Asset Purchase Agreement - Unisys Corp. and Broadway & Seymour Inc.
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ASSET PURCHASE AGREEMENT
BETWEEN
UNISYS CORPORATION
AND
BROADWAY & SEYMOUR, INC.,
DATED AS OF
JULY 24, 1997
REGARDING THE VISUALIMPACT SOFTWARE BUSINESS
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TABLE OF CONTENTS
BACKGROUND STATEMENT.......................................................... 1
STATEMENT OF AGREEMENT........................................................ 1
ARTICLE 1..................................................................... 1
THE TRANSACTION............................................................... 1
1.1 Transfer of Assets........................................................ 1
1.2 Payment at Closing........................................................ 2
1.3 Assumption of Liabilities................................................. 3
1.4 Additional Consideration.................................................. 4
1.5 Termination of License.................................................... 7
1.6 The Closing............................................................... 8
1.7 Deliveries at Closing..................................................... 8
(a) Documents and Certificate........................................ 8
(b) Delivery......................................................... 8
(c) Additional Agreements............................................ 8
1.8 Allocation of Purchase Price.............................................. 8
1.9 Taxes and Prorations...................................................... 8
ARTICLE 2..................................................................... 9
REPRESENTATIONS AND WARRANTIES OF BSI......................................... 9
2.1 Organization and Standing of BSI.......................................... 9
2.2 Execution and Enforceability of Agreements................................ 9
2.3 Compliance with Laws...................................................... 9
2.4 Consents and Approvals.................................................... 9
2.5 Assets....................................................................10
2.6 Software and Proprietary Rights...........................................10
(a) Software, Diagnostics and Documentation..........................10
(b) Other Software...................................................10
(d) Proprietary Rights...............................................11
(e) No Infringement..................................................11
(f) Condition........................................................11
(g) Maintenance......................................................11
(h) Year 2000 Compliant..............................................12
(i) No Other Warranties..............................................12
2.7 Contracts.................................................................12
2.8 Taxes.....................................................................12
2.9 Litigation................................................................13
2.10 Labor and Employment Matters.............................................13
(a) Employment Agreements............................................13
(b) Collective Bargaining............................................13
(c) Plans............................................................14
(d) Compensation and Benefits........................................14
2.11 Absence of Changes or Events.............................................14
2.12 Commission...............................................................14
2.13 Financial Information....................................................14
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2.14 Full Disclosure..........................................................15
ARTICLE 3.....................................................................15
REPRESENTATIONS AND WARRANTIES OF BUYER.......................................15
3.1 Organization and Standing of Buyer........................................15
3.2 Execution and Enforceability of Agreements................................15
3.3 Consents and Approvals....................................................15
3.4 Commission................................................................15
3.5 Full Disclosure...........................................................15
ARTICLE 4.....................................................................16
COVENANTS.....................................................................16
4.1 Operation of Business Prior to Closing....................................16
4.2 Consummation of Agreement.................................................17
4.3 Publicity.................................................................17
4.4 Warranty Claims...........................................................17
4.5 Business Employees........................................................17
4.6 Agreement Not to Solicit Employees........................................18
4.7 Nonassignable Contracts...................................................18
4.8 Compliance with Bulk Sales Laws...........................................19
4.9 Additional Documents; Updated Schedules...................................19
4.10 Non-Solicitation.........................................................19
4.11 Books and Records........................................................19
(a) Access...........................................................19
(b) Destruction......................................................19
(c) Confidentiality..................................................20
4.12 Non-Competition..........................................................20
ARTICLE 5.....................................................................20
ACCESS TO INFORMATION; CONFIDENTIALITY........................................20
5.1 Access to Information.....................................................20
5.2 Confidentiality...........................................................20
ARTICLE 6.....................................................................20
CLOSING CONDITIONS............................................................20
6.1 Mutual Conditions.........................................................20
6.2 Conditions to the Obligations of BSI......................................21
6.3 Conditions to the Obligations of Buyer....................................22
ARTICLE 7.....................................................................23
TERMINATION...................................................................23
7.1 Termination...............................................................23
7.2 Procedure and Effect of Termination.......................................23
ARTICLE 8.....................................................................25
INDEMNIFICATION...............................................................25
8.1 Survival of Representations...............................................25
8.2 BSI's Agreement to Indemnify..............................................25
(a) Agreement to Indemnify...........................................25
(b) Limitations......................................................25
(c) Claims by Other Persons..........................................26
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8.3 Buyer's Agreement to Indemnify............................................26
(a) Agreement to Indemnify...........................................26
(b) Limitations......................................................27
(c) Claims by Other Persons..........................................27
ARTICLE 9.....................................................................28
GLOSSARY OF DEFINITIONS AND TERMS.............................................28
ARTICLE 10....................................................................32
MISCELLANEOUS PROVISIONS......................................................32
10.1 Expenses.................................................................32
10.2 Amendment and Modification...............................................32
10.3 Waiver of Compliance; Consents...........................................32
10.4 Notices..................................................................32
10.5 Binding Agreement; Assignment............................................33
10.6 No Rights in Third Parties...............................................33
10.7 Governing Law............................................................33
10.8 Counterparts.............................................................33
10.9 Interpretation...........................................................33
10.10 Entire Agreement........................................................33
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THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of July 24,
1997, is by and between Unisys Corporation, a Delaware corporation ("Buyer"),
and Broadway & Seymour, Inc., a Delaware corporation ("BSI").
BACKGROUND STATEMENT
BSI owns, develops, markets and maintains various versions and releases
of software products commonly referred to as "VisualImpact" and "Echo" (the
"Business"). BSI and Buyer entered into a Software License Agreement dated March
28, 1996 (the "1996 License Agreement") pursuant to which BSI licensed certain
versions of VisualImpact to Buyer.
Buyer now desires to purchase the VisualImpact and Echo software and
certain other assets relating to the Business from BSI and to assume certain
liabilities relating to the Business, subject to the terms and conditions set
forth in this Agreement. In connection with that purchase, the parties wish to
terminate the 1996 License Agreement and all of the rights and obligations of
the parties thereunder. This Agreement sets forth in more detail the agreements
and understandings of the parties.
STATEMENT OF AGREEMENT
In consideration of the mutual covenants herein contained, the parties
hereto agree as follows:
ARTICLE 1.
THE TRANSACTION
1.1 TRANSFER OF ASSETS. At the Closing, BSI shall sell, transfer,
assign and deliver to Buyer all of its right, title and interest in the
following rights and properties of BSI (specifically excluding any Excluded
Assets (as defined below), the "Assets"):
(a) all of BSI's right, title and interest in the Software,
Diagnostics and Documentation, including, without limitation,
BSI's Proprietary Rights relating thereto, including without
limitation any of the foregoing that are escrowed with Buyer
pursuant to the 1996 License Agreement;
(b) any Other Software that is owned by BSI and used exclusively
in the Business; and BSI's contract rights in any Other
Software that is licensed from other Persons and used
exclusively in the Business;
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(c) Business Records relating exclusively to the Business and not
to the retained business of BSI;
(d) Fixed Assets used exclusively in the Business, including BSI's
contract rights in any such Fixed Assets leased by BSI from
any other Person, which Fixed Assets are set forth on SCHEDULE
1.1 (d);
(e) those Contracts relating exclusively to the Business that are
listed on SCHEDULE 1.1A, and all rights of BSI of any nature
whatsoever arising out of any such Contract, including any
rights arising as a result of the breach thereof;
(f) any other assets used by BSI exclusively in the operation of
the Business;
(g) to the extent assignable, any Permits which are exclusively
related to or used in the Business; and
(h) those Marks and Trade Names relating exclusively to the
Business that are listed in SCHEDULE 1.1B and all of the
goodwill associated with the Business.
(i) all of BSI's right, title and interest in the Echo software,
including, without limitation, BSI's Proprietary Rights
relating thereto.
Buyer shall not be acquiring any asset, right or interest of BSI except as
expressly set forth above. Furthermore, notwithstanding any provision herein to
the contrary, BSI does not sell, and Buyer is not acquiring, the assets set
forth on SCHEDULE 1.1C (the "Excluded Assets"). At the Closing, BSI shall convey
the Assets to the Buyer, free and clear of any Encumbrance other than Permitted
Encumbrances. At the Closing, Buyer shall purchase the Assets from BSI, upon and
subject to the terms and conditions of this Agreement, and in reliance on the
warranties, representations and covenants of BSI contained in this Agreement.
The parties acknowledge that Buyer is not acquiring from BSI any of BSI's
accounts receivable relating to the Business ("Accounts Receivable"). From and
after the Closing Buyer shall act as BSI's agent for the collection of Accounts
Receivable, shall exercise its reasonable best efforts to collect such accounts
(consistent with the efforts used by Buyer to collect its own accounts
receivable) on behalf of and for the benefit of BSI and shall remit to BSI full
payment in respect of Accounts Receivable, to the extent received by Buyer,
within ten (10) business days after such receipt. In the event any Account
Receivable remains unpaid after six (6) months after the issuance of the invoice
therefor, upon written notice by BSI to Buyer such agency relationship may be
terminated (but only with respect to such Account Receivable, or such other
Accounts Receivable specified in any such notice).
1.2 PAYMENTS. (a) In consideration of the transfer to Buyer of the
Assets and the performance by BSI of its obligations under this Agreement, and
subject to the terms and conditions of this Agreement, Buyer shall pay to BSI at
the Closing, by certified check or wire transfer of funds, an amount (the
"Closing Payment") equal to the difference between $3,000,000
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and the Prepayment (as defined below). The "Prepayment" shall be determined by
deducting (a) any royalty amounts actually paid or payable by Buyer to BSI under
the 1996 License Agreement in respect of sales of VisualImpact occurring on or
after April 1, 1997 and prior to the Closing Date from (b) the sum of $1,975,000
and any prepaid royalties existing as of the Closing made by Buyer to BSI
pursuant to the 1996 License Agreement.
