
acceleration of any right or obligation of Buyer or Parent under any provision
of any agreement, contract or other instrument binding upon Buyer or Parent or
by which any of their respective properties or assets is or may be bound or (iv)
result in the creation or imposition of any lien on any of their respective
properties or assets.
4.05. Finders' Fees. There is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Parent or Buyer who might be entitled to any fee or commission from Seller or
any of its Affiliates upon consummation of the transactions contemplated by this
Agreement.
4.06. Litigation. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Parent or Buyer threatened against or
affecting, Parent or Buyer before any court or arbitrator or any governmental
body, agency or official which in any matter challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated hereby.
4.07. Required Consents. Neither the execution, delivery and performance of
this Agreement and the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby does or will require on the part of
Parent or Buyer any consent under any agreement, contract or other instrument
binding upon Parent or Buyer, except for those which the failure to obtain would
not have a material adverse effect on either of Parent or Buyer or would
materially affect the ability of Parent or Buyer to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements.
4.08. Representations. No representation or warranty by Parent and Buyer
set forth in this Agreement, and no statement contained in any exhibit or
schedule hereto or any certificate or writing delivered in connection with this
Agreement and the transactions herein contains any untrue statement of a
material fact, or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
ARTICLE V
COVENANTS OF SELLER
Seller agrees that:
5.01. Conduct of the Business. From the date hereof until the Closing
Date, Seller shall conduct the Business in the ordinary course consistent with
past practice, use its best reasonable efforts to preserve intact the business
organization and relationships with third parties of the Business, and to keep
available the services of the Persons designated as Hired Employees. Without
limiting the generality of the foregoing, from the date hereof until the Closing
Date, Seller will not, without the prior written consent of Parent:
(a) Enter into any commitment or transaction relating to the Business not
in the ordinary course of business;
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(b) Terminate any Hired Employee;
(c) Transfer to any Person any Proprietary Rights, other than software
product licenses in the ordinary course of business pursuant to written software
license agreements;
(d) Enter into or amend any agreements pursuant to which any other Party is
granted exclusive marketing or other rights of any type or scope with respect to
the Business;
(e) Violate, amend or otherwise modify the terms of any of the Assigned
Contracts;
(f) Commence any litigation relating to the Business;
(g) Acquire or agree to acquire any assets relating to the Business other
than inventory and supplies in the ordinary course of business;
(h) Sell, lease, license or otherwise dispose of any of the Purchased
Assets, other than software product licenses in the ordinary course of business
pursuant to the Base License Agreement; or
(i) Adopt or amend any employee benefit plan of Seller applicable to any
Hired Employee, except with respect to any such plan or amendment applicable to
all of Seller's employees generally, or enter into any employment contract with
any Hired Employee, pay any special bonus or special remuneration to any Hired
Employee, or increase the salaries or wage rates of any Hired Employee.
Seller will not (i) take or agree or commit to take any action that would make
any representation and warranty of Seller hereunder inaccurate in any respect
at, or as of any time from and after the dates hereof and prior to, the Closing
Date or (ii) omit or agree to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect at any such
time.
5.02. Access to Information. From the date hereof until the Closing Date,
Seller (a) will give Buyer, its counsel, financial advisors, auditors and other
authorized representatives full access to the offices, properties, books and
records of Seller related to the Business during normal business hours and upon
reasonable notice, in such a manner as not unreasonably to disrupt Seller's
normal business activities, (b) will furnish to Buyer, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information relating to the Business as such Persons
may reasonably request and (c) will instruct the employees of Seller to
cooperate with Buyer in its investigation of the Business; provided that no
investigation pursuant to this Section shall affect any representation or
warranty given by Seller hereunder.
5.03. Notices of Certain Events. Seller shall promptly notify Buyer of:
(i) any notice or other communication from any Person received by
Seller alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
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(ii) any notice or other communication received by Seller from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to Seller's knowledge threatened against, Seller and relating
to or involving the Purchased Assets or the Business that, if pending on the
date of this Agreement, would have been required to have been disclosed
pursuant to Section 3.12 or that relate to the consummation of the
transactions contemplated by this Agreement.
5.04. Noncompetition.
(a) Seller agrees that for a period of two full years from the Closing
Date, neither it nor any of its Affiliates shall anywhere in the world, without
the prior written consent of Buyer:
(i) engage, either directly or indirectly, as a principal or for its
own account, solely or jointly with others, or as an equity holder in any
corporation or joint stock association, or otherwise (other than as a
stockholder of any entity the securities of which are listed on a national
securities exchange or are regularly traded in the over-the-counter market,
provided that neither Seller nor its Affiliates shall at any time own more
than 3% of the outstanding equity securities of such entity), in any
business engaged (1) in the fields of mechanical (A) computer-aided
engineering, design and manufacturing, (B) computer-aided styling and
industrial design, and (C) kinematics and structural and thermal dynamics,
or (2) in any business that competes with the Business as of the Closing
Date or with parent's business as of the Closing Date; provided, however,
that Seller shall not be deemed to be in violation of the foregoing
provisions if it shall develop or market any products that contain features
or functionality which fall within the Exclusive Field of Use, provided that
the resulting products are not competitive with products of Buyer within the
Exclusive Field of Use existing at the Closing Date (including those
products acquired by Buyer hereunder); or
(ii) solicit for employment by Seller or any of its Affiliates any
Hired Employee.
For purposes of this Section and Section 6.02(a), the terms "Restricted
Field of Use" and "Exclusive Field of Use" shall have the meanings set forth in
Section 1 of the Patent Assignment and Grant-Back License Agreement.
(b) If any provision contained in this Section shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Section, but this
Section shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. It is the intention of the Parties
that if any of the restrictions or covenants contained herein is held to cover a
geographic area or to be for a length of time which is not permitted by
applicable law, or in any way construed to be too broad or to any extent
invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this
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Section to provide for a covenant having the maximum enforceable geographic
area, time period and other provisions (not greater than those contained herein)
as shall be valid and enforceable under such applicable law. Seller acknowledges
that Buyer would be irreparably harmed by any breach of this Section and that
there would be no adequate remedy at law or in damages to compensate Buyer for
any such breach. Seller agrees that Buyer shall be entitled to seek injunctive
relief requiring specific performance by Seller of this Section.
5.05. Confidentiality. Except as otherwise specifically permitted under the
Patent Assignment and Grant-Back License Agreement and Patent License Agreement,
Seller will hold, and will cause its officers, directors, employees,
consultants, advisors and agents to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law,
all proprietary or confidential documents and information concerning Buyer or
the Business or the Purchased Assets and will not use and will cause their
respective officers, directors, employees, consultants, advisors and agents not
to use, any such proprietary or confidential documents or information for any
purpose whatsoever; except to the extent that such information can be shown to
have been (i) previously known by Seller or any of its Affiliates, (ii) in the
public domain through no fault of Seller or any of its Affiliates, (iii)
lawfully acquired by Seller or any of its Affiliates from sources other than
Buyer, (iv) furnished to a third party by Buyer without a similar restriction on
the third party's rights, or (vi) approved for release in writing by Buyer.
5.06. Trademarks; Trade names. As soon as practicable after the Closing
Date, Seller shall eliminate the use of all of the Seller Tradenames in any of
their forms or spellings, on all advertising, stationery, business cards,
checks, purchase orders and acknowledgments, customer agreements and other
contracts and business documents. "Seller Tradenames" means all of the
trademarks, trade names, service marks and service names as set forth in
Schedule 3.17 of the Disclosure Schedule.
5.07. No Negotiation with Third Parties. From the date hereof until the
earlier of the Closing Date or the date on which this Agreement is terminated,
Seller agrees that neither Seller, nor any of its Affiliates, agents or
representatives shall, directly or indirectly, encourage, solicit or engage in
any discussions or negotiations with, or provide any information to, any Person
concerning the possible acquisition by such third party of all or any part of
the Business or the Purchased Assets other than as contemplated or permitted by
this Agreement. Seller agrees promptly to notify Buyer of any contact by any
Person with respect to any such possible acquisition.
5.08. Continuation of Certain Services and MIS Support. Seller will
negotiate in good faith the definitive form of the transition and services
agreement whereby the Seller will continue to provide, (i) for a period of up to
three months after the Closing Date (A) without cost to Buyer (1) continuing
computer services and management information services and support, (2)
continuing use of accounting software and support, (3) continuing use of a
telephone system and (4) continuing use of the servers of Seller connected to
the Internet, in each case consistent with those provided to the Business by
Seller prior to the Closing and (B) at Seller's out-of-pocket cost plus 15%,
continuing manufacturing services, and (ii) the use of certain office space to
be leased by Buyer from Seller pursuant to a lease (the "Lease") substantially
in such form as shall be mutually agreed upon on or prior to March 6, 1995.
