ASSET PURCHASE AGREEMENT
BY AND BETWEEN
SDC SOFTWARE, INC.
AND
NICHOLAS SKREPETOS
DATED AS OF JUNE 15, 2011
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS1 |
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1.1 |
Capitalized Terms |
1 |
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1.2 |
Construction |
7 |
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ARTICLE 2 TRANSFER OF ASSETS7 |
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2.1 |
Transfer of Assets |
7 |
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2.2 |
Delivery of Transferred Assets. |
8 |
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2.3 |
Technology Retention |
9 |
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2.4 |
Collateral Agreements |
9 |
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2.5 |
Agreement to Perform Necessary Acts |
9 |
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2.6 |
Assumed Liabilities |
9 |
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2.7 |
Excluded Liabilities |
10 |
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ARTICLE 3 CLOSING, PURCHASE PRICE AND PAYMENTS11 |
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3.1 |
Closing |
11 |
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3.2 |
Deliveries at Closing |
11 |
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3.3 |
Purchase Price |
12 |
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3.4 |
Payment of Purchase Price |
12 |
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3.5 |
Escrow Fund and Escrow Agreement |
12 |
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3.6 |
Allocation of Purchase Price |
13 |
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3.7 |
Transfer Taxes |
13 |
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3.8 |
Expenses |
13 |
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3.9 |
Withholding Taxes |
14 |
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER14 |
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4.1 |
Qualification; Subsidiaries |
14 |
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4.2 |
Authorization of Transactions |
14 |
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4.3 |
Noncontravention |
14 |
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4.4 |
Consents |
15 |
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4.5 |
Ownership of the Business |
15 |
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4.6 |
Financial Information |
15 |
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4.7 |
Restrictions on Transactions or Business Activities |
15 |
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4.8 |
Title of Properties; Absence of Liens and Encumbrances; Condition |
16 |
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4.9 |
Intellectual Property |
16 |
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4.10 |
Brokers153 and Finders153 Fees |
19 |
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4.11 |
Transferred Contracts |
19 |
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4.12 |
Complete Copies of Materials |
20 |
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4.13 |
Transferred Assets |
20 |
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4.14 |
Operational Licenses |
20 |
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4.15 |
Litigation |
20 |
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4.16 |
Employee Benefits |
20 |
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4.17 |
Bulk Transfer Laws |
21 |
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4.18 |
Compliance with Applicable Laws |
21 |
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4.19 |
Business Practices |
21 |
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4.20 |
Tax Matters |
21 |
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4.21 |
Certain Relationships |
22 |
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4.22 |
Product Warranties |
22 |
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4.23 |
Accounts Receivable |
22 |
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4.24 |
No Insolvency |
22 |
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4.25 |
Disclosure |
23 |
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4.26 |
Environmental |
23 |
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER23 |
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5.1 |
Organization |
23 |
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5.2 |
Authorization of Transaction |
23 |
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5.3 |
Sufficient Cash Funds |
23 |
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ARTICLE 6 CONFIDENTIAL INFORMATION23 |
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6.1 |
Confidentiality of Agreement and Public Announcements |
23 |
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6.2 |
Remedies |
24 |
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ARTICLE 7 COVENANTS24 |
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7.1 |
Additional Documents and Further Assurances |
24 |
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7.2 |
Tax Matters |
24 |
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7.3 |
Delivery of Final Financial Information |
25 |
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ARTICLE 8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; |
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8.1 |
Survival of Representations and Warranties |
25 |
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8.2 |
Indemnification |
26 |
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8.3 |
Source of Indemnification |
26 |
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8.4 |
Indemnification Procedure |
26 |
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8.5 |
Resolution of Conflicts; Arbitration. |
27 |
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8.6 |
Third-Party Claims |
27 |
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8.7 |
Limitations on Indemnity. |
27 |
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8.8 |
Exclusive Remedy |
28 |
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ARTICLE 9 AMENDMENT AND WAIVER28 |
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9.1 |
Amendment |
28 |
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9.2 |
Extension; Waiver |
28 |
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ARTICLE 10 GENERAL28 |
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10.1 |
Notices |
28 |
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10.2 |
Governing Law |
29 |
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10.3 |
Forum and Venue |
29 |
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10.4 |
Resolution of Conflicts; Arbitration |
29 |
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10.5 |
Assignment |
30 |
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10.6 |
No Third-Party Beneficiaries |
30 |
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10.7 |
WAIVER OF JURY TRIAL |
30 |
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10.8 |
Severability |
30 |
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10.9 |
Entire Agreement |
30 |
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10.10 |
Counterparts |
31 |
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SCHEDULES |
Schedule 1.1(tt) Product Software
Schedule 1.1(aaa) Sites
Schedule 1.1(ddd) Tangible Assets
Schedule 1.1(kkk) Transferred Contracts
Schedule 1.1(lll) Transferred IP
Schedule1.1(mmm) Transferred Products
Schedule 1.1(nnn) Transferred Technology
Schedule 2.1(a)(xii) Other Transferred Assets
Schedule 2.1(b) Excluded Assets
Schedule 2.6(d) Assumed Liabilities
Schedule 2.7 Other Excluded Liabilities
Schedule 3.4 Wire Transfer Instructions
Schedule 3.5 Business Milestones
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EXHIBITS |
Exhibit A-1 Form of Seller Non-Competition and Non-Solicitation Agreement
Exhibit A-2 Form of Employee Non-Competition and Non-Solicitation Agreement
Exhibit B Disclosure Schedule
Exhibit C Escrow Agreement
Exhibit D General Assignment and Bill of Sale
Exhibit E Form of Assignment of Copyright, Trademarks, Patents
Exhibit F Form of Legal Opinion
Exhibit G Short-Term Lease of Existing Office Space
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this “Agreement“), is made and entered
into as of June 15, 2011 by and between SDC Software, Inc., a
Delaware corporation, with a place of business at 1900 Seaport Boulevard, 3rd
Floor, Redwood City, CA 94063 (“Purchaser“), and Nicholas Skrepetos, with
a principal residence at 1185 Throne Drive, Eugene, OR 97402 (“Seller“).
Each of Purchaser and Seller is referred to herein individually as a
“Party,” and collectively as the “Parties“.
RECITALS
A. Seller owns and operates the Business (as defined below).
B. Seller desires to sell, and Purchaser desires to purchase, all right,
title and interest of Seller in and to all of the assets of Seller related to,
useful in or necessary to the Business, other than the Excluded Assets (as
defined below), and Purchaser will assume only the Assumed Liabilities (as
defined below), all upon the terms and subject to the conditions set forth
herein.
C. A portion of the consideration payable by Purchaser to Seller hereunder
shall be placed in escrow as security for certain obligations of Seller set
forth in this Agreement.
D. Concurrently with the execution and delivery of this Agreement, and as a
material inducement to Purchaser to enter into this Agreement, (i) Nicholas
Skrepetos and each of the Designated Employees (as defined below) shall execute
and deliver to Purchaser an offer letter (the “Offer Letters“) for
employment with Purchaser to be effective immediately following the Closing (as
defined below); (ii) Nicholas Skrepetos shall execute and deliver to Purchaser a
non-competition and non-solicitation agreement in the form attached hereto as
Exhibit A-1 (the “Seller Non-Competition and Non-Solicitation
Agreement“); and (iii) each of the Designated Employees shall execute and
deliver to Purchaser a non-competition and non-solicitation agreement in the
form attached hereto as Exhibit A-2 (the “Employee Non-Competition and
Non-Solicitation Agreement“).
AGREEMENT
NOW, THEREFORE, in consideration of the covenants, promises, representations
and warranties set forth herein, and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged by the Parties
hereto), intending to be legally bound hereby, the Parties hereto hereby agree
as follows:
ARTICLE 1
DEFINITIONS
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1.1 |
Capitalized Terms |
The following capitalized terms shall have the meanings set forth below for
purposes of this Agreement and the schedules attached hereto (unless such terms
are otherwise defined in the schedules):
(a) “Actual Purchase Price Adjustment” means an amount equal to (x)
the Assumed Liabilities set forth on Schedule 2.6(d), less (y) Prepaid
Expenses, in each case as finally calculated pursuant to Section 7.3;
provided that if the amount of the foregoing calculation is negative,
the Actual Purchase Price Adjustment shall be deemed to equal zero.
(b) “Allocation” has the meaning set forth in Section 3.6.
(c) “Assumed Liabilities” has the meaning set forth in Section
2.6.
(d) “Books and Records” means the books and records (in paper or
electronic format) of the Business, including the sales records, reports on
sales and business performance, customer and end user lists and information,
including customer email addresses, supplier lists and information, Transferred
Product records, distributor and other sales information, copies of Transferred
Contracts, and copies of policies and procedures regarding marketing and
customer and end user support.
(e) “Business” shall mean all of the operations, activities, services
and products of the SUPERAntiSpyware.com business operated by Seller, including
without limitation those relating to (i) the marketing and sales of anti-malware
and other software technology and products; (ii) the development of anti-malware
and other software technology and products; (iii) the provision of services and
support relating to anti-malware and other software technology and products, as
such operations and activities are currently conducted and proposed to be
conducted by Seller and as such services and products are currently offered and
proposed to be offered by Seller; and (iv) any other software or technology in
research, development or production as reflected in the books and records of the
Business including, but not limited to the source code vaults maintained by the
Business.
(f) “Closing” has the meaning set forth in Section 3.1.
(g) “Closing Date” means the date on which the Closing occurs.
(h) “Code” means the U.S. Internal Revenue Code of 1986, as amended.
(i) “Collateral Agreements” has the meaning set forth in Section
2.4.
(j) “Competing Business Purpose” means any business (including
research and development), operations, activities and/or services that are
related to software or services in the field of supporting, maintaining,
repairing, installing, optimizing the performance of or securing a technology
device or software (such as, but not limited to, personal computers, tablets,
printers, routers, home gateways, smart phones, gaming devices, digital cameras,
Facebook accounts or any other accounts that store personally identifiable
information, and music players); provided that the foregoing shall not
be deemed to include software or services the principal purpose of which is the
development or operation of websites, gaming applications, social networking
applications, instant messengers, audio and media applications, file and image
manipulation applications, accounting applications, or word processing
applications, so long as the ancillary or indirect purpose of such software or
services is not related to a Competing Business Purpose.
(k) “Consent” means any consent, waiver, approval, permit, order or
authorization of, or registration, declaration or filing with, any Person not a
party to this Agreement.
(l) “Contract” shall mean any note, bond, mortgage, indenture, lease,
contract, purchase order, insertion order, terms of service or sale, binding
quote, covenant or other agreement, instrument or commitment, permit,
concession, franchise or license, including any amendment or modifications made
thereto, whether oral or written.
(m) “Designated Employees” means Don Fowler, Geoff Bullard and David
Price.
(n) “Disclosure Schedule” means the Disclosure Schedule dated as of
the date hereof and attached hereto as Exhibit B.
(o) “Employee” means any current or former employee, contractor,
consultant or advisor of the Business.
(p) “Employee Non-Competition and Non-Solicitation Agreement” has the
meaning set forth in the recitals hereto.
(q) “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended.
(r) “ERISA Affiliate” means such subsidiary of Seller and any other
person or entity under common control with Seller or any of its subsidiaries
within the meaning of Section 414(b), (c), (m) or (o) of the Code and the
regulations issued thereunder.
(s) “Escrow Agent” means U.S. Bank, National Association.
(t) “Escrow Agreement” means the Escrow Agreement to be executed and
delivered prior to Closing by and among the Purchaser, Seller and the Escrow
Agent, attached hereto as Exhibit C.
(u) “Escrow Fund” has the meaning set forth in Section 3.5.
(v) “Escrow Payment” has the meaning set forth in Section 3.4.