(b) The parties acknowledge that, in addition to the other prorations
contemplated by Section 1.9, the parties intend to allocate between Buyer and
BSI and prorate, as of the Closing, the prepaid expenses, work-in-process and
items of deferred revenue relating to the Business for the periods prior to the
Closing and following the Closing, respectively. Accordingly, at the Closing and
for each calendar month commencing with the month in which the Closing occurs
and continuing until reasonably determined by the parties to be no longer
necessary, Buyer and BSI will negotiate in good faith and cause all adjustments
to be made (and any cash collections and disbursements received or made by any
party hereto after the Closing for the benefit of the other to be remitted or
reimbursed) to give effect to such allocation and proration. In addition, the
parties agree to make an appropriate adjustment to the purchase price (in an
aggregate amount not to exceed $50,000) at Closing with respect to assets
purchased (including Fixed Assets and inventory, subsequent to June 30, 1997 by
BSI for the normal operation of the Business), which purchases have been
approved by Buyer in writing.
1.3 ASSUMPTION OF LIABILITIES. As of the Closing Date, Buyer shall
assume, and shall thereafter timely pay, discharge and perform, only the
following obligations and liabilities of BSI existing as of the Closing Date
(the "Assumed Liabilities"):
(a) BSI's obligations under those Contracts listed on SCHEDULE
1.1A, including both executory obligations and monetary
obligations accruing subsequent to Closing;
(b) all of BSI's liabilities arising from and after the Closing
related to the Fixed Assets;
(c) all accrued vacation, sick leave and similar obligations to
any employees of the Business who are offered and accept
employment by Buyer at or immediately following the Closing;
and
(d) other liabilities listed by type, contract, payee and amount
in SCHEDULE 1.3.
Except as expressly set forth in this SECTION 1.3, Buyer shall neither assume
nor become liable for the payment or performance of any other Liabilities of BSI
(the "Retained Liabilities"), including, without limitation, the following:
(i) accounts payable of BSI relating to the Business
arising prior to the Closing;
(ii) Liabilities of BSI concerning employee compensation
and benefits accrued on or prior to the Closing Date
under BSI's employee compensation and benefit Plans;
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(iii) Liabilities of BSI to the extent arising out of the
employment relationship between BSI and employees of
the Business prior to the Closing (except for the
accrued vacation and leave obligations set forth in
subsection 1.3(c) above), including, without
limitation, any Liabilities or claims based upon any
Law or contract;
(iv) Liabilities of BSI to the extent arising out of the
employment relationship between BSI and employees of
the Business who do not become employees of Buyer,
including, without limitation, Liabilities with
respect to contractual or legal obligations of BSI
regarding severance or termination pay or notice;
(v) Liabilities of BSI to the extent not exclusively
related to the Business;
(vi) Taxes, including any late payment penalties and
interest, with respect to the Business or its
employees arising on or prior to the Closing Date;
(vii) Except as specifically and expressly assumed above,
any Liabilities of BSI arising from or relating to
the ownership or operation of the Business prior to
the Closing.
1.4 ADDITIONAL CONSIDERATION. In further consideration of the transfer
to Buyer of the Assets and the performance by BSI of its obligations under this
Agreement, Buyer shall pay to BSI an additional amount (the "Earn-Out Payments")
calculated as follows:
(a) The Earn-Out Payments shall be payable with respect to that
period of time commencing with the Closing and ending on
December 31, 2000 (the "Earnout Period").
(b) Within forty-five days after the end of each calendar quarter
during the Earnout Period, Buyer shall pay to BSI an amount
equal to ten percent (10%) of Buyer's End User Revenue (as
defined below) during that calendar quarter. The maximum
additional consideration payable hereunder is Three Million
Five Hundred Thousand Dollars ($3,500,000). Buyer shall
continue to make quarterly payments, as provided above,
throughout the Earn-Out Period (including payment for the
final quarter of calendar year 2000), or until the Earn-Out
Payments total $3,500,000, whichever occurs first. The minimum
additional consideration payable hereunder is One Hundred
Fifty Thousand Dollars ($150,000) per calendar quarter (it
being understood that with respect to the quarter ending
September 30, 1997 (in the event the Closing occurs prior to
September 30, 1997), such minimum amount shall equal the pro
rata portion of $150,000 in respect of such calendar quarter,
which shall be paid by Buyer at Closing, and it being further
understood that on or before December 31, 1997 Buyer will pay
to BSI an amount equal to $150,000 for the quarter ended
December 31 1997 (which prepayments will be
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subject to adjustment in later quarters in the event the
amount due hereunder is less than the amount so prepaid)),
beginning with the calendar quarter ending September 30, 1997,
with an aggregate of Two Million Dollars ($2,000,000). If the
cumulative additional consideration paid to BSI under the
terms of this SECTION 1.4 is less than $150,000 for any
calendar quarter, Buyer shall pay the difference to BSI with
its payment due for such calendar quarter until the aggregate
amount of $2,000,000 has been paid by Buyer under this SECTION
1.4; provided, however, that in the event Buyer pays to BSI an
amount in excess of $150,000 in respect of any calendar
quarter, for any subsequent quarter(s) in which the amount due
hereunder is less than $150,000, the amount of any such excess
over $150,000 for such prior quarter will be credited to Buyer
for purposes of determining the payment due in respect of such
subsequent quarter(s); provided, further, that for any
calendar quarter in which (a) the amount due hereunder is less
than $150,000 (the difference being referred to as the
"Difference") and (b) Buyer pays to BSI an amount equal to
$150,000, for any subsequent quarter(s) in which End User
Revenue is greater than $150,000, then for such subsequent
quarter(s) Buyer shall be entitled to apply the amount of the
Difference (until the entire amount of such Difference shall
have been so applied) such that Buyer will be required to pay
to BSI only an amount equal to $150,000 for such subsequent
quarter(s).
(c) The term "End User Revenue" means those amounts payable to
Buyer and its Affiliates from the sale, licensing or
sublicensing of the Software, Diagnostics or Documentation and
all Derivative Works thereof to end users less the following
items: (i) trade, cash and quantity discounts actually allowed
and taken; (ii) excises, sales Taxes or other Taxes imposed
upon and paid with respect to such sales (excluding national,
state, local or foreign Taxes based on income); (iii) amounts
repaid or credited by reason of rejections, defects, recalls
or returns or because of retroactive price reductions; (iv)
rebates paid pursuant to government regulations; (v) product
and software maintenance charges or fees; and (vi) fees for
consulting or development services; provided, however, that
any deductions made pursuant to clauses (v) and (vi) shall be
based on allocations among fees for the sale, licensing and
sublicensing of Software, Diagnostics, Documentation and
Derivative Works, on the one hand, and fees or charges for
maintenance or professional services, on the other, as are
fair and reasonable under the circumstances and as are
commensurate with the relative values of the types of products
and services being delivered, and that the portion of the
proceeds allocated to the Software, Diagnostics and
Documentation is no less than the fair market value of a
"stand alone" transaction. For the purposes of this SECTION
1.4, "Software" shall include "Echo Software".
(d) End User Revenue shall be determined from the books and
records of Buyer, maintained in accordance with the relevant
generally accepted accounting principles, consistently
applied. In the event that the Software, Diagnostics or
Documentation or a Derivative Work thereof is sold as part of
a Bundled Product, the End User Revenue from the Bundled
Product shall be determined by
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multiplying the End User Revenue of the Bundled Product
(applying the "End User Revenue" definition above) by the
fraction A/A+B, where A is the average sale price of such
Software, Diagnostics or Documentation or Derivative Work
thereof when sold separately in finished form and B is the
average sale price of the other product(s) included in the
Bundled Product when sold separately in finished form. In the
event that such average sale price cannot be determined for
both such Software, Diagnostics or Documentation or Derivative
Work thereof and all other product(s) included in the Bundled
Product, End User Revenue shall be calculated by multiplying
the End User Revenue of the Bundled Product by the fraction
C/C+D, where C is the fair market value of such Software,
Diagnostics or Documentation or Derivative Work thereof and D
is the fair market value of all other product(s) included in
the Bundled Product. As used above, the term "Bundled Product"
means any computer software product comprised of Software,
Diagnostics or Documentation or a Derivative Work thereof and
any other computer software product, and the term "Derivative
Work" means any new version or release of the Software,
Diagnostics or Documentation (whether renamed or bundled with
other computer software products), including any Updates or
Upgrades thereof, but not including any Enhancements thereto
developed entirely by Buyer following the Closing which
include no more than an insubstantial portion of the Software,
Diagnostics or Documentation. In the event that a material
portion of the Software, Diagnostics or Documentation is
incorporated into another computer software product developed
by or on behalf of Buyer, the End User Revenue attributable to
such other computer software product shall be prorated based
upon the extent to which such source code or object code so
incorporated contributes to the functionality thereof, as
mutually determined by BSI and Buyer. Any particular amount
shall be deemed to be payable on the date that it is specified
as being payable in the contract with the end user. If there
is no such contract, or no such date in the relevant contract,
any particular amount shall be deemed to be payable on the
earlier of the date that the product or service is provided to
the end user or the date that such amount is invoiced to the
end user. Should Buyer agree with any end user to defer any
potential End User Revenue beyond the date on which such
revenue would customarily be due in the ordinary course of
business, such revenue shall be deemed to have been payable
when such amounts would have been due in the ordinary course
of business. Should Buyer or its Affiliates market the
Software, Diagnostics or Documentation to end users through
unaffiliated Persons, the term End User Revenue means the
amount paid by that Person to Buyer or its Affiliates for the
Software, Diagnostics or Documentation, whether such amount is
a fixed amount or a royalty or similar payment; provided,
however, that if other of Buyer's products are resold by such
Person, End User Revenue in respect of sales of the Software,
Diagnostics or Documentation shall be no less than the amount
that would be payable in a stand-alone transaction by such
Person.
(e) Should Buyer discontinue the Business during the Earnout
Period or otherwise cease the sale, licensing or sublicensing
of the Software, Diagnostics,
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Documentation or Derivative Works, BSI shall be deemed to be
entitled to receive, in a single lump-sum payment within 10
days after such discontinuation or cessation, an amount equal
to the minimum additional consideration payable under this
SECTION 1.4.
(f) Buyer shall provide BSI with a report, within forty-five days
after the end of each calendar quarter during the Earnout
Period, that describes in reasonable detail the calculation of
End User Revenue for that calendar quarter. BSI shall have the
right to conduct annual audits of Buyer's records to the
extent reasonably necessary to understand and verify Buyer's
calculation relative to the determination of End User Revenue.
Such audits shall be conducted by a nationally recognized
independent auditing firm approved by each of BSI and Buyer.
