ASSET PURCHASE AGREEMENT

 

Exhibit 2.1

 

EXECUTION ORIGINAL

 

 

 

ASSET PURCHASE AGREEMENT

by and among

FIELDCENTRIX, INC.,

ASTEA INTERNATIONAL INC.,

AND

FC ACQUISITION CORP.

September 21, 2005

 

 

 

 

TABLE OF CONTENTS

Page

 

 

SCHEDULES

 

 

 

EXHIBITS

 

 

 

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (the “ Agreement ”) is made this 21 ^st day of September, 2005, by and among FIELDCENTRIX, INC., a California corporation (“ Seller ”), ASTEA INTERNATIONAL INC., a Delaware corporation (“ Parent ”) and FC ACQUISITION CORP., a Delaware corporation (“ Acquisition Sub ”).

BACKGROUND

WHEREAS, Seller designs, develops, licenses, distributes, implements, maintains, and supports proprietary software, including, without limitation, the FieldCentrix Enterprise software application suite, for field service automation solutions (the “ Business ”);

WHEREAS, Seller desires to sell to Acquisition Sub substantially all of the assets of Seller, other than the Excluded Assets, and Acquisition Sub desires to purchase from Seller such assets on the Closing Date;

WHEREAS, Seller desires to transfer to Acquisition Sub only certain enumerated liabilities and obligations of Seller, all of which are more particularly identified herein, and Acquisition Sub is willing to assume from Seller on the Closing Date only such enumerated liabilities and obligations, all of which are more particularly identified herein, in each case, upon the terms and subject to the conditions hereinafter set forth;

WHEREAS, Acquisition Sub desires to hire certain of the Employees on the Closing Date; and

WHEREAS, to induce each other to enter into this Agreement and to consummate the acquisition of the Purchased Assets by Acquisition Sub and the related transactions contemplated by this Agreement, Seller, Parent and Acquisition Sub are willing to enter into this Agreement and undertake their respective obligations as set forth herein.

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises, covenants, representations, warranties and agreements herein contained, and intending to be legally bound, Parent, Acquisition Sub and Seller agree as follows:

ARTICLE 1

DEFINITIONS AND CONSTRUCTION

Except as otherwise provided herein, the following capitalized terms have the meanings set forth next to such capitalized terms below:

1.1.   “ Accounts Receivable ” has the meaning set forth in Section 4.7(b) .

1.2.   “ Acquisition Sub’s Secretary’s Certificate ” has the meaning set forth in Section 6.2(b)(xi).

1.3.   “ Accrued Vacation Amount ” has the meaning set forth in Section 4.16(c) .

1.4.   “ Action ” means any action, appeal, petition, plea, charge, complaint, claim, suit, litigation, arbitration, mediation, hearing, inquiry, investigation or similar event, occurrence or proceeding.

1.5.   “ Affiliate ” of a Person means: (i) any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person; (ii) any officer, director, partner, employer, or direct or indirect beneficial owner of any 10% or greater equity or voting interest of such Person; or (iii) any other Person for which a Person described in clause (ii) acts in any such capacity.

1.6.   “ Affiliated Seller ” has the meaning set forth in Section 4.17 .

1.7.   “ Agreement ” means this Asset Purchase Agreement, all Schedules and Exhibits, as the same shall be amended from time to time.

1.8.   “ Allocation ” has the meaning set forth in Section 3.5 .

1.9.   “ Assets ” of a Person means all of the assets, properties, businesses and rights of such Person of every kind, nature, character and description, whether real, personal or mixed, tangible or intangible (including, without limitation, Intellectual Property), accrued or contingent, or otherwise relating to or utilized in such Person’s business, directly or indirectly, in whole or in part, whether or not carried on the books and records of such Person, and whether or not owned in the name of such Person or any Affiliate of such Person and wherever located.

1.10.   “ Assumed Contracts ” has the meaning set forth in Section 2.1(c) .

1.11.   “ Assumed Liabilities ” has the meaning set forth in Section 2.3 .