(w) “Escrow Period” means the period commencing immediately after the
Closing and ending at 5:00 p.m. (California Time) on the date thirty (30) days
after the expiration of the period which is eighteen (18) months after the
Closing.
(x) “Estimated Purchase Price Adjustment” means an amount equal to (x)
the Assumed Liabilities set forth on Schedule 2.6(d), less (y) Prepaid
Expenses, in each case as set forth in the Adjustment Certificate delivered to
Purchaser pursuant to Section 3.2(i); provided that if the
amount of the foregoing calculation is negative, the Estimated Purchase Price
Adjustment shall be deemed to equal zero.
(y) “Excluded Assets” has the meaning set forth in Section
2.1(b).
(z) “Excluded Liabilities” has the meaning set forth in Section
2.7.
(aa) “Excluded Employee Liabilities” means: (i) payments or
entitlements that Seller or its ERISA Affiliates may owe or have promised to pay
to Employees, including wages, other remuneration, holiday or vacation pay,
bonus, profit sharing, commission, pension contributions, taxes, and any other
related Liability; (ii) all payments with respect to the Employees that are due
to be paid on or prior to the Closing Date (including pension contributions,
insurance premiums and taxation) to any third party in connection with the
employment of any of the Employees; (iii) any claims or expectancies of any
Employees following from their employment or consultancy with Seller or its
ERISA Affiliates which have been incurred or accrued on or prior to the Closing
Date; and (iv) any other Liability related to the Employees or agents of Seller
or its ERISA Affiliates, whenever arising, in each case including WARN Act or
any similar law or statute, change of control, workers153 compensation, severance,
salary, bonuses, COBRA benefits or other benefits or payments due under any
Seller Employee Plan, whether or not any such Employees shall accept employment
with Purchaser in connection with the Transactions.
(bb) “Governmental Entity” means any court, administrative agency or
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission.
(cc) “Indemnified Party” has the meaning set forth in Section
8.2.
(dd) “Indemnifying Party” has the meaning set forth in Section
8.2.
(ee) “Intellectual Property Rights” shall mean any or all of the
following and all statutory and/or common law rights throughout the world in,
arising out of, or associated therewith: (i) all patents and applications
therefor and all reissues, divisions, renewals, extensions, provisionals,
substitutions, continuations and continuations-in-part thereof (collectively,
“Patents“); (ii) all inventions (whether patentable or not), invention
disclosures and improvements, all trade secrets, proprietary information, know
how and technology; (iii) all works of authorship, copyrights, mask works,
copyright and mask work registrations and applications; (iv) all industrial
designs and any registrations and applications therefor; (v) all trade names,
logos, trademarks and service marks, trademark and service mark registrations
and applications (collectively, “Trademarks“); (vi) all databases and
data collections (including knowledge databases, customer lists and customer
databases); (vii) all rights in Software; (viii) rights to uniform resource
locators, Web site addresses and domain names; (ix) any similar, corresponding
or equivalent rights to any of the foregoing; and (x) all goodwill associated
with any of the foregoing.
(ff) “Knowledge” or “Known” shall mean, with respect to Seller,
the knowledge of the Seller assuming that Seller shall have made due and
diligent inquiry with respect to the applicable subject matter, including
inquiry of the Employees that would be reasonably expected to have knowledge of
the matter.
(gg) “Legal Requirement” means any constitution, act, statute, law,
ordinance, treaty, rule, regulation or official interpretation of, or judgment,
injunction, order, decision, decree, license, permit or authorization issued by,
any Governmental Entity.
(hh) “Liability” shall mean any debt, liability, indebtedness, duty,
expense, claim, deficiency, guaranty, endorsement or other obligation of any
type (whether known or unknown, whether asserted or unasserted, whether matured
or unmatured, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, whether incurred or consequential and
whether due or to become due), including any liability for Taxes.
(ii) “Lien” shall mean any mortgage, pledge, lien, security interest,
charge, claim, equity, encumbrance, restriction on transfer, conditional sale or
other title retention device or arrangement (including a capital lease),
transfer for the purpose of subjection to the payment of any indebtedness, or
restriction on the creation of any of the foregoing, whether relating to any
property or right or the income or profits therefrom.
(jj) “Loss” and “Losses” has the meaning set forth in
Section 8.2.
(kk) “Offer Letter” has the meaning set forth in the recitals hereto.
(ll) “Officer153s Certificate” has the meaning set forth in Section
8.4.
(mm) “Open Source Materials” has the meaning set forth in Section
4.9(h).
(nn) “Party” and “Parties” have the meaning set forth in the
introductory paragraph hereto.
(oo) “Person” means an individual, partnership, corporation, limited
liability company, association, joint venture, trust, unincorporated
organization or Governmental Entity.
(pp) “Personally Identifiable Information” or “PII” has the
meaning set forth in Section 4.9(t).
(qq) “Prepaid Expenses” means the prepaid expenses of the Business as
of 11:59 p.m., local time on the Closing Date.
(rr) “Privacy Policies” has the meaning set forth in Section
4.9(t).
(ss) “Processing” has the meaning set forth in Section 4.9(u).
(tt) “Product Software” means all Software that is (i) included in or
part of any version of the Transferred Products, including the Software listed
on Schedule 1.1(tt) and all versions thereof, and including any Software
from which such Software was derived, or (ii) currently under development by or
on behalf of the Business.
(uu) “Purchase Price” has the meaning set forth in Section
3.3.
(vv) “Purchaser” has the meaning set forth in the introductory
paragraph hereto.
(ww) “Registered IP” means all United States, international and
foreign: (i) patents and patent applications (including provisional
applications) or service marks; (ii) registered trademarks, applications to
register trademarks, intent-to-use applications, or other registrations or
applications related to trademarks or service marks; (iii) registered copyrights
and applications for copyright registration; (iv) domain name registrations; and
(v) any other Intellectual Property Rights that are the subject of an
application, certificate, filing, registration or other document issued, filed
with, or recorded by any state, government or other public legal authority.
(xx) “Seller” has the meaning set forth in the introductory paragraph
hereto.
(yy) “Seller Employee Plan” shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for compensation,
severance, termination pay, deferred compensation, performance awards, stock or
stock-related awards, welfare benefits, retirement benefits, fringe benefits or
other Employee benefits or remuneration of any kind, whether written or
unwritten, funded or unfunded, formal or informal, including each “employee
benefit plan” within the meaning of Section 3(3) of ERISA, which is or has been
maintained, contributed to, or required to be contributed to, by Seller or any
of its ERISA Affiliates for the benefit of any of the Employees of the Business
or with respect to which Seller or any of its ERISA Affiliates has or may have
any liability or obligation.
(zz) “Seller Non-Competition and Non-Solicitation Agreement” has the
meaning set forth in the recitals hereto.
(aaa) “Sites” shall mean all of the world wide web sites used in the
Business, including those located at the uniform resource locators set forth on
Schedule 1.1(aaa).
(bbb) “Software” means any and all computer software and code,
including assemblers, applets, compilers, source code, object code, data
(including image and sound data), design tools and user interfaces, in any form
or format, however fixed. Software includes source code listings, comments, flow
diagrams, and any other documentation in any form or format and user manuals.
(ccc) “Special Representations” has the meaning set forth in
Section 8.1.
(ddd) “Tangible Assets” means all tangible assets, including
Technology, related to, useful in or necessary to the Business, the material
items of which are described on Schedule 1.1(ddd).
(eee) “Tax” and “Taxes” means (i) any and all federal, state,
local and foreign taxes, assessments, and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value-added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts; (ii) any liability for the payment of any
amounts of the type described in clause (i) above as a result of being a member
of an affiliated, consolidated, combined or unitary group for any period; and
(iii) any liability for the payment of any amounts of the type described in
clause (i) or (ii) above as a result of any express or implied obligation to
indemnify any other Person or as a result of any obligations under any
agreements or arrangements with any other Person or entity with respect to such
amounts and including any liability for taxes of a predecessor entity.
(fff) “Tax Returns” means all forms required to be filed with a taxing
authority.
(ggg) “Technology” means all technology, including all know-how,
show-how, techniques, design rules, trade secrets, inventions (whether or not
patented or patentable), algorithms, routines, Software, files, databases, works
of authorship, processes, devices, prototypes, schematics, netlist, mask works,
test methodologies, documentation, hardware development tools, any media on
which any of the foregoing is recorded, and any other tangible embodiments of
any of the foregoing.
(hhh) “Transactions” means the transactions contemplated by this
Agreement and any agreements related to this Agreement.
(iii) “Transfer Taxes” has the meaning set forth in Section
3.7.
(jjj) “Transferred Assets” has the meaning set forth in Section
2.1.
(kkk) “Transferred Contracts” means those Contracts listed on
Schedule 1.1(kkk), with any Transferred Contracts requiring a Consent
indicated thereon.
(lll) “Transferred IP” means all Intellectual Property Rights owned by
Seller that are embodied by or would be infringed by the making, using, offering
for sale, marketing, selling, servicing, supporting, importing or other
exploitation of the Transferred Products, the Product Software or the Web
Content, or by the operation of the Business, the material items of which are
listed or described in Schedule 1.1(lll).
(mmm) “Transferred Products” means the entire line of products and
services offered by or relating to the Business, including without limitation
all versions of such products and services, and products and services under
development, and including the products listed on Schedule 1.1(mmm)
hereto.
(nnn) “Transferred Technology” shall mean all Technology owned by
Seller or that Seller has the right or authority to transfer that is related to,
useful in or necessary to the Business (other than Technology used exclusively
in an Excluded Asset), including without limitation the Technology constituting
the Transferred Products and the Web Content, and including all Technology
listed on Schedule 1.1(nnn). To the extent that any Software constitutes
Transferred Technology, all versions and releases of such Software, and Software
from which such Software was derived shall be included as Transferred
Technology.
(ooo) “Web Content” shall mean all content that is or has been
displayed or available, or that has otherwise been prepared or developed to sell
or market the Transferred Products, on the Sites or on any third party153s web
site.
1.2 Construction
For purposes of this Agreement, the Parties hereto agree that:
(a) whenever the context requires, the singular number will include the
plural, and vice versa, the masculine gender will include the feminine and
neuter genders, the feminine gender will include the masculine and neuter
genders, and the neuter gender will include the masculine and feminine genders;
(b) the words “include” and “including,” and variations thereof, will not be
deemed to be terms of limitation, but rather will be deemed to be followed by
the words “without limitation”;
(c) all references in this Agreement to “Schedules,” “Sections” and
“Exhibits” are intended to refer to Schedules, Sections and Exhibits to this
Agreement, except as otherwise indicated;
(d) the headings in this Agreement are for convenience of reference only,
will not be deemed to be a part of this Agreement, and will not be referred to
in connection with the construction or interpretation of this Agreement;
(e) each Party has been represented by counsel during the negotiation and
execution of this Agreement and, therefore, each waives the application of any
law, regulation, holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the Party drafting such
agreement or document;
(f) nothing in the Disclosure Schedule shall be deemed an adequate disclosure
to a representation or warranty made herein unless the statements in the
Disclosure Schedule identifies the disclosure with particularity and indicates
the Section and, if applicable, the Subsection of this Agreement to which such
disclosure relates; and
(g) each representation, warranty and covenant herein shall have independent
significance so that if any Party has breached any representation, warranty or
covenant in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) that the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty or covenant.
