Asset Purchase Agreement - Ask Jeeves Inc. and Lumina Decision Systems Inc.
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ASSET PURCHASE AGREEMENT
between
ASK JEEVES , INC.
a California corporation; and
LUMINA DECISION SYSTEMS, INC.
a California corporation.
Dated as of April 16, 1999
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is entered into effective as of
April __, 1999 (the "Effective Date") between ASK JEEVES, INC., a California
corporation ("Ask Jeeves"), and LUMINA DECISION SYSTEMS, INC. a California
corporation ("Lumina"). Certain capitalized terms used in this Agreement are
defined in the License Agreement.
RECITALS
A. Lumina is engaged in the business of developing and marketing
business decision support software and related products.
B. Pursuant to the terms and conditions of this Agreement, Lumina wishes
to sell to Ask Jeeves, and Ask Jeeves desires to purchase from Lumina certain
assets related to the Personal Decision Expert ("PDE").
C. Ask Jeeves and Lumina are entering into, concurrently with the
execution of this Agreement, a License Agreement (the "License Agreement")
pursuant to which Lumina is granting to Ask Jeeves an exclusive license to the
Licensed Technology in the Ask Jeeves Field of Use, as defined in the License
Agreement.
D. As a condition of entering this Agreement and the License Agreement,
Ask Jeeves has requested that Lumina agree to certain restrictions in the
License Agreement regarding Lumina's development and use of the Licensed
Technology.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. SALE OF ASSETS; RELATED TRANSACTIONS.
1.1 PURCHASE AND SALE. Subject to the terms and conditions contained
herein, Ask Jeeves agrees to buy and Lumina agrees to sell those certain
tangible and intangible assets, contracts, rights, and properties, including
without limitation the PDE and related Intellectual Property Rights (as defined
below), all as more particularly described in Exhibit A to this Agreement
(collectively, the "Assets").
1.2 ASSIGNMENT OF CONTRACTS. To the best of each parties' knowledge,
there are no contracts directly related to the Assets (collectively, the
"Contracts"). Lumina agrees to assign all of its rights in such Contracts, if
any, to Ask Jeeves. Lumina shall give all such assistance to Ask Jeeves as Ask
Jeeves reasonably requests to enable Ask Jeeves to enjoy the benefit of such
Contracts. If consents to the transfer or assignment of such Contracts from
third parties are required or in Ask Jeeves' reasonable opinion desirable and
such consents have not already been obtained, Lumina will use its best efforts
to obtain such consents prior to the Closing Date.
1.3 COMPLETE TRANSFER. Lumina expressly agrees that the sale of the
Assets under this Agreement constitutes a complete transfer of all of its
rights, title and interest with respect to the Assets and that Lumina reserves
no rights to market or otherwise transfer the Assets. Lumina
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hereby assigns, waives, and/or sublicenses any and all Moral Rights (as defined
below) Lumina may have in or with respect to the Assets to the maximum extent
permitted under the laws of any relevant jurisdiction worldwide. For purposes of
this Section "Moral Rights" means any right to (i) divulge a copyrighted work to
the public; (ii) retract a copyrighted work from the public; (iii) claim
authorship of a copyrighted work; (iv) object to any distortion, mutilation or
other modification of a copyrighted work; or (v) any and all similar rights,
existing under the law of any jurisdiction in the world, or under any treaty.
Ask Jeeves shall have no obligation to Lumina to support, maintain, offer, or do
any other act relating to the Assets and may dispose of the Assets as Ask
Jeeves, in its sole discretion, decides. Notwithstanding the foregoing, Lumina
will retain all rights to the Licensed Technology (as defined in the License
Agreement) outside the Ask Jeeves Field of Use (as defined in the License
Agreement). Further, except as restricted by any noncompetition obligations set
forth in the License Agreement, Lumina shall retain the right to create
derivative works from the Licensed Technology (as defined in the License
Agreement).
1.3.1 NO ASSUMPTION OF LIABILITIES. This Agreement does not
transfer, Ask Jeeves does not assume, and Ask Jeeves expressly disclaims any and
all liabilities, costs, debts, claims and obligations of Lumina relating to the
Assets or otherwise. Ask Jeeves shall have no obligation with respect to any
obligations of Lumina arising prior to the Closing Date.
2. PAYMENT.
2.1 PURCHASE PRICE. The aggregate purchase price for the Assets shall be
eight hundred twelve thousand five hundred ($812,500) dollars and shall be paid
as set forth on Exhibit B subject to the successful completion of the closing as
set forth in Section 3.1.
2.2 TAXES. Lumina shall be responsible for any and all sales or other
transaction taxes, duties and other similar charges payable in connection with
the sale of the Assets or the transactions and payments contemplated hereby.
3. CLOSING.
3.1 CLOSING. On the Closing Date, (a) Ask Jeeves shall pay to Lumina,
the amount in cash and other consideration set forth in Exhibit B, and (b)
Lumina shall deliver the following to Ask Jeeves: (i) a bill of sale relating to
the Assets in a form reasonably acceptable to Ask Jeeves; (ii) a duly executed
assignment of the Contracts in a form reasonably acceptable to Ask Jeeves; and
(iii) a duly executed assignment of the Intellectual Property Rights (as defined
in Section 4.3.1) included in the Assets in a form reasonably acceptable to Ask
Jeeves.
3.2 TRANSFER OF ASSETS. On the Closing Date, Lumina shall deliver to Ask
Jeeves at Ask Jeeves' premises, or at such other place as the parties to this
Agreement may mutually agree, the Assets (including without limitation, all
source code thereto and programmers' notes, test scripts, build scripts and any
and all other documentation and information necessary and useful to
understanding and using the source code for the Assets, which shall be
transferred on CD-ROM).
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4. REPRESENTATIONS AND WARRANTIES OF LUMINA.
Except as disclosed or excepted in the Schedule of Exceptions (the
"Schedule"), which shall state the specific subsection of this Section 4 to
which each disclosure or exception is made, Lumina represents and warrants to
Ask Jeeves as set forth in this Section 4.