1.12.   “ Assumption Agreement ” has the meaning set forth in Section 6.2(a)(xi) .

1.13.   “ Astea Shares ” has the meaning set forth in Section 3.1 .

1.14.   “ Balance Sheet Date ” has the meaning set forth in Section 4.9(b) .

1.15.   “ Bill of Sale ” has the meaning set forth in Section 6.2(a)(x) .

1.16.   “ Bonus Amount ” has the meaning set forth in Section 4.16(d) .

1.17.   “ Books and Records ” has the meaning set forth in Section 2.1(k) .

1.18.   “ Business ” has the meaning set forth in the Background section of this Agreement.

1.19.   “ Business Customer Base ” has the meaning set forth in Section 4.27(a) .

1.20.   “ Business Day ” means any calendar day which is not a Saturday, Sunday or public holiday under the laws of the Commonwealth of Pennsylvania.

1.21.   “ Business Material Adverse Change ” or “ Business Material Adverse Effect ” means any event, fact, circumstance or change which results or could result in a material adverse effect on the Assets, Liabilities, business, operations, results of operations or condition (financial or otherwise) of Seller, including, without limitation, the Purchased Assets, either individually or taken as a whole, excluding effects reasonably attributable to the consummation of the transactions contemplated by this Agreement and the Collateral Documents or conditions generally affecting the industry in which Seller participates.

1.22.   “ Cash Assets ” means Seller’s cash and cash equivalents.

1.23.   “ Cash Escrowed Amount ” has the meaning set forth in Section 3.6 .

1.24.   “ Claim ” means any demand, claim, suit, Action, cause of action, investigation, proceeding or notice by any Person, alleging actual or potential Liability for any Loss.

1.25.   “ Claim Notice ” means written notification as to which indemnity for a Claim or Loss under Article 7 is sought by an Indemnified Party, enclosing a copy of all papers served, if any, and describing in reasonable detail the nature of and basis for such Claim, Litigation, or Loss, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such Claim, Litigation, or Loss.

1.26.   “ Closing ” has the meaning set forth in Section 6.1 .

1.27.   “ Closing Date ” has the meaning set forth in Section 6.1 .

1.28.   “ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985 (29 U.S.C. §§ 1161-1169).

1.29.   “ Code ” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder or with respect thereto.

1.30.   “ Collateral Documents ” has the meaning set forth in Section 4.2 .

1.31.   “ Confidential Information ” has the meaning set forth in Section 4.14(d) .

1.32.   “ Contract ” means any written or oral contract, agreement, arrangement, commitment, note, bond, pledge, lease, mortgage, guaranty, indenture, license, undertaking, understanding, plan, consulting agreement, supply contract, repair contract, distribution agreement, purchase order, work order, job order, joint venture agreement, franchise, technology and know-how agreement, employment agreement, instrument or any other contractual commitment or document to which any Person is a party or that is binding upon any Person or its capital stock, Assets, or business.

1.33.   “ Corporate Books ” has the meaning set forth in Section 2.2(b) .

1.34.   “ Current Asset Adjustment Amount ” means $760,506, which equals the Maintenance Amount, plus the Customer Deposits, plus the difference between the Bonus Amount and the Required Bonus Payment, less the Partial Month Expenses.

1.35.   “ Current Balance Sheet ” has the meaning set forth in Section 4.9(b) .

1.36.   “ Current Policies ” has the meaning set forth in Section 4.13 .

1.37.   “ Customer Consents ” has the meaning set forth in Section 4.5(a) .

1.38.   “ Customer Deposits ” has the meaning set forth in Section 4.27(c) .

1.39.   “ Default ” means (i) a violation, breach or default; (ii) the occurrence of an event which, with the passage of time, the giving of notice or both, would constitute a violation, breach or default; or (iii) the occurrence of an event which, with or without the passage of time, the giving of notice or both, would give rise to a right of damages, specific performance, termination, cancellation, renegotiation or acceleration (including, without limitation, the acceleration of payment).

1.40.   “ Earnout Customers ” has the meaning set forth in Section 3.3(a) .