ARTICLE 2
TRANSFER OF ASSETS
2.1 Transfer of Assets
(a) Transferred Assets. At the Closing and subject to the terms and
conditions set forth in this Agreement, Seller shall sell, assign, transfer,
convey and deliver to Purchaser good and valid title to the Transferred Assets
free and clear of any and all Liens. For purposes of this Agreement and subject
to Section 2.1(b), “Transferred Assets” means and includes all of
the properties, rights, interests and other tangible and intangible assets
(wherever located and whether or not required to be reflected on a balance sheet
prepared in accordance with GAAP), of Seller related to, useful in or necessary
to the Business, other than the Excluded Assets. Without limiting the generality
of the foregoing, the Transferred Assets shall include the following:
(i) all accounts receivable of the Business and Prepaid Expenses;
(ii) the Books and Records;
(iii) the Transferred IP;
(iv) the Transferred Products, including all Product Software;
(v) the Tangible Assets;
(vi) all rights of Seller under the Transferred Contracts;
(vii) the Transferred Technology;
(viii) all marketing, promotional, marketing and advertising materials,
brochures and presentations of the Business, including all advertising and web
content;
(ix) all Trademarks associated with the Business;
(x) the Sites and all rights thereto;
(xi) all goodwill associated with the Transferred Products and the Business;
(xii) any other assets, tangible or intangible, or rights of Seller related
to, useful in or necessary to the Business or the Transferred Products,
including those assets listed on Schedule 2.1(a)(xii); and
(xiii) all rights to recover past, present and future damages for the breach,
infringement or misappropriation, as the case may be, of any of the foregoing,
and all claims and causes of action against third parties related to the
Business, including those related to the Transferred Assets.
(b) Excluded Assets. Notwithstanding anything to the contrary, the
Transferred Assets shall not include those assets set forth on Schedule
2.1(b) (the “Excluded Assets“), except to the extent any Technology
or Intellectual Property Rights or other such assets may be related to, useful
in or necessary to the Business or the Transferred Products, in which case they
shall be and remain Transferred Assets. The parties acknowledge and agree that
the Excluded Assets shall include, and the Transferred Assets shall not include,
the real property used prior to Closing for Business operations (the
“Existing Office“), and those personal assets of Seller and the employees
of the Business located in the Existing Office, provided that such assets are
not related to, useful in or necessary to the Business.
2.2 Delivery of Transferred Assets
(a) At the Closing, Seller shall, at Seller153s sole cost, in the manner and
form, and to the locations, reasonably specified by Purchaser, (i) deliver to
Purchaser or other entity designated by Purchaser, all of the Transferred
Assets, (ii) in the case of the Transferred IP or other intangible assets,
deliver such instruments as are necessary or desirable to document and to
transfer title to such assets from Seller to Purchaser in accordance with
Section 2.4 below, and (iii) deliver to Purchaser fully-executed,
complete and accurate originals of all of the Transferred Contracts, or, to the
extent originals are not available, fully-executed, complete and accurate copies
of all of the Transferred Contracts. Without limiting the foregoing, Seller
shall deliver to Purchaser at the Closing, by electronic transmission in a
manner specified by Purchaser, all Transferred Assets contained in electronic
form, including source code, object code, source documentation and all other
related materials for Transferred Assets. For clarification, Purchaser shall
bear the costs associated with preparation, filing and processing of
documentation and instructions necessary to transfer the Transferred Assets
pursuant to this Agreement, subject to Section 3.8 below.
(b) To the extent that Purchaser cannot be granted possession by Seller of
certain Tangible Assets as of the Closing Date, the transfer of possession will
be substituted by an agreement that those assets shall be held by Seller for and
on behalf of Purchaser until such time as Purchaser is granted possession
thereof. During that period, Seller shall bear all risk of loss with respect to
those Tangible Assets.
2.3 Technology Retention
Following the Closing, Seller shall not retain copies of any of the Product
Software or other Technology included in the Transferred Assets, even if such
Transferred Assets are such that more than one copy may exist. Seller hereby
waives, solely for the benefit of Purchaser and its subsidiaries and affiliates,
any rights to which Seller is entitled under any employee confidential
information and invention assignment agreement or similar Contract or arising
under applicable law with respect to the subject matter thereof.
2.4 Collateral Agreements
Without limiting the foregoing, at the Closing, Seller shall deliver to
Purchaser, duly executed by Seller: (a) a General Assignment and Bill of Sale
substantially in the form of Exhibit D hereto; (b) assignments of the
Transferred IP in forms acceptable to Purchaser and otherwise suitable for
filing in all relevant jurisdictions and governmental offices, including an
assignment of copyright, and trademarks, and patents substantially in the form
of Exhibit E; and (c) such other good and sufficient instruments of
conveyance, assignment and transfer, in form and substance acceptable to
Purchaser, as shall be effective to vest in Purchaser good and valid title in
and to the Transferred Assets (the instruments referred to in clauses (a), (b)
and (c) being collectively referred to herein as the “Collateral
Agreements“).
2.5 Agreement to Perform Necessary Acts
To the extent reasonably necessary, following the Closing and without
demanding further consideration therefor, Seller shall, and shall use his good
faith best efforts to cause the Employees and agents (including any named
inventors on any Patents included in the Transferred Assets) of the Business to,
provide Purchaser with reasonable access to relevant information, to provide
Purchaser with reasonable cooperation and assistance in the enforcement or
prosecution of any Transferred IP and otherwise to execute and deliver such
other instruments and do and perform such other acts and things as may be
reasonably necessary or desirable for effecting completely the consummation of
the Transactions. Assistance under this Section 2.5 may include
execution, acknowledgment and recordation of specific assignments, oaths,
declarations and other documents on a jurisdiction-by-jurisdiction and/or a
country-by-country basis and such other instruments of sale, transfer,
conveyance, and assignment as Purchaser or its counsel may reasonably request.
2.6 Assumed Liabilities
Upon the terms and subject to the conditions set forth herein, at the
Closing, Purchaser shall assume from Seller (and thereafter pay, perform,
discharge or otherwise satisfy), the following Liabilities of the Business to
the extent they arise from and after the Closing Date, and no others
(collectively, the “Assumed Liabilities“):
(a) those executory obligations of Seller under the Transferred Contracts, in
each case solely on a going-forward basis from and after the Closing Date;
(b) warranty and support obligations under the standard terms and conditions
of sale, license and lease set forth in Section 4.22 of the Disclosure
Schedule for Transferred Products sold by the Business in the ordinary course
prior to Closing. For purposes of clarification, for purposes hereof, warranty
and support obligations shall not be deemed to include any obligations to
provide returns or refunds to customers;
(c) the deferred revenue of the Business as of the Closing, notwithstanding
that Seller has not historically carried deferred revenue on its books; and
(d) the Liabilities related to the Business specifically identified on
Schedule 2.6(d).
The assumption of the Assumed Liabilities by Purchaser hereunder shall not
enlarge any rights of third parties under any contracts or agreements with
Purchaser or Seller or any of their respective affiliates.
2.7 Excluded Liabilities
Except for the Assumed Liabilities, Purchaser shall not assume or be
obligated to pay, perform, discharge or in any way be responsible for any
Liability of Seller, any related or affiliated Person or the Business (the
“Excluded Liabilities“). Without limiting the foregoing, and
notwithstanding anything in Section 2.6 to the contrary, the Assumed
Liabilities will not include and Purchaser will not assume any Liability of
Seller, any related or affiliated Person or the Business with respect to:
(a) any Liabilities of Seller under this Agreement and any agreement executed
pursuant hereto or contemplated hereby;
(b) other than the Assumed Liabilities, any Liabilities in connection with,
resulting from or arising out of, directly or indirectly, the ownership of the
Transferred Assets or the operation of the Business on or prior to the Closing
Date, including (i) returns or refunds for any products or services sold by
Seller prior to Closing, whether or not related to the Transferred Products;
(iii) royalties or fees due for use or distribution of any products or services
sold by Seller prior to Closing, whether or not related to the Transferred
Products; (iv) any failure to comply with data collection, e-commerce and
privacy laws and regulations; and (v) any Liability of Seller or the Business
arising out of violations of law, infringement of third party Intellectual
Property Rights, actions or omissions of Seller or the Business, or breaches of
any agreement, contract, indenture, instrument, guarantee or other similar
agreement occurring on or prior to the Closing;
(c) any legal, accounting, brokerage, finder153s fees or other expenses, if
any, incurred by Seller or the Business in connection with this Agreement or the
consummation of the Transactions;
(d) any Liabilities of Seller or the Business for borrowed money;
(e) any Liabilities with respect to Taxes of any nature for all periods (or
portions thereof) beginning on or prior to the Closing Date and any Taxes
recognized or owed as a result of this Agreement or the consummation of the
Transactions;
(f) any Excluded Employee Liabilities;
(g) claims for injury to person or property regardless of when made or
asserted, which relate to the products and services sold or delivered by the
Business prior to Closing; specifically, and without limiting the generality of
the foregoing, Purchaser expressly does not assume or agree to pay or be
responsible for claims, whether foreseeable or unforeseeable, based on successor
liability doctrines conceptualized under such rubrics as the “product line”,
“continuity of enterprise” or “de facto merger” doctrines; and
(h) any Liability of Seller or the Business with respect to the Excluded
Assets.
Seller agrees to satisfy all Liabilities with respect to the Excluded
Liabilities whether known at Closing or thereafter determined, as and when due,
and Seller shall indemnify and hold Purchaser harmless therefrom in accordance
with Section 8.2, as set forth herein.
ARTICLE 3
CLOSING, PURCHASE PRICE AND PAYMENTS
3.1 Closing
The closing (the “Closing“) of the sale and purchase of the
Transferred Assets and all other Transactions contemplated to occur at the
Closing shall be deemed to take place at the offices of Seller, at 11:59 p.m.,
local time, on the date of this Agreement.
3.2 Deliveries at Closing
In addition to and in accordance with the obligations of Seller set forth
under ARTICLE 2, prior to or at the Closing, Seller shall deliver, or
cause to be delivered, to Purchaser:
(a) the Transferred Assets (including the Transferred Contracts, if any);
(b) fully-executed counterparts to the Collateral Agreements;
(c) copies of the Books and Records, and any filings and other documentation
relevant to the Transferred Assets;
(d) fully-executed counterparts to the Escrow Agreement and such other
documentation as the Escrow Agent may reasonably request;
(e) written Consents for each Transferred Contract indicated as requiring
consent on Schedule 1.1(kkk) hereto;
(f) fully-executed counterparts to the Offer Letters and Purchaser153s standard
Employment, Confidential Information and Invention Assignment Agreement (in form
and substance satisfactory to Purchaser) and such other documentation as is
required by Purchaser153s standard human resources policies, for Seller and each
of the Designated Employees;
(g) fully-executed counterpart to the Seller Non-Competition and
Non-Solicitation Agreement from Nicholas Skrepetos;
(h) a fully-executed counterpart to the Employee Non-Competition and
Non-Solicitation Agreement from each of the Designated Employees;
(i) a certificate executed by Seller setting forth the estimated Assumed
Liabilities set forth on Schedule 2.6(d) and estimated Prepaid Expenses,
in each case as of 11:59 p.m., local time on the Closing Date, a draft of which
shall have been delivered to Purchaser not less than three (3) business days
prior to Closing;
(j) a certificate executed by Seller, certifying as of the date of Closing
that (i) the representations and warranties of Seller contained in this
Agreement and all Related Agreements to which Seller is a party are true and
complete; (ii) Seller has performed all covenants and agreements under this
Agreement and all Related Agreements to which Seller is a party required to be
performed on or before the Closing Date; and (iii) no material adverse change
shall have occurred with respect to the Business or the Transferred Assets;
(k) legal opinion from Gleaves Swearingen Potter & Scott LLP, legal
counsel to Seller, substantially in the form attached hereto as Exhibit
F;
(l) month-to-month lease with minimum six-month availability option to
Purchaser for existing office space, substantially in the form attached hereto
as Exhibit G;
(m) evidence reasonably satisfactory to Purchaser that Seller has obtained,
and the Transferred Assets include, valid licenses for all copies of Microsoft
Office 2007 and all operating system software used in the Business; and
(n) such other instruments and documents as shall be reasonably requested by
Purchaser in connection with this Agreement and the consummation of the
Transactions.