BSI shall notify Buyer in writing at least 30 days in advance
of such audit. Any such audit shall be performed during normal
working hours. The results of such audit shall be furnished to
BSI and Buyer in writing within 45 days following the
commencement thereof. In the event such audit reveals that the
amount of the Earn-Out Payments owed to BSI exceeds the amount
of the Earn-Out Payments made to BSI, Buyer shall pay to BSI
such difference. In the event such audit reveals that the
amount of the Earn-Out Payments made to BSI exceeds the amount
of the Earn-Out Payments owed to BSI, Buyer shall use such
difference as a credit against future Earn-Out Payments owed
to BSI (it being understood that once Buyer shall have paid to
BSI the full amount owed in respect of this Section 1.4 for
the Earn-Out Period, then any additional amounts having been
paid to BSI shall be refunded to Buyer). The costs of any such
audit shall be borne by BSI; provided, however, that in the
event that such audit reveals that the amount of the Earn-Out
Payments owed to BSI exceeds the amount of the Earn-Out
Payments made to BSI by 10% or more in respect of any calendar
quarter audited, such costs shall be borne by Buyer. As a
condition to the conduct of any such audit, the auditing firm
shall be required to execute and deliver to Buyer an
agreement, reasonably satisfactory to Buyer, pursuant to which
such auditing firm shall agree that all data and information
acquired by it or its employees from Buyer during such audit
shall be used by it solely to verify the accuracy of the
quarterly Earn-Out Payment reports submitted by Buyer and
otherwise shall not be disclosed to any other party, including
BSI, for any reason.
1.5 TERMINATION OF LICENSE. Upon the Closing, the 1996 License
Agreement shall terminate, without further action by either party, and
notwithstanding any provision to the contrary therein, no provision thereof
shall survive and neither party shall have any further rights or obligations
thereunder, including without limitation any further obligation of the Buyer to
pay royalties or fees thereunder and any further obligation of BSI to provide
maintenance or technical support; provided, however, that Articles 15 and 19 of
such License Agreement shall remain in effect with respect to any claims arising
with respect to any period of time prior to Closing (it being understood that
Article 15 shall survive as to confidential information exchanged by the parties
pursuant to the 1996 License Agreement prior to Closing). At the Closing, BSI
shall return to Buyer the development hardware described in Addendum G to the
1996 License
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Agreement (and any modification or replacement thereto provided by Buyer to BSI
pursuant to the 1996 License Agreement) and the Buyer's information and
documents provided to BSI pursuant to Article 3 of the 1996 License Agreement,
to the extent that any of the foregoing is still in BSI's possession.
1.6 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall occur on August 29, 1997, or on such other date
as may be agreed upon by the parties (the "Closing Date"). The Closing will take
place on the Closing Date at the offices of BSI, 128 South Tryon Street,
Charlotte, North Carolina 28202.
1.7 DELIVERIES AT CLOSING.
(a) Documents and Certificates. At the Closing, the parties shall
execute and deliver to each other the certificates and
opinions of counsel and documents required to be delivered
pursuant to ARTICLE 6 and all documents necessary to effect
the transactions contemplated in this Agreement, including
bills of sale, assignments, consents and assumption
agreements.
(b) Delivery. On the Closing Date, BSI shall physically deliver
the Assets to Buyer at the location at which each such Asset
is then located, or at such other place as may be agreed upon
by the parties. Title and risk-of-loss with respect to each
Asset shall pass at the location at which the Asset is
transferred. Simultaneously with such delivery, BSI shall take
any steps necessary to place Buyer in possession and operating
control of the Assets.
(c) Additional Agreements. At the Closing, the parties shall enter
into a Temporary Services and Facilities Use Agreement in form
and substance reasonably satisfactory to the parties (the
"Services Agreement") pursuant to which BSI will provide
certain transitional services and facilities to Buyer.
1.8 ALLOCATION OF PURCHASE PRICE. On or before the Closing Date BSI and
Buyer will agree upon an allocation of the Closing Payment and the Earn-Out
Payments among the Purchased Assets. BSI and Buyer agree to report the purchase
and sale of the Assets and the assumption of the Assumed Liabilities in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"), and on a consistent basis, and shall provide each other with
copies of any statements required thereunder prior to the filing of any federal
income tax return in which such statement must be included.
1.9 EXPENSES, TAXES AND PRORATIONS. Each party shall be responsible for
the payment of costs and expenses it has incurred and will incur in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby; provided, however, that the parties shall each
pay one-half of any sales, use, transfer, or similar Taxes arising from this
Agreement, the sale of the Assets and the transactions contemplated hereby. The
parties shall make appropriate payments at, or as soon as practical after
Closing, to reflect the following prorations: (a) ad valorem property taxes on
the tangible Assets for the year of Closing shall be
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prorated on a calendar year basis to the Closing Date; (b) all utilities, rent,
equipment lease payments and similar obligations covering a period of time that
includes the Closing Date shall be prorated as of the Closing Date; and (c) all
Contracts under which the Buyer will have executory obligations shall be
adjusted so that the percentage of payments actually received under each such
contract by each of Buyer and BSI matches the percentage of the obligation
thereunder performed by Buyer and BSI, respectively.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF BSI
BSI represents and warrants to Buyer as follows:
2.1 ORGANIZATION AND GOOD STANDING OF BSI. BSI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. BSI has full corporate power and authority and possesses all Permits
necessary to enable it to own, lease or otherwise hold its properties and Assets
and to carry on the Business as presently conducted.
2.2 EXECUTION AND ENFORCEABILITY OF AGREEMENTS. BSI has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by BSI of this Agreement and
the performance by BSI of its obligations hereunder have been duly and validly
authorized by all necessary corporate action on the part of BSI. This Agreement
has been duly executed and delivered by BSI and constitutes the legal, valid and
binding obligation of BSI, enforceable against it in accordance with its terms.
2.3 COMPLIANCE WITH LAWS. BSI is operating and has operated the
Business in material compliance with all applicable Laws of any Governmental
Authority and no facts or circumstances exist that, with or without the passing
of time or the giving of notice or both, might reasonably serve as the basis for
any claim that BSI is not operating the Business in material compliance with any
such Laws. BSI does not have any Permits that are used in connection with the
Business, other than those Permits that apply generally to BSI and its retained
business.
2.4 CONSENTS AND APPROVALS. Except as set forth in SCHEDULE 2.4, there
is no requirement applicable to BSI to make any filing with, or to obtain any
permit, authorization, consent or approval of, any Governmental Authority as a
condition to the lawful consummation of the transactions contemplated hereby.
Neither the execution, delivery or performance by BSI of this Agreement nor
BSI's compliance with the terms hereof will: (a) conflict with any provision of
the Certificate of Incorporation or bylaws of BSI; (b) except as set forth in
SCHEDULE 2.7, result in a default (or give rise to any right of termination,
cancellation or acceleration) or require any consent, approval or authorization
of, or notice to, any third party under any Contract, (c) violate any Law or (d)
result in any Encumbrances on any of the Assets or give any third party any
interests or rights therein.
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2.5 ASSETS. Except as set forth on SCHEDULE 2.5, the Assets constitute
all of the assets, rights and interests necessary to conduct the Business as
presently conducted by BSI. BSI has, and, following the Closing, Buyer will
have, the right to use all of the Assets in the manner that such Assets are
presently used in the Business. BSI owns and will convey to Buyer, good, valid
and marketable title to all of the Assets, free and clear of any Encumbrance
other than Permitted Encumbrances, except: (a) Fixed Assets leased from any
Person pursuant to a Contract listed on SCHEDULE 1.1A; (b) any Other Software
licensed from any Person pursuant to a Contract listed on SCHEDULE 2.6(b); and
(c) the Echo Software, which is subject to the License Agreement, dated as of
April, 1992, between BSI and Document Solutions, Inc. (the "DSI License").
2.6 SOFTWARE AND PROPRIETARY RIGHTS.
(a) Software, Diagnostics and Documentation. BSI owns all right,
title and interest in and to the Software, Diagnostics and
Documentation, has the right and authority to transfer the
Software, Diagnostics and Documentation to Purchaser and has,
and upon the Closing Buyer will have, the right to use the
Software, Diagnostics and Documentation in the manner that
such Software, Diagnostics and Documentation are presently
being used in the Business. Each Person who participated in
the development of any material portion of the Software,
Diagnostics or Documentation has either so participated as an
employee of BSI or has entered into a written agreement
assigning any intellectual property rights (including, without
limitation, any copyright) in such Software, Diagnostics or
Documentation to BSI. BSI has not entered into any Contract
that imposes any restriction or limitation upon BSI , or will
impose any restriction or limitation upon Buyer, relating to
the development, use or marketing of the Software, Diagnostics
or Documentation. Except as listed in SCHEDULE 1.1A, there are
no Contracts, written or, to BSI's Knowledge, oral, with
respect to the license or use of Source Code or Object Code
comprising the Software, Diagnostics or Documentation.
Subject to the third-party consent required under the DSI
License, BSI has the right and authority to transfer the Echo
Software to Buyer and has, and upon the Closing Buyer will
have, the right to use Echo Software in the manner that such
Echo Software is presently being used in the Business. Except
for the DSI License, BSI has not entered into any Contract
that imposes any restriction or limitation upon BSI, or that
will impose any restriction or limitation upon Buyer, relating
to the development, use or marketing of the Echo Software.
Except as listed in SCHEDULE 1.1A, there are no Contracts,
written or, to BSI's Knowledge, oral, with respect to the
license or use of Source Code or Object Code comprising the
Echo Software.
(b) Other Software. SCHEDULE 2.6(b) lists all Other Software that
BSI uses exclusively in the Business. With respect to each
such Other Software program, SCHEDULE 2.6(b) indicates whether
BSI owns the Other Software or licenses the Other Software
from another Person either (i) via a shrink-wrap license which
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accompanied such software, either in written or electronic
form, or (ii) pursuant to a license or sublicense Contract,
executed by BSI, which contract is listed in SCHEDULE 2.6(b).
Except as set forth in SCHEDULE 2.6(b), BSI has, and upon the
Closing Buyer will have, the right to use all such Other
Software in the manner that such Other Software is presently
being used in the Business.
