Asset Purchase Agreement - SofTech Inc., Adra Systems Inc., Adra Systems GmbH and MatrixOne Inc.
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (the "Agreement") dated as of May 7, 1998 by and
among SofTech, Inc., a Massachusetts corporation (the "Buyer" or "SofTech"),
Adra Systems, Inc., a Delaware corporation, Adra Systems, GmbH, ("Adra GmbH") a
wholly owned subsidiary of MatrixOne, Inc. (collectively the "Seller" or "ADRA")
and MatrixOne, Inc., a Delaware corporation which owns all of the outstanding
stock of ADRA (the "Parent").
WITNESSETH
WHEREAS, subject to the terms and conditions hereof, Seller desires to sell
substantially all of the properties and assets of ADRA and all of the
outstanding shares of capital stock of Adra GmbH, and Parent has authorized
Seller to effect such sale; and
WHEREAS, subject to the terms and conditions hereof, Buyer desires to
purchase said properties and assets of Seller for the consideration specified
herein and the assumption by Buyer of certain liabilities and obligations of
Seller specified herein;
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
Section 1
PURCHASE AND SALE OF ASSETS
1.1 Sale of Assets. Subject to the provisions of this Agreement on the
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date this Agreement is signed (the "`Closing"), at such time and place as shall
be determined by mutual agreement of the parties, Seller agrees to sell and
Buyer agrees to purchase, all of the Seller's right, title and interest in and
to the properties and assets used primarily in the business of ADRA
(collectively, the "Business") of every kind and description, tangible and
intangible, real personal or mixed, and wherever located, including, without
limitation, all assets shown or reflected on the Base Balance Sheet (as defined
in Section 2.7 hereof) and listed on Schedule 1.1 (except for those disposed of
or converted into cash after the date of such Balance Sheet in each case in the
ordinary course of business), the capital stock of Adra GmbH, and all of the
Proprietary Rights (as defined in Section 2.22 below); provided, however, that
the following property shall be excluded from such purchase and sale:
(a) Seller's corporate seals, corporate franchise, organizing or
governing documents, Bylaws, stock record books, corporate record books
containing minutes of meetings of directors and stockholders and such other
records as have to do exclusively with Seller's organization or stock
capitalization (collectively, the "Corporate Records");
(b) All refunds of any Taxes for which Seller, Parent or Adra GmbH is
liable; Seller's tax and accounting records; provided, however, that Seller
shall provide Buyer with access to these documents in accordance with Section
2.15 hereof;
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(c) All cash on hand, cash overdraft positions, bank deposits and cash
equivalents of or associated with the Business wherever conducted as of the
Closing Date; and
(d) any assets of the Business sold or otherwise disposed of or
converted into cash in the ordinary course of business after the March 31, 1998
Balance Sheet up to and including the Closing Date.
The assets, property and business of Seller to be sold to and purchased by
Buyer under this Agreement are hereinafter sometimes referred to as the "Subject
Assets", and the assets, property and business of Seller to be excluded from the
sale to Buyer are hereinafter sometimes referred to as the "Excluded Assets" and
are detailed at Schedule 1.1(a).
1.2 Limited Assumption of Liabilities. Upon the sale and purchase of the
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Subject Assets, Buyer shall assume and agree to pay or discharge when due in
accordance with their respective terms, those liabilities listed on Schedule
1.2, including without limitation all obligations of Seller reflected on the
March 28, 1998 Balance Sheet and other obligations incurred following such
Balance Sheet Date in the ordinary course of business, all obligations on all
contracts including those listed on Schedule 2.11, all liabilities in respect of
Taxes for which Buyer is responsible, any warranty or other obligations to
provide service on, or to repair or replace, any products sold by ADRA prior to
the Closing Date. Buyer shall not assume or be liable for any liabilities or
obligations of Seller arising at or prior to the Closing unless identified
herein or on Schedule 1.2. Without limiting the foregoing, and unless
identified herein or on Schedule 1.2, Buyer shall not assume and shall not pay
any of the following liabilities or obligations:
(a) liabilities incurred by Seller in connection with this Agreement,
and the transactions provided for herein, including, without limitation, counsel
and accountants' fees, salary continuation arrangements extended to ADRA
employees and severance arrangements incurred by or for the account of Seller,
or committed to by Seller, in each case prior to the Closing Date, and expenses
pertaining to the performance by Seller of its obligations hereunder whenever
incurred;
(b) subject to Section 1.10 hereof, Taxes (as defined in Section 2.8
hereof) payable by Seller, except for Taxes related to the Subject Assets with
respect to periods ending after the Closing Date. Buyer shall not be
responsible for any income related Taxes incurred by Seller prior to the Closing
Date;
(c) liabilities of Seller with respect to any options, warrants,
agreements or convertible or other rights to acquire any shares of its capital
stock of any class; and
(d) liabilities in connection with or relating to any actions, suits,
claims, proceedings, demands, assessments and judgments, costs, losses,
liabilities, damages, deficiencies and expenses (whether or not arising out of
third-party claims but in each and every case exclusively arising out of the
conduct of the Business before the Closing Date), including, without limitation,
interest, penalties, attorneys' and accountants' fees and all amounts paid in
investigation, defense or settlement of any of the foregoing.
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The liabilities to be assumed by the Buyer under this Agreement are hereinafter
sometimes referred to as the "Liabilities" and the liabilities which are not
assumed by Buyer under this Agreement are hereinafter sometimes referred to as
the "Excluded Liabilities". The assumption of said Liabilities by Buyer
hereunder shall not enlarge any rights of third parties under contracts or
arrangements with Buyer or Seller, and nothing herein shall prevent Buyer or
Seller from contesting in any manner any of said Liabilities.
