<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 31, 1998
ASTEA INTERNATIONAL INC.
-------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE
-------------------------------------------------
(State or other jurisdiction of incorporation)
0-26330 23-2119058
------- ----------
(Commission File Number) (IRS Employer Identification No.)
455 BUSINESS CENTER DRIVE, HORSHAM, PENNSYLVANIA 19044
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(215) 682-2500
-------------
N.A.
-------------------------------------------------------------
(Former name or former address, if changed since last report)
=====================================================================
<PAGE>
PAGE 2
SECURITIES AND EXCHANGE COMMISSION
CURRENT REPORT ON FORM 8-K
DATE OF REPORT: DECEMBER 31, 1998
ITEM 2. DISPOSITION OF ASSETS
On December 31, 1998, Astea International Inc. ("Astea" or the "Company")
completed the sale of all of the capital stock of its subsidiary, Abalon AB, a
Swedish corporation ("Abalon"), including Abalon's subsidiaries, to Industri-
Matematik International Corporation, a Delaware corporation ("IMIC"). This
transaction is referred to as the "Sale of Abalon." Astea entered into a Stock
Purchase Agreement, dated December 31, 1998, among IMIC, Astea, and Astea's
wholly owned subsidiary Network Data, Inc. The closing of the Sale of Abalon
took place simultaneously with the signing of the Stock Purchase Agreement.
In consideration of the transfer of all of the outstanding capital stock of
Abalon AB to IMIC, Astea (through its wholly-owned subsidiary, Network Data,
Inc.) received from IMIC at the closing $9.5 million in cash, of which $1.1
million was deposited in escrow to secure certain indemnification obligations
through June 2000.
IMIC is not affiliated with Astea and, prior to the closing, was not
affiliated with Abalon AB, or any of their respective officers or directors or
their associates. The consideration paid by IMIC and received by Astea was
determined through arms-length negotiations between Astea and IMIC.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Pro Forma Financial Information
PRO FORMA FINANCIAL STATEMENTS
The following unaudited Pro Forma Balance Sheet as of September 30, 1998
and the Pro Forma Statements of Operations for the nine months ended September
30, 1998 and 1997 and for the years ended December 31, 1997 and 1996 are
presented to give effect to the Sale of Abalon. No Pro Forma information is
necessary for any periods prior to December 31, 1996 as the Company purchased
Abalon in June 1996.
Historical financial data used to prepare the pro forma financial
statements were derived from the pro forma consolidated financial statements
included in the Company's Report on Form 8-K dated September 4, 1998 for the
years ended December 31, 1997 and 1996 (as adjusted for discontinued operations)
and the unaudited consolidated financial statements included in the Company's
quarterly report on Form 10-Q for the quarterly period ended September 30, 1998
for the nine month periods ended September 30, 1998 and 1997. The September 4,
1998 Form 8-K was filed to report the Company's sale of all the capital stock of
its subsidiary, Bendata, Inc. These pro forma financial statements should be
read in conjunction with such historical financial statements and notes thereto.
The pro forma adjustments reflected herein are based on available
information and certain assumptions that the Company's management believes are
reasonable. Pro forma adjustments made in the Pro Forma Balance Sheet assume
that the Sale of Abalon was consummated on September 30, 1998 and do not reflect
the impact of the Abalon operating results or changes in the balance sheet
amounts subsequent to September 30, 1998. The pro
<PAGE>
forma adjustments to the Pro Forma Statements of Operations assume that the Sale
of Abalon was consummated on June 28, 1996, the date the Company acquired
Abalon.
The Pro Forma Balance Sheet and Pro Forma Statements of Operations are
based on assumptions and approximations and, therefore, do not reflect in
precise numerical terms the impact of the transaction on the historical
financial statements. In addition, such pro forma financial statements should
not be used as a basis for forecasting the future operations of the Company.
<PAGE>
<TABLE>
<CAPTION>
Astea International Inc. and Subsidiaries
Pro forma Consolidated Balance Sheet
As of September 30, 1998
(In Thousands, Unaudited)
Less
Abalon net
Historical assets sold Adjustments Pro Forma
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,079 $ -- $ 8,200 A $ 24,279
Note receivable 8,400 -- 8,400
Investments available for sale 16,441 -- 16,441
Receivables, net of reserves 10,151 1,820 8,331
Prepaid expenses and other 2,248 495 1,753
Deferred income taxes 75 (402) 477
----------------------------------------------------------------------------
Total current assets 53,394 1,913 8,200 59,681
Restricted cash -- -- 1,100 A 1,100
Property and equipment, net 1,965 423 1,542
Capitalized software development costs, net 3,578 521 3,057
Goodwill, net 725 725 -- --
-------------------------------------------------- --------------------
Total assets $ 59,662 $ 3,582 $ 9,300 $ 65,380
================================================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 906 $ 906 $ --
Current portion of long-term debt 663 -- 663
Accounts payable and accrued expenses 8,906 1,506 325 B 7,725
Income taxes payable 2,211 -- (1,596) B 615
Deferred revenues 4,876 235 4,641
----------------------------------------------------------------------------
Total current liabilities 17,562 2,647 (1,271) 13,644
Deferred income taxes 1,253 1,253
Long-term debt 973 973
----------------- --------------------
Stockholders' equity 39,874 9,636 B 49,510
----------------- ----------------- --------------------
Total liabilities and stockholders'
equity $ 59,662 $ 8,365 $ 65,380
================= ================= ====================
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
<TABLE>
<CAPTION>
Astea International Inc. and Subsidiaries
Pro forma Consolidated Statement of Operations
For the nine months ending September 30, 1998
(In Thousands, Unaudited)
Historical Less Abalon Adjustments Pro Forma
<S> <C> <C> <C> <C>
Revenues:
Software license fees $ 5,526 $ 1,266 $ 4,260
Services and maintenance 20,456 3,515 16,941
---------------------------------------------- ---------------
Total revenues 25,982 4,781 21,201
---------------------------------------------- ---------------
Costs and expenses:
Cost of software license fees 1,695 275 1,420
Cost of services and maintenance 15,923 2,762 13,161
Product development 5,066 785 4,281
Sales and marketing 7,937 1,676 6,261
General and administrative 4,777 814 3,963
Restructuring charge (800) -- (800)
---------------------------------------------- ---------------
Total costs and expenses 34,598 6,312 28,286
Loss from continuing operations before
interest and taxes (8,616) (1,531) (7,085)
Net interest income (expense) 64 (56) 120
----------------------------------------------------------------
Loss from continuing operations before
income taxes (8,552) (1,587) (6,965)
Income tax benefit (432) -- (432)
---------------------------------------------- ---------------
Loss from continuing operations (8,120) $(1,587) $(6,533)
============== ===============
Gain on disposal of discontinued operations,
net of income taxes 33,902
Income from discontinued operations 677
--------------
Net income (loss) $26,459
==============
Basic and diluted net income (loss) per share:
Continuing Operations $ (0.60)
Discontinued Operations $ 2.57
--------------
Net Income $ 1.97
==============
Shares used in computing basic and
diluted income per share 13,457
==============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
Astea International Inc. and Subsidiaries
Pro forma Consolidated Statement of Operations
For the nine months ending September 30, 1997
(In Thousands, Unaudited)
Historical Less Abalon Adjustments Pro Forma
<S> <C> <C> <C> <C>
Revenues:
Software license fees $ 8,645 $ 2,016 $ 6,629
Services and maintenance 20,979 3,063 17,916
-------------------------------------------- -----------------
Total revenues 29,624 5,079 24,545
-------------------------------------------- -----------------
Costs and expenses:
Cost of software license fees 2,449 268 2,181
Cost of services and maintenance 15,023 2,270 12,753
Product development 7,138 513 6,625
Sales and marketing 8,903 1,340 7,563
General and administrative 10,619 657 9,962
Restructuring charge 5,328 -- 5,328
-------------------------------------------- -----------------
Total costs and expenses 49,460 5,048 44,412
Income (loss) from continuing operations
before interest and taxes (19,836) 31 (19,867)
Net interest expense (106) (70) (36)
-------------------------------------------- -----------------
Loss from continuing operations
before income taxes (19,942) (39) (19,903)
Income tax (benefit) (659) 5 (664)
-------------------------------------------- -----------------
Loss from continuing operations (19,283) $ (44) $(19,239)
============ =================
Income from discontinued operations 677
---------------
Net Loss $(18,606)
===============
Basic and diluted net income (loss) per share:
Continuing operations $ (1.46)
Discontinued Operations $ 0.05
---------------
Net Loss $ (1.41)
===============
Shares used in computing basic and diluted loss
per share 13,215
===============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
Astea International Inc. and Subsidiaries
Pro forma Consolidated Statement of Operations
For the year ending December 31, 1997
(In Thousands, Unaudited)
Historical Less Abalon Adjustments Pro Forma
<S> <C> <C> <C> <C>
Revenues:
Software license fees $ 13,073 $ 3,192 $ 9,881
Services and maintenance 27,493 4,308 23,185
---------------------------------------- ---------------
Total revenues 40,566 7,500 33,066
---------------------------------------- ---------------
Costs and expenses:
Cost of software license fees 3,411 662 2,749
Cost of services and maintenance 19,421 3,020 16,401
Product development 9,456 726 8,730
Sales and marketing 11,580 1,940 9,640
General and administrative 11,928 855 11,073
Restructuring charge 5,328 5,328
---------------------------------------- ---------------
Total costs and expenses 61,124 7,203 53,921
Income (loss) from continuing operations
before interest and taxes (20,558) 297 (20,855)
Net interest income (expense) (97) (101) 4
---------------------------------------- ---------------
Income (loss) from continuing operations
before income taxes (20,655) 196 (20,851)
Income tax (benefit) (865) 12 (877)
---------------------------------------- ---------------
Net income (loss) from continuing operations (19,790) $ 184 $(19,974)
Income from discontinued operations 1,296 ========== ===============
------------
Net loss $(18,494)
============
Basic and diluted net income (loss) per share:
Continuing operations $ (1.49)
Discontinued operations 0.09
------------
Net loss $ 1.40
============
Shares used in computing basic and diluted loss
per share 13,252
============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
Astea International Inc. and Subsidiaries
Pro forma Consolidated Statement of Operations
For the year ending December 31, 1996
(In Thousands, Unaudited)
Historical Less Abalon Adjustments Pro Forma
<S> <C> <C> <C> <C>
Revenues:
Software license fees $ 17,727 $ 1,935 $15,792
Services and maintenance 28,306 2,296 26,010
----------------------------------------------- ---------------
Total revenues 46,033 4,231 41,802
----------------------------------------------- ---------------
Costs and expenses:
Cost of software license fees 2,966 504 2,462
Cost of services and maintenance 20,338 1,430 18,908
Product development 6,949 321 6,628
Sales and marketing 15,349 1,296 14,053
General and administrative 7.934 410 7,524
Charge for purchased research
and development 13,810 -- 13,810 C
----------------------------------------------- ---------------
Total costs and expenses 67,346 3,961 13,810 49,575
Income (loss) from continuing operations
before interest and taxes (21,313) 270 (13,810) (7,773)
Net interest income (expense) 590 (42) 632
----------------------------------------------- ---------------
Income (loss) from continuing operations
before income taxes (20,723) 228 (7,141)
Income tax (benefit) (3,162) -- (3,162)
----------------------------------------------- ---------------
Income (loss) from continuing operations (17,561) $ 228 $(13,810) $(3,979)
========================== ===============
Loss from discontinued operations (2,146)
---------------
Net loss $(19,707)
===============
Basic and diluted loss per share
Continuing Operations $ (1.37)
Discontinued operations $ (0.16)
---------------
Net loss $ (1.53)
===============
Shares used in computing basic and
diluted loss per share 12,844
===============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Astea International Inc. and Subsidiaries
Notes to Pro Forma Consolidated financial Statements
(Unaudited)
1. Historical
The historical balances represent the financial position as of September
30, 1998 and the results of operations for the nine months ended September 30,
1998 and 1997 and for the years ended December 31, 1997 and 1996 as reported
in the historical consolidated financial statements of Astea International
Inc. (the "Company"), by reference to Company's Form 8-K dated September 4,
1998 for the years ended December 31, 1997 and 1996 (and adjusted for
discontinued operations) and Form 10-Q for the quarterly period ended
September 30, 1998 for the nine month periods ended September 30, 1998 and
1997. The September 4, 1998 Form 8-K was filed to report the Company's sale of
all the capital stock of its subsidiary, Bendata, Inc.
2. Sale of the Capital Stock of Abalon AB
On December 31, 1998, the Company completed the sale of all of the capital
stock of its subsidiary, Abalon AB and related subsidiaries (collectively
"Abalon"). The Company acquired Abalon on June 28, 1996.
The following pro forma adjustments for the Sale of Abalon are reflected as
of September 30, 1998 in the case of the pro forma consolidated balance sheet,
or as of June 28, 1996 in the case of the pro forma consolidated statements of
operations for the nine months ended September 30, 1998 and 1997 and the years
ended December 31, 1997 and 1996:
(A) In consideration for the Sale of Abalon, the Company received $9.5 million
in cash, of which $1.1 million was deposited in escrow to secure certain
indemnification obligations through June 2000.
<TABLE>
<S> <C> <C>
Gross cash proceeds from the sale $8,400,000
Less - Estimated cash expenses related to sale (200,000)
-----------------
Net Cash Proceeds $8,200,000
(B) Net change in retained earnings is calculated as follows:
Gross proceeds from the sale $9,500,000
Less - Estimated cash expenses related to the sale (200,000)
Less - Estimated accrued expenses (325,000)
-----------------
Proceeds net of expenses 8,975,000
Less - Abalon net assets sold (935,000)
Estimated federal tax benefit 1,596,000
=================
Net book gain on the sale of Abalon $9,636,000
=================
</TABLE>
(C) To reverse charge for purchased research and development related to the
June 26, 1996 acquisition of Abalon.
<PAGE>
PAGE 3
SECURITIES AND EXCHANGE COMMISSION
CURRENT REPORT ON FORM 8-K
DATE OF REPORT: DECEMBER 31, 1998
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
ASTEA INTERNATIONAL INC.
By: /s/ John G. Phillips
_________________________
John G. Phillips
Vice President and Chief Financial Officer
Date: January 14, 1999
<PAGE>
(c) Exhibits
2.1 Stock Purchase Agreement, dated December 31, 1998.
99.1 Press Release, dated January 4, 1999.
<PAGE>
STOCK PURCHASE AGREEMENT
By and Among
INDUSTRI-MATEMATIK INTERNATIONAL CORP.,
ASTEA INTERNATIONAL INC.,
and
NETWORK DATA, INC.
December 31, 1998
<PAGE>
TABLE OF CONTENTS
EXHIBITS
--------
Exhibit A - Escrow Agreement
Exhibit B - Pro Forma Statement of Operations for the Three Months
ended December 31, 1998
Exhibit C - Green Shark Tool
Exhibit D - Financial Statements
Exhibit E - Exempted Trademarks
Exhibit F-1
F-2 and F-3 - Seller's Counsel Opinions
Exhibit G - Buyer's Counsel Opinions
SCHEDULES
---------
Schedule 1.4(d) - Final Closing Balance Sheet Variance Calculations
Schedule 2 - Disclosure Schedules
Schedule 6.1(n) - List of Employment Ageements with Key Employees
<PAGE>
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This Agreement is entered into as of December 31, 1998 by and among Industri-
Matematik International Corp., a Delaware corporation (the "Buyer"), Astea
International Inc., a Delaware corporation ("Astea") and Network Data, Inc., a
Delaware corporation and wholly owned subsidiary of Astea ("Network"). Astea
and Network are referred to collectively as the "Seller." The Buyer and the
Seller are referred to individually herein as a "Party" and are referred to
together herein as the "Parties."
Preliminary Statement
---------------------
1. Network owns 1,000 shares (collectively, the "Shares") of the common stock
(the "Common Stock"), of Abalon AB, a corporation organized under the laws of
the Kingdom of Sweden (Registration No. 556502-4972) (the "Company"), which
Shares in the aggregate represent all of the issued and outstanding shares of
the Company.
2. The Company owns 2,000 shares of common stock of Astea International AB, a
corporation organized under the laws of the Kingdom of Sweden (Registration No.
556329-9741) ("Astea AB"), which represents in the aggregate all of the issued
and outstanding shares of capital stock of Astea AB.
3. The Buyer desires to purchase, and the Seller desires to sell, the Shares
for the consideration set forth below, subject to the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
THE PURCHASE
I.1 Purchase and Sale of Shares. Upon and subject to the terms and
---------------------------
conditions of this Agreement, the Buyer shall purchase the Shares from the
Seller, and the Seller shall sell, transfer, convey, assign and deliver the
Shares to the Buyer, at the Closing (as defined in Section 1.3(a) below), for
the consideration specified below in this Article I. At the Closing, the Seller
shall deliver to the Buyer and the Buyer shall purchase, acquire and accept from
the Seller, the Shares. At the Closing, the Board of Directors of the Company
shall, in accordance with the Companies Act of the Kingdom of Sweden (Sw:
Aktiebolagslagen), cause the transfer of the Shares to the Buyer to be entered
into the share register of the Company.
I.2 Purchase Price.
--------------
(a) Subject to adjustment pursuant to Section 1.4, the purchase price to
be paid by the Buyer for the Shares shall be NINE MILLION FIVE HUNDRED THOUSAND
UNITED STATES DOLLARS (US$9,500,000) (the "Purchase Price"). The Purchase Price
shall be payable as follows:
(i) The Buyer shall pay to the Seller at the Closing, by wire
transfer or other delivery of immediately available funds, an aggregate amount
equal to the Purchase Price less ONE MILLION ONE HUNDRED THOUSAND UNITED STATES
DOLLARS (US$1,100,000) (the "Escrow Amount"); and
(more)
<PAGE>
(ii) The Buyer shall deliver to the Escrow Agent (as defined in
the Escrow Agreement, a form of which is attached hereto as Exhibit A (the
---------
"Escrow Agreement")) at the Closing, by wire transfer or other delivery of
immediately available funds, an aggregate amount equal to the Escrow Amount,
pursuant to Section 1.6.
(b) Three (3) Business Days (as defined below) prior to the Closing Date
(as defined in Section 1.3(a) below), the Seller shall prepare and deliver (or
cause the Company to prepare and deliver) to the Buyer an estimated balance
sheet of the Company, including an estimated statement of Shareholders' Equity
(as defined below) (together, the "Estimated Closing Balance Sheet"), as of the
close of business on December 31, 1998 (which shall not give effect to the
transactions contemplated by this Agreement). The Seller shall prepare the
Estimated Closing Balance Sheet in good faith and in accordance with the
accounting methods, treatments, principles and procedures set forth in Section
1.4(a) below to be used with respect to the preparation of the Closing Balance
Sheet (as defined in Section 1.4(a) below). For purposes of this Agreement,
"Shareholders' Equity" means the excess of the Company's consolidated total
tangible assets over the Company's consolidated total liabilities.
I.3 The Closing.