(c) Proprietary Rights. SCHEDULE 2.6(c) lists each Mark and Trade
Name that is used by BSI to identify the Business or the
products marketed by the Business. There is no Patent that is
owned or licensed by BSI and used in or in connection with the
Business in any material respect. SCHEDULE 2.6(c) lists each
Copyright registration owned by BSI and used in connection
with the Business. BSI has not disclosed any Trade Secrets or
other confidential or proprietary information contained in or
relating to the Software, Diagnostics or Documentation to
other Persons who are not under an obligation of
confidentiality nor, to BSI's Knowledge, has any such Trade
Secret or other confidential or proprietary information been
misappropriated by any Person. To the Knowledge of BSI, no
university, hospital, Governmental Authority or other
organization has sponsored the research and development
conducted by BSI relating to any of the Software, Diagnostics
or Documentation or has any claim of right or ownership
therein or Encumbrance thereon.
(d) No Infringement. The Software, Diagnostics and Documentation
and the Echo Software, do not generally interfere with,
infringe upon or misappropriate any Proprietary Right of any
other Person and, to BSI's Knowledge, no Person is interfering
with, infringing upon or misappropriating any Proprietary
Right used by BSI in its conduct of the Business; provided,
however, that for purposes of the preceding sentence,
"Proprietary Rights" shall not include Patents; and provided,
further, that Buyer acknowledges that BSI has not conducted an
investigation or search, nor engaged any third party, to
conduct an investigation or search of Patents with regard to
Software, Diagnostics or Documentation or the Echo Software.
Without limiting the foregoing, BSI represents and warrants
that it has marketed the Software, Diagnostics and
Documentation since 1995 and has marketed the Echo Software
since 1991, throughout the United States and that it has
received no notice of, nor does it have knowledge of, any
infringement of or any claim of infringement of any
Proprietary Right.
(e) Condition. Except as set forth on SCHEDULE 2.6(e), to the
Knowledge of BSI, the Software and Diagnostics, and the Echo
Software perform in all material respects in accordance with
its respective specifications and documentation. To the
Knowledge of BSI, except as set forth in SCHEDULE 2.6(e), the
Software and Diagnostics and the Echo Software are
substantially free from material defects in programming and
operations.
(f) Maintenance. Except as set forth on SCHEDULE 2.6(f), BSI has,
and, upon the consummation of the Closing, Buyer will have, no
obligation to any Person to
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maintain, modify, improve or upgrade any of the Software,
Diagnostics or Documentation.
(g) Year 2000 Compliant. BSI warrants that the advent of year 2000
will not adversely affect the performance of the Software and
Diagnostics, or the Echo Software, with respect to date and
date dependent data.
(h) No Other Warranties. Except as expressly provided above, Buyer
is acquiring the Software, Other Software, Diagnostics and
Documentation, and the Echo Software on an "As Is" basis.
EXCEPT AS EXPRESSLY PROVIDED ABOVE, BSI DISCLAIMS ALL
WARRANTIES RELATING TO THE CAPABILITIES OR FUNCTIONING OF THE
SOFTWARE, THE ECHO SOFTWARE, OTHER SOFTWARE, DIAGNOSTICS OR
DOCUMENTATION, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
2.7 CONTRACTS. Each Contract included within the Assets is a legal,
valid, binding and enforceable obligation of BSI and the other party or parties
to such Contract. Neither BSI nor any other party to any such Contract has
committed a material uncured breach thereunder that would entitle the
nonbreaching party to terminate such Contract. To BSI's knowledge (based
exclusively on BSI's reliance upon representations of its employees), no offsets
or counterclaims have been asserted under any such Contract and BSI has not
waived any substantial rights thereunder. Except as set forth in SCHEDULE 2.7,
(i) BSI has the right to assign to Buyer each Contract included within the
Assets without the consent of any other Person, (ii) upon such assignment, Buyer
will have all of the rights of BSI under such Contract, and (iii) no such
Contract may be terminated by any other party thereto as a result of the
transactions contemplated by this Agreement. The Contracts included within the
Assets constitute each Contract currently in effect which is related exclusively
to the Business or necessary in connection with the continued ownership and
operation of the Business. To BSI's knowledge (based exclusively on BSI's
reliance upon representations of its employees), except as set forth on SCHEDULE
2.7, each of the Contracts included within the Assets is in written form. Prior
to the date hereof, BSI has delivered to Buyer a complete and correct copy of
each Contract included within the Assets.
2.8 TAXES. BSI has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other Person who has performed
services within the scope of the Business. There are no Encumbrances with
respect to Taxes (except for liens for taxes, assessments or other governmental
charges not yet delinquent) upon any of the Assets. No facts exist or have
existed that would constitute grounds for the imposition of any Encumbrance with
respect to Taxes upon any of the Assets or that would otherwise obligate Buyer
to pay any Taxes related to or arising out of BSI's conduct of the Business
prior to the Closing. No audits or other proceedings before a Governmental
Authority are presently pending with regard to any Taxes or Tax returns of BSI
related primarily to the Business or the Assets, and BSI has not received
written notice of any such pending audits or proceedings. There are no
outstanding requests,
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agreements, consents or waivers to extend the statutory period of limitations
applicable to the assessment of any Taxes or deficiencies against BSI related
primarily to the Business or the Assets. All Tax returns of BSI have been filed
on a timely basis, except for normal requests for extensions for time to file in
accordance with applicable regulatory guidelines.
2.9 LITIGATION. There are no lawsuits, claims, or legal, administrative
or arbitration proceedings or investigations pending or, to the Knowledge of
BSI, threatened by or against BSI and affecting the Business, the Assets or the
Assumed Liabilities. To BSI's Knowledge, there is no order, decree or injunction
of a Governmental Authority in effect that has had or that could reasonably be
expected to have an adverse effect in any material respect on the Business.
2.10 LABOR AND EMPLOYMENT MATTERS.
(a) Employment Agreements. SCHEDULE 2.10(a) lists the name of each
BSI employee who performs services exclusively within the
scope of the Business (the "Business Employees") and each
independent contractor who performs material services for BSI
within the scope of the Business (the "Business Independent
Contractors"), together with such Business Employee's or such
Business Independent Contractor's respective title or job
classification, current wage or salary and incentive
compensation, employment commencement date with BSI and amount
of vacation, sick or other or paid leave accrued but unpaid as
of the date hereof. The Business Employees and the Business
Independent Contractors include all of the employees of BSI or
other personnel necessary for the development, delivery and
maintenance of the Software, Diagnostics and Documentation and
Echo Software as currently developed, delivered and
maintained. BSI has delivered to Buyer complete and accurate
copies of each written employment, consulting and similar
agreement to which BSI is a party that applies to one or more
of the Business Employees or Business Independent Contractors,
all of which are listed on SCHEDULE 2.10(a). Except as
disclosed on SCHEDULE 2.10(a), BSI is not a party to or bound
by any written or oral agreement, or any employment practice
or policy constituting a contractual obligation, or any
consent decree, court order or statutory obligation: (i) for
the employment of any Business Employee or Business
Independent Contractor who is not terminable by BSI without
penalty upon thirty days notice or less; (ii) with any labor
union; or (iii) relating to the payment of any severance or
termination payment, bonus or death benefit to any Business
Employee.
(b) Collective Bargaining. BSI is not a party to any collective
bargaining agreement, and has not recognized or received a
demand for recognition of any collective bargaining
representative with respect thereto. During the past three
years there have been no actual or, to BSI's Knowledge,
threatened labor strikes, disputes or work stoppages or
slow-downs nor, to the Knowledge of BSI, are any such actions
threatened against BSI. No labor union or other representative
has been designated or selected as the representative of the
Business Employees in accordance with the National Labor
Relations Act or any other applicable Law
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and, to the Knowledge of BSI, no union organizing activity is
currently taking place with respect to the Business. To the
Knowledge of BSI, BSI has not engaged in, and has not received
written notice of any allegation of, any unfair labor practice
related to the Business.
(c) Plans. Prior to the Closing Date, BSI has not had any complete
or partial withdrawal from any "multiemployer plan" (as
defined in Section 3(37) or 4001(a)(3) of ERISA)
("Multiemployer Plan") that could result, directly or
indirectly, in any withdrawal liability under Subtitle E of
Title IV of ERISA. BSI does not participate in or contribute
to, and never has participated in or contributed to, any
Multiemployer Plan.
(d) Compensation and Benefits. Set forth on SCHEDULE 2.10(d) is a
list of BSI's current welfare, pension, compensation, bonus,
incentive, stock option or other employee benefit Plans and
policies currently in effect with respect to the Business
Employees. Except for the Assumed Liabilities, Buyer will have
no Liabilities for benefits, costs or expenses accrued on or
prior to the Closing Date under BSI's welfare, pension,
compensation, bonus, incentive, stock option or other employee
benefit Plans, policies or procedures or any written or oral
representations made by BSI promising or guaranteeing the
continuation of employee benefits (except as set forth in
SECTION 4.5 hereof).
2.11 ABSENCE OF CHANGES OR EVENTS. Except as set forth in SCHEDULE
2.11, since December 31, 1996, BSI has not: (a) granted or made any commitments
with respect to any increases in compensation to Business Employees, other than
in the ordinary course of business; (b) conducted the Business other than in the
ordinary course of business consistent with past practice; or (c) suffered any
undisclosed material adverse change in the Business, Assets, condition
(financial or otherwise) or results of operations of the Business. Except as set
forth in SCHEDULE 2.11, since December 31, 1996, there has not been (i) any
sale, lease, transfer, pledge, encumbrance or assignment of any of the Assets,
tangible or intangible, or any material damage, destruction or loss, whether or
not covered by insurance, to any of the Assets; (ii) any change in the insurance
customarily maintained by BSI for the Business and the Assets; (iii) any
material amendment or termination of any Contract related exclusively to the
Business (other than a Contract with Buyer) or (iii) any agreement or commitment
to do any of the foregoing.
2.12 COMMISSION. Neither BSI nor any Person on its behalf has made any
agreement or taken any action which may cause any Person to become entitled to a
commission as a result of the sale of the Assets pursuant to this Agreement.
2.13 FINANCIAL INFORMATION. Attached hereto as SCHEDULE 2.13 are the
unaudited statement of operations ("P&L") for the period ended June 30, 1997 and
the statement of net assets of the Business as of June 30, 1997 (the "Financial
Statements"). To the Knowledge of BSI, the Financial Statements fairly present,
in all material respects, the results of operations of the Business for the
period then ended and the Assets and Assumed Liabilities for the Business
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(among other assets and liabilities) as of the date thereof, subject to BSI's
normal accounting policies and practices and subject to normal year-end
adjustments and the absence of footnotes.