4.1 ORGANIZATION AND STANDING. Lumina is a corporation organized,
validly existing and in good standing under the laws of the State of California.
4.2 POWER AND AUTHORIZATION. Lumina has all requisite legal power and
authority to enter into and perform this Agreement in accordance with its terms.
The execution and delivery of this Agreement and the transactions contemplated
hereby have been validly and duly authorized by all necessary corporate action
on the part of Lumina and no further authorization or approval, whether from
directors or shareholders of Lumina, or governmental bodies or otherwise, is
necessary to enable Lumina to enter into and perform the same; and this
Agreement, when executed and delivered, shall constitute the legal and binding
obligation of Lumina, enforceable against Lumina in accordance with its terms.
4.3 TITLE TO ASSETS; INTELLECTUAL PROPERTY.
4.3.1 GOOD TITLE. Lumina has good and marketable title in and to
all of the Assets including any patents, patent applications, service marks,
trade names, trademarks, trademark applications, copyrights, copyright
applications, trade secrets, know-how, data or other proprietary or intellectual
property rights included in the Assets (collectively, "Intellectual Property
Rights") and such are not subject to any mortgage, pledge, lien, lease, claim,
encumbrance, charge, security interest, royalty obligations or other interest or
claim of any kind or nature whatsoever, and Lumina and does not license any
component thereof from a third party. There are no material agreements or
arrangements between Lumina and any third party which are reasonably likely to
have a material effect upon Lumina's title to and other rights respecting the
Assets. Lumina has the sole right to bring actions for infringement of any
Intellectual Property Rights included in the Assets.
4.3.2 EMPLOYEES. The Assets do not include any inventions of any
of Lumina's officers, employees or consultants made or owned prior to their
appointment by Lumina. All current or former employees and consultants have
assigned in writing all of their rights in the Intellectual Property Rights
related to the Assets to Lumina. No current or former employee or consultant of
Lumina owns or has claimed an interest in any Intellectual Property Rights
related to the Assets or, to the best of Lumina's knowledge, any other
Intellectual Property Rights directly or indirectly competitive with those
related to the Assets.
4.3.3 PROTECTION OF OWNERSHIP INTEREST. Lumina has taken and will
take all reasonable security measures to protect the secrecy, confidentiality
and value of all Intellectual Property Rights transferred in accordance with
this Agreement. Lumina has not taken any action or, to its knowledge, failed to
take an action that directly or indirectly caused the proprietary information
contained in the Assets to enter the public domain or in any way affected its
value or Lumina's absolute and unconditional ownership thereof. No source code
or object code of any
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Intellectual Property Rights is subject to escrow and such source code has not
been disclosed to any third party.
4.3.4 NO LIMITATIONS ON ASSETS. With respect to the transfer of
rights in and to the Assets under this Agreement, except as to the Contracts
assigned to Ask Jeeves under Section 1.2, Ask Jeeves shall be subject to no
limitations, obligations or restrictions with regard to the sale, license,
distribution or other transfer or exploitation of the Assets, whether in the
form transferred to Ask Jeeves or after modification. All rights to any tangible
or intangible property material (including, but not limited to, all Intellectual
Property Rights in the Assets) to the Assets and used in Lumina's business as
presently conducted or currently planned by Lumina, or as conducted by any
predecessor entity to Lumina or prior owner of any portion of the Assets, have
been validly transferred to Lumina free of any adverse claims by any such
predecessor entity, or any partner, limited partner, security holder or creditor
of any such predecessor entity, and no such property rights remain in any such
entity. Lumina is under no obligation to pay any other party any royalties or
other fixed or contingent amounts based upon the sale, license, distribution or
other use or exploitation of the Assets.
4.3.5 NO VIOLATION OF THIRD PARTY RIGHTS. The use of the Assets
and the Intellectual Property Rights in the Assets in the conduct of Lumina's
business have not and do not infringe or conflict with the rights of others
under any Intellectual Property Rights in any jurisdiction in the world.
4.3.6 NO INDEMNITY OBLIGATIONS. Lumina has not agreed to
indemnify any third party for or against any infringement of any Intellectual
Property Rights.
4.3.7 YEAR 2000. To Lumina's knowledge, the Assets and the
Intellectual Property Rights in the Assets include design, performance and
functionality so that Lumina does not reasonably expect that the Assets and the
Intellectual Property Rights in the Assets will experience invalid or incorrect
results or abnormal hardware or software operation related to calendar year
2000. To Lumina's knowledge, the Assets and the Intellectual Property Rights in
the Assets include calendar year 2000 date conversion and compatibility
capabilities, including, but not limited to, date data century recognition, same
century and multiple century formula and date value calculations, and user
interface date data values that reflect the century and accurately accept date
input and process, store and output date data and date-related data, including,
without limitation, calculating, comparing, sorting and sequencing such data and
calculating leap years before, during and after the calendar year 2000 A.D.
without manual intervention.
4.4 CONFLICTING AGREEMENTS. Neither the execution nor delivery by Lumina
of this Agreement nor compliance by Lumina with the terms and provisions hereof
will (a) conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of, the
bylaws or articles of incorporation of Lumina, any award of any arbitrator or
any other agreement, any regulation, law, judgment, order or the like to which
Lumina is subject or any Contract, or (b) result in the creation of any lien
upon all or any of the Assets. Lumina is not a party to, or otherwise subject to
any provision contained in, any instrument evidencing indebtedness, any
agreement relating thereto or any other contract or agreement which restricts or
otherwise limits the transfer of the Assets.
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4.5 CAPITALIZATION. The shareholders of Lumina listed on Part 4.5 of the
Schedule beneficially own the shares listed on Part 4.5, and will be as of the
Closing Date, the sole shareholders of Lumina (the "Shareholders"). Only the
Shareholders shall have the right to receive the Shares (as defined in Exhibit
B) upon the Company's distribution of the Shares (as defined in Exhibit B) after
the Closing Date.