-----------
(a) The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Hale and Dorr LLP, 60 State
Street, Boston, MA 02109 commencing at 10:00 a.m. local time on December 31,
1998, or at such other place, time or date as may be mutually agreed upon in
writing by the Parties, or, if all of the conditions to the obligations of the
Parties to consummate the transactions contemplated hereby have not been
satisfied or waived by such date, on such mutually agreeable later date as soon
as practicable after the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby,
but in no event more than five (5) Business Days after the satisfaction or
waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (the "Closing Date"). The transfer of the
Shares to the Buyer shall be deemed to occur at 10:00 a.m., local time on the
Closing Date. (For purposes of this Agreement, "Business Day" means any day on
which banks in Boston, Massachusetts are open for business.)
(b) At the Closing:
(i) the Seller shall deliver to the Buyer the various
certificates, instruments and documents referred to in Section 6.1;
(ii) the Buyer shall deliver to the Seller the various
certificates, instruments and documents referred to in Section 6.2;
(iii) the Buyer, the Seller and the Escrow Agent shall execute
and deliver to each other the Escrow Agreement;
(iv) the Buyer shall pay the Purchase Price in the amounts
and the manner specified in Section 1.2;
(v) the Seller shall deliver to the Buyer one or more
certificates evidencing the Shares;
(vi) the Seller shall (or shall cause the Company to) deliver to
the Buyer the minute books, stock books, ledgers and registers and similar
corporate records of the Company and the Subsidiaries; and
(more)
<PAGE>
(vii) the Buyer and the Seller shall execute and deliver to each
other a cross-receipt evidencing the transactions referred to above.
I.4 Post-Closing Adjustment. The Purchase Price set forth in Section 1.2
-----------------------
shall be subject to adjustment after the Closing Date as follows:
(a) As promptly as possible after the Closing Date (but in any event not
later than 30 days thereafter), the Seller shall prepare and deliver to the
Buyer a balance sheet of the Company, (the "Closing Balance Sheet"), as of the
close of business on December 31, 1998 (which shall not give effect to the
transactions contemplated by this Agreement). Except as set forth below in this
Section 1.4(a), the Seller shall prepare the Closing Balance Sheet in accordance
with the accounting methods, treatments, principles and procedures used in the
preparation of the Financial Statements (as defined in Section 2.5 below), to
the extent that the Financial Statements comply with U.S. generally accepted
accounting principles, except that such Financial Statements do not include any
purchase accounting adjustments relating to the acquisition of the Company by
the Seller ("Modified U.S. GAAP"), and otherwise in accordance with Modified
U.S. GAAP. The Closing Balance Sheet shall be accompanied by a calculation which
sets forth the amount, if any, that the Seller is obligated to pay to the Buyer
pursuant to Section 1.4(d) below. Any amounts due from customers of the Buyer
for product which has been shipped but for which payment has not been collected,
including amounts which have not yet been billed to the customer ("Accounts
Receivable"), which have been outstanding for 90 days or longer from the date of
the invoice as of the Closing Date, shall be written off and not appear as
assets on the Closing Balance Sheet. All property, plant and equipment shown on
the Closing Balance Sheet shall be net of all applicable depreciation and
amortization. All intercompany payables, receivables and other balances shall be
excluded from the Closing Balance Sheet and given no effect. The Shareholders'
Equity of the Company as reflected on the Closing Balance Sheet (i.e., the
excess of consolidated total tangible assets over consolidated total
liabilities, in each case as determined on the basis set forth in this Section
1.4(a)) is referred to herein as the "Closing Adjusted Shareholders' Equity."
(b) If the Buyer objects to the Closing Balance Sheet, the Buyer shall
deliver to the Seller, within 30 days after receiving the Closing Balance Sheet,
a detailed written statement describing the basis for such objection (the
"Dispute Notice"). If the Buyer fails to deliver a Dispute Notice within this
time period, the Closing Adjusted Shareholders' Equity shall be deemed to be the
"Final Closing Adjusted Shareholders' Equity" and the Closing Balance Sheet
shall be deemed the "Final Closing Balance Sheet." In the event the Buyer
delivers a Dispute Notice, the Buyer and the Seller shall use reasonable efforts
to resolve such differences regarding the determination of the Closing Adjusted
Shareholder's Equity. If the Parties resolve such differences, the Closing
Adjusted Shareholder's Equity agreed to by the Parties shall be deemed to be the
"Final Closing Adjusted Shareholders' Equity" and the Closing Balance Sheet
agreed to by the Parties shall be deemed to be the "Final Closing Balance
Sheet".
(c) The Parties shall use reasonable efforts to resolve any objections
by the Buyer set forth in the Dispute Notice, but if they do not reach a final
resolution within 60 days after the Closing Date, the Parties shall select a
nationally recognized accounting firm mutually acceptable to them (the "Neutral
Accountants") to resolve any such remaining objections. If the Parties are
unable to agree on the choice of Neutral Accountants, they shall select by lot
as Neutral Accountants a "Big Five" accounting firm other than Arthur Andersen
LLP and PricewaterhouseCoopers LLC, provided, that if no "Big Five" accounting
firm is available and willing to serve, an accounting firm shall be selected to
serve as the Neutral Accountants pursuant to the Commercial Arbitration Rules of
the American Arbitration Association. The Parties shall jointly instruct the
Neutral Accountants to resolve any unresolved objections of the Buyer and
deliver the Closing Balance Sheet within 30 days after the date of their
appointment. The Neutral Accountants shall, in making their determination,
follow the definitions and provisions of Section 1.4(a) of this Agreement. The
Closing Balance Sheet
(more)
<PAGE>
shall be adjusted only as needed to conform with the requirements of Section
1.4(a) and, as so adjusted, shall be the "Final Closing Balance Sheet." The
determination by the Neutral Accountants shall be conclusive and binding upon
the Parties, absent fraud or manifest error. Nothing herein shall be construed
to authorize or permit the Neutral Accountants to determine (i) any questions or
matters whatever under or in connection with this Agreement except the
determination of what adjustments, if any, must be made in one or more of the
items reflected in the Closing Balance Sheet, or (ii) an adjustment to an item
on the Closing Balance Sheet that is outside of the range defined by amounts as
finally proposed by the Parties.
(d) If the Final Closing Adjusted Shareholders' Equity as shown on the
Final Closing Balance Sheet is less than US$576,000, the Seller shall be
obligated to pay to Buyer the amount by which the Final Closing Adjusted
Shareholders' Equity is less than US$576,000, except to the extent that such
shortfall results from variances in actual revenue for the period from October
1, 1998 to the Closing Date, from the revenue forecast in the Forecasted Pro
Forma Statement of Operations for the Three Months Ended December 31, 1998
attached hereto as Exhibit B and associated variable expenses (e.g. sales
------- -
commissions) as determined in accordance with Schedule 1.4(d) attached hereto
---------------
(the resulting amount plus interest thereon from Closing Date at the simple rate
of 8% per annum being hereinafter referred to as the "Seller Post-Closing
Adjustment"). An example of the manner in which the calculation of the amount
payable pursuant to this Section 1.4(d) is to be made is set forth in Schedule
--------------- --------
1.4(d) attached hereto.
- ------
(e) Any payments required to be made by the Seller to the Buyer pursuant
to this Section 1.4 shall be made by wire transfer or by other delivery of
immediately available funds, within three (3) Business Days after the date on
which the Final Closing Balance Sheet is finally determined pursuant to this
Section 1.4. Notwithstanding the immediately preceding sentence, the Parties
agree that any claim by the Buyer pursuant to this Section 1.4 may, in the
Buyer's discretion, be pursued against the Escrow Amount, subject to the terms
of the Escrow Agreement; provided, however, that the Escrow Agreement shall not
-------- -------
be the exclusive means of enforcing, nor shall the Escrow Amount serve as a
limit upon, the Buyer's rights under this Section 1.4. The Seller shall remain
liable to the Buyer to the extent, if any, that the obligations of the Seller
under Section 1.4(d) are not satisfied from the Escrow Amount.
(f) The Parties shall share equally the fees and expenses of the Neutral
Accountants in connection with the resolution of any dispute pursuant to Section
1.4(c) above. The Buyer shall cooperate with the Seller as reasonably requested
by the Seller in connection with the preparation of the Closing Balance Sheet
and the Final Closing Balance Sheet, including without limitation providing the
Seller and the Seller's representatives with access to the Company's financial
books and records, financial and accounting personnel and auditors.
I.5 Further Assurances. At any time and from time to time after the
------------------
Closing, at the request of the Buyer and without further consideration, the
Seller shall promptly execute and deliver such other instruments of sale,
transfer, conveyance and assignment and take such reasonable action as the Buyer
may determine is necessary to transfer, convey and assign to the Buyer, and to
evidence and confirm Buyer's rights to, title in and ownership of, the Shares,
to place the Buyer in actual possession and operating control of the assets,
properties and business of the Company and the Subsidiaries (as defined in
Section 2.10 hereof), to assist the Buyer in exercising all rights with respect
thereto and to carry out the purpose and intent of this Agreement; provided that
Seller shall not be required to take any action that has a material adverse
effect on its business or tax position unless otherwise required by or
consistent with this Agreement.
I.6 Escrow. At the Closing, as provided in Section 1.2(a)(i), the Escrow
------
Amount shall be paid by the Buyer to the Escrow Agent for the purpose of
securing the obligations of the Seller under Section 1.4(d), Article VIII and
Article IX hereof. The Escrow Amount shall be held by the
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Escrow Agent pursuant to the terms of the Escrow Agreement. The nonpayment to
the Seller of any of the Escrow Amount pursuant to the terms of the Escrow
Agreement shall be treated as a corresponding reduction in the Purchase Price.
The Escrow Amount shall be held as trust funds and shall not be subject to any
lien, attachment, trustee process or any other judicial process of any creditor
of any Party, and shall be held and disbursed solely for the purposes and in
accordance with the terms of the Escrow Agreement.
I.7 Transaction Taxes. Any and all federal, state, county, local or
-----------------
foreign sales, use, value added, excise, stamp, transfer, registration and other
Taxes (as defined in Section 2.8 hereof) not in the nature of income taxes, fees
and duties (including any interest, additions to tax and penalties with respect
thereto) and any and all transfer, registration, recording or similar fees and
charges imposed in connection with the consummation of the transactions
contemplated by this Agreement (collectively, "Transfer Taxes") shall be borne
equally by the Buyer, on the one hand, and the Seller, on the other hand.
I.8 Assignment of "Green Shark" and Other Assets. On or before the
--------------------------------------------
Closing Date, Astea shall irrevocably assign and transfer to Astea AB, and
otherwise waive any rights Astea may have to, and release any claims it may have
against the Buyer, the Company or any of its Subsidiaries, with respect to (i)
the "Green Shark" software architecture technology and development tool, more
fully described on Exhibit C hereto (the "Green Shark Tool") and (ii) any and
---------
all other assets held by Astea or any of its subsidiaries which are used in
connection with or necessary to conduct the business of the Company or any of
its Subsidiaries. In addition, effective on the Closing Date, the Development
and Cost Sharing Agreement dated as of August 1, 1996 by and between Astea
International Inc. and Astea International AB shall be terminated and be of no
further force and effect.
I.9 Cancellation of Intercompany Balances. Immediately prior to the
-------------------------------------
Closing Date, the Seller shall cause all intercompany receivables, payables or
other balances relating to the Company and its Subsidiaries to be cancelled and
no such amounts shall be reflected on the Closing Balance Sheet.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller, jointly and severally, represents and warrants to the Buyer that
the statements contained in this Article II, as qualified by the disclosure
schedule attached hereto (the "Disclosure Schedule"), are true and correct. The
Disclosure Schedule shall be arranged in Sections and paragraphs corresponding
to the numbered and lettered Sections and paragraphs contained in this Article
II, and the disclosures in any Section or paragraph of the Disclosure Schedule
shall qualify only the corresponding Section or paragraph in this Article II to
the extent specified in such Section or paragraph of this Article II unless it
is reasonably apparent from a reading of such disclosure that it is applicable
to such other sections or paragraphs.
II.1 Organization, Qualification and Corporate Power .
-----------------------------------------------
(a) Astea. Astea is a corporation duly organized, validly existing and
-----
in corporate good standing under the laws of the State of Delaware. Astea has
all requisite corporate power and authority to carry on the business in which it
is now engaged and to own and use the properties now owned and used by it.
(b) Network. Network is a corporation duly organized, validly existing
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and in corporate good standing under the laws of the State of Delaware. Network
has all requisite corporate
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power and authority to carry on the business in which it is now engaged and to
own and use the properties now owned and used by it.
(c) The Company. The Company is a corporation duly organized, validly
-----------
existing and in corporate and tax good standing under the laws of the Kingdom of
Sweden. The Company is duly qualified to conduct business under the laws of each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification necessary, each of
which is set forth in Section 2.1 of the Disclosure Schedule, except where
absence of such qualification will not have a material adverse effect on the
business, operations, assets, liabilities, prospects or financial condition of
the Company. The Company has all requisite corporate power and authority to
carry on the business in which it is now engaged and to own and use the
properties now owned and used by it.
(d) Astea AB. Astea AB is a corporation duly organized, validly existing
--------
and in corporate and tax good standing under the laws of the Kingdom of Sweden.
Astea AB is duly qualified to conduct business under the laws of each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification necessary, each of
which is set forth in Section 2.1 of the Disclosure Schedule, except where
absence of such qualification will not have a material adverse effect on the
business, operations, assets, liabilities, prospects or financial condition of
Astea AB. Astea AB has all requisite corporate power and authority to carry on
the business in which it is now engaged and to own and use the properties now
owned and used by it.
(e) The Subsidiaries. Each of the Subsidiaries, as defined in Section
----------------
2.10, is a corporation duly organized, validly existing and in corporate and tax
good standing under the laws of the jurisdiction of its incorporation. Each of
the Subsidiaries is duly qualified to conduct business under the laws of each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification necessary except
where absence of such qualification will not have a material adverse effect on
the business, operations, assets, liabilities, prospects or financial condition
of such Subsidiary. Each of the Subsidiaries has all requisite corporate power
and capacity to carry on the business in which it is now engaged and to own and
use the properties now owned and used by it.
II.2 Authority.
---------
(a) Network. Network has the full right, power and authority to execute
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and deliver this Agreement and the agreements contemplated herein to which it is
a party and to perform its obligations hereunder and thereunder, and to
transfer, convey and sell the Shares to the Buyer at the Closing and, upon
consummation of the purchase contemplated hereby, the Buyer will acquire from
Network good and marketable title to such Shares, free and clear of all
covenants, conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever. The execution and
delivery by Network of this Agreement and the agreements contemplated herein to
which it is a party and the performance by Network of this Agreement and the
agreements contemplated herein to which it is a party and the consummation by
Network of the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action on the part of Network.
This Agreement has been duly and validly executed and delivered by Network and
constitutes, and each of the agreements contemplated herein, upon its execution
and delivery by Network will constitute, valid and binding obligations of
Network, enforceable against Network in accordance with their respective terms.
Network is not a party to, subject to or bound by any agreement or any judgment,
order, writ, prohibition, injunction or decree of any court or other
governmental body which would prevent the execution or delivery of this
Agreement or the agreements contemplated herein by Network or the transfer,
conveyance and sale of the Shares to be sold by Network to the Buyer pursuant to
the terms hereof.
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(b) Astea. Astea has the full right, power and authority to execute and
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deliver this Agreement and the agreements contemplated herein to which it is a
party and to perform its obligations hereunder and thereunder, and to cause
Network to transfer, convey and sell the Shares to the Buyer at the Closing an,
upon consummation of the purchase contemplated hereby, the Buyer will acquire
from Astea (through Network) good and marketable title to such Shares, free and
clear of all covenants, conditions, restrictions, voting trust arrangements,
liens, charges, encumbrances, options and adverse claims or rights whatsoever.
The execution and delivery by Astea of this Agreement and the agreements
contemplated herein to which it is a party and the performance by Astea of this
Agreement and the agreements contemplated herein to which it is a party and the
consummation by Astea of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part
of Astea. This Agreement has been duly and validly executed and delivered by
Astea and constitutes, and each of the agreements contemplated herein, upon its
execution and delivery by Astea will constitute, valid and binding obligations
of Astea, enforceable against Astea in accordance with their respective terms.
Astea is not a party to, subject to or bound by any agreement or any judgment,
order, writ, prohibition, injunction or decree of any court or other
governmental body which would prevent the execution or delivery of this
Agreement or the agreements contemplated herein by Astea or the transfer,
conveyance and sale of the Shares to be sold by Astea (through Network) to the
Buyer pursuant to the terms hereof.
II.3 Capitalization and Ownership .
----------------------------
(a) The Company. The authorized capital stock of the Company consists of
-----------
1,000 shares of Common Stock, of which 1,000 shares are issued and outstanding.
All of the issued and outstanding shares of Common Stock are duly authorized,
validly issued, fully paid, and nonassessable. There are no outstanding or
authorized options, warrants, rights, agreements or commitments to which the
Company is a party or which are binding upon the Company providing for the
issuance, disposition or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting trusts, proxies or
understandings with respect to the voting or registration under the Securities
Act of 1933, as amended (the "Securities Act") of any of the Shares. All of the
issued and outstanding shares of Common Stock are owned of record and
beneficially by Network, and, immediately prior to the Closing, Network will
have good and marketable title to the Shares, free and clear of any Security
Interest (as defined below), contractual restriction or covenant, option or
other adverse claim (whether arising by contract or by operation of law). For
purposes of this Agreement, "Security Interest" means any mortgage, pledge,
security interest, encumbrance, charge, or other lien (whether arising by
contract or by operation of law).
(b) Astea AB. The authorized capital stock of Astea AB consists of 2,000
--------
shares of Common Stock, of which 2,000 shares are issued and outstanding ("OC
Shares"). All of the issued and outstanding OC Shares are duly authorized,
validly issued, fully paid, and nonassessable. There are no outstanding or
authorized options, warrants, rights, agreements or commitments to which Astea
AB is a party or which are binding upon Astea AB providing for the issuance,
disposition or acquisition of any of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock or similar rights with respect
to Astea AB. There are no agreements, voting trusts, proxies or understandings
with respect to the voting or registration under the Securities Act of any of
the OC Shares. All of the issued and outstanding OC Shares are owned of record
and beneficially by Abalon AB, and, immediately prior to the Closing, Abalon AB
will have good and marketable title to the OC Shares, free and clear of any
Security Interest, contractual restriction or covenant, option or other adverse
claim (whether arising by contract or by operation of law).
(c) Subsidiaries. Astea AB is the only Subsidiary of the Company.
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II.4 Noncontravention. Neither the execution and delivery of this
----------------
Agreement or any other agreements contemplated herein by the Seller, nor the
consummation by the Seller of the transactions contemplated hereby or thereby,
will (a) conflict with or violate any provision of the charter or bylaws or
similar organizational documents of the Seller, the Company or the Subsidiaries,
(b) require on the part of the Seller, the Company or any of the Subsidiaries
any filing with, or any permit, authorization, consent or approval of, any
court, arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (a "Governmental Entity"), (c)
conflict with, result in a breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which the Company or the Subsidiaries is a part or by which the Company or the
Subsidiaries is bound or to which any of their assets is subject, (d) result in
the imposition of any Security Interest upon the issued and outstanding shares
of capital stock or any assets of the Company or the Subsidiaries, (e) violate
any order, writ, injunction or decree applicable to the Seller, the Company, the
Subsidiaries or any of their respective properties or assets or (f) violate any
statute, rule or regulation applicable to the Seller, the Company, the
Subsidiaries or any of their respective properties or assets.