1.41.   “ Earnout Products ” has the meanings set forth in Section 3.3(a) .

1.42.   “ Earnout Purchase Price ” has the meaning set forth in Section 3.3 .

1.43.   “ Employees ” has the meaning set forth in Section 4.16(a) .

1.44.   “ Employment Letter ” has the meaning set forth in Section 6.2(a)(viii) .

1.45.   “ Environmental Laws ” means all U.S. or foreign federal, state and local Laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.A. §§9601 et seq., the Resource Conversation and Recovery Act, 42 U.S.C.A. §§6901 et seq., the Clean Water Act, 33 U.S.C.A §§1251 et seq., the Clean Air Act 42 U.S.C.A. §§7401 et seq., the Occupational Safety and Health Act, 29 U.S.C. §651 et seq., the Toxic Substances Control Act, 15 U.S.C. §2601 et seq., and laws and regulations relating to emissions, spills, leaks, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise relating to the manufacture, possession, distribution, use, treatment, storage, disposal, presence, transport or handling of Materials of Environmental Concern.

1.46.   “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder or with respect thereto.

1.47.   “ Escrow Agreement ” has the meaning set forth in Section 3.6 .

1.48.   “ Exchange Act ” means the Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, in each case as in effect from time to time.

1.49.   “ Excluded Assets ” has the meaning set forth in Section 2.2 .

1.50.   “ Excluded Liabilities ” has the meaning set forth in Section 2.4 .

1.51.   “ Exhibits ” mean the Exhibits to this Agreement.

1.52.   “ Export/Import Laws ” means all U.S. or foreign federal, state and local Laws relating to the export or import of any items (commodities, software or technology), and all Laws relating to Customs, export controls, embargoes, quotas, antiboycott and economic sanctions, including, without limitation, the International Traffic in Arms Regulations (“ITAR”), Arms Export Control Act (“AECA”), and Defense Trade Security Initiatives (“DTSI”) administered by the U.S. Department of Defense and the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”); the Export Administration Regulations (“EAR”) (including, without limitation, the antiboycott laws) administered by the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”), the sanctions and assets control regulations administered by the U.S. Department of Treasury, Office of Foreign Assets Control (“OFAC”), and the U.S. Customs Laws administered by the U.S. Department of Homeland Security, Bureau of Customs and Border Protection ("CBP").

1.53.   “ Financial Statements ” has the meaning set forth in Section 4.9(b) .

1.54.   “ GAAP ” means generally accepted accounting principles consistently applied, as applied in the United States of America.

1.55.   “ Governmental or Regulatory Authority ” shall mean any court, tribunal, arbitrator, authority, agency, commission, official, agency or other instrumentality exercising governmental or regulatory authority of the United States, any foreign country or any domestic or foreign state, province, county, city, municipality or other political subdivision or any quasi-governmental or regulatory body exercising authority thereunder (including, without limitation, the United States Patent and Trademark Office and any foreign governmental office equivalent).

1.56.   “ IIPI ” has the meaning set forth in Section 4.15(a) .

1.57.   “ Indebtedness ” of any Person means all obligations of such Person (i) for borrowed money; (ii) evidenced by notes, bonds, debentures or similar instruments; (iii) for the deferred purchase price of goods or services (other than trade payables or accruals incurred in the ordinary course of business); (iv) under capital leases; or (v) in the nature of guarantees of the obligations described in clauses (i) through (iv) above of any other Person.

1.58.   “ Indemnifiable Losses ” shall mean the Claims, Litigation and Losses subject to indemnification obligations of Seller or Parent, as the case may be, pursuant to Sections 7.1 and 7.2 hereof.

1.59.   “ Indemnification Threshold ” has the meaning set forth in Section 7.4 .

1.60.   “ Indemnified Party ” means any Person entitled to and seeking indemnification from another Person all as otherwise provided for under Article 7 .

1.61.   “ Indemnifying Party ” means any Person obligated to provide indemnification and against whom indemnification is being sought by another Person all as otherwise provided for under Article 7 .