4.6 LITIGATION. No action, suit, proceeding or investigation is pending
or threatened against Lumina: (a) which questions the validity of this Agreement
or the License Agreement or the right of Lumina to enter into this Agreement or
the License Agreement or seeks to prevent any of the transactions contemplated
under this Agreement or the License Agreement, (b) which is reasonably likely to
have a material adverse effect on the Assets, (c) which challenges the ownership
or use, in any respect, of the Assets, or (d) which challenges the rights of
Lumina under or the validity of any of the Intellectual Property Rights. There
is no judgment, decree, injunction, rule or order of any court, governmental
department, commission agency, instrumentality or arbitrator or other similar
ruling outstanding against Lumina relating to the Assets or this transaction. No
action, suit, proceeding or investigation is pending or threatened by Lumina
against any third party relating to the Assets.
4.7 GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS. Lumina is not in
violation of any laws, material governmental orders, rules or regulations,
whether federal, state or local, to which Lumina or the Assets are subject
except for any such violations which are not reasonably likely to have a
material adverse effect on Lumina. Lumina has prior to the Closing Date
delivered to Ask Jeeves a true and correct list of all licenses, franchises,
permits and other governmental authorizations held by Lumina that are material
in connection with Lumina's business related to the ownership and use of the
Assets.
4.8 BULK SALES LAWS. The Bulk Sales laws of no state are applicable to
the sale and transfer of the Assets.
4.9 MATERIAL CONTRACTS, COMMITMENTS, AND PRODUCT WARRANTIES. Lumina has
supplied Ask Jeeves true and correct copies of all of the Contracts. Except for
terminated agreements, each of the Contracts is valid, binding and in full force
and effect in all material respects and enforceable by Lumina, in accordance
with its terms. Lumina is not in default under any of the Contracts. No party to
a Contract has terminated or overtly threatened termination of any contractual
arrangement with Lumina directly related to the Assets. To the knowledge of
Lumina, no other party to any of the Contracts is in material default
thereunder. Lumina has supplied to Ask Jeeves copies of any and all written
warranties by Lumina granted with respect to the Assets.
4.10 MANUFACTURING AND TECHNOLOGY RIGHTS. Lumina has not granted rights
to manufacture, publish, produce, assemble, license or sell the Intellectual
Property Rights or any of its technology to any other person and is not bound by
any agreement which affects Lumina's exclusive right to manufacture, publish,
produce, assemble, license, distribute or sell the Intellectual Property Rights.
4.11 TAXES. There are no tax liens against the Assets and there is no
basis for any such lien.
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4.12 BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Lumina.
4.13 FULL DISCLOSURE. This Agreement, the Exhibits and Schedules hereto,
the License Agreement, and all other documents delivered by Lumina to Ask Jeeves
or their attorneys or agents in connection herewith or therewith or with the
transactions contemplated hereby or thereby, when taken as a whole, do not
contain any untrue statement of a material fact nor, to Lumina's knowledge, omit
to state a material fact necessary in order to make the statements contained
herein or therein not misleading.
5. REPRESENTATIONS AND WARRANTIES OF ASK JEEVES.
Ask Jeeves represents and warrants to Lumina as follows:
5.1 ORGANIZATION AND STANDING. Ask Jeeves is a corporation duly
organized, validly existing and in good standing under the law of California.
5.2 POWER; AUTHORIZATION. Ask Jeeves has all requisite legal power and
authority to enter into and perform this Agreement in accordance with its terms.
The execution and delivery of this Agreement and the transactions contemplated
hereby have been validly and duly authorized by all necessary corporate action
on the part of Ask Jeeves and no further authorization or approval, whether from
directors or shareholders of Ask Jeeves or governmental bodies or otherwise, is
necessary to enable Ask Jeeves to enter into and perform the same; and this
Agreement, when executed and delivered, shall constitute the legal and binding
obligation of Ask Jeeves, enforceable against Ask Jeeves in accordance with its
terms.
5.3 CAPITALIZATION. As of April 6, 1999, Ask Jeeve's authorized capital
stock consists of (a) Eighty Million (80,000,000) shares of Common Stock,
without par value, of which Twenty Three Million One Hundred Sixty Seven
Thousand Four Hundred Sixty Six (23,167,466) shares are issued and outstanding
and of which Eleven Million Nine Hundred Forty Six Thousand Seven Hundred Forty
Five (11,946,745) shares are reserved for issuance under Ask Jeeves' 1996 Equity
Incentive Plan and of which Seventy Eight Thousand (78,000) shares are reserved
for issuance pursuant to outstanding warrants, and (b) Twenty Million
(20,000,000) shares of Preferred Stock, without par value, of which Seven
Million Five Hundred Thousand (7,500,000) shares have been designated Series A
Preferred Stock, without par value, of which Seven Million Four Hundred Nineteen
Thousand Seven Hundred Sixty Nine (7,419,769) shares are issued and outstanding
and Twelve Million Five Hundred Thousand (12,500,000) shares have been
designated Series B Preferred Stock, without par value, of which Eleven Million
Five Hundred Fifty One Thousand Six Hundred Thirteen (11,551,613) shares are
issued and outstanding. There are no outstanding options other than pursuant to
the 1996 Equity Incentive Plan.
5.4 SHARES VALIDLY ISSUED. When issued in compliance with the provisions
of this Agreement, the Shares (as defined in Exhibit B) will be validly issued,
fully paid and nonassessable, and will be free of any liens or encumbrances;
provided, however, that the Shares (as defined in Exhibit B) may be subject to
restrictions on transfer under state and/or federal
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securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.
5.5 CONFLICTING AGREEMENTS. Neither the execution nor delivery by Ask
Jeeves of this Agreement nor compliance by Ask Jeeves with the terms and
provisions hereof will conflict with, or result in a breach of (a) the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, the bylaws or articles of incorporation of Ask Jeeves or any
agreement to which Ask Jeeves is a party, which would prevent any of the
transactions contemplated under this Agreement or the License Agreement, or (b)
any regulation, law, judgment, order or the like to which Ask Jeeves is subject,
the default or violation of which would prevent any of the transactions
contemplated under this Agreement or the License Agreement.