II.5 Financial Statements. The Seller has provided to the Buyer
--------------------
unaudited consolidated statements of operations of the Company and its
Subsidiaries for the year ended December 31, 1996, unaudited consolidated
statements of operations, shareholders' equity and cash flows of the Company and
its Subsidiaries for the year ended December 31, 1997, unaudited consolidated
balance sheets of the Company and its Subsidiaries as of December 31, 1996 and
1997 and unaudited consolidated statements of operations, shareholders' equity
and cash flows of the Company and its Subsidiaries for the nine months ended
September 30, 1998, and an unaudited consolidated balance sheet of the Company
and its Subsidiaries as of September 30, 1998 (the "September 30, 1998 Balance
Sheet"), which statements are attached hereto as Exhibit D (collectively, the
---------
"Financial Statements"). The Financial Statements present fairly the financial
condition, results of operations and cash flows of the Company and the
Subsidiaries as of and for the respective dates thereof and for the periods
referred to therein in accordance with Modified U.S. GAAP consistently applied
and are consistent with books and records of the Company and the Subsidiaries.
Any Interim Financial Statements (as defined in Section 5.6 hereof) delivered by
the Seller or the Company, as the case may be, in accordance with Section 5.6 of
this Agreement shall be prepared in accordance with Modified U.S. GAAP and
fairly present the consolidated financial condition and consolidated results of
operations of the Company and the Subsidiaries as of and for the respective
dates thereof and for the periods referred to therein, except that Interim
Financial Statements will not contain footnote disclosure and will be subject to
normal and recurring year-end adjustments which will not be material in amount.
II.6 Absence of Certain Changes. Since September 30, 1998, (a) there has
--------------------------
not been any material adverse change in the assets, business, condition
(financial or otherwise), results of operations or future prospects of the
Company or any of the Subsidiaries, nor has there occurred any event or
development which could reasonably be foreseen to result in such a material
adverse change in the future, and (b) neither the Company nor any of the
Subsidiaries has taken any of the following actions:
(i) acquired, sold, leased, encumbered or disposed of any
assets, other than purchases and sales of assets in the ordinary course of
business consistent with past custom and practice (including with respect to
frequency and amount) (the "Ordinary Course of Business");
(ii) created, incurred or assumed any Indebtedness (as
defined in Section 2.29 hereof) (including obligations in respect of capital
leases);
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(iii) entered into, adopted or amended any Employee Benefit
Plan (as defined in Section 2.18 hereof) or any employment or severance
agreement or arrangement of the type described in Section 2.18 or increased in
any manner the compensation or fringe benefits of, or modified the employment
terms of, its directors, officers or employees, generally or individually, or
paid any benefit not required by the terms in effect on the date hereof of any
existing Employee Benefit Plan or, except in the Ordinary Course of Business,
hired any new employees or consultants;
(iv) changed its accounting methods, principles or practices
or made any new elections with respect to Taxes or any changes in current
elections with respect to Taxes;
(v) paid any obligation or liability other than in the
Ordinary Course of Business;
(vi) mortgaged or pledged any property or assets or subjected
any assets to any Security Interest;
(vii) sold, assigned, transferred, licensed or sublicensed any
Intellectual Property (as defined in Section 2.9 hereof), other than in the
Ordinary Course of Business;
(viii) entered into, amended, terminated, taken or omitted to
take any action that would constitute a violation of or default under, or waived
any rights under, any contract or agreement listed in Section 2.11 of the
Disclosure Schedule;
(ix) entered into any written arrangement (including written
agreements) which creates a liability on the part of the Company or any of its
Subsidiaries in excess of US$35,000;
(x) made or committed to make any capital expenditure in
excess of US$10,000 per item or total capital expenditures in excess of
US$50,000 in the aggregate;
(xi) failed to take any action necessary to preserve the
validity of any Intellectual Property or Permit (as defined in Section 2.21
hereof);
(xii) assumed, guaranteed, endorsed or otherwise become liable
or responsible (either directly, contingently or otherwise) for the obligations
of any other person; or
(xiii) agreed in writing or otherwise to take any of the
foregoing actions.
II.7 Undisclosed Liabilities. Neither the Company nor any of the
-----------------------
Subsidiaries has any liabilities (whether known or unknown, whether absolute or
contingent, whether liquidated or unliquidated, whether accrued or unaccrued and
whether due or to become due, or otherwise), except for (a) liabilities shown on
the September 30, 1998 Balance Sheet, (b) liabilities which have arisen after
September 30, 1998 in the Ordinary Course of Business and which are, or will be,
reflected on the Final Closing Balance Sheet, and are similar in nature and
amount to the liabilities which arose during the comparable period of the
immediately preceding financial period and (c) contractual liabilities and
obligations incurred in the Ordinary Course of Business which are not required
by Modified U.S. GAAP to be reflected on the September 30, 1998 Balance Sheet
and which in the aggregate are not material.
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II.8 Tax Matters.
-----------
(a) The Company and each of the Subsidiaries has filed all Tax Returns
(as defined below) that it was required to file, and all such Tax Returns were
correct and complete in all material respects. The Company and each of the
Subsidiaries has paid all Taxes that are shown to be due on any such Tax
Returns. The accruals and reserves for Taxes set forth on the September 30, 1998
Balance Sheet are sufficient to pay all unpaid Taxes of the Company and the
Subsidiaries attributable (on an accrual basis) to all periods (treating
September 30, 1998 as the ending date of a tax period for this purpose) ended on
or before September 30, 1998, and all Tax obligations arising after such date
have arisen in the Ordinary Course of Business. Neither the Company nor any of
its Subsidiaries has any actual or potential liability for any obligation to pay
the Taxes of any taxpayer (including without limitation any affiliated group of
corporations or other Entities that included the Company or any of its
Subsidiaries during a prior period) other than the Company or its Subsidiaries.
All Taxes that the Company or any of its Subsidiaries is or was required by law
to withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Entity. For purposes of this
Agreement, "Taxes" means all taxes, charges, fees, levies or other similar
assessments or liabilities, including without limitation income, gross receipts,
ad valorem, premium, value-added, excise, real property, personal property,
sales, use, transfer, withholding, employment, payroll, unemployment insurance,
social security, business license, occupation, business organization, stamp,
environmental and franchise taxes imposed by the United States of America,
Sweden or any other state, local or foreign government, or any agency thereof,
or other political subdivision of the United States of America, Sweden or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof. For purposes of this Agreement, "Tax Returns"
means all reports, returns, declarations, statements or other information
required to be supplied to a Taxing authority in connection with Taxes.
(b) The Seller has delivered, or has caused the Company to deliver, to
the Buyer correct and complete copies of all Tax Returns, examination and any
audit reports and statements of deficiencies assessed against, agreed to or
filed by the Company or any of its Subsidiaries since January 1, 1994. No
deficiencies have been asserted or assessed as a result of any examination or
audit of the Company or any of its Subsidiaries by any Governmental Entity and
no such deficiency has been proposed or, to the Seller's knowledge, threatened.
No examination or audit of any Tax Return of the Company or any Subsidiary by
any Governmental Entity is currently in progress or, to the knowledge of the
Company and the Subsidiaries, threatened or contemplated. There are no liens for
Taxes (other than for current Taxes not yet due and payable) on any assets of
the Company or any of its Subsidiaries. Neither the Company nor any Subsidiary
has waived any statute of limitations with respect to Taxes or agreed to any
extension of the with respect to a Tax assessment or deficiency.
(c) Neither the Company nor any of its Subsidiaries has made an election
to be treated as a domestic corporation pursuant to Section 897(i) of the
Internal Revenue Code of 1986, as amended (the "Code").
II.9 Intellectual Property; Year 2000.
--------------------------------
(a) The Company and each of its Subsidiaries owns, or is licensed or
otherwise possesses valid rights to use, all Intellectual Property (as defined
below) used by the Company and each of its Subsidiaries or necessary for the
operation of the Company and each of its Subsidiaries as presently proposed to
be conducted. The Company and each of its Subsidiaries has taken reasonable
measures (consistent with industry standards) to protect the proprietary nature
of each item of Intellectual Property and to maintain in confidence all trade
secrets and confidential information, that the Company or such Subsidiary owns
or uses. No other person or entity (other than licensors of
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software that generally is commercially available) has any rights to any of the
Intellectual Property used by the Company or any of its Subsidiaries (except
pursuant to agreements or licenses specified in Section 2.9(c) or 2.9(d) of the
Disclosure Schedule), and, to the Seller's knowledge, no other person or Entity
is infringing, violating or misappropriating any of the Intellectual Property
used by the Company or any of its Subsidiaries.
(b) The business, operations and activities of the Company and its
Subsidiaries as now conducted and as conducted prior to the date of this
Agreement have not (i) infringed or violated, or constituted a misappropriation
of, and do not now infringe or violate, or constitute a misappropriation of, any
Intellectual Property rights (other than patent rights) of another person or
entity (including without limitation any Affiliate of the Company or its
Subsidiaries), (ii) infringed or violated, and do not now infringe or violate,
any patent rights of any Affiliate of the Company or its Subsidiaries or, (iii)
to the Seller's knowledge, infringed or violated, and do not now infringe or
violate, any patent rights of any other person or entity. Neither the Company
nor any of its Subsidiaries has received any complaint, claim or notice alleging
any such infringement, violation or misappropriation.
(c) Section 2.9(c) of the Disclosure Schedule identifies each patent or
trademark registration which has been issued to, or is owned by, the Company or
any of its Subsidiaries, identifies each pending patent or trademark application
or application for registration which the Company or any of its Subsidiaries has
made or which the Company or any of its Subsidiaries owns, identifies each
software product ever licensed or distributed by the Company or any of its
Subsidiaries and identifies each license or other agreement pursuant to which
the Company or any of its Subsidiaries has granted any rights to any third party
with respect to any Intellectual Property of the Company or any of the
Subsidiaries. The Seller has delivered, or has caused the Company to deliver, to
the Buyer correct and complete copies of all such patents, registrations,
applications, licenses and agreements (as amended to date) and has made
available, or caused the Company to make available, to the Buyer correct and
complete copies of all other written documentation evidencing ownership of,
rights to use and any claims or disputes relating to, each such item. With
respect to each such item of Intellectual Property that the Company or any of
its Subsidiaries owns, licenses or distributes:
(i) the Company and its Subsidiaries possesses all right,
title and interest in and to such item (in the case of items under licenses or
distribution arrangements, in accordance with and subject to the limitations
contained in such licenses and arrangements);
(ii) such item is not subject to any outstanding judgment,
order, decree, stipulation or injunction; and
(iii) neither the Company nor any of its Subsidiaries has
agreed to indemnify any person or entity for or against any infringement,
misappropriation or other conflict with respect to such item (in the case of
items under licenses or distribution arrangements found in user agreements
disclosed in Section 2.9(d) of the Disclosure Schedule, in accordance with and
subject to the limitations contained in such licenses and arrangements).
(d) Section 2.9(d) of the Disclosure Schedule identifies each item of
Intellectual Property used at any time in the operation of the Company or any of
its Subsidiaries or that the Company or any of its Subsidiaries plans to use in
connection with the operation of the Company or such Subsidiaries in the future,
the rights to which are owned by a party other than the Company or its
Subsidiaries. For purposes of the preceding sentence, the Company shall be
deemed to "plan" an activity, if the activity is currently planned or under
active consideration to be conducted as set forth in its written business plans.
The Seller has supplied, or caused the Company to supply, the Buyer with correct
and complete copies of all licenses, sublicenses or other agreements (as amended
to date) pursuant to which the Company or any of its Subsidiaries uses such
Intellectual Property, all of which
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are listed on Section 2.9(d) of the Disclosure Schedule. Neither the Company nor
any of its Subsidiaries is obligated to pay and will not, during the 180 days
following the Closing Date, be obligated to pay any maintenance, license or
other fees to any third party in connection with the Company's or any of its
Subsidiaries' use of such Intellectual Property other than such fees that result
from the sale of products by the Company and its Subsidiaries after the Closing.
With respect to each such item of Intellectual Property:
(i) the license, sublicense or other agreement covering such
item is legal, valid, binding, enforceable and in full force and effect;
(ii) such license, sublicense or other agreement will
continue to be legal, valid, binding, enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing;
(iii) neither the Company, any of its Subsidiaries, nor to the
Seller's knowledge, any other party is in breach or default, and no event has
occurred which with notice or lapse of time or both would constitute a breach or
default or permit termination, modification or acceleration thereunder;
(iv) to the Seller's knowledge, the underlying item of
Intellectual Property is not subject to any outstanding judgment, order, decree,
stipulation or injunction; and
(v) neither the Company nor any of its Subsidiaries has
agreed to indemnify any person or entity for or against any interference,
infringement, misappropriation or other conflict with respect to such item (in
the case of items under licenses or distribution arrangements found in user
agreements disclosed in Section 2.9(d) of the Disclosure Schedule, in accordance
with and subject to the limitations contained in such licenses and
arrangements).
(e) Section 2.9(e) of the Disclosure Schedule identifies each item of
Intellectual Property that is not owned or licensed by the Company or its
Subsidiaries and that is required to use or operate any of the Intellectual
Property used by the Company or any of its Subsidiaries.
(f) For purposes of this Agreement, "Intellectual Property" shall mean
and include (i) patents, patent applications, patent disclosures and all related
continuation, continuation-in-part, divisional, reissue, re-examination, utility
model, certificate of invention and design patents, patent applications,
registrations and applications for registrations, (ii) trademarks, service
marks, trade dress, logos, trade names and corporate names and registrations and
applications for registration thereof, (iii) copyrights and registrations and
applications for registration thereof, (iv) mask works and registrations and
applications for registration thereof, (v) computer software (including both
source code and object code), data and documentation, (vi) trade secrets and
confidential business information, whether patentable or nonpatentable and
whether or not reduced to practice, know-how, technical drawings, manufacturing
and product processes and techniques, research and development information,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information, (vii) other proprietary rights relating to any of the foregoing
(including without limitation remedies against infringements thereof and rights
of protection of interest therein under the laws of all jurisdictions) and
(viii) copies and tangible embodiments thereof.
(g) Each of the Company's and its Subsidiaries' products and all
software, firmware, systems, files, applications, interfaces, databases and
other computer-related materials used in such products ("Software") and either
are Millennium Compliant (as defined below) or the failure of such products and
Software to be Millennium Compliant will not result in any liability to or
obligation of the Company or any of its Subsidiaries. The Company and its
Subsidiaries have
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developed and are in the process of implementing a plan which will ensure that
in all material respects all hardware, software, firmware, systems, files,
applications, interfaces, databases and other computer-related materials (other
than the products and Software) ("Internal Systems") that they own, possess or
use are or will be Millennium Compliant (as defined below). The Seller has
provided a copy of such plan to the Buyer. The Seller in good faith expects the
implementation of such plan will be completed no later than March 31, 1999 and
will be accomplished according to Section 2.9(g) of the Disclosure Schedule
attached hereto, using the resources and manpower, and at or below the cost set
forth on Section 2.9(g) of the Disclosure Schedule. "Millennium Compliant" means
that products, Software and Internal Systems are designed to be used prior to,
during and after the calendar year 2000 A.D. and each will operate during each
such time period without error relating to or caused by date data, including any
error relating to, or the product of, date data which represents, is generated
in or references more than one century ("Century-Based Data"). Specifically, the
products, Software and Internal Systems will operate in all material respects
prior to, during, and after the calendar year 2000 A.D., both on a stand-alone
basis and when interacting or interoperating with third-party hardware, software
and systems, without material error and without human intervention, other than
original data entry. Neither the occurrence of any date nor the change of
century will adversely affect the processing, calculating, comparing, sequencing
or other use of data by the products or Software, including without limitation
causing (i) any error relating to or resulting from Century-Based Data; (ii) any
abnormal ending or provision of invalid or incorrect results as a result of any
Century-Based Data; and (iii) any error relating to century recognition or
calculations accommodating Century-Based Data, values or formulae. The
representations and warranties provided in this Section 2.9(g) shall not apply
to third-party hardware, firmware, software, databases, data and other
components that are not provided by the Company.
II.10 Subsidiaries.
------------
(a) Network is a wholly-owned subsidiary of Astea. Section 2.10 of the
Disclosure Schedule attached hereto sets forth:
(i) the name and percentage ownership by the Company of each
corporation, limited liability company, general or limited partnership, joint
venture or other entity in which the Company has, directly or indirectly, an
equity interest representing 50% or more of the capital stock thereof or other
equity interests therein (individually, a "Subsidiary" and, collectively, the
"Subsidiaries");
(ii) the name and percentage ownership by Astea of each
corporation, limited liability company, general or limited partnership, joint
venture or other entity in which Astea has, directly or indirectly, an equity
interest representing 50% or more of the capital stock thereof or other equity
interests therein (individually, an "Affiliated Entity" and collectively, the
"Affiliated Entities"), which has or at any time in the past five years has had
a relationship with the Company or any of the Subsidiaries;
(iii) the jurisdiction of incorporation, capitalization and
ownership of each Subsidiary;
(iv) the names of the officers and directors of each
Subsidiary; and
(v) the jurisdictions in which each Subsidiary is qualified
or holds licenses to do business as a foreign corporation.
(b) Except as set forth in Section 2.10 of the Disclosure Schedule, the
Company owns of record and beneficially all of the outstanding shares of capital
stock of each of the Subsidiaries free and clear of all covenants, conditions,
restrictions, liens, charges and encumbrances.
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(c) Each of the Subsidiaries is a corporation or other entity duly
organized and validly existing and in corporate and tax good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own its properties and carry on its business as
now being conducted. Each of the Subsidiaries is duly qualified to do business
and in corporate and tax good standing in all jurisdictions in which its
ownership of property or the character of its business requires such
qualification. Certified copies of the charter, bylaws and other governing
instruments of each of the Subsidiaries, each as amended to date, have been
previously delivered to the Buyer, are complete and correct, and no amendments
have been made thereto or have been authorized since the date of such delivery.
The Company does not own any capital stock of or other equity interest in any
corporation, limited liability corporation, general or limited partnership,
joint venture or other entity, other than the Subsidiaries. The shares of
capital stock of each Subsidiary as set forth in Section 2.10 of the Disclosure
Schedule have been duly and validly issued and are fully paid and non-
assessable.
(d) Except as set forth in Section 2.10 of the Disclosure Schedule, none
of the Subsidiaries holds shares of its capital stock in its treasury, and there
are not, and on the Closing Date there will not be, outstanding any (i) options,
warrants or other rights with respect to the capital stock of any of the
Subsidiaries, (ii) any securities convertible into or exchangeable for shares of
such stock, or (iii) any other commitments of any kind for the issuance of
additional shares of capital stock or options, warrants or other securities of
any of them.
II.11 Contracts.