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5.09. Transfer of Purchased Assets by Affiliates. Seller will cause all of
its Affiliates to transfer, assign and deliver all Purchased Assets owned or
held by any of them to Buyer.
5.10. Seller's Guaranty of Subsidiaries' Performance. Seller will cause the
Subsidiaries to carry out and perform their respective obligations under their
respective asset purchase agreements and ancillary agreements with Buyer (the
"Subsidiary Agreements") in form and substance substantially similar to this
Agreement and the Ancillary Agreements.
5.11. Certain Consents. Seller will use its best efforts to obtain by March
15, 1995, the necessary consent to the assignment to Buyer of the agreement
described in Item 2 of Schedule 3.13(c) of the Disclosure Schedule. If such
consent is not received by such date, Seller shall thereupon terminate such
agreement in accordance with its terms. In exchange for all revenues received by
Seller after the date of such termination and after the Closing, Buyer shall
provide to Seller, at no cost to Seller, all services necessary for Seller to be
able to comply with its maintenance obligations under such agreements. Seller
covenants and agrees that it shall not provide any source code to the other
party to the agreement described in the preceding sentence.
ARTICLE VI
COVENANTS OF BUYER
Buyer agrees that:
6.01. Confidentiality. Prior to the Closing Date and after any termination
of this Agreement, Buyer and its Affiliates will hold, and will use their best
efforts to cause their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Business of Seller and its Subsidiaries furnished to Parent, Buyer or their
respective Affiliates in connection with the transactions contemplated by this
Agreement on such terms as are set forth in the confidentiality agreement dated
as of February 13, 1995 between Seller and Parent, which agreement is
incorporated herein by reference and made a part hereof; provided that Buyer may
disclose such information to its officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the transactions
contemplated by this Agreement. The obligation of Parent, Buyer and their
respective Affiliates to hold any such information in confidence shall be
satisfied if they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own similar
information.
6.02. Noncompetition.
(a) Buyer agrees that for a period of two full years from the Closing Date,
neither it nor any of its Affiliates shall anywhere in the world, without the
prior written consent of Seller, use the Proprietary Rights for any use which
competes with Seller's business as of the Closing Date (other than the
Business); provided, however, that Buyer shall not be deemed to be in violation
of the foregoing provisions if it shall develop or market any products within
the Exclusive Field of Use that contain features or functionality which fall
within the Restricted
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Field of Use, provided that the resulting products are not competitive with
products of Seller within the Restricted Field of Use existing at the Closing
Date.
(b) If any provision contained in this Section shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Section, but this Section shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. It is the intention of
the Parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable law.
Buyer acknowledges that Seller would be irreparably harmed by any breach of this
Section and that there would be no adequate remedy at law or in damages to
compensate Seller for any such breach. Buyer agrees that Seller shall be
entitled to seek injunctive relief requiring specific performance by Buyer of
this Section.
6.03. Hired Employees' Vacation Pay. Buyer agrees to pay in cash to each
Hired Employee, the aggregate amount of such Hired Employee's accrued but unused
vacation time with Seller through the Closing Date, such payment to be made
promptly within 30 days after the Closing Date.
6.04. Exchange Cooperation. Buyer shall cooperate in structuring this
transaction as a like kind exchange for the benefit of Seller (the "Exchange");
provided that Buyer shall incur no additional cost or expense or any other
significant adverse consequences in connection therewith. In connection with the
Exchange, Seller's rights and obligations under this Agreement shall be
assignable to an intermediary party (the "Intermediary") and Buyer acknowledges
and consents to such assignment; provided that such assignment shall not relieve
Seller of any liability or obligation under this Agreement or the Ancillary
Agreements. In no event shall the assignment of the Agreement by Seller to the
Intermediary affect any of the representations, warranties or indemnifications
made by Buyer or Seller in this Agreement. In the event Seller does not arrange
for the Exchange prior to the Closing Date, this transaction shall be
consummated as a sale and purchase.
ARTICLE VII
MUTUAL COVENANTS
The Parties agree that:
7.01. Best Efforts; Further Assurances.
(a) Subject to the terms and conditions of this Agreement, each Party will
use its best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement. Each
Party agrees to execute and deliver such other
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documents, certificates, agreements and other writings and to take such other
actions as may be necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement and to vest in
Buyer good and marketable title to the Purchased Assets.
(b) Seller hereby constitute and appoint, effective as of the Closing Date,
Parent, Buyer and their respective successors and assigns as the true and lawful
attorneys of Seller with full power of substitution in the name of Buyer or in
the name of Seller, but for the benefit of Buyer (i) to collect for the account
of Buyer any items of Purchased Assets and (ii) to institute and prosecute all
proceedings which Buyer may in its sole discretion deem proper in order to
assert or enforce any right, title or interest in, to or under the Purchased
Assets, and to defend or compromise any and all actions, suits or proceedings in
respect of the Purchased Assets. Buyer shall be entitled to retain for its
account any amounts collected pursuant to the foregoing powers, including any
amounts payable as interest in respect thereof.
(c) Whenever requested to do so by Buyer in connection with the conduct of
the Business, Seller shall execute any and all applications or other instruments
which Buyer shall deem necessary in order to apply for and obtain patent and
copyright registrations in the United States of America and obtain patents and
copyrights in all countries and any and all documents which Buyer shall deem
necessary or desirable in order to confirm or evidence the transfer of any of
the rights transferred to Buyer hereunder or pursuant to the Patent Assignment
and Grant-Back License Agreement and Patent License Agreement and shall
cooperate with and assist Buyer in any interference or litigation pertaining
thereto, with all out-of-pocket expenses reasonably incurred by Seller or any
Subsidiary at the request of Buyer to be borne by Parent.
7.02. Certain Filings. The Parties shall cooperate with one another (a) in
determining whether any action by or in respect of, or filing with, any
governmental body, agency, official or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from Parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Agreement and (b) in taking such actions or making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such actions, consents, approvals or waivers.
7.03. Public Announcements. The Parties agree to consult with each other
before issuing any press release or making any public statement with respect to
this Agreement or the transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation.
ARTICLE VIII
TAX MATTERS
8.01. Tax Definitions. The following terms, as used herein, have the
following meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
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"Post-Closing Tax Period" means any Tax period (or portion thereof) ending
on or after the Closing Date that is not a Pre-Closing Tax Period.
"Pre-Closing Tax Period" means any Tax period (or portion thereof) ending
on or before the close of business on the Closing Date.
"Tax" means any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, franchise, capital, paid-up
capital, profits, license, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental or windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any penalty, addition to
tax or additional amount imposed by any governmental authority (domestic or
foreign) responsible for the imposition of any such tax.
8.02. Tax Matters. Seller hereby represents and warrants to Buyer that:
(a) Seller has timely paid all Taxes payable by it for the Pre-Closing Tax
Period which will have been required to be paid on or prior to the date hereof,
the non-payment of which would result in a Lien on any Purchased Asset, would
otherwise adversely affect the Business or would result in Buyer becoming liable
or responsible therefor.
(b) Seller has established, in accordance with generally accepted
accounting principles applied on a basis consistent with that of preceding
periods, adequate reserves for the payment of, and will timely pay all Tax
liabilities which arise from or with respect to the Purchased Assets or the
operation of the Business and are incurred in or attributable to the Pre-Closing
Tax Period, the non-payment of which would result in a Lien on any Purchased
Asset, would otherwise adversely affect the Business or would result in Buyer
becoming liable therefor.
8.03. Tax Cooperation; Allocation of Taxes.
(a) Each Party agrees to furnish or cause to be furnished to the other
Parties, upon request, as promptly as practicable, such information and
assistance relating to the Purchased Assets and the Business as is reasonably
necessary for the filing of all Tax returns, and making of any election related
to Taxes, the preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating to any Tax
return. Each Party shall cooperate with the other Parties in the conduct of any
audit or other proceeding related to Taxes involving the Business and each shall
execute and deliver such powers of attorney and other documents as are necessary
to carry out the intent of this paragraph (a) of Section 8.03.