2.14 FULL DISCLOSURE. The warranties and representations of BSI set
forth in this Agreement do not contain any untrue statement of a material fact
or omit to state any material fact necessary to avoid such warranties and
representations being materially misleading.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to BSI as follows:
3.1 ORGANIZATION AND STANDING OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.2 EXECUTION AND ENFORCEABILITY OF AGREEMENTS. Buyer has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery by Buyer of this
Agreement and the performance by Buyer of its obligations hereunder have been
duly and validly authorized by all necessary corporate action on the part of
Buyer. This Agreement has been duly executed and delivered by Buyer and
constitutes the legal, valid and binding obligation of Buyer, enforceable
against it in accordance with its terms.
3.3 CONSENTS AND APPROVALS. There is no requirement applicable to Buyer
to make any filing with, or to obtain any permit, authorization, consent or
approval of, any Governmental Authority as a condition to the lawful
consummation of the transactions contemplated hereby. Neither the execution,
delivery or performance by Buyer of this Agreement nor Buyer's compliance with
the terms hereof will conflict with any provision of the Articles of
Incorporation or bylaws of Buyer or violate any Law.
3.4 COMMISSION. Neither Buyer nor any Person on its behalf has made any
agreement or taken any action which may cause any Person to become entitled to a
commission as a result of the purchase of the Assets pursuant to this Agreement.
3.5 FULL DISCLOSURE. The warranties and representations of the Buyer
set forth in this Agreement do not contain any untrue statement of a material
fact or omit to state any material fact necessary to avoid such warranties and
representations being materially misleading.
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ARTICLE 4.
COVENANTS
4.1 OPERATION OF BUSINESS PRIOR TO CLOSING. BSI shall continue
conducting the Business between the date hereof and the Closing in the ordinary
course in substantially the same manner as presently conducted and shall make
all reasonable efforts consistent with past practices to preserve the goodwill
of the Business, perform its obligations under Contracts related to the Business
in a timely fashion, comply with all applicable Laws and repair, keep and
maintain the Assets in good order and condition, normal wear and tear excepted.
BSI shall not do any of the following between the date hereof and the Closing,
without the prior written consent of Buyer:
(a) grant or agree to grant to any Business Employee any increase
in compensation (other than increases in the ordinary course
of business) or pay or agree to pay to any such person any
bonus, severance or termination payment;
(b) acquire or agree to acquire any assets that are material to
the Business, except supplies and materials acquired in the
ordinary course of business consistent with past practice and
except as approved in writing by Buyer;
(c) sell, lease, license or otherwise dispose of, or agree to
sell, lease, license or otherwise dispose of, any Assets that
are material to the Business, except for the license of
Software, Diagnostics and Documentation in the ordinary course
of business consistent with past practices;
(d) take, or agree in writing or otherwise to take, any action
that would make any of the representations or warranties of
BSI contained in this Agreement untrue or incorrect or would
result in any of the conditions set forth in this Agreement
not being satisfied;
(e) incur any Liability that would be an Assumed Liability, except
in the ordinary course of business consistent with past
practices;
(f) enter into, amend or terminate, or propose to enter into,
amend or terminate, any Contract related exclusively to the
Business, except in the ordinary course of business consistent
with past practices;
(g) waive any material right, forgive any material debt or release
any claim related primarily to the Business, except in the
ordinary course of business consistent with past practices;
(h) make any material change in the conduct of the Business; or
(i) agree, whether in writing or otherwise, to do any of the
foregoing.
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4.2 CONSUMMATION OF AGREEMENT. BSI and Buyer agree to use their
reasonable efforts to perform or fulfill all conditions and obligations to be
performed or fulfilled by them under this Agreement so that the transactions
contemplated hereby shall be consummated. Except for events that are the subject
of specific provisions of this Agreement, if any event should occur, either
within or outside the control of Buyer or BSI, that would materially delay or
prevent fulfillment of the conditions upon the obligations of either party
hereto to consummate the transactions contemplated by this Agreement, each party
will notify the other of any such event and the parties will use their
reasonable, diligent and good faith efforts to cure or minimize the same as
expeditiously as possible.
4.3 PUBLICITY. Each of BSI and Buyer agrees not to make any public
release or announcement concerning the transactions contemplated hereby without
the prior consent of the other party. The above notwithstanding, any party
hereto may publicly release or cause the release of such information as may be
required by Law but shall provide the other party to this Agreement with
reasonable advance notice of the timing and substance of any such release.
4.4 WARRANTY CLAIMS. If any Person has asserted, or asserts in the
future, a warranty or similar claim relating to services or products provided by
BSI in the ordinary course of the Business prior to the Closing, BSI may request
Buyer to perform on behalf of BSI those services within the scope of the
Business that BSI concludes, in its reasonable judgment, to be reasonably
required to remedy the claim. Upon receipt of any such request from BSI, and
upon execution and delivery by such Person and BSI of Buyer's then standard
Support Services Agreement, Buyer shall perform the requested services as soon
as reasonably possible, taking into account the other obligations of Buyer and
the availability of its employees. Upon its receipt of an invoice from Buyer,
BSI promptly shall pay and reimburse Buyer for its reasonable costs and expenses
in providing such services, including its reasonable labor costs.
4.5 BUSINESS EMPLOYEES.
(a) At the Closing, Buyer shall hire or offer to hire all of the
Business Employees with compensation and on terms and
conditions that are, in the aggregate, at least comparable to
the compensation and terms and conditions of employment of
such Business Employee immediately prior to the Closing as
disclosed in SECTION 2.10 hereof. Buyer agrees that, under any
Plan made available to the Business Employees by Buyer after
the Closing, each Business Employee will receive credit for
his or her years of service with BSI in determining
eligibility for vesting purposes. Buyer further agrees to
cover the Business Employees under a health plan that will
waive any preexisting condition. Each such offer to hire shall
be for employment at will, except that Buyer shall not
terminate any Business Employee other than for cause for a
period of sixty days subsequent to the Closing.
(b) In order to induce certain key employees of the Business to
accept Buyer's offer of employment, Buyer agrees to establish
a bonus pool of an amount of $50,000 or more, from which bonus
payments would be made to such employees on terms to be agreed
upon prior to Closing. BSI agrees to contribute twenty percent
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(20%) of the funds necessary to establish such pool, up to an
aggregate amount not to exceed $50,000 (but only to the extent
the proceeds of such pool are actually paid to such Business
Employees within 18 months following the Closing). Any such
contributions on the part of BSI shall be made through Buyer's
offsetting of Earn-Out Payments due pursuant to SECTION 1.4.
(c) Subject to approval of its Board of Directors, BSI shall
amend the Broadway & Seymour, Inc. 401(k) Profit Sharing Plan
(for the purposes of this subsection 4.5(c), the "Plan") to
provide that the Business Employees, upon termination of
their employment by BSI pursuant to this Agreement, shall
immediately vest in any unvested portion of the employer
matching contributions under the Plan.
4.6 AGREEMENT NOT TO SOLICIT EMPLOYEES. (a) Buyer acknowledges that
BSI's provision of temporary facilities and services to Buyer will provide Buyer
with an opportunity to observe and evaluate employees of BSI who are not
Business Employees. Buyer agrees that, commencing upon the execution of this
Agreement, (i) for period of two years subsequent to Closing, Buyer shall not
directly or indirectly solicit for hire any person who is then, or was within
the preceding six months, an employee of BSI other than a Business Employee,
which employee is one with whom representatives of the Buyer had more than
insubstantial contact at such temporary facilities or in connection with such
temporary services (a "non-Business Employee"), and (ii) for a period of one
year subsequent to Closing, Buyer shall not directly or indirectly hire any
non-Business Employee; provided, however, that such restriction shall not apply
to general public advertisements or postings of job vacancies. The obligations
of Buyer described above shall not apply to any person subsequent to the date
that such person has been terminated by BSI.
(b) BSI agrees that, commencing upon the consummation of the Closing,
without the prior written consent of the Buyer, (i) for a period of one year
subsequent to the Closing, BSI shall not directly or indirectly hire any
Business Employee who is offered and who accepts employment by Buyer at the
Closing pursuant to the terms hereof and (ii) for a period of two years
subsequent to the Closing, BSI shall not solicit for hire any Business Employee
or other employee of the Business who is then, or was within the preceding six
months, an employee of the Business; provided, however, that such restriction
shall not apply to general public advertisements or postings of job vacancies.
The obligations of BSI described above shall not apply to any person subsequent
to the date that such person has been terminated by Buyer.
4.7 NONASSIGNABLE CONTRACTS. Prior to the Closing, BSI shall use its
best efforts to obtain any consents that are required for the assignment to
Buyer of any Contracts included within the Assets. Buyer shall cooperate with
BSI and use its best efforts to assist BSI in obtaining such consents. In the
event that the parties are unable to obtain any such required consents prior to
Closing (and in the further event that Buyer agrees to proceed to Closing
without such consents), the parties shall cooperate fully and in good faith
subsequent to Closing to ensure that, to the maximum extent possible, Buyer
obtains the benefits of and assumes the burdens of all such Contracts to the
full extent contemplated by this Agreement. Without limitation, with respect to
all such Contracts: (a) the parties shall continue to use their best efforts to
obtain such consents; (b) Buyer shall act as a subcontractor of BSI and, in that
capacity, shall
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perform all of the obligations and assume all of the liabilities that Buyer
would have been required to perform and assume if the other parties to such
Contracts had consented to the assignment thereof; and (c) BSI will seek to
collect on behalf of Buyer all amounts that Buyer would have directly received
from the other parties to such Contracts if such parties had consented to the
assignment thereof and will promptly remit to Buyer any such amounts that are so
received by BSI.
4.8 COMPLIANCE WITH BULK SALES LAWS. Buyer hereby waives compliance by
BSI with the bulk sales law and any other similar laws in any applicable
jurisdiction in respect of the transactions contemplated by this Agreement.
Buyer's waiver of BSI's compliance with such procedures shall not be deemed to
be a waiver of Buyer's rights with respect to any lien asserted by any Person as
a result of BSI's failure to comply with such procedures.