1.62.   “ Independent Accountants ” shall mean an independent accounting firm mutually agreed upon in good faith by Parent, Acquisition Sub and Seller.

1.63.   “ Independent Contractors ” has the meaning set forth in Section 4.16(b) .

1.64.   “ Initial Purchase Price ” has the meaning set forth in Section 3.1 .

1.65.   “ Insolvent ” shall mean with regard to a Person and on a particular date that: (i) such Person is not able to meet or satisfy its obligations as they generally become due; (ii) such Person is not paying its current obligations in the ordinary course of business as they generally become due; or (iii) the Person’s Assets are less than the sum of all of the Person’s debts on such date.

1.66.   “ Intellectual Property ” means, collectively, under applicable foreign and domestic Law, (i) patents (including, without limitation, continuations, continuations-in-part, divisionals, renewals, reissues, and extensions thereof), inventions or discoveries (including, without limitation, processes, compositions of matter, formulas, techniques, concepts and ideas) whether patentable or not, and whether reduced to practice or not; (ii) moral rights and copyrights in any work of authorship (including, without limitation, databases and computer software, including, without limitation, all source code, object code, firmware, development tools, files, records and data, and all media on which any of the foregoing is recorded); (iii) mask works; (iv) trademarks, service marks, Internet domain names, URLs, logos, trade names and trade dress, brand names, model names, corporate names and other source indicators, and all goodwill related thereto; (v) trade secrets and confidential information (including, without limitation, confidential ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer, sales prospect and supplier lists, pricing and cost information, and marketing plans and proposals); (vi) all other intellectual property rights protectable under any Laws or international conventions throughout the world; (vii) all improvements to or derivatives from any of the foregoing; (viii) registrations and applications (including, without limitation, provisional applications), renewals, reissues and extensions for any of the foregoing; (ix) all joint or partial interests in any of the foregoing; and (x) all rights to pursue, recover and retain damages, costs and attorneys’ fees for past, present and future infringement or misappropriations of the foregoing.

1.67.   “ Intellectual Property Assignment ” has the meaning set forth in Section 6.2(a)(xii) .

1.68.   “ Interim Financial Statements ” has the meaning set forth in Section 4.9(b) .

1.69.   “ Inventory ” has the meaning set forth in Section 2.1(i) .

1.70.   “ IP License ” has the meaning set forth in Section 4.14(b) .

1.71.   “ Known ,” “ Knowingly ” or “ Knowledge ” means with respect to (i) Seller, the actual knowledge of Steven Hamerslag, Ronald Fikert, Scott Hiraoka and Carl Smith, after such Persons shall have made all reasonable inquiries of those Persons directly reporting to such Persons; and (ii) Parent and Acquisition Sub, the actual knowledge of Zack B. Bergreen, Fredric (Rick) Etskovitz and John Tobin.

1.72.   “ Law ” or “ Laws ” means any and all codes, laws (including, without limitation, common law), ordinances, regulations, reporting or licensing requirements, orders, decrees, edicts, rules, or statutes applicable to a Person or its Assets, Liabilities, or business, including, without limitation, those promulgated, interpreted or enforced by any Governmental or Regulatory Authority.

1.73.   “ Lease Consents ” has the meaning set forth in Section 4.6(b) .

1.74.   “ Liabilities ” means all Indebtedness, obligations and other liabilities, whether direct or indirect, and any loss, damage, cost, contingent liability, loss contingency, unpaid expense, claim, deficiency, guaranty or endorsement of or by any Person whether or not ascertainable.

1.75.   “ Licensed Intellectual Property ” means Intellectual Property made, used, offered for sale, sold, imported, reproduced, created derivative works based on, translated, distributed, transmitted, displayed, performed, licensed or sublicensed by Seller pursuant to an agreement between Seller and another Person.

1.76.   “ License In ” has the meaning set forth in Section 4.14(b) .

1.77.   “ License Out ” has the meaning set forth in Section 4.14(b) .

1.78.   “ Licensed Software ” has the meaning set forth in Section 4.14(i) .