5.6 LITIGATION. No action, suit, proceeding or investigation is pending
or threatened against Ask Jeeves which questions the validity of this Agreement
or the License Agreement or the right of Ask Jeeves to enter into this Agreement
or the License Agreement or seeks to prevent any of the transactions
contemplated under this Agreement or the License Agreement.
5.7 BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of Ask
Jeeves.
5.8 FINANCIAL STATEMENTS. Ask Jeeves has delivered to Lumina (a) its
audited balance sheet as at December 31, 1997 and audited statement of income
and cash flows for the twelve months ending December 31, 1997, and (b) its
unaudited balance sheet as at December 31, 1998 and unaudited statement of
income and cash flows for the twelve months ending December 31, 1998
(collectively, the "Financial Statements"). The Financial Statements, together
with the notes thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated, except as disclosed therein, and present fairly the financial
condition and position of Ask Jeeves as of December 31, 1998; provided, however,
that the unaudited financial statements are subject to normal recurring year end
audit adjustments (which are not expected to be material), and do not contain
all footnotes required under generally accepted accounting principles.
6. CLOSING CONDITIONS OF LUMINA. Lumina's obligations to sell the Assets are
subject to the fulfillment on or prior to the Closing Date of all of the
conditions set forth in this Section 6. Ask Jeeves acknowledges and agrees that
Lumina shall not owe Ask Jeeves any amount for a failure of the closing to occur
as a result of a closing condition.
6.1 MATERIAL ADVERSE CHANGE. Lumina shall be satisfied in its sole
discretion that the representations and warranties made by Ask Jeeves in Section
5 above are true and correct as of the Closing Date.
6.2 CONSENTS, APPROVALS AND WAIVERS. Lumina and Ask Jeeves shall have
obtained, in a manner satisfactory to Lumina and its counsel, any and all
approvals, consents, permits and waivers and made all filings necessary or
appropriate for the sale and transfer of the Assets under this Agreement.
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6.3 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by Ask Jeeves on or prior to the Closing Date
shall have been performed or complied with in all respects.
6.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in substance and
form to Lumina and its counsel, and Lumina and its counsel shall have received
all such counterpart originals or certified or other copies of such documents
and instruments as they may reasonably request.
6.5 OFFER LETTERS. Ask Jeeves and the Lumina employees to whom Ask
Jeeves has offered employment prior to Closing shall have entered into offer
letters substantially in the form attached hereto as Exhibit C (each an "Offer
Letter").
6.6 LICENSE AGREEMENT. The License Agreement shall have been executed
and delivered by the parties thereto.
7. CLOSING CONDITIONS OF ASK JEEVES. Ask Jeeves' obligations to purchase the
Assets are subject to the fulfillment on or prior to the Closing Date of all of
the conditions set forth in this Section 7.
7.1 SATISFACTORY DUE DILIGENCE; MATERIAL ADVERSE CHANGE. Ask Jeeves
shall be satisfied in its sole discretion (a) that the representations and
warranties made by Lumina in Section 4 above are true and correct as of the
Closing Date, (b) that any matters included in the Schedule which Ask Jeeves
deems to be unacceptable and which have been specified in writing to Lumina have
been remedied to Ask Jeeves's satisfaction, and (c) with the results of its
business, technical, legal and financial review of the books, records,
agreements and other legal documents and business organization of Lumina.
7.2 CONSENTS, APPROVALS AND WAIVERS. Lumina and Ask Jeeves shall have
obtained, in a manner satisfactory to Ask Jeeves and its counsel, any and all
approvals, consents, permits and waivers and made all filings necessary or
appropriate for the sale and transfer of the Assets under this Agreement.
7.3 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by Lumina on or prior to the Closing Date shall
have been performed or complied with in all respects.
7.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in substance and
form to Ask Jeeves and its counsel, and Ask Jeeves and its counsel shall have
received all such counterpart originals or certified or other copies of such
documents and instruments as they may reasonably request.
7.5 OFFERS OF EMPLOYMENT. Ask Jeeves and the Lumina employees to whom
Ask Jeeves has offered employment prior to Closing shall have executed Offer
Letters.
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7.6 LICENSE AGREEMENT. The License Agreement shall have been executed
and delivered by the parties thereto.
7.7 ESCROW AGREEMENT. The escrow agreement among Ask Jeeves, Lumina,
certain shareholders of Lumina, Max Henrion as the shareholder representative,
and ___________ as the escrow agent (the "Escrow Agreement") shall have been
executed and delivered by the parties thereto.
8. INDEMNIFICATION.
8.1 LUMINA INDEMNITY. Lumina and its successors (collectively, the
"Sellers") agree to indemnify Ask Jeeves, its affiliates, its subsidiaries, or
its successors (collectively the "Purchasers") and hold them harmless from and
against any and all liabilities, losses, damages, costs or expenses (including
without limitation reasonable legal and expert witnesses' fees and expenses)
incurred by the Purchasers, directly or indirectly, to the extent that such
liabilities, losses, damages, costs or expenses ("Damages") are occasioned by,
caused by or arise out of:
8.1.1 Any breach of any of the representations or warranties or
failure to perform any of the covenants made by the Sellers in this Agreement,
or any certificate, exhibit, instrument or other document delivered pursuant to
this Agreement; or
8.1.2 Any debts, claims, liabilities, or obligations of the
Sellers not expressly assumed by Purchaser pursuant to this Agreement; or
8.1.3 Any breach of any of the representations or warranties or
failure to perform any of the covenants made by the Sellers in the License
Agreement, or any certificate, exhibit, instrument or other document delivered
pursuant to the License Agreement.
8.2 ASK JEEVES INDEMNITY. Purchaser agrees to indemnify Seller and hold
them harmless from and against any and all liabilities, losses, damages, costs
or expenses (including without limitation reasonable legal and expert witnesses'
fees and expenses) incurred by the Sellers to the extent that such Damages are
occasioned by, caused by or arise out of:
8.2.1 any breach of any of the representations or warranties or
failure to perform any of the covenants made by Purchasers in this Agreement, or
any certificate, exhibit, instrument or other document delivered pursuant to
this Agreement; or
8.2.2 Any breach of any of the representations or warranties or
failure to perform any of the covenants made by the Purchasers in the License
Agreement, or any certificate, exhibit, instrument or other document delivered
pursuant to the License Agreement.