4.9 ADDITIONAL DOCUMENTS; UPDATED SCHEDULES. Subject to the other terms
and conditions of this Agreement, at any time and from time to time, whether
before or after the Closing, each party shall execute and deliver to the other
all instruments and documents and take all other action that such other party
may reasonably request to consummate or to evidence the consummation of the
transactions contemplated by this Agreement. Without limiting the foregoing, BSI
shall furnish to Buyer at least five days prior to the Closing Date, updated
Schedules reflecting any changes to the information disclosed in the Schedules
hereto.
4.10 NON-SOLICITATION. Prior to the valid termination hereof, BSI shall
not, directly or indirectly, encourage, solicit, initiate, engage in or continue
any discussions or negotiations with or provide any information to any Person
other than Buyer concerning the acquisition of the Business or all or any
material Assets.
4.11 BOOKS AND RECORDS.
(a) Access. For a period of six years after the Closing, each
party shall provide the other party with reasonable access
during normal business hours to the books and records of the
Business (other than books and records protected by the
attorney-client privilege) including, but not limited to,
general books of account and books of original entry that
comprise such party's permanent accounting or Tax records and
books and records that such party is required to retain
pursuant to any statute, rule or regulation, to the extent
that they relate to the condition or operation of the Business
prior to the Closing and are requested by such party to
prepare its Tax returns, to respond to third party claims or
actions or for any other legitimate purpose specified in
writing. Each party shall have the right, at its own expense,
to make copies of any such books and records.
(b) Destruction. For a period of six years after the Closing,
neither party shall dispose of or destroy any books and
records of the Business to the extent that they relate to the
condition or operation of the Business without first offering
to turn over possession thereof to the other party by written
notice at least 30 calendar days prior to the proposed date of
disposition or destruction.
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(c) Confidentiality. Each party may take such action as it deems
reasonably appropriate to separate or redact information
unrelated to the Business from documents and other materials
requested and made available pursuant to this Section and to
condition access to materials that it deems confidential to
the execution and delivery of an agreement by the other party
not to disclose or misuse such information.
4.12 NON-COMPETITION. BSI agrees that, for a period of three
years following the Closing Date, without the prior written consent of Buyer, it
shall not compete with Buyer in the development, sale, licensing, maintenance or
distribution of check imaging, processing or archiving software or any other
business directly competitive with the Business as presently conducted.
Notwithstanding the foregoing, BSI shall not be prohibited from performing
systems integration services not primarily related to the check imaging,
processing or archiving business.
ARTICLE 5.
ACCESS TO INFORMATION; CONFIDENTIALITY
5.1 ACCESS TO INFORMATION. Between the date of this Agreement and the
Closing Date, BSI shall give Buyer and its authorized representatives reasonable
access, during normal business hours and upon reasonable notice, to the Business
Records of BSI that relate to the Business and the Business Employees and
Business Independent Contractors. Buyer shall conduct any such investigation in
such a manner as not to interfere unreasonably with the normal operations of
BSI. BSI shall furnish Buyer with such financial and operating data and other
information with respect to the operations of the Business as Buyer may from
time to time reasonably request.
5.2 CONFIDENTIALITY. As used in this section, the term "Confidential
Information" shall have the meaning set forth in the Confidentiality Agreement
dated April 15, 1997 between Buyer and BSI (the "Confidentiality Agreement").
Prior to the Closing, Buyer will hold all Confidential Information in confidence
in accordance with the terms of the Confidentiality Agreement. Should this
Agreement be validly terminated prior to Closing, Buyer promptly shall destroy
or return to BSI all written or electronic copies of Confidential Information,
and shall not make any further use thereof in accordance with the terms of the
Confidentiality Agreement.
ARTICLE 6.
CLOSING CONDITIONS
6.1 MUTUAL CONDITIONS. Neither party shall be obligated to proceed with
the Closing if, on the Closing Date, either BSI or Buyer is subject to any
order, decree or injunction of a court of competent jurisdiction that enjoins or
prohibits the consummation of this Agreement or any
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Governmental Authority has instituted a suit or proceeding that is then pending
and seeks to enjoin or prohibit the transactions contemplated hereby. Any party
who is subject to any such order, decree or injunction or the subject of any
such suit or proceeding shall take any steps within that party's control to
cause any such order, decree or injunction to be modified so as to permit the
Closing and to cause any such suit or proceeding to be dismissed.
6.2 CONDITIONS TO THE OBLIGATIONS OF BSI. The obligations of BSI to
effect the transactions contemplated hereby shall be further subject to the
fulfillment of the following conditions, any one or more of which may be waived
by BSI:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects
as of the Closing Date as though made as of such date
(provided that any representation or warranty already
qualified by materiality shall be required to be true and
correct). Buyer shall have performed and complied in all
material respects with all covenants and agreements contained
in this Agreement required to be performed and complied with
by it at or prior to the Closing. BSI shall have received a
certificate to the matters set forth in this SECTION 6.2(a)
signed on behalf of Buyer by an authorized officer of Buyer.
(b) BSI shall have received an opinion from counsel to Buyer (who
may be an attorney in the office of the General Counsel of
Buyer), dated the Closing Date, dealing with matters typical
for a transaction of this nature and in form and substance
reasonably acceptable to BSI.
(c) BSI shall have obtained any required consent to assignment
under any Contract that is material to the operation of the
Business.
(d) BSI shall have received from Buyer the following:
(i) Payment of the Closing Payment pursuant to SECTION
1.2.
(ii) An Assignment and Assumption Agreement (the
"Assumption Agreement") in a form mutually
satisfactory to each of BSI and the Buyer, pursuant
to which BSI will assign to Buyer the Contracts
included in the Assets and Buyer will assume the
Assumed Liabilities, duly executed by Buyer;
(iii) The Services Agreement, duly executed by Buyer;
(iv) A North Carolina resale certificate for the Software,
if required; and
(v) Any other agreements, certificates, consents,
approvals or documentary evidence required to be
delivered pursuant to Buyer's obligations hereunder.
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6.3 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligations of Buyer to
effect the transactions contemplated hereby shall be further subject to the
fulfillment of the following conditions, any one or more of which may be waived
by Buyer:
(a) All representations and warranties of BSI contained in this
Agreement shall be true and correct in all material respects
as of the Closing Date as though made as of such date
(provided that any representation or warranty already
qualified by materiality shall be required to be true and
correct). BSI shall have performed and complied in all
material respects with all covenants and agreements contained
in this Agreement required to be performed and complied with
by it at or prior to the Closing. Buyer shall have received a
certificate to the matters set forth in this SECTION 6.3(a)
signed by an authorized officer of BSI.
(b) Buyer shall have received an opinion from counsel to BSI (who
may be an attorney in the office of the General Counsel of
BSI), dated the Closing Date, dealing with matters typical for
a transaction of this nature and in form and substance
reasonably acceptable to Buyer.
(c) BSI shall have obtained any required consent from any third
party (including, without limitation, pursuant to any Contract
that is material to the operation of the Business).
(d) Buyer shall have received from BSI the following:
(i) The Assumption Agreement, duly executed by BSI;
(ii) A Bill of Sale in a form satisfactory to Buyer,
pursuant to which BSI will convey to Buyer certain of
the Assets, duly executed by BSI;
(iii) one or more Assignments of Trademark in a form
satisfactory to Buyer, pursuant to which BSI will
transfer and convey to Buyer the Marks and Trade
Names included in the Assets, in each case duly
executed by BSI;
(iv) one or more Assignments of Copyright in a form
satisfactory to Buyer, pursuant to which BSI will
transfer and convey to Buyer the Copyrights included
in the Assets, in each case duly executed by BSI;
(v) The Services Agreement, duly executed by BSI; and
(vi) Any other agreements, certificates, consents,
approvals or documentary evidence required to be
delivered pursuant to Buyer's obligations hereunder.
(e) Buyer shall have completed its due diligence investigation of
the Business, the Assets and the Assumed Liabilities, and
shall not have discovered any facts or
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circumstances relating to the Business, the Assets or the
Assumed Liabilities that, in its reasonable judgment and
discretion, would have an adverse impact on the Assets,
Assumed Liabilities or the properties, financial condition or
prospects of the Business involving an amount in excess of
$350,000 in the aggregate, or a material adverse effect on the
ability of either party to perform its obligations hereunder.
(f) The Business Employees set forth on SCHEDULE 6.3(f) shall have
accepted Buyer's offer of employment, contingent upon the
consummation of the Closing.
(g) BSI shall have amended the Broadway & Seymour, Inc. 401(k)
Profit Sharing Plan as provided in Section 4.5(c).
ARTICLE 7.
TERMINATION
7.1 TERMINATION. Notwithstanding anything to the contrary in this
Agreement, the obligations of the parties hereunder may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing
Date:
(a) by mutual written consent of BSI and Buyer;
(b) by either BSI or Buyer, if there shall be any law or
regulation that makes consummation of this Agreement illegal
or otherwise prohibited or if any judgment, injunction, order
or decree permanently enjoining Buyer or BSI from consummating
this Agreement is entered and such judgment, injunction, order
or decree shall become final and non-appealable;
(c) by either BSI or Buyer if the Closing has not occurred on or
prior to September 30, 1997; or
(d) By Buyer, in the event that Buyer determines that the
condition set forth in SECTION 6.3(f) cannot or will not be
satisfied prior to the Closing.
7.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to SECTION 7.1, the party terminating
this Agreement shall give prompt written notice thereof to the other party, and
the transactions contemplated hereby shall be abandoned, without further action
by any party; provided, that each party shall remain liable for any Buyer's
Damages or BSI's Damages as the case may be, resulting from any breach by it of
the terms of this Agreement. Each filing, application and other submission
relating to the transactions contemplated hereby shall, to the extent
practicable, be withdrawn from the Person to which it was made. Buyer shall
continue to be bound by its obligations of confidentiality set forth in the
Confidentiality Agreement subsequent to the termination of this Agreement.
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ARTICLE 8.
INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS. The representations and warranties
made by the parties in this Agreement, or in any certificate furnished by one
party to another party pursuant to this Agreement on or prior to Closing, shall
survive for a period of eighteen months following the Closing (provided,
however, that the representations contained in the final sentence of Section 2.5
and in Section 2.6(d) shall survive for a period of three (3) years following
the Closing and provided, further, that the representations contained in Section
2.8 shall survive following the Closing for the period of the statute of
limitations applicable to such matters). No warranty or representation shall be
deemed to be waived or otherwise diminished as a result of any due diligence
investigation by the party to whom the warranty or representation was made or as
a result of any actual or constructive knowledge by such party with respect to
any facts, circumstances or claims or by the actual or constructive knowledge of
such person that any warranty or representation is false at the time of Closing.
