Asset Purchase Agreement - Cray Research Inc. and ARIS Corp.
EXECUTION COPY ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of August 5, 1996 (as hereafter amended,
modified or supplemented, this "Agreement"), between CRAY RESEARCH, INC., a
corporation organized and existing under the laws of the State of Delaware
("Seller"), and ARIS CORPORATION, a corporation organized and existing under the
laws of the State of Washington ("Purchaser");
WITNESSETH
WHEREAS, Seller, though its Cray Solutions division ("Cray Solutions"), is
engaged in the business of providing certain software consulting services in the
United States; and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, all right, title and interest of Seller in and to certain
of the property and assets used in connection with the business of Cray
Solutions, and in connection therewith Purchaser is willing to assume certain
liabilities of Seller relating thereto, all upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing, the payment by Purchaser
to Seller of the amount of $10.00 and the mutual agreements and covenants
hereinafter set forth and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
SECTION 1. Assets to Be Sold. (a) On the terms and subject to the
conditions of this Agreement, Seller shall, on the Closing Date, sell, assign,
transfer, convey and deliver to Purchaser or cause to be sold, assigned,
transferred, conveyed and delivered to Purchaser, and Purchaser shall acquire
from Seller, on the Closing Date, all of Seller's right, title and interest in
and to the following assets, in each case owned or leased by Seller and used
primarily or, in the case of clause (iv) of this Section 1, solely in connection
with the business of Cray Solutions at the Closing Date (collectively, the
"Assets"):
(i) the office lease agreement, dated October 20, 1993, between
Metropolitan Life Insurance Company, as landlord, and Cray Research, Inc. (as
successor in interest of Savant Systems, Inc.), as tenant (the "Dallas Lease");
(ii) all furniture, fixtures, equipment, machinery and other tangible
personal property at 5430 LBJ Freeway, Suite 950, Dallas, Texas 75240 (the
"Dallas Facility");
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(iii) all books of account, general, financial, tax and personnel
records, invoices, supplier lists, correspondence and other documents, records
and files and all computer software and programs and any rights thereto;
(iv) all intellectual property, goodwill, trade secrets and other
intangible personal property;
(v) all sales and promotional literature, customer lists and other
sales-related materials; and
(vi) all rights under all contracts, subcontracts, licenses,
sublicenses, agreements, leases, purchase orders, customer orders, commitments
and similar binding arrangements of Seller, including, without limitation, all
non-compete agreements between Seller and any Transferred Employee.
(b) Notwithstanding the foregoing, the Assets shall exclude the following
assets owned or leased by Seller (the "excluded Assets"):
(i) all cash, cash equivalents and bank accounts;
(ii) all accounts receivable, notes and other amounts receivable from
third parties (including, without limitation, customers and employees) arising
from the conduct of the business of Cray Solutions on or before the Closing
Date, including, without limitation, all amounts receivable under invoices for
services performed by Cray Solutions on or before July 31, 1996;
(iii) all claims, causes of action, chases in action, rights of
recovery and rights of set-off of any kind (including rights to insurance
proceeds) pertaining to, arising out of or inuring to the benefit of the
business of Cray Solutions on or before the Closing Date;
(iv) all rights of Seller in and to the names "Cray" and "Cray
Solutions" ;
(v) all rights of Seller under the consulting services agreement,
dated March 1, 1995 (the "TIG Agreement"), between TIG Insurance Company and
Cray Research, Inc.; and
(vi) all rights of Seller under this Agreement and any agreements
ancillary hereto.
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SECTION 2. Assumption and Exclusion of Liabilities. (a) Purchaser shall, on
the Closing Date, assume and shall pay, perform and discharge when due all
liabilities of Seller as at the Closing Date arising out of or relating to (i)
the Assets, (ii) to the extent arising on or after the Closing Date, the
Transferred Employees (as defined below), and (iii) severance benefits under the
terms of the 1995 Cray Severance Plan claimed by any Employee upon the
termination of any such Employee on or after the Closing Date (the "Assumed
Liabilities"), including, without limitation, (A) liabilities under all
contacts, agreements and purchase orders listed on Schedule I attached hereto,
(B) all accounts payable arising after the Closing.
(b) Seller shall retain, and shall be responsible for paying, performing
and discharging when due, and Purchaser shall not assume or have any
responsibility for, all liabilities of Seller as of the Closing Date other than
the Assumed Liabilities (the "Excluded Liabilities"), including, without
limitation, (i) all liabilities relating to or arising out of the Excluded
Assets and (ii) liabilities for vacation time, sick leave, personal leave and
other compensated time off accrued by the Employees as of the Closing Date.
SECTION 3. Closing. Subject to the terms and conditions of this Agreement,
the sale and purchase of the Assets and the assumption of the Assumed
Liabilities contemplated by this Agreement shall take place at a closing (the
"Closing") to be held at the offices of Shearman & Sterling, 555 California
Street, San Francisco, California (telephone: (415) 616-1100; telecopier: (415)
616-1199), August 5, 1996 or at such other place or at such other time or on
such other date as Seller and Purchaser may mutually agree upon in writing (the
day on which the Closing takes place being the "Closing Date").