3.3 Purchase Price
In consideration of the sale, assignment and transfer of the Transferred
Assets, and subject to the terms and conditions set forth in this Agreement,
including Section 3.5 below, Purchaser will pay an amount (the
“Purchase Price“) equal to (x) Eight Million Five Hundred Thousand
Dollars ($8,500,000), less (y) the Actual Purchase Price Adjustment. In
addition, Purchaser shall assume the Assumed Liabilities. Purchaser shall have
no obligation to pay the Purchase Price or any other amount in the event the
Closing does not occur.
3.4 Payment of Purchase Price
(a) At the Closing, Purchaser shall (i) on behalf of Seller, deposit with the
Escrow Agent a portion of the Purchase Price equal to One Million Dollars
($1,000,000) (the “Escrow Payment“); and (ii) pay to Seller by wire
transfer, in cash, a portion of the estimated remaining amount of the Purchase
Price equal to Seven Million Five Hundred Thousand Dollars ($7,500,000), less
(x) the Estimated Purchase Price Adjustment, less (y) $7,500 (the “Holdback
Amount“), in accordance with the wire transfer instructions set forth on
Schedule 3.4.
(b) Within the later of thirty (30) days following the Closing Date, and ten
(10) business days following the receipt by Purchaser of the final calculations
of the Assumed Liabilities set forth on Schedule 2.6(d) and Prepaid
Expenses pursuant to Section 7.3, Purchaser shall pay to Seller by wire
transfer, in cash: (i) if the Actual Purchase Price Adjustment is less than or
equal to the Estimated Purchase Price Adjustment, an amount equal to the
Holdback Amount; and (ii) if the Actual Purchase Price Adjustment is greater
than the Estimated Purchase Price Adjustment, an amount (not less than zero)
equal to the Holdback Amount, less the difference between the Actual Purchase
Price Adjustment and the Estimated Purchase Price Adjustment.
3.5 Escrow Fund and Escrow Agreement
(a) The Escrow Payment, together with any accrued interest, will constitute
an escrow fund (the “Escrow Fund“) and will be governed by the terms set
forth in ARTICLE 8 hereof and the Escrow Agreement. The Escrow Fund shall
be available to compensate Purchaser for Losses incurred by the Indemnified
Parties pursuant to the indemnification provisions set forth in ARTICLE 8
hereof.
(b) In addition, pursuant to this Section 3.5(b), the Escrow Fund
shall be available to compensate Purchaser in the event of the failure of the
Business to achieve each of those four milestones set forth on Schedule
3.5 hereto (each, a “Milestone” and collectively, the
“Milestones“). If any of the Milestones are not achieved by the
applicable dates referenced in Schedule 3.5 as determined in good faith
by the Board of Directors of Purchaser, Purchaser may deliver a notice (the
“Milestone Notice“) to Seller and the Escrow Agent at any time within
thirty (30) days of the expiration of the eighteen-month period following the
Closing Date, requesting that a portion of the Escrow Fund (the “Milestone
Adjustment Amount“) be delivered from the Escrow Fund to Purchaser. The
Milestone Adjustment Amount shall be equal to Two Hundred Fifty Thousand Dollars
($250,000) multiplied by the number of Milestones that have not been achieved by
the time required, up to a total amount equal to the Escrow Payment. Seller may
object to such request by delivering written notice to Purchaser and the Escrow
Agent, specifying the basis for such objection within thirty (30) days following
receipt by Seller of the Milestone Notice. If no such objection is made within
such 30-day period, the Escrow Agent shall deliver the Milestone Adjustment
Amount to Purchaser without any further action by any party. If Seller objects
within such 30-day period, the parties shall resolve such request and objection
pursuant to the procedures set forth in Section 8.5 as if the notice constituted
an Officer153s Certificate thereunder. Any Milestone Adjustment Amount paid to
Purchaser shall be deemed an adjustment of the Purchase Price for all purposes.
In addition, if Seller believes that a Milestone has been achieved by the
applicable date, Seller may deliver to Purchaser a written notice of completion
(the “Milestone Completion Notice“) describing the Milestone and setting
forth in reasonable detail the factual basis for Seller153s belief that the
Milestone has been achieved. Purchaser shall have a period of not more than
thirty (30) business days from receipt of the Milestone Completion Notice to
reject the Milestone Completion Notice by delivering to Seller a written
rejection setting forth in reasonable detail the factual basis for Purchaser153s
belief that the Milestone has not been achieved. If no such rejection is made
within such thirty (30) day period, the Milestone shall be for all purposes of
this Agreement deemed achieved. If Purchaser rejects the Milestone Completion
Notice within such thirty (30) day period, Seller may elect to withdraw the
Milestone Completion Notice and subsequently provide a replacement Milestone
Completion Notice after addressing Purchaser153s basis for rejection, or, if
Seller does not so elect, the parties shall resolve such request and objection
pursuant to the procedures set forth in Section 8.5 as if the notice
constituted an Officer153s Certificate thereunder. For purposes of clarification,
none of the Escrow Fund shall be released to Seller upon the completion of any
Milestone prior to the Escrow Period Termination (as defined in the Escrow
Agreement), and the Escrow Fund shall remain available for purposes of
indemnification until such time pursuant to the terms hereof and the Escrow
Agreement.
3.6 Allocation of Purchase Price
Not later than 90 days following the Closing, Purchaser shall provide Seller
with an allocation of the Purchase Price (the “Allocation“). Such
Allocation shall be prepared in accordance with Section 1060 of the Code, or any
successor thereto, and the regulations promulgated thereunder. The Allocation
shall be conclusive and binding upon the Parties for all tax purposes, and the
Parties agree that all returns and reports (including IRS Form 8594) shall be
prepared in a manner consistent with (and the Parties shall not otherwise file a
tax return position inconsistent with) the Allocation unless required by the IRS
or any other applicable taxing authority.
3.7 Transfer Taxes
All sales, use, value-added, gross receipts, excise, registration, stamp
duty, transfer, documentary or other similar taxes or governmental fees
(“Transfer Taxes“) imposed or levied against Seller or the Business by
reason of, in connection with or attributable to this Agreement and the
Transactions shall be borne solely by Seller.
3.8 Expenses
Except as otherwise provided herein, each Party shall be solely responsible
for its own costs and expenses (including those of its employees and attorneys153
and other advisors153 fees) incurred in negotiating and consummating the
Transactions.
3.9 Withholding Taxes
Notwithstanding any other provision in this Agreement, Purchaser shall have
the right to deduct and withhold Taxes from any payments to be made hereunder if
such withholding is required by law and to request any necessary Tax forms,
including Form W-9 or the appropriate series of Form W-8, as applicable, or any
similar information, from the direct or indirect recipients of payments
hereunder. To the extent that amounts are so withheld, such withheld amounts
shall be treated for all purposes of this Agreement as having been delivered and
paid to the recipient of the payment in respect of which such deduction and
withholding was made. The foregoing notwithstanding, Purchaser shall withhold no
portion of the Purchase Price pursuant to this Section 3.9, unless required by
applicable Legal Requirements.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
SELLER
Seller represents and warrants to Purchaser, as qualified by such exceptions
as are specifically set forth in the Disclosure Schedule (referencing the
appropriate Section and paragraph numbers), as follows:
4.1 Qualification; Subsidiaries
(a) The Business is duly qualified or licensed to do business, to perform its
obligations under all Contracts by which it is bound and is in good standing in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary. Section 4.1(a) of the Disclosure Schedule lists each
jurisdiction in which the Business is qualified to do business.
(b) The operations of the Business have not now and have never been conducted
under any name other than SUPERAntiSpyware.com153 and SUPERAdBlocker.com.153
(c) Neither Seller nor the Business owns or controls, directly or indirectly,
any interest in any corporation, association or other business entity
(excluding, however: (i) any passive investment in less than 1% of the
outstanding shares of the capital stock of a publicly traded corporation that is
engaged in a Competing Business Purpose, provided that Seller is not otherwise
associated with such corporation; and (ii) a passive investment in shares of the
capital stock of a corporation, or other interest of a business entity, that is
not engaged in a Competing Business Purpose and is not associated with any
entity engaged in a Competing Business Purpose). The Business is not a
participant in any joint venture, partnership or other arrangement involving
joint ownership of assets and sharing of profits.
4.2 Authorization of Transactions
Seller has all requisite power and authority to enter into this Agreement,
the Escrow Agreement, the Collateral Agreements and any related agreements to
which he is a party and to consummate the Transactions. No further actions are
required on the part of Seller to authorize this Agreement, the Escrow Agreement
or the Collateral Agreements or any related agreements to which he is a party or
to consummate the Transactions. Seller does not need the approval of any other
Person to approve this Agreement or the transactions contemplated hereby. This
Agreement, the Escrow Agreement, the Collateral Agreements and any related
agreements to which Seller is a party have been duly executed and delivered by
Seller and constitutes the valid and binding obligation of Seller, enforceable
in accordance with their terms, except as such enforceability may be subject to
the laws of general application relating to bankruptcy, insolvency and the
relief of debtors and rules of law governing specific performance, injunctive
relief or other equitable remedies.
4.3 Noncontravention
The execution and delivery of this Agreement, the Escrow Agreement, the
Collateral Agreements and any related agreement by Seller does not, and the
performance of this Agreement, the Escrow Agreement, the Collateral Agreements
and any related agreement by Seller will not, (a) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Seller or the
Business or by which any of the properties of the Business is bound or affected,
or (b) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair the
rights of Seller or the Business or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any of
the Transferred Assets pursuant to, any Contract or other obligation to which
Seller is a party or by which the Business or the Transferred Assets are bound
or affected.
4.4 Consents
No Consent of any Governmental Entity or any third party is required by
Seller or the Business in connection with the execution and delivery of this
Agreement or any related agreements or the consummation of the Transactions,
except for those Transferred Contracts specifically noted as requiring consent
on Schedule 1.1(kkk) hereto.
4.5 Ownership of the Business
Seller is the sole owner of the Business, including the Transferred Assets.
No Person other than Seller has any right to the revenue or profits, or is
liable for the debts, obligations and expenses, of the Business. For the
avoidance of doubt, and without limiting the foregoing, Seller153s spouse has no
direct or indirect legal or equitable ownership interest in the Business,
including the Transferred Assets, whether by virtue of an express ownership or
financial interest or by virtue of her marital relationship with Seller.
4.6 Financial Information
(a) Section 4.6 of the Disclosure Schedule sets forth the following
unaudited financial information: (i) sales bookings by month for the 2010
calendar year and for the interim period beginning January 1, 2011 and ending
June 13, 2011; (ii) the accounts receivable, prepaid expenses and accrued
liabilities of the Business as of June 13, 2011; and (iii) a profit and loss
statement for the Business by month for the 2010 calendar year, prepared on the
cash basis (together, the “Business Financial Data“). The Business
Financial Data (i) are true and correct in all material respects and have been
prepared on a consistent basis throughout the periods indicated and consistent
with each other, and (ii) present fairly the financial condition of the Business
insofar as may be presented by such data, as of the dates and during the periods
indicated therein.
(b) The Business has no Liability of any type, whether accrued, absolute,
contingent, matured, unmatured or other, except Liabilities which individually
or in the aggregate (i) have been set forth in Section 4.6 of the
Disclosure Schedule, or (ii) are executory obligations arising in the ordinary
course of business (and not as a result of the breach of any Contract identified
in the Disclosure Schedule).