1.79.   “ Licenses ” means all licenses, permits, authorizations, approvals, franchises, rights, orders, variances, easements, rights of way, and similar consents or certificates granted or issued by any Person other than a Governmental or Regulatory Authority.

1.80.   “ Lien ” means any conditional sale agreement, default or defect of title, easement, encroachment, assessment, encumbrance, hypothecation, infringement, lien (including, without limitation, federal, state and local tax liens), mortgage, pledge, negative pledge, reservation, restriction, restraint, option (whether consensual, statutory or otherwise), security interest, title retention or other security arrangement, defect of title, or any adverse right or interest, charge, or claim of any nature whatsoever of, on, or with respect to any Asset, other than (i) Liens for Taxes not yet due and payable and (ii) Liens which do not materially impair the use of or title to the Assets subject to such Lien.

1.81.   “ Litigation ” means (i) any Action by, before or on behalf of any Person, including, without limitation, any Governmental or Regulatory Authority; or (ii) any investigation or inquiry asserting a violation of any Law by, before or on behalf of any Governmental or Regulatory Authority.

1.82.   “ Loss ” or “ Losses ” means any and all damages (including, without limitation, direct and special damages, but excluding incidental or consequential damages), losses, obligations, deficiencies, Liabilities, Liens, penalties, fines, interest, costs and expenses (including, without limitation, court costs, fees and disbursements of attorneys, accountants, consultants and other experts, or other expenses of investigating, prosecuting or defending any Litigation, Claim or Default).

1.83.   “ Maintenance Amount ” shall mean $434,990 representing certain costs associated with the Prepaid Maintenance Fees.

1.84.   “ Maintenance Customers ” has the meaning set forth in Section 4.5(a) .

1.85.   “ Material ” or “ material ” for purposes of this Agreement shall be determined in light of the facts and circumstances of the matter in question.

1.86.   “ Materials of Environmental Concern ” means any toxic, reactive, corrosive, carcinogenic, flammable or hazardous pollutant or other substance that is the subject of regulation under Environmental Laws, including, without limitation, any “hazardous substance,” or “hazardous waste,” as defined in Environmental Laws, petroleum and petroleum products, natural gas or synthetic gas, material that is a source, special nuclear or by-product material, as defined by the Atomic Energy Act of 1954, 42 U.S.C.A. §§3011 et seq., and the regulations promulgated thereto and “hazardous chemical,” as defined in 29 C.F.R. Part 1910.

1.87.   “ Non-consenting Customers ” has the meaning set forth in Section 4.5(b) .

1.88.   “ Off-Site Purchased Assets ” has the meaning set forth in Section 4.7(d) .

1.89.   “ Order ” means any administrative decision or award, decree, injunction, judgment, order, quasi-judicial decision or award, ruling, or writ of any federal, state, local or foreign Governmental or Regulatory Authority.

1.90.   “ Ordinary Course of Business ” or “ Ordinary Course ” or any similar phrase means the ordinary course of the business of Seller, consistent with past customs and practice of Seller.

1.91.   “ Parent Common Stock ” means the shares of common stock, par value $.01 per share, of Parent.

1.92.   “ Parent Companies ” has the meaning set forth in Section 3.3(a) .

1.93.   “ Parent Indemnified Parties ” has the meaning set forth in Section 7.1 .

1.94.   “ Parent SEC Filings ” has the meaning set forth in Section 5.7(a) .

1.95.   “ Parent’s Auditors ” means the independent auditors of Parent’s financial statements from time to time.

1.96.   “ Parent’s Current Balance Sheet ” has the meaning set forth in Section 5.7(c) .

1.97.   “ Parent’s Off-Set Claims ” has the meaning set forth in Section 11.1 .

1.98.   “ Partial Month Expenses ” has the meaning set forth in Section 4.6(e) .

1.99.   “ Parties ” means, collectively, Seller, Parent and Acquisition Sub.

1.100.   “ Periodic Taxes ” has the meaning set forth in Section 10.1 .