(b) All personal property taxes and similar ad valorem obligations levied
with respect to the Purchased Assets for a taxable period which includes (but
does not end on) the Closing Date (collectively, the "Apportioned Obligations")
shall be apportioned between Seller and its Subsidiaries, on the one hand, and
Buyer, on the other hand, as of the Closing Date based on the number of days of
such taxable period included in the Pre-Closing Tax Period and the number of
days of such taxable period included in the Post-Closing Tax Period. Seller
shall be liable for the amount of such taxes that is attributable to the Pre-
Closing Tax Period. Within 30 days after the Closing, Seller and Buyer shall
present a statement to the other setting forth the amount of reimbursement to
which each is entitled under this Section 8.03(b) together with
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such supporting evidence as is reasonably necessary to calculate the proration
amount. The proration amount shall be paid by the Party owing it to the other
within 10 days after delivery of such statement. Thereafter, Seller shall notify
Buyer upon receipt of any bill for personal property taxes relating to the
Purchased Assets, part or all of which are attributable to the Post-Closing Tax
Period, and shall promptly deliver such bill to Buyer who shall pay the same to
the appropriate taxing authority, provided that if such bill covers the
Pre-Closing Tax Period, Seller shall also remit prior to the due date of payment
to Buyer payment for the amount of such bill that is attributable to the
Pre-Closing Tax Period. If either Seller or Buyer shall thereafter make a
payment for which it is entitled to reimbursement under this Section 8.03(b),
the other Party shall make such reimbursement promptly but in no event later
than 30 days after the presentation of a statement setting forth the amount of
reimbursement to which the presenting Party is entitled along with such
supporting evidence as is reasonably necessary to calculate the amount of
reimbursement. Any payments required under this Section 8.03(b) and not made
within 30 days of delivery of the statement shall bear interest at the rate per
annum determined, from time to time, under the provisions of law related to the
late payment of the tax in question for each day until paid.
(c) Any transfer, documentary, sales or use Taxes assessed upon the
transfer of the Purchased Assets to Buyer and any recording or filing fees with
respect thereto shall be shared equally by Seller and Buyer.
ARTICLE IX
EMPLOYEE BENEFITS
9.01. Employee Benefits Definitions. The following terms, as used herein,
having the following meanings:
"Benefit Arrangement" means an employment, severance or similar contract,
arrangement or policy and each plan or arrangement providing for severance
benefits, insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights or other forms
of incentive compensation or post-retirement insurance, compensation or benefits
that (i) is not an Employee Plan and (ii) is maintained or contributed to by
Seller or any of its ERISA Affiliates or Buyer or any of its ERISA Affiliates,
as the case may be.
"Employee Plans" means each "employee benefit plan", as such term is
defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA,
and (ii) is maintained or contributed to by Seller or any of its ERISA
Affiliates or Buyer or any of its ERISA Affiliates, as the case may be.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity that, together with
such entity, would be treated as a single employer under Section 414 of the
Code.
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"Multiemployer Plan" means each Employee Plan that is a multiemployer plan,
as defined in Section 3(37) of ERISA.
9.02. ERISA Representations. Seller hereby represents and warrants to Buyer
that:
(a) Schedule 3.18(b) of the Disclosure Schedule lists each Employee Plan
and each Benefit Arrangement that covers any employee or former employee of the
Business, copies or descriptions of all of which have previously been made
available or furnished to Buyer. With respect to each Employee Plan, Seller has
provided the most recently filed Form 5500 and an accurate summary description
of such plan. Seller has provided Buyer with, or has caused to be provided to
Buyer, complete age, salary, service and related data as of the most recent
practicable date for employees of the Business.
(b) Neither Seller nor any ERISA Affiliate maintains or has ever maintained
or contributed to any Multiemployer Plan or Employee Plan subject to Title IV of
ERISA. Neither Seller nor any of ERISA Affiliate has incurred any liability
under Title IV of ERISA arising in connection with the termination of any plan
covered or previously covered by Title IV of ERISA that could become, after the
Closing Date, an obligation of Buyer or any of its ERISA Affiliates.
(c) To Seller's best knowledge, each Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and has been so
qualified during the period from its adoption to date, and each trust forming a
part thereof is exempt from tax pursuant to Section 501(a) of the Code. Each
Employee Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to such
Plan.
(d) To Seller's best knowledge, each Benefit Arrangement has been
maintained in substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such Benefit Arrangement.
(e) With respect to the employees and former employees of the Business,
there are no employee post-retirement medical or health plans in effect, except
as required by Section 4980B of the Code.
(f) Except as disclosed in writing to Buyer prior to the date hereof, there
has been no amendment to, written interpretation of or announcement (whether
written or not written) by Seller or any of its ERISA Affiliates relating to, or
change in employee participation or coverage under, any Employee Plan or Benefit
Arrangement which would increase the expense of maintaining such Employee Plan
or Benefit Arrangement above the level of the expense incurred in respect
thereof for the most recent fiscal year.
(g) The Purchased Assets are not now nor will they with the passage of time
become subject to any Lien imposed under Code Section 412(n) by reason of the
failure of Seller or its ERISA Affiliates to make timely installments or other
payments required by Code Section 412.
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(h) No Hired Employee will become entitled to any bonus, retirement,
severance or similar benefit or enhanced benefit solely as a result of the
transactions contemplated hereby.
(i) None of the Employee Plans or Benefit Arrangements listed on Schedule
3.18(b) of the Disclosure Schedule covers any non-United States employee or
former employee of Seller.
(j) No "prohibited transaction", as described in Section 406 of ERISA or
Section 4975 of the Code, has occurred with respect to any Employee Plan.
(k) No tax under Section 4980B of the Code has been incurred in respect of
any Employee Plan that is a group health plan, as defined in Section 5000(b)(1)
of the Code.
9.03. Employees and Consultants.
(a) On or prior to the Closing Date, Buyer shall offer to engage as
independent contractors all consultants to the Business listed on Schedule
3.17(f) of the Disclosure Schedule (to be provided by Buyer to Seller at least
one week before the Closing Date) by assuming the existing consulting agreements
with the Hired Consultants. The consultants who accept and commence such
engagements with Buyer are hereinafter collectively referred to as the "Hired
Consultants". Seller will not take any action that would impede, interfere or
otherwise compete with Buyer's effort to engage any Hired Consultants. In the
event that any consulting agreement does not constitute a Purchased Asset, Buyer
shall not assume any obligation relating to any consultant to the Business until
the commencement of such consultant's engagement with Buyer.
(b) On or prior to the Closing Date, Buyer shall offer employment to all
employees of the Business designated by Buyer on Schedule I attached hereto;
provided, that Buyer may terminate at any time after the Closing Date the
employment of any employee who accepts such offer. Any such offer shall be at
such current base salary or wage and reasonably comparable benefit levels. Buyer
shall provide the same severance benefits to Hired Employees whose employment is
terminated by Buyer within six months of the Closing Date as Seller would have
provided pursuant to Seller's written reduction-in-force policy previously
provided to Buyer; provided, however, that for purposes of determining the
amount of severance benefits to which a Hired Employee would be entitled
pursuant to this sentence and to Parent's vacation policies, such Hired Employee
shall be credited with his or her prior service with Seller. In addition, as
soon as practicable after the Closing Date, management of Parent shall use
reasonable efforts to obtain the approval of Parent's Board of Directors for the
waiver of the waiting period for the Hired Employees with respect to Parent's
employee stock purchase plan as in effect on the Closing Date. The employees who
accept and commence employment with Buyer are hereinafter collectively referred
to as the "Hired Employees". Seller will not take any action that would impede,
hinder, interfere or otherwise compete with Buyer's efforts to hire any Hired
Employees. Buyer shall not assume responsibility for any Hired Employee until
such employee commences employment with Buyer.
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9.04. Seller's Employee Benefit Plans.
(a) Seller shall retain all obligations and liabilities under the Employee
Plans and Benefit Arrangements in respect of each employee or former employee
(including any beneficiary thereof) who is not a Hired Employee. Except as
expressly set forth herein, Seller or its designated ERISA Affiliate shall
retain all liabilities and obligations in respect of benefits accrued as of the
Closing Date by Hired Employees under the Employee Plans and Benefit
Arrangements, and neither Buyer nor any of its Affiliates shall have any
liability with respect thereto. Except as expressly set forth herein, no assets
of any Employee Plan or Benefit Arrangement shall be transferred to Buyer or any
of its Affiliates or to any plan of Buyer or any of its Affiliates. Accrued
benefits or account balances of Hired Employees under the Employee Plans and
Benefit Arrangements shall be fully vested as of the Closing Date.
(b) With respect to the Hired Employees (including any beneficiary or
dependent thereof), Seller shall retain (i) all liabilities and obligations
arising under any group life, accident, medical, dental or disability plan or
similar arrangement (whether or not insured) to the extent that such liability
or obligation relates to contributions or premiums accrued (whether or not
payable), or to claims incurred (whether or not reported), on or prior to the
Closing Date, (ii) all liabilities and obligations arising under any worker's
compensation arrangement to the extent such liability or obligation relates to
the period prior to the Closing Date, including liability for any retroactive
workers' compensation premiums attributable to such period and (iii) all other
liabilities and obligations arising under the Employee Plans and the Benefit
Arrangements to the extent any such liability or obligation relates to the
period, prior to the Closing Date, including, without limitation, liabilities
and obligations in respect of proportional accruals through the Closing Date
under any bonus plan or arrangement.