4.7 Restrictions on Transactions or Business Activities
There is no agreement (noncompetition, field of use, most favored nation or
otherwise), commitment, judgment, injunction, order or decree to which Seller is
a party or which is otherwise binding upon Seller or relates to the Business or
the Transferred Assets which has or reasonably could be expected to have the
effect of prohibiting or impairing (a) any practice of the Business, (b) any
acquisition of property (tangible or intangible) by Purchaser in connection with
the operation of the Business or the Transferred Assets, (c) the conduct of the
Business or (d) the Transactions. Without limiting the foregoing, Seller has not
entered into any agreement under which the operations of the Business are
restricted or which places any restrictions upon Seller with respect to selling,
licensing or otherwise using or distributing any of the Transferred Products or
the Transferred Technology to or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or in any segment of the market.
4.8 Title of Properties; Absence of Liens and Encumbrances; Condition
Seller has good and valid title to all of the Transferred Assets, and the
power to sell, assign and transfer the Transferred Assets free and clear of any
Liens. At the Closing, Purchaser will obtain good and valid title to the
Transferred Assets, free and clear of all Liens. The Tangible Assets are in good
condition and repair, subject to normal wear and tear. After the Closing,
Purchaser shall be able to use the Transferred Assets and exercise, and enjoy
the benefits of, the Transferred Assets in substantially the same manner as
Seller prior to the Closing without infringing the rights of any third party.
The Transferred Assets are usable for their intended purposes, are free from
defects and conform in all material respects to all applicable statutes,
ordinances and regulations relating to their development, use and operation.
4.9 Intellectual Property
(a) Section 4.9(a) of the Disclosure Schedule lists all Transferred IP
that is Registered IP. All such Registered IP is currently in compliance with
formal Legal Requirements (including payment of filing, examination and
maintenance fees and proofs of use), is valid and enforceable, and is not
subject to any unpaid maintenance fees or taxes or actions falling due within
ninety (90) days after the Closing Date. There are no proceedings or actions
Known to Seller before any court, tribunal (including the United States Patent
and Trademark Office or equivalent authority anywhere in the world) related to
any such Registered IP. Seller has not claimed any status in the application for
or registration of any Registered IP, including “small business status,” that
would not be applicable to Purchaser.
(b) All schedules attached to this Agreement and listing or describing the
Transferred Products, the Transferred IP and the Transferred Technology are
complete and accurate.
(c) The Transferred IP constitutes all of the Intellectual Property Rights
that are used in or necessary for the current or reasonably anticipated
continued operation of the Business or use of the Transferred Assets and for
Purchaser to sell, market, modify, develop, license, service, support, and
maintain the Transferred Products after Closing. The Transferred Technology
constitutes all of the Technology related to, used in or necessary for the
current or reasonably anticipated continued operation of the Business or use of
the Transferred Assets, and for Purchaser to sell, market, modify, develop,
license, support, service and maintain the Transferred Products after Closing.
(d) Seller does not own or have any interest in any Patents or other
Registered IP other than the Patents and other Registered IP included in the
Transferred Assets. None of the Patents included in the Transferred Assets, or
any Patents related thereto, are subject to a terminal disclaimer.
(e) Each item of the Transferred Products, Product Software, Transferred IP
and Transferred Technology is free and clear of any Liens and any other
encumbrances. Seller owns exclusively, and has good and marketable title to, all
works of authorship and all associated copyrights that are used or embodied in,
and all other Intellectual Property Rights in and to, the Transferred
Technology, and no other Person has any other rights thereto. All Transferred
Assets shall be fully transferable and alienable by Purchaser.
(f) To the extent that any Transferred IP, Transferred Products, Product
Software or item of Transferred Technology was originally owned or created by or
for any third party, including any Employee: (i) Seller has a written agreement
with such third party or parties with respect thereto, pursuant to which Seller
has obtained complete, unencumbered and unrestricted ownership and is the
exclusive owner of, all such Transferred Products, Transferred Technology,
Product Software and Intellectual Property Rights by valid assignment or
otherwise and has requested the waiver of all non-assignable rights, including
all moral rights; (ii) the transfers from Seller to Purchaser hereunder do not
violate such third-party agreements; (iii) such third parties have not retained
and do not have any rights or licenses with respect to the Transferred IP,
Transferred Products, Product Software or Transferred Technology; and (iv) no
basis exists for any third party to challenge or object to the Transactions. No
third party who has licensed any Intellectual Property Rights to Seller has
ownership rights or license rights to modifications or improvements made by
Seller in the technology embodying such Intellectual Property Rights.
(g) No Transferred Asset is subject to any proceeding or outstanding decree,
order, judgment, agreement or stipulation that restricts in any manner the use,
transfer or licensing thereof or that may affect the validity, use or
enforceability of the Transferred Assets.
(h) Section 4.9(h) of the Disclosure Schedule lists all software or
other material that is distributed as “free software”, “open source software” or
under a similar licensing or distribution model (including the GNU General
Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public
License (MPL), BSD license, the Artistic License, the Netscape Public License,
the Sun Community Source License (SCSL) the Sun Industry Standards License
(SISL) and the Apache License) (collectively, “Open Source Materials“)
and that has been used by or incorporated into any Transferred Product, Product
Software or Transferred Technology in any way and describes the manner in which
such Open Source Materials were used or incorporated (such description shall
include whether (and, if so, how) the Open Source Materials were modified and/or
distributed by Seller). Seller has not used Open Source Materials in any manner
that would or could (i) require the disclosure or distribution in source code
form of any Transferred Product, Product Software or Transferred Technology,
(ii) require the licensing of any Transferred Product, Product Software or
Transferred Technology for the purpose of making derivative works, (iii) impose
any restriction on the consideration to be charged for the distribution of any
Transferred Product, Product Software or Transferred Technology, (iv) create, or
purport to create, obligations for Seller (or any successor) with respect to
Intellectual Property Rights owned by or purported to be owned by Seller or
grant, or purport to grant, to any third party, any rights or immunities under
Intellectual Property Rights owned by or purported to be owned by Seller, or (v)
impose any other limitation, restriction, or condition on the right of Seller to
use or distribute any Transferred Product, Product Software or Transferred
Technology. With respect to any Open Source Materials that are or have been used
by Seller in any way, Seller has been and is in compliance with all applicable
licenses with respect thereto.
(i) Neither this Agreement nor the Transactions, including the assignment to
Purchaser, by operation of law or otherwise, of any Contracts to which Seller is
a party, will result in (i) Purchaser granting to any third party any right to
or with respect to any Technology or Intellectual Property Rights owned by
Purchaser, (ii) Purchaser being bound by, or subject to, any non-compete or
other restriction on the operation or scope of its businesses, or (iii)
Purchaser being obligated to pay any royalties or other amounts to any third
party.
(j) Section 4.9(j) of the Disclosure Schedule lists all Contracts to
which Seller is a party (i) related to the licensing or acquisition of any third
party Intellectual Property Rights or Technology related to or used in the
Business or incorporated into the Transferred Products, Product Software or
Transferred Technology, or (ii) related to the licensing or sale of any
Transferred IP other than non-exclusive object code-only licenses granted by
Seller in the ordinary course pursuant to Seller153s standard form of license
agreement attached to Section 4.9(j) of the Disclosure Schedule. Seller
is not required to make or accrue any royalty or other payment to any third
party in connection with the Business or any of the Transferred Assets.
(k) No third party possesses any copy of any source code for any Product
Software or other Software included in the Transferred Assets. As of the
Closing, Seller will have delivered to Purchaser, and Seller will not have
retained any copy of any source code for any Product Software or other Software
included in the Transferred Assets.
(l) Seller has taken all reasonable steps to protect Seller153s rights in the
confidential information and trade secrets associated with, related to or
included in the Transferred Assets. To the Knowledge of Seller, no Person is
infringing or misappropriating the Transferred IP, Transferred Technology,
Transferred Products or Product Software.
(m) Seller has and enforces a policy requiring each Employee to execute a
proprietary rights and confidentiality agreement substantially in the form set
forth in Section 4.9(m) of the Disclosure Schedule. All Employees have
executed such an agreement assigning all of such Employees153 rights in and to the
Transferred Technology and the Transferred IP to Seller. The Transferred Assets
do not include any inventions of any of the Employees made prior to their
employment by the Business.
(n) The Transferred Products, the Product Software, and any other Technology
or Software included in the Transferred Assets prior to the Closing Date, did
not, do not, and will not (i) infringe or misappropriate the Intellectual
Property Rights of any other Person, (ii) violate the rights of any other Person
(including rights to privacy or publicity), or (iii) constitute unfair
competition or trade practices under the laws of any jurisdiction.
(o) Seller has not received notice from any Person claiming that the
Transferred Assets infringe, misappropriate or violate the Intellectual Property
Rights or other rights of any Person or constitute unfair competition or trade
practices under the laws of any jurisdiction (nor does Seller have Knowledge of
any basis therefor).
(p) There are no Contracts between Seller and any other Person with respect
to Transferred IP or the Transferred Assets under which there is any dispute or
any threatened dispute regarding the scope of such Contract or performance under
such Contract.
(q) To the extent that Seller has distributed or licensed any Transferred
Product to an end user pursuant to any form of encryption key: (i) Seller has a
written agreement with each such end user requiring such end user to protect the
confidentiality of such key; (ii) Seller has delivered to Purchaser a true and
complete list of all third parties who have had access to any such keys; (iii)
no third party has had access to any such keys, except pursuant to clause (i)
above; and (iv) Seller has delivered to Purchaser any such keys and the
Technology to generate such keys and has not retained any such keys or such
Technology.
(r) Seller has disclosed in writing to Purchaser all information relating to
any bugs, non-conformities or other problem or issue with respect to any of the
Product Software, Transferred Products or Transferred Technology that does, or
may reasonably be expected to, adversely affect the value, functionality or
fitness for the intended purpose of that Product Software, Transferred Product
or Transferred Technology. Without limiting the foregoing, there have been, and
are, no claims asserted against Seller related to the Transferred Products (or
any other product, Technology or service of Seller).
(s) Seller has taken reasonable steps and implemented reasonable procedures
(based on standard industry practices) to ensure that the Transferred Products
and the Product Software are free from viruses and other disabling codes.
(t) Section 4.9(t) of the Disclosure Schedule contains a true and
complete description of the current and any prior privacy policy(ies) of the
Business related to “Personally Identifiable Information” or
“PII” (collectively, “Privacy Policies“) concerning any
individual, including but not limited to current, former or potential customers,
employees, or agents. “Personally Identifiable Information” or
“PII” means any information that alone or in combination with other
information held by the Business, whether obtained online or offline, can be
used to specifically identify a person.
(u) The Privacy Policies and all other representations, marketing materials,
and advertisements that address privacy issues and the treatment of PII,
accurately and completely describe the information practices of the Business in
regard to PII that it collects, maintains, controls, stores, accesses,
transfers, processes, uses or discloses (collectively, “Processing“). The
Business has complied with the Privacy Policies, all applicable laws,
regulations, Contracts and other obligations related to processing of PII. The
Business has given all notices, made all disclosures, and obtained all necessary
consents related to Processing of PII required by the Privacy Policies,
applicable laws, regulations and Contracts and no such notices, disclosures or
consent requests have been inaccurate, misleading or deceptive. The Business has
not collected any information online from children who it knows or has reason to
know are under the age of 13 without verifiable parental consent or directed any
of its Sites153 content to children under the age of 13 through which such
information could be obtained.
(v) The Business has stored and maintained PII in a secure manner, using
commercially reasonable physical, administrative and technical measures to
assure the integrity and security of the data and to prevent loss, alteration,
corruption, misuse and unauthorized access to PII. All electronic or paper-based
records containing PII that the Business has sought to dispose of in the
ordinary course of business have been destroyed or otherwise rendered
unretrievable or unusable. All third party access to PII has been subject to
confidentiality requirements. There has been no unauthorized access to,
acquisition of, or disclosure of PII.
(w) The transfer of PII under this Agreement complies with all applicable
laws and regulations relating to such transfer and with the Privacy Policies,
Contracts and other obligations in regard to PII.