8.3 INDEMNIFICATION CLAIMS. If either party hereto (the "Claimant")
wishes to assert an indemnification claim against the other party hereto, the
Claimant shall deliver to the other party a written notice setting forth:
8.3.1 the specific representation and warranty alleged to have
been breached by such other party;
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8.3.2 a detailed description of the facts and circumstances
giving rise to the alleged breach of such representation and warranty; and
8.3.3 a detailed description of, and a reasonable estimate of the
total amount of, the Damages actually incurred or expected to be incurred by the
Claimant as a direct result of such alleged breach.
A copy of any notice delivered to the Sellers shall be delivered by the
Purchasers to the Escrow Agent and the Shareholder Representative, each as
defined in the Escrow Agreement.
8.4 DEFENSE OF THIRD PARTY ACTIONS. If either party hereto (the
"Indemnified Party") receives notice or otherwise obtains knowledge of the
commencement or threat of any claim, demand, dispute, action, suit, examination,
audit, proceeding, investigation, inquiry or other similar matter that may give
rise to an indemnification claim against the other party hereto (the
"Indemnifying Party"), then the Indemnitee shall promptly deliver to the
Indemnified Party a written notice describing such complaint or the commencement
of such action or proceeding; provided, however, that the failure to so notify
the Indemnifying Party shall relieve the Indemnifying Party from liability under
this Agreement with respect to such claim only if, and only to the extent that,
such failure to notify the Indemnifying Party results in the forfeiture by the
Indemnifying Party of rights and defenses otherwise available to the
Indemnifying Party with respect to such claim or the opportunity to defend or
participate in the defense of said claim. The Indemnifying Party shall have the
right, upon written notice delivered to the Indemnified Party within 20 days
thereafter to assume the defense of such action or proceeding, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of the fees and disbursements of such counsel. In the event, however,
that the Indemnifying Party declines or fails to assume the defense of the
action or proceeding or to employ counsel reasonably satisfactory to the
Indemnified Party, in either case within such 20 day period, then such
Indemnified Party may employ counsel, reasonably acceptable to the Indemnifying
Party, to represent or defend it in any such action or proceeding and the
Indemnifying Party shall pay the reasonable fees and disbursements of such
counsel as incurred; provided, however, that the Indemnifying Party shall not be
required to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any jurisdiction in any single action or proceeding. In
any action or proceeding with respect to which indemnification is being sought
hereunder, the Indemnified Party or the Indemnifying Party, whichever is not
assuming the defense of such action, shall have the right to participate in such
litigation and to retain its own counsel at such party's own expense. The
Indemnifying Party or the Indemnified Party, as the case may be, shall at all
times use all commercially reasonable efforts to keep the Indemnifying Party or
the Indemnified Party, as the case may be, reasonably apprised of the status of
the defense of any action, the defense of which they are maintaining, and to
cooperate in good faith with each other with respect to the defense of any such
action. No Indemnified Party may settle or compromise any claim or consent to
the entry of any judgment with respect to which indemnification is being sought
hereunder without the prior written consent of the Indemnifying Party, which
shall not be unreasonably withheld. The Indemnifying Party shall not settle any
claim or assertion, unless the Indemnified Party consents in writing to such
settlement, which consent shall not be unreasonably withheld.
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8.5 EXPIRATION OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties set forth in this Agreement shall terminate and
expire, and shall cease to be of any force or effect on the first anniversary of
the Closing Date, and all liability of Lumina and Ask Jeeves with respect to
such representations and warranties shall thereupon be extinguished; provided,
however, that if, prior to such first anniversary, Claimant delivers a written
notice to the other party hereto or to the Escrow Agent, then the specific
indemnification claim set forth in such notice shall survive such first
anniversary (and shall not be extinguished thereby) until the settlement of such
specific claim.
8.6 THRESHOLD. Neither the Sellers nor the Purchasers shall be required
to make any indemnification payment pursuant to Section 8.1 or 8.2,
respectively, until such time as the total amount of all Damages that have been
directly or indirectly suffered or incurred by an Indemnified Party, or to which
an Indemnified Party has or otherwise becomes subject to, exceeds $50,000 in the
aggregate. At such time as the total amount of such Damages exceeds $50,000 in
the aggregate, the Indemnified Party shall be entitled to be indemnified against
the full amount of such Damages (and not merely the portion of such Damages
exceeding $50,000).
9. POST-CLOSING COVENANTS.
9.1 FURTHER ASSURANCES. Lumina shall not voluntarily undertake any
course of action which interferes in any way with the rights obtained by Ask
Jeeves hereunder or is otherwise inconsistent with the satisfaction of its
obligations or agreements set forth in this Agreement. Lumina hereby agrees not
to contest Ask Jeeves's ownership of the Intellectual Property Rights or Ask
Jeeves's title to the Assets. Lumina shall execute, acknowledge and deliver any
further assignments, conveyances and other assurances, documents and instruments
of transfer, consistent with the terms of this Agreement, which are reasonably
requested and prepared by Ask Jeeves or its counsel and shall take any other
action, consistent with the terms of this Agreement, that may be reasonably
requested and prepared by Ask Jeeves or its counsel for the purpose of
assigning, transferring, granting, conveying, and confirming to Ask Jeeves or
reducing to its possession, any or all of the Assets or the liabilities. Ask
Jeeves shall be solely responsible for all out-of-pocket costs related to such
requests. If Ask Jeeves cannot secure Lumina's signature for any of the
foregoing after reasonable efforts, Lumina appoints Ask Jeeves as Lumina's
attorney-in-fact to take all actions Ask Jeeves deems reasonably necessary to
exercise its rights under this Section.