1.3 Base Purchase Price and Payment. In reliance upon the representations
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and warranties of the Seller herein contained and made at the Closing and in
full consideration of the terms and conditions hereof and the sale by Seller to
Buyer of the Subject Assets, SofTech shall deliver (the "Base Purchase Price")
to the Seller at the Closing the sum of $5,000,000 by wire transfer of
immediately available funds to such account(s) as Seller shall designate and
$2,000,000 in the form of a SofTech check from Fleet Bank, Boston,
Massachusetts.
1.4 Additional Purchase Price; Deferred Payments. In addition to the cash
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paid to Seller by Buyer at the Closing, additional cash payments of $4,400,000
(not dependent in any way on the performance of the Business) shall be due no
later than the sixtieth day immediately following the transaction Closing Date
(the "Deferred Payments"). The Buyer shall execute a note for the Deferred
Payments and a Common Stock Purchase Warrant at the Closing in the forms
appended hereto as Exhibits A and B.
1.5 Additional Purchase Price; Contingent Payments. In addition to the
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cash paid to the Seller by the Buyer at the Closing and the Deferred Payments,
additional payments will be due the Seller from the Buyer in cash in the event
that either of two alternative software license revenue goals are achieved in
the two six month periods (the "Measurement Periods") immediately following the
transaction Closing Date. The goals and the percentage of license revenue to be
due for each of the two Measurement Periods shall be as follows:
ADRA License % of License Revenue
Revenue Goals: Payable to Seller:
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Less than $2,750,000 0
Equal to or more than $2,750,000 25.3% of the Business software
license revenue up to a maximum of
$1,100,000;
OR
SofTech Consolidated % of License
License Revenue Goals: Revenue
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Less than $7,350,000 0
Equal to or more than $7,350,000 9.4% of consolidated SofTech
software license revenues up to a
maximum of $1,100,000.
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Each of the two six-month Measurement Periods will be measured independent
of one another and Buyer will pay Seller the higher of the two payments
calculated under the two alternative methods. The Business software license
revenue shall be comprised of all revenues generated from the license of all of
the Business software products purchased by Buyer in this transaction (including
revenue from future versions and enhancements of existing Business software but
specifically excluding maintenance revenue). The SofTech software license
revenue shall be comprised of all revenues generated from the license of all
proprietary and third party software products marketed by SofTech including all
Business products during the applicable Measurement Period.
In no event shall the Contingent Payments exceed $ 1,100,000 for either of
the Measurement Periods or $2,200,000 for both periods. Contingent Payments
earned in respect of either Measurement Period shall be paid to Seller within 30
days of the end of the applicable Measurement Period. Buyer's records with
respect to revenue generated from the license of ADRA and other software
products in respect of the Measurement Periods will be subject to audit by
Seller or its agents during regular business hours with reasonable notice.
1.6 Allocation of Purchase Price. Both parties agree that the Base Purchase
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Price and Deferred Payments of $11.4 million will be allocated as follows:
Software purchased $10,000,000
Net tangible assets 250,000
Goodwill 1,050,000
Capital stock of Adra GmbH 100,000
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Total $11,400,000
The parties further agree that the Contingent Payments shall be allocated to
Software purchased. The parties agree that the amounts so allocated are fair
measures of the market value of the software and net tangible assets (except
that the net tangible assets reflect accrued liability of approximately $600,000
by the Buyer for transaction costs as compared with Seller's net tangible assets
sold of approximately $850,000) based on assumptions regarding current market
information, replacement value, projected cash flow from expected revenue and
experience from marketing such assets to other interested parties, and the
parties agree to file all required reports with the Internal Revenue Service
consistent with the foregoing.
1.7 Transfer of Subject Assets. Unless waived by Buyer at the Closing,
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Seller shall deliver or cause to be delivered to Buyer good and sufficient
instruments of transfer transferring to Buyer title to all Subject Assets. Such
instruments of transfer (a) shall be in the form (not inconsistent with the
provisions hereof) which are usual and customary for transferring the type of
property involved under the laws of the jurisdictions applicable to such
transfers, (b) shall be in form and substance reasonably satisfactory to Buyer
and its counsel, and (c) shall effectively vest in Buyer good and marketable
title to all the Subject Assets free and clear of all liens, restrictions and
encumbrances not shown or reflected on the Base Balance Sheet except anything
arising from actions of Buyer and except for such liens as are identified on the
Disclosure
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Schedule with respect to which Buyer shall take the assets subject to
such liens. Notwithstanding anything to the contrary in this Agreement, title to
(i) Sellers assets (tangible and intangible) located in France, (ii) the stock
of Adra Systems, GmbH, and (iii) contracts which the Seller and/or Parent
requires a sublicense of rights under prior to assigning same to Buyer, shall
pass as promptly as reasonably and commercially practicable following the
Closing.
1.8 Delivery of Records and Contracts. Within four (4) weeks of the
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Closing, Seller shall use reasonable commercial efforts to deliver or cause to
be delivered to Buyer all of Seller's leases, contracts, commitments, agreements
applicable to the ADRA business (including without limitation non-competition
agreements) and rights, and will use reasonable commercial efforts to assist
Buyer in obtaining such assignments thereof and consents to assignments as are
necessary to assure Buyer of the full benefit of the same. Buyer in its sole
discretion may waive the obtainment of any necessary consent or assignment prior
to the Closing, in which case Seller's sole obligation with respect thereto will
be to use reasonable efforts to cooperate with Buyer in obtaining same following
the Closing. Seller shall also deliver to Buyer at the Closing all of Seller's
business records, tax returns, books and other data, in each case relating to
the Business (except corporate records and other property of Seller excluded
under Section 1.1 as to which only copies need to be delivered in accordance
with such Section), and Seller shall take all reasonable steps to put Buyer in
actual possession and operating control of the ADRA assets and Business.
1.9 Further Assurances. Seller from time to time after the Closing at the
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request of Buyer and without further consideration shall execute and deliver
further instruments of transfer and assignment and take such other action as
Buyer may reasonably require to more effectively transfer and assign to, and
vest in, Buyer each of the Subject Assets. Seller shall cooperate with Buyer to
permit Buyer to enjoy Seller's rating and benefits under the workman's
compensation laws and unemployment compensation laws of the applicable
jurisdictions, to the extent permitted by such laws.
1.10 Sales and Transfer Taxes. All sales, use, value added, and transfer
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taxes, fees and duties under applicable law incurred in connection with this
Agreement or the transactions contemplated thereby will be shared equally by
Buyer and Seller whether imposed by federal, state, local or foreign
governmental authorities.
Section 2
REPRESENTATIONS AND WARRANTIES OF SELLER
2.1 Making of Representations and Warranties. As a material inducement to
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Buyer to enter into this Agreement and consummate the transactions contemplated
hereby, Seller and Parent, jointly and severally, hereby make to Buyer the
representations and warranties contained in this Section 2, (all such
representations and warranties being deemed to be supplemented or conditioned by
any material contained in the disclosure schedule).
2.2 Organization and Qualification of ADRA. ADRA is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware with full
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corporate power and authority to own or lease its properties and to conduct its
business in the manner and in the places where such properties are owned or
leased or such business is currently conducted. The copies of ADRA's Certificate
of Incorporation and bylaws, as amended to date, certified by the Secretary of
State of the State of Delaware are complete and correct, and no amendments are
pending or contemplated. ADRA is not required to be licensed or qualified to
conduct its business or own its property in any other jurisdiction in which it
is not qualified except in any jurisdiction where the failure to so qualify will
not have a material adverse effect on ADRA.
2.3 Subsidiaries. ADRA has no subsidiaries and does not own any
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securities issued by, and has not loaned any funds to, any other business
organization or governmental authority other than those listed on Schedule 2.3.
2.5 Authority. Seller has full right, authority and power to
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enter into this Agreement and each agreement, document and instrument to be
executed and delivered by Seller pursuant to this Agreement and to carry out the
transactions contemplated hereby. The execution delivery and performance by
Seller of this Agreement and each such agreement, document and instrument have
been fully authorized by all necessary action of Seller and no other action on
the part of Seller is required in connection therewith with the exception of the
obtainment of any necessary consents to transfer or other transfer transactions
which have been waived by the Buyer herein. The execution, delivery and
performance of this Agreement by Seller does not and will not: (a) violate any
provision of the Certificate of Incorporation or bylaws; (b) violate any laws of
the United States, or any state or other jurisdiction applicable to Seller or
require Seller to obtain any approval, consent or waiver of, or make any filing
with, any person or entity that has not been obtained or made; and (c) result in
a material breach of, constitute a material default under, accelerate any
material obligation under, or give rise to a right of termination of any
material contract, agreement, or lease to which Seller is a party except as set
forth on Schedule 2.5.
2.6 Status of Tangible Property.
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(a) No Real Property Owned. Seller does not currently, nor has Seller
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in the past, owned any real property.
(b) Leased Real Property. All real property leased by Seller as
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tenant or lessee and used in the ADRA business is listed on Schedule 2.6(b).
Copies of all the leases have been provided to Buyer and are complete, accurate,
true and correct. Each of the Leases is in full force and effect on the terms
set forth therein and have not been modified, amended or altered, in writing or
otherwise.
(c) Personal Property. A complete list of machinery, equipment,
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furniture, fixtures, leasehold improvements and all other tangible personal
property owned or leased by Seller and used in the ADRA business is listed on
Schedule 2.6(c). Seller has good and valid, legal title to all of the personal
property owned by it and used in the Business, free and clear of all claims,
liens and encumbrances and all of its equipment leases are valid and no default
exists under any such lease. All such personal property is being sold to Buyer
on an "as is, where is" basis.
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2.7 Financial Statements.
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(a) Buyer has received the following financial statements and
statements of revenues related to the actual performance and the financial
position of the ADRA business, copies of which are attached hereto as part of
Schedule 2.7: balance sheets as of June 27, 1997 and March 28, 1998; and
statements of income and cash flows for the nine months ended March 28, 1998;
and statements of revenue for the twelve months ended June 27, 1997 and June 29,
1996. Said financial statements have been prepared in accordance with generally
accepted accounting principles applied consistently during the periods covered
thereby, and present fairly the financial position of the Business at the dates
of said statements and the results of its operations for the periods covered
thereby subject to year-end audit and adjustments which are not expected to be
material. The balance sheet of ADRA as of March 28, 1998 is hereafter referred
to as the "Base Balance Sheet".
(b) As of the date hereof, ADRA had no known liabilities of any nature
that would be required to be disclosed in accordance with generally accepted
accounting principles, whether accrued, absolute, contingent or otherwise,
asserted or unasserted except liabilities (i) stated or adequately reserved
against on the Base Balance Sheet, or (ii) specifically reflected on the
Schedules furnished to Buyer hereunder as of the date hereof, or (iii) incurred
in the ordinary course of business since the date of the Base Balance Sheet.
2.8 Taxes.
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(a) Seller has paid or caused to be paid all federal, state, local,
foreign and other taxes, including, without limitation, income taxes, estimated
taxes, alternative taxes, excise taxes, sales taxes, use taxes, value-added
taxes, gross receipts taxes, capital stock taxes, franchise taxes, employment
and payroll related taxes, withholding taxes, property taxes, whether or not
measured in whole or part by net income, and all deficiencies, or other
additions to tax, interest, fines and penalties owed by it (collectively,
"Taxes") required to be paid by it through the date hereof whether disputed or
not.
(b) Seller has, in accordance with applicable law, filed all federal,
state, local and foreign tax returns required to be filed by it through the date
hereof, and all such returns correctly and accurately set forth the amount of
any Taxes relating to the applicable period. Schedule 2.8(b) lists all federal,
state, local and foreign income tax returns filed by Seller for the fiscal year
ended June 30, 1995, 1996 and 1997 with notation as to those returns that have
been audited or are currently being audited. Seller has delivered to Buyer a
complete and correct copy of each of those returns listed and all examination
reports and statements of deficiencies assessed against or agreed to by Seller
with respect to such returns.
2.9 Accounts Receivable.
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(a) Except as set forth in the Schedule 2.9(a) attached hereto, all of
the accounts receivable of ADRA shown or reflected on the Base Balance Sheet or
existing on the date hereof are valid and enforceable claims, fully collectible
and subject to no setoff or counterclaim except to the extent of the reserve
established for doubtful accounts as of the Base
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Balance Sheet. Schedule 2.9(a) is the detailed aging of accounts receivable as
of March 28, 1998 reconciled to the balance sheet of the same date. ADRA has no
accounts or loans receivable from any person, firm or corporation which is
affiliated with ADRA or from any of its directors, officers, employees or
shareholders except intercompany accounts which have been eliminated in the
ordinary consolidation process.
(b) Schedule 2.9(b) presents a rollforward of the allowance for
doubtful accounts from June 28, 1997 through March 31, 1998 by fiscal year
detailing the additions to the reserve and the accounts written off against the
reserve. Seller represents that since June 30, 1997 all uncollectible accounts
have been written off against such reserve and no material revenue reversals or
direct writeoffs have been recorded except as reflected on Schedule 2.9(b) to be
delivered post-closing.
2.10 Absence of Certain Changes. Since the date of the Base
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Balance Sheet there has not been:
(a) any material adverse change in the financial condition,
properties, assets, liabilities, business or operations of the Business;
(b) any material contingent liability incurred by the Business as
guarantor or otherwise with respect to the obligations of others or any
cancellation of any debt or claim owing to, or waiver of any right of
Seller;
(c) any material obligation or liability of any nature incurred by
Seller, whether accrued, absolute, contingent or otherwise, asserted or
unasserted, other than obligations and liabilities incurred in the ordinary
course of business consistent with the terms of this Agreement;
(d) any purchase, sale or other disposition, or any agreement or other
arrangement for the purchase, sale or other disposition, of any assets of
Seller other than in the ordinary course of business;
(e) any labor trouble or claim of unfair labor practices involving
Seller, any change in compensation by Seller to any officers, employees,
agents or independent contractors other than normal merit increases in
accordance with its usual practices, or any bonus payment or arrangement
made to or with any of such officers, employees, agents or independent
contractors;
(f) any payment or discharge of a lien or liability of Seller which
was not shown on the Base Balance Sheet or incurred in the ordinary course
of business thereafter,
(g) any change in accounting methods or practices, credit practices or
collection policies used by Seller,
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(h) any agreement or understanding, whether in writing or otherwise,
for Seller to take any of the actions specified in paragraphs (a) through
(g) above; or
(i) any material change in relations with customers, employees or
distributors that would have a material adverse effect on the Business.
2.11 Contracts. Schedule 2.1 1 is a complete list of all material written
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and oral contracts, commitments, plans, agreements and licenses to which Seller
is a party relating to ADRA. Seller is not a party to any other material
contract, commitment, plan, agreement or license relating to the Business that
is not described on Schedule 2.11.
Seller is not in material default under any such contracts, commitments,
plans, agreements or licenses described on Schedule 2.11 and has no knowledge of
conditions or facts which with notice or passage of time, or both, would
constitute default. To the knowledge of Seller, no other party to any such
contract, commitment, plan, agreement or license is in default thereunder.
2.12 Litigation. There is no litigation or governmental or administrative
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proceeding or investigation pending against Seller or threatened against Seller
which is reasonably likely to have a material adverse effect on Seller's assets,
prospects, financial condition or business or which would prevent or hinder the
consummation of the transactions contemplated by this Agreement.
2.13 Compliance with Laws. Seller is in compliance in all material respects
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with all applicable statutes, ordinances, orders, rules and regulations
promulgated by any federal, state, municipal or governmental authority which
apply to the conduct of its business, and Seller has not received written notice
of a violation or alleged violation of any such statute, ordinance, order, rule
or regulation.
2.15 Corporate Records. The corporate record books of ADRA record all
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material corporate action taken by its stockholders and board of directors and
committees thereof. The copies of the ADRA's Corporate Records delivered to
Buyer are true and complete copies of the originals of such documents. Seller
has provided Buyer with access to all tax and accounting records in order to
perform its due diligence procedures. Seller represents that such tax and
accounting records are complete.
2.16 Employee Benefit Plan. Schedule 2.16 lists and describes all employee
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benefit plans that have been offered to employees of the ADRA business since
inception through the Closing Date. Seller has provided Buyer with complete
copies of all documents embodying or governing such Plans.
2.17 Environmental Matters. ADRA has never generated, transported, used,
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stored, treated, disposed of or managed any Hazardous Waste. No Hazardous
Material has ever been or is threatened to be spilled, released or disposed of
by or on behalf of ADRA at any site presently or formerly owned, operated,
leased or used by ADRA. For the purposes of this Section 2.17, (i) "Hazardous
Material" shall mean and include any hazardous waste, hazardous material
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hazardous substance, petroleum product, oil, toxic substance, pollutant
contaminant or other substance which may pose a threat to the environment or to
human health or safety, as defined or regulated under any Environmental Law;
(ii) "Hazardous Waste" shall mean and include any hazardous waste as defined or
regulated under any Environmental Law; (iii) "Environmental Law" shall mean any
environmental or health and safety-related law, regulation, rule, ordinance, or
bylaw at the foreign, federal state, or local level, whether existing as of the
date hereof, previously enforced, or subsequently enacted; and (iv) "Seller"
shall mean and include Seller and all other entities for whose conduct Seller is
or may be held responsible under any Environmental Law.
2.18 Directors, Officers, and Suppliers.
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(a) Schedule 2.18(a) is a true and complete list of all current
directors and officers of Seller. Neither the Seller nor, to Seller's
knowledge, any other director or officer of Seller, owns, directly or
indirectly, on an individual or joint basis, any material interest in, or serves
as an officer, director, employee of or consultant to, any customer, competitor
or supplier of ADRA or any organization that has a material contract or
arrangement with or lease of real or personal property to the Business.
(b) Schedule 2.18(b) is a true and complete list of the suppliers of
ADRA to whom ADRA has made a payment of $10,000 or more during or with respect
to the fiscal year ended June 30, 1997 or during the nine month period ended
March 31, 1998 showing with respect to each, the name, address and dollar volume
involved.
2.19 Disclosure. To the knowledge of Seller, the representations,
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warranties and statements contained in this Agreement and in the certificates,
exhibits and schedules delivered by ADRA to Buyer pursuant to this transaction
do not contain any untrue statement of a material fact.
2.20 Employees and Labor Matters.
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(a) As of the date hereof, Seller employs 76 full-time employees and 2
part-time employees in the ADRA business and generally enjoys a good employer-
employee relationship. Schedule 2.20(a) sets forth the name, position, pay
rate, fulltime or part-time status, date of hire, annual review date and exempt
or nonexempt status of each of ADRA's employees. Seller has no knowledge that
any employee of the Business does not plan to accept employment with Buyer other
than as detailed on Schedule 2.20(a).
(b) Schedule 2.20(b) is a list of all employees that have terminated
employment, for any reason, voluntarily or otherwise, with ADRA over the last
nine (9) months with a brief description of the circumstances of such
termination. Also included on said Schedule is a description of the former
position held by the former employee and the pay rate of said former employee.
Seller is not delinquent in payments to any of its employees, past or
present, for any wages, salaries, commissions, bonuses or other direct
compensation for any services provided or
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amounts required to be reimbursed, relating to the Business. There are no
workers' compensation or other similar claims filed against Seller, and the
Seller does not know of any injury or other event that may give rise to any such
claim, relating to the Business. There are no charges of employment
discrimination or unfair labor practices that have been filed against or
involving Seller, relating to the Business. There are no grievances, complaints,
or charges that have been filed against Seller, relating to the Business. Seller
is, and has been at all times since its effective date, in compliance with the
requirements of the Immigration Reform Control Act of 1986, relating to the
Business. Seller's payroll systems and classification of employees is and for 18
months prior to the Closing has been consistent with and in compliance with the
requirements of the Fair Labor Standards Act, as amended, and any and all
applicable state minimum wage and overtime laws, relating to the Business.
2.21 Customers and Distributors.
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(a) As of the date hereof, Schedule 2.21(a) sets forth any
representative, distributor or direct customer who accounted for more than
$100,000 of revenue to the Business in any of the fiscal years ended June 30,
1996 and 1997 or for the nine month period ended March 28, 1998. The Schedule
shall include customer name and dollar amount purchased. Schedule shall also
quantify the sales in units to distributors during each of fiscal years 1996,
1997 and for the nine months ended March 28, 1998.
(b) Schedule 2.21(b) is the list maintained by the Seller of license
sales of ADRA products by customer in North America only from inception through
April 30, 1998 and is hereinafter defined as the Installed Base. Such Schedule
identifies those customers currently on maintenance. This listing of Installed
Base includes customer name, location, contact person, phone number, and other
pertinent information available from the books and records of ADRA the list is
provided "as is, where is". Seller represents that to its knowledge, such
listing is complete and accurate in all material respects.
2.22 Proprietary Rights,
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(a) "Proprietary Rights" means all of the following owned by, issued
to or licensed to Seller and used exclusively in the Business, and any and all
corresponding rights that, now or hereafter, may be secured throughout the
world: patents, patent applications, patent disclosures and inventions (whether
or not patentable and whether or not reduced to practice) and any reissues,
continuations, continuations-in-part, revisions, extensions, or reexaminations
thereof; trade marks, service marks, trade dress, logos, trade names, corporate
names, together with all goodwill associated therewith; copyrights and
copyrightable works; and registrations, applications and renewals for any of the
foregoing; trade secrets and confidential information (including, without
limitation, ideas, formulae, compositions, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data, financial
and accounting data, business and marketing plans, and customer and supplier
lists and related information); computer software (including, without
limitation, data, data bases and documentation); other intellectual property
<PAGE>
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rights; and all copies and tangible embodiments of the foregoing (in whatever
form or medium), in each case including, without limitation, the items set forth
in Schedule 2.21 attached hereto.
(b) Schedule 2.22 sets forth a complete list of all: (i) patented or
registered Proprietary Rights and pending patent applications or other
applications for registrations of Proprietary Rights owned or filed by or on
behalf of ADRA; (ii) all material trade names and material unregistered
trademarks and service marks owned by ADRA and used exclusively in the Business;
(iii) all material software owned by ADRA and licensed to third parties
exclusively through the Business ("Material Software"); and (iv) all licenses or
similar agreements under which ADRA is the licensee of any Proprietary Rights.
(c) Except as set forth in Schedule 2.22: (i) to its knowledge, ADRA
owns and possesses all right, title and interest in and to, or has a valid and
enforceable license to use, the Proprietary Rights reasonably necessary for the
operation of the Business as currently conducted, free and clear of all liens,
licenses, security interests, encumbrances and other restrictions, (ii) no claim
by any third party contesting the validity, enforceability, use or ownership of
any of the Proprietary Rights has been made, is currently outstanding or, to its
knowledge, is threatened, (iii) to its knowledge, the conduct of the Business
has not infringed, misappropriated or otherwise conflicted with any intellectual
property rights of any third parties, and ADRA has not received any notices of,
and is not aware of any facts which indicate a likelihood of, any infringement
or misappropriation by, or conflict with, any third party with respect to the
Proprietary Rights (including any demands by third parties that ADRA take a
license of any intellectual property for use in the Business); and (iv) to its
knowledge, no independent contractor developed or assisted in the development of
any other Material Software, except in accordance with a written agreement
assigning to ADRA or Parent such independent contractor's right, title and
interest in such Material Software.
(d) ADRA has taken all steps required to maintain and protect the
Proprietary Rights. Such steps have included, but are not limited to: (i) the
affixation of all copyright notices required by U.S. law to all copies of
Material Software and the documentation related thereto; (ii) distribution of
source code of Material Software (A) to employees, consultants, contractors and
potential investors, only subject to appropriate confidentiality agreements or
(B) to customers of the Business, only subject to license agreements; and (iii)
disclosure of material confidential information of the Business (including but
not limited to source code and systems documentation for Material Software) only
to persons who require access to such information for the Business, and only
subject to written confidentiality agreements.
2.23 Warranty. Except as expressly provided herein, Seller and/or Parent
--------
make no warranty of any kind whatsoever, including, without limitations any
representation as to physical condition, suitability for a particular use, value
of assets or future earnings or performance of the ADRA Business. All implied
warranties of merchantability and fitness for a particular purpose are expressly
excluded.
<PAGE>
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Section 3
REPRESENTATIONS AND WARRANTIES OF SOFTECH
3.1 Making of Representations and Warranties. As a material inducement to
----------------------------------------
Sellers to enter into and to consummate the transactions contemplated by this
Agreement, Buyer hereby represents and warrants the following:
(a) SofTech is duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts with full corporate power
and authority to own or lease its properties and to conduct its business in the
manner and in the places where such properties are owned or leased or such
business is conducted by them.
(b) SofTech has the full right, authority and power to enter into
this Agreement and each agreement, document and instrument to be executed and
delivered pursuant to this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance by SofTech of this
Agreement has been duly authorized by all necessary corporate action of SofTech,
and no other action on the part of SofTech or its Board of Directors or
shareholders is required in connection therewith.
3.2 Disclosure. To the knowledge of Buyer, the representations,
----------
warranties and statements contained in this Agreement and in the certificates,
exhibits and schedules delivered by Buyer to Seller pursuant to this transaction
do not contain any untrue statement of a material fact.
3.3 SEC Documents. Buyer has furnished or made available to Seller a true
-------------
and complete copy of its definitive proxy statement in connection with the
annual meeting of its Stockholders, its annual report and Form 10-K for the
fiscal year ended May 31, 1997, its current reports on Form 8-K and any other
document dated prior to the date of this Agreement which Buyer filed under the
Securities and Exchange Act of 1934 after the filing of such Form 10-K
(collectively, the "SEC Documents"), which are all of the documents (other than
preliminary material) that Buyer was required to file with the Commission since
such date. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, or the
Securities Exchange Act of 1934, as the case may be, and the rules and
regulations of the Commission thereunder applicable to such SEC Documents, and,
to the knowledge of Buyer, none of the SEC Documents, as of their respective
dates, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of Buyer included in the SEC
Documents complied as to form in all material respects with the published rules
and regulations of the Commission with respect thereto, were prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X) and fairly
presented in accordance with applicable requirements of GAAP (subject, in the
case of the unaudited statements, to normal recurring adjustments, none of which
will be material) the
<PAGE>
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consolidated financial position of Buyer as of their respective dates and the
consolidated results of operations and consolidated cash flows of Buyer for the
periods presented therein.
3.4 Litigation. Except as disclosed in the SEC Documents, there is no
----------
litigation or governmental or administrative proceeding or investigation pending
against Buyer which is reasonably likely to have a material adverse effect on
Buyer's assets, prospects, financial condition or business or which would
prevent or hinder the consummation of the transactions contemplated by this
Agreement or performance by Buyer of its obligations under this Agreement.
3.5 Compliance with Laws. Buyer is in compliance in all material respects
--------------------
with all applicable statutes, ordinances, orders, rules and regulations
promulgated by any federal, state, municipal or governmental authority which
apply to the conduct of its business, and Buyer has not received any notice of a
violation or alleged violation of any such statute, ordinance, order, rule or
regulation.
Section 4
INDEMNIFICATION
4.1 Indemnification by the Sellers. Each Seller, jointly and severally,
------------------------------
agrees to indemnify and hold Buyer and their respective subsidiaries, officers,
directors, partners or employees harmless from and against any damages,
diminution in value, liabilities, losses, claims, taxes or expenditures of any
kind or nature whatsoever which may be sustained or suffered by any of them
arising out of or based upon any breach of any representation, warranty or
covenant under this Agreement or in any agreement, certificate, schedule or
exhibit delivered pursuant hereto, or by reason of any claim, action or
proceeding asserted or instituted growing out of any matter or thing
constituting a breach of such representation, warranty, covenant or agreement,
in each case to the extent a claim for indemnity with respect thereto is
asserted within the time period specified in Section 4.6.
4.2 Indemnification by SofTech. SofTech agrees to indemnify and hold
--------------------------
Seller harmless from and against any damages, liabilities, losses, taxes or
expenditures of any kind or nature whatsoever which may be sustained or suffered
by any of them arising out of or based upon any breach of any representation,
warranty, covenant or agreement under this Agreement or in any agreement,
certificate, schedule or exhibit delivered pursuant hereto, or by reason of any
claim, action or proceeding asserted or instituted growing out of any matter or
thing constituting a breach of such representation, warranty, covenant or
agreement in each case to the extent a claim for indemnity with respect thereto
is asserted within the time period specified in Section 4.6.
4.3 Notice and Defense of Claims. In the event of a claim arising under
----------------------------
the indemnification provisions detailed above, the party making the claim shall
do so in writing to the person or persons responsible for the indemnification.
The party receiving such claim has 30 days to review the written notification
and either agree the claim is valid or dispute such claim in writing to the
other party, or contend that liability might be properly asserted but that a
claim for
<PAGE>
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a certain dollar amount has not matured as of such date; provided, that a claim
in respect of any action at law or suit in equity by or against a third person
as to which indemnification will be sought shall be given promptly after the
action or suit is commenced; provided further that failure to give such notice
shall not relieve the indemnitor of its obligations hereunder except to the
extent it shall have been prejudiced by such failure. In calculating any loss or
expense there shall be deducted (i) any insurance recovery in respect thereof
(and no right of subrogation shall accrue hereunder to any insurer) and (ii) the
amount of any tax benefit to the indemnified party (or any of its affiliates)
with respect to such loss or expense (after giving effect to the tax effect of
receipt of the indemnification payments). In the case of loss or expense
asserted against, resulting to, imposed upon, or suffered by any indemnified
party by reason of any claim by any third party (a "Third Party Claim"), the
indemnified party shall provide a claim as previously provided. Upon receipt of
a claim in respect of a Third Party Claim, the indemnitor may, in its sole
discretion, undertake the defense thereof by counsel of its own choosing, which
counsel shall be reasonably satisfactory to the indemnified party (it being
understood, in the event that the indemnitor undertakes such defense, the
defense, compromise, or settlement of such claim shall be for the account of,
and at the risk of, the indemnitor); provided, however, that the indemnified
party shall have the right at its own expense to participate in the defense
thereof and to employ counsel at its own expense to assist in such defense. If
the indemnified party has not, within fifteen (15) days after a claim with
respect to any Third Party Claim is made, received written notice from the
indemnitor stating that the indemnitor elects to assume the defense of such
Third Party Claim, the indemnified party shall have the right, with counsel
reasonably acceptable to the indemnitor, to undertake and control the defense,
compromise or settlement of such Third Party Claim. The indemnitor shall not,
without the prior written consent of each indemnified party against whom a Third
Party Claim is asserted, settle or compromise any claim or consent to the entry
of any judgment relating to or cease to defend any such Third Party Claim,
unless such settlement, compromise, or judgment includes as an unconditional
term thereof the giving by the claimant or by the plaintiff to each indemnified
party against whom a Third Party Claim is asserted, a release from all
liabilities in respect of such Third Party Claim and does not result in the
imposition on the indemnified party of any remedy other than monetary damages
for which the indemnified party is fully indemnified. The indemnitor shall, at
its expense, provide each indemnified party against whom a Third Party Claim is
asserted with reasonable access to all records and documents of the indemnitor
relating to any Third Party Claim. The indemnified party shall, at the expense
of the indemnitor, provide the indemnitor with reasonable access to all records
and documents of the indemnified party relating to any Third Party Claim. In the
event of agreement with the validity of such claim, payment shall be made within
45 days of receipt of notification. If the dispute cannot be settled by
negotiation between the parties within 90 days of receipt of notification, upon
election of either party, the dispute shall be referred to the American
Arbitration Association to be settled in Boston, MA on an expedited basis in
accordance with the commercial arbitration rules of said organization. Fees and
expenses of such arbitration shall be shared equally.
4.4 Exclusive Remedy. The parties agree that the remedies provided in
----------------
Section 4 shall be the exclusive remedies with respect to any alleged breach of
any representation or warranty or covenant made in this Agreement. The only
legal action which may be asserted by any party with respect to any matter shall
be a contract action to enforce, or to recover damages
<PAGE>
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for the breach of, this Section 4. Without limiting the generality of the
preceding sentence, no legal action sounding in tort or strict liability may be
maintained by any party.