(x) Seller has not received any claims, notices or complaints regarding the
information practices and Processing of PII of the Business. Section
4.9(x) of the Disclosure Schedule sets forth the privacy seal program
(e.g., TRUSTe, BBBOnline) in which the Business or the Sites is a member;
if any of them are a member of any such seal program, the Business and/or the
Sites, as applicable, are in compliance with the requirements of such program.
(y) The Business has completely and accurately described in the Privacy
Policies, Contracts and other materials the use of cookies, web beacons and
other online tracking resources of the Business. The Business does not use such
resources to collect PII without obtaining the express consent of all
individuals to whom such PII relates.
(z) The Business153 Processing of PII complies with the then-current version of
the Payment Card Industry Data Security Standard.
4.10 Brokers153 and Finders153 Fees
Seller has not incurred, nor will Seller incur, directly or indirectly, any
liability for brokerage or finders153 fees or agents153 commissions or investment
bankers153 fees or any similar charges in connection with this Agreement or the
Transactions.
4.11 Transferred Contracts
The Transferred Contracts are all of the Contracts between Seller and any
third party related to, or necessary for, the operation of the Business and the
Transferred Assets, and true and complete copies of all such Contracts have been
delivered to Purchaser. Each Transferred Contract is in full force and effect
and Seller is not subject to any default thereunder, nor is any party obligated
to Seller pursuant to any such Transferred Contract subject to any default
thereunder. Seller has not breached, violated or defaulted under, nor received
notice that they have breached, violated or defaulted under, any of the terms or
conditions of any Transferred Contract. Seller has obtained all necessary
consents, waivers and approvals of parties to any Transferred Contract as are
required thereunder in connection with the Closing, or for any such Transferred
Contract to remain in full force and effect without limitation, modification or
alteration after the Closing. Following the Closing, Purchaser will be permitted
to exercise all of the rights Seller had under the Transferred Contracts without
the payment of any additional amounts or consideration.
4.12 Complete Copies of Materials
Seller has Seller has delivered true and complete copies of (i) all Tax
Returns filed with any taxing authority since January 1, 2009, including federal
income Tax Returns for tax years 2008 and 2009, and the extension filed for the
2010 tax year; (ii) bank statements of the Business for the 2010 calendar year
and for the periods beginning on or after January 1, 2011 and ending on or prior
to May 16, 2011; and (iii) each other existing document that has been requested
in writing by Purchaser or its counsel.
4.13 Transferred Assets
The Transferred Assets comprise all of the tangible and intangible assets,
properties and rights of every type and description (other than real property)
used in or reasonably necessary for the operation of the Business by Purchaser
following the Closing in a manner consistent with its operation prior to
Closing, provided, however, that the Transferred Assets shall not include cash,
leaving the Business without cash as of Closing.
4.14 Operational Licenses
Section 4.14 of the Disclosure Schedule lists all permits, government
approvals, licenses, clearances and Consents necessary for the conduct of the
Business. Seller currently holds and has provided to Purchaser true and complete
copies of all such permits, government approvals, licenses, clearances and
Consents.
4.15 Litigation
There is no action, suit, proceeding, claim, arbitration or any investigation
pending or, to the Knowledge of Seller, threatened before any court or
administrative agency against Seller that relates directly or indirectly to the
Business, any Transferred Asset or any Employee, or that questions the validity
of this Agreement, the Collateral Agreements, the Escrow Agreement or any
related agreements, or of any action taken or to be taken pursuant to or in
connection with such agreements. There is no judgment, decree or order against
Seller or the Business, or any of the Transferred Assets.
4.16 Employee Benefits
(a) Section 4.16(a) of the Disclosure Schedule contains a complete and
accurate list of the Employees as of the date hereof and shows with respect to
each such Employee (i) the Employee153s name, position held, all remuneration
payable and other benefits provided by Seller or which Seller is bound to
provide (whether at present or in the future) to each such Employee, or any
person connected with any such person, and includes, if any, particulars of all
profit sharing, incentive and bonus arrangements to which Seller is a party,
whether legally binding or not, (ii) the date of hire, (iii) vacation
eligibility for the current calendar year, (iv) leave status (including type of
leave, expected return date for non-disability related leaves and expiration
dates for disability leaves), (v) visa status, and (vi) any Known or recorded
performance issues (including any violations of ethical rules or codes of
conduct), incidents of violence or drug abuse, or criminal record of such
Employee. Neither Seller nor the Business has any Employee Benefit Plan as
defined in ERISA.
(b) No payment or benefit which will or may be made by Seller or its ERISA
Affiliates with respect to any Employee or any other “disqualified individual”
(as defined in Code Section 280G and the regulations thereunder) will be
characterized as a “parachute payment,” within the meaning of Section 280G(b)(2)
of the Code.
4.17 Bulk Transfer Laws
There are no current or past creditors of Seller to whom any law, rule or
regulation requires the delivery of notice or from whom any form of consent is
required in conjunction with undertaking the Transactions, and the “bulk
transfer laws” of any state in which the Transferred Assets are located do not
apply to the transfer of those Transferred Assets under this Agreement.
4.18 Compliance with Applicable Laws
(a) Seller, the Transferred Assets and the Business are in compliance with
all applicable Legal Requirements, including laws, statutes, codes, regulations,
standards, guidelines, guidance documents, and directives or consents (including
consent decrees and administrative orders) at any time in effect, including all
applicable regulations promulgated by the Federal Trade Commission and U.S.
Bureau of Industry and Standards. No investigation or review by any Governmental
Entity or self-regulatory entity with respect to Seller is pending or, to the
Knowledge of Seller, threatened.
(b) Seller has obtained and has in effect all permits, licenses and other
authorizations which are required with respect to the operation of the Business
and the ownership of the Transferred Assets. Seller is in full compliance with
all terms and conditions of such permits, licenses and authorizations, no
proceeding is pending or, to the Knowledge of Seller, threatened, to revoke or
limit any thereof, and to the Knowledge of Seller there is no basis for any such
proceeding and the consummation of the Transactions will not result in the
non-renewal, revocation or termination of any such license or permit.
(c) Seller is conducting and has conducted the export transactions of the
Business in accordance with all applicable export and re-export control laws of
the United States and all applicable import/export control laws in other
countries in which the Business operates. Without limiting the foregoing:
(i) Seller has obtained, and is in compliance with, all export licenses,
license exceptions and other consents, notices, permits, waivers, approvals,
orders, authorizations, registrations, declarations, classifications and filings
with any Governmental Entity required for (A) the export and re-export of
products, services, software and technologies of the Business and (B) releases
of technologies and software to foreign nationals located in the United States
and abroad (“Export Approvals“), and has performed classification reviews
of all of the Transferred Products.
(ii) There are no pending or, to the Knowledge of Seller, threatened claims
or legal actions against Seller alleging a violation of such Export Approvals or
the export control laws of any Governmental Entity.
(iii) No Export Approvals are required by the consummation of the
Transactions.
4.19 Business Practices
Seller and, to the Knowledge of Seller, the Employees are in compliance with
the U.S. Foreign Corrupt Practices Act, as amended, including the books and
records provisions thereof. Neither Seller nor any Person acting on Seller153s
behalf has ever paid or delivered, or promised to pay or deliver, directly or
indirectly through any other Person, any monies or anything else of value to any
government official or employee of any political party, for the purpose of
illegally or improperly inducing or rewarding any action by the official
favorable to Seller.
4.20 Tax Matters
(a) Seller has prepared and timely filed all required Tax Returns for all
periods ending on or prior to the Closing Date relating to any and all Taxes
concerning or attributable to the Transferred Assets or the Business, and such
Tax Returns are true and correct and have been completed in accordance with
applicable Legal Requirements.
(b) Seller has timely paid all Taxes required to be paid that are
attributable to the Transferred Assets or the Business and timely paid or
withheld and paid over to the appropriate Governmental Entities with respect to
its Employees and other third parties all income taxes, social security and
national insurance contributions and other Taxes required to be withheld.
(c) Purchaser shall not have any Liability, and shall not incur any loss,
expense or cost, and none of the Transferred Assets are or shall be subject to
any Liens, by reason of any Taxes arising out of (i) the Business as conducted
by Seller prior to the consummation of the sale hereunder of the Transferred
Assets or (ii) any other operations or activities of Seller whether conducted
prior to the date hereof or hereafter.
(d) Seller has not executed any waiver of any statute of limitations on or
extending the period for assessment or collection of any Tax attributable to the
Transferred Assets or the Business.
4.21 Certain Relationships
No Employee (nor any immediate family member or affiliate of any Employee)
has or has had, directly or indirectly, any financial interest in any Person
with any contractual or business relationship with the Business, including any
party to any of the Transferred Contracts.
4.22 Product Warranties
Each product manufactured, sold, leased, licensed or delivered by the
Business has been done so in material conformity with all applicable contractual
commitments and all express and implied warranties, and Seller has no liability
(and there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against Seller
giving rise to any liability) for replacement or repair thereof or other damages
in connection therewith other than warranty obligations, customer service,
updates, upgrades and the like provided to users in the ordinary course of
operation of the Business pursuant to the standard terms and conditions of sale,
license and lease for the Business set forth in Section 4.22 of the
Disclosure Schedule. No product manufactured, sold, leased, distributed,
licensed or delivered by Seller is subject to any guaranty, warranty, or other
indemnity beyond Seller153s applicable standard terms and conditions of sale,
license or lease or beyond that implied or imposed by applicable Legal
Requirements. Section 4.22 of the Disclosure Schedule includes copies of
the standard terms and conditions of sale, license and lease for the Business.
4.23 Accounts Receivable
All receivables reflected on the Current Balance Sheet arose from goods
shipped or products sold or services rendered by the Business in the ordinary
course of business, are current and collectible in accordance with their terms
at their recorded amounts, subject only to the reserve for bad debts set forth
on the face of the Current Balance Sheet, and no such receivable is subject to
any counterclaim or setoff.
4.24 No Insolvency
(a) There is not outstanding any:
(i) appointment of a receiver over the whole or part of the assets of Seller;
(ii) petition or order for administration of Seller under any federal or
state bankruptcy, insolvency or similar law; or
(iii) voluntary arrangement between Seller and any of Seller153s creditors
under any federal or state bankruptcy, insolvency or similar law.
(b) Seller is not deemed unable to pay his debts within the meaning of
applicable Legal Requirements. Seller is not now insolvent and will not be
rendered insolvent by the Transactions contemplated in this Agreement. As used
in this section, “insolvent” means that the sum of debts and other probable
liabilities of a party exceeds the present fair saleable value of such party153s
assets.
4.25 Disclosure
(a) No statement made by Seller in this Agreement or any of the agreements
contemplated hereby, or the exhibits and schedules attached hereto or thereto or
in any certificate or schedule furnished or to be furnished by or on behalf of
Seller to Purchaser in connection with the Transactions contains any untrue
statement of a material fact or omits to state a material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements contained herein or therein not misleading or necessary in order
to fully and fairly provide the information required to be provided in any such
document, certificate or schedule.
4.26 Environmental
The facilities used by the Business have all necessary environmental permits
and authorizations if and to the extent any are required by law; there has been
no release of hazardous materials or substances at or near such facilitites; and
there are no pending enforcement, administrative actions or environmental claims
against the Seller relating to the Business.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
PURCHASER
Purchaser represents and warrants to Seller as follows:
5.1 Organization
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
5.2 Authorization of Transaction
Purchaser has all requisite power and authority to execute and deliver this
Agreement, the Escrow Agreement and the Collateral Agreements to which it is a
party and to perform its obligations hereunder and thereunder. The execution and
delivery by Purchaser of this Agreement, the Escrow Agreement and the Collateral
Agreements to which it is a party and the consummation by Purchaser of the
Transactions have been duly and validly authorized by all necessary corporate
action on the part of Purchaser. This Agreement, the Escrow Agreement and the
Collateral Agreements to which it is a party have been duly and validly executed
and delivered by Purchaser and (assuming due authorization, execution and
delivery by Seller) constitute valid and binding obligations of Purchaser.