1.101.   “ Permits ” means any and all licenses, franchises, permits, registrations, certificates of authority, easements and rights of way, variances (including, without limitation, zoning variances), rights, consents, orders, approvals, certificates and other authorizations of or issued by any Governmental or Regulatory Authority.

1.102.   “ Person ” means a natural person or any legal, commercial or governmental entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, limited liability partnership, trust, business association, group acting in concert, or any person acting in a representative capacity, including, without limitation, a Governmental or Regulatory Authority.

1.103.   “ Plans ” has the meaning set forth in Section 4.17 .

1.104.   “ Prepaid Maintenance Fees ” has the meaning set forth in Section 4.5(c) .

1.105.   “ Products ” means all current products or services sold, distributed or otherwise commercially exploited by Seller and all products or service offerings as to which substantial development has occurred prior to the date of this Agreement.

1.106.   “ Public Software ” has the meaning set forth in Section 4.14(p) .

1.107.   “ Purchased Asset Liens ” has the meaning set forth in Section 4.6(a) .

1.108.   “ Purchased Assets ” has the meaning set forth in Section 2.1 .

1.109.   “ Purchased Current Assets ” has the meaning set forth in Section 2.1(e) .

1.110.   “ Purchase Price ” has the meaning set forth in Section 3.1 .

1.111.   “ Real Property ” has the meaning set forth in Section 4.6(c) .

1.112.   “ Real Property Leases ” has the meaning set forth in Section 4.6(b) .

1.113.   “ Registration Rights Agreement ” has the meaning set forth in Section 6.2(a)(xiii) .

1.114.   “ Required Bonus Payment ” has the meaning set forth in Section 4.16(d) .

1.115.   “ Required Consents ” has the meaning set forth in Section 4.3 .

1.116.   “ Schedules ” mean the Schedules to this Agreement.

1.117.   “ SEC ” shall mean the U.S. Securities and Exchange Commission.

1.118.   “ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, in each case as in effect from time to time.

1.119.   “ Self-Help Code ” means any back door, time bomb, drop dead device, or other software routine designed to disable a CD or computer program automatically with the passage of time or under the positive control of a Person other than the licensee. Self-Help Code does not include software routines in a computer program, if any, designed to permit access to licensee’s computer system(s) (e.g., remote access via modem) for purposes of maintenance or technical support.

1.120.   “ Seller Indemnified Parties ” has the meaning set forth in Section 7.2 .

1.121.   “ Seller Intellectual Property ” means all Intellectual Property that is used, or held for use in connection with the business of Seller and/or in any Product.

1.122.   “ Seller Registered IP ” has the meaning set forth in Section 4.14(a) .

1.123.   “ Seller Software ” has the meaning set forth in Section 4.14(i) .

1.124.   “ Seller’s Officer’s Certificate ” has the meaning set forth in Section 6.2(a)(vi) .

1.125.   “ Shares ” has the meaning set forth in Section 4.1(b) .

1.126.   “ Software ” means all computer software programs, including, without limitation, all firmware, middleware, software libraries and software tools, and related objects, object codes and source codes. All documentation and specifications used in connection with and related to the Software shall be included in the definition of Software.

1.127.   “ Solvent ” shall mean with regard to a Person and on a particular date that: (i) such Person is able to meet or satisfy its obligations as they generally become due; (ii) such Person is paying its current obligations in the ordinary course of business as they generally become due; and (iii) such Person’s Assets are equal to or greater than the sum of all of such Person’s debts on such date.

1.128.   “ SOX Act ” has the meaning set forth in Section 5.7(d) .

1.129.   “ Stock Escrowed Amount ” has the meaning set forth in Section 3.6 .

1.130.   “ Tail Policy ” has the meaning set forth in Section 4.13 .

1.131.   “ Takeover Laws ” has the meaning set forth in Section 4.35 .

1.132.   “ Tangible Personal Property ” has the meaning set forth in Section 2.1(a) .

1.133.   “ Target Amount ” means One Million Dollars ($1,000,000).

1.134.   “ Tax ” or “ Taxes ” shall mