UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 2, 2006
PAR TECHNOLOGY CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-09720 16-1434688
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
PAR Technology Park, 8383 Seneca Turnpike, New Hartford, NY 13413-4991
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (315) 738-0600
Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.01. Completion of Acquisition or Disposition of Assets.
On November 2, 2006, PAR Technology Corporation (the "Company") and its
wholly owned subsidiary, Par-Siva Corporation (f/k/a PAR Vision Systems
Corporation) (the "Subsidiary") acquired substantially all of the assets and
assumed certain liabilities of SIVA Corporation ("SIVA"). The purchase price of
the assets was approximately $6.6 million in cash and PAR stock. The agreement
provides for additional contingent purchase price payments based on certain
sales based milestones and other conditions.
SIVA, based in Delray Beach, Florida, is a developer of software solutions
for multi-unit restaurant operations.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Financial statements will be filed by amendment not later than 71 calendar
days after the date on which this initial report on Form 8-K is required to be
filed.
(b) Exhibits.
10.1 Asset Purchase Agreement by and among PAR Technology Corporation, a
Delaware corporation, Par-Siva Corporation, a New York corporation,
and SIVA Corporation, a Delaware corporation dated as of October 27,
2006, effective as of November 2, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PAR TECHNOLOGY CORPORATION
Date: November 8, 2006
By: /s/ Ronald J. Casciano
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Ronald J. Casciano
Vice President, Chief Financial
Officer and Treasurer
EXHIBIT INDEX
Exhibit No. Description
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10.1 Asset Purchase Agreement by and among PAR Technology Corporation, a
Delaware corporation, Par-Siva Corporation, a New York corporation,
and SIVA Corporation, a Delaware corporation dated as of October 27,
2006, effective as of November 2, 2006.
Exhibit 10.1
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ASSET PURCHASE AGREEMENT
DATED AS OF OCTOBER 27, 2006
BY AND AMONG
PAR TECHNOLOGY CORPORATION
PAR-SIVA CORPORATION
AND
SIVA CORPORATION
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CONFIDENTIAL TREATMENT CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF
THIS DOCUMENT MARKED WITH ASTERISKS
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of October 27, 2006 (this
"Agreement"), is entered into by and among PAR Technology Corporation, a
Delaware corporation ("PTC"), Par-Siva Corporation ("Buyer") and SIVA
Corporation, a Delaware corporation ("Seller").
RECITALS
A. Seller conducts a business which provides enterprise wide and point of
sale operation and revenue management software, solutions, systems, products and
services to the restaurant industry (the "Business").
B. Buyer desires to purchase and assume from Seller, and Seller desires to
sell and transfer to Buyer, certain of the assets and liabilities of Seller, all
as more specifically set forth herein, and upon the terms and subject to the
conditions of this Agreement (the "Transaction").
C. Certain capitalized terms used herein have the meanings ascribed to such
terms in Article 1 hereof.
AGREEMENT
In order to consummate the Transaction, and in consideration of the mutual
agreements hereinafter contained, Buyer and Seller agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Certain Defined Terms. As used in this Agreement, the following
terms have the following meanings:
"Action" means any claim, action, suit, arbitration, investigation, audit
or proceeding by or before any Governmental Authority or arbitrator.
"Affiliate" means, when used with respect to a specified Person, another
Person that, either directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified. With respect to any Person who is a natural person, such Person's
Affiliates shall include such Person's spouse and their respective siblings,
parents and lineal descendents.
"Ancillary Agreements" means the Employment Agreement(s), the Escrow
Agreement and other agreements required to be delivered pursuant to this
Agreement.
"Assets" means all of Seller's or any of Seller's Subsidiaries' right,
title and interest in and to all properties, assets and rights of any kind,
whether tangible or intangible, real or personal, contingent or existing, owned
or used by Seller or any of Seller's Subsidiaries or in which Seller or any of
Seller's Subsidiaries has any interest whatsoever.
"Benefit Arrangement" means any employment, consulting, severance, change
in control or other similar contract, arrangement or policy and each plan,
arrangement (written or oral), program, agreement or commitment providing for
insurance coverage (including without limitation any self insured arrangements),
workers' compensation, disability benefits, unemployment benefits, severance,
vacation benefits, retirement benefits, life, health, disability or accident
benefits (including without limitation any "voluntary employees' beneficiary
association" as defined in Section 501(c)(9) of the Code providing for the same
or other benefits), fringe benefits or for deferred compensation, profit sharing
bonuses, stock options, stock appreciation rights, phantom stock rights, stock
purchases, annual or long term cash incentive compensation, base pay or other
forms of incentive compensation or post retirement insurance, compensation or
benefits which is not a Multiemployer Plan, Pension Plan or Welfare Plan and
which is sponsored, administered, entered into, maintained, contributed to, has
been contributed to or required to be contributed to, as the case may be, by
Seller.
"Books and Records" means copies of all books of account and other
financial records pertaining to Seller or any of Seller's Subsidiaries;
excluding, however, Seller's minute books, shareholder records and charter
documents; Seller shall be entitled to retain the originals of Seller's
financial records for purposes of winding up Seller's affairs.
"Business Day" means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by law to be closed in New York, New
York.
"Code" means the Internal Revenue Code of 1986, as amended.
"Computer Program(s)" means (i) any and all computer programs (consisting
of sets of statements or instructions to be used directly or indirectly in a
computer in order to bring about a certain result) and portions thereof, and
(ii) all associated data and compilations of data, regardless of their form or
embodiment. "Computer Programs" shall include, without limitation, all source
code, object code, natural language code, all versions, all screen displays and
designs, all component modules, all descriptions, flow charts and other work
product used to design, plan, organize and develop any of the foregoing, and all
documentation, including without limitation user manuals and training materials,
relating to any of the foregoing.
"Confidentiality Agreement" means the Confidentiality and Non-Disclosure
Agreement dated as of February 3, 2006 between PTC and Seller.
"Contract" means any agreement, contract, lease, note, loan, evidence of
Indebtedness, letter of credit, accepted purchase order, franchise agreement,
distribution agreement, undertaking, covenant not to compete, employment
agreement, license, instrument, obligation, commitment, purchase and sale order
or other executory commitment to which Seller or any of its Subsidiaries is a
party or which relates to the Business or any of the Assets, whether oral or
written, express or implied, and which pursuant to its terms has not expired,
terminated or been fully performed by the parties thereto, including, without
limitation, any Real Property Lease and any Personal Property Lease.
"Disclosure Schedule" means the disclosure schedules attached hereto.
"Employee Plans" means all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
"Employment Agreement(s)" means employment agreements to be entered into
between Buyer and James Melvin and such other key personnel as are identified by
Buyer on Schedule 1.1-1 pursuant to the terms and conditions of this Agreement.
"Encumbrance" means any claim, lien, pledge, option, charge, easement,
hypothec, security interest, deed of trust, mortgage, right of way,
encroachment, building or use restriction, encumbrance or other right of third
parties, whether voluntarily or involuntarily incurred or arising by operation
of law, and includes, without limitation, any agreement to give any of the
foregoing in the future, and any contingent or conditional sale agreement or
other title retention agreement or lease in the nature thereof.
"Environmental Law" means any Law, now in effect and as amended, and any
judicial, legislative or administrative interpretation thereof, including any
Governmental Order relating to the environment, the effect of Hazardous
Materials on the environment or human safety or health, emissions, discharges or
releases of Hazardous Materials into the environment, including without
limitation into ambient air, surface water, groundwater or land, occupational
safety and health, or otherwise relating to the handling of Hazardous Materials
or the clean up or other remediation of Hazardous Materials.
"Equity Securities" of any Person means (i) shares of capital stock,
limited liability company interests, unlimited liability company interests,
partnership interests or other equity securities of such Person, (ii)
subscriptions, calls, warrants, options or commitments of any kind or character
relating to, or entitling any Person to purchase or otherwise acquire, any
capital stock, limited liability company interests, unlimited liability company
interests, partnership interests or other equity securities of such Person,
(iii) securities convertible into or exercisable or exchangeable for shares of
capital stock, limited liability company interests, unlimited liability company
interests, partnership interests or other equity securities of such Person, and
(iv) equity equivalents, interests in the ownership or earnings of, or equity
appreciation, phantom stock or other similar rights of, or with respect to, such
Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person which is (or at any relevant time was) a
member of a "controlled group of corporations" within the meaning of Section
414(b) of the Code, a member of a group of trades or businesses which is under
"common control" within the meaning of Sections 414(c) or (o) of the Code, or a
member of an "affiliated service group" within the meaning of Section 413(m) of
the Code.
"Escrow Agent" means NBT Bank, N.A.
"Excluded Assets" means (any other provision of this Agreement
notwithstanding) all cash and cash equivalents over and above aggregate advance
payments and/or other deposits on executory Contracts, the future obligations of
which are being assumed by Buyer; the Assets listed on Schedule 1.1-2 of the
Disclosure Schedule; and any Contracts hereinafter entered into in violation of
the terms hereof or not listed on Schedule 2.1(a)(iii) of the Disclosure
Schedule.
"Facility" means the facility located at 3333 South Congress Avenue, Suite
400, Delray Beach, Florida 33445 leased, operated and used by Seller.
"Financial Statements" means the unaudited balance sheets of Seller and its
Subsidiaries as of December 31, 2005, and the related statements of income for
the twelve month period then ended.
"GAAP" means United States generally accepted accounting principles in
effect from time to time applied consistently throughout the period involved.
"General Intangibles" means all good will and general intangibles
associated with the Business including, without limitation, all information
relating to suppliers, customers, potential customers, distributors and vendors,
and telephone and facsimile numbers used by Buyer prior to Closing Date.
"Government Contract" means any Contract to which Seller or any of its
Subsidiaries is a party or by which any of them are bound, the ultimate
contracting party of which is a Governmental Authority (including any
subcontract with a prime contractor or other subcontractor who is a party to any
such Contract).
"Government-Furnished Property" means all machinery, equipment, tools,
dies, spare parts and all other personal property and fixtures loaned, bailed or
otherwise furnished by the United States Government to Seller or any of its
Subsidiaries pursuant to any Government Contract.
"Governmental Authority" means any government, any governmental entity,
department, commission, board, agency or instrumentality, and any court,
tribunal, or judicial or arbitral body, whether federal, state, local or
foreign.
"Governmental Order" means any order, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"Handling of Hazardous Materials" means the production, use, generation,
storage, treatment, recycling, disposal, discharge, release or other handling or
disposition of Hazardous Materials.
"Hazardous Materials" means: (a) petroleum, waste oil, crude oil, asbestos,
urea formaldehyde or polychlorinated biphenyl; (b) any waste, gas or other
substance or material that is explosive, radioactive or infectious; (c) any
"hazardous substance," "pollutant," "contaminant," "hazardous waste," "regulated
substance," "hazardous chemical," "toxic chemical" or "toxic substance" as
designated, listed or defined (whether expressly or by reference) in any Law
(including the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq. and any other so called "superfund" or
"superlien" law, the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean Air
Act, 42 U.S.C. Section 7401 et seq., and the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq., and the respective regulations promulgated
thereunder, or any analogous Laws); and (d) any compound, mixture, solution,
product or other substance or material that contains any substance or material
referred to in clauses (a), (b) or (c) above.
"Indebtedness" means (i) indebtedness of Seller or any of its Subsidiaries
for borrowed money (including the aggregate principal amount thereof, the
aggregate amount of any accrued but unpaid interest thereon and any prepayment
penalties or other similar amounts payable in connection with the repayment
thereof on or prior to the Closing Date), (ii) obligations of Seller or any of
its Subsidiaries evidenced by bonds, notes, debentures, letters of credit or
similar instruments, (iii) obligations of Seller or any of its Subsidiaries
under capitalized leases, (iv) obligations of Seller or any of its Subsidiaries
under conditional sale, title retention or similar agreements or arrangements
creating an obligation of Seller or any of its Subsidiaries with respect to the
deferred purchase price of property (other than customary trade credit), and (v)
all obligations of Seller to guarantee any of the foregoing types of obligations
on behalf of any Person other than Seller.
"Intellectual Property Rights" means all (i) domestic and foreign
registrations of trademarks, service marks, logos, domain names, protected
models, designs, created works, trade names or other trade rights of Seller or
any of its Subsidiaries, (ii) pending applications by Seller or any of its
Subsidiaries for any such registrations, (iii) rights in or to inventions,
patents and copyrights (whether or not registered) and pending applications
therefor of Seller or any of its Subsidiaries, (iv) Seller's or any of its
Subsidiaries' rights to other trademarks, service marks, logos, domain names,
web sites, protected models, designs, data, software, created works, trade names
and other trade rights and all other trade secrets, designs, plans,
specifications, technology, know how, methods, designs, concepts, software
utilities and tools, other proprietary rights (including, without limitation,
associated goodwill and remedies against infringements thereof and rights of
protection of an interest therein under the Laws of all jurisdictions) and other
intellectual property, whether or not registered, and (v) rights under any
licenses of Seller or any of its Subsidiaries to use any of the intellectual
property described in clauses (i) to (iv) above.
"Interim Financial Statements" means the balance sheet of Seller and its
Subsidiaries as of June 30, 2006, and the related statements of income for the 6
month period then ended.
"Inventory" means all of the inventory of Seller or any of its Subsidiaries
held for resale, and all of Seller's raw materials, works in process, finished
products and supply items, in each case wherever the same may be located.
"IRS" means the United States Internal Revenue Service.
"Knowledge" or "Known" means those facts or circumstances actually known by
a Specified Person of Seller, or any facts or circumstances which would be known
after due inquiry by a person holding a comparable office or with comparable
experience or responsibilities. For purposes of this definition, the term
"Specified Persons" means: Jim Melvin ("Melvin"), Doug Betlach, Glenn Levi, Rick
King, Julie Grosse, Aaron Link, Adrian Peschl and David Joyce.
"Law" means any federal, state, local or foreign statute, law, legislation,
constitution, ordinance, regulation, rule, code, edict, order, directive,
pronouncement, judgment, decree, or rule of common law.
"Leasehold Improvements" shall mean all leasehold improvements situated in
or on the real property covered by the Real Property Lease and owned by Seller
or any of its Subsidiaries to the extent and only to the extent the same may be
removed from such real property without significant damage.
"Licenses" means all of the licenses, permits, approvals, certificates,
exemptions, consents and other authorizations from any Government Authority,
whether foreign, federal, state or local, or other third party necessary for the
use, occupancy, operation or conduct of the Business as conducted as of the date
of this Agreement and as of the Closing Date.
"Loss Bid" means any outstanding offer by Seller or any of its Subsidiaries
to provide goods or services to any customer at a quoted price which Seller
reasonably expects, based on Seller's Knowledge as of the date hereof and as of
the Closing Date, to result in a loss.
"Loss Contract" means any Contract for which Seller or any of its
Subsidiaries reasonably expects, based on such Seller's Knowledge as of the date
hereof and as of the Closing Date, to result in a loss.
"Losses" means any and all losses, liabilities, damages, claims, awards,
judgments, diminution of value, fines, penalties, costs and expenses (including,
without limitation, the costs of reasonable investigation, remediation and
attorneys' fees) actually suffered or incurred .
"Material Adverse Effect" or "Material Adverse Change" or a similar phrase
means, with respect to any Person, any material adverse effect on or material
adverse change with respect to the business, operations, assets, liabilities,
condition (financial or otherwise), results of operations or prospects of such
Person and its Subsidiaries, taken as a whole.
"Multiemployer Plan" means any "multiemployer plan," as defined in Section
3(37) or 4001(a)(3) of ERISA, which Seller or any ERISA Affiliate of Seller
sponsors, maintains or administers or to which Seller or any ERISA Affiliate of
Seller contributes, has contributed or is, or was obligated to contribute.
"Pension Plan" means any "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) which Seller and any of
its Subsidiaries or any ERISA Affiliate of Seller and any of its Subsidiaries
sponsors, maintains or administers or to which Seller and any of its
Subsidiaries or any ERISA Affiliate of Seller and any of its Subsidiaries
contributes, has contributed or is, or was obligated to contribute.
"Person" means any natural person, corporation, limited partnership,
general partnership, limited liability company, unlimited liability company,
joint stock company, joint venture, association, company, trust or other
organization or any Governmental Authority.
"Personal Property Leases" shall mean all of the existing leases with
respect to the personal property of Seller or any of its Subsidiaries.
"Personnel" means all employees, officers, directors and independent
contractors of, employed by or contracting with Seller or any of its
Subsidiaries.
"Potential Loss" means any and all losses, liabilities, damages, claims,
awards, judgments, diminution of value, fines, penalties, costs and expenses
(including, without limitation, the costs of reasonable investigation,
remediation and attorneys' fees.)
"Pre-Closing Tax Period" means all taxable periods ending on or prior to
the Closing Date and the portion of any taxable period ending on the Closing
Date that includes but does not end on the Closing Date.
"Real Property Leases" means the lease entered into by Seller for the
Facility.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" of any Person means any other Person (i) of which such first
Person (either alone or through or together with any other Subsidiary) owns,
directly or indirectly, at least 50% of the stock or other Equity Securities of
such other Person or (ii) the operations of which are consolidated with such
first Person, pursuant to GAAP, for financial reporting purposes.
"Tax" or "Taxes" means any federal, state, local or foreign net or gross
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, offer, registration, value added,
alternative or add on minimum, estimated or other tax, governmental fee or like
assessment or charge of any kind whatsoever (including any liability for Taxes
imposed on another Person, whether incurred or borne as a transferee or
successor or by contract or otherwise), including any interest, penalty or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendments thereof.
"Transaction Related Expenses" means the (i) fees and disbursements of
counsel to Seller or its independent accountants or financial or other advisors
incurred by Seller or any of its Subsidiaries in connection with the
transactions contemplated hereby, and (ii) any expenses incurred by Seller or
any of its Subsidiaries in connection with the transactions contemplated hereby
or for which it may have any liability.
"Transferred Subsidiaries" means, collectively, those subsidiaries listed
on Schedule 1.1-3.
"Welfare Plan" means any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA (other than a Multiemployer Plan) which Seller or any of
its Subsidiaries or any ERISA Affiliate of Seller or any of its Subsidiaries
sponsors, maintains or administers or to which Seller or any of its Subsidiaries
or any ERISA Affiliate of Seller or any of its Subsidiaries contributes, has
contributed or is, or was obligated to contribute.
Section 1.2 Other Defined Terms. The following terms have the meanings
defined for such terms in the Sections set forth below:
Term Section
---- -------
Agreed Upon Deposits ................................... 2.1(a)
Agreement .............................................. Preamble
Assumed Liabilities .................................... 2.2
Base Amount ............................................ 2.4
Balance Sheet .......................................... 4.6
Business ............................................... Preamble
Buyer .................................................. Preamble
Buyer Indemnified Parties .............................. 8.2(a)
Buyer Threshold Amount ................................. 8.2(e)
Claim .................................................. 8.2(c)
Claim Notice ........................................... 8.2(c)
Closing ................................................ 3.1
Closing Date ........................................... 3.1
Contingent Purchase Price Amount ....................... 2.5
Contingent Purchase Price Period ....................... 2.5
DMI .................................................... 10.3
DMI Agreement .......................................... 10.3
eCentra ................................................ 10.4
eCentra Agreement ...................................... 10.4
Escrow Agreement ....................................... 2.4(b)(iii)
Escrow Amount .......................................... 2.4(b)(iii)
Escrow Shares .......................................... 2.4(b)(iii)
Excluded Liabilities ................................... 2.3
Facilities Agreement ................................... 10.1
GMRI ................................................... 4.12(c)
GMRI Agreement ......................................... 4.12(c)
Indemnifying Party ..................................... 8.2(c)
Loaned Equipment ....................................... 4.14
Luby's ................................................. 10.6
Luby's Agreement ....................................... 10.6
Luby's Deposit ......................................... 10.6
Luby's Support Obligations ............................. 10.6
Machinery and Equipment ................................ 4.14
Material Contracts ..................................... 4.12 (a)
Melvin ................................................. 1.1
Purchase Price ......................................... 2.4(a)
Purchased Assets ....................................... 2.1(a)
PTC .................................................... Preamble
PTC Common Stock ....................................... 2.3(b)(iii)
***** ..................................................
Related Party Transaction .............................. 4.25
Reports ................................................ 5.6
SEC .................................................... 2.5(b)
Seller ................................................. Preamble
Seller Software ........................................ 4.11
Seller Indemnified Party ............................... 8.2(b)
Seller Threshold Amount ................................ 8.2(d)
Share Value ............................................ 2.4(b)(ii)
SIVA Products .......................................... 2.5(a)
Software Contract ...................................... 4.11
Subsidiary Equity Securities ........................... 4.3(a)
Third Party Notice ..................................... 8.2(c)
Transaction ............................................ Recitals
Universal .............................................. 10.2
Universal Agreement .................................... 10.2
Section 1.3 Construction.
(a) Unless the context of this Agreement otherwise requires, (i) words of
any gender include each other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement; (iv) the terms "Article" or "Section" refer to the specified
Article or Section of this Agreement; (v) the word "including" shall mean
"including, without limitation;" and (vi) the word "or" shall be disjunctive but
not exclusive.
(b) References to agreements and other documents shall be deemed to include
all subsequent amendments and other modifications thereto.
(c) References to statutes shall include all regulations promulgated
thereunder and references to statutes or regulations shall be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(d) The language used in this Agreement shall be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.
(e) The annexes, schedules and exhibits to this Agreement are a
material part hereof and shall be treated as if fully incorporated into the body
of the Agreement.
(f) Whenever this Agreement refers to a number of days, such number shall
refer to calendar days unless Business Days are specified and shall be counted
from the day immediately following the date from which such number of days are
to be counted.
(g) All accounting terms used herein and not expressly defined herein shall
have the meanings given to them under GAAP.
(h) Whenever a disclosure with respect to a Subsidiary is required pursuant
to this Agreement, the specific Subsidiary to which such disclosure applies
shall be disclosed.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
Section 2.1 Transfer of Assets.
(a) Transfer of Purchased Assets. Upon the terms and subject to the
conditions contained herein, at the Closing, Seller will sell, convey, transfer,
assign and deliver to Buyer free and clear of any and all Encumbrances, and
Buyer will purchase from Seller free and clear of any and all Encumbrances, all
of the rights, title and interest of Seller in and to all Assets, except for the
Excluded Assets, including without limitation, all of Seller's right, title and
interest in the following (the "Purchased Assets");
(i) an agreed upon amount of one hundred fifty thousand dollars
($150,000) representing Seller's deposits as of the date of this Agreement
including, but not limited to, the Luby's Deposit (the "Agreed Upon
Deposits") and any amounts received or to be received after the date of the
execution of this Agreement from any source in connection with any
transaction which requires Seller or Buyer to perform any obligation or
deliver any product or service of any kind after the date of such
execution, including but not limited to: (a) deposits for maintenance,
technical support, development or other professional services, and items of
a similar nature and/or (b) any payment by Deli Management, Inc. ("DMI")
beyond the "1st Tranche" as that term is used in the DMI - Enterprise
Software License Agreement dated June 9,2004 between DMI and Seller.
(ii) all accounts and notes receivable (whether current or
noncurrent), refunds, prepayments or prepaid expenses;
(iii) all Contracts to be specifically listed (and only those listed)
on Schedule 2.1(a)(iii) of the Disclosure Schedule;
(iv) all General Intangibles;
(v) all Inventory;
(vi) all Books and Records;
(vii) all Intellectual Property Rights;
(viii) all Licenses;
(ix) all Seller Software;
(x) all rights under or pursuant to all warranties, representations
and guarantees made by suppliers in connection with Purchased Assets or
services furnished to Seller;
(xi) all Machinery and Equipment;
(xii) all Leasehold Improvements;
(xiii) all interests in the Transferred Subsidiaries;
(xiv) all other tangible assets necessary or useful in the conduct of
the Business including, but not limited to, those set forth in Schedule
2.1(xiv) of the Disclosure Schedule; and
(xv) all claims, causes of action, chooses in action, rights of
recovery and rights of set-off of any kind relating to Purchased Assets or
the Assumed Liabilities, against any Person including, without limitation
any liens, security interests, pledges, or other rights to payment or to
enforce payment in connection with products delivered by Seller on or prior
to the Closing Date; and
(xvi) all rights relating to Government-Furnished Property.
Section 2.2 Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees, effective at the Closing, to assume
the following, and only the following, liabilities of Seller (the "Assumed
Liabilities"):
(i) all liabilities of Seller to provide goods and/or services under any of
the Contracts specifically listed on Schedule 2.1(a)(iii) of the Disclosure
Schedule to the extent the obligation to provide such goods and/or services
arises subsequent to the Closing Date;
(ii) all liabilities of Seller for payment of rent on the Facility arising
during the six (6) month period after the Closing Date under the Real Property
Lease; and
(iii) all liabilities set forth on Schedule 2.2 to the extent, and only to
the extent, the same arise subsequent to the Closing Date.
Section 2.3 Excluded Liabilities. Any provisions in this Agreement or any
writing to the contrary notwithstanding, Buyer is assuming only the Assumed
Liabilities and is not assuming any other liability or obligation of Seller or
any Affiliate of Seller, of whatever nature, whether presently in existence or
arising or asserted hereafter. All such other liabilities and obligations shall
be retained by and remain obligations and liabilities of the Seller (all such
liabilities and obligations not being assumed being herein referred to as the
"Excluded Liabilities"). Without limiting the foregoing, none of the following
shall be Assumed Liabilities for purposes of this Agreement:
(a) all liabilities and obligations of Seller for or in respect of Taxes
(including any Taxes that arise as a result of the transactions contemplated by
this Agreement);
(b) any liability or obligation under any Environmental Law incurred in or
attributable to the operation of the Business on or before the Closing Date;
(c) any liability of Seller under the Real Property Lease not specifically
assumed pursuant to the terms hereof;
(d) any liability or obligation of Seller arising out of any Contract not
specifically assumed pursuant to the terms hereof;
(e) any liability or obligation of Seller arising out of any Contract
assumed pursuant to the terms hereof arising out of any breach by the Seller of
any provision thereof including, but not limited to, liabilities or obligations
arising out of Seller's failure to perform any Contract according to its terms
prior to Closing;
(f) any liability or obligation relating to an Excluded Asset (whether or
not arising prior to, on or after the Closing Date);
(g) any liability or obligation owing to any employee, director, officer or
other Affiliate of Buyer; any law firms, accountants or other advisors; any
banks or other lenders; or to trade creditors; and
(h) any liability or obligation arising out of or in connection with any
Actions arising out of or relating to the conduct of the Business prior to the
Closing.
Section 2.4 Purchase Price.
(a) Purchase Price. Upon the terms and subject to the conditions set forth
herein, Buyer shall pay to Seller for the sale, transfer, assignment, conveyance
and delivery of the Purchased Assets, a base purchase price in an aggregate
amount equal to Six Million Eight Hundred Thousand Dollars ($6,800,000) ("Base
Amount") plus an amount equal to the Contingent Purchase Price Amount, if any,
as is earned by Seller after the Closing Date pursuant to the terms hereof (the
"Purchase Price"), subject, however, to the adjustments set forth in Article 8
hereof. The Purchase Price (including the Assumed Liabilities) shall be
allocated among the Purchased Assets in accordance with Schedule 2.4 to be
annexed hereto as soon after the Closing as is practicable and such allocation
shall be the allocation which is used by the parties in preparing (i) Internal
Revenue Service Form 8594, Asset Acquisition Statement, (ii) all other Tax
Returns and (iii) for all other Tax purposes. Seller and Buyer shall each file
Internal Revenue Service Form 8594 with their U.S. federal income tax returns
for the tax period including the Closing Date. All allocations made pursuant to
this Section 2.4 shall be binding upon the parties and upon each of their
successors and assigns, and the parties shall report the transactions
contemplated hereby in accordance with such allocations. The parties hereto
shall not make any written statements or take any position on any Tax Return, in
any refund claim, during the course of any Tax audit, for any financial or
regulatory purpose in any litigation or investigation or otherwise that are
inconsistent with the allocations made pursuant to this Section 2.4. Each party
shall notify the other parties if it receives notice that any Tax authority
proposes any allocation different from that made pursuant to this Section 2.4.
(b) Payment of the Base Amount. The Base Amount shall be paid as follows:
(i) At the Closing, Buyer will pay to Seller Five Million Eight
Hundred Thousand Dollars ($5,800,000) less the amount of the Agreed Upon
Deposits, by wire transfer of immediately available funds to an account
designated by Seller;
(ii) The balance of the Base Amount shall be paid by Buyer through the
delivery of one hundred twenty five thousand five hundred forty nine
(125,549) shares of PTC Common Stock, par value $0.02 ("PTC Common Stock")
to the Escrow Agent pursuant to paragraph (iii) immediately below;
(iii) A portion of the Base Amount equal to One Million Dollars
($1,000,000) (the "Escrow Amount") shall be paid by Buyer to the Escrow
Agent to be held in escrow in accordance with the terms of the Escrow
Agreement in the form of "Exhibit B" annexed hereto (the "Escrow
Agreement") to serve as a source, but not the sole source, of
indemnification payments that may become due pursuant to Section 8.2 hereof
or otherwise. The Escrow Amount, shall consist of the PTC Common Stock (the
"Escrow Shares"). The Escrow Amount shall be held, invested and distributed
in accordance with the Escrow Agreement. Subject to any such
indemnification claims, the Escrow Amount shall be delivered to Seller on
the second anniversary date of the Closing Date.
(iv) In connection with the issuance of the PTC Common Stock, Seller
shall execute and deliver an investment agreement in the form annexed
hereto as Exhibit "A".
Section 2.5 Payment of the Contingent Purchase Price Amount.
(a) ****
(b) Any Contingent Purchase Price Amounts due pursuant to paragraph (a)
above shall, except as set forth in Section 6.12 or Article 10 hereof, be paid
to Seller in accordance with Schedule 2.5(b) hereto. Within forty (40) days
after the end of each calendar quarter during the Contingent Purchase Price
Period, Buyer will deliver to Seller copies of quarterly Revenue and collection
reports with respect to sales of licenses of the SIVA Products by Buyer for such
quarter, which shall prepared by the Buyer's Controller in accordance with the
terms hereof. Seller shall have the right to inspect the applicable records of
Buyer and PTC and to discuss the generation of Revenue, collections and accounts
with the Buyer's Chief Financial Officer, all at such reasonable times during
normal business hours and as may be reasonably requested. In the event that all
or any portion of a Contingent Purchase Price Amount is being paid in shares of
PTC Common Stock, the number of shares to be delivered shall be derived by
dividing the Contingent Purchase Price Amount being so paid by the average of
the last reported sale price of the PTC Common Stock on the New York Stock
Exchange for the 20 trading days ending on the third day immediately preceding
the date on which the payment is due.
(c) Notwithstanding the above, in no event shall any Contingent Purchase
Price Amount be due or payable with respect to the recognition of the deferred
revenue set forth on Schedule 2.5(c).
Section 2.6 Closing Costs and Fees. Except as otherwise specifically set
forth in this Agreement, the cost of the recording or filing of all applicable
conveyancing instruments incurred by reason of the transfer of Purchased Assets
hereunder (including documentary and transfer taxes in connection therewith), if
any, shall be paid by the party required to pay the same by custom in the State
of Florida.
ARTICLE 3
CLOSING
Section 3.1 Closing. The Closing of the transactions contemplated herein
(the "Closing") shall be held at 10:00 a.m. Eastern Standard Time on the date
which is the later of (i) November 1, 2006 or (ii) three (3) Business Days after
the date on which all conditions to the Transaction set forth in Sections 7.1,
7.2 and 7.3 of this Agreement shall have been satisfied (the "Closing Date") at
the offices of Seller, 3333 South Congress Avenue, Delray Beach, Florida 33445
or at such other time or at such other place as Seller and Buyer may mutually
agree in writing.
Section 3.2 Deliveries at Closing.
(a) Instruments and Possession. To effect the sale and assumption referred
to in Article 2, Seller will, at the Closing, execute and deliver to Buyer:
(i) one or more bills of sale and assignments conveying in the
aggregate all of Seller's right, title and interest in and to the Purchased
Assets free and clear of any and all Encumbrances;
(ii) an agreement regarding the sublease of the Facility;
(iii) an assignment of contracts with respect to the Contracts
included in the Purchased Assets;
(iv) assignments of the Intellectual Property Rights in recordable
form to the extent necessary to assign such rights;
(v) the Ancillary Agreements and any other agreements required to be
delivered pursuant to this Agreement;
(vi) one or more certificates of amendment in form suitable for filing
in all applicable jurisdictions pursuant to which Seller and each
Subsidiary shall have changed its name to a name that bears no resemblance
to the name "SIVA" or any derivation thereof; and
(vii) such other instruments as shall be reasonably requested by Buyer
to vest in Buyer such right, title or interest in and to the Purchased
Assets in accordance with the provisions hereof.
(b) Assumption and Other Documents. To effect the sale and assumption
referred to in Article 2, at the Closing, Buyer shall execute and deliver to
Seller:
(i) an instrument of assumption evidencing Buyer's assumption of the
Assumed Liabilities pursuant to Section 2.2 hereof (the "Assumption
Document");
(ii) the Ancillary Agreements and any other agreements required to be
delivered pursuant to this Agreement; and
(iii) such other instruments as shall be reasonably requested by
Seller to evidence Buyer's assumption of the Assumed Liabilities in
accordance with the provisions hereof.
(c) Form of Instruments. To the extent that a form of any document to be
delivered hereunder is not attached as an Exhibit hereto, such documents shall
be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to the party or parties in whose favor the document
runs.
(d) Certificates; Opinions. Buyer and Seller shall deliver the
certificates, opinions of counsel and other documents described in Article 7.
(e) Consents. Seller shall deliver all governmental and other third party
consents and waivers required pursuant to Sections 7.1(a) and 7.3(e) (or
otherwise obtained by Seller) as have been obtained, plus such other documents
related thereto as Seller and Buyer shall have agreed.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer (which representations and
warranties shall survive the Closing) as follows:
Section 4.1 Organization and Qualification of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware and has the requisite corporate power and authority to
own, operate or lease the properties and assets now owned, operated or leased by
it and to carry on the Business as currently conducted. Seller is duly qualified
to do business as a foreign corporation and is in good standing in each of the
jurisdictions listed on Schedule 4.1 of the Disclosure Schedule. Such
jurisdictions constitute each and all of the jurisdictions where the character
of Seller's properties owned, operated or leased or the nature of its activities
makes such qualification necessary except where the failure to be so qualified
would not result in a Material Adverse Effect with respect to Seller. True and
complete copies of the Articles of Incorporation and bylaws (or equivalent
organizational documents) of Seller (in each case, as amended to the date of
this Agreement), are attached to Schedule 4.1 of the Disclosure Schedule.
Schedule 4.1 of the Disclosure Schedule lists all voting trusts, stockholder
agreements, proxies or other agreements in effect with respect to the voting or
transfer of Seller's Equity Securities.
Section 4.2 Authorization. Seller has all necessary organizational power
and authority to execute and deliver this Agreement and each Ancillary Agreement
to which it is party and to perform its obligations hereunder and thereunder.
The execution and delivery by Seller of this Agreement and each Ancillary
Agreement to which it is party and the performance of its obligations hereunder
and thereunder have been duly and validly authorized by the shareholders and
directors of Seller, and no other action on the part of Seller or its
shareholders or directors is necessary. This Agreement has been, and each
Ancillary Agreement to which the Seller is a party will be, duly and validly
executed and delivered by Seller and is, or will be, a legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms,
except as the enforceability may be limited by (i) applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance or similar laws in
effect which affect the enforcement of creditors' rights generally; or (ii)
general principles of equity.
Section 4.3 Subsidiaries; Shareholders; Capitalization.
(a) Schedule 4.3(a) of the Disclosure Schedule sets forth the name of each
Subsidiary of Seller, the jurisdiction of incorporation or organization of each
such Subsidiary, the number and type of its authorized Equity Securities
(collectively, the "Subsidiary Equity Securities"), the number of each class of
Equity Securities that are issued and outstanding with respect to such
Subsidiaries, the identity of all record and beneficial holders of the
Subsidiary Equity Securities of each Subsidiary and each jurisdiction in which
each Subsidiary is duly qualified to do business. Each Subsidiary is qualified
to do business in each jurisdiction where the character of such Subsidiary's
properties or the nature of its activities makes such qualification necessary.
The Subsidiaries listed on Schedule 4.3(a) are the only Subsidiaries of Seller
and each such Subsidiary is consolidated with Seller for purposes of preparing
financial statements of Seller in accordance with GAAP. The Subsidiary Equity
Securities described on Schedule 4.3(a) constitute all the issued and
outstanding Equity Securities of the respective Subsidiaries. The Subsidiary
Equity Securities have been duly authorized and validly issued and are fully
paid and nonassessable and were not issued in violation of any pre-emptive
rights. None of the respective Subsidiaries has issued or granted any
outstanding options, warrants, rights or other securities convertible into or
exchangeable or exercisable for shares of Subsidiary Equity Securities; there
are no commitments or obligations of any kind or character for the issuance of
Subsidiary Equity Securities or for the repurchase, redemption or other
acquisition of any Subsidiary Equity Securities; either Seller of another
Subsidiary owns the Subsidiary Equity Securities, free and clear of all
Encumbrances; there are no agreements of any kind which may obligate any of the
Subsidiaries listed on Schedule 4.3(a) to issue, purchase, register for sale,
redeem or otherwise acquire any Subsidiary Equity Securities; (v) there are no
voting trusts, stockholder agreements, proxies or other agreements in effect
with respect to the voting or transfer of the Subsidiary Equity Securities held
by Seller or any of its Subsidiaries or, to the knowledge of Seller, the
Subsidiary Equity Securities held by any other Person; and neither Seller nor
any of its Subsidiaries own of record or beneficially any Equity Securities of
any Person or any right (contingent or otherwise) to acquire the same.
(b) Schedule 4.3(b) of the Disclosure Schedule sets forth the names of each
and all of the shareholders of Seller and the number and class of shares of
Seller's capital stock held by each. The authorized capital of Seller consists
of 35,000,000 shares of common stock, $.001 par value; 1,564,890 shares of
Series A-1 Preferred Stock, $.001 par value; and 6,750,000 shares of Series B-1
Preferred Stock, $.001 par value of which 2,508,460 shares of common stock,
1,564,890 shares of Series A-1 Preferred Stock and 2,611,966 shares of Series
B-1 Preferred Stock are issued and outstanding. Each of such shares has been
validly issued in accordance with all applicable Laws and is fully paid and
non-assessable. Seller has no other authorized securities of any nature. Seller
also has 435,110 shares of undesignated Preferred Stock, $.001 par value, none
of which are issued and outstanding.
(c) Except as set forth on Schedule 4.3(c) of the Disclosure Schedule,
there are no commitments or obligations of any kind or nature for the issuance
of Equity Securities of Seller.
(d) Seller has, or prior to the Closing shall have, transferred all of each
Subsidiary's right, title and interest in and to each and all of such
Subsidiary's assets of every kind and nature to Seller free and clear of all
Encumbrances.
Section 4.4 No Conflict. The execution, delivery and performance of this
Agreement and each Ancillary Agreement to which it is a party by Seller and the
consummation of the transactions contemplated hereby and thereby do not and will
not (a) violate or conflict with the Articles of Incorporation or bylaws of
Seller or any Subsidiary of Seller, (b) conflict with or violate any Law or
Governmental Order applicable to Seller or any Subsidiary of Seller, or (c)
violate or conflict with in any material respect, result in any breach of, or
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, or result in or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of any Encumbrance on any of the Purchased Assets pursuant to, any
Contract or License to which any of Seller or any Subsidiary of Seller is a
party or by which any of the Purchased Assets are bound.
Section 4.5 Consents and Governmental Approvals. No consent, approval,
authorization, license, order or permit of, or declaration, filing or
registration with, or notification to, any Governmental Authority, or any other
Person, is required to be made or obtained by Seller or any of its Affiliates in
connection with the execution, delivery and performance of this Agreement and
each Ancillary Agreement to which Seller is a party and the consummation of the
transactions contemplated hereby and thereby.
Section 4.6 Financial Statements; Undisclosed Liabilities.
(a) Attached as Schedule 4.6(a) of the Disclosure Schedule are true and
complete copies of (i) the Financial Statements and (ii) the Interim Financial
Statements. Except as set forth in the notes thereto or as disclosed in Schedule
4.6 of the Disclosure Schedule, all such financial statements (including the
footnotes thereto) were prepared in accordance with GAAP and fairly present in
all material respects the consolidated financial condition, results of
operations and changes in cash flows and stockholder's equity of Seller and its
Subsidiaries as of the respective dates thereof and for the respective periods
covered thereby, subject to, in the case of the Interim Financial Statements,
normal recurring year end adjustments to the extent consistent with GAAP (the
effect of which is not expected to be material individually or in the aggregate)
and the absence of footnotes.
(b) Neither Seller nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether absolute, accrued, contingent or otherwise,
liquidated or unliquidated, or due or to become due) other than (i) liabilities
reflected and reserved against on the balance sheet included in the Interim
Financial Statements, (ii) liabilities disclosed in Schedule 4.6(b) of the
Disclosure Schedule, or (iii) current liabilities incurred since the date of the
balance sheet included in the Interim Financial Statements (the "Balance Sheet")
in the ordinary course of business, consistent with Seller's past practice.
Section 4.7 Absence of Certain Changes or Events. Since January 1, 2006,
except as disclosed in Schedule 4.7 of the Disclosure Schedule, there has been
no:
(a) Material Adverse Change with respect to Seller or any of its
Subsidiaries;
(b) (i) except for normal periodic increases in the ordinary course of
business consistent with past practice, increase in the compensation payable or
to become payable by Seller or any of its Subsidiaries to any of its Personnel,
(ii) bonus, incentive compensation, severance, deferred compensation, service
award or other like benefit granted, made or accrued, contingently or otherwise,
for or to the credit of any of the Personnel, except in the ordinary course of
business consistent with past practices and reflected in the Interim Financial
Statements, (iii) employee welfare, pension, insurance, retirement, profit
sharing or similar payment or arrangement made or agreed to by Seller or any of
its Subsidiaries for any of their Personnel except pursuant to the existing
Employee Plans described in Schedule 4.18 of the Disclosure Schedule or (iv) new
employment or severance agreement to which any Seller is a party;
(c) addition to or modification of the Employee Plans other than (i)
contributions made in accordance with the normal practices of Seller and its
Subsidiaries or (ii) the extension of coverage to Personnel who became eligible
after January 1, 2006;
(d) sale, assignment or transfer of any assets of Seller or any of its
Subsidiaries other than in the ordinary course of business consistent with prior
practices, or the imposition of any Encumbrance thereon;
(e) cancellation of any Indebtedness or waiver of any rights of substantial
value to Seller or any of its Subsidiaries;
(f) cancellation, termination or material amendment of any Material
Contract, material License or other instrument material to Seller or any of its
Subsidiaries;
(g) capital expenditure or any incurring of liability therefor by Seller or
any of its Subsidiaries, other than capital expenditures involving payments that
do not, individually or in the aggregate, exceed $2,500;
(h) failure to operate the Business in the ordinary course so as to use
reasonable efforts to preserve the Business intact, to keep available the
services of the Personnel, and to preserve the goodwill of Seller's or its
Subsidiaries' suppliers, customers and others having business relations with
Seller or its Subsidiaries;
(i) change in Tax or accounting methods, principles or practices by Seller
or any of its Subsidiaries or the making of any Tax election or the change of an
existing election;
(j) revaluation by Seller or any of its Subsidiaries of any of its assets
or properties, including without limitation, writing off notes or accounts
receivable;
(k) damage, destruction or loss (whether or not covered by insurance) and
adversely affecting the assets, properties, business or prospects of Seller or
any of its Subsidiaries;
(1) Indebtedness incurred by Seller or any of its Subsidiaries for borrowed
money or any commitment to incur Indebtedness entered into by Seller or any of
its Subsidiaries, or any loans made or agreed to be made by Seller or any of its
Subsidiaries (other than the advancement of expenses to Personnel in the
ordinary course of business);
(m) to the Knowledge of Seller, change in relations between Seller or any
of its Subsidiaries and the Personnel that adversely affects Seller or any of
its Subsidiaries;
(n) change in collection policies or payment terms applicable to any of the
suppliers or customers of Seller or any of its Subsidiaries;
(o) action which, if it had been taken or had occurred after execution of
this Agreement, would have required the consent of Buyer pursuant to Section
6.1(a); or
(p) agreement by Seller or any of its Subsidiaries to do any of the
foregoing.
Section 4.8 Absence of Litigation. (a) Except as set forth in Schedule
4.12(b)(i), items 1.a. and 3, there are no Actions pending or, to Sellers'
Knowledge, threatened against Seller or any of its Subsidiaries or involving any
of the Assets; (b) neither the Assets nor Seller or any of its Subsidiaries are
subject to any Governmental Order; (c) neither Seller nor any of its
Subsidiaries is the subject of any pending, or to the Knowledge of Seller,
threatened investigation by any Governmental Authority; and (d) to the Knowledge
of Seller, no event has occurred and no condition exists on the basis of which
any litigation, proceeding or investigation might reasonably be expected to be
instituted.
Section 4.9 Compliance with Laws. Seller and each of its Subsidiaries are,
and at all times since their respective dates of incorporation have been, in
compliance in all material respects with all applicable Laws and Governmental
Orders. Neither Seller nor any of its Subsidiaries has received any notice to
the effect that Seller or such Subsidiary is not or may not be in compliance
with any applicable Laws or Governmental Orders.
Section 4.10 Licenses. Schedule 4.10 of the Disclosure Schedule sets forth
a true and correct list of each of the Licenses (other than Licenses to Computer
Programs described on Schedule 4.11 of the Disclosure Schedule) held by Seller
or any of its Subsidiaries or issued by any Governmental Authority with respect
to any of Seller's Assets. Such Licenses (together with the Licenses to Computer
Programs) constitute all of the Licenses required to permit Seller and each of
its Subsidiaries to own, operate, use and maintain the Assets in the manner in
which they are now operated and maintained and to conduct the Business as
presently conducted. Each License is valid, binding and in full force and effect
(and the continuing validity and effectiveness of such Licenses will not be
affected by the consummation of the transactions contemplated hereby) and
neither Seller nor any of its Subsidiaries is in default (or with the giving of
notice or lapse of time or both, would be in default) under any such License in
any material respect. There are no proceedings pending, nor to the Knowledge of
Seller, threatened, that seek the revocation, cancellation, suspension, failure
to renew or adverse modification of any such License. All required filings with
respect to such Licenses have been timely made and all required applications for
renewal thereof have been timely filed.
Section 4.11 Computer Programs.
(a) Set forth in Schedule 4.11(a) of the Disclosure Schedule is a list and
brief description of the Computer Programs (other than generally available
commercial off-the-shelf or downloadable Computer Programs used internally by
Seller or any of its Subsidiaries in accordance with the applicable license
agreement) which are in whole or in part owned, licensed, distributed, copied,
modified, displayed, sublicensed or otherwise used by Seller or any of its
Subsidiaries in connection with the operation of the Business as now conducted
or as now proposed to be conducted (such Computer Programs, together with the
generally available Computer Programs described above, being referred to herein
as the "Seller Software"), identifying with respect to each such Computer
Program whether it is owned or licensed by Seller or any of its Subsidiaries.
(b) Each and every Computer Program included in whole or in part in the
Seller Software is either: (i) owned by Seller or a Subsidiary free and clear of
any Encumbrance, (ii) currently in the public domain or otherwise available for
use, modification and distribution by Seller or a Subsidiary without a license
from or the approval or consent of any third party, or (iii) licensed or
otherwise used by Seller or a Subsidiary pursuant to the terms of a valid,
binding and enforceable written agreement ("Software Contract"). Schedule
4.11(b) of the Disclosure Schedule identifies all Software Contracts (other than
generally available commercial off-the-shelf or downloadable Computer Programs
used internally by Seller or a Subsidiary in accordance with the applicable
license agreement). Except as set forth on Schedule 4.11(b) of the Disclosure
Schedule, no other Person has any rights of any kind or nature with respect to
any Seller Software owned by Seller or a Subsidiary other than pursuant to
valid, binding and enforceable written contract listed on Schedule 4.11(b). No
Software Contract creates, or purports to create, obligations or immunities with
respect to any Intellectual Property Rights of Seller or any of its
Subsidiaries, including but not limited to, obligations requiring the disclosure
or distribution of all or a portion of the source code for Seller Software. For
example, except as set forth on Schedule 4.11(b) of the Disclosure Schedule, no
portion of the Seller Software is licensed to Seller pursuant to any version of
the General Public License, Lesser General Public License, or Common Public
License.
(c) No portion of the Seller Software sold or licensed by Seller or any of
its Subsidiaries directly or indirectly to end users contained, on the date of
shipment by Seller or any of its Subsidiaries or currently for sale or license
directly or indirectly to end users contains, any software routines or hardware
components designed to permit unauthorized access; to disable or erase software,
hardware or data; or to perform any other similar actions. Seller and each of
its Subsidiaries use industry standard methods to detect and prevent viruses and
other code covered by the preceding sentence (and subsequently to correct or
remove such viruses) that may be present in the Seller Software. The Seller
Software does not include or install any spyware, adware, or other similar
software which monitors the use of any remote computer without the knowledge and
express consent of the users of such remote computer.
(d) Seller and each of its Subsidiaries have adopted policies or procedures
to control the use of (i) Computer Programs including without limitation object
code and source code portions thereof available for download on the internet;
and (ii) any other Computer Programs not introduced into Seller's or its
Subsidiaries' development environment through a formal procurement process and
pursuant to a license agreement determined to be appropriate for establishing
Seller's or its Subsidiaries' rights and obligations with respect to Computer
Programs.
(e) ****
(f) Schedule 4.11(f) sets forth a true and complete description of all
remaining development requirements prior to the general public release of
version 5.0 of the iSIVA(TM) Suite (as presently contemplated and as described
on Schedule 4.11(f)) specifying for each such requirement the reasonably
anticipated maximum number of person hours required to complete such
requirement.
(g) Schedule 4.11(g) sets forth a true and complete listing of all
development commitments of Seller or any of Seller's Subsidiaries, specifying
for each such commitment: (i) the nature of the commitment; (ii) the commitment
delivery date; (iii) any milestone delivery commitments; (iv) the status of all
milestones; (v) the maximum number of person hours required to satisfactorily
complete, test and meet any milestone or final delivery commitment; (vi) the
acceptance criteria for each milestone and final delivery; (vii) the
ramifications of missing any milestone or final delivery requirement; (viii) the
amount of any funding received to date for any commitment; and (ix) the maximum
funds necessary to successfully fulfill the commitment.
(h) Schedule 4.11(h) sets forth a complete listing of any SIVA Products
which contain the development work of any non-employee personnel specifying for
each such Product, the nature of the development work, the name of the
non-employee personnel performing the development work and any compensation of
any kind or nature due or which, upon the occurrence of any event or passage of
time, may become due to such non-employee personnel. All development work
performed by any employee personnel of SIVA is the sole property of SIVA and
SIVA is not, and will not become in the future, upon the occurrence of any event
or the passage of time, obligated to pay any compensation of any kind or nature
to any such employee personnel in connection with any such development work.
(i) Schedule 4.11(i) sets forth a complete listing of all Persons for whose
benefit any portion of any Computer Programs are being held or required to be
held in escrow. For each such Person, Schedule 4.11(i) sets forth the Person
holding the Computer Program (or portion thereof) in escrow and the conditions
pursuant to which such Computer Program (or portion thereof) may be released.
Section 4.12 Material Contracts.
(a) Schedule 4.12(a) of the Disclosure Schedule lists the following
Contracts (other than Software Contracts disclosed in Schedule 4.11 of the
Disclosure Schedule) to which Seller or any of its Subsidiaries is a party or by
which any of its Assets may be bound (collectively, the "Material Contracts"):
(i) any Contract (other than purchase orders entered into in the
ordinary course of the business) that Seller reasonably anticipates will
involve aggregate payments to Seller or any of its Subsidiaries of more
than $5,000 or by Seller or any of its Subsidiaries of more than $5,000;
(ii) any lease, rental or occupancy agreement, license, installment
and conditional sale agreement and any other contract or agreement
affecting the ownership of, leasing of, title to, use of, or any leasehold
or other interest in, any real property or personal property;
(iii) any Contract containing covenants limiting the freedom of Seller
or any of its Subsidiaries to engage in any line of business or compete
with any Person;
(iv) any distribution, franchise, license, sales, commission,
consulting agency or advertising Contracts;
(v) any Contract relating to Indebtedness or any indebtedness for
borrowed money of any other person;
(vi) any Contract relating to the sale or disposition of Assets of
Seller or any of its Subsidiaries (other than the sale of inventory in the
ordinary course of the Business);
(vii) any Contract of which Seller is aware to which any Personnel is
bound which in any manner purports to (a) restrict such Person's freedom to
engage in any line of business or to compete with any other Person, or (b)
assign to any other Person rights to any material invention, improvement,
or discovery by such employee, officer, director or independent contractor;
(viii) any Contract relating to Seller Software or Intellectual
Property Rights (other than any license agreement for generally available
commercial off-the-shelf or downloadable Computer Programs used internally
in accordance with the applicable license agreement);
(ix) any joint venture, partnership, limited liability company or
other agreement (however named) involving a sharing of profits, losses,
costs, or liabilities by Seller or any of its Subsidiaries with any other
Person;
(x) any Contract providing for payments to or by any Person or entity
based on sales, purchases or profits, other than direct payments for goods;
(xi) any Contract providing for capital expenditures after the date
hereof in an amount in excess of $5,000 individually or in the aggregate;
(xii) any written warranty, guaranty or other similar undertaking with
respect to contractual performance extended by Seller;
(xiii) any Loss Contract or Loss Bid;
(xiv) any Government Contract;
(xv) any Contract between or among Seller and any Affiliate of Seller;
(xvi) any employment, severance or consulting Contract; and
(xvii) any Contract or other arrangement entered into other than in
the ordinary course of business.
Seller has delivered or made available to Buyer true, correct and complete
copies of all of the Material Contracts, including all amendments and
supplements thereto.
(b) Except as specifically noted on Schedule 4.12(b)(i) of the Disclosure
Schedule, neither Seller nor any of its Subsidiaries is (and to the Knowledge of
Seller, no other party is), as of the date of this Agreement, in material breach
or violation of, or default under, any of the Material Contracts nor has Seller
or any of its Subsidiaries received any notice (written or oral) of breach or
violation of, or default under, a Material Contract. Each Material Contract is,
as of the date of this Agreement, in full force and effect (and will remain in
full force and effect upon consummation of the transactions contemplated
hereby). Except as specifically noted on Schedule 4.12(b)(ii) of the Disclosure
Schedule (i) no consent of any party to any Material Contract is required in
connection with the execution and delivery of this Agreement by Seller or any of
its Subsidiaries or the consummation of the transactions contemplated hereby and
(ii) not Material Contract is subject to cancellation or termination as a result
of any assignment thereof to Buyer.
(c) With respect to the Software License and Service Agreement by GMRI,
Inc. ("GMRI") and Seller, as amended, described on Schedule 2.1(a)(iii) (the
"GMRI Agreement"):
(i) Except for the obligation of Seller to provide routine maintenance
and support to GMRI, Seller has no obligations of any kind or nature,
either fixed or contingent, to GMRI;
(ii) GMRI has Accepted the Software and/or Company Specified Software
(as such capitalized terms are defined in the GMRI Agreement).
Section 4.13 Government Contracts. Neither Seller nor any of its
Subsidiaries has any Government Contracts.
Section 4.14 Machinery and Equipment and Other Property. Seller and each of
its Subsidiaries own and have good and marketable title to all items of
machinery, equipment, tools, spare parts, furniture, automobiles and other fixed
assets used in the Business or otherwise reflected as owned by Seller or any of
its Subsidiaries on the Interim Financial Statements in each case free and clear
of any Encumbrances (the "Machinery and Equipment"). The Machinery and
Equipment, taken as a whole, are in good operating condition and repair (subject
to normal wear and tear) and are suitable for the purposes for which they are
presently and have historically been used. Except as otherwise contemplated by
this Agreement, Seller or its Subsidiaries owns, or, in the case of leases and
licenses, has valid and subsisting leasehold interests or licenses in, all of
the material assets and properties of whatever kind (whether real or personal,
tangible or intangible and including, without limitation, all material
intellectual property) used in the Business, in each case free and clear of any
Encumbrances. Schedule 4.14(a) sets forth a true and complete list of all
Machinery and Equipment owned by Seller or any Subsidiary. Schedule 4.14(b) of
the Disclosure Schedule sets forth all equipment on loan to Seller or a
Subsidiary by customers or otherwise (the "Loaned Equipment"). The Loaned
Equipment is in a condition, which if returned to the lender thereof, would
satisfy the entire obligation of Seller or the Subsidiary to such lender.
Seller's sole obligation with respect to the Loaned Equipment is to return the
same to the lender thereof subject to ordinary wear and tear.
Section 4.15 Intellectual Property Rights. Schedule 4.15 of the Disclosure
Schedule lists each patent, copyright, trademark, service mark, mask work, trade
name or domain name, and each application (and renewal) for or to register any
of the foregoing, that is included in the Intellectual Property Rights owned by
Seller or any of its Subsidiaries, including the record owner, the registration
or application number and the expiration date. Seller or a Subsidiary of Seller
solely owns free and clear of any Encumbrance, or has the right to use, each of
the Intellectual Property Rights, including without limitation the Intellectual
Property Rights listed on Schedule 4.15 of the Disclosure Schedule. The
Intellectual Property Rights constitute all of the intellectual property
necessary to carry out the Business's former, current and currently - planned
future activities. No other Person other than Seller (i) has the right to use
any of the Intellectual Property Rights, except pursuant to the Material
Contracts; or (ii) to Seller's Knowledge, is infringing upon or otherwise
violating any Intellectual Property Rights. Neither use of the Intellectual
Property Rights, nor the conduct of Seller's or any of its Subsidiaries
businesses, is infringing upon or otherwise violating the rights of any other
Person. Except as set forth in Schedule 4.15 of the Disclosure Schedule, neither
Seller nor any of its Subsidiaries is obligated to provide any consideration
(financial or otherwise) to any third party, nor is any third party otherwise
entitled to any consideration, with respect to any exercise of rights by Seller
or any of its Subsidiaries, or by Buyer as successor to Seller, in the
Intellectual Property Rights. No proceedings are pending against or notices
received by Seller or any of its Subsidiaries that are presently outstanding
alleging that Seller's or any of its Subsidiaries' use of the Intellectual
Property Rights, or the conduct of Seller's or any of its Subsidiaries'
businesses, infringes upon or otherwise violates any rights of a third party, or
alleging that any Intellectual Property rights are invalid or unenforceable, nor
have any such allegations been made to Seller's Knowledge. Seller and each of
its Subsidiaries have taken commercially reasonable steps (including measures to
protect secrecy and confidentiality) to protect Seller's and its Subsidiaries'
right, title and interest in and to all Intellectual Property Rights, and to
assure that any Personnel who has access to confidential or proprietary
information of Seller or any of its Subsidiaries has a contractual or legal
obligation of confidentiality to Seller and its Subsidiaries with respect to
such information, and has an obligation to transfer rights for no additional
consideration in inventions, and authored works, whether or not patented,
patentable, copyrighted or otherwise protectable under the law, made during the
course of his employment using resources of Seller or any of its Subsidiaries.
Section 4.16 Sufficiency of Purchased Assets. Except as set forth in
Schedule 4.16 of the Disclosure Schedule, Seller has good and marketable title
to, or a valid leasehold interest in, the Assets free and clear of all
Encumbrances of any kind or nature With respect to each Encumbrance listed,
Schedule 4.16 sets forth the name of the encumbering party, the assets affected,
a description of the agreement pursuant to which the Encumbrance arises and the
amount of the debt associated with the Encumbrance. Upon the consummation of the
transactions contemplated hereby, Buyer will acquire good and marketable title
to, or a valid leasehold interest in, all the Purchased Assets, free and clear
of any Encumbrances. The Purchased Assets include in all material respects all
assets used or held for use in the conduct of the Business as presently
conducted.
Section 4.17 Employee Benefit Plans and Other Agreements.
(a) Disclosure; Delivery of Copies of Relevant Documents and Other
Information. Schedule 4.17 of the Disclosure Schedule contains a complete list
of each Employee Plan which covers one or more present, former or retired
employees, directors or consultants of Seller or any of its Subsidiaries.
(b) Employee Plans. Except as set forth in the Disclosure Schedule:
(i) Pension Plans.
(A) Neither Seller nor any ERISA Affiliate of Seller now, or at
any time, (1) sponsored, administered, maintained, contributed to, or
was obligated to contribute to a defined benefit plan as defined in
Section 3(35) of ERISA or a multiple employer plan as defined in
Section 210 of ERISA or (2) has incurred or reasonably expects to
incur any liability with respect to any transaction described in
Section 4069 of ERISA.
(B) Each Pension Plan which covers present, former or retired
employees of Seller or any Subsidiary of Seller, has been determined
by the IRS to be qualified and tax exempt under the provisions of Code
Sections 401(a) (or 403(a), as appropriate) and 501(a) and has been so
qualified during the period from its adoption to date.
(C) Each Pension Plan is in compliance with and has been
maintained in compliance with, its terms and, both as to form and in
operation, with the requirements prescribed by any Laws which are
applicable to such plans. Seller knows of no facts or set of
circumstances that have adversely affected, or could reasonably
adversely affect, the qualification of any Pension Plan.
(ii) Multiemployer Plans. Neither Seller nor any ERISA Affiliate of
Seller sponsors, administers, maintains, contributes to or is, or was
obligated to maintain or contribute to, or has withdrawn from, a
Multiemployer Plan.
(iii) Welfare Plans.
(A) Each Welfare Plan is in compliance with, and has been
maintained in compliance with, its terms and, both as to form and
operation, with the requirements prescribed by any and all Laws which
are applicable to such Welfare Plan. Seller knows of no facts or set
of circumstances that have adversely affected, or could reasonably
adversely affect, the qualification of any Welfare Plan.
(B) Except as disclosed on Schedule 4.17 of the Disclosure
Schedule, neither Seller nor any of its Subsidiaries has any present
or future obligation to make any payment to, or with respect to any
present, former or retired employee of Seller or any of its
Subsidiaries pursuant to, any retiree medical benefit plan, or other
retiree Welfare Plan, and no condition exists which would prevent
Seller or any of its Subsidiaries from amending or terminating any
such employee plan or Welfare Plan.
(C) Each Welfare Plan which is a "group health plan," as defined
in Section 607(1) of ERISA, has been operated in compliance with
provisions of Part 6 of Title I, Subtitle B of ERISA and Section 4980B
of the Code at all times.
(iv) Fiduciary Duties and Prohibited Transactions. Neither Seller nor
any of its Subsidiaries has engaged in any transaction in violation of
Sections 404 or 406 of ERISA or is liable for any "prohibited transaction,"
as defined in Section 4975(c)(1) of the Code, for which no exemption exists
under Section 408 of ERISA or Section 4975(c)(2) or (d) of the Code, or has
otherwise violated the provisions of Part 4 of Title I, Subtitle B of
ERISA.
(v) Litigation. There is no action, order, writ, injunction, judgment
or decree outstanding or claim, suit, litigation, proceeding, arbitral
action, governmental audit or investigation relating to or seeking benefits
under any Employee Plan that is pending, threatened or anticipated against
Seller or any of its Subsidiaries.
Section 4.18 Labor Matters.
(a) Schedule 4.18 of the Disclosure Schedule sets forth a true and correct
list of (i) with respect to each employee of Seller or any of its Subsidiaries
as of the date hereof, (A) his or her name, job title, date of hire and
annualized compensation (including, without limitation, base salary, bonus,
and/or commission potential), and (B) whether such employee is on any leave or
layoff status, (ii) all collective bargaining agreements to which Seller or any
of its Subsidiaries is a party, (iii) all employment Contracts to which Seller
or any of its Subsidiaries is a party with respect to any employee or former
employee and which may not be terminated at will, (iv) all severance Contracts
to which Seller or any of its Subsidiaries is a party, and (v) each individual
who, as of the date hereof, is retained by Seller or any of its Subsidiaries and
classified as a consultant or independent contractor, the compensation for each
such individual and any Contracts with any such individual to which Seller or
any of its Subsidiaries is a party.
(b) The employment of all persons presently employed, and the engagement of
any consultants presently retained, by Seller or any of its Subsidiaries is
terminable at will.
(c) Neither Seller nor any of its Subsidiaries has engaged in any unfair
labor practice and there are no complaints against Seller pending or, to the
Knowledge of Seller, threatened, or any basis therefore, before the National
Labor Relations Board or any similar federal, state, local or foreign labor
agency by or on behalf of any employee.
(d) There are no claims pending, or, to the Knowledge of Seller, threatened
to be brought, against Seller or any of its Subsidiaries in any court,
administrative agency, arbitral forum or other forum, by or on behalf of any
former or current employees of Seller or any of its Subsidiaries for
compensation, severance benefits, vacation time, vacation pay, benefits,
employment discrimination, harassment, wrongful discharge, breach of contract,
tort, unfair competition or any other claim.
(e) To the Knowledge of Seller, no employees are in violation of any
immigration laws.
Section 4.19 Product Liability, Warranty and Product Recalls. Neither
Seller nor any of its Subsidiaries has committed any act or omission which would
result in, or has any knowledge of any facts or circumstances which would give
rise to, (a) any material product liability not covered by insurance (other than
deductibles or self retention amounts under such insurance policies), (b) any
obligation to recall or replace any products produced by Seller or any of its
Subsidiaries or (c) any material liability for breach of warranty in excess of
the reserve established therefor on the Balance Sheet. Except as set forth on
Schedule 4.19 of the Disclosure Schedule, neither Seller nor any of its
Subsidiaries has, during the past five (5) years, (x) recalled any products sold
or licensed by Seller or any of its Subsidiaries, or (y) received any warranty
claims that individually or in the aggregate exceed $10,000 in any calendar
year.
Section 4.20 Environmental Matters. Seller and each of its Subsidiaries are
at all times have been in material compliance with all Environmental Laws, and
have obtained or caused to be obtained all Licenses under Environmental Laws
necessary for operation of the Business to comply, in all material respects,
with all applicable Environmental Laws.
Section 4.21 Tax Matters. Except as set forth in Schedule 4.21 of the
Disclosure Schedule:
(a) Seller and each of its Subsidiaries have filed all Tax Returns required
to be filed through the date hereof and will timely file any such Tax Returns
required to be filed on or prior to the Closing Date, in each case, subject to
any applicable extensions. All such Tax Returns are correct, complete and
accurate in all material respects.
(b) All Taxes that accrue or are payable by Seller or any of its
Subsidiaries in respect of Pre-Closing Tax Periods have been or will be timely
paid in full on or before the Closing Date, except to the extent a reserve for
the amount of such unpaid Taxes has been established.
(c) There are no liens for Taxes on the Purchased Assets.
(d) Seller and each of its Subsidiaries have withheld from its employees,
customers and any other applicable payees (and timely paid to the appropriate
person) proper and accurate amounts for all periods through the date hereof in
compliance with all Tax withholding provisions of applicable federal, state,
local and foreign laws (including, without limitation, income, social security
and employment tax withholding for all types of compensation).
(e) No portion of the Purchase Price is subject to any Tax withholding
provision of federal, state, local or foreign law.
Section 4.22 Insurance.
(a) Schedule 4.22 of the Disclosure Schedule contains an accurate and
complete description of all policies of property, fire and casualty, product
liability, general liability, workers' compensation, and other forms of
insurance held by Seller or any of its Subsidiaries. True, correct and complete
copies of such insurance policies have been made available to Buyer.
(b) All policies listed on Schedule 4.22 of the Disclosure Schedule (i) are
valid, outstanding, and enforceable policies and (ii) provide adequate insurance
coverage for the Assets and the operations of Seller and its Subsidiaries for
all material risks normally insured against by a Person carrying on the same
businesses as Seller and its Subsidiaries.
Section 4.23 Customers and Suppliers. Schedule 4.23 of the Disclosure
Schedule sets forth a complete and accurate list of the names of Seller's and it
Subsidiaries' (i) five (5) largest customers and/or programs for the three (3)
most recent fiscal years based on sales, showing the approximate aggregate total
sales in dollars by Seller and its Subsidiaries' to each such customer during
each such fiscal year; and (ii) three (3) largest suppliers for the three (3)
most recent fiscal years based on purchases, showing the approximate aggregate
total purchases in dollars by Seller and its Subsidiaries from each such
supplier during each such fiscal year. Neither Seller nor any of its
Subsidiaries has received any written communication since January 1, 2006 from
any customer or supplier named on Schedule 4.23 of the Disclosure Schedule of
any intention or threat to terminate or materially reduce purchases from or
supplies or services to Seller or any of its Subsidiaries or to fail to renew
any Contract with Seller or, to the Knowledge of Seller, that any such action is
being considered, by any such customer or supplier.
Section 4.24 Affiliate Transactions. No officer, manager, director,
stockholder or Affiliate of Seller or any of its Subsidiaries or any individual
related by blood, marriage or adoption to any such Person or in which any such
Person owns a greater than 10% beneficial interest, is, or during the last three
year period has been, a party to any agreement, contract, commitment or
transaction with Seller or has a material interest in any material property used
by Seller or any of its Subsidiaries (any such agreement, contract, commitment,
transaction or interest, a "Related Party Transaction").
Section 4.25 Accounts Receivable. The amount of accounts receivable,
unbilled invoices, and other debts due or recorded in the records and books of
account of Seller or any of its Subsidiaries as being due to Seller or any of
its Subsidiaries as of the Closing Date will be collected in full in the
ordinary course of business, except to the extent of any reserve with respect
thereto set forth on the Balance Sheet, and none of such accounts receivable or
other debts is subject to any counterclaim or set off except to the extent of
any such reserve. Since January 1, 2005, Seller has not made any change in its
credit policies, nor has it materially deviated therefrom.
Section 4.26 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller or any of its Subsidiaries.
Section 4.27 Full Disclosure. Seller has made available to Buyer all
information requested by Buyer in connection with its decision to consummate the
transactions contemplated hereby. No representation or warranty made by Seller
in this Agreement, nor any document, exhibit, statement, certificate or schedule
attached to this Agreement or delivered by Seller at the Closing to Buyer nor
any other document delivered by Seller to Buyer or its attorneys or agents in
connection with the transactions contemplated hereby contains any untrue
statement of material fact or omits to state any material fact necessary in
order to make the statement contained herein, in light of the circumstances
under which they were made, not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as of the
Closing Date as follows:
Section 5.1 Incorporation and Authority of PTC and Buyer. Each of PTC and
Buyer is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation and Buyer has all necessary
corporate power and authority to enter into this Agreement and each Ancillary
Agreement, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery by Buyer of this
Agreement and each Ancillary Agreement, the performance by Buyer of its
obligations hereunder and thereunder and the consummation by Buyer of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action on the part of Buyer. This Agreement has been, and
each Ancillary Agreement will be, duly executed and delivered by Buyer and
constitutes, or will constitute, a legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except to the extent
such enforceability (a) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally, or (b) is subject to general principles of equity.
Section 5.2 No Conflict. The execution and delivery by Buyer of this
Agreement and each Ancillary Agreement does not and the consummation of the
transactions contemplated hereby and, with respect to Buyer, thereby will not:
(a) conflict with or violate any of the terms, conditions or provisions of
the certificate of incorporation or bylaws of Buyer;
(b) subject to obtaining the consents, approvals and actions, making the
filings and giving the notices disclosed in Schedule 5.3 of the Disclosure
Schedule, conflict with or result in a material violation or breach of any term
or provision of any Law or Governmental Order applicable to Buyer, or any of its
assets or properties; or
(c) except as could not, individually or in the aggregate, reasonably be
expected to materially and adversely affect the ability of Buyer to consummate
the transactions contemplated hereby or, with respect to Buyer, by the Ancillary
Agreements or to perform its obligations hereunder or thereunder, (i) conflict
with or result in a material violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, or (iii) require Buyer
to obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, any material Contract to
which Buyer is a party or by which any of its assets and properties is bound.
Section 5.3 Consents and Approvals. Except as disclosed in Schedule 5.3 of
the Disclosure Schedule, no consent, approval or action of, filing with or
notice to any Governmental Authority on the part of Buyer is required in
connection with the execution, delivery and performance of this Agreement or any
Ancillary Agreement or the consummation of the transactions contemplated hereby
or, with respect to Buyer, thereby, except where the failure to obtain any such
consent, approval or action, to make any such filing or to give any such notice
could not reasonably be expected to adversely affect the assets, liabilities,
business or condition of Buyer in any material respect or the ability of Buyer
to consummate the transactions contemplated by this Agreement or by the
Ancillary Agreements or to perform its obligations hereunder or thereunder.
Section 5.4 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission based upon arrangements made
by or on behalf of Buyer.
Section 5.5 Validity of PTC Common Stock. The PTC Common Stock to be issued
as part of the Purchase Price has been duly authorized by all necessary
corporate action on the part of PTC and will, when issued, be validly issued,
fully paid and nonassessable.
Section 5.6 Absence of Certain Changes or Events. Since June 30, 2006,
there has not been any Material Adverse Change in PTC or Buyer.
Section 5.7 Disclosure. No representation or warranty made by Buyer in this
Agreement, or any document, exhibit, statement, certificate or schedule attached
to this Agreement or delivered by Buyer to Seller nor any other document
delivered to Seller in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary in order to make the statement contained herein, in light of the
circumstances under which they were made, not misleading.
ARTICLE 6
ADDITIONAL AGREEMENTS
Section 6.1 Conduct of Business Prior to the Closing.
(a) Between the date of this Agreement and the Closing Date, Seller and
each of its Subsidiaries shall conduct the Business in the ordinary course and
consistent with past practice. Without limiting the foregoing, except (i) for
such actions as are expressly contemplated by this Agreement and (ii) as
described in Schedule 6.1 of the Disclosure Schedule, without the prior written
consent of Buyer, neither Seller nor any of its Subsidiaries shall:
(i) change any accounting methods, principles or practices, make any
material Tax election, amend any Tax return, settle or compromise any Tax
audit or take any action not in accordance with past practices that would
have the effect of deferring any Tax liability for a taxpayer from any
taxable period ending on or before the Closing Date to any subsequent
taxable period;
(ii) revalue any of the Assets, including, without limitation, writing
off receivables or reserves, other than in the ordinary course of business;
(iii) establish or increase the benefits payable under any Employee
Plan or establish any new bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing or other employee benefit
plan for its Personnel, or otherwise increase the compensation payable or
to become payable to any of its Personnel, or include any additional Person
in any deferred compensation plan, except as may be required by Law or
applicable collective bargaining agreements;
(iv) enter into or amend any employment or severance agreement with
any of its Personnel;
(v) change or amend its Articles of Incorporation or bylaws, or other
charter document;
(vi) enter into, extend, materially modify, terminate or renew any
Material Contract other than in the ordinary course of business;
(vii) sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any material Assets or any interests
therein, except for the sale of Inventory or the disposition of obsolete or
worn out Assets in the ordinary course of business consistent with past
practices;
(viii) acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or
otherwise acquire any material assets or business of, any Person or any
other business organization or division thereof;
(ix) fail to expend funds for capital expenditures or commitments in
accordance with customary practices;
(x) fail to maintain the Assets in substantially their current state
of repair, excepting normal wear and tear, or fail to replace, consistent
with past practice, inoperable, worn out or obsolete or destroyed Assets;
(xi) make any material loans or advances to any Person, or, except for
advances in the ordinary course of business, to any employee of Seller or
its Subsidiaries;
(xii) collect accounts receivable and pay accounts payable other than
in the ordinary course of business;
(xiii) cancel any Indebtedness owed to Seller or any of its
Subsidiaries;
(xiv) incur, create, assume or guarantee any Indebtedness;
(xv) intentionally do any other act which would cause any
representation or warranty of Seller in this Agreement to become untrue in
any material respect; or
(xvi) enter into any agreement, or otherwise become obligated, to do
any action prohibited hereunder.
(b) Seller agrees that, prior to the Closing, it shall use its reasonable
best efforts to preserve substantially intact the business organization,
goodwill, and assets of Seller and each of its Subsidiaries, keep available to
Buyer the services of the key Personnel of Seller and each of its Subsidiaries
and preserve the current relationships of Seller and each of its Subsidiaries
with the material customers and suppliers and with any other Persons with whom
Seller and each of its Subsidiaries have a significant business relationship.
Section 6.2 Access to Information. From the date of this Agreement until
the Closing, upon reasonable notice, Seller shall, and shall cause each of its
officers, employees, auditors and agents of Seller to, (i) afford the officers,
employees and authorized agents and representatives of Buyer reasonable access,
during normal business hours, to the offices, properties, books and records of
Seller and each of its Subsidiaries, (ii) furnish to the officers, employees and
authorized agents and representatives of Buyer such additional financial and
operating data and other information regarding the assets, properties, goodwill
and business of Seller and each of its Subsidiaries (including any work papers
prepared by Seller and its accountants, and (iii) make available to Buyer the
management employees, officers and directors of Seller, as Buyer may from time
to time reasonably request in order to assist Buyer in fulfilling its
obligations under this Agreement and to facilitate the consummation of the
transactions contemplated hereby; provided, however, that Buyer shall not
unreasonably interfere with any of the businesses or operations of Seller. No
investigation by Buyer pursuant to this Section 6.2 shall affect any
representation or warranty given by Seller hereunder, or any of Buyer's rights
under this Agreement, including, without limitation, Articles 7 and 8 hereof.
Section 6.3 Confidentiality.
(a) The terms of the Confidentiality Agreement are hereby incorporated
herein by reference and shall continue in full force and effect until the
Closing, at which time such Confidentiality Agreement and the obligations of
Buyer thereunder shall terminate. If this Agreement is, for any reason,
terminated prior to the Closing, the Confidentiality Agreement shall continue in
full force and effect.
(b) Seller and its Affiliates have obtained confidential information
relating to the operations and assets of Seller and each of its Subsidiaries,
including the Business. Following the Closing, Seller and its Affiliates shall
treat such information as confidential, preserve the confidentiality thereof,
not duplicate or use such information and instruct its employees and Affiliates
who have had access to such information to keep confidential and not to use any
such information unless such information (i) is now or is hereafter disclosed,
through no act or omission of Seller or its Affiliates, in a manner making it
available to the general public; (ii) is required by law to be disclosed; or
(iii) was available from a third-party source on a non-confidential basis.
(c) Buyer has obtained confidential information relating to the Excluded
Assets. Following the Closing, Buyer and its Affiliates shall treat such
information as confidential, preserve the confidentiality thereof, not duplicate
or use such information and instruct its employees and Affiliates who have had
access to such information to keep confidential and not to use any such
information unless such information (i) is now or is hereafter disclosed,
through no act or omission of Buyer and its Affiliates, in a manner making it
available to the general public; (ii) is required by law to be disclosed; or
(iii) was available from a third-party source on a non-confidential basis.
Section 6.4 Regulatory and Other Authorizations, Consents. Each party
hereto shall use its commercially reasonable efforts to obtain all
authorizations, consents (including any consents required under the terms of any
Material Contract or License), orders and approvals of, and to give all notices
to and make all filings with, all Governmental Authorities and other third
parties that may be or become necessary for its execution and delivery of, and
the performance of its obligations pursuant to, this Agreement, and each party
will cooperate fully with the other parties in promptly seeking to obtain all
such authorizations, consents, orders and approvals, giving such notices, and
making such filings.
Section 6.5 Further Action. Subject to the terms and conditions herein
provided, each of the parties hereto covenants and agrees to deliver or cause to
be delivered such documents and other papers, including the Ancillary
Agreements, and to use commercially reasonable efforts to take or cause to be
taken such further actions as, in each case, may be necessary, proper or
advisable under applicable Laws or otherwise to consummate and make effective
the actions contemplated hereby.
Section 6.6 Notification of Certain Matters. From the date hereof through
the Closing, Seller shall give prompt notice to Buyer and Buyer shall give
prompt notice to Seller of (a) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any of Seller's or Buyer's
respective representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect and (b) any material failure of
Seller or Buyer to comply with or satisfy any of its respective covenants,
conditions or agreements to be complied with or satisfied by it under this
Agreement; provided, however, that such disclosure shall not be deemed to cure
any breach of a representation, warranty, covenant or agreement, or to satisfy
any condition. Seller shall provide Buyer with an unaudited balance sheet and
the related statements of income and cash flow for each month from the date
hereof through the Closing Date within 15 calendar days after the end of each
such month.
Section 6.7 Exclusivity. From the date hereof through the Closing Date or
earlier termination of this Agreement pursuant to Article 9, Seller shall not
knowingly permit its respective Affiliates, shareholders, directors, officers,
employees, representatives and agents to, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any Person or group of Persons (other than Buyer or any of
its Affiliates) in furtherance of any merger, sale of assets, sale of shares of
capital stock or similar transactions involving Seller. Seller shall (a)
immediately notify Buyer (orally and in writing) if any discussions or
negotiations are sought to be initiated, any inquiry or proposal is made, any
information is requested with respect to the transactions contemplated hereby or
any offer is made with respect to any Equity Securities of Seller, or any of the
material Assets of Seller, (b) include in such notification the terms of any
such proposal or offer that it may receive with respect thereto (and provide
Buyer with a copy thereof in writing), including the identity of the soliciting
party and (c) keep Buyer informed with respect to the status of the foregoing.
Section 6.8 Pre Closing Taxes. Seller shall promptly pay after the Closing
any unpaid Taxes arising in any Pre-Closing Tax Period that could give rise to a
lien on the Purchased Assets in the hands of Buyer or otherwise cause Buyer to
be liable therefor. All real property Taxes, personal property Taxes and similar
ad valorem obligations, if any, levied with respect to the Purchased Assets for
a taxable period which includes (but does not end on) the Closing Date shall be
apportioned between Seller and Buyer as of the Closing Date based on the number
of days of such taxable period included in the Pre-Closing Tax Period and the
number of days of such taxable period following the Closing Date.
Section 6.9 Employee and Employee Benefit Matters.
(a) Seller and each of its Subsidiaries shall terminate each and all of its
Personnel who are employees on or before the close of business in the Closing
Date other than those necessary to continue the operations of Seller other than
relating to the Business. Seller shall be responsible for any and all
liabilities, claims or causes of action arising out of or resulting from any
such Person's employment by Seller or the termination thereof. On or before the
Closing, Seller shall pay to each and all of its employees the total amount of
any accrued vacation pay due such employee for the period ending on the Closing
Date.
(b) Buyer shall extend offers of employment to those key employees
identified by Buyer, following completion of its due diligence, regarding
services to be provided to Buyer subsequent to the Closing Date on such terms
and conditions as Buyer shall, in its sole discretion, deem appropriate.
However, nothing in this Agreement shall be construed as granting such
individuals or any other Personnel any rights under this Agreement, including
the right to employment by any such Person.
Section 6.10 Noncompetition. (a) Seller hereby agrees that it shall not at
any time during the period beginning on the Closing Date through the period
ending five (5) years after the Contingent Payment Period:
(i) engage, either directly or indirectly, as a principal or for its
own account, solely or jointly with others, or through any form of
ownership in another Person, or otherwise, in any business that competes
with the Business as it exists on the Closing Date; or
(ii) employ or solicit, or receive or accept the performance of
services for compensation by, any Personnel;
(iii) advise any customer or supplier of the Business with respect to
its business relationship with the Business.
(b) If any provision contained in this Section shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Section, but this
Section shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. It is the intention of the parties
that if any of the restrictions or covenants contained herein is held to cover a
geographic area or to be for a length of time which is not permitted by
applicable law, or in any way construed to be too broad or to any extent
invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable law.
Seller acknowledges that Buyer would be irreparably harmed by any breach of this
Section and that there would be no adequate remedy at law or in damages to
compensate Buyer for any such breach. Seller agrees that Buyer shall be entitled
to injunctive relief requiring specific performance of this Section, and Seller
consents to the entry thereof.
Section 6.11 Trademark; Tradenames. As soon as practicable after the
Closing Date, Seller and each of its Subsidiaries shall eliminate the use of all
of the trademarks, tradenames, service marks and service names used in the
Business, in any of their forms or spellings, on all advertising, stationery,
business cards, checks, purchase orders and acknowledgments, customer agreements
and other contracts and business documents. Seller shall change its corporate
name so as to bear no resemblance to the current name.