(c) With respect to any Hired Employee (including any beneficiary or
dependent thereof) who enters a hospital or is on short-term disability under
any Benefit Arrangement on or prior to the Closing Date and continues in a
hospital or on short-term disability after the Closing Date, Seller shall be
responsible for claims and expenses incurred both before and after the Closing
Date in connection with such Person, to the extent that such claims and expenses
are covered by a Benefit Arrangement, until such time, (if any) that, in the
case of a Hired Employee, such Person resumes full-time employment with Buyer or
one of its Affiliates and, in the case of any beneficiary or dependent of a
Hired Employee, such Person's hospitalization has terminated. With respect to
any Benefit Arrangements covering medical expenses and other costs relating to
pregnancies and maternity leave, Seller shall be responsible for all claims
(whether or not reported) and expenses incurred during the period prior to and
ending on the Closing Date, and Buyer or one of its Affiliates shall be
responsible for such Benefit Arrangements covering such pregnancies and
maternity leave for the period subsequent to the Closing Date.
(d) Seller shall offer to all Hired Employees who have pre-existing
conditions which make them ineligible for coverage under a group health plan
(within the meaning of Section 4980B(g)(2) of the Code and Section 607(1) of
ERISA) maintained by or contributed to by Buyer ("Buyer Health Plan") or whose
pre-existing conditions are not covered under a Buyer Health Plan ("Non-Covered
Employees"), COBRA health care continuation coverage in accordance with Section
4980B of the Code and Section 601 through 608 of ERISA, and shall comply with
any related requirements thereunder, in connection with any loss of coverage by
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any Person under any group health plan sponsored by Seller, Buyer shall pay for
up to 18 months after the Closing Date, the COBRA coverage payments required to
be made by the Non-Covered Employees and the out-of-pocket costs of Seller in
maintaining coverage for such Non-Covered Employees under Seller's group health
plan in each case for so long as the Non-Covered Employees are employees of
Buyer.
9.05. No Third Party Beneficiaries. No provision of this Article shall
create any third party beneficiary or other rights in any employee or former
employee (including any beneficiary or dependent thereof) of Seller in respect
of continued employment (or resumed employment) with either Buyer or the
Business or any of their Affiliates and no provision of this Article IX shall
create any such rights in any such Persons in respect of any benefits that may
be provided, directly or indirectly, under any Employee Plan or Benefit
Arrangement or any plan or arrangement that may be established by Buyer or any
of its Affiliates. No provision of this Agreement shall constitute a limitation
on rights to amend, modify or terminate after the Closing Date any such plans or
arrangements of Buyer or any of its Affiliates.
ARTICLE X
CONDITIONS TO CLOSING
10.01. Conditions to the Obligations of Each Party. The obligations of the
Parties to consummate the Closing are subject to the satisfaction of the
following conditions:
(a) Any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated.
(b) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Closing.
(c) No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially delay
the Closing shall have been instituted by any Person before any court,
arbitrator or governmental body, agency or official and be pending.
(d) Each of Buyer and Seller shall have executed and delivered to the other
each of the Ancillary Agreements, in each case substantially in the form
attached as an Exhibit to this Agreement.
(e) All actions by or in respect of or filings with any governmental body,
agency, official or authority required to permit the consummation of the Closing
shall have been obtained.
10.02. Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the Closing is subject to the satisfaction of the following further
conditions:
(a) (i) Seller shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the Closing
Date, (ii) except for the representation and warranty of Seller contained in
Section 3.26, the representations and
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warranties of Seller contained in this Agreement as of the date hereof and in
any certificate or other writing delivered by Seller pursuant hereto shall be
true and correct in all material respects at and as of the Closing Date as if
made at and as of such date and (iii) Buyer shall have received a certificate
signed by a duly authorized officer of Seller to the foregoing effect.
(b) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall restrain, prohibit or otherwise interfere
with the effective operation or enjoyment by Buyer of all or any of the
Purchased Assets.
(c) Buyer shall have received an opinion of Snell & Wilmer, counsel to
Seller, dated the Closing Date to the effect specified in Sections 3.01 through
3.04 and Section 3.12 as it relates to Seller, in form and substance reasonably
satisfactory to Buyer.
(d) Seller shall have received (i) all consents, authorizations or
approvals from the governmental agencies referred to in Section 3.03, (ii) all
Required Consents with respect to the Key Customers, and (iii) consents no later
than March 15, 1995, with respect to Items 11 and 12 of Schedule 3.17(e) of the
Disclosure Schedule, such consents to be in form and substance reasonably
satisfactory to Buyer.
(e) All corporate action by Seller required to be taken in connection with
the transactions contemplated by this Agreement shall have been validly taken,
and Seller shall have furnished Buyer with certified copies of resolutions,
minutes and such other instruments and documents as Buyer shall have requested.
(f) (i) All individuals reasonably necessary to carry on the Business and
without whose continued employment would have a significant adverse effect on
Buyer's operation of the Business shall have agreed to be Hired Employees or
Hired Consultants; provided, that the provisions of this Section 10.02(f)(i)
shall apply only if Buyer shall, within seven days after the date of this
Agreement, have made offers of employment to all employees listed on Schedule I
hereto and if Buyer shall have used reasonable efforts to keep Seller reasonably
informed about the status of Buyer's discussions with such employees; and
(ii) Thomas W. Jensen, Ph.D., shall have entered into an Employment
Agreement with Buyer for a term of one year, in a form satisfactory to
Buyer.
(g) Each of the Subsidiaries shall have executed and delivered to Buyer the
Subsidiary Agreements.
(h) Without prejudice to Buyer's and Parent's rights under Sections 10.02
and 12.02, Seller shall have delivered to Buyer a revised Disclosure Schedule
to this Agreement containing information updated in all material respects to the
Closing Date.
(i) The Parties shall have executed and delivered to the other a transition
and services agreement, in a form mutually acceptable to Buyer and Seller,
reflecting the matters described in Section 5.09.
(j) The Parties shall have executed and delivered to the other the Lease.
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10.03. Conditions to Obligations of Sellers. The obligation of Seller to
consummate the Closing is subject to the satisfaction of the following further
conditions:
(a) (i) Buyer shall have performed in all material respects all of their
respective obligations hereunder required to be performed by them at or prior to
the Closing Date, (ii) the representations and warranties of Buyer contained in
this Agreement as of the date hereof shall be true and correct in all material
respects at and as of the Closing Date, as if made at and as of such date, and
(iii) Seller shall have received a certificate signed by the President or duly
authorized Vice President of Buyer to the foregoing effect.
(b) Seller shall have received an opinion of Testa, Hurwitz & Thibeault
dated the Closing Date to the effect specified in Sections 4.01 through 4.04 and
4.06 as if relates to Buyer, in form and substance reasonably satisfactory to
Seller.
(c) Buyer shall have received all material consents, authorizations or
approvals from governmental agencies referred to in Section 4.03, in each case
in form and substance reasonably satisfactory to Seller, and no such consent,
authorization or approval shall have been removed.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01. Survival. The covenants, agreements, representations and warranties
of the Parties contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Closing until the close of business one year after the Closing Date.
Notwithstanding the preceding sentence, any covenant, agreement, representation
or warranty in respect of which indemnity may be sought under Sections 11.02 or
11.03 shall survive the time at which it would otherwise terminate pursuant to
the preceding sentence, if notice of the inaccuracy or breach thereof giving
rise to such right to indemnity shall have been given to the Party against whom
such indemnity may be sought prior to such time; provided that any such claim
for indemnification shall be made within two years of the Closing Date.
11.02. Indemnification.
(a) Seller agrees to indemnify Parent, Buyer and their respective
Affiliates against, and agrees to hold each of them harmless from, any and all
damage, loss, liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) (collectively, "Loss") incurred
or suffered by Parent, Buyer or any of their respective Affiliates arising out
of:
(i) any misrepresentation or breach of warranty, covenant or agreement
made or to be performed by Seller or its Subsidiaries pursuant to this
Agreement;
(ii) the failure of Seller or its Subsidiaries to assume full
responsibility for any Excluded Liability or any obligation of the Business
or any liability of the Business relating to the Excluded Assets;
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(iii) the incurrence by Buyer of any warranty or indemnification
Losses with respect to sales or licenses of Seller's products on or before
the Closing Date to the extent such Losses exceed the warranty reserve on
the Balance Sheet;
(iv) in addition to and not in limitation of the provisions of Section
11.02(a)(iii), the incurrence by Buyer of any Losses with respect to
software licensed or sold by Seller prior to the Closing Date that fails to
conform in any material respect to the written specifications applicable to
such software at the time of license or sale;
(v) in addition to and not in limitation of the provisions of Section
11.02(a)(iii) and (iv), any Loss arising on or before the Closing Date
that is caused solely by Seller's breach of this Agreement or that is
caused by Seller's conduct of the Business on or prior to the Closing Date,
and such Loss (A) is not the result of a breach of this Agreement by Buyer,
and (B) is not an Assumed Liability; or
(vi) in addition to and not in limitation of the provisions of Section
11.02(a)(iii) and (iv), the incurrence of any Loss by Buyer with respect to
software products to any customer, which Loss would have been avoided had
such customer executed and delivered a Base License Agreement.
(b) Buyer hereby indemnifies Seller and its Affiliates against and agrees
to hold harmless from any and all Loss incurred or suffered by Seller or any of
its Affiliates arising out of:
(i) any misrepresentation or breach of warranty, covenant or agreement
made or to be performed by the Buyer pursuant to this Agreement;
(ii) the failure of Buyer to assume full responsibility for any of the
Assumed Liabilities; or
(iii) any Loss arising after the Closing Date that is caused solely by
Buyer's breach of this Agreement or that is caused by Buyer's conduct of
the Business after the Closing Date, and such Loss (A) is not the result of
a breach of this Agreement by Seller or (B) is not an Excluded Liability.
11.03. Limitations on Liabilities.
(a) Claims for Losses caused by or arising out of misrepresentation or
breach of any warranty, representation or covenant may be made only pursuant to
Article XI hereof and only by written notice provided in accordance with Section
13.01 within the period, if any, provided for survival of such representation,
warranty or covenant in Section 11.01.
(b) The liabilities of Seller under Section 11.02(a) of this Agreement
shall be subject to the following limitations:
(i) Seller shall be liable for Losses pursuant to Section 11.02(a)(i)
only once the cumulative aggregate amount of all such Losses equals or
exceeds $225,000 (the "Basket").
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(ii) The aggregate amount of Losses for which the Seller shall be
liable with respect to the following Sections shall not exceed the
following amounts: (A) $20,000,000 pursuant to Sections 11.02(a)(i) and
(iv) with respect to matters arising out of any misrepresentation or breach
of warranty, covenant or agreement contained in Section 3.17; or (B)
$10,000,000 pursuant to Sections 11.02(a)(i) and (vi) with respect to
matters arising out of any misrepresentation or breach of warranty,
covenant or agreement and which relate to any one or more Key Customers;
or (C) $3,450,000 with respect to all other claims for indemnification
pursuant to Section 11.02(a)(i), (a)(iii) and (a)(v). If more than one of
the foregoing clauses (A), (B) or (C) applies with respect to any Loss,
then only the clause with the highest maximum indemnifiable amount shall
apply.
(iii) Any loss paid by Buyer's insurer.
(c) The liabilities of Buyer under Section 11.02(b) of this Agreement shall
be subject to the following limitations:
(i) Buyer shall be liable for Losses pursuant to Section 11.02(b)(i)
only to the extent that the cumulative aggregate amount of all such Losses
exceeds the Basket.
(ii) The aggregate amount of Losses for which Buyer shall be liable
pursuant to Section 11.02(b)(i) shall not exceed $3,450,000.
(d) Any provision contained in this Article XI to the contrary
notwithstanding, neither Party will, after the Closing Date, assert against the
other or any customer or supplier of any Party, any claim for infringement of
any patents entitled to a filing date priority before the second anniversary of
the Closing Date.
11.04. Procedures; No Waiver.
(a) The Party seeking indemnification under Section 11.02 (the "Indemnified
Party") agrees to give prompt notice to the Party against whom indemnity is
sought (the "Indemnifying Party") of the assertion of any claim or the
commencement of any suit, action or proceeding in respect of which indemnity may
be sought under such Section. The Indemnifying Party may, and at the request of
the Indemnified Party shall, participate in and control the defense of any such
suit, action or proceeding at its own expense; provided, that if any claim
against or affecting Buyer by a Person who is not a Party which seeks damages
in excess of Seller's indemnification obligation as described in Section
11.03(b)(ii), Buyer shall have the right to control the defense of any such
suit, action or proceeding. The Indemnifying Party shall not be liable hereunder
for any settlement or compromise affected without its consent of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder,
which consent shall not be unreasonably withheld or delayed.
(b) If Seller used its best efforts to comply with a closing condition but
is unable so to comply, and Buyer elects to waive such compliance, such waiver
of such closing condition by Buyer shall limit their rights under Section 11.02
solely with respect to the matter waived.
(c) If the Indemnifying Party disputes its liability with respect to such
claim or demand or the amount thereof (whether or not the Indemnifying Party
desires to defend the
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submitted to mediation in accordance with Section 13.09 hereof. Pending the
resolution of any dispute by the Indemnifying Party of its liability with
respect to any claim or demand, such claim or demand shall not be settled
without the prior written consent of the Indemnifying Party, such consent not to
be unreasonably withheld or delayed.
ARTICLE XII
TERMINATION
12.01. Grounds for Termination. This Agreement may be terminated at any
time prior to the Closing:
(i) by mutual written agreement of Seller and Parent;
(ii) by either Seller or Parent if the Closing shall not have been
consummated on or before April 30, 1995 or within thirty (30) days of such
date in order to satisfy any of the conditions in Sections 10.01(a) and
(e) or Section 10.02(d); or
(iii) by either Seller or Parent if there shall be any law or
regulation that makes the consummation of the transactions contemplated
hereby illegal or otherwise prohibited or if consummation of the
transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any court or governmental body having
competent jurisdiction.
The Party desiring to terminate this Agreement pursuant to clauses (ii) or
(iii) shall give notice of such termination to the other Parties.
12.02. Effect of Termination. If this agreement is terminated as permitted
by Section 12.01, such termination shall be without liability of either Party
(or any shareholder, director, officer, employee, agent, consultant or
representative of such Party) to the other Parties to this Agreement; provided
that if such termination shall result from the willful failure of either Party
to fulfill a condition to the performance of the obligations of the other Party
or to perform a covenant of this Agreement or from a breach by either Party to
this Agreement due to substantial or gross negligence, recklessness or
willfulness, such Party shall be fully liable for any and all Losses incurred or
suffered by the other Party as a result of such failure or breach. The
provisions of Sections 6.01 and 13.03 shall survive any termination hereof
pursuant to Section 12.01.
ARTICLE XIII
MISCELLANEOUS
13.01. Notices. All notices, requests and other communications to any Party
hereunder shall be in writing (including telex, telecopy or similar writing) and
shall be given,
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if to Buyer, to:
Parametric Technology Corporation
128 Technology Drive
Waltham, MA 02154
Telecopy: (617) 398-5662
Attention: Chief Financial Officer
with a copy to:
William B. Asher, Jr., Esq.
Testa, Hurwitz & Thibeault
53 State Street
Boston, MA 02108
Telecopy: (617) 248-7100
if to Seller, to:
Evans & Sutherland Computer Corporation
600 Komas Drive
P.O. Box 58700
Salt Lake City, UT 84158
Telecopy: (801) 583-9701
Attention: Gary Meredith
with a copy to:
William C. Gibbs, Esq.
Snell & Wilmer
Broadway Centre
111 East Broadway, Suite 900
Salt Lake City, UT 84111
Telecopy: (801) 237-1950
13.02 Amendments; No Waivers.
(a) Any provisions of this Agreement may be amended or waived prior to the
Closing Date if, and only if, such amendment or waiver is in writing and signed,
in the case of an amendment, by all the Parties, or in the case of a waiver, by
the Party against whom the waiver is to be effective.
(b) No failure or delay by either Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
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13.03. Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the Party
incurring such cost or expense.
13.04. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and assigns; provided, however, that, other than as described in
Section 6.04, (i) Seller shall not be entitled to assign or in any way transfer
any of its rights hereunder, by operation of law or otherwise, without the prior
written consent of Parent, and (ii) prior to the Closing Date, Buyer shall be
entitled to assign its rights only to Parent or any subsidiary of Parent. Any
attempted assignment of such rights without such prior written consent shall be
void and prohibited, and all such rights shall thereupon automatically be
terminated and of no further force or effect. For purposes of this Section, any
merger or transfer of control of Seller shall be deemed an assignment or
attempted assignment.
13.05. Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of Delaware, or in the event a court
decides that Delaware law may not govern, the law of the Commonwealth of
Massachusetts.
13.06. Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signature thereto and hereto were upon the same instrument.
This Agreement shall become effective when each Party hereto shall have received
a counterpart hereof signed by the other Party hereto.
13.07 Entire Agreement. This Agreement, the Ancillary Agreements and the
confidentiality agreement dated as of February 13, 1995 between Seller and Buyer
constitute the entire agreement between the Parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, between the Parties with respect to the
subject matter of this Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein in the documents
referred to in the preceding sentence has been made or relied upon by either
Party hereto. None of this Agreement, the Ancillary Agreements and the
confidentiality agreement dated as of February 13, 1995 between Seller and
Buyer, nor any provision hereof or thereof, is intended to confer upon any
Person other than the Parties any rights or remedies hereunder.
13.08. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
13.09. Legal Proceedings.
(a) Mediation. Any claim, dispute, or controversy between the Parties
arising in connection with or relating to this Agreement or the making,
performance or interpretation thereof shall, if not settled by negotiation, be
submitted to non-binding mediation under the Procedure for Mediation of Business
Disputes of the Center for Public Resources, Inc. then in effect. Any demand for
mediation shall be made in writing and served upon the other Party in the same
manner as otherwise provided for notice in this contract. The demand shall set
forth with reasonable specificity the basis of the dispute and the performance
or relief sought. The Parties shall, within thirty (30) days of receipt of a
demand to mediate, confer and select a
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mediator. The mediation shall take place at a time and location mutually
agreeable to the Parties and the mediator, but not later than 60 days after a
demand for mediation is received.
(b) Jurisdiction. Any claim, dispute or controversy not settled by
mediation shall be resolved in the federal or state courts in the State of
Delaware. The Parties hereby irrevocably submit to the exclusive jurisdiction of
a court sitting in the State of Delaware over any suit, action or proceeding
brought against either Party by any Person or other Party and arising out of or
relating to this Agreement or the Ancillary Agreements. Each Party agrees that,
during the pendency of any such suit, action or proceeding commenced in
accordance with the provisions of this Section 13.09(b), it will only bring any
counter-claims arising out of or relating to this Agreement or the Ancillary
Agreements (whether or not related to the matter currently the subject of
litigation) in the court in which such suit, action or proceeding is pending.
Each Party hereby irrevocably waives, to the fullest extent permitted by law,
any objection that it may now have or hereafter have to the laying of the venue
of any such suit, action or proceeding in the court contemplated under this
Section 13.09(b), and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.
13.10. No Partnership or Joint Venture. Notwithstanding anything to the
contrary contained herein, nothing contained herein shall be construed as
creating a partnership or joint venture relationship between the Parties and the
Parties shall be deemed to have made any election necessary under applicable
law, rule or regulation to prevent their being considered or deemed to be a
partnership or joint venture.
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IN WITNESS WHEREOF, the Parties here caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
PARAMETRIC TECHNOLOGY CORPORATION
By: /s/ C. Richard Harrison
-----------------------
Name: C. Richard Harrison
Title: President and Chief Operating Officer
PTC ACQUISITION CORPORATION
By: /s/ C. Richard Harrison
-----------------------
Name: C. Richard Harrison
Title: President
EVANS & SUTHERLAND COMPUTER
CORPORATION
By: /s/ James Oyler
-----------------------
Name: James Oyler
Title: President & CEO
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EXHIBIT A
PURCHASED ASSETS
<TABLE>
<CAPTION>
Item Description
---- -----------
<S> <C>
Assigned Contracts All Contracts, Licenses, Leases and Agreements
listed on Schedules 3.08(b), 3.13.(a), 3.13(b),
3.13(c), 3.13(d), 3.13(e), 3.17(e), and 3.17(f).
Personal Property All personal property listed on Schedules 3.06(a)
and 3.08(a).
Accounts Receivable All accounts receivable listed on Schedule 3.23.
Other Assets All rights under all Assigned Contracts
(collectively, the "Contract Rights"); all rights,
claims, credits, causes of action (choate or
inchoate), rights of set-off against third parties
relating to the Purchased Assets or the Business,
including, without limitation, unliquidated rights
under any manufacturers' and vendors' warranties;
the obligations that Seller is required to perform
for customers with respect to the customer deposits
deducted from the Purchase Price pursuant to
Section 2.06(a); and all goodwill associated with
the Business and the Purchased Assets.
Proprietary Rights As listed on Schedule 3.17
</TABLE>
<PAGE>
EXHIBIT B
PATENT ASSIGNMENT AND
GRANT-BACK LICENSE AGREEMENT
This Agreement effective , 1995, is made by and between
Parametric Technology Corporation, a Massachusetts corporation (hereinafter,
together with all subsidiary and affiliate companies which it now or hereafter
owns or controls, "PTC"), and Evans & Sutherland Computer Corporation, a Utah
corporation ("E&S").
WHEREAS, E&S and PTC are Parties to a certain Asset Purchase Agreement (the
"Purchase Agreement") relating to the purchase and sale of certain assets of the
Design Software Division of E&S, including the sale and assignment of
Proprietary Rights (as defined in the Purchase Agreement);
WHEREAS, the Parties desire to effect the assignment by E&S to PTC pursuant
to the Purchase Agreement of all claims of all United States patents and all
patent applications set forth in Appendix A to this Agreement, together with any
division, continuation, continuation-in-part, extension, revival and reissue
thereof or any substitution therefor, and all corresponding patents and patent
applications in other countries (the "Assigned Patents and Patent Rights"); and
WHEREAS, E&S has requested, and PTC desires to grant to E&S, a license
under the Assigned Patents and Patent Rights, as well as a license to certain
software included in the Proprietary Rights, such licenses to be limited in
scope as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained in this Agreement and in the Purchase
Agreement, in which this Agreement is incorporated and made a part, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, PTC and E&S hereby agree as follows:
1. Definitions. The following terms shall have the meaning set forth
below. Terms not otherwise defined herein shall have the meaning ascribed to
them in the Purchase Agreement.
"Exclusive Field of Use" means the design, development, modification,
reproduction, use, distribution, sale, license and support of software products
for applications consisting of mechanical (A) computer-aided engineering, design
and manufacturing, (B) computer-aided styling and industrial design and (C)
kinematics and structural and thermal dynamics. The Exclusive Field of Use shall
also include any extensions of the foregoing that may develop after the Closing
as a result of general changes in the markets for such products.
"Restricted Field of Use" means the design, development, modification,
reproduction, use, distribution, sale, license and support of hardware and
software products for E&S's current simulation, graphics, entertainment and
visualization businesses (other than those in the Exclusive Field of Use). The
Restricted Field of Use shall also include any
<PAGE>
2
extensions of the foregoing that may develop after the Closing as a result of
general changes in the markets for such products.
"Licensed Software" means the CDRS and 3D Paint software, including any and
all copyrights therein, included in the Proprietary Rights and conveyed by E&S
to PTC pursuant to the Purchase Agreement. For purposes of this Agreement, the
Licensed Software includes both source and object code for such software and
supporting documentation therefor, such as code listings, flowcharts, schematics
and programmer's notes, in each case as the same exist on the Closing Date.
2. Assignment of Patent Rights. E&S hereby assigns, remises and releases
unto PTC all right, title, interest, claim and demand in and to the Assigned
Patents and Patent Rights. For a period of two years following the Closing Date,
PTC shall not, without the prior written consent of E&S, use or practice the
Assigned Patents and Patent Rights within the Restricted Field of Use.
Notwithstanding the foregoing, PTC shall not be deemed to be in violation of the
preceding sentence if it shall use or practice the Assigned Patents and Patent
Rights in products that contain features or functionality that fall within the
Restricted Field of Use, provided that the resulting products are not
competitive with products of E&S within the Restricted Field of Use existing at
the Closing Date (including those products acquired by PTC pursuant to the
Purchase Agreement).
3. Grant-Back Patent License. PTC hereby grants E&S a fully paid,
non-exclusive, perpetual, irrevocable, worldwide license to make, use, sell and
offer to sell devices, methods, processes and products embodying the Assigned
Patents and Patent Rights or any claimed elements thereof (or their
equivalents), and otherwise to use and practice the Assigned Patents and Patent
Rights, provided, however, that E&S shall not use or practice the Assigned
Patents and Patent Rights within the Exclusive Field of Use. Notwithstanding the
foregoing, E&S shall not be deemed to be in violation of the foregoing sentence
if it shall use the Assigned Patents and Patent Rights in products that contain
features or functionality that fall within the Exclusive Field of Use, provided
that the resulting products are not competitive with products of PTC within the
Exclusive Field of Use existing at the Closing Date. The license granted herein
shall be effective for the life of the subject Assigned Patents and Patent
Rights and shall terminate on the expiration date of the last of the subject
Assigned Patents and Patent Rights to expire. E&S shall not sublicense any
rights granted hereunder for any purpose within the Exclusive Field of Use, but
may do so in any other field of use.
4. Software License. PTC hereby grants to E&S a fully paid, perpetual, non-
exclusive worldwide right and license, but not within the Exclusive Field of
Use, to use, modify, copy, execute, reproduce, sell, distribute, display and
perform the Licensed Software or portions thereof, to port, translate and
convert the Licensed Software or portions thereof to execute on any operating
platform, and to prepare products and works of authorship (including "derivative
works" within the meaning of such term in the Copyright Act, 17 U.S.C.
(S)(S) 101 et seq.) using, based on, derived from or incorporating the Licensed
Software or portions thereof. The foregoing grant of rights and licenses
includes the right to make and sublicense to end users copies of the Licensed
Software (or portions thereof incorporated in any E&S product or work of
authorship), in object code form only and on any media or format, provided,
however, that E&S shall not sublicense, or develop and release for itself,
directly or indirectly, the Licensed Software or any product or work
incorporating or reproducing portions of the
<PAGE>
3
Licensed Software within the Exclusive Field of Use. Notwithstanding anything to
the contrary, E&S may use at any time, without restriction, and incorporate in
any product or work any application, utility, subroutine, macro, code, library,
object module and the like which is generic in nature and not specific to the
Licensed Software, and which was not confidential information of E&S (within the
meaning of Section 6.01 of the Purchase Agreement) at the date of the Purchase
Agreement. In no event shall E&S sublicense or deliver any copy of the source
code for the Licensed Software to any Person without the prior written consent
of PTC. For purposes of implementing the foregoing license, E&S may retain
copies of the Licensed Software following the date of transfer provided for in
the Purchase Agreement. Nothing in this Agreement shall be construed to place an
obligation on PTC to deliver or to transfer to E&S any tangible or intangible
property following the date of execution on this Agreement.
5. Ownership of Improvements, etc. As between PTC and E&S, each Party owns
and will retain, to the maximum extent permitted by law, all rights, including
worldwide intellectual property rights, in (y) all modifications that such Party
may make to the Licensed Software following the Closing Date and (z) all
inventions, products and works of authorship made by such Party following the
Closing Date using, based on, derived from or incorporating any portion of the
Licensed Software; and nothing herein shall be construed to mean that either
Party licenses, conveys or transfers, or has any obligation to license, convey
or transfer to the other Party, any right or interest in such modifications,
inventions, products or works, provided, however, that all rights, including
intellectual property rights, in portions of the Licensed Software code
incorporated or reproduced in any product or work of authorship by E&S pursuant
to the license granted in Section 4 hereof are retained by PTC, and no rights
are granted to E&S other than the rights and licenses expressly granted
hereunder.
6. Other Terms and Provisions.
(a) Ownership. E&S retains no ownership or intellectual property rights in
the Assigned Patents and Patent Rights under this Agreement except for such
license rights as are expressly set forth herein.
(b) Disclaimer of Warranties. The Assigned Patents and Patent Rights are
assigned to PTC hereunder subject to the representations, warranties and
undertakings of the Parties contained in the Purchase Agreement, including
without limitation Sections 3.17 and Article XI thereof. The Assigned Patents
and Patent Rights and the Licensed Software are licensed to E&S hereunder "AS
IS", WITHOUT WARRANTY OF ANY KIND. PTC DISCLAIMS ALL WARRANTIES WHATSOEVER,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF TITLE,
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTIES OF
NON-INFRINGEMENT.
(c) No Obligation to Defend Infringement Claims. PTC shall have no
obligation to defend any claim that the Assigned Patents and Patent Rights or
Licensed Software infringe any patent or other intellectual property right or to
assert any claim of infringement against another Person. In the event that PTC
elects not to defend or assert any such claim, E&S may, at its cost and expense,
assume the defense or prosecution of such claim.
(d) Entire Agreement. This Agreement, together with the Purchase
Agreement, constitutes the full and complete understanding of the Parties with
respect to the
<PAGE>
4
subject matter hereof and these documents together supersede and terminate all
other prior or contemporaneous agreements between the Parties, whether oral or
written, with respect to the subject matter therein.
(e) Successors and Assigns. Except as may otherwise be provided in Section
2, this Agreement and any rights granted hereby may be assigned by PTC, in whole
or in part, to any person or entity without the consent of E&S. In no event
shall E&S assign this Agreement or any rights granted hereby without the prior
written consent of PTC, which consent shall not be unreasonably withheld.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
<TABLE>
<CAPTION>
PARAMETRIC TECHNOLOGY EVANS & SUTHERLAND COMPUTER
CORPORATION: CORPORATION:
<S> <C>
By: _______________________ By: _______________________
Name: Name:
Title: Title:
</TABLE>
<PAGE>
EXHIBIT A
SCHEDULE OF PATENTS AND PATENT APPLICATIONS
U.S. Patents:
<TABLE>
<CAPTION>
OTHER CORRESPONDING FILING/ISSUE
PATENT NO. ISSUE DATE PATENTS/APPLICATION DATE
- ---------- ---------- ------------------- ------------
<S> <C> <C> <C>
5,251,160
5,361,386
</TABLE>
Pat. Pending Docket No. 853-260 (Paint)
Pat. Pending Docket No. 853-260 C1 (Continuation of Paint)
Pat. Pending Docket No. 853-278 (Modeling)
U.S. Patent Applications:
<TABLE>
<CAPTION>
FILING DOCKET SERIAL OTHER
TITLE DATE NO. NO. CORRESPONDING
- ----- ------ ------ ------ -------------
<S> <C> <C> <C> <C>
Texture Operations
</TABLE>
<PAGE>
EXHIBIT C
PATENT LICENSE AGREEMENT
This Agreement effective , 1995, is made by and between
Parametric Technology Corporation, a Massachusetts corporation (hereinafter,
together with all subsidiary and affiliate companies which it now or hereafter
owns or controls, "PTC"), and Evans & Sutherland Computer Corporation, a Utah
corporation ("E&S").
WHEREAS, E&S and PTC are parties to a certain Asset Purchase Agreement (the
"Purchase Agreement") relating to the purchase and sale of certain assets of the
Design Software Division of E&S, including the sale and assignment of
Proprietary Rights (as defined in the Purchase Agreement);
WHEREAS, E&S will retain ownership of all claims of all United States
patents and any and all patent applications set forth in Appendix A to this
Agreement, together with any division, continuation, continuation-in-part,
extension, revival and reissue thereof or any substitution therefor, and all
corresponding patents and patent applications in other countries (the "Retained
Patents and Patent Rights"); and
WHEREAS, PTC has requested, and E&S desires to grant to PTC, a license
under the Retained Patents and Patent Rights, such license to be limited in
scope as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained in this Agreement and in the Purchase
Agreement, to which this Agreement is incorporated and made a part, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, PTC and E&S hereby agree as follows:
1. Definitions. The following terms shall have the meaning set forth
below. Terms not otherwise defined herein shall have the meaning ascribed to
them in the Purchase Agreement.
"Exclusive Field of Use" means the design, development, modification,
reproduction, use, distribution, sale, license and support of software products
for applications consisting of mechanical (A) computer-aided engineering, design
and manufacturing, (B) computer-aided styling and industrial design and (C)
kinematics and structural and thermal dynamics. The Exclusive Field of Use shall
also include any extensions of the foregoing that may develop after the Closing
as a result of general changes in the markets for such products.
"Restricted Field of Use" means the design, development, modification,
reproduction, use, distribution, sale, license and support of hardware and
software products for E&S's current simulation, graphics, entertainment and
visualization businesses (other than those in the Exclusive Field of Use). The
Restricted Field of Use shall also include any extensions of the foregoing that
may develop after the Closing as a result of general changes in the markets for
such products.
<PAGE>
2
2. Patent License Grant to PTC. E&S hereby grants PTC a fully paid,
non-exclusive, perpetual, irrevocable, worldwide license to make, use, sell and
offer to sell devices, methods, processes and products embodying the Retained
Patents and Patent Rights or any claimed elements thereof (or their
equivalents), and otherwise to use and practice the Retained Patents and Patent
Rights; provided, however, that for a period of two years following the Closing
Date, E&S shall grant no further licenses within the Exclusive Field of Use; and
provided further, that, for a period of two years following the Closing Date,
PTC shall not use or practice the Retained Patents and Patent Rights pursuant to
the foregoing license within the Restricted Field of Use. Notwithstanding the
foregoing, PTC shall not be deemed to be in violation of the final proviso in
the preceding sentence if it shall use or practice the Retained Patents and
Patent Rights in products that contain features or functionality which fall
within the Restricted Field of Use, provided that the resulting products are not
competitive with products of E&S within the Restricted Field of Use existing at
the Closing Date. The license granted herein is, at all times, subject to E&S's
right, title, interest, claim and demand which E&S has in and to the Retained
Patents and Patent Rights. The license granted herein shall be effective for the
life of the subject Retained Patents and Patent Rights and shall terminate on
the expiration date of the last of the subject Retained Patents and Patent
Rights to expire. For the term of this Agreement, PTC will not sublicense the
rights granted herein to another Person without the written permission of E&S,
which consent shall not be unreasonably withheld.