---------
(a) Section 2.11 of the Disclosure Schedule contains a true, complete
and correct list and description of the following contracts or arrangements,
whether oral or written (collectively, the "Contracts"):
(i) any written arrangement (or group of related written
arrangements) for the lease of personal property from or to third parties
providing for lease payments in excess of US$25,000 per annum;
(ii) any written arrangement (or group of related written
arrangements) to which the Company or any of its Subsidiaries is a party for the
purchase, sale, supply or manufacture of raw materials, commodities, supplies,
products or other personal property or for the furnishing or receipt of services
(A) which calls for performance over a period of more than one year, (B) which
involves more than the sum of US$25,000, or (C) in which the Company or any of
its Subsidiaries has granted manufacturing rights, "most favored nation" pricing
provisions or marketing or distribution rights relating to any products or
territory or has agreed to purchase a minimum quantity of goods or services,
agreed to make a minimum payment or has agreed to purchase goods or services
exclusively from a certain party;
(iii) any written arrangement establishing an entity;
(iv) any written arrangement (or group of related written
arrangements) under which the Company or any of its Subsidiaries has created,
incurred, assumed or guaranteed (or may create, incur, assume or guarantee)
Indebtedness (including capitalized lease obligations) involving more than
US$25,000;
(v) any written arrangement concerning confidentiality
(other than in the Ordinary Course of Business), assignment of inventions or
non-competition or involving Intellectual Property;
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(vi) any written arrangement involving any affiliate, as
defined in Rule 12b-2 under the Securities Exchange Act of 1934 (an
"Affiliate"), of the Seller, the Company or any of its Subsidiaries;
(vii) any written arrangement to which the Company or any of
its Subsidiaries is a party under which the consequences of a default or
termination could have a material adverse effect on the assets, business,
condition (financial or otherwise), results of operations or future prospects of
the Company or any of its Subsidiaries;
(viii) any written arrangement limiting or otherwise
restricting the ability of the Company or any of its Subsidiaries to compete
anywhere in the world; any bonus, incentive or deferred compensation arrangement
of the Company or any of its Subsidiaries or the transactions contemplated by
this Agreement; and all profit-sharing, pension, multi-employer pension,
vacation, group insurance or employee welfare plans or other similar plans or
fringe benefits which could result in a cost to the Company or any of its
Subsidiaries of more than US$25,000 per annum;
(ix) any sales representative, distributorship or other
written arrangement providing for the distribution or marketing of products;
(x) any agreement to which the Company or any of its
Subsidiaries is a party entered into since January 1, 1995 relating to the
acquisition or disposition of assets (other than the purchase or sale of assets
in the Ordinary Course of Business), businesses or companies (whether by sale of
assets, sale of stock, merger or otherwise); and
(xi) any other written arrangement (or group of related
written arrangements) to which the Company or any of its Subsidiaries is a party
either involving more than US$25,000 or not entered into in the Ordinary Course
of Business.
(b) The Seller has delivered to the Buyer a correct and complete copy of
each written arrangement (as amended to date) listed in Section 2.11 of the
Disclosure Schedule. With respect to each written arrangement so listed: (i) the
written arrangement is legal, valid, binding and enforceable and in full force
and effect; (ii) with respect to written arrangements to which the Company or
any of its Subsidiaries is a party, the written arrangement will continue to be
legal, valid, binding and enforceable and in full force and effect immediately
following the Closing in accordance with the terms thereof as in effect prior to
the Closing; and (iii) neither the Company nor any of its Subsidiaries is, and
to the Seller's knowledge no other party is, in breach or default, and no event
has occurred which with notice or lapse of time would constitute a breach or
default or permit termination, modification or acceleration, under the written
arrangement, nor is there any dispute between the parties thereto. Neither the
Company nor any of its Subsidiaries is a party to any oral contract, agreement
or other arrangement which, if reduced to written form, would be required to be
listed in Section 2.11 of the Disclosure Schedule under the terms of this
Section 2.11.
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II.12 Accounts Receivable. All Accounts Receivable reflected on the
-------------------
September 30, 1998 Balance Sheet are valid receivables (except to the extent
satisfied since that date) subject to no setoffs or counterclaims and are
current and will be collected within 90 days of the invoice date, but not later
than April 30, 1999, net of the reserve for doubtful accounts as set forth
thereon. All Accounts Receivable reflected in the financial or accounting
records of the Company or any of its Subsidiaries that have arisen since
September 30, 1998 are valid receivables subject to no setoffs or counterclaims
and will be collected within 90 days of the invoice date, but not later than
April 30, 1999, net of any reserves for doubtful accounts created by the Company
or any of its Subsidiaries. All such Account Receivables arose in the Ordinary
Course of Business subsequent to September 30, 1998. The reserve for doubtful
accounts set forth on the September 30, 1998 Balance Sheet and any reserves for
doubtful accounts created by the Company or any of its Subsidiaries in the
Ordinary Course of Business subsequent to September 30, 1998 are adequate and
were calculated in accordance with Modified U.S. GAAP consistently applied. A
complete list of all Accounts Receivable reflected on the September 30, 1998
Balance Sheet, showing the aging thereof, is set forth in Section 2.12 of the
Disclosure Schedule. No written notice has been received from any account
debtor that any such Accounts Receivable are subject to any contest, claim, or
right of set-off, other than returns in the Ordinary Course of Business
consistent with past practices.
II.13 Powers of Attorney. There are no outstanding powers of
------------------
attorney executed on behalf of the Company or any of its Subsidiaries relating
to any assets of the Company or any of its Subsidiaries.
II.14 Insurance.
---------
(a) Section 2.14 of the Disclosure Schedule sets forth a list (including
the name of the insurer, the name of the policyholder, the name of each insured,
the policy number and periods of coverage, the scope of coverage, a description
of any retroactive premium adjustments or other loss-sharing arrangement and all
claims made under such policies) of all policies of fire, theft, casualty,
liability, burglary, fidelity, workers' compensation, business interruption,
environmental, product liability, product warranty, automobile and other forms
of insurance under which the Company or any of its Subsidiaries has been a
party, a named insured or otherwise the beneficiary of coverage at any time
since January 1, 1996.
(b) Neither the Company nor any of its Subsidiaries (i) is in breach or
default with respect to the payment of premiums or the giving of notices under
any policy listed in Section 2.14 of the Disclosure Schedule, (ii) is in breach
or default with respect to any other obligations under any such policy, and no
event has occurred which, with notice or the lapse of time, would constitute
such a breach or default or permit termination, modification or acceleration,
under any such policy or (iii) has received any notice from the insurer
disclaiming coverage or reserving rights with respect to a particular claim
under any such policy in general, or amending or cancelling any such policy.
Neither the Company nor any of its Subsidiaries has incurred any loss, damage,
expense or liability covered by any such insurance policy for which it has not
properly asserted a claim under the policy. The Company and each of its
Subsidiaries is covered by insurance in scope and amount sufficient to satisfy
the insurance provision of each written arrangement listed or required to be
listed in Section 2.11 of the Disclosure Schedule.
II.15 Litigation. Section 2.15 of the Disclosure Schedule indentifies,
----------
and contains a brief description of, (a) any unsatisfied judgment, order,
decree, stipulation or injunction relating to the Company or any of its
Subsidiaries and (b) any claim, complaint, action, suit, proceeding, hearing or
investigation of, in or brought before (by a private party or otherwise) any
Governmental Entity or before any arbitrator relating to or affecting the
Company or any of its Subsidiaries which is currently pending or, to the
Seller's knowledge, threatened.
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II.16 Product Warranty; Recall.
------------------------
(a) No product manufactured, sold, licensed, leased or delivered by the
Company or any of its Subsidiaries is subject to any guaranty, warranty, right
of return, credit or other indemnity beyond the applicable standard terms and
conditions of sale or lease, which are set forth in Section 2.16 of the
Disclosure Schedule. Section 2.16 of the Disclosure Schedule sets forth the
aggregate expenses incurred by the Company and its Subsidiaries in fulfilling
its obligations under its guaranty, warranty, right of return and indemnity
provisions during each of the fiscal years and the interim period covered by the
Financial Statements; and the Seller does not know of any reason why such
expenses should materially increase as a percentage of sales in the future.
(b) None of the products of the Company or any of its Subsidiaries is
subject to any recall by the Company or any Governmental Entity and, to the
Seller's knowledge, no Governmental Entity has threatened to require any such
recall nor is there any basis for any such recall. To the Seller's knowledge,
there is no basis for the recall, withdrawal or suspension of any approval by
any Governmental Entity with respect to any of the products sold or proposed to
be sold by the Company or any of its Subsidiaries. Neither the Company nor any
of its Subsidiaries has plans to initiate any voluntary recall of any product
manufactured or sold by the Company or any of its Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries has any liability to
any customer in connection with any product manufactured, sold, licensed, leased
or delivered by the Company or any of its Subsidiaries to provide the customer
with any other products of the Company or any of its Subsidiaries on pre-
negotiated terms, including without limitation for upgrades to other products at
prices below the Company's or any of its Subsidiaries published price for such
products. Neither the Company nor any of its Subsidiaries has any liability to
any customer in connection with any product manufactured, sold, leased or
delivered by the Company or its Subsidiaries other than those arising in the
Ordinary Course of Business.
II.17 Employees.
---------
(a) Section 2.17(a) of the Disclosure Schedule contains a list of each
employee and officer employed by the Company and each of its Subsidiaries, and
the position and the annual rate of compensation of, and any bonus paid relating
to such fiscal year to, each such person. To the Seller's knowledge, no key
employee or group of employees employed by the Company or any of its
Subsidiaries has any plans to terminate employment with the Company or such
Subsidiary (other than for the purpose of accepting employment with the Buyer
following the Closing) or not to accept employment with the Buyer. Neither the
Company nor any of its Subsidiaries is a party to or bound by any collective
bargaining agreement, nor has the Company or any of its Subsidiaries experienced
any strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes in the past five years. The Seller has no knowledge of any
organizational effort made or threatened, either currently or within the past
two years, by or on behalf of any labor union with respect to the Company's
employees or the employees of any of the Company's Subsidiaries. Except as set
forth in Section 2.17(a) of the Disclosure Schedule, neither the Company nor any
of its Subsidiaries is a party to any employment or consulting agreement.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will trigger or otherwise result in any
obligation of the Company or any of its Subsidiaries to pay severance or related
costs under any employment or consulting agreement or by operation of law.
(b) For purposes of this Section 2.17, the term "employee" shall be
construed to include individuals who act as sales agents and other independent
contractors who spend at least 25 hours per week on the Company or any of its
Subsidiaries.
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(c) The Seller has provided the Buyer with correct and complete copies
of the following documents relating to the Company and each of its Subsidiaries:
(i) any and all affirmative action plans, summaries of affirmative action
policies, affirmative action plan documents and required reports; and (ii) any
letters of compliance, letters of commitment or conciliation agreements
resulting from any audits by the United States Department of Labor through its
Office of Federal Contract Compliance Programs or any similar agencies or
instrumentalities of any foreign Governmental Entity.
II.18 Employee Benefits.
-----------------
(a) Section 2.18(a) of the Disclosure Schedule contains a complete and
accurate list of all Employee Benefit Plans (as defined below) maintained, or
contributed to, by the Company, or any of the Subsidiaries, or any ERISA
Affiliate (as defined below) for the benefit of present or former employees of
the Company or any of its Subsidiaries (the "Company Plans"). For purposes of
this Agreement, "Employee Benefit Plan" means any "employee pension benefit
plan" (as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) other than a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA), and any other written or oral plan, agreement or
arrangement involving direct or indirect compensation, including without
limitation insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation. For purposes of this Agreement, "ERISA Affiliate" means any entity
which is a member of (i) a controlled group of corporations (as defined in
Section 414(b) of the Code), (ii) a group of trades or businesses under common
control (as defined in Section 414(c) of the Code), or (iii) an affiliated
service group (as defined under Section 414(m) of the Code or the regulations
under Section 414(o) of the Code), any of which includes the Company or any of
its Subsidiaries. Complete and accurate copies of (i) all Company Plans which
have been reduced to writing, (ii) written summaries of all unwritten Company
Plans, (iii) all trust agreements, insurance contracts, investment advisory
agreements and summary plan descriptions related to Company Plans, (iv) all
employee handbooks, (v) all correspondence with government agencies regarding
any Company Plan, (vi) all actuarial reports for the last three years for all
plans subject to Title IV of ERISA, (vii) all annual reports filed on Form 5500,
5500C or 5500R for the last two plan years for each Company Plan, and (viii)
test results from all applicable nondiscrimination tests relating to the Company
Plans which have been made available to the Buyer. Each Company Plan has been
administered in accordance with its terms and each of the Company and its
Subsidiaries has met its obligations with respect to such Company Plan. The
Company, each of its Subsidiaries and the Company Plans are in compliance in all
material respects with the currently applicable provisions of ERISA and the Code
and the regulations thereunder and other laws applicable to such plans.
(b) None of the Company, its Subsidiaries or any ERISA Affiliate has
ever been obligated to contribute to any "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA). Neither the Company nor any ERISA Affiliate has
ever maintained an Employee Benefit Plan subject to Section 412 of the Code,
Part 3 of Subtitle B of Title I of ERISA or Title IV of ERISA.
(c) Each Employee Benefit Plan is amendable and terminable unilaterally
by the Company or its Subsidiaries at any time without liability to the Company
or such Subsidiary and no Employee Benefit Plan, plan documentation or
agreement, summary plan description or other written communication distributed
generally to employees by its terms prohibits the Company or its Subsidiaries
from amending or terminating any such Employee Benefit Plan.
(d) Section 2.18(d) of the Disclosure Schedule discloses each: (i)
agreement with any director, executive officer or other key employee of the
Company or its Subsidiaries (A) the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a
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transaction involving the Company or its Subsidiaries of the nature of any of
the transactions contemplated by this Agreement, (B) providing any term of
employment or compensation guarantee or (C) providing severance benefits or
other benefits after the termination of employment of such director, executive
officer or key employee; (ii) agreement, plan or arrangement under which any
person may receive payments from the Company or its Subsidiaries that may be
subject to the tax imposed by Section 4999 of the Code or included in the
determination of such person's "parachute payment" under Section 280G of the
Code; and (iii) agreement or plan binding, the Company or any of its
Subsidiaries, including without limitation any stock option plan, stock
appreciation right plan, restricted stock plan, stock purchase plan, severance
benefit plant or employee benefit plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
(e) Section 2.18(e) of the Disclosure Schedule lists (i) each non-
governmental retirement plan maintained or contributed to by or on behalf of the
Seller, the Company or any of its Subsidiaries, applicable to employees of the
Company or any of its Subsidiaries located outside of the U.S. (a "Foreign
Retirement Plan") and (ii) each non-governmental non-industry welfare benefit
plan maintained or contributed to by or on behalf of the Company or any of its
Subsidiaries applicable to employees of the Company or any of its Subsidiaries
located outside of the U.S. and which, in the case of clause (ii), obligates or
may reasonably be expected to obligate the Company or such Subsidiary to pay
more than US$25,000 annually (a "Foreign Welfare Plan"). Each such Foreign
Retirement Plan and Foreign Welfare Plan (collectively, the "Foreign Plans") has
been administered, in all material respects, in compliance with its terms and
the requirements of all applicable laws, rules and regulations, and all required
contributions to each Foreign Plan have been made. The Seller has heretofore
delivered to the Buyer true and complete copies of all of the written Foreign
Plans and written summaries of the oral Foreign Plans and, where applicable,
related trusts, including all amendments. There are no inquiries or
investigations by any foreign government or Governmental Entity, no termination
proceedings and no actions, suits or claims (other than claims for benefits)
pending or, to the knowledge of the Seller, threatened against any Foreign Plan
(or the Seller, the Company or any of its Subsidiaries with respect thereto) or
the assets thereof. There are no unfunded obligations under any Foreign Plan
providing benefits after termination of employment to any employee or former
employee of the Company or its Subsidiaries (or to any beneficiary of any such
employee or former employee), including but not limited to retiree health
coverage and deferred compensation, but excluding insurance conversion
privileges under applicable foreign law. No Foreign Plan, plan documentation or
agreement, summary plan description or other written communication distributed
generally to employees of the Company or any of its Subsidiaries by its terms
prohibits the amendment or termination of any such Foreign Plan. All reports,
forms and other documents required to be filed or advisable to be filed with any
governmental entity with respect to each Foreign Plan have been timely filed and
are accurate.
(f) Neither the Company nor any of the Subsidiaries has violated any
labor legislation, regulation or agreement in any relevant jurisdiction,
including without limitation the Swedish lagen (1976:580) om medbestammande i
arbetslivet (MBL).
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II.19 Environmental Matters.
---------------------
(a) The Company and each of its Subsidiaries has complied with, and its
operations as of the Closing Date are in compliance with, all Environmental Laws
(as defined below). For purposes of this Agreement, "Environmental Law" means
any federal, state, regional, local, foreign or European Union ("EU") law,
statute, rule or regulation or the common law relating to the environment or
occupational health and safety, including without limitation any statute,
regulation or order pertaining to (i) treatment, storage, disposal, generation
or transportation of commercial, industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water or noise pollution; (iii) groundwater
or soil contamination; (iv) the release or threatened release into the
environment of commercial, industrial, toxic or hazardous substances, or solid
or hazardous waste, including without limitation emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants, pesticides
or chemicals; (v) the protection of wildlife, marine sanctuaries or wetlands,
including without limitation all endangered or threatened species; (vi)
underground and other storage tanks or vessels, and abandoned, disposed or
discarded barrels, containers and other receptacles; (vii) health and safety of
employees and other persons; and (viii) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, pesticides, chemicals or commercial, industrial, toxic
or hazardous substances or oil or petroleum products or solid or hazardous
waste. As used above, the terms "release," "environment" and "hazardous
substances" shall have the meaning set forth in the federal Comprehensive
Environmental Compensation, Liability and Response Act of 1980 ("CERCLA").
(b) There have been no releases of any Materials of Environmental
Concern (as defined below) into the environment at or from (i) any parcel of
real property or any facility formerly or currently owned, leased, operated or
controlled by the Company or any of its Subsidiaries, (ii) any facility to which
the Company or any of its Subsidiaries has delivered products for manufacturing,
processing, packaging or distribution or (iii) to the Seller's knowledge, any
facility to which waste of the Company or any of its Subsidiaries has been
transported for processing, storage or disposal. With respect to any such
releases of Materials of Environmental Concern, the Company and each of its
Subsidiaries has given all required notices to Governmental Entities (copies of
which have been provided to the Buyer). The Company is not aware of any releases
of Materials of Environmental Concern at parcels of real property or facilities
other than those owned, leased, operated or controlled by the Company or any of
its Subsidiaries that could reasonably be expected to have an impact on such
real property or facilities. For purposes of this Agreement, "Materials of
Environmental Concern" means any chemicals, pollutants or contaminants,
hazardous substances (as such term is defined under CERCLA), solid wastes and
hazardous wastes (as such terms are defined under the Resource Conservation and
Recovery Act), pesticides, toxic materials, oil or petroleum and petroleum
products or any other material subject to regulation under any Environmental Law
in the jurisdictions where such materials are or have been located.
(c) There is no pending or, to the Seller's knowledge, threatened civil
or criminal litigation, written notice of violation or noncompliance, formal
administrative or judicial proceeding, claim, cause of action, liability,
investigation, citation, order, consent order, consent decree, inquiry or
information requested by any Governmental Entity involving the Company or any of
its Subsidiaries relating to any of the following: (i) violation of any
Environmental Law; (ii) violation of any permit, license or registration issued
under any Environmental Law; (iii) the disposal, discharge or release of
Materials of Environmental Concern, whether or not in compliance with
Environmental Laws; (iv) the generation, storage, treatment, transportation,
reclamation, recycling or other handling of Materials of Environmental Concern,
whether or not in compliance with Environmental Laws; (v) the ownership,
operation or use of any landfill, surface impoundment, pit, pond, lagoon,
underground injection well, waste pile, land treatment unit, wastewater
treatment plant, air pollution control equipment, or any other unit used for the
storage, disposal, handling or treatment of Materials of Environmental concern;
(vi) the exacerbation of previously existing environmental
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conditions; or (vii) exposure to any Materials of Environmental Concern, noises,
odors, or vibrations at or from any real property or facility formerly or
currently owned, leased, operated or controlled by the Company. Without limiting
the foregoing, neither the Company nor any of its Subsidiaries has been named a
"potentially responsible party" or received any correspondence or notice that it
may be named a "potentially responsible party."
(d) The Company and each of its Subsidiaries possesses all Permits,
licenses and/or registrations required under Environmental Laws for its business
and operations, including Permits, licenses and/or registrations required for
equipment owned and/or operated by the Company or any of its Subsidiaries and
all such Permits, licenses and/or registrations are valid and in full force and
effect.
(e) Set forth in Section 2.19(e) of the Disclosure Schedule is a list of
all environmental reports, investigations, audits, assessments, surveys and
analyses (whether conducted by or on behalf of the Company or any of its
Subsidiaries or a third party, and whether done at the initiative of the Company
or any of its Subsidiaries or directed by a Governmental Entity or other third
party) relating to premises currently or previously owned, leased or operated by
the Company or any of its Subsidiaries which the Seller, the Company or any of
its Subsidiaries has possession of or access to or has knowledge of. Complete
and accurate copies of each such report that the Company or any of its
Subsidiaries has access to or possession of, or the results of each such
investigation or audit, have been provided to the Buyer.
(f) To the Seller's knowledge, all Entities, including without
limitation transporters, treatment, storage and disposal facilities and
remediation companies, used by the Company or any of its Subsidiaries for the
transportation, storage, disposal, treatment or other handling of Materials of
Environmental Concern possess all Permits, licenses and registrations required
under Environmental Laws. To the Seller's knowledge, there is no previous,
pending or threatened civil or criminal litigation, written notice of violation
of noncompliance, formal administrative or judicial proceedings, investigation,
citation, order, consent order, consent decree, inquiry or information request
by any Governmental Entity, relating to such Entities for any violations of
Environmental Laws.
II.20 Legal Compliance. The Company and each of its Subsidiaries is
----------------
conducting and has conducted their business and operations in compliance in
all material respects with all applicable federal, state, local, foreign and EU
laws, regulations and orders ("Laws and Regulations"). Neither the Company nor
any of its Subsidiaries has received any notice or communication from any
Governmental Entity alleging noncompliance with any applicable Laws and
Regulations.
II.21 Permits. Section 2.21 of the Disclosure Schedule sets forth a
-------
list of all permits ("Permits") and the status thereof (including without
limitation those issued or required under the Environmental Laws) issued to or
held by the Company or any of its Subsidiaries. Such listed Permits are the only
Permits that are required for the Company or any of its Subsidiaries to conduct
the business of the Company or such Subsidiary as presently conducted. Each such
Permit is in full force and effect and, to the Seller's knowledge, no suspension
or cancellation of such Permit is threatened and there is no basis for believing
that such Permit will not be renewable upon expiration. The Company and each of
its Subsidiaries is in compliance in all material respects with the terms and
conditions of each such Permit.
II.22 Certain Business Relationships With Affiliates. No Affiliate of
----------------------------------------------
the Company or any of its Subsidiaries (a) owns any property or right, tangible
or intangible, which is used by the Company or any of its Subsidiaries, (b) has
any claim or cause of action against the Company or any of its Subsidiaries or
(c) owes any money to the Company or any of its Subsidiaries. Section 2.22 of
the Disclosure Schedule describes any transaction or relationships between the
Company and each of
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<PAGE>
its Subsidiaries, on the one hand, and the any of its Affiliates, on the other
hand, which have occurred since January 1, 1996.
II.23 Brokers' Fees. Except as set forth in Section 2.23 of the
-------------
Disclosure Schedule, neither the Company nor any of its Subsidiaries has any
liability or obligation to pay any fees, costs or commissions to any broker,
finder or agent with respect to the transactions contemplated by this Agreement.
II.24 Books and Records. The books, records, accounts, ledgers
-----------------
and files of the Company and each of its Subsidiaries are accurate and complete
and have been maintained in accordance with good business and bookkeeping
practices.
II.25 Customers and Suppliers. No unfilled customer order or
-----------------------
commitment obligating the Company or any of its Subsidiaries to process,
manufacture, license, sell or deliver products or perform services will result
in a loss upon completion of performance. No purchase order or commitment is in
excess of the Company's or any of its Subsidiaries then current requirements
therefor nor are prices provided therein in excess of the relevant current
market prices for the products or services to be provided thereunder. Section
2.25 of the Disclosure Schedule sets forth a list of (a) each customer that
accounted for more than 5% of the revenues of the Company or any of its
Subsidiaries during (i) the last full fiscal year and (ii) the first nine months
of 1998, respectively, and the amount of revenues accounted for by such customer
during each such period and (b) each supplier that is the sole supplier of any
significant material, product, component or service used by the Company or any
of its Subsidiaries. No such customer of the Company or any of its Subsidiaries
has indicated since January 1, 1998 that it will stop, or decrease the rate of,
buying materials, products or components produced by, or services offered by,
the Company or any of its Subsidiaries, and no such supplier to the Company or
any of its Subsidiaries has indicated since January 1, 1998 that it will stop,
or decrease the rate of, supplying materials, products, components or services
to the Company or any of its Subsidiaries.
II.26 Real Property Leases. Section 2.26 of the Disclosure Schedule
--------------------
lists all real property currently leased or subleased to the Company and each of
its Subsidiaries. The Seller has delivered to the Buyer correct and complete
copies of the leases and subleases (as amended to date) listed therein. With
respect to each such lease and sublease:
(a) the lease or sublease is legal, valid, binding, enforceable and in
full force and effect;
(b) the lease or sublease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the Closing
in accordance with the terms thereof as in effect prior to the Closing;
(c) neither the Company nor any of its Subsidiaries nor, to the Seller's
knowledge, any other party to the lease or sublease is in breach or default, and
no event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification or acceleration
thereunder;
(d) there are no disputes, oral agreements or forbearance programs to
which the Company or any of its Subsidiaries is a party in effect as to the
lease or sublease;
(e) neither the Company nor any of its Subsidiaries has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in
the leasehold or subleasehold;
(more)
<PAGE>
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities;
(g) no lease imposes any penalty or cost, other than the payment of rent
at a rate not in excess of the maximum rate payable during the term of the
lease, for holdover occupancy by the tenant after the term of the lease expires;
and
(h) to the Seller's knowledge, the owner of the facility leased or
subleased has good and clear record and marketable title to the parcel of real
property, free and clear of any Security Interest, easement, covenant or other
restriction except for recorded mortgages, easements and covenants and other
restrictions which do not impair the intended uses or occupancy of the property
subject thereto by the Company or any of its Subsidiaries.
II.27 Owned Real Property. Neither the Company nor any of its
-------------------
Subsidiaries owns any real property or, except for the leases and subleases set
forth in Section 2.26 of the Disclosure Schedule, any interest in real property.
II.28 Banking Facilities. Section 2.28 of the Disclosure Schedule sets
------------------
forth a true, correct and complete list of:
(a) each bank, savings and loan or similar financial institution at
which the Company or any of its Subsidiaries has an account, safety deposit box,
line of credit or credit facility and the numbers of the accounts or safety
deposit boxes maintained by the Company or any of its Subsidiaries and details,
including terms, of any line of credit or credit facility; and
(b) the names of all persons authorized to draw on each such account or
to have access to any such safety deposit box facility, together with a
description of the authority (and conditions thereof, if any) of each such
person with respect thereto.
II.29 Indebtedness and Guaranties. Section 2.29 of the Disclosure
---------------------------
Schedule sets forth a true and complete list (including the obligor, the
beneficiary, the amount and the date of maturity or expiration) of all debt
instruments, loan agreements, indentures, guaranties or other obligations which
relate to (i) indebtedness (including principal, interest thereon and any
contingent or other payments associated therewith) of the Company or any of its
Subsidiaries for borrowed money of any nature, including without limitation
convertible indebtedness ("Indebtedness"), or (ii) money loaned by the Company
or any of its Subsidiaries to others. All of the foregoing arrangements were
entered into in the Ordinary Course of Business, are valid and binding, in full
force and effect and are enforceable in accordance with their respective terms;
and there are no prepayment penalties associated therewith.
II.30 Government Contracts. Neither the Company nor any of its
--------------------
Subsidiaries has been suspended or debarred from bidding on contracts or
subcontracts with any Governmental Entity; no such suspension or debarment has
been initiated or, to the Seller's knowledge, threatened; and the consummation
of the transactions contemplated by this Agreement will not result in any such
suspension or debarment of the Company or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries has been audited or investigated nor are now
being audited or investigated by the U.S. Government Accounting Office, the U.S.
Department of Defense or any of its agencies, the Defense Contract Audit Agency,
the U.S. Department of Justice, the Inspector General of any U.S. Governmental
Entity, any similar agencies or instrumentalities of any foreign Governmental
Entity, or any prime contractor with a Governmental Entity nor, to the Seller's
knowledge, has any such audit or investigation been threatened. To the Seller's
knowledge, there is no valid basis for (a) the suspension or debarment of the
Company or any of its Subsidiaries from bidding on contracts or subcontracts
with any Governmental Entity or (b) any claim pursuant to an audit or
investigation by any of the Entities named in the foregoing sentence. Neither
the Company nor any of its Subsidiaries has
(more)
<PAGE>
agreements, contracts or commitments which require it to obtain or maintain a
security clearance with any Governmental Entity.
II.31 Assets of the Business. The Company or its Subsidiaries own all
----------------------
material assets, properties and rights that are used in connection with or
necessary to conduct the business of the Company and the Subsidiaries. Section
2.31 of the Disclosure Schedule lists all material assets of Astea or any of its
Affiliated Entities used in connection with the business of the Company and the
Subsidiaries at any time since January 1, 1996 which are not owned by the
Company or the Subsidiaries.
II.32 Disclosure. No representation or warranty by the Seller contained
----------
in this Agreement, and no statement contained in the Disclosure Schedule or any
other document, certificate or other instrument delivered or to be delivered by
the Seller or on behalf of the Company pursuant to this Agreement (unless
subsequently corrected prior to the date hereof), and no other statement made by
the Seller or any of its representatives in connection with this Agreement,
contains any untrue statement of a material fact or omits to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
III.1 Organization. The Buyer is a corporation duly organized,
------------
validly existing and in corporate and tax good standing under the laws of the
State of Delaware.
III.2 Authority. The Buyer has all requisite power and authority
---------
to execute and deliver this Agreement and the agreements contemplated herein to
which it is a party and to perform its obligations hereunder and thereunder.
The execution and delivery by the Buyer of this Agreement and the agreements
contemplated herein to which it is a party and the performance by the Buyer of
this Agreement and the agreements contemplated herein to which it is a party and
the consummation by the Buyer of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
on the part of the Buyer. This Agreement has been duly and validly executed and
delivered by the Buyer and constitutes, and each of the agreements contemplated
herein, upon its execution and delivery by the Buyer will constitute, valid and
binding obligations of the Buyer, enforceable against the Buyer in accordance
with their respective terms.
III.3 Noncontravention. Neither the execution and delivery of
----------------
this Agreement or the agreements contemplated herein by the Buyer, nor the
consummation by the Buyer of the transactions contemplated hereby or thereby,
will, directly or indirectly (with or without notice or lapse of time), (a)
conflict with or violate any provision of the certificate of incorporation or
bylaws of the Buyer or any resolution adopted by the board of directors or
stockholders of the Buyer or (b) conflict with or result in a breach of any
contract, lease, license, franchise, permit, indenture, agreement, instrument or
other arrangement to which the Buyer is bound and which would have a materially
adverse effect on the Buyer's ability to consummate the transactions
contemplated by this Agreement or (c) other than as required to be disclosed by
the Seller on the Disclosure Schedule, require on the part of the Buyer any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity or give any Governmental Entity the right to challenge any of the
transactions contemplated by this Agreement or the agreements contemplated
herein.
<PAGE>
III.4 Brokers' Fees. The Buyer has no liability or obligation to pay any
-------------
fees, costs or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
III.5 Litigation. There are no actions, suits, claims or legal,
----------
administrative or arbitratorial proceedings pending against, or, to the Buyer's
knowledge, threatened against, the Buyer which would adversely affect the
Buyer's performance under this Agreement or the consummation of the transactions
contemplated by this Agreement.
III.6 Investment Intent. The Buyer is acquiring the Shares for investment for
-----------------
its own account and not with a view to the distribution of any part thereof. The
Buyer acknowledges that the Shares have not been registered under U.S. federal
or any applicable state securities laws or the laws of any other jurisdiction
and cannot be resold without registration under such laws or an exemption
therefrom.
III.7 Disclosure. No representation or warranty by the Buyer contained in
----------
this Agreement, and no statement contained in any other document, certificate or
other instrument delivered to or to be delivered by or on behalf of the Buyer
pursuant to this Agreement, and no other statement made by the Buyer or any of
their respective representatives in connection with this Agreement, contains any
untrue statement of a material fact or omits to state any material fact
necessary, in light of the circumstances under which it was or will be made, in
order to make the statements herein or therein not misleading.
ARTICLE IV
ACCESS TO INFORMATION
IV.1 Access to Management, Properties and Records.
--------------------------------------------
(a) From the date of this Agreement until the Closing Date, the Seller
shall cause the Company to afford the officers, attorneys, accountants and other
authorized representatives of the Buyer free and full access upon reasonable
notice and during normal business hours to all management personnel, offices,
properties, books and records of the Company and its Subsidiaries, so that the
Buyer may have full opportunity to make such reasonable investigation as it
shall desire to make of the management, business, properties and affairs of the
Company and its Subsidiaries, and the Buyer shall be permitted to make abstracts
from, or copies of, all such books and records. The Seller shall cause the
Company to furnish to the Buyer such financial and operating data and other
information as the Buyer shall reasonably request.
(b) The Seller shall cause the Company to release to the Buyer all
files pertaining to the Company and its Subsidiaries or the business or the
operations of the Company and its Subsidiaries held by any federal, state,
county or local authorities, agencies or instrumentalities.
IV.2 Confidentiality. All information not previously disclosed to the
---------------
public or generally known to persons engaged in the respective businesses of the
Company, the Subsidiaries or the Buyer which shall have been furnished by the
Buyer, the Seller or the Company to any other party in connection with the
transactions contemplated hereby or as provided pursuant to Section 4.1 shall
not be disclosed to any person other than their respective employees, directors,
attorneys, accountants or financial advisors or other than as contemplated
herein. In the event that the transactions contemplated by this Agreement shall
not be consummated, all such information which is in writing shall be returned
to the party furnishing the same, including, to the extent reasonably
practicable, all copies or reproductions thereof which may have been prepared,
and neither party shall at any time thereafter disclose to third parties, or
use, directly or indirectly, for its own benefit, any such
(more)
<PAGE>
information, written or oral, about the business of the other party hereto.
Notwithstanding any other provision of this Agreement, the Confidentiality and
Non-Disclosure Agreement between Astea and the Buyer, dated August 20, 1998,
shall remain in full force and effect according to its terms.
ARTICLE V
PRE-CLOSING COVENANTS
From and after the date hereof and until the Closing Date:
V.1 Best Efforts. Each Party shall use its best efforts to take all
------------
actions and to do all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement.
V.2 Notices and Consents. The Seller shall obtain on behalf of the
--------------------
Company and its Subsidiaries, at its expense, all of the waivers, Permits,
consents, approvals or other authorizations from third parties and Governmental
Entities, if any, and effect all such registrations, filings and notices with or
to third parties or Governmental Entities, if any, as may be necessary or
desirable in connection with the transactions contemplated by this Agreement.
V.3 Conduct of Business. The Seller shall cause the Company and the
-------------------
Subsidiaries to carry on their business diligently and substantially in the same
manner as heretofore and shall not make or institute any unusual or new methods
of manufacture, purchase, sale, shipment or delivery, lease, management,
accounting or operation, and shall not ship or deliver any quantity of products
in excess of normal shipment or delivery levels, except as agreed to in writing
by the Buyer. The Seller shall cause all of the property of the Company and the
Subsidiaries to be used, operated, repaired and maintained in a normal business
manner consistent with past practice.
V.4 Absence of Material Changes. Without the prior written consent of the
---------------------------
Buyer, neither the Company nor any of the Subsidiaries shall:
(i) take any action to amend its organizational documents;
(ii) issue any stock, bonds or other corporate securities or
grant any option or issue any warrant to purchase or subscribe to any of such
securities or issue any securities convertible into such securities;
(iii) incur any obligation or liability (absolute or
contingent), except current liabilities incurred and obligations under contracts
entered into in the Ordinary Course of Business;
(iv) declare or make any payment or distribution to its
shareholders with respect to their stock or purchase or redeem any shares of its
capital stock;
(v) mortgage, pledge, or subject to any Security Interest or
any other encumbrance any of their respective assets or properties;
(vi) sell, assign, or transfer any of its assets, except for
inventory sold in the Ordinary Course of Business;
(vii) cancel any debts or claims, except in the Ordinary
Course of Business;
(more)
<PAGE>
(viii) merge or consolidate with or into any entity;
(ix) make, accrue or become liable for any bonus, profit
sharing or incentive payment, except for accruals under existing Employee
Benefit Plans, if any, or increase the rate of compensation payable or to become
payable by it to any of its officers, directors or employees;
(x) make any election or give any consent under the Code or
the Tax statutes of any state or other jurisdiction or make any termination,
revocation or cancellation of any such election or any consent or compromise or
settle any claim for past or present Tax due;
(xi) waive any rights of material value;
(xii) modify, amend, alter or terminate any of its executory
contracts of a material value or which are material in amount;
(xiii) take or permit any act or omission constituting a breach
or default under any contract, indenture or agreement by which it or its
properties are bound;
(xiv) fail to (i) preserve the possession and control of its
assets and business, (ii) keep in faithful service its present officers and key
employees, (iii) preserve the goodwill of its customers, suppliers, agents,
brokers and others having business relations with it, and (iv) keep and preserve
its business substantially as existing on the date hereof until the Closing
Date;
(xv) fail to operate itself and maintain its books, accounts
and records in the customary manner and in the Ordinary Course of Business and
maintain in good repair its business premises, fixtures, machinery, furniture
and equipment;
(xvi) enter into any leases, contracts, agreements or
understandings other than those entered into in the Ordinary Course of Business
calling for payments which in the aggregate do not exceed US$10,000 for each
such lease, contract, agreement or understanding;
(xvii) engage any additional employees;
(xviii) materially alter the terms, status or funding condition
of any Employee Benefit Plan;
(xix) change its accounting methods, principles or practices,
except insofar as may be required by a generally applicable change in United
States generally accepted accounting principles;
(xx) take any action or fail to take any action permitted by
this Agreement with the knowledge that such action or failure to take action
would result in (i) any of the representations and warranties of the Seller set
forth in this Agreement becoming untrue or (ii) any of the conditions to the
Closing not being satisfied; or
(xxi) commit or agree to do any of the foregoing in the
future.
V.5 Taxes. The Seller shall cause the Company and the Subsidiaries, on a
-----
timely basis (taking into account any allowed extensions), to file all Tax
Returns for and pay any and all Taxes which shall become due on account of the
operation of the Company or its Subsidiaries on or prior to the Closing Date,
other than Taxes that are being contested in good faith or for which adequate
reserves have been taken on the Closing Balance Sheet.
(more)
<PAGE>
V.6 Delivery of Interim Financial Statements. The Seller shall deliver to
----------------------------------------
the Buyer as promptly as possible following the last day of each month after the
date hereof, and in any event within 15 days after the end of each such month,
its consolidated balance sheet and related consolidated statements of income,
for the Company and the Subsidiaries for the one-month period then ended and for
the period then ended since December 31, 1997 and for the year to date period
then ended in the prior fiscal year, all certified by the chief financial
officer of the Seller (collectively, the "Interim Financial Statements").
V.7 Communication with Customers and Suppliers. Unless instructed
------------------------------------------
otherwise by the Buyer in writing, the Seller shall cause the Company and each
of its Subsidiaries to accept customer orders in the Ordinary Course of Business
and consistent with past practice for all products offered by the Company and
the Subsidiaries but expected to be shipped by the Company or its Subsidiaries.
V.8 Compliance with Laws and Regulations. The Seller shall cause the
------------------------------------
Company and each of the Subsidiaries to comply with all Laws and Regulations
which are applicable to the conduct of the Company and its Subsidiaries and
shall perform and comply in all material respects with all contracts,
commitments and obligations by which it is bound.
V.9 Exclusive Dealing.
-----------------
(a) Until December 31, 1998, subject to the satisfaction or waiver of
the conditions of Section 5.9(b) below by Buyer, neither the Seller nor the
Company shall, directly or indirectly, through any officer, director, agent or
otherwise, (i) solicit, initiate or encourage submission of proposals or offers
from any person relating to any acquisition or purchase of all or a material
portion of the assets, or any equity interest in, the Company or any of its
Subsidiaries or any equity investment, merger, consolidation or business
combination with the Company or any of its Subsidiaries, or (ii) participate in
any discussions or negotiations regarding, or furnish to any other person, any
non-public information with respect to, or otherwise cooperate in any way with,
or assist or participate in, facilitate or encourage, any effort or attempt by
any other person to do or seek any of the foregoing. The Seller, the Company and
each of the Subsidiaries shall immediately notify the Buyer if any such proposal
or offer, or any inquiry or contact with any person with respect thereto, is
made, inform the Buyer of the terms and structure of any such proposal or offer
and the substance of any such inquiry or contact and provide to the Buyer all
written information received by the Seller, the Company and each of the
Subsidiaries with respect to any such proposal, offer, inquiry or contact.
(b) Until December 31, 1998, subject to the satisfaction or waiver of
the conditions of Section 5.9(a) above by the Seller, the Buyer agrees (i) not
to submit to any person any proposal or offer to acquire or purchase all or a
material portion of the assets, or any equity interest in, any company or
business or any equity investment, merger, consolidation or business combination
with any company or business, which is engaged in the Primary Business of the
Company, or participate in any discussions or negotiations with or regarding any
such company or business or (ii) not to participate in any discussions or
negotiations regarding, or request from any other person, any non-public
information with respect to, or otherwise cooperate in any way with or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing.
For the purposes of this Section 5.9, the "Primary Business of the
Company" shall mean: the business of design, development, demonstration,
manufacture (including subcontracted manufacture), internal use, offering for
sale, sale, importation, exportation and servicing, maintenance and support of
software in the customer management relationship market, including, without
limitation, software for the management of sales and marketing relationships.
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<PAGE>
V.10 Notice of Breaches; Updates.
---------------------------
(a) By the Seller. The Seller shall promptly deliver to the Buyer
-------------
written notice of any event or development known to the Seller that would (i)
render any statement, representation or warranty of the Seller in this Agreement
(including the Disclosure Schedule) inaccurate or incomplete in any material
respect or (ii) constitute or result in a breach by the Seller of, or a failure
by the Seller to comply with, any agreement or covenant in this Agreement
applicable to it. No such disclosure shall be deemed to avoid or cure any such
misrepresentation or breach.
(b) By the Buyer. The Buyer shall promptly deliver to the Seller
------------
written notice of any event or development known to the Buyer that would (i)
render any statement, representation or warranty of the Buyer in this Agreement
inaccurate or incomplete in any material respect or (ii) constitute or result in
a breach by the Buyer or a failure by the Buyer to comply with, any agreement or
covenant in this Agreement applicable to it. No such disclosure shall be deemed
to avoid or cure any such misrepresentation or breach.
V.11 Insurance. The Seller shall cause the Company and each of its
---------
Subsidiaries to maintain through and including the Closing Date, insurance
coverage that is substantially similar to the insurance coverage under the
insurance policies identified in Section 2.14 of the Disclosure Schedule.
ARTICLE VI
CONDITIONS TO CLOSING
VI.1 Conditions to Obligations of the Buyer. The obligation of the Buyer to
--------------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to the satisfaction, or waiver by the Buyer, of the following
conditions:
(a) the Seller shall have obtained at its own expense all of the
waivers, Permits, consents, approvals or other authorizations from third parties
and Governmental Entities, and effected all of the registrations, filings and
notices with or to third parties or Governmental Entities, as may be necessary
in connection with the transactions contemplated by this Agreement and the
agreements contemplated herein;
(b) the representations and warranties of the Seller set forth in
Article II shall be true and correct on the date hereof and shall be true and
correct at and as of the Closing Date as if made as of the Closing Date, except
(i) changes contemplated or permitted by this Agreement, (ii) those
representations and warranties made as of a specific date, which shall be true
and correct as of such date (subject to clause (iii) below) and (iii) where the
failure of the representations and warranties to be true and correct would not,
individually or in the aggregate, have a material adverse effect on the assets,
business, condition (financial or otherwise), results of operations or future
prospects of the Company or any of its Subsidiaries (it being agreed that this
clause (iii) shall be inapplicable to any portion of a representation or
warranty which is already qualified as to materiality);
(c) the Seller shall have performed or complied with its agreements
and covenants required to be performed or complied with under this Agreement in
all material respects as of or prior to the Closing Date;
(d) no action, suit or proceeding shall be pending or threatened by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would
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<PAGE>
(i) prevent consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation or (iii) affect materially and adversely the
right of the Buyer to conduct the business of the Company and its Subsidiaries
as currently conducted and as presently proposed to be conducted following the
Closing, and no such judgment, order, decree, stipulation or injunction shall be
in effect;
(e) there shall not have occurred a change, or an event involving a
prospective change, in the business, properties, operations, condition
(financial or otherwise), prospects, assets or liabilities of the Company or any
of its Subsidiaries since September 30, 1998 which could, individually or in the
aggregate, result in a material adverse effect on the assets, business, results
of operations, condition (financial or otherwise) or future prospects of the
Company or the Subsidiaries;
(f) the Seller shall have delivered to the Buyer a certificate
(without qualification as to knowledge or materiality or otherwise) to the
effect that each of the conditions specified in clauses (a) through (e) of this
Section 6.1 is satisfied in all respects;
(g) the Buyer shall have received from each of (i) Robert G. Schwartz,
Jr., as Vice President and General Counsel of the Seller, (ii) Testa, Hurwitz &
Thibeault LLP, as United States counsel to the Seller, and (iii) Baker and
McKenzie, as Swedish counsel to the Seller and the Company, an opinion dated as
of the Closing Date in the form attached hereto as Exhibits F-1, F-2 and F-3;
-------------------------
(h) the Buyer shall have executed employment agreements with the
employees of the Company set forth on Schedule 6.1(h);
(i) the Buyer, the Company, the Seller and the Escrow Agent shall have
entered into the Escrow Agreement in the form attached hereto as Exhibit A and
---------
such Agreement shall be in full force and effect on the Closing Date in
accordance with its terms;
(j) the Buyer shall have received from the Seller and the Seller's
officers certificates from the appropriate government officials of all
appropriate jurisdictions attesting to the legal existence, good standing
(corporate) and qualification of the Company and its Subsidiaries and all other
customary closing certificates as the Buyer shall have requested;
(k) all actions to be taken by the Seller in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
the Buyer; and
(l) the Buyer shall have received at or prior to the Closing such
other documents, instruments or certificates as the Buyer may reasonably request
including, without limitation:
(i) the stock certificates representing the Shares duly
endorsed in accordance with Article I of this Agreement;
(ii) certificates of the Secretary of the Seller attesting to
the incumbency of the Seller's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the organizational documents of the
Seller, the Company and each of its Subsidiaries;
(iii) where required by the applicable lease, estoppel
certificates from each tenant to whom the Company or any Subsidiary leases real
property consenting to the acquisition
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of the Shares by the Buyer and the other transactions contemplated hereby, and
representing that there are no outstanding claims against the Company or such
Subsidiary under such lease;
(iv) written resignations of all members of the Company's and
each of the Subsidiaries' Board of Directors;
(v) the original corporate minute books of the Company and
each of its Subsidiaries; and
(vi) a cross receipt executed by the Buyer and the Seller.
VI.2 Conditions to Obligations of the Seller. The obligations of the Seller
---------------------------------------
to consummate the transactions to be performed by them in connection with the
Closing is subject to the satisfaction, or waiver by the Seller of the following
conditions:
(a) the representations and warranties of the Buyer set forth in
Article III shall be true and correct on the date hereof and shall be true and
correct at and as of the Closing Date as if made as of the Closing Date, except
(i) changes contemplated or permitted by this Agreement, (ii) those
representations and warranties made as of a specific date, which shall be true
and correct as of such date (subject to clause (iii) below) and (iii) where the
failure of the representations and warranties to be true and correct would not,
individually or in the aggregate, have a material adverse effect on the ability
of the Buyer to consummate the transactions contemplated by this Agreement;
(b) the Buyer shall have performed or complied with its agreements and
covenants required to be performed or complied with under this Agreement as of
or prior to the Closing Date;
(c) no action, suit or proceeding shall be pending or threatened by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation;
(d) the Buyer shall have delivered to Astea a certificate (without
qualification as to knowledge or materiality or otherwise) to the effect that
each of the conditions specified in clauses (a) through (c) of this Section 6.2
is satisfied in all respects;
(e) Astea shall have received from the Buyer and the Buyer's officers
certificates from the appropriate government officials of all appropriate
jurisdictions attesting to the legal existence, good standing (corporate and
tax) and qualification of the Buyer and all other customary closing certificates
as Astea shall have requested; and
(f) all actions to be taken by the Buyer in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to the effect the
transactions contemplated hereby shall be reasonable satisfactory in form and
substance to the Seller;
(g) the Buyer, the Company, the Seller and the Escrow Agent shall have
entered into the Escrow Agreement in the form attached hereto as Exhibit A and
---------
such Agreement shall be in full force and effect on the Closing Date in
accordance with its terms;
(h) the Seller shall have received from Hale and Dorr LLP, United
States counsel to the Buyer, an opinion dated as of the Closing Date in the form
attached hereto as Exhibit G.
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(i) the Seller shall have received at or prior to the Closing such
documents, instruments or certificates as the Seller may reasonably request
including, without limitation:
(i) such certificates of the Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this Section
6.2 as the Seller shall reasonably request;
(ii) a certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing of the Buyer in Delaware;
(iii) a certificate of the Secretary of the Buyer attesting to
the incumbency of the Buyer's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the charter documents and by-laws of the
Buyer;
(iv) payment of the Purchase Price; and
(v) a cross receipt executed by the Buyer and the Seller.
ARTICLE VII
POST-CLOSING COVENANTS
VII.1 Proprietary Information. From and after the Closing, the Seller shall
-----------------------
keep confidential, and shall cause its Affiliates to keep confidential, all
knowledge, information and documents of a confidential nature or not generally
known to the public with respect to the Company and its Subsidiaries (including
without limitation the financial information, Intellectual Property, technical
information or data relating to the materials, products or components sold, or
the services offered, by the Company and its Subsidiaries and names of customers
of the Company) (collectively, "Proprietary Information") and shall not disclose
or make use of, and shall cause its Affiliates not to disclose or make use of,
Proprietary Information without the prior written consent of the Buyer, except
to the extent that such knowledge, information or documents shall have become
public knowledge other than through a breach of this Agreement by the Seller or
its Affiliates or agents.
VII.2 Solicitation and Hiring of Employees.
------------------------------------
(a) For a period of three years after the Closing Date, the Seller
shall not, and shall cause its Affiliates not to, either directly or indirectly
as a stockholder, investor, partner, director, officer, employee or otherwise
(i) solicit (except for general solicitations directed at the public at large)
or attempt to induce any Principal Employee (as defined below) to terminate his
employment with the Company or any of its Subsidiaries, or (ii) hire or attempt
to hire any Principal Employee without the prior written consent of the Buyer.
For purposes of this Agreement a "Principal Employee" shall mean any of Per
Edstrom, Henrik Lindberg, Orjan Grinndal and Bjorn Candler.
(b) For a period of two years after the Closing Date, the Seller shall
not, and shall cause its Affiliates not to, either directly or indirectly as a
stockholder, investor, partner, director, officer, employee or otherwise, (i)
solicit (except for general solicitations directed at the public at large), or
attempt to induce any Restricted Employee (as defined below) to terminate his
employment with the Company or any of its Subsidiaries, or (ii) hire or attempt
to hire any Restricted Employee without the prior written consent of the Buyer.
For purposes of this Agreement, a "Restricted Employee" shall mean any person
who was employed by the Company or any of its Subsidiaries on the date of this
Agreement or on the Closing Date other than the Principal Employees.
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VII.3 Non-Competition; Referral of Customers.
--------------------------------------
(a) For a period of two (2) years after the Closing Date, Seller shall
refrain from, directly or indirectly, carrying on or participating in any stand-
alone sales force automation or sales and marketing management software business
worldwide, including the development, distribution, licensing, sales and
marketing of any products that compete, on a stand-alone basis, with the current
products of the Company. However, this Section shall not prevent Seller from (a)
including sales force automation or sales and marketing management functionality
in its service management software products which are not stand-alone sales
force automation or sales and marketing management software products or (b)
owning as a passive investment, up to 5% of a class of equity securities issued
by any company, including a competitor of Company or Buyer that is registered
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") or
subject to Section 15(d) of the Exchange Act; provided that neither Seller nor
its Subsidiaries shall enter into any licensing or technology support agreement
with such competitor related to sales force automation or sales and marketing
management functions.
(b) The Seller agrees that the duration and geographic scope of the
non-competition provision set forth in this Section 7.3 are reasonable. In the
event that any court determines that the duration or the geographic scope, or
both, are unreasonable and that such provision is to that extent unenforceable,
the Seller and the Buyer agree that the provision shall remain in full force and
effect for the greatest time period and in the greatest area that would not
render it unenforceable. The Seller and the Buyer intend that this non-
competition provision shall be deemed to be a series of separate covenants, one
for each and every county of each and every state or province of each and every
country.
(c) The Seller shall, and shall cause its Affiliates to, refer all
inquiries regarding the Company and its Subsidiaries and their products and
services to the Buyer and neither the Seller nor any of its Affiliates shall
independently pursue any such inquiries. The Seller shall notify its Affiliates
in writing promptly after the Closing that the Company and its Subsidiaries have
been sold to the Buyer, and such notice shall inform such Affiliates of their
obligations under this Section 7.3(c). Such notice shall be in the form and
substance reasonably satisfactory to the Buyer.
VII.4 Sharing of Data.
---------------
(a) The Seller shall have the right for a period of seven (7) years
following the Closing Date to have reasonable access to such books, records and
accounts, including financial and Tax information, correspondence, production
records, employment records and other records that are transferred to the Buyer
pursuant to the terms of this Agreement for the limited purposes of concluding
its involvement in the business of the Company and its Subsidiaries as conducted
by the Company and its Subsidiaries prior to the Closing Date and for complying
with its obligations under applicable securities, Tax, environmental, employment
or other Laws and Regulations. The Buyer shall have the right for a period of
seven (7) years following the Closing Date to have reasonable access to (i)
those books, records and accounts, including financial and Tax information,
correspondence, production records, employment records and other records that
are retained by the Seller pursuant to the terms of this Agreement and (ii) the
workpapers of the Seller's accountants prior to the Closing Date, in each case
only to the extent that any of the foregoing is needed by the Buyer for the
purposes of conducting the business of the Company and its Subsidiaries after
the Closing Date and for complying with its obligations under applicable
securities, Tax, environmental, employment or other Laws and Regulations.
Neither Party shall destroy any books, records or accounts retained by it
without first providing the other Party with the opportunity to obtain or copy
such books, records or accounts at such other Party's cost and expense.
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(b) In addition to all files and documents required to be provided
pursuant to this Agreement or any of the other agreements contemplated herein,
promptly upon request by the Buyer made at any time following the Closing Date,
the Seller shall authorize the release to the Buyer of all files pertaining to
the Shares or the business or operations of the Company and its Subsidiaries
held by any federal, state, county or local authorities, agencies or
instrumentalities.
VII.5 Cooperation in Litigation. From and after the Closing Date, each Party
-------------------------
shall fully cooperate with the other in the defense or prosecution of any
litigation or proceeding already instituted or which may be instituted hereafter
against or by such other Party relating to or arising out of the conduct of the
business of the Company or any of its Subsidiaries prior to or after the Closing
Date (other than litigation among the Parties and/or their respective Affiliates
arising out of the transactions contemplated by this Agreement or the agreements
contemplated herein). The Party requesting such cooperation shall pay the
reasonable out-of-pocket expenses incurred in providing such cooperation
(including legal fees and disbursements) by the Party providing such cooperation
and by its officers, directors, employees and agents, but shall not be
responsible for reimbursing such Party or its officers, directors, employees and
agents for their time spent in such cooperation.
VII.6 Return of Certain Payments. After the Closing Date, the Buyer shall
--------------------------
promptly remit to the Seller any payment received by the Buyer with respect to
any Account Receivable of the Company and the Subsidiaries (i) which, as of the
Closing Date, had been outstanding for 90 days or longer from the date of
invoice or (ii) for which the Buyer has received full or partial payment for
Damages (as defined in Section 9.1) pursuant to Section 9.5.
VII.7 Use of Trademarks.
-----------------
(a) Each Party shall take all steps necessary or appropriate to
terminate use of trademarks, trade names and trade dress of the other Party as
quickly as possible, and in no event shall such termination be completed later
than sixty (60) days after the Closing Date.
(b) Buyer acknowledges Seller's ownership of, and right to continue
using and commercializing, the Astea corporate graphic style and "star
constellation" symbols and trade dress, as exemplified in the materials attached
as Exhibit E hereto.
---------
(c) Within 10 business days after the Closing Date, the Company and
the Buyer shall take all actions necessary to change the name of Astea AB and
its Internet website address so that it does not include the name "Astea" or any
other entity names or trademarks (whether registered or unregistered) of the
Seller.
VII.8 Cooperation in Website Transition. The Company shall provide
---------------------------------
reasonable telephone and on-line assistance (no more than 20 person-hours) to
Astea for the purpose of enabling Astea to move the physical location of Astea's
corporate Internet website from the Company's office in Sweden to Astea's office
in the United States or The Netherlands. Such assistance shall consist primarily
of advice and data transfer services. Nothing in this paragraph shall imply that
Astea is entitled to receive any computer hardware from the Company.
VII.9 Transfer of Abalon-Related Contracts.
------------------------------------
(a) Promptly following the Closing Date, and in no event later than 30
days after the Closing Date, Astea shall assign to the Company any and all end-
user, distributor and reseller contracts (i) relating to the Abalon software
system (not including any rights relating to other software of Astea even if
bundled with Abalon software) and (ii) to which Astea is a party as licensor.
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(b) Astea shall give the Buyer full support and actively participate
in communicating with Abalon customers and third parties to accomplish the
assignment or subcontracting of support and maintenance agreements pursuant to
which Astea provides maintenance services on behalf of Abalon customers, the
termination of such at the expiration of their term with Astea and the
transition of such users to the Company. Astea shall not make any assignment
which requires the payment of any money by the Company or making of any
concession by the Company or the Buyer.
(c) The Company and the Buyer will each give full support at all
levels of each respective company and actively participate with Astea in the
assignment effort, including entering into subcontracting arrangements with
Astea for customers that are not willing to have their contracts assigned to the
Company until the end of the then current term.
(d) To the extent any support or maintenance agreement is not assigned
to the Company at the Closing, Astea shall subcontract to the Company, and the
Company shall perform on behalf of Astea, the support and maintenance services
relating to the Abalon software under such agreement. At the end of each month
in which the Company provides subcontracting services, Astea will pay to the
Company, by wire transfer to an account designated by the Company, the sum of
(i) that month's billing (including all prepaid amounts as collected and not
prorated over the service period) that Astea has collected from customers in
respect of the services which have been subcontracted to the Company and (ii)
any amounts payable in respect to such services which are 60 days or more
overdue unless the customer's withholding of payment is due to the Company's
failure to satisfactorily perform services.
(e) Astea agrees to forward to the Company a copy of any consent to
the assignment of a customer contract obtained and received by Astea after the
Effective Date.
(f) Astea agrees to forward to the Company a complete set of
electronic data for "Abalon" product leads currently in Astea's database.
VII.10 Nordbanken Loan. Within two (2) Business Days of the Closing Date, the
---------------
Buyer shall cause the Company to repay amounts outstanding under the revolving
credit agreement with Nordbanken and shall reasonably assist the Seller in
terminating the letter of credit issued to Nordbanken by PNC Bank.
ARTICLE VIII
TAX MATTERS
VIII.1 Preparation and Filing of Tax Returns.
-------------------------------------
(a) The Seller shall cause to be prepared and timely filed all income
Tax Returns of the Company or any of its Subsidiaries attributable to any Tax
period ending on or before the Closing Date.
(b) The Buyer shall prepare and timely file or shall cause to be
prepared and timely filed all other Tax Returns with respect to the Company and
any of its Subsidiaries or in respect of their businesses, assets or operations.
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VIII.2 Tax Indemnification by the Seller.
---------------------------------
(a) The Seller shall indemnify the Buyer in respect of, and hold the
Buyer harmless, on an after-Tax basis, against (x) Damages resulting from,
relating to, or constituting a breach of any representation contained in Section
2.8 hereof, (y) the failure to perform any covenant or agreement set forth in
Section 5.5 hereof or this Article VIII and (z), without duplication, the
following Taxes with respect to the Company any of its Subsidiaries:
(i) Any and all Taxes due and payable by the Company or the
Subsidiary for any taxable period that ends (or is deemed pursuant to Section
8.4 to end) on or before the Closing Date ("Pre-Closing Periods"); and
(ii) Any liability of such entities for Taxes of other
entities whether pursuant to Treasury Regulation Section 1.1502-6 (or comparable
or similar provision under state, local or foreign law), as transferee or
successor or pursuant to any contractual obligation for any period that ends (or
is deemed pursuant to Section 8.4 to end) on or before the Closing Date.
The amounts specified in paragraphs (i) and (ii) shall be reduced (but not below
zero) by the amount of any accruals for Tax liabilities on the Final Closing
Balance Sheet (exclusive of any accruals for "deferred taxes" or similar items
that reflect timing differences between Tax and financial accounting
principles). For purposes of Section 8.2(a)(i), any and all transactions or
events contemplated by this Agreement that occur at or prior to the Closing
shall be deemed to have occurred in a Pre-Closing Period.
VIII.3 Tax Indemnification by the Buyer. The Buyer shall indemnify and hold
--------------------------------
the Seller harmless, on an after-Tax basis, from and against, the following
Taxes with respect to the Company and the Subsidiaries:
(a) Any and all Taxes for any taxable period beginning (or deemed
pursuant to Section 8.4 to begin) after the Closing Date ("Post-Closing
Periods"), due or payable by the Company or its Subsidiaries; and
(b) Any and all Taxes due and payable by the Company or any
Subsidiaries for any Pre-Closing Periods to the extent of the amount of any
accruals for Tax liabilities on the Final Closing Balance Sheet (exclusive of
any accruals for "deferred taxes" or similar items that reflect timing
differences between Tax and financial accounting principles).
VIII.4 Allocation of Certain Taxes. In the case of any Tax that is
---------------------------
attributable to a taxable period which begins before the Closing Date and ends
after the Closing Date, the amount of Taxes attributable to the Pre-Closing
Period and the Post-Closing Period shall be determined as follows:
(a) The Buyer and the Seller agree that if the Company or any of its
Subsidiaries is permitted but not required under applicable foreign, state or
local Tax laws to treat the Closing Date as the last day of a taxable period,
the Buyer and the Seller shall treat such day as the last day of a taxable
period.
(b) Except to the extent provided in subsection (a) of this Section
8.4, in the case of ad valorem Taxes imposed on the Company or any of its
Subsidiaries and franchise or similar Taxes imposed on the Company or any of its
Subsidiaries based on capital (including net worth or long-term debt) or number
of shares of stock authorized, issued or outstanding, such Taxes shall be
allocated between the Pre-Closing Period and the Post-Closing Period based upon
the respective number of days in each such period.
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(c) Except to the extent provided in subsections (a) and (b) of this
Section 8.4, all other Taxes shall be allocated between the Pre-Closing Period
and the Post-Closing Period based upon an interim closing of the books of the
Company or the Subsidiaries as of the end of the day of the Closing Date and the
computation of the Tax for each resulting period as if the period were a
separate taxable period; provided, however, that in no event shall the
hypothetical Tax for any period be less than zero.
VIII.5 Cooperation on Tax Matters.
--------------------------
(a) The Buyer and the Seller and their respective Affiliates shall
cooperate in the preparation of all Tax Returns for any Tax periods for which
one party could reasonably require the assistance of the other party in
obtaining any necessary information. Such cooperation shall include, but not be
limited to, furnishing prior years' Tax Returns or return preparation packages
illustrating previous reporting practices or containing historical information
relevant to the preparation of such Tax Returns, and furnishing such other
information within such party's possession reasonably requested by the party
filing such Tax Returns as is relevant to their preparation. Such cooperation
and information also shall include without limitation promptly forwarding copies
of appropriate notices and forms or other communications received from or sent
to any taxing authority which relate to the Company or any of its Subsidiaries,
and providing copies of all relevant Tax Returns, together with accompanying
schedules and related workpapers, documents relating to rulings or other
determinations by any taxing authority and records concerning the ownership and
tax basis of property, which the requested party may possess. The Buyer, the
Company, the Subsidiaries and their respective Affiliates and the Seller and its
Affiliates shall make their respective employees and facilities available on a
mutually convenient basis to provide explanation of any documents or information
provided hereunder.
(b) For a period of ten (10) years after the Closing Date or such
longer period as may be required by law, the Buyer shall, and shall cause the
Company and any of its Subsidiaries to, retain and not destroy or dispose of all
Tax Returns (including supporting materials), books and records (including
computer files) of, or with respect to the activities or Taxes of, such entities
for all taxable periods ending (or deemed, pursuant to Section 8.4, to end) on
or prior to the Closing Date to the extent the Buyer, the Company or any of its
Subsidiaries received or had possession of such records on the Closing Date.
(c) For a period of ten (10) years after the Closing Date or such
longer period as may be required by law, the Seller (or its Affiliates) shall
retain and not destroy or dispose of all Tax Returns (including supporting
materials), books and records (including computer files) of, or with respect to
the activities or Taxes of, the Company and any of its Subsidiaries for all
taxable periods ending (or deemed, pursuant to Section 8.4, to end) on or prior
to the Closing Date to the extent the Seller did not deliver such records to the
Buyer, the Company or any of its Subsidiaries. Thereafter, the Seller shall not
destroy or dispose of any such Tax Returns, books or records unless it first
offers them to the Buyer in writing and the Buyer fails to accept such offer
within sixty (60) days of its being made.
(d) If the Buyer, the Company or any of its Subsidiaries (as the case
may be) on the one hand, or the Seller on the other, fails to provide any
information requested by the other party in the time specified herein, or if no
time is specified pursuant to this Section 8.5, within a reasonable period, or
otherwise fails to do any act required of it under this Section 8.5, then the
party failing to so provide the information or do such act shall be obligated,
notwithstanding any other provision of this Agreement, to indemnify the party
requesting the information or act and shall so indemnify the requesting party
and hold such party harmless from and against any and all costs, claims or
damages, including, without limitation, all Taxes or deficiencies thereof,
payable as a result of such failure.
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Notwithstanding the foregoing, the party that failed to deliver the information
or do the act requested, shall in no event be obligated to make any payments
pursuant to this Section 8.5(d) or otherwise be liable, if such party used all
reasonable commercial efforts to provide the requested information or perform
the requested act.
(e) The Seller shall control any tax audits of the Company and/or any
of its Subsidiaries for all periods prior to the Closing Date, provided,
however, that the Seller shall notify Buyer of any audit in which items that
would affect the obligations of the Buyer for periods after the Closing Date are
in issue and shall thereafter keep the Buyer informed on a timely basis of any
material developments in the audit relating to such items. In no event shall the
Seller settle any issue with a taxing authority relating to such item without
the Buyer's consent.
(f) The Buyer shall control any tax audits of the Company and/or any
of its Subsidiaries for all periods after to the Closing Date; provided,
however, that Buyer shall notify Seller of any audit in which items with respect
to which the Seller has indemnified Buyer pursuant to this Article VIII are in
issue and shall thereafter keep Seller informed on a timely basis of any
material developments in the audit relating to such items. In no event shall
Buyer settle any issue with a taxing authority relating to any such item without
Seller's consent, provided that Seller shall first have acknowledged in writing
its obligation to indemnify the Buyer with respect to any and all Damages
relating to such item and an adverse resolution of such item would not have a
material adverse effect on the business or operations of the Buyer, the Company
or any of its Subsidiaries.
VIII.6 Termination of Tax-Sharing Agreements. All Tax sharing agreements or
-------------------------------------
similar arrangements with respect to or involving the Company and any of its
Subsidiaries shall be terminated prior to the Closing Date and, after the
Closing Date, the Company and any of its Subsidiaries shall not be bound thereby
or have any liability thereunder for amounts due in respect of periods ending on
or before the Closing Date.
VIII.7 Certain Tax Elections.
---------------------
(a) Neither the Buyer nor the Seller shall elect, cause to be elected
or participate in any election to allocate items of income and expense of the
Company and any of its Subsidiaries between the taxable year of the Seller
ending on the Closing Date and its taxable year commencing on the day after the
Closing Date on a proportionate method based on the number of days contained in
each such taxable year.
(b) To the maximum extent permitted by applicable law, neither the
Buyer nor any of its Affiliates will carry back to any taxable period of the
Seller or any of its subsidiaries or Affiliates any loss, credit or deduction
incurred or generated in, or attributable to any period commencing after the
Closing Date that would affect any Tax Return or Tax of the Seller or any of its
subsidiaries or Affiliates, and Buyer agrees to make or exercise, or cause to be
made or exercised, any and all necessary or permitted elections available under
applicable law to avoid any such carryback.
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ARTICLE IX
INDEMNIFICATION
IX.1 Indemnification by the Seller. The Seller shall indemnify the Buyer in
-----------------------------
respect of, and hold the Buyer harmless against, any and all debts, obligations
and other liabilities (whether absolute, accrued, contingent, fixed or
otherwise, or whether known or unknown, or due or to become due or otherwise),
monetary damages, fines, fees, penalties, interest obligations, deficiencies,
diminutions in value of assets, losses and expenses (including without
limitation amounts paid in settlement, interest at the simple rate of 8% per
annum, compounded quarterly, from the date of any payments made by the Buyer,
court costs, costs of investigators, fees and expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation) net of any amounts reserved in respect of such liabilities on the
Final Closing Balance Sheet ("Damages") incurred or suffered by the Buyer or any
of its Affiliates resulting from, relating to, constituting or arising out of:
(a) any misrepresentation or breach of warranty by the Seller
contained in this Agreement, any other agreements contemplated herein, the
Disclosure Schedule or in any certificate, document or instrument furnished by
or on behalf of the Seller pursuant to this Agreement or in connection with the
transactions contemplated hereby;
(b) any failure to perform any covenant, agreement or obligation of
the Seller contained in this Agreement or any other agreements contemplated
herein;
(c) any failure of the Seller to have good title to the Shares, free
and clear of any Security Interest, contractual restriction or covenant, option
or other adverse claims (whether arising by contract or by operation of law);
(d) any violation by the Company and the Subsidiaries of, or any
failure by the Company and the Subsidiaries to comply with, any law, ruling,
order, decree, regulation or zoning, environmental or permit requirement
applicable to the Company and the Subsidiaries, its assets or its business,
whether or not any such violation or failure to comply has been disclosed to the
Buyer, including any costs incurred by the Buyer (A) in order to bring the
Company and the Subsidiaries into compliance with environmental laws as a
consequence of noncompliance with such laws on the Closing Date or (B) in
connection with the transfer of the Shares;
(e) any warranty claim (except to the extent such warranty claim
arises under any end-user license and the amount of such claim does not exceed
certain limitations set forth in such end-user license) or product liability
claim relating to (i) products released by the Company and the Subsidiaries
prior to the Closing Date or (ii) the Company's and the Subsidiaries business or
operations prior to the Closing Date;
(f) relating to any claims with respect to any Company Plans or any
Employee Benefit Plans of the Seller or any ERISA Affiliate or relating to the
termination of any Company Plans, any Foreign Plans or any Employee Benefit
Plans of the Seller or any ERISA Affiliate arising with respect to circumstances
existing on or prior to the Closing Date;
(g) relating to any liabilities associated with or arising from any
claim by a former stockholder of the Company or any of its Subsidiaries, or any
person seeking to assert, based upon ownership or rights of ownership of any
shares of capital stock or securities of, or equity interest in, the Company or
any of its Subsidiaries, any rights under the charter or by-laws or similar
organization documents of the Company or any of its Subsidiaries;
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(h) relating to any legal, administrative or arbitratorial actions,
suits, claims or proceedings arising from events occurring or actions taken
prior to the Closing (whether asserted prior to or after the Closing),
including, without limitation, any such action, suit, claim or proceeding set
forth on Section 2.15 to the Disclosure Schedule;
(i) resulting from any personal injury, property damage or other
product liability claim caused by any products released by the Company or any of
its Subsidiaries prior to the Closing, regardless of whether such claim is made
or brought prior to the Closing Date;
(j) relating to any claims for compensation or benefits made by any
former or retired employees of the Company or any of its Subsidiaries;
(k) relating to any liabilities associated with or arising from the
failure to obtain any consents set forth on Section 2.4 of the Disclosure
Schedule or required under any Contract but which are not obtained prior to the
Closing; and
(l) relating to the Svea Reklam marketing invoices described on
Section 2.7 of the Disclosure Schedule, any payments to be made to Microsoft
Corporation for licenses to use any Microsoft software used in connection with
the Company's business, including the licenses described on Section 2.9 of the
Disclosure Schedule, and any liabilities associated with or arising from the
failure to obtain any such licenses.
Notwithstanding the foregoing, all liability and indemnification obligations
with respect to Taxes shall be governed by Article VIII hereof rather than this
Article IX.
IX.2 Indemnification by Buyer. The Buyer shall indemnify the Seller in
------------------------
respect of, and hold the Seller harmless against, any and all Damages incurred
or suffered by any of the Seller or the Seller's Affiliates resulting from,
relating to, constituting or arising out of:
(a) any misrepresentation or breach of warranty by the Buyer contained
in this Agreement, any other agreement contemplated herein or in any
certificate, document or instrument furnished by the Buyer pursuant to this
Agreement or in connection with the transactions contemplated hereby; or
(b) any failure to perform any covenant or agreement of the Buyer
contained in this Agreement or any other agreement contemplated herein.
IX.3 Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification hereunder, the Party seeking indemnification (the "Indemnified
Party") shall promptly notify the Party from whom indemnification is sought (the
"Indemnifying Party") of the claim and, when known, the facts constituting the
basis for such claim; provided, however, that no delay on the part of the
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Indemnified Party in notifying the Indemnifying Party and, if applicable, the
Escrow Agent shall relieve the Indemnifying Party from any liability or
obligation hereunder except to the extent of any damage or liability caused by
or arising out of such delay. In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings by
a third party, the notice to the Indemnifying Party and, if applicable, the
Escrow Agent shall specify, if known, the claimed amount or an estimate of the
amount of the liability arising therefrom. Subject to Section 9.4(d) below, the
Indemnified Party shall not settle or compromise any claim by a third party for
which it is seeking indemnification hereunder without the prior written consent
of the Indemnifying Party (which shall not be unreasonably withheld), unless the
Indemnifying Party has not taken control of the defense of such claim as
provided in Section 9.4 of this Agreement, after notification thereof pursuant
to this Section 9.3, in which case the Indemnified Party may settle or
compromise such claim without the Indemnifying Party's consent.
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IX.4 Defense by the Indemnifying Party.
---------------------------------
(a) Subject to Section 9.4(d) below, in connection with any claim for
indemnification hereunder resulting from or arising out of any claim or legal
proceeding by a third party, the Indemnifying Party at its sole cost and expense
may, upon written notice to the Indemnified Party given within 20 days after the
date of the notice of the claim from the Indemnified Party pursuant to Section
9.3, assume the defense of such claim or legal proceeding with counsel approved
by the Indemnified Party (which approval shall not be unreasonably withheld), if
(i) the Indemnifying Party acknowledges to the Indemnified Party in writing the
Indemnifying Party's obligations to indemnify the Indemnified Party with respect
to all elements of such claim, (ii) the third party seeks monetary damages only.
(b) If the Indemnifying Party so assumes such defense, the Indemnified
Party shall be entitled to participate in (but not control) such defense, with
its counsel and at its own expense (except that the Indemnifying Party will be
responsible for the reasonable fees and expenses of the separate co-counsel to
the extent the Indemnified Party reasonably concludes that the counsel the
Indemnifying Party has selected has a conflict of interest). In addition, if the
Indemnifying Party so assumes such defense, it shall take all steps necessary in
the defense or settlement thereof; provided, however, that the Indemnifying
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Party shall not consent to any settlement or to the entry of any judgment with
respect to a claim or legal proceeding which does not include a complete release
of the Indemnified Party from all liability with respect thereto or which
imposes any liability or obligation on the Indemnified Party without the written
consent of the Indemnified Party.
(c) If the Indemnifying Party does not (or is not permitted under the
terms hereof to) assume the defense of any such claim or legal proceeding, (i)
the Indemnified Party may defend against such claim or legal proceeding (with
the Indemnifying Party responsible for the reasonable fees and expenses of
counsel for the Indemnified Party) in such manner as it may deem appropriate,
including, but not limited to, settling such claim or legal proceeding on such
terms as the Indemnified Party may deem appropriate, and (ii) the Indemnifying
Party shall be entitled to participate in (but not control) the defense of such
action, with its counsel and at its own expense.
(d) If a customer or supplier of the Company asserts that the Company
or its Subsidiaries or the Buyer is liable to such party for a monetary or other
obligation which may constitute or result in Damages for which the Buyer may be
entitled to indemnification pursuant to this Article IX and the Buyer reasonably
determines that it has a valid business reason to fulfill such obligation, then
(subject to notifying the Seller in reasonable detail as to the matter asserted
by the customer or supplier) (i) the Buyer shall be entitled to satisfy such
obligation, without consent from the Seller, (ii) the Buyer may make a claim for
indemnification pursuant to this Article IX in accordance with the provisions
hereof and (iii) the Buyer shall be reimbursed, in accordance with the
provisions hereof, for any such Damages for which it is entitled to
indemnification pursuant to this Article IX.
IX.5 Payment of Indemnification Obligation. All indemnification by the
-------------------------------------
Indemnifying Party hereunder shall be satisfied promptly as Damages are incurred
by payment of cash, delivery of a cashier's or certified check or wire transfer
of immediately available funds in the amount of the indemnification liability.
The Seller agrees that any claim for indemnification by the Buyer under this
Article IX shall first be pursued by the Buyer against the Indemnification
Escrow Fund, subject to the terms of the Escrow Agreement; provided, however,
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that the Escrow Agreement shall not be the exclusive means of enforcing, nor
shall the Indemnification Escrow Amount serve as a limit upon, the Buyer's
rights under this Article IX.
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IX.6 Treatment of Indemnity Payments. Any payment made to the Buyer
-------------------------------
pursuant to this Article IX shall be treated and reported by the Buyer and the
Seller as a reduction in the Purchase Price.
IX.7 Survival of Representations; Claims for Indemnification. All
-------------------------------------------------------
representations, warranties, covenants, agreements and obligations set forth in
this Agreement, or in any instrument or document furnished in connection with
this Agreement or the transactions contemplated hereby, shall survive the
Closing. Unless otherwise expressly provided in the applicable document, all
such covenants, agreements and obligations shall survive Closing without
limitation. All such representations and warranties shall expire on the date
that is eighteen months after the Closing Date, except:
(a) the representations and warranties of the Seller in Sections 2.1,
2.2, 2.3, 2.10, and 2.23 and the representations and warranties of the Buyer in
Sections 3.1, 3.2, 3.3, and 3.4 shall survive without limitation;
(b) the representations and warranties of the Seller in Section 2.8
shall expire 90 days after the expiration of the applicable statute of
limitations relating to the underlying claim for indemnification;
(c) the representations and warranties of the Seller in Section 2.9
shall expire on the third anniversary of the Closing Date;
(d) any claim based upon breach of a representation or warranty of
which the Indemnifying Party had actual knowledge, (conscious awareness of the
underlying facts) at any time prior to the time at which the representation or
warranty was made shall survive without limitation; and
(e) any claim (i) asserted in writing prior to the expiration as
provided in this Section 9.7 which is identified as a claim for indemnification
pursuant to this Article IX or (b) which is based upon fraud by the Sellers,
shall survive until finally resolved and satisfied in full.
IX.8 Limitations. The Seller will have no liability for indemnification
-----------
pursuant to this Article IX until the total of all Damages specified in such
Article IX exceeds US$100,000 (the "Basket") (at which point the Indemnified
------
Party shall be liable for the entire amount of such Damages, and not just the
amount in excess of US$100,000). In addition, the Seller shall not be liable for
indemnification pursuant to this Article IX in an aggregate amount in excess of
US$9,500,000. However, the preceding sentences shall not apply to any claim
based on Sections 9.1(b), (c),(g),(h) and (l).
The rights to indemnification, reimbursement or other remedy set forth in this
Agreement will not be affected by any investigation conducted by a Party with
respect to, or any knowledge acquired (or capable of being acquired) by a Party
about, the accuracy or inaccuracy of, or compliance with any representation,
warranty, covenant or obligation.
ARTICLE X
DEFINITIONS
For purposes of this Agreement, each of the following defined terms is defined
in the Section of this Agreement indicated below.
Section Defined Term
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Abalon AB Preliminary Statement
Accounts Receivable 1.4
Affiliate 2.11(a)(vi)
Affiliated Entity 2.10(a)(ii)
Astea Introduction
Astea AB Preliminary Statement
Basket 9.8
Big Five 1.4(c)
Business Day 1.3(a)
Buyer Introduction
Century-Based Data 2.9(g)
CERCLA 2.19(a)
Closing 1.3(a)
Closing Adjusted Shareholder's Equity 1.4(a)
Closing Balance Sheet 1.4(a)
Closing Date 1.3(a)
Code 2.8(c)
Company Preliminary Statement
Company Plans 2.18(a)
Common Stock Preliminary Statement
Contracts 2.11
Damages 9.1
Designated Transferee 12.4
Disclosure Schedule Article II
Dispute Notice 1.4(b)
Employee Benefit Plan 2.18(a)
Environmental Law 2.19(a)
ERISA 2.18(a)
ERISA Affiliate 2.18(a)
Escrow Agent 1.2(a)(ii)
Escrow Agreement 1.2(a)(i)
Escrow Amount 1.2(a)(ii)
Estimated Closing Balance Sheet 1.2(b)
EU 2.9
Final Closing Adjusted Shareholder's Equity 1.4(b)
Final Closing Balance Sheet 1.4(b)
Financial Statements 2.5
Foreign Plans 2.18(e)
Foreign Retirement Plan 2.18(e)
Foreign Welfare Plan 2.18(e)
GAAP 1.4(a)
Green Shark Tool 1.8
Governmental Entity 2.4
Indebtedness 2.29
Indemnified Party 9.3
Indemnifying Party 9.3
Initial Closing Statement 1.4(a)
Intellectual Property 2.9(f)
Interim Financial Statements 5.6
Internal Systems 2.9(g)
Laws and Regulations 2.20
Materials of Environmental Concern 2.19(b)
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Millennium Compliant 2.9(g)
Modified US GAAP 1.4
Network Introduction
Neutral Accountants 1.4(c)
OC Shares 2.3(b)
Ordinary Course of Business 2.6(i)
Party Introduction
Permits 2.21
Post-Closing Periods 8.3(a)
Pre-Closing Periods 8.2(a)(i)
Primary Business 5.9
Principal Employer 7.2(a)
Proprietary Information 7.1
Purchase Price 1.2(a)
Restricted Employee 7.2
Securities Act 2.3(a)
Security Interest 2.3(a)
September 30, 1998 Balance Sheet 2.5
Seller Introduction
Seller Post Closing Adjustment 1.4(d)
Shares Preliminary Statement
Shareholders' Equity 1.2(b)
Software 2.9(g)
Subsidiary 2.10(a)(i)
Taxes 2.8(a)
Tax Returns 2.8(a)
Transfer Taxes 1.7
ARTICLE XI
TERMINATION
XI.1 Termination by Lapse of Time. This Agreement shall terminate at 5:00
----------------------------
p.m., Boston Time, on January 31, 1999, if the transactions contemplated hereby
have not been consummated, unless such date is extended by the written consent
of the Buyer and the Seller.
XI.2 Termination by Agreement of the Parties. This Agreement may be
---------------------------------------
terminated by the mutual written agreement of the parties hereto. In the event
of such termination by agreement, the Buyer shall have no further obligation or
liability to the Seller under this Agreement, and the Seller shall have no
further obligation or liability to the Buyer under this Agreement.
XI.3 Termination by Reason of Breach.
-------------------------------
(a) This Agreement may be terminated by the Seller, if at any time
prior to the Closing there shall occur a breach of any of the representations,
warranties or covenants of the Buyer or the failure by the Buyer to perform any
condition or obligation hereunder. In the event that a breach of any of the
representations, warranties or covenants of the Buyer or the failure by the
Buyer to perform any condition or obligation hereunder, together with the
satisfaction or waiver of all conditions, obligations, representations,
warranties or covenants of the Seller and the Company by the Seller and the
Company, causes the Closing not to occur on or before December 31, 1998, subject
to the mutual agreement in writing by the Parties to consummate the transactions
contemplated hereby on a later date, the Buyer shall pay to the Seller by wire
transfer or other delivery of immediately
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available funds an amount equal to ONE MILLION UNITED STATES DOLLARS
(US$1,000,000) on January 4, 1999. Such payment shall be the sole and exclusive
damages for Buyer's breach, but shall not limit the Seller's ability to
terminate the Agreement for Buyer's breach.
(b) This Agreement may be terminated by the Buyer, if at any time
prior to the Closing there shall occur a breach of any of the representations,
warranties or covenants of the Seller, the Company or any of the Subsidiaries or
the failure of the Seller, the Company or any of the Subsidiaries to perform any
condition or obligation hereunder.
XI.4 Effect of Termination. If (i) the Seller terminates this Agreement
---------------------
pursuant to the terms of Section 11.3(a), all obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except as otherwise set forth in Section 11.3(a)) and (ii) if the Buyer
terminates this Agreement pursuant to the terms of Section 11.3(b), all
obligations of the Parties hereunder shall terminate without any liability of
any Party to any other Party (except for any liability of any Party for breaches
of this Agreement that occurred prior to such termination).
ARTICLE XII
MISCELLANEOUS
XII.1 Press Releases and Announcements. Neither Party shall, prior to or
--------------------------------
after the Closing Date, issue any press release or announcement relating to the
subject matter of this Agreement without the prior review by and written
approval of the other Party (which review shall be timely and which approval
shall not be unreasonably withheld); provided, however, that either Party may
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make any public disclosure it believes in good faith is required by Law or
Regulation or the applicable rules of a stock exchange or the Nasdaq National
Market (in which case the disclosing Party shall advise the other Party and
provide it with a copy of the proposed disclosure prior to making the
disclosure).
XII.2 No Third Party Beneficiaries. This Agreement shall not confer any
----------------------------
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
XII.3 Entire Agreement. This Agreement (including the Ancillary Agreements)
----------------
constitutes the entire agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between the Parties,
written or oral, that may have related in any way to the subject matter hereof,
including without limitation that certain Letter of Intent, dated November 25,
1998 between the Parties which shall be deemed to have terminated on the date of
this Agreement.
XII.4 Succession and Assignment. This Agreement shall be binding upon and
-------------------------
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. Neither Party may assign either this Agreement or any of
its rights, interests, or obligations hereunder, whether by operation of law or
otherwise, without the prior written approval of the other Party; provided that
the Buyer may assign some or all of its rights, interests and/or obligations
hereunder to one or more Affiliates of the Buyer (each, a "Designated
Transferee"). If the Buyer assigns any of its rights, interests and/or
obligations hereunder to one or more Designated Transferees, unless the context
otherwise requires, all references herein to the Buyer shall mean and include
any and all such Designated Transferees.
XII.5 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
XII.6 Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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XII.7 Notices. Any notice, request, demand, claim or other communication
-------
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly delivered three Business Days after
it is sent by U.S. registered or certified mail, return receipt requested,
postage prepaid, or one Business Day after it is sent via a reputable nationwide
overnight courier service, in each case to the intended recipient as set forth
below:
If to the Seller: Copies to:
- ---------------- ---------
Astea International Inc. Testa, Hurwitz & Thibeault, LLP
455 Business Center Drive 125 High Street
Horsham, PA 19044 Boston, MA 02110
Telecopy: 215-682-2502 Telecopy: 617-248-7100
Attention: Chief Executive Officer Attention: John M. Hession, Esq.
and
Robert G. Schwartz, Esq.
Astea International Inc.
55 Middlesex Turnpike
Bedford, MA 01730
Telecopy: 781-275-3544
If to the Buyer: Copies to:
- --------------- ---------
Industri-Matematik International Corp. Hale and Dorr LLP
560 White Plains Road 60 State Street
Tarrytown, NY 10591 Boston, MA 02109
Telecopy: 914-333-1500 Telecopy: (617) 526-5000
Attention: President Attention: Thomas S. Ward, Esq.
Either Party may give any notice, request, demand, claim, or other communication
hereunder by personal delivery or telecopy, but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless and
until it actually is received by the Party or individual for whom it is
intended. Any notice sent by telecopy shall be followed by a confirmation copy
sent by reputable overnight business courier service. Either Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
XII.8 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws (and not the law of conflicts) of the State of
Delaware.
XII.9 Amendments and Waivers. The Parties may amend any provision of this
----------------------
Agreement at any time by a written instrument signed by each of the Parties. No
waiver by either Party of any default, misrepresentation, or breach of warranty
or covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
XII.10 Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or
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provision in any other situation or in any other jurisdiction. If the final
judgment of a court of competent jurisdiction declares that any term or
provision hereof is invalid or unenforceable, the Parties agree that the court
making the determination of invalidity or unenforceability shall have the power
to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.
XII.11 Expenses. Except as otherwise set forth in the Agreement, each Party
--------
shall bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby. In the event of any litigation, claim, proceeding or arbitration with
respect to this Agreement or the Ancillary Agreements, the prevailing Party
shall be paid its reasonable legal fees and expenses by the opposing Party.
XII.12 Specific Performance. Each Party acknowledges and agrees that the
--------------------
other Party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each Party agrees that the other Party
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the matter,
in addition to any other remedy to which it may be entitled, at law or in
equity.
XII.13 Submission to Jurisdiction. Each of the Parties (a) submits to the
--------------------------
jurisdiction of any state or federal court sitting in the State of Delaware in
any action or proceeding arising out of or relating to this Agreement or the
Ancillary Agreements, (b) agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court, (c) agrees not to
bring any action or proceeding arising out of or relating to this Agreement or
the Ancillary Agreements in any other court and (d) waives any right it may have
to a trial by jury with respect to any action or proceeding arising out of or
relating to this Agreement or the Ancillary Agreements. Each of the Parties
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety or other security that might
be required of any other party with respect thereto. Any Party may make service
on another Party by sending or delivering a copy of the process to the Party to
be served at the address and in the manner provided for giving of notices in
Section 12.7. Nothing in this Section 12.13, however, shall affect the right of
any Party to serve legal process in any other manner permitted by law.
XII.14 Construction. The language used in this Agreement shall be deemed to
------------
be the language chosen by the Parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against either Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
XII.15 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
---------------------------------------
identified in this Agreement are incorporated herein by reference and made a
part hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
Buyer:
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INDUSTRI-MATEMATIK INTERNATIONAL CORP.
By:________________________________
Name:
Title:
SELLER:
ASTEA INTERNATIONAL INC.
By:________________________________
Name:
Title:
NETWORK DATA, INC.
By:________________________________
Name:
Title:
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EXHIBIT 99.1
[ASTEA LOGO APPEARS HERE]
CONTACTS:
AT ASTEA MEDIA RELATIONS INVESTOR RELATIONS
Jack Phillips Steven Greene Harvey A. Goralnick
Chief Financial Officer Sperling Greene Associates FOCUS Partners LLC
Astea International Inc. (212) 366-5060 (212) 752-9445
(215) 682-2500 [email protected] [email protected]
[email protected]
ASTEA COMPLETES SALE OF ITS ABALON SUBSIDIARY
HORSHAM, PA. January 4, 1999 - Astea International (Nasdaq: ATEA), a leading
developer and supplier of Customer Management Solutions (CMS) software, today
announced that it has sold its Abalon subsidiary to Industri-Matematic
International Corp. (Nasdaq: IMIC) for $9.5 million in cash.
Jake LaMotta, President and COO of Astea, noted, "The sale of Abalon represents
the final organizational step necessary to re-focus Astea on its core
competencies: the development of leading-edge, mission critical Customer
relationship management solutions. Customer-focused service applications
represent the historic strength and expertise of Astea as well as its strongest
market position. The Abalon divestiture allows this management team to sharply
focus development and marketing efforts on Astea's flagship service-related CMS
product suites. The divestiture proceeds, from Bendata and now Abalon, make it
possible for us to aggressively emphasize sales and marketing efforts that will
take advantage of dramatically increasing product licensing opportunities in
this market space."
According to Zack Bergreen, Chairman and CEO of Astea International, "The sale
of Abalon improves our management team's market focus, helps to simplify our
organization and culture, and funds continued expansion of both product
development and sales and marketing efforts designed to maximize our impact and
success worldwide."
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Astea also announced today the appointment of John Jacobs as Vice President of
Software Development as of December 7, 1998. "John's appointment demonstrates
the Company's commitment to strengthen its software development pipeline"
commented Mr. LaMotta. Mr. Jacobs brings over 23 years of engineering,
development, and operational skills with him to Astea, including 15 years
experience in all aspects of the product development life cycle with Shared
Medical Systems (SMS) of Malvern, Pa. In his most recent role, as Group Manager
for one of SMS's new strategic clinical information systems, he was directly
responsible for spearheading the development of an enterprise-wide, three tier,
Microsoft-centric product.
ABOUT ASTEA INTERNATIONAL
Astea International develops Customer Management Software that enables
organizations to automate their field service and customer support operations.
Astea's products include ServiceAlliance, an integrated, client/server customer-
service automation application that can be easily configured and rapidly
deployed, DISPATCH-1, the industry's leading and most complete field service
application, and V-Service, a unique, 100% web-based field service application.
Astea markets its products through direct and indirect sales and services
networks throughout North America, Europe, Israel, Asia, Australia and New
Zealand.
The Company's customer base includes such industry leaders as StorageTek, Groupe
Bull, NCR, GTE Customer Networks, Phillips Medical Systems, Siemens Business
Communications Systems, Johnson Controls, Sprint, and Pomeroy Computer
Resources. Astea's products embody 20 years of industry-leading experience and
knowledge-building tightly integrated, end-to-end solutions for service-based
organizations of different sizes and needs. Astea can be reached at (800) 724-
2891 or via the World Wide Web at www.astea.com.
DISPATCH-1 and ServiceAlliance are trademarks of Astea International, Inc. All
other company and product names mentioned herein are trademarks of their
respective holders.This press release contains forward-looking statements that
are made under the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995 and involve a number of risks and uncertainties that could
materially affect future results. Among these risk factors are the continuing
acceptance of Astea's products, general competitive pressures in the
marketplace, and the continued overall growth in the customer management
solutions market industry. Further information regarding these as well as other
key risk factors and meaningful cautionary statements that could affect the
Company's financial results are included at length in the Company's Form 10-K
for the fiscal year ended December 31, 1997, filed with the Securities and
Exchange Commission.