9.2 CONFIDENTIALITY. From and after the Closing Date, to the maximum
extent permitted by applicable law, all technical, marketing and other
information directly relating to the Assets and Intellectual Property Rights
thereto shall at all times be and remain the sole and exclusive property of Ask
Jeeves. At all times after the Closing Date, Lumina shall retain in strictest
confidence, and shall not disclose to third parties or use for its benefit or
for the benefit of any third party, all information assigned under this
Agreement or disclosed by Ask Jeeves or in any other way relating to the Assets.
Lumina understands and agrees that Ask Jeeves's remedies at law for a breach by
Lumina of its obligations under this Section will be inadequate and that Ask
Jeeves shall, in the event of any such breach, be entitled to equitable relief
(including without limitation injunctive relief and specific performance) in
addition to all other remedies provided under this Agreement or available to Ask
Jeeves at law.
11
<PAGE> 13
10. MISCELLANEOUS.
10.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California applicable to
contracts between California residents entered into and to be performed entirely
within the State of California. Any action or proceeding brought by either party
against the other arising out of or related to this Agreement shall be brought
exclusively in a state or federal court in Santa Clara County, California.
10.2 WAIVERS; CUMULATIVE REMEDIES. Any waiver, consent or the like must
be in writing. Any waiver by either party of any breach of this Agreement by the
other party shall not constitute a waiver of any other or subsequent breach of
this Agreement. All remedies, either under this Agreement or by law or
otherwise, afforded to the parties hereunder shall be cumulative and not
alternative.
10.3 NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon receipt by facsimile
with a confirming copy sent by first-class mail, postage prepaid, or five (5)
days after deposit in the U.S. postal system by certified or registered mail,
return receipt requested, postage prepaid to the addresses first set forth below
such other address as a party may designate for itself by providing notice
hereunder:
If to Lumina: If to Ask Jeeves:
Max Henrion Amy Slater
Lumina Decision Systems, Inc. Ask Jeeves, Inc.
59 N. Santa Cruz Avenue, Suite Q 918 Parker Street
Los Gatos, California 95030 Berkeley, California 94210
Fax: (408) 354-9562 Fax: (510) 649-8663
10.4 AUDIT. Each party shall provide the other with notice of an audit
by any tax authority of such party's books and records which is reasonably
likely to relate to the Assets or the sale of the Assets in this transaction.
10.5 ATTORNEYS' FEES. In any action brought to construe or enforce this
Agreement, the prevailing party shall receive in addition to any other remedy to
which it may be entitled, compensation for all costs incurred in pursuing such
action, including, but not limited to, reasonable attorneys' and expert
witnesses' fees and costs.
10.6 EXPENSES. Each party shall bear its own expenses and legal fees
incurred on its behalf with respect to this Agreement and the transaction
contemplated hereby.
10.7 SEVERABILITY. In case any provision of this Agreement is held to be
invalid or unenforceable, such provision shall be deemed amended to the extent
required to make it valid and enforceable and such amended provision and the
remaining provisions of this Agreement will remain in full force and effect.
10.8 TITLE AND HEADINGS. The titles and headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
12
<PAGE> 14
10.9 SUCCESSOR AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors and assigns of the parties
hereto.
10.10 RIGHTS OF THIRD PARTIES. Nothing contained in this Agreement,
express or implied, shall be deemed to confer any rights or remedies upon, or
obligate any of the parties hereto, to any person or entity.
10.11 PUBLICITY. The terms of this Agreement shall be considered
confidential information of Ask Jeeves and Lumina. Both parties agree that the
specific provisions hereof shall not be revealed or disclosed by it without the
prior written consent of the other except to the extent such disclosure is
required by applicable law or regulation.
10.12 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Exhibits hereto
and the other documents delivered pursuant hereto constitute the full,
exclusive, complete and entire understanding and agreement between the parties
with regard to the subject matter hereof and thereof and supersedes and revokes
all other previous discussions, understanding and agreements, whether oral or
written, between the parties with regard to the subject matter hereof. Any term
of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the affected
party.
13
<PAGE> 15
The parties to this Agreement have caused this Agreement to be executed
and delivered as of April 16, 1999.
ASK JEEVES, INC.,
a California corporation
By: /s/ Rob Wrubel
------------------------------------
Printed Name: Rob Wrubel
--------------------------
Title: CEO
---------------------------------
LUMINA DECISION SYSTEMS, INC.
a California corporation
By: /s/ Max Henrion
---------------------------------
Printed Name: Max Henrion
-----------------------
Title: CEO
------------------------------
<PAGE> 16
EXHIBIT A
ASSETS
The following assets are the subject of this Purchase Agreement:
1. The Lumina Shopping Advisor prototype for digital cameras, as of 15 April
1999 including
a. The general template Customer-Value model for consumer products written
in Analytica(R)
b. The Category Knowledgebase for the product category of digital cameras
written in Analytica(R)
c. The ASP (Microsoft Active Server Pages) Code for the Web user interface
for the digital camera advisor
d. The digital camera product database
e. Existing design documentation
2. The Lumina Shopping Advisor prototype for Laptop computers, as of 15 April,
1999 including
a. The general template Customer-Value model for configurable products
written in Analytica(R)
b. The Category Knowledgebase for configurable laptop computers written in
Analytica(R)
c. The ASP Code for the Web user interface for the above
d. The Dell laptop product database
e. Existing design documentation
3. Draft marketing materials for the Lumina Shopping Advisor including
a. Draft Powerpoint marketing presentation
b. Report analyzing market segments
Items 1 and 2 are included in a Microsoft Source Safe database, as of April 15,
1999. These assets will be installed by Lumina on computer hardware systems of
the Purchaser.
<PAGE> 17
EXHIBIT B
PAYMENT TERMS
On the Closing Date, Ask Jeeves shall deliver to Lumina the following:
(1) by wire transfer or check made payable to Lumina, the amount of
$700,000;
(2) 450,000 shares of the common stock of Ask Jeeves (the "Shares").
Within five (5) business days following the Closing Date, Lumina shall
deliver the following:
(1) 150,000 Shares to State Street Bank and Trust Company of California,
N.A. (the "Escrow Agent") pursuant to a distribution to the Shareholders in
accordance with the terms of the Escrow Agreement; and
(2) 300,000 Shares to the Shareholders pursuant to a distribution.
Within six (6) business days following the Closing Date, the Employees
(as defined below) shall deliver between 213,018 and 221,614 Shares (the
"Buyback Shares") to Ask Jeeves to be held in escrow subject to the following
right of repurchase by Ask Jeeves contained in the Offer Letters (the "Buyback
Option"):
If an Employee's continuous service with Ask Jeeves is voluntarily
terminated by such Employee or by Ask Jeeves with Cause, Ask Jeeves will have
the right at any time within ninety (90) days after such Employee's termination
of continuous service with Ask Jeeves to purchase from such Employee such
Employee's pro rata portion of the Buyback Shares then subject to the Buyback
Option, at the price per share of $0.25. For purposes of the Buyback Option,
"Employee" shall mean a former employee of Lumina who accepts an offer of
employment by Ask Jeeves pursuant to an Offer Letter at or prior to the Closing
Date. Twenty-Five percent (25%) of the Buyback Shares will be released from the
Buyback Option on the date which is six months following the Closing Date of the
Asset Purchase Agreement to which this Exhibit B is attached. An additional
4.16667% of the Buyback Shares will be released from the Buyback Option monthly
thereafter. For the purpose of the Buyback Option, "Cause" shall mean (a) an
intentional refusal or failure to follow lawful and reasonable directions of the
Board of Directors of Ask Jeeves or the Chief Executive Officer or Chief
Technical Officer; (b) a willful and habitual neglect of duties as reasonably
determined by the Chief Executive Officer or Chief Technical Officer; or (c) a
conviction of a felony involving moral turpitude which is reasonably likely to
inflict or has inflicted material injury on Ask Jeeves. For the purpose of the
Buyback Option, an Employee will be deemed to have been terminated without Cause
and, therefore, the Buyback Option will terminate with respect to such Employee,
if the Employee voluntarily terminates for "Good Reason". Termination for "Good
Reason" shall occur in the event that (a) there is a diminution in the
Employees' office, title, duties, salary or benefits from the Closing Date, (b)
Ask Jeeves breaches its Offer Letter with such Employee, (c) such Employee is
disabled or dies, or (d) the Employee is relocated to an office that is more
than twenty (20) miles away from Lumina's current office in Los Gatos.
<PAGE> 18
EXHIBIT C
Form of Offer Letter
<PAGE> 19
April __, 1999
Dear ____________:
In connection with our proposed acquisition of certain assets of Lumina Decision
Systems, Inc. (the "Transaction") we are pleased to offer you the position of
_________________________________________ for Ask Jeeves, Inc. (the "Company")
effective upon the closing of the Transaction. Your first day of employment will
be approximately April 19, 1999, or as soon after the closing of the Transaction
as feasible (your "Start Date"). You will report to ________________.
You will receive an annual salary of $_______, which will be paid semi-monthly
in accordance with the Company's normal payroll procedures. You will also be
eligible to participate in any employee benefit programs that are, or may
become, available to a full time _____________________________________, or an
employee at a comparable level, at Ask Jeeves. You acknowledge, by signing this
letter where indicated below, that Ask Jeeves is not assuming any liability of
Lumina in connection with your employment by Lumina.
Upon your employment you will be awarded _______ non-statutory stock options to
purchase stock in the Company pursuant to the Company's incentive stock option
plan (the Plan), vesting over a period of four years, with 25% of the shares
vesting on the first anniversary of your employment, and the remaining shares
vesting in 36 equal monthly installments thereafter, with a ten-year term, at an
exercise price of $____, with a vesting commencement date of February 8, 1999.
You will be eligible for a one-time performance bonus payment if Ask Jeeves,
within 18 months of the closing date of the Transaction, has sold and invoiced,
with the expectation of receiving payment, five licensing deals incorporating
the Lumina PDE software. To be counted towards the performance bonus, such deals
must have an average total selling price of $100,000 per deal. If this goal is
met, you will, at your option, receive either (a) $_______ in cash; (b) $_______
worth of Ask Jeeves common stock valued at the fair market value for the shares
on the day that the Company's Board of Directors approves the bonus payment; or
(c) a combination of stock and cash with an aggregate value of $_______. Subject
to Board approval, your share of the performance bonus will be paid within 30
days of the date that this goal is met.
The Company agrees that for the lesser of (i) the duration of your employment
with the Company or (ii) two (2) years from your Start Date you will be able to
perform your duties at a location that is not more than twenty (20) miles from
Lumina's current offices in Los Gatos.
Notwithstanding anything else contained in this letter, your employment with the
Company is for no specified period and constitutes at will employment. As a
result, you are free to resign at any time, for any reason or for no reason.
Similarly, the Company is free to conclude its employment
<PAGE> 20
relationship with you at any time, with or without cause. We agree that up to
199,874 shares of the Company stock you received in connection with the
Transaction may be subject to the buyback described in Attachment A (the
"Buyback Shares").
Enclosed is a summary of current Company benefits. Our benefits, payroll and
other human resource management services are provided through TriNet Employer
Group, Inc. TriNet is a professional employer organization (PEO) contracted by
Ask Jeeves to perform selected employer responsibilities on our behalf. As a
result of our arrangement with TriNet, TriNet will be considered your employer
of record for payroll, benefits and other functions involving employer related
administration. However, your managers at Ask Jeeves will be responsible for
reviewing your performance and otherwise directing your work
For purposes of federal immigration law, you will be required to provide to the
Company documentary evidence of your identity and eligibility for employment in
the United States. Such documentation must be provided to us within three (3)
business days of your date of hire or our employment relationship with you may
be terminated.
I have enclosed our Confidential Information and Invention Assignment Agreement.
If you accept this offer, please return to me a signed copy of this agreement.
In the event of any dispute or claim relating to or arising out of our
employment relationship, you and the Company agree that all such disputes shall
be fully and finally resolved by binding arbitration conducted by the American
Arbitration Association in Berkeley, California.
However, we agree that this arbitration provision shall not apply to any
disputes or claims relating to or arising out of the misuse or misappropriation
of the Company's trade secrets or proprietary information.
To indicate your acceptance of the Company's offer, please sign and date this
letter in the space provided below and return it to me. A duplicate original is
enclosed for your records.
<PAGE> 21
This letter, along with the Confidential Information and Invention Assignment
Agreement between you and the Company, sets forth the terms of your employment
with the Company and supersedes any prior representations or agreements, whether
written or oral. This letter may not be modified or amended except by a written
agreement signed by the Company and by you.
Welcome to Ask Jeeves
Sincerely,
Robert W. Wrubel
President & CEO
Enclosures
Accepted:
Date:
----------------------------------- -----------------------------
<PAGE> 22
ATTACHMENT A
If an Employee's continuous service with Ask Jeeves is voluntarily
terminated by such Employee or by Ask Jeeves with Cause, Ask Jeeves will have
the right at any time within ninety (90) days after such Employee's termination
of continuous service with Ask Jeeves to purchase from such Employee such
Employee's pro rata portion of the Buyback Shares then subject to the Buyback
Option, at the price per share of $0.25. For purposes of the Buyback Option,
"Employee" shall mean a former employee of Lumina who accepts an offer of
employment by Ask Jeeves pursuant to an Offer Letter at or prior to the Closing
Date. Twenty-Five percent (25%) of the Buyback Shares will be released from the
Buyback Option on the date which is six months following the Closing Date of the
Asset Purchase Agreement to which this Attachment A is attached as Exhibit B. An
additional 4.16667% of the Buyback Shares will be released from the Buyback
Option monthly thereafter. For the purpose of the Buyback Option, "Cause" shall
mean (a) an intentional refusal or failure to follow lawful and reasonable
directions of the Board of Directors of Ask Jeeves or the Chief Executive
Officer or Chief Technical Officer; (b) a willful and habitual neglect of duties
as reasonably determined by the Chief Executive Officer or Chief Technical
Officer; or (c) a conviction of a felony involving moral turpitude which is
reasonably likely to inflict or has inflicted material injury on Ask Jeeves. For
the purpose of the Buyback Option, an Employee will be deemed to have been
terminated without Cause and, therefore, the Buyback Option will terminate with
respect to such Employee, if the Employee voluntarily terminates for "Good
Reason". Termination for "Good Reason" shall occur in the event that (a) there
is a diminution in the Employees' office, title, duties, salary or benefits from
the Closing Date, (b) Ask Jeeves breaches its Offer Letter with such Employee,
(c) such Employee is disabled or dies, or (d) the Employee is relocated to an
office that is more than twenty (20) miles away from Lumina's current office in
Los Gatos.
<PAGE> 23
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. SALE OF ASSETS; RELATED TRANSACTIONS...................................1
1.1 Purchase and Sale...............................................1
1.2 Assignment of Contracts.........................................1
1.3 Complete Transfer...............................................1
1.3.1 No Assumption of Liabilities.............................2
2. PAYMENT................................................................2
2.1 Purchase Price..................................................2
2.2 Taxes...........................................................2
3. CLOSING................................................................2
3.1 Closing.........................................................2
3.2 Transfer of Assets..............................................2
4. REPRESENTATIONS AND WARRANTIES OF LUMINA..............................3
4.1 Organization and Standing.......................................3
4.2 Power and Authorization.........................................3
4.3 Title to Assets; Intellectual Property..........................3
4.4 Conflicting Agreements..........................................4
4.5 Capitalization..................................................5
4.6 Litigation......................................................5
4.7 Governmental Authorizations and Regulations.....................5
4.8 Bulk Sales Laws.................................................5
4.9 Material Contracts, Commitments, and Product Warranties.........5
4.10 Manufacturing and Technology Rights.............................5
4.11 Taxes...........................................................5
4.12 Brokerage.......................................................6
4.13 Full Disclosure.................................................6
5. REPRESENTATIONS AND WARRANTIES OF ASK JEEVES...........................6
5.1 Organization and Standing.......................................6
5.2 Power; Authorization............................................6
5.3 Capitalization..................................................6
5.4 Shares Validly Issued...........................................6
5.5 Conflicting Agreements..........................................7
</TABLE>
i
<PAGE> 24
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
5.6 Litigation.....................................................7
5.7 Brokerage......................................................7
5.8 Financial Statements...........................................7
6. CLOSING CONDITIONS OF LUMINA..........................................7
6.1 Material Adverse Change........................................7
6.2 Consents, Approvals and Waivers................................7
6.3 Covenants......................................................8
6.4 Proceedings and Documents......................................8
6.5 Offer Letters..................................................8
6.6 License Agreement..............................................8
7. CLOSING CONDITIONS OF ASK JEEVES......................................8
7.1 Satisfactory Due Diligence; Material Adverse Change............8
7.2 Consents, Approvals and Waivers................................8
7.3 Covenants......................................................8
7.4 Proceedings and Documents......................................8
7.5 Offers of Employment...........................................8
7.6 License Agreement..............................................9
7.7 Escrow Agreement...............................................9
8. INDEMNIFICATION.......................................................9
8.1 Lumina Indemnity...............................................9
8.2 Ask Jeeves Indemnity...........................................9
8.3 Indemnification Claims.........................................9
8.4 Defense of Third Party Actions................................10
8.5 Expiration of Representations and Warranties..................11
8.6 Threshold.....................................................11
9. POST-CLOSING COVENANTS...............................................11
9.1 Further Assurances............................................11
9.2 Confidentiality...............................................11
10. MISCELLANEOUS........................................................12
10.1 Governing Law.................................................12
10.2 Waivers; Cumulative Remedies..................................12
</TABLE>
ii.
<PAGE> 25
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
10.3 Notices.......................................................12
10.4 Audit.........................................................12
10.5 Attorneys' Fees...............................................12
10.6 Expenses......................................................12
10.7 Severability..................................................12
10.8 Title and Headings............................................12
10.9 Successor and Assigns.........................................13
10.10 Rights of Third Parties.......................................13
10.11 Publicity.....................................................13
10.12 Entire Agreement; Amendment...................................13
</TABLE>
iii.