4.5 Tax Effect of Indemnification Payments. In determining the amount of
--------------------------------------
claims against an indemnifying party pursuant to this Section 4, there shall be
added (in the case of a tax detriment) or deducted (in the case of a tax
benefit) to or from the amounts to be paid by the indemnifying party an amount
equal to the net present value of any tax benefit or tax detriment (federal,
state, local or foreign) realized or expected by the independent public
accountants of Seller to be realized by the indemnified party by reason of such
claim and the receipt of any indemnity payment pursuant to this Section 4.
For purposes of this Section 4.5, "present value" shall be calculated using
the applicable annual Federal midterm rate, as that term is defined in the Code,
as in effect for the month in which the payment is to be made; "tax benefit" and
"tax detriment" shall be calculated using the actual effective tax rate with
respect to the taxable period or periods for which the tax benefit or the tax
detriment, as the case may be, is realized or incurred, or expected by the
independent public accountants of Seller to be realized or incurred, as the case
may be.
4.6 Limitation on Indemnification by Sellers. The right of the Buyer to
----------------------------------------
indemnification from the Seller shall be subject to the following provisions:
(a) The Seller shall be provided with a $500,000 deductible for all claims
for indemnification under Section 4.1 by the Buyer. No payments of such claims
shall be made by the Seller to the Buyer until such time as such claims exceed
$500,000 and only to the extent that such claims exceed that amount; and
(b) No indemnification shall be payable to the Buyer from the Seller
pursuant to Section 4.1 for claims in excess of $1.0 million in the aggregate
exclusive of claims relating to the Excluded Liabilities as to which there shall
be no such limitation and which shall not be counted toward such limitation.
4.7 Survival. The representations and warranties of each party contained
--------
in this Agreement shall survive the Closing Date until December 31, 1998. Any
claim for indemnity shall be asserted on or before such date except that any
claim relating to Taxes may be asserted until the 60th day after the running of
the applicable statute of limitations with respect to the taxable period to
which the particular claim relates. Notwithstanding anything to the contrary
contained in this Agreement, no time or other limitation applies to losses
relating to Excluded Liabilities.
Section 5
POST CLOSING OBLIGATIONS
5.1 Required Audits of ADRA. Seller agrees to cooperate reasonably
-----------------------
following the transaction to complete the required audits of prior fiscal years
as required for Buyer's Form 8K
<PAGE>
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filing. Such audited financial statements must be filed with the Securities and
Exchange Commission on or before the 75th day following the Closing date of the
transaction.
5.2 Nonsolicitation. Each of the Buyer and Seller agree that, for a
---------------
period of one year from the Closing Date, without the prior written consent of
the other party, which consent shall not be unreasonably withheld, they shall
not, directly or indirectly, solicit for employment hire as an employee,
consultant or contractor, or otherwise engage any employee who was employed by
the other party as of the transaction date or for a period of six months
immediately preceding transaction date. For the purpose of this section 5.2
only, all employees of the Business that are offered employment by the Buyer
shall be deemed employees of Buyer at the transaction date regardless of their
ultimate acceptance of such offer of employment with Buyer, provided, however,
that Seller may offer employment to a former employee of the Business 15 days
after their rejection of an offer of employment with Buyer.
5.3 Account Reconciliation. Seller agrees to close the April 30, 1998
----------------------
ADRA books and records in the normal course and to provide Buyer with such final
records by May 26, 1998.
5.4 Assignment of Registered Trademarks. Seller agrees to enter into an
-----------------------------------
assignment agreement with Buyer subsequent to the Closing to assign all of the
registered trademarks listed of the Business as listed on Schedule 2.22 to
Buyer. Such assignment agreement shall be in a form suitable for filing with the
Patent and Trademark Office.
Section 6
OTHER INFORMATION
6.1 Governing Law. This Agreement shall be construed under and governed by
-------------
the internal laws of the Commonwealth of Massachusetts.
6.2 Notices. Any notice or communication required hereunder shall be in
-------
writing and shall be deemed to have been given if sent by facsimile transmission
(with confirming copy by mail) upon receipt. All notices will be sent to the
addresses set forth below:
To SofTech:
SofTech, Inc.
3260 Eagle Park Drive, N.E.
Grand Rapids, MI 49505
Attention: Mark Sweetland
To the Sellers:
MatrixOne, Inc.
Two Executive Drive
Chelmsford, MA 01824
Attention: Mark O'Connell
<PAGE>
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To Seller's Legal Counsel:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 021 10
Attention: Gordon H. Hayes
6.3 Entire Agreement. This Agreement, including the Schedules and
----------------
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. All inducements to the making of
this Agreement relied upon by either party have been expressed herein.
6.4 Assignability. This Agreement may not be assigned by the Buyer or the
-------------
Seller without the prior written consent of the other party. This Agreement
shall be binding upon and enforceable by, and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns. No right
hereunder shall be created in any person or entity not a party to this
Agreement, it being the express intention of the parties hereto that no third
party beneficiary rights shall be created or implied by virtue of this
Agreement.
<PAGE>
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ASSET PURCHASE AGREEMENT SIGNATURE PAGE
---------------------------------------
IN WITNESS WHEREOF the parties hereto have executed or caused this
Agreement to be executed by their duly authorized representatives as of the date
set forth above.
SOFTECH, INC.
By: /s/ Joseph Mullaney
-----------------------------
Joseph P. Mullaney
Chief Financial Officer
ADRA SYSTEMS, INC.
By: /s/ William L. Fiedler
-----------------------------
William L. Fiedler
Chief Financial Officer
MATRIXONE, INC.
By: /s/ William L. Fiedler
-----------------------------
William L. Fiedler
Chief Financial Officer