5.3 Sufficient Cash Funds
Purchaser has available sufficient funds to enable it to pay the Purchase
Price.
ARTICLE 6
CONFIDENTIAL INFORMATION
6.1 Confidentiality of Agreement and Public Announcements
(a) Seller acknowledges that included in the Transferred Assets are certain
Technology, Intellectual Proprietary Rights and other confidential and/or
proprietary information that have been used, and have commercial value, in the
Business and accordingly have been treated by Seller as confidential. All such
information, and all information regarding this Agreement and the Transactions
(collectively, the “Confidential Information“), shall be kept
confidential by Seller. On and after the Closing Date, Seller will keep in
strictest confidence and trust all Confidential Information and Seller will not,
without Purchaser153s prior written consent, use or disclose any Confidential
Information, except to the extent (i) necessary to comply with any Legal
Requirements in connection with Seller153s ownership or operation of the
Transferred Assets on or prior to the Closing Date, such as the filing of income
tax returns or reports or (ii) any of them become legally compelled (e.g., by
oral questions, interrogatories, request for information or documents, subpoena,
civil investigative demand or similar process) to disclose any of the
Confidential Information, in which case, Seller will provide Purchaser with
prompt written notice so that Purchaser may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this
Section 6.1(a). If such protective order or other remedy is not obtained
or Purchaser waives compliance with the provisions of this Section
6.1(a), Seller will furnish only that portion of the Confidential
Information which is legally required.
(b) Except as provided in Section 6.1(c), each Party hereto agrees
that this Agreement and every provision hereof shall be strictly confidential
and shall not be disclosed to any other person other than: (i) with the written
consent of Purchaser; (ii) if it is required by Legal Requirements; (iii) if it
is made pursuant to existing contractual obligations; or (iv) if it is required
by any rule or regulation of any securities exchange or regulatory or
governmental body whether or not this has the force of law.
(c) Notwithstanding the foregoing, the confidentiality obligations set forth
in Section 6.1(b) shall not prevent or restrict Purchaser in any way from
(i) announcing publicly or otherwise notifying third parties at any time that it
has purchased the Transferred Assets (including notifying them of the amount of
the Purchase Price) and introducing itself as successor or (ii) disclosing this
Agreement and the exhibits and schedules hereto and the terms hereof and thereof
for purposes of complying with applicable securities laws or the rules of the
Nasdaq National Market applicable to Purchaser or its affiliated entities.
6.2 Remedies
If any of the obligations set forth in Section 6.1 with respect to
confidentiality or use of Confidential Information hereunder are breached,
Purchaser shall be entitled to seek equitable relief to protect its interest
therein, including injunctive relief, as well as money damages.
ARTICLE 7
COVENANTS
7.1 Additional Documents and Further Assurances
At any time or from time to time after the Closing, at Purchaser153s request
and without any further consideration, Seller shall: (a) execute and deliver to
Purchaser such other instruments of sale, transfer, conveyance, assignment and
confirmation; (b) provide such materials and information; and (c) take such
other actions, as Purchaser may reasonably deem necessary or desirable in order
more effectively to transfer, convey and assign to Purchaser, to confirm
Purchaser153s title to, all of the Transferred Assets, and, to the full extent
permitted by Legal Requirements, to put Purchaser in actual possession and
operating control of the Transferred Assets and to assist Purchaser in
exercising all rights with respect thereto, and otherwise for purposes of
fulfilling Seller153s obligations under this Agreement, the Escrow Agreement and
the Collateral Agreements.
7.2 Tax Matters
(a) Seller Tax Returns. Subject to Section 7.2(b), Seller will
prepare and file all Tax Returns for the Business (including Tax Returns
required to be filed after the Closing Date) to the extent such Tax Returns
include or relate to the operations of the Business or the use or ownership of
the Transferred Assets on or prior to the Closing Date (the “Seller Tax
Returns“). The Seller Tax Returns shall be true, complete and correct and
prepared in accordance with applicable Legal Requirements. Seller will make all
payments for Taxes required with respect to the Seller Tax Returns.
(b) Purchaser Tax Returns. Purchaser will be responsible for the
preparation and filing of all Tax Returns it is required to file with respect to
Purchaser153s ownership or use of the Transferred Assets or its operation of the
Business following the Closing Date (the “Purchaser Tax Returns“). The
Purchaser Tax Returns shall be true, complete and correct and prepared in
accordance with applicable Law. Purchaser will make all payments for Taxes
required with respect to the Purchaser Tax Returns.
(c) Property Taxes. In the case of any real or personal property Taxes
(or other similar taxes) attributable to the Transferred Assets for which the
corresponding Tax Returns cover periods both prior to and following the Closing,
Purchaser shall prepare such Tax Returns and make all payments required with
respect to any such Tax Return; provided, however, that Seller will
reimburse Purchaser concurrently therewith to the extent that any payment made
by Purchaser relates to any period on or prior to the Closing Date, prorated on
a per diem basis.
7.3 Delivery of Final Financial Information
As promptly as practical but in any event within twenty (20) business days
following the Closing, Seller shall deliver to Purchaser:
(a) the final calculations of (i) the Assumed Liabilities set forth on
Schedule 2.6(d), and (ii) Prepaid Expenses, in each case as of 11:59
p.m., local time on the Closing Date;
(b) any updates to the sales bookings for the interim period beginning
January 1, 2011 and ending June 15, 2011 set forth on Section 4.6 of the
Disclosure Schedule, together with detailed invoices and related data with
respect to such sales bookings; and
(c) a profit and loss statement for the Business by month for the interim
period beginning January 1, 2011 and ending June 15, 2011, prepared on a cash
basis consistent with the profit and loss statement set forth on Section
4.6 of the Disclosure Schedule and which shall present fairly the financial
condition of the Business insofar as may be presented by such data, during the
periods indicated therein.
In addition, Seller shall provide Purchaser all documents, records and work
papers and access to all personnel as Purchaser may reasonably request with
respect to the foregoing.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
8.1 Survival of Representations and Warranties
The representations and warranties of Seller contained in this Agreement, or
in any certificate or other instrument delivered pursuant to this Agreement,
shall survive the Closing and continue in full force and effect until and
terminate upon the end of the day on the date eighteen (18) months following the
Closing Date (the “Survival Date“); provided, however, that
the following representations and warranties (the “Special
Representations“) shall survive for longer periods as follows: (a) the
representations and warranties contained in this Agreement (including but not
limited to Section 4.2 (Authorization of Transactions)), or in any
certificate or other instrument delivered pursuant to this Agreement, with
respect to due authorization to enter into this Agreement and complete the
Transactions shall survive indefinitely and not terminate; (b) the
representations and warranties contained in Section 4.8 (Title of
Properties; Absence of Liens and Encumbrances; Condition), Section 4.9
(Intellectual Property), Section 4.13 (Transferred Assets), Section
4.16 (Employee Benefits) and Section 4.20 (Tax Matters), shall
survive until the expiration of the applicable statutes of limitations; and (c)
in the event of fraud or the willful or intentional breach of a representation,
warranty or covenant contained in this Agreement, or in any certificate or other
instrument delivered pursuant to this Agreement, as applicable, such
representation, warranty or covenant shall survive indefinitely and not
terminate. The representations and warranties of Purchaser contained in this
Agreement, or in any certificate or other instrument delivered pursuant to this
Agreement, shall terminate on the Survival Date. If a claim for indemnification
under Section 8.2 arises on or before the Survival Date or other
applicable date of expiration and Purchaser delivers a notice of such claim no
later than thirty (30) days after such date, then the claims contained in such
notice shall survive for the benefit of all Indemnified Parties beyond the
Survival Date or other applicable date of expiration until such claims are
settled or otherwise resolved.
8.2 Indemnification
Seller and his successors and assigns (together, the “Indemnifying
Party“) will indemnify and hold Purchaser and each of Purchaser153s
subsidiaries and other affiliates, and their respective officers, directors,
employees, agents and representatives (the “Indemnified Parties“),
harmless against all claims, losses, liabilities, diminution in value, damages,
deficiencies, interest, penalties, taxes, costs and expenses, including
reasonable attorneys153 fees and expenses of investigation and defense
(hereinafter individually a “Loss” and collectively “Losses“)
paid, sustained, incurred or accrued by the Indemnified Parties, directly or
indirectly, as a result of (a) any breach or inaccuracy of a representation or
warranty of Seller contained in this Agreement or in any certificate,
instrument, or other document delivered by Seller pursuant to this Agreement
(without, for purposes of determining the amount of any such Loss, giving effect
to any limitation as to “materiality,” “material adverse effect,” or similar
qualifications set forth therein); (b) any failure by Seller to perform or
comply with any covenant applicable to Seller contained in this Agreement or any
agreement delivered by Seller pursuant to this Agreement, including without
limitation Seller153s Non-Competition and Non-Solicitation Agreement as shown in
Exhibit A-1; (c) any Excluded Liabilities; (d) any failure of Seller to
comply with any applicable bulk transfer or similar laws with respect to the
Transactions; (e) any amount by which the Actual Purchase Price Adjustment is
greater than the Estimated Purchase Price Adjustment (if and to extent the
excess is greater than the amount by which the Holdback Amount is reduced
pursuant to Section 3.4(b)), or any inaccuracy in the calculation of the
Actual Purchase Price Adjustment based upon Purchaser153s review of the final
calculations of the Assumed Liabilities set forth on Schedule 2.6(d) and
Prepaid Expenses at any time following receipt of such amounts pursuant to
Section 7.3.
8.3 Source of Indemnification
Subject to Section 8.7, the amount of any Losses shall be recoverable by
Purchaser either through recourse to the Escrow Fund or by proceeding against
the Indemnifying Party directly, or a combination of the two, as may be
determined in Purchaser153s sole discretion. Notwithstanding the foregoing, in the
case of fraud or intentional or willful breach of a representation, warranty or
covenant of Seller contained in this Agreement or in any certificate,
instrument, or other document delivered by Seller pursuant to this Agreement,
Purchaser may seek any remedy to which it is entitled under law or equity.
8.4 Indemnification Procedure
If an Indemnified Party seeks indemnification under this ARTICLE 8,
Purchaser shall deliver an Officer153s Certificate to Seller and the Escrow Agent,
if the Escrow Period has not expired. Seller may object to such claim by
delivering written notice to Purchaser (and the Escrow Agent, if the Escrow
Period has not expired) specifying the basis for such objection within thirty
(30) days following receipt by Seller of notice from Purchaser regarding such
claim. If no such objection is made within such 30-day period, the Indemnified
Party may recover Losses without further consent or approval required of the
Indemnifying Party. For the purposes hereof, “Officer153s Certificate”
shall mean a certificate signed by any officer of Purchaser (i) stating that an
Indemnified Party has paid, sustained, incurred or accrued, or in good faith
reasonably anticipates that it will pay, sustain, incur or accrue Losses, and
(ii) specifying in reasonable detail the individual items of Losses included in
the amount so stated, the date each such item was paid, sustained, incurred or
accrued, or the basis for such anticipated liability.
8.5 Resolution of Conflicts; Arbitration..
(a) If Seller shall object in writing to any claim or claims made in any
Officer153s Certificate to recover Losses within thirty (30) days after delivery
of such Officer153s Certificate, Seller and Purchaser shall attempt in good faith
to agree upon the rights of the respective parties with respect to each of such
claims. If Seller and Purchaser should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both Parties, at which time the claim
shall be promptly paid, expensed or settled, as the case may be.