The obligation of indemnification in this ARTICLE 8 is the exclusive remedy with
respect to any breach of a warranty or representation within the scope of this
SECTION 8.1 and all claims made by virtue of such warranties and representations
must be made under, and subject to the limitations set forth in, this ARTICLE 8.
8.2 BSI'S AGREEMENT TO INDEMNIFY.
(a) Agreement to Indemnify. Subject to the limitations set forth
in this SECTION 8.2, BSI agrees to indemnify, defend and hold
harmless Buyer and its Affiliates from and against all
demands, claims, actions, losses, damages, liabilities, costs
and expenses (including, without limitation, settlement costs,
arbitration costs and any reasonable legal and other expenses
for investigating or defending any action or threatened
action) asserted against or incurred by Buyer or its
Affiliates arising out of or in connection with or resulting
from (i) a breach of any warranty or representation of BSI
contained in this Agreement or in any certificate furnished to
Buyer pursuant to this Agreement, (ii) a breach by BSI of any
of its agreements or covenants contained herein or in any
agreement executed pursuant hereto or in connection herewith
and (iii) any and all Retained Liabilities (collectively,
"Buyer's Damages").
(b) Limitations. BSI shall be obligated to indemnify Buyer only
for those Buyer's Damages as to which Buyer has given BSI
notice within the applicable survival period, as set forth in
SECTION 8.1 hereof. Buyer shall not be entitled to assert any
claim under SECTION 8.2(a)(i) until the cumulative amount of
Buyer's Damages exceeds Fifty Thousand Dollars ($50,000), at
which time Buyer may seek indemnification for all Buyer's
Damages (including such $50,000). The cumulative obligation of
BSI to Buyer for Buyer's Damages under SECTION 8.2(a)(i) shall
not exceed the amount equal to the sum of $3,000,000 and the
minimum amount owed in respect of the Earn-Out Payments due
pursuant to SECTION 1.4(b).
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(c) Claims by Other Persons. In the event Buyer has a claim for
Buyer's Damages resulting from the assertion of liability by
another Person, Buyer will promptly give BSI notice of any
such claim, and BSI may undertake the defense thereof by
counsel of its own choosing. Buyer may, by counsel,
participate in such proceedings, negotiations or defense, at
its own expense. Buyer shall furnish to BSI in reasonable
detail such information as Buyer may have with respect to such
claim, including all records and similar materials that are
reasonably required in the defense of such claim. In the event
that within ten (10) days after notice of any such claim, BSI
has not notified Buyer of its intention to defend the claim,
or in the event that BSI fails to pursue the defense of the
claim in a reasonable manner, Buyer will (upon further notice
to BSI) have the right to undertake the defense, compromise or
settlement of such claim at the reasonable expense of BSI. BSI
may elect to participate in such proceedings, negotiations or
defense at any time at its own expense. Buyer shall not settle
any such claim without the consent of BSI, which consent shall
not be unreasonably withheld. BSI will obtain the prior
written consent of Buyer before entering into any settlement
of any such claim, which approval will not be unreasonably
withheld, except that it will not be unreasonable to withhold
approval if, pursuant to or as a result of such settlement,
injunctive or other equitable relief would be imposed upon
Buyer or its Affiliates. In no event will BSI consent to the
entry of judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to Buyer and its Affiliates of a release
from liability in respect of such claim. Notwithstanding the
above, Buyer may elect by written notice, at any time in its
sole discretion, to control the defense or settlement of any
claim to the extent such claim seeks an order, injunction or
other equitable relief against Buyer or its Affiliates which,
if successful, in Buyer's sole judgment, could materially
interfere with the business, operations, assets, conditions or
prospects of Buyer or its Affiliates, provided that upon such
election Buyer shall be responsible for the subsequent costs
of defending such claim and BSI shall remain liable to Buyer
for any other Buyer's Damages as herein provided. The failure
by Buyer to furnish on a timely basis to BSI any notice
required to be furnished under this SECTION 8.2 shall not
relieve BSI from any liability that it may have to Buyer under
this SECTION 8.2 except to the extent that BSI's ability to
defend a claim is materially prejudiced by such failure.
8.3 BUYER'S AGREEMENT TO INDEMNIFY.
(a) Agreement to Indemnify. Subject to the limitations set forth
in this SECTION 8.3, Buyer hereby agrees to indemnify, defend
and hold harmless BSI and its Affiliates from and against all
demands, claims, actions, losses, damages, liabilities, costs
and expenses (including, without limitation, settlement costs,
arbitration costs and any reasonable legal and other expenses
for investigating or defending any action or threatened
action) asserted against or incurred by BSI and its Affiliates
arising out of or in connection with or resulting from (i) a
breach of any warranty or representation of Buyer contained in
this Agreement or in any certificate furnished
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to BSI pursuant to this Agreement, (ii) a breach by Buyer of
any of its agreements or covenants contained herein or in any
agreement executed pursuant hereto or in connection herewith
and (iii) any and all Assumed Liabilities. (collectively,
"BSI's Damages").
(b) Limitations. Buyer shall be obligated to indemnify BSI only
for those BSI's Damages as to which BSI has given Buyer notice
within eighteen months after the Closing Date. BSI shall not
be entitled to assert any claim under SECTION 8.3(a)(i) until
the Cumulative amount of BSI's Damages exceeds Fifty Thousand
Dollars ($50,000), at which time BSI may seek indemnification
for all BSI's Damages (including such $50,000). The cumulative
obligation of Buyer to BSI for BSI's Damages under SECTION
8.3(a)(i) shall not exceed the amount of the cash purchase
price paid by Buyer at Closing.
(c) Claims by Other Persons. In the event BSI has a claim for
BSI's Damages resulting from the assertion of liability by
another Person, BSI will promptly give Buyer notice of any
such claim, and Buyer may undertake the defense thereof by
counsel of its own choosing. BSI may, by counsel, participate
in such proceedings, negotiations or defense, at its own
expense. BSI shall furnish to Buyer in reasonable detail such
information as BSI may have with respect to such claim,
including all records and similar materials that are
reasonably required in the defense of such claim. In the event
that within ten (10) days after notice of any such claim,
Buyer fails to notify BSI of its intention to defend the
claim, or in the event that Buyer fails to pursue the defense
of the claim in a reasonable manner, BSI will (upon further
notice to Buyer) have the right to undertake the defense,
compromise or settlement of such claim at the reasonable
expense of Buyer. Buyer may elect to participate in such
proceedings, negotiations or defense at any time at its own
expense. BSI shall not settle any such claim without the
consent of Buyer, which consent shall not be unreasonably
withheld. Buyer will obtain the prior written consent of BSI
before entering into any settlement of any such claim, which
approval will not be unreasonably withheld, except that it
will not be unreasonable to withhold approval if, pursuant to
or as a result of such settlement, injunctive or other
equitable relief would be imposed upon BSI or its Affiliates.
In no event will Buyer consent to the entry of judgment or
enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to BSI and its Affiliates of a release from
liability in respect of such claim. Notwithstanding the above,
BSI may elect by written notice, at any time in its sole
discretion, to control the defense or settlement of any claim
to the extent such claim seeks an order, injunction or other
equitable relief against BSI or its Affiliates which, if
successful, in BSI's sole judgment, could materially interfere
with the business, operations, assets, conditions or prospects
of BSI or its Affiliates, provided that upon such election BSI
shall be responsible for the subsequent costs of defending
such claim and Buyer shall remain liable to BSI for any other
BSI's Damages as herein provided. The failure by BSI to
furnish on a timely basis to Buyer any notice required to be
furnished under this SECTION 8.2
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shall not relieve Buyer from any liability that it may have to
BSI under this SECTION 8.2 except to the extent that Buyer's
ability to defend a claim is materially prejudiced by such
failure.
ARTICLE 9.
GLOSSARY OF DEFINITIONS AND TERMS
In addition to the terms that may be defined elsewhere in this
Agreement, the following terms shall have the meanings indicated below when used
in this Agreement as defined terms:
"1996 LICENSE AGREEMENT" shall have the meaning assigned to such term
in the Background Statement of this Agreement.
"AFFILIATE" means, with respect to any Person, each of the Persons that
directly or indirectly, through one or more intermediaries, owns or controls, or
is controlled by or under common control with, such Person. For the purpose of
this Agreement "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership or voting securities, by contract or otherwise.
"BUSINESS RECORDS" means all files, records, documents, data, plans,
Contracts, proposals and other recorded knowledge of BSI, whether in written,
electronic, visual or other form.
"CLOSING" shall have the meaning assigned to such term in SECTION 1.6.
"CONTRACT" means any legally binding obligation or agreement to which
BSI is a party, whether or not reduced to writing, specifically including any
note, bond, mortgage, lease, license and other instrument.
"COPYRIGHT" means the legal right provided by the Copyright Act of
1976, as amended, to the expression contained in any work of authorship fixed in
any tangible medium of expression together with any similar rights arising in
any other jurisdiction as a result of statute or treaty.
"CORRECTIONS" means a change in the Software or Diagnostics to correct
errors or defects in the Software or Diagnostics or to make the Software conform
to BSI's then current Documentation.
"DIAGNOSTICS" means those diagnostic programs or associated software
that constitute a system of analysis and testing, in Object Code form of one or
more software programs, and whose primary function is to perform or assist in
performing diagnostic functions on all or any part of the Software, including
all Corrections, Updates, Upgrades, Improvements and Enhancements and
Translations to any portion thereof.
"DOCUMENTATION" means (a) those visually or machine readable materials
for use in connection with the Software and Diagnostics, including, but not
limited to, new documents, corrected documents
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and revisions to properly reflect changes made to the Software and Diagnostics;
and (b) those Source Code listings, comment statements, flow charts, maintenance
tools, test programs, program specifications and other similar documents and
materials related to the Software and Diagnostics, including, but not limited
to, new documents, corrected documents and revisions to properly reflect changes
made to the Software and Diagnostics.