3. Restrictions on Practice. For a period of two years following the
Closing, E&S shall not use or practice the Retained Patents and Patent Rights
within the Exclusive Field of Use. Notwithstanding the foregoing, E&S shall not
be deemed to be in violation of the foregoing sentence if it shall use or
practice the Retained Patents and Patent Rights in products within the
Restricted Field of Use that contain features or functionality which fall within
the Exclusive Field of Use, provided that the resulting products are not
competitive with products of PTC within the Exclusive Field of Use existing at
the Closing Date (including those products acquired by PTC pursuant to the
Purchase Agreement). During the term of this Agreement, E&S shall not sublicense
any rights to use and practice the Retained Patents and Patent Rights to another
Person within the Exclusive Field of Use.
4. Other Terms and Provisions.
(a) Ownership. PTC receives no ownership or intellectual property rights
in the Retained Patents and Patent Rights under this Agreement except for such
license rights as are expressly set forth herein.
(b) Disclaimer of Warranties. The Retained Patents and Patent Rights are
licensed hereunder "AS IS", WITHOUT WARRANTY OF ANY KIND, EXCEPT AS SET FORTH IN
SECTION 3.17 OF THE PURCHASE AGREEMENT. EXCEPT AS SO SET FORTH IN THE PURCHASE
AGREEMENT, E&S DISCLAIMS ALL WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTIES OF NON-INFRINGEMENT.
(c) No Obligation to Defend Infringement Claims. Except as set forth in
the Purchase Agreement, E&S shall have no obligation to defend any claim that
the Retained Patents and Patent Rights infringe any patent or other intellectual
property right or to assert
<PAGE>
3
any claim of infringement against another Person. In the event that E&S elects
not to defend or assert any such claim, PTC may, at its cost and expense, assume
the defense or prosecution of such claim.
(d) Entire Agreement. This Agreement, together with the Purchase
Agreement, constitutes the full and complete understanding of the parties with
respect to the subject matter hereof and these documents together supersede and
terminate all other prior or contemporaneous agreements between the parties,
whether oral or written, with respect to the subject matter therein.
(e) Successors and Assigns. Except as may otherwise be provided in Section
2, this Agreement and any rights granted hereby may be assigned by PTC, in whole
or in part, to any person or entity without the consent of E&S. In no event
shall E&S assign this Agreement or any rights granted hereby without the prior
written consent of PTC, which consent shall not be unreasonably withheld.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
<TABLE>
<CAPTION>
PARAMETRIC TECHNOLOGY EVANS & SUTHERLAND COMPUTER
CORPORATION: CORPORATION:
<S> <C>
By: _______________________ By: _______________________
Name: Name:
Title: Title:
</TABLE>
<PAGE>
APPENDIX A
PATENTS AND PATENT APPLICATIONS
U.S. Patent:
<TABLE>
<CAPTION>
OTHER CORRESPONDING FILING/ISSUE
PATENT NO. ISSUE DATE PATENTS/APPLICATION DATE
- ---------- ---------- ------------------- ------------
<S> <C> <C> <C>
4,646,251
4,918,626
</TABLE>
U.S. Patent Applications:
<TABLE>
<CAPTION>
FILING DOCKET SERIAL OTHER
TITLE DATE NO. NO. CORRESPONDING
- ----- ------ ------ ------ -------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT D
ASSUMPTION AGREEMENT
This ASSUMPTION AGREEMENT is made and entered into as of the day of
1995 BETWEEN Parametric Technology Corporation, a Massachusetts corporation
("Buyer"), and Evans & Sutherland Computer Corporation, a Utah corporation
("Seller"), pursuant to a certain Asset Purchase Agreement dated as of March 1,
1995, between Buyer and Seller (the "Agreement").
Pursuant to the Agreement, Buyer purchased certain of the assets, property
and business of Seller (the "Purchased Assets"), and Buyer agreed to assume
certain liabilities of Seller in connection with its acquisition of the
Purchased Assets. Capitalized terms used as defined terms herein and not
otherwise defined shall have the meanings set forth in the Agreement.
1. Assumption of Liabilities.
(a) As part of the consideration for the sale of the Purchased Assets by
Seller to Buyer, Buyer hereby assumes and agrees to pay, perform and discharge,
and shall have a continuing obligation to discharge, when and as they become
due, all liabilities and obligations of Seller described in the Agreement and
Disclosure Schedule as being Assumed Liabilities.
(b) Notwithstanding the foregoing, Buyer shall not be obligated to pay,
perform or discharge any obligation except to the extent that such obligation or
liability constitutes a valid and legally enforceable claim against Seller with
respect to the Assumed Liabilities and nothing herein shall prevent Buyer from
contesting in good faith any such obligation or liability.
(c) Notwithstanding anything to the contrary set forth above, Buyer does
not assume and will not assume or be deemed to have assumed any debts,
liabilities, obligations, contracts, loans, commitments or undertakings of
Seller with respect to the Purchased Assets, whether fixed, unliquidated,
contingent or otherwise, except as described above. All such non-assumed debts,
liabilities, obligations, contracts, loans, commitments or undertakings shall be
retained by Seller.
2. Agreement. This Assumption Agreement is subject to and has the benefit
of the representations, warranties, covenants, indemnities, terms, conditions
and other provisions of the Agreement. The provisions contained herein shall not
confer any rights upon any person not a party to the Agreement.
<PAGE>
2
WITNESS the due executed hereof as instrument under seal as of the day and
the year first above written.
PARAMETRIC TECHNOLOGY CORPORATION
By: _____________________________________________
Name:
Title:
EVANS & SUTHERLAND COMPUTER CORPORATION
By: _____________________________________________
Name:
Title:
<PAGE>
EXHIBIT E
BILL OF SALE
THIS BILL OF SALE is made, executed and delivered as of the th day of
, 1995, by Evans & Sutherland Computer Corporation, a Utah corporation
("Seller"), to Parametric Technology Corporation ("Buyer"), a Massachusetts
corporation.
WITNESSETH:
WHEREAS, the Buyer has acquired the entire right, title and interest in and
to the Purchased Assets pursuant to an Asset Purchase Agreement by and between
the Seller and the Buyer as of March 1, 1995 (the "Purchase Agreement"); and
WHEREAS, pursuant to the Purchase Agreement the Seller has agreed to
execute such additional instruments as may be necessary or desirable to confirm
said acquisition of the Purchased Assets by the Buyer.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged:
Capitalized terms not otherwise defined herein shall have the meanings
given them in the Purchase Agreement.
Seller does hereby sell, transfer and assign unto the Buyer, its successors
and assigns forever, all of its right, title and interest in and to the
Purchased Assets.
Seller, for itself and its successors and assigns, covenants and agrees
that in the event any of the Purchased Assets cannot be transferred or assigned
by it without the consent of or notice to a third party and in respect of which
any necessary consent or notice has not at the date of delivery of this Bill of
Sale been given or obtained, the beneficial interest in and to the same shall in
any event pass hereby to the Buyer; and Seller, for itself and its successors
and assigns, consents and agrees to: (a) hold the Purchased Assets in trust for
the benefit of the Buyer, its successors and assigns, (b) use its best efforts
to obtain and secure a valid transfer of the Purchased Assets, and (c) use its
best efforts to make or complete such transfer as soon as reasonably possible.
Seller, for itself and its successors and assigns, further covenants and
agrees without further expense to the Buyer that it will, from time to time at
the request of the Buyer, execute, acknowledge, seal and deliver all such other
instruments and documents, pay all legal and other fees, and do all such other
things necessary to effectuate the transfer and assignment of the Purchased
Assets to the Buyer.
This Bill of Sale and the covenants and agreements contained herein shall
be binding upon Seller, its successor and assigns and shall inure to the benefit
of the Buyer, its successors and assigns. The covenants, representations and
warranties of Seller set forth in the Purchase
<PAGE>
2
Agreement will be incorporated in and survive the execution and delivery of this
Bill of Sale and are subject to the limitations and restrictions set forth in
the Purchase Agreement.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed and
delivered under seal by a duly authorized officer as of the date first above
written.
EVANS & SUTHERLAND COMPUTER CORPORATION
By: ______________________________________________
Title: ___________________________________________