(b) If no such agreement can be reached after good faith negotiation and
prior to sixty (60) days after delivery of an Officer153s Certificate, Seller or
Purchaser may demand arbitration of the matter unless the amount of the Loss is
at issue in pending litigation with a third party, in which event arbitration
shall not be commenced until such amount is ascertained or both Parties agree to
arbitration, and in either such event the matter shall be settled by arbitration
conducted pursuant to Section 10.4.
(c) Arbitration under Section 10.4 shall apply to any dispute among
the Indemnifying Party, on the one hand, and the Indemnified Parties, on the
other hand, under this ARTICLE 8 hereof, whether relating to claims upon
the Escrow Fund or to the other indemnification obligations set forth in this
ARTICLE 8.
(d) The decision of the arbitrator or a majority of the three arbitrators, as
the case may be, as to the validity and amount of any claim in such Officer153s
Certificate shall be final, binding, and conclusive upon the Parties to this
Agreement, including the Indemnifying Party and any Indemnified Party. Such
decision shall be written and shall be supported by written findings of fact and
conclusions which shall set forth the award, judgment, decree or order awarded
by the arbitrator(s), and the Escrow Agent shall be entitled to rely on, and
make distributions from the Escrow Fund in accordance with, the terms of such
award, judgment, decree or order, as applicable. Within 30 days of a decision of
the arbitrator(s) requiring payment by one Party to another, such Party shall
make the payment to such other Party, including any distributions out of the
Escrow Fund, as applicable.
8.6 Third-Party Claims
In the event Purchaser becomes aware of a third-party claim that Purchaser
reasonably believes may result in a demand for indemnification pursuant to
this ARTICLE 8, Purchaser shall notify Seller of such claim, and Seller
shall be entitled, at its expense, to participate in, but not to determine or
conduct, the defense of such claim. Purchaser shall have the right, in its sole
discretion, to conduct the defense of and settle any such claim;
provided, however, that except with the consent of Seller, which
consent may not be unreasonably withheld, no settlement of any such claim with
third-party claimants shall be determinative of the amount of Losses relating to
such matter. In the event that Seller has consented to any such settlement, the
Indemnifying Party shall not have power or authority to object under any
provision of this ARTICLE 8 to the amount of any claim by the Indemnified
Party against the Escrow Fund or the Indemnifying Party directly, as the case
may be, with respect to such settlement.
8.7 Limitations on Indemnity.
(a) Cap. Subject to Section 8.7(b), the liability of the
Indemnifying Party for indemnification to the Indemnified Parties will be
limited to the Escrow Fund whether or not the Survival Date has passed.
(b) Exceptions. Notwithstanding anything herein to the contrary, the
limitations set forth in Section 8.7(a) will not apply to Losses which
result from or are related to (i) fraud; (ii) willful breach of a
representation, warranty or covenant contained in this Agreement or in any
certificate or other instrument delivered pursuant to this Agreement; (iii) any
breach of Section 4.2 (Authorization of Transactions), Section 4.5
(Ownership of the Business), Section 4.6 (Financial Information),
Section 4.8 (Title of Properties; Absence of Liens and Encumbrances;
Condition); Section 4.9 (Intellectual Property), Section 4.13
(Transferred Assets) and Section 4.20 (Tax Matters); or (iv) any Excluded
Liabilities, and the liability of the Indemnifying Party for indemnification of
Losses with respect to such matters shall not be limited in any manner under
this Agreement. In addition, nothing herein shall limit the liability of Seller
for any breach of any representation, warranty or covenant if the Closing does
not occur, in which case Purchaser is entitled to any remedy available at law,
in equity or under this Agreement, including seeking in such relief or monetary
damages for breaches of ARTICLE 6 hereof.
8.8 Exclusive Remedy
From and after the Closing Date, the remedies under this ARTICLE 8
shall be the exclusive remedies of the Parties under this Agreement, other than
in the event of fraud or willful breach.
ARTICLE 9
AMENDMENT AND WAIVER
9.1 Amendment
This Agreement may not be amended, modified, altered or supplemented other
than by means of a written instrument duly executed and delivered on behalf of
Seller and Purchaser.
9.2 Extension; Waiver
At any time prior to the Closing, Purchaser or Seller may, to the extent
legally allowed, extend the time for the performance of any of the obligations
of the other Party, or waive compliance with any of the agreements or conditions
for the benefit of such Party contained herein. Any agreement on the part of a
Party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such Party.
ARTICLE 10
GENERAL
10.1 Notices
Any notice or other communication required or permitted to be delivered to
any Party under this Agreement must be in writing and shall be deemed properly
delivered, given and received when delivered (by hand, by registered mail, by
courier or express delivery service or by facsimile) to the address or facsimile
telephone number set forth beneath the name of such Party below (or to such
other address or facsimile telephone number as such Party may have specified in
a written notice given to the other Party):
|
if to Purchaser: |
SDC Software, Inc. |
1900 Seaport Boulevard, 3rd Floor
Redwood City, CA 94063
Attn: President
Facsimile:
|
with a copy to: |
Hayden Bergman, Professional Corporation |
150 Post Street, Suite 650
San Francisco, CA 94108
Attn: Peter Bergman
Telephone: (415) 692-3310
Facsimile: (866) 409-3373
|
if to Seller: |
Nicholas Skrepetos |
1185 Throne Drive
Eugene, OR 97402
|
with a copy to: |
Gleaves Swearingen Potter & Scott LLP |
975 Oak Street, Suite 800
Eugene, OR 97401
Attn: Ian T. Richardson
Telephone: (541) 686-8833
Facsimile: (541) 345-2034
10.2 Governing Law
This Agreement shall be governed in all respects by the laws of the United
States of America and the State of Delaware as such laws apply to agreements
entered into and to be performed entirely within Delaware by residents of such
state.
10.3 Forum and Venue
Each of the Parties hereto irrevocably consents to the exclusive jurisdiction
and venue of any court within San Francisco County, State of California, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of California for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and such process. Each Party agrees
not to commence any legal proceedings related hereto except in such courts.
10.4 Resolution of Conflicts; Arbitration
Any claim or dispute arising out of or related to this Agreement, or the
interpretation, making, performance, breach or termination thereof, shall
(except as specifically set forth in this Agreement) be finally settled by
binding arbitration in the County of San Francisco, California in accordance
with the then current Commercial Arbitration Rules of the American Arbitration
Association and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. The arbitrator(s) shall have the authority to grant
any equitable and legal remedies that would be available in any judicial
proceeding instituted to resolve a dispute.
(a) Selection of Arbitrators. Such arbitration shall be conducted by a
single arbitrator chosen by mutual agreement of Purchaser and Seller.
Alternatively, at the request of either Party before the commencement of
arbitration, the arbitration shall be conducted by three independent
arbitrators, none of whom shall have any competitive interests with Purchaser or
Seller. Purchaser and Seller shall each select one arbitrator. The two
arbitrators so selected shall select a third arbitrator.
(b) Discovery. In any arbitration under this Section 10.4, each
Party shall be limited to calling a total of three witnesses both for purposes
of deposition and the arbitration hearing. Subject to the foregoing limitation
on the number of witnesses, the arbitrator or arbitrators, as the case may be,
shall set a limited time period and establish procedures designed to reduce the
cost and time for discovery while allowing the parties an opportunity, adequate
in the sole judgment of the arbitrator or majority of the three arbitrators, as
the case may be, to discover relevant information from the opposing parties
about the subject matter of the dispute. The arbitrator, or a majority of the
three arbitrators, as the case may be, shall rule upon motions to compel or
limit discovery and shall have the authority to impose sanctions for discovery
abuses, including attorneys153 fees and costs, to the same extent as a competent
court of law or equity, should the arbitrators or a majority of the three
arbitrators, as the case may be, determine that discovery was sought without
substantial justification or that discovery was refused or objected to without
substantial justification.
(c) Decision. The decision of the arbitrator or a majority of the
three arbitrators, as the case may be, as to the validity and amount of any
claim in such Officer153s Certificate shall be final, binding, and conclusive upon
the parties to this Agreement. Such decision shall be written and shall be
supported by written findings of fact and conclusions which shall set forth the
award, judgment, decree or order awarded by the arbitrator(s). Within 30 days of
a decision of the arbitrator(s) requiring payment by one party to another, such
party shall make the payment to such other party, including any distributions
out of the Escrow Fund, as applicable.
(d) Other Relief. The parties to the arbitration may apply to a court
of competent jurisdiction for a temporary restraining order, preliminary
injunction or other interim or conservatory relief, as necessary, without breach
of this arbitration provision and without abridgement of the powers of the
arbitrator(s).
(e) Costs and Expenses. The Parties agree that each Party shall pay
its own costs and expenses (including counsel fees) of any such arbitration, and
each Party waives its right to seek an order compelling the other Party to pay
its portion of its costs and expenses (including counsel fees) for any
arbitration.
10.5 Assignment
This Agreement shall be binding upon and inure to the benefit of the Parties
named herein and their respective successors and permitted assigns. Purchaser
may assign all of its assets, licenses and other rights acquired hereunder in
their entirety or in part after the Closing. This Agreement may not be assigned
by Seller.
10.6 No Third-Party Beneficiaries
This Agreement shall not confer any rights or remedies upon any Person other
than the Parties hereto, and their respective successors and permitted assigns.
10.7 WAIVER OF JURY TRIAL
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY AND ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS
OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
HEREOF.
10.8 Severability
If, for any reason, a court of competent jurisdiction finds any provision of
this Agreement, or portion thereof, to be invalid or unenforceable, such
provision of this Agreement will be enforced to the maximum extent permissible
so as to effect the intent of the Parties, and the remainder of this Agreement
will continue in full force and effect. The Parties agree to negotiate in good
faith an enforceable substitute provision for any unenforceable provision that
most nearly achieves the intent and economic effect of the unenforceable
provision. Notwithstanding the foregoing, if a court of competent jurisdiction
determines that any restriction on any license granted herein is invalid or
unenforceable, then the license grants to which such restriction relates shall
terminate automatically.
10.9 Entire Agreement
This Agreement (including the Schedules and Exhibits hereto) sets forth the
entire understanding of the Parties hereto relating to the subject matter hereof
and supersedes all prior agreements and understandings between the Parties
hereto relating to the subject matter hereof, and is not intended to confer upon
any other Person any rights or remedies hereunder.
10.10 Counterparts
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the Parties and delivered
to the other Party, it being understood that all Parties need not sign the same
counterpart. Until and unless each Party has received a counterpart hereof
signed by the other Party hereto, this Agreement shall have no effect and no
Party shall have any right or obligation hereunder (whether by virtue of any
other oral or written agreement or other communication). Any signature page
delivered electronically or by facsimile (including transmission by Portable
Document Format or other fixed image form) shall be binding to the same extent
as an original signature page.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, Purchaser, by its duly authorized representative, and
Seller have executed this Agreement as of the date first written above.
PURCHASER:
SDC SOFTWARE, INC.
By:
Name:
Title:
SELLER:
Nicholas Skrepetos
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
SPOUSAL CONSENT
I, Kellie Skrepetos, spouse of Nicholas Skrepetos, have read and approve of
the foregoing Asset Purchase Agreement, dated as of June 15, 2011, together with
all exhibits, schedules and attachments thereto (collectively, the
“Agreement“), by and between my spouse and SDC Software, Inc.,
a Delaware corporation (“Purchaser“). In consideration of the
rights and benefits accruing to Nicholas Skrepetos pursuant to the Agreement, I
hereby appoint Nicholas Skrepetos as my attorney-in-fact in respect to the
exercise or waiver of any rights under the Agreement, and agree to be bound by
the provisions of the Agreement insofar as I may have any rights in said
Agreement, the Business (as defined in the Agreement) or any of the Transferred
Assets (as defined in the Agreement) under any community property or similar
laws relating to marital property.
Dated: June 15, 2011.
“Spouse of Seller”
Kellie Skrepetos