Section 6.12 Winding Up. Seller hereby covenants and agrees: (i) to apply
any moneys received by Seller from Buyer pursuant to this Agreement first to the
payment of Seller's and each of its Subsidiaries' debts and obligations; (ii)
subject to the exception set forth below, to provide Buyer within thirty (30)
days of the Closing written evidence acceptable to Buyer, in Buyer's sole
discretion, that all Contracts not listed on Schedule 2.1(a)(iii) other than the
Universal Agreement (as described in Section 10.2) and the RDNA Agreements shall
have been terminated without expense or liability to Buyer; (iii) to provide
Buyer within thirty (30) days of the Closing written evidence acceptable to
Buyer, in Buyer's sole discretion, that all Third Party Rights have been
terminated; (iv) to, as soon as practicable after the end of the Contingent
Purchase Price Period, wind up Seller's and each of its Subsidiaries (other than
any Transferred Subsidiaries) affairs and to cause Seller's and each of its
Subsidiaries (other than any Transferred Subsidiaries) dissolution in accordance
with all applicable Laws; and (v) to refrain from conducting any trade or
business following the Closing and to limit its activities and the activities of
its Subsidiaries (other than the Transferred Subsidiaries) to collecting the
Contingent Purchase Price Amount and winding up the affairs of Seller and its
Subsidiaries (other than the Transferred Subsidiaries). For purposes hereof, the
term "Third Party Rights" shall mean all existing third party rights and any
future or contingent right of third parties (vested or unvested) to obtain or
retain rights to any SIVA Product or to any Intellectual Property Rights with
respect to any version of any SIVA Product which would reduce, impair, interfere
or compete with the exclusive, perpetual, irrevocable, worldwide right of Buyer,
upon consummation of the Transaction, and without further compensation of any
kind or nature, to reproduce, copy, modify, enhance, make or create derivative
works of or practice, translate, perform, display, compile, market, demonstrate,
install, distribute, maintain, support, license, sublicense, sell or otherwise
exploit or commercialize the SIVA Products and any works derived from the SIVA
Products in all languages and any and all media now or hereafter known,
including but not limited to electronic transmission. It is understood that this
provision shall not require the termination of standard use licenses of
executable software applications granted to customers of SIVA, the GMRI license
to source code issued in 2004 nor standard escrow provisions in the acquired
Contracts where release of source code is triggered by the licensor's insolvency
or failure to maintain licensed software. Notwithstanding anything contained
herein to the contrary, if within the thirty (30) day period described above,
Seller has not produced the evidence required pursuant to clauses (ii) and (iii)
above with respect to a required Contract or Third Party Right, Buyer shall have
the right, in its sole discretion and in addition to any other available rights,
to withhold any Contingent Purchase Price Amounts until such time as the
required evidence is produced. Notwithstanding anything contained herein to the
contrary, during the four (4) calendar year period following the Closing, Seller
agrees to maintain in effect its participation in the NCR RealPartner Program
(or similar program). Seller agrees to convert any benefits due Seller pursuant
to such program to cash as soon after such benefits become available as is
practicable. On or before the 15th day following each calendar quarter during
such four (4) year period, Seller shall provide Buyer with a written statement
detailing the benefits earned by Seller during the previous quarter and the cash
equivalent thereof. All such cash equivalents shall either be paid to Buyer
within five (5) days of receipt by Seller if no Contingent Payment Amount is due
pursuant to Section 2.5 hereof or, if a Contingent Payment Amount is or may
become due, shall be retained by Seller, but shall automatically be deemed a
prepayment by Buyer towards the next Contingent Purchase Price Amount due Seller
pursuant to Section 2.5 hereof.
ARTICLE 7
CONDITIONS TO CLOSING
Section 7.1 Joint Conditions to the Obligations of each of Buyer and
Seller. The obligations of each of Buyer and Seller to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
or waiver, at the Closing, of each of the following conditions:
(a) Governmental Consents. All consents, approvals and actions of, filings
with and notices to any Governmental Authority necessary to permit Buyer and
Seller to perform their respective obligations under this Agreement and to
consummate the transactions contemplated hereby shall have been duly obtained,
made or given and shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental Authority necessary
for the consummation of the transactions contemplated by this Agreement shall
have occurred; and
(b) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Governmental Order which is in effect and
has the effect of making the transactions contemplated by this Agreement or any
of the Ancillary Agreements illegal or otherwise prohibiting consummation of
such transactions.
Section 7.2 Conditions to Obligations of Seller. In addition to the
satisfaction or waiver of each of the conditions set forth in Section 7.1, the
obligation of Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at the Closing, of each
of the following conditions:
(a) Representations and Warranties, Covenants. (i) The representations and
warranties of Buyer contained in this Agreement shall have been true and correct
when made in all material respects when made and shall be true and correct in
all material respects as of the Closing, with the same force and effect as if
made as of the Closing; (ii) the covenants and agreements contained in this
Agreement to be complied with by Buyer at or prior to the Closing shall have
been complied with in all material respects; and (iii) Seller shall have
received a certificate of Buyer as to the matters set forth in clauses (i) and
(ii) above, signed by a duly authorized officer of Buyer;
(b) Ancillary Agreements. Buyer and the other parties to the Ancillary
Agreements (other than Seller) shall have executed and delivered to Seller the
Ancillary Agreements;
(c) Resolutions. Seller shall have received true and complete copies,
certified by the Secretary or an Assistant Secretary (or similar officers) of
Buyer of the resolutions duly and validly adopted by the boards of directors of
Buyer evidencing their authorization of the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
thereby; and
(d) General. The form and substance of all instruments and documents
executed and delivered by Buyer in connection with the Closing shall be
reasonably acceptable to Seller and its counsel.
(e) Legal Opinion. Buyer shall have delivered the opinion of counsel to
Buyer in the form of Exhibit "D" annexed hereto.
Section 7.3 Conditions to Obligations of Buyer. In addition to the
satisfaction or waiver of each of the conditions set forth in Section 7.1, the
obligations of Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at the Closing, of each
of the following conditions:
(a) Representations and Warranties; Covenants. (i) The representations and
warranties of Seller contained in this Agreement shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects as of the Closing, with the same force and effect as if made
as of the Closing, subject to updates for changes in the ordinary course of
business and subject to such other changes that do not, either individually or
in the aggregate, cause the occurrence of a Material Adverse Change of the
character described in Section 7.3(h); (ii) the covenants and agreements
contained in this Agreement to be complied with by Seller at or prior to the
Closing shall have been complied with in all material respects; and (iii) Buyer
shall have received a certificate from Seller as to the matters set forth in
clauses (i) and (ii) above signed by a duly authorized officer of Seller;
(b) Ancillary Agreements. Seller and the other parties to the Ancillary
Agreements (other than PTC and Buyer) shall have executed and delivered to Buyer
the Ancillary Agreements.
(c) Resolutions. Buyer shall have received a true and complete copy,
certified by the Secretary or an Assistant Secretary (or similar officer) of
Seller of the resolutions duly and validly adopted by the Board of Directors and
the shareholders of Seller evidencing the authorization of the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and thereby;
(d) Incumbency Certificate. Buyer shall have received a certificate of the
Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying
the names and signatures of the officers of Seller authorized to sign this
Agreement and the other documents to be delivered hereunder;
(e) Third Party Consents. The required consents, approvals, permissions,
acknowledgments and notices have been obtained or made, and Buyer shall have
received reasonably acceptable written evidence thereof;
(f) Legal Opinion. Seller shall have delivered the opinion of Tiffany
Baughman, Esq., counsel to Seller, in the form of Exhibit "E" annexed hereto;
(g) Employment Agreements. Melvin and such other employees of Seller as
Buyer shall determine each shall have executed and delivered to Buyer employment
agreements on such terms and conditions as may be satisfactory to the parties
thereto;
(h) Material Adverse Change. Between the date hereof and the Closing Date,
there shall not have occurred any Material Adverse Change with respect to Seller
that could reasonably be expected to result in a Potential Loss to Seller (on or
before the Closing Date) or Buyer (following the Closing Date until the first
anniversary of the Closing Date) in an amount equal to or greater than $50,000;
(i) Liens. All Encumbrances shall have been removed from the Purchased
Assets;
(j) Due Diligence. Buyer shall have been satisfied, in its sole discretion,
with its due diligence examination with respect to Seller, the Assets and the
Business;
(k) Approval of Board of Directors. The Board of Directors of Buyer shall
approve the Transaction pursuant to the general terms and conditions of this
Agreement;
(l) Facility Agreement. Buyer having entered into a sublease agreement
regarding the Facility for a period of six (6) months following the Closing and
continuing on a month to month basis thereafter on terms acceptable to Buyer in
Buyer's sole discretion;
(m) Employee Arrangements. Buyer shall have entered into satisfactory
arrangements with such other employees of Seller as Buyer shall determine
regarding such other employees' employment by Buyer following the Closing;
(n) General. The form and substance of all instruments and documents
executed and delivered in connection with the Closing shall be reasonably
acceptable to Buyer and its counsel; and
ARTICLE 8
INDEMNIFICATION
Section 8.1 Survival. Subject to the limitations and other provisions of
this Agreement, (x) the representations and warranties of each party contained
herein shall survive the Closing and shall remain in full force and effect,
regardless of any investigation made by or on behalf of the other party, for a
period of twenty-four (24) months after the Closing Date; provided, however,
that the (i) representations and warranties set forth in Sections 4.20
(Environmental Matters) and 4.21 (Tax Matters) shall survive the Closing for a
period ending 180 days after the expiration of the applicable statute of
limitations, (ii) representations and warranties set forth in Section 4.11 and
4.15 shall survive the Closing for a period ending 180 days after the later of
(A) the date the last Earn-Out Amount is scheduled to be paid or (B) the
dissolution of Seller, (iii) the covenants and agreements of the parties shall
remain in full force and effect for the applicable periods specified in the
respective Sections or Articles or, if no such period is specified, indefinitely
and (iv) the expiration of the representations and warranties and covenants and
agreements of Seller shall not serve to preclude Buyer from asserting a claim
arising out of, resulting from or relating to fraud or intentional
misrepresentation prior to the expiration of the applicable statute of
limitations period.
Section 8.2 Indemnification.
(a) By Seller. Subject to the provisions of this Section 8.2, Seller shall
indemnify, defend and save and hold harmless Buyer, its Affiliates,
stockholders, officers, directors and employees (the "Buyer Indemnified
Parties") from and against any and all Losses, whether or not involving any
third party claims, arising out of, resulting from or relating to (i) any breach
of any representation or warranty of Seller contained in Article 4 hereof or set
forth in an officer's certificate delivered by Seller pursuant to Article 7
hereof, (ii) any breach of any covenant or agreement of Seller contained herein,
and (iii) any Excluded Liabilities, ****
(b) By Buyer. Subject to the provisions of this Section 8.2, Buyer shall
indemnify, defend and save and hold harmless Seller, its Affiliates, members,
managers, officers and employees (the "Seller Indemnified Parties") from and
against any and all Losses, whether or not involving any third party claims,
arising out of, resulting from or relating to (i) any breach of any
representation or warranty of Buyer contained in Article 5 hereof or set forth
in an officer's certificate delivered by Buyer pursuant to Article 7 hereof,
(ii) any breach of any covenant or agreement of Buyer contained herein, or (iii)
from and after the Closing, any Assumed Liabilities.
(c) Claim Procedure. If a claim for Losses (a "Claim") is to be made by an
indemnified party, such indemnified party shall give written notice (a "Claim
Notice") to the indemnifying party (the "Indemnifying Party"), promptly after
such indemnified party becomes aware of any fact, condition or event which may
give rise to Losses for which indemnification may be sought under this Section
8.2. If any lawsuit or other action is filed or instituted against any
indemnified party with respect to a matter subject to indemnity hereunder,
notice thereof (a "Third Party Notice") shall be given to the Indemnifying Party
as promptly as practicable (and in any event within fifteen (15) calendar days
after the service of the citation or summons). The failure of any indemnified
party to give timely notice hereunder shall not affect such indemnified party's
rights to indemnification hereunder, except to the extent such delay or failure
materially prejudices the Indemnifying Party's ability to defend such Claim or
mitigate any Losses resulting therefrom. After receipt of a Third Party Notice,
the Indemnifying Party shall have the right by providing written notice to the
indemnified party to (i) take control of the defense and investigation of such
lawsuit or action, (ii) employ and engage attorneys of its own choice (subject
to the approval of the indemnified party, such approval not to be unreasonably
withheld) to handle and defend the same, at the Indemnifying Party's sole cost,
risk and expense, and (iii) compromise or settle such claim, which compromise or
settlement shall be made only with the written consent of the indemnified party.
The indemnified party shall cooperate in all reasonable respects with the
Indemnifying Party and such attorneys in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom (at the cost and expense
of the Indemnifying Party); and the indemnified party may, at its own cost,
participate in the investigation, trial and defense of such lawsuit or action
and any appeal arising therefrom. If the Indemnifying Party fails to assume the
defense of such claim within ten (10) Business Days after receipt of the Third
Party Notice (or such earlier date, if the failure to assume the defense on such
earlier date would materially impair the ability of such indemnified party to
defend such claim), the indemnified party against which such claim has been
asserted will (upon delivering notice to such effect to the Indemnifying Party)
have the right to undertake the defense, compromise or settlement of such claim
(all at the cost and expense of the Indemnifying Party) and the Indemnifying
Party shall have the right to participate therein at its own cost.
Notwithstanding the foregoing, whether or not the Indemnifying Party assumes the
defense of a third party Claim, if the indemnified party determines in good
faith that a third party Claim is likely to have a Material Adverse Effect on
the indemnified party in a manner that may not be adequately compensated by
money damages (it being understood that any third party Claim related to Taxes
shall be deemed to have such a material adverse effect on the Buyer Indemnified
Parties), then the indemnified party may, by written notice to the Indemnifying
Party, assume the exclusive right to defend, compromise, or settle such third
party Claim. Notwithstanding anything to the contrary contained in Section 8.2,
no Claim may be settled by the indemnified party without the written consent of
the Indemnifying Party, such consent not to be unreasonably withheld.
(d) Limitations on Seller's Indemnification. Notwithstanding the foregoing,
no Buyer Indemnified Party shall be entitled to indemnification pursuant to
Section 8.2(a)(i) for any Losses unless and until the amount of all Losses for
which all Buyer Indemnified Parties are entitled to indemnification pursuant to
Section 8.2(a)(i) exceeds $50,000 (the "Seller Threshold Amount"), at which time
the Buyer Indemnified Parties shall be entitled to indemnification for all such
Losses sustained by such Buyer Indemnified Parties without regard to the Seller
Threshold Amount. Notwithstanding the preceding sentence, the Buyer Indemnified
Parties shall be entitled to indemnification for all Losses sustained by the
Buyer Indemnified Parties in connection with any Claim by RDNA without regard to
the Seller Threshold Amount.
(e) Limitations on Buyer Indemnification. Notwithstanding the foregoing,
(i) no Seller Indemnified Party shall be entitled to indemnification pursuant to
Section 8.2(b)(i) for any Losses unless and until the amount of all Losses for
which all Seller Indemnified Parties are entitled to indemnification pursuant to
Section 8.2(b)(i) exceeds $50,000 (the "Buyer Threshold Amount"), at which time
the Seller Indemnified Parties shall be entitled to indemnification for all
Losses sustained by such Seller Indemnified Parties without regard to the Buyer
Threshold Amount.
(f) Survival. Except as otherwise provided in this Agreement, no Claim may
be asserted for the breach of any representation, warranty, covenant or
agreement contained herein after the expiration of the survival period
applicable to such representation, warranty, covenant or agreement, as specified
in Section 8.1; provided, that this Section 8.2(f) shall not limit the ability
of any indemnified party to recover for any Claim relating to the breach of any
representation, warranty, covenant or agreement asserted prior to the expiration
of the survival period applicable to such representation, warranty, covenant and
agreement.
(g) Offset. Buyer shall have the right to offset any amounts due Seller
hereunder including, but not limited to, any Contingent Payment Amount or the
Escrow Amount, against any indemnification payments to which Buyer shall be
entitled hereunder. In the event Buyer elects, in its sole discretion, to
satisfy such obligation, in whole or in part, with Escrow Shares, the number of
Escrow Shares to be returned to Buyer shall be determined by dividing the total
amount of the Claim for which Buyer is entitled to be indemnified by the Share
Value. Nothing herein contained is intended to limit in any manner the source
from which or the amount to which Buyer may be indemnified. For purposes hereof,
"Share Value" shall mean the average of the last reported sale price of the PTC
Common Stock on the New York Stock Exchange for the twenty (20) trading days
ending on the third day immediately preceding the date the entitlement to and
the amount for which Buyer is entitled to be indemnified is fixed, either by
agreement of the parties or by a court of competent jurisdiction.
(h) Total Limitation. Notwithstanding anything contained herein to the
contrary, in no event shall either party's indemnification obligations hereunder
exceed the Purchase Price except to the extent such obligation arises out of
such party's gross negligence, intentional misconduct or fraud.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by the mutual written consent of the parties hereto;
(b) by either Seller or Buyer, if any Governmental Authority with
jurisdiction over such matters shall have issued a Governmental Order
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby, and such order, decree, ruling or other action
shall have become final and unappealable; provided, however, that the provisions
of this Section 9.1(b) shall not be available to any party unless such party
shall have used its commercially reasonable efforts to oppose any such
Governmental Order or to have such Governmental Order vacated or made
inapplicable to the transactions contemplated by this Agreement;
(c) at any time before the Closing, by notice given by Seller or Buyer (i)
in the event of a material breach of this Agreement by the non terminating party
if such non-terminating party fails to cure such breach within ten (10) days
following notification thereof by the terminating party or (ii) upon the
satisfaction of any condition to the terminating party's obligations under this
Agreement becoming impossible or impracticable with the use of commercially
reasonable efforts, if the failure of such condition to be satisfied is not
caused by a breach of this Agreement by the terminating party;
(d) by PAR, if at any time it is not satisfied with its due diligence
examination.
Section 9.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith be of no
force or effect and there shall be no liability on the part of any party hereto
except (a) that the obligations of the parties set forth in Section 6.3 and this
Section 9.2 shall survive such termination, and (b) that nothing herein shall
relieve any party from liability for any breach of this Agreement prior to the
date of termination.
ARTICLE 10
POST CLOSING AGREEMENTS
Section 10.1 Office Obligations. Pursuant to the sublease arrangement
described in Section 7.3(n), Buyer will continue to occupy and use the
Facilities for a period after the Closing. In connection with such use, Buyer
would like to have available certain services and equipment for its use. Set
forth on Schedule 10.1 of the Disclosure Schedule are certain agreements to
which Seller is a party regarding services and/or equipment used by Seller at
the Facility which services and/or equipment Buyer desires to have made
available after the Closing (the "Facility Agreements"). Following the Closing,
Buyer shall pay to Seller an amount equal to the obligations of Seller arising
under the Facilities Agreements after the Closing Date. This obligation with
respect to each such Facility Agreement shall continue only until such time
Buyer shall have given Seller thirty (30) days written notice that it no longer
desires any services or use of equipment pursuant to such Facility Agreement.
Upon the expiration of the thirty (30) day period, Buyer shall have no further
obligation with respect to such Facilities Agreement. Notwithstanding anything
contained herein to the contrary, in no event shall Buyer be responsible for any
amounts due under a Facilities Agreement arising out of or in connection with
any breach by Seller of its obligations under the Facilities Lease or any
obligations of Seller relating to the period prior to and including the Closing
Date.
Section 10.2 Universal Agreement. Seller is currently a party to
Professional Services Agreement with Universal City Development Partners, Ltd.
("Universal") dated as of August 1, 2006 (the "Universal Agreement") pursuant to
which Seller has agreed, among other things, to render professional development
services to Universal. As of the Closing, Buyer is not assuming any of Seller's
obligations under the Universal Agreement. **** In the event of any such
assignment, Seller shall remain liable to Buyer for any costs, penalties or
damages of any kind or nature assessed by Universal pursuant to the Universal
Agreement as a result of the failure by Buyer to meet any delivery requirements
set forth in the Universal Agreement; in addition, Seller shall remain liable
for any breaches by or failures of Seller to comply with the Universal Agreement
prior to the date of the assignment. In the event Universal refuses for any
reason to consent to the assignment of the Universal Agreement to Buyer, Buyer
shall be entitled to be reimbursed for any costs and expenses incurred by Buyer
in connection with any services performed by Buyer with respect to the Universal
Agreement during the thirty-five (35) day period following the Closing. Buyer
shall have the right to satisfy any such amount due Buyer hereunder, at Buyer's
option, through a distribution of a portion of the Escrow Amount or through a
reduction of any Contingent Purchase Price Amount due Seller. The obligation of
Seller to reimburse Buyer pursuant to this Section shall survive until the
fourth anniversary of the Closing.
Section 10.3 DMI Agreement. Pursuant to Section 2.1(a)(iii), Buyer has
agreed to assume Seller's obligations arising after the Closing under the
Enterprise Software License Agreement dated June 9, 2004 by and between DMI
Management Inc. ("DMI") and Seller (the "DMI Agreement"). Pursuant to Section 8
of the DMI Agreement, Seller is obligated to return to DMI the sum $47,817 if
(i) DMI does not accept the software delivered by Seller pursuant to the DMI's
Agreement or (ii) during the one year period following the delivery of the
Advance Delivery Module software, DMI agrees to permit Seller to license the
Advanced Delivery Module to third parties other than as a result of the request
of Buyer. If, in the event of the occurrence of either (i) or (ii) above Buyer
is required to refund any monies to DMI pursuant to the DMI Agreement, Buyer
shall be entitled to be reimbursed the amount of the refund by Seller. Buyer
shall have the right to satisfy any such amount due Buyer hereunder, at Buyer's
option, through a distribution of a portion of the Escrow Amount or through a
reduction of any Contingent Purchase Price Amount due Seller. The obligation of
Seller to reimburse Buyer pursuant to this Section shall survive until the
fourth anniversary of the Closing.
Section 10.4 eCentra Agreement. Pursuant to Section 2.1(a)(iii), Buyer has
agreed to assume Seller's obligations arising after the Closing under the
Software License Purchase Agreement dated May 30, 2006 by and between eCentra
Incorporated. ("eCentra") and Seller (the "eCentra Agreement"). Pursuant to the
eCentra Agreement, eCentra has agreed to purchase licenses at a total discounted
price of $250,000. To date, eCentra has paid one-half of this amount. Seller
hereby agrees that any further amount paid by eCentra pursuant to the eCentra
Agreement, either before or after the Closing, shall be the property of Buyer.
In the event eCentra makes any payment to Seller prior to the Closing, Buyer
shall have the right to reduce the amount of cash due Seller pursuant to Section
2.4(b) hereof by the amount of any such payment.
Section 10.5 ****
Section 10.6 Luby's Agreement. Pursuant to the Master Purchase Agreement
between Seller and Luby's Inc. ("Luby's"), as amended, and as described on
Schedule 2.1(a)(iii) (the "Luby's Agreement"), Luby's has a deposit remaining
with Seller in the amount of $94,000 (the "Luby's Deposit"). The Luby's Deposit
represents a prepayment by Luby's for certain dedicated resources, technical
support and help desk/support remaining to be provided to Luby's by Seller (the
"Luby's Support Obligations"). Seller hereby represents and warrants to Buyer
that the maximum cost of the Luby's Support Obligations following the Closing of
the Transaction will not exceed the amount of the Luby's Deposit. In the event
the total cost to Buyer of performing the Luby's Support Obligations exceeds the
Luby's Deposit, Buyer shall be entitled to be reimbursed such excess costs by
Seller. Buyer shall have the right to satisfy any such amount due Buyer
hereunder, at Buyer's option, through a distribution of a portion of the Escrow
Amount or through a reduction of any Contingent Purchase Price Amount due
Seller. The obligation of Seller to reimburse Buyer pursuant to this Section
shall survive until the fourth anniversary of the Closing.
ARTICLE 11
GENERAL PROVISIONS
Section 11.1 Expenses. Each party hereto shall bear its own expenses,
including, without limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated hereby, whether or not such transactions shall be
consummated.
Section 11.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by nationally recognized overnight delivery service, by telecopy or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
11.2:
(a) if to Seller:
Jim Melvin
SIVA Corporation
3333 South Congress Avenue
Suite 400
Delray
Beach, FL 33445
Facsimile: (561) 272-2121
with a copy to:
Tiffany M. Baughman, Esq.
5476 Gooseberry Way
Oceanside, CA 92057
Facsimile: (760) 874-2924
(b) if to Buyer:
PAR Technology Park
8383 Seneca Turnpike
New Hartford, New York 13413-4991
Attention: Vi Murdock, Esq.
Facsimile: (315) 735-4191
with a copy to:
Hiscock & Barclay, LLP
One Park Place
300 South State Street
Syracuse, New York 13202
Attention: James J. Canfield, Esq.
Facsimile: (315) 703-7378
Section 11.3 Public Announcements. Unless otherwise required by applicable
Law, Seller shall not make any public announcements in respect of this Agreement
or the transactions contemplated hereby or otherwise communicate with any news
media without the prior written consent of Buyer. The parties shall cooperate as
to the content of any public announcements.
Section 11.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 11.5 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the essential economic or legal
substance of the transactions contemplated hereby is not affected. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the greatest
extent possible.
Section 11.6 Entire Agreement. This Agreement (including the Ancillary
Agreements, Disclosure Schedule, and the other Exhibits hereto) constitute the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and undertakings, both written and oral,
other than the Confidentiality Agreement, with respect to the subject matter
hereof and except as otherwise expressly provided herein.
Section 11.7 Assignment. This Agreement shall not be assigned by operation
of Law or otherwise without the consent of Seller and Buyer; provided, however,
that without the consent of Seller, Buyer may, by providing written notice to
Seller, assign this Agreement and Buyer's rights and obligations hereunder in
whole or in part to (a) an Affiliate of Buyer, and (b) to any Person who
acquires all or a portion of the Purchased Assets or the Equity Securities of
PTC or Buyer following the Closing (by merger, recapitalization, sale of stock
or otherwise), provided, in each case, that Buyer remains bound by the terms and
conditions of this Agreement.
Section 11.8 No Third Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any other person or
entity any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
Section 11.9 Waivers and Amendments. This Agreement may be amended or
modified, and the terms and conditions hereof may be waived, only by a written
instrument signed by the parties hereto or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder,
nor any single or partial exercise of any other right, power or privilege
hereunder, preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.
Section 11.10 Specific Performance. Seller agrees that Buyer would be
irreparably and immediately injured and could not be made whole by monetary
damages if this Agreement is not specifically enforced. Therefore, Buyer shall
have the right to specifically enforce Seller's performance of its obligations
under this Agreement, and Seller agrees to waive the defense in any such suit
that Buyer has an adequate remedy at law and to interpose no opposition, legal
or otherwise, as to the propriety of specific performance as a remedy, and that
Buyer shall have the right to obtain specific performance of the terms of this
Agreement without being required to prove actual damages, post bond or furnish
other security. In addition, Buyer shall be entitled to obtain from Seller court
costs and reasonable attorneys' fees incurred by Buyer in enforcing its rights
hereunder. As a condition to seeking specific performance, Buyer shall not be
required to have tendered the Purchase Price.
Section 11.11 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of New York applicable to
contracts executed in and to be performed entirely in that state. All actions
and proceedings arising out of or relating to this Agreement shall be heard and
determined solely in a New York state or federal court sitting in Oneida County,
New York, and the parties hereto hereby irrevocably submit to the exclusive
jurisdiction of such courts in any such action or proceeding and irrevocably
waive the defense of an inconvenient forum to the maintenance of any such action
or proceeding.
Section 11.12 Counterparts; Signatures. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
Signatures delivered by facsimile or by electronic mail shall be deemed original
signatures for all purposes of this Agreement.
Section 11.13 Mediation. Except for matters in which injunctive relief is
required to prevent immediate and irreparable harm, in the event an issue arises
between the parties which cannot be resolved by good faith discussion, it shall
be a condition precedent to either party's right to commence litigation that the
parties shall have participated in at least sixteen (16) hours of non-binding
mediation in Chicago, IL before an independent mediator.
[Balance of Page Intentionally Left Blank; Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
PAR TECHNOLOGY CORPORATION
By: __________________________________
Name: ____________________________
Title: _____________________________
PAR-SIVA CORPORATION
By: __________________________________
Name: ____________________________
Title: _____________________________
SIVA CORPORATION
By: ___________________________________
Name: _____________________________
Title: ______________________________