"ECHO SOFTWARE" means object code and source code versions of all
releases of Echo, together with any corrections, updates, upgrades,
improvements, enhancements and translations to any portion thereof. The term
"Echo Software" also includes all written or electronic materials in BSI's
possession that explain the structure or use of the Echo Software or that were
used in the development of the Echo Software, including logic diagrams, flow
charts, procedural diagrams, error reports, manuals and training materials.
"ENCUMBRANCE" means any lien, security interest, claim, charge,
assessment, covenant, restriction, easement, encroachment or other title
exception or defect or other encumbrance of any nature whatsoever.
"ENHANCEMENT" means a new function or feature for any portion of the
Software or Diagnostics that provides a new capability that the previous
releases or versions of the Software or Diagnostics did not have and that may be
incorporated into the Software or Diagnostics by modification of the then
existing programs or by development of new programs.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed also to refer to any successor sections.
"FIXED ASSETS" means all equipment (including computer hardware and
data processing and telecommunications equipment), machinery, furniture and
furnishings, fixtures, tools, supplies, replacement parts and vehicles owned or
leased by BSI, but excluding any leasehold improvements.
"GOVERNMENTAL AUTHORITY" means any nation, province, state, city,
county or other political subdivision thereof, and any court, agency, natural
person or other entity exercising executive, judicial, legislative, regulatory
or administrative functions of or pertaining to government.
"IMPROVEMENT" means an addition to any portion of the Software or
Diagnostics that is intended to or that does improve the performance of the
Software or Diagnostics or any portion thereof or that is a replacement for any
such portion.
"INVENTORY" means all inventories of goods, materials and supplies of
BSI within the scope of the Business that are used or consumed in providing
products and services, or are held for sale or license to customers, in the
ordinary course of the Business.
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"KNOWLEDGE" means, with respect to any particular fact, actual or
constructive knowledge that the fact is true or actual or constructive knowledge
of facts and circumstances that would lead a reasonable person to believe the
fact to be true. A party shall be deemed to have constructive knowledge of those
facts and circumstances relating to any particular matter that would have been
learned through reasonable inquiry and investigation by those employees of that
party with responsibility for the matter.
"LAWS" mean and includes statutes, laws, ordinances, rules, orders and
regulations.
"LIABILITIES" means all liabilities or obligations of any nature
whatsoever, whether accrued or unaccrued, known or unknown, fixed or contingent,
specifically including any liability or obligation resulting from or relating to
any breach of contract, breach of warranty, tort, infringement, or violation of
law.
"MARK" means any word, name, symbol or device used by a Person to
identify its goods or services, whether or not registered, and any right that
may exist to obtain a registration with respect thereto from any Governmental
Authority and any rights arising under any such application. As used in this
Agreement, the term "Mark" includes trademarks and service marks.
"OBJECT CODE" means the machine executable form of Software,
Diagnostics or Other Software which results from the compilation or assembly of
Source Code.
"OTHER SOFTWARE" means all types of computer software programs other
than the Software Diagnostics or Echo Software including internally used
software and software licensed by BSI for resale to end-users. The term "Other
Software" includes any Object Code and Source Code versions of operating
systems, application programs, software tools and firmware in BSI's possession.
The term "Other Software" also includes all written or electronic materials in
BSI's possession that explain the structure or use of Other Software or that
were used in the development of Other Software, including logic diagrams, flow
charts, procedural diagrams, error reports, manuals and training materials.
"PATENT" means any patent granted by the U.S. Patent and Trademark
Office, or by the comparable agency of any other country, and any renewal
thereof, and any rights arising under any patent application filed with the U.S.
Patent and Trademark Office or the comparable agency of any other country and
any rights that may exist to file any such application.
"PERMITS" means all licenses, permits, authorizations, registrations,
certificates, franchises and approvals of any nature issued by any Governmental
Authority to BSI or otherwise obtained by BSI from any Governmental Authority.
"PERMITTED ENCUMBRANCES" means liens for Taxes not yet due and payable,
for current Taxes not in default, other statutory liens arising in the ordinary
course of business and under certain equipment leases listed in SCHEDULE 1.1A
hereto.
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"PERSON" means an individual, partnership, corporation, limited
liability company, trust, decedent's estate, joint venture, joint stock company,
association, unincorporated organization, Governmental Authority or other
entity.
"PLAN" means any employee pension, retirement, profit-sharing, stock
bonus, incentive, deferred compensation, stock option, employee stock ownership,
hospitalization, medical, dental, vacation, insurance, sick pay, disability,
severance or other plan, fund, program, policy, contract or arrangement, whether
arrived at through collective bargaining or otherwise, providing employee
benefits, including but not limited to any "employee benefit plan" as that term
is defined in Section 3(3) of ERISA, currently or expected to be maintained or
previously maintained at any time in the last five years by, sponsored in whole
or in part by, or contributed to by BSI, for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries,
whether created in writing, through an employee manual or similar document, or
orally.
"PROPRIETARY RIGHTS" means Copyrights, Marks, Trade Secrets, Trade
Names, Patents, together with any rights in and to trade secrets, know-how,
show-how, proprietary technical information, algorithms, designs, process, work
for hire, inventions, invention disclosures, drawings, blueprints, research in
progress and claims of infringement against third parties.
"SOFTWARE" means (a) Object Code and Source Code versions of all
Releases of VisualImpact, including without limitation VisualImpact Release 2.1
and the state of completion of releases 4.0 and 5.0, together with any
Corrections, Updates, Upgrades, Improvements, Enhancements and Translations to
any portion thereof.
"SOURCE CODE" means the symbolic programming languages employed to
develop the Software, Diagnostics and Other Software which when compiled and/or
assembled is transformed into an Object Code form of the Software, Diagnostics
and Other Software.
"TAXES" means all taxes, charges, fees, levies or other assessments
(whether federal, state, local or foreign), including, without limitation,
income, gross receipts, excise, property, estate, sales, use, value added,
transfer, license, payroll, franchise, ad valorem, withholding, Social Security
and unemployment taxes; and such term shall include any interest, penalties and
additions to such taxes, charges, fees, levies or other assessments.
"TRADE NAME" means any word, name or symbol used by a Person to
identify its business.
"TRADE SECRETS" means business or technical information of any Person
including, but not limited to, customer lists and know-how, that is not
generally known to other Persons who are not subject to an obligation of
nondisclosure and that derives actual or potential commercial value from not
being generally known to other Persons.
"TRANSLATIONS" means translations of the Software and Diagnostics into
foreign languages and localizations and nationalizations of the Software and
Diagnostics for foreign countries made by or for BSI.
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"UPDATE" means a release of the Software or Diagnostics subsequent to
the initial delivery to Buyer under the 1996 License Agreement in which BSI has
incorporated (a) accumulated Corrections, (b) Upgrades, (c) Improvements, or (d)
Enhancements, together with new or revised Documentation that properly describes
the updated Software or Diagnostics.
"UPGRADE" means a change made in the Software or Diagnostics to permit
the Software or Diagnostics to be used and properly operated with modifications
made to the operating system.
ARTICLE 10.
MISCELLANEOUS PROVISIONS
10.1 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, each party shall pay all costs and expenses incurred by such party
in connection with this Agreement and the transactions contemplated hereby.
10.2 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement of Buyer and BSI.
10.3 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided in
this Agreement, any failure of one party to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the other party only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, representation, warranty, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
10.4 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered by hand or a reputable
national over-night courier service or by facsimile transmission or three
business days after mailing when mailed by registered or certified mail (return
receipt requested), postage prepaid, to the parties in the manner provided
below:
(a) Any notice to Buyer shall be given to Buyer at the following
address:
Unisys Corporation
P.O. Box 500
Blue Bell, Pennsylvania 19424
Attn: Chief Financial Officer
Fax: (215) 986-6352
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with a copy to:
Unisys Corporation
P.O. Box 500
Blue Bell, Pennsylvania 19424
Attn: General Counsel
Fax: (215) 986-5803
(b) Any notice to BSI shall be given to BSI at the following
address:
128 South Tryon Street
Charlotte, North Carolina 28202
Fax No. (704) 344-3542
Attn: General Counsel
Any party may change the address to which notice is to be given by notice given
in the manner set forth above.
10.5 BINDING AGREEMENT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder
(including without limitation Buyer's obligations under SECTION 1.4) shall be
assigned by any party hereto without the prior written consent of the other
party.
10.6 NO RIGHTS IN THIRD PARTIES. This Agreement shall not grant any
rights or remedies to any Person that is not a party to this Agreement. No
Person is a third party beneficiary of this Agreement.
10.7 GOVERNING LAW. The execution, interpretation and performance of
this Agreement shall be governed by the internal laws and judicial decisions of
the State of New York.
10.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. The warranties, representations, covenants, rights and remedies
of the parties hereunder shall be construed as being cumulative.
10.10 ENTIRE AGREEMENT. This Agreement, including the Schedules hereto,
embodies the entire agreement and understanding of the parties with respect of
the subject matter of this Agreement. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the
transactions contemplated hereby.
33
<PAGE> 38
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
UNISYS CORPORATION
By: /s/ Lawrence C. Russell
-------------------------------------
Name: Lawrence C. Russell
Title: President, Information Services Group
BROADWAY & SEYMOUR, INC.
By: /s/ Alan C. Stanford
-------------------------------------
Name: Alan C. Stanford
Title: Chairman and Chief Executive Officer
34
<PAGE> 39
INDEX
1996 License Agreement.......................................................28
Affiliate....................................................................28
Business Records.............................................................28
Closing......................................................................28
Contract.....................................................................28
Copyright....................................................................28
Corrections..................................................................28
Diagnostics..................................................................28
Documentation................................................................28
Encumbrance..................................................................29
Enhancement..................................................................29
ERISA........................................................................29
Fixed Assets.................................................................29
Governmental Authority.......................................................29
Improvement..................................................................29
Inventory....................................................................29
Knowledge....................................................................30
Laws.........................................................................30
Liabilities..................................................................30
Mark.........................................................................30
Object Code..................................................................30
Patent.......................................................................30
Permits......................................................................30
Permitted Liens..............................................................30
Person.......................................................................31
Plan.........................................................................31
Proprietary Rights...........................................................31
Software.................................................................30, 31
Source Code..................................................................31
Taxes........................................................................31
Trade Name...................................................................31
Trade Secrets................................................................31
Translations.................................................................31
Update.......................................................................32
Upgrade......................................................................32
35