SECTION 4. Conditions to Closing. (a) The obligation of Purchaser to
consummate the transactions contemplated by this Agreement shall be subject to
the receipt by Seller, at or prior to the Closing, of TIG's written agreement
(the "Termination Agreement") to terminate the TIG Agreement and release Seller
of any liability thereunder, in the form attached hereto as Exhibit D. After the
Closing, Purchaser shall perform, at no cost to TIG (other than documented
expenses), such services as TIG may reasonably request in an aggregate amount of
$250,000 of consulting services. As consideration of performing such services,
(i) Seller shall pay to Purchaser the sum of $175,000 within 30 days of the
Closing Date; provided that Purchaser and TIG shall have entered into a contract
with respect to the full amount of the $250,000 of services to be provided by
Purchaser to TIG as referenced above; and (ii) Seller shall pay to Purchaser the
sum of $135,000 in accordance with the payment schedule set forth on Schedule II
hereto, which payments Seller shall make within 30 days of receipt of
Purchaser's invoice.
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(iii) The obligations of Seller and Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to (iv) the receipt by Seller,
at or prior to the Closing, of the landlord's written consent to the assignment
of the Dallas Lease to Purchaser, and (v) the delivery by Seller and Purchaser
of joint termination notices to the customers under each of the customer
contracts listed on Schedule I hereto.
SECTION 5. Closing Deliveries. At the Closing, (a) Seller shall deliver or
cause to be delivered to Purchaser an executed bill of sale and executed
counterparts of an assignment and assumption agreement for the Dallas Lease and
an assignment and assumption agreement for the other Assets; and (b) Purchaser
shall deliver to Seller executed counterparts of the assignment and assumption
agreement for the Dallas Lease and the assignment and assumption agreement for
the other Assets. The foregoing documents shall be in the form attached hereto
as Exhibits A, B and C.
SECTION 6. Consents. Seller shall use reasonable efforts to obtain any
required consents to assignment of all contracts, licenses, sublicenses,
agreements and leases included among the Assets, and shall use its best efforts
to obtain the consent of the landlord to assignment of the Dallas Lease;
provided, however, that Seller shall not be required to pay any amount to any
person to obtain any such consents. Purchaser shall use its best effort in
assisting and cooperating with Seller to obtain the consent of the landlord to
the assignment of the Dallas Lease.
SECTION 7. Use of Intellectual Property. Cray will retain all rights to the
names "Cray" and "Cray Solutions," and Purchaser shall not use the name "Cray,"
either alone or in combination with any other names, as a trademark, service
mark, trade name or corporate name or for any other purpose whatsoever;
provided, however, that Purchaser may, for a period not to exceed three months
following the Closing Date, refer to its division carrying on business with the
Assets acquired pursuant hereto as "formerly known as Cray Solutions. "
SECTION 8. Employee Matters. (a) As of the Closing Date, Purchaser shall
offer employment to each of the employees of Cray Solutions listed on Schedule
III hereto (each an "Employee," and each such Employee who accepts such offer a
"Transferred Employee"), with employment grade, credit for years of service,
base compensation and incentive bonuses not less than that set forth opposite
such Employees name on Schedule III.
(b) Purchaser shall provide each Transferred Employee whose employment
with Purchaser is terminated at any time on or within one year after the Closing
Date with severance benefits in an amount not less than the amount of severance
payable to such Transferred Employee under the terms of the 1995 Cray Severance
Plan, as amended April 24, 1996.
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SECTION 9. Indemnification. (a) Purchaser shall be indemnified and held
harmless by Seller for any and all liabilities, losses, damages, claims, costs
and expenses, interest, awards, judgments and penalties (including, without
limitation, reasonable attorneys' fees and expenses) actually suffered or
incurred by it (collectively "Losses") and arising out of, resulting from or
relating to (i) the Excluded Liabilities, (ii) the Excluded Assets, (iii) claims
by any Transferred Employee relating to facts and circumstances occurring before
the Closing Date, and (iv) claims by any customer under any customer contract
listed on Schedule I hereto relating to facts and circumstances occurring before
the Closing Date.
(b) Seller shall be indemnified and held harmless by Purchaser for any and
all Losses arising out of or resulting from (i) the Assumed Liabilities, (ii)
the Assets and (iii) claims by any Transferred Employee relating to facts and
circumstances occurring on or after the Closing Date.
(c) In no event shall Seller or Purchaser be liable for consequential
damages under this Agreement or any documents or instruments delivered by such
parties at the Closing.
SECTION 10. Representations and Warranties. (a) Seller and Purchaser each
hereby represents and warrants to the other that (i) it is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to enter into this Agreement and any agreements ancillary hereto, to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby; (ii) the execution and delivery of
this Agreement and any agreements ancillary hereto by it, the performance by it
of its obligations hereunder and thereunder and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized and
approved by all requisite action on its part; and (iii) this Agreement has been,
and upon their execution any agreements ancillary hereto will be, duly executed
and delivered by it, and (assuming due authorization, execution and delivery by
the other party) this Agreement constitutes, and upon their execution any
agreements ancillary hereto will constitute, legal, valid and binding
obligations of it enforceable against it in accordance with their respective
terms.
(b) Seller hereby represents and warrants to Purchaser that it has not
received from the landlord under the Dallas Lease prior to the Closing any
written notice of default under such lease which remains uncured as of the date
hereof.
(c) EXCEPT WITH RESPECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES
SPECIFICALLY SET FORTH HEREIN, SELLER MAKES NO, AND EXPRESSLY DISCLAIMS ANY,
REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, ORAL OR
WRITTEN, WHETHER OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR A
PARTICULAR
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PURPOSE OR QUALITY OF THE ASSETS, OR ANY PART THEREOF, OR AS TO THE CONDITION,
WORKMANSHIP OR VALUE THEREOF OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER
LATENT OR PATENT. IT IS UNDERSTOOD BY THE PARTIES THAT THE ASSETS ARE TO BE
CONVEYED HEREUNDER "AS-IS" AND "WHERE-IS" ON THE CLOSING DATE AND IN THEIR THEN
PRESENT CONDITION, AND THE PURCHASER SHALL RELY SOLELY UPON ITS OWN
INVESTIGATION AND EXAMINATION THEREOF.
SECTION 11. Prorations; Taxes. Except as expressly provided herein,
prorations will be made with regard to the amount of rents, real and personal
property taxes, telephone and other utilities relating to the Assets as of the
Closing Date, with Seller liable for such items to the extent relating to the
period prior to the Closing Date and Purchaser liable for such items to the
extent relating to the period on and after the Closing Date. Seller and
Purchaser shall each be liable for one-half of any sales, use, registration,
transfer or similar taxes, charges or fees incurred in connection with the
transactions contemplated by this Agreement.
SECTION 12. Confidentiality. The confidentiality agreement, dated July 15,
1996, between Seller and Purchaser shall remain in full force and effect, and
the terms and conditions of this Agreement shall be deemed to constitute, and
shall be treated as, confidential or proprietary information under such
confidentiality agreement.
SECTION 13. Public Announcements. Neither party hereto shall make, or cause
to be made, any press release or other public announcement with respect to this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party, and in any event, no such press release or other
public announcement shall disclose any of the terms or conditions of this
Agreement.
SECTION 14. Further Action. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable law,
and execute and deliver such documents and other papers, as may be required to
carry out the provisions of this Agreement and consummate and make effective the
transactions contemplated hereby.
SECTION 15. Expenses. All costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred.
SECTION 16. Headings. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning, construction or interpretation of this Agreement.
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SECTION 17. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 18. Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, representations, undertakings and
understandings, both written and oral, between Seller and Purchaser with respect
to the subject matter hereof.
SECTION 19. Assignment. This Agreement may not be assigned by operation of
law or otherwise without the express written consent of Seller and Purchaser
(which consent may be granted or withheld in the sole discretion of Seller and
Purchaser).
SECTION 20. No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other person, including, without limitation, any employee or former
employee of Seller, any legal or equitable right, benefit or remedy of any
nature whatsoever, including, without limitation, any rights of employment for
any specified period, under or by reason of this Agreement.
SECTION 21. Amendment. This Agreement may not be amended, modified or
supplemented except by an instrument in writing signed by, or on behalf of,
Seller and Purchaser.
SECTION 22. Arbitration. All disputes, differences, controversies or claims
between the parties hereto arising out of or relating to this Agreement or the
transactions contemplated hereby shall be finally settled under binding
arbitration in the city of San Francisco, California. Any such arbitration shall
be governed by the Commercial Arbitration Rules of the American Arbitration
Association.
SECTION 23. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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SECTION 24. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity, without the necessity of demonstrating the inadequacy
of money damages.
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IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement
to be executed by their respective officers "hereunto duly authorized as of the
date first written above.
CRAY RESEARCH, INC.
By: /s/ Robert H. Ewald
-----------------------------
Name: Robert H. Ewald
Title: President and Chief Operating Officer
c/o Silicon Graphics, Inc.
2011 North Shoreline Boulevard
Mountain View, California 94039-7311
Attention: Ed Malysz
Telephone: (415) 933-3013 Telecopy: (415) 933-0466
ARIS CORPORATION
By: /s/ Paul Song
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Name: Paul Song Title: President
6720 Fort Dent Way Suite 150
Seattle, Washington 98188-2555
Attention: Paul Song
Telephone: (206) 433-2081 Telecopy: (206) 433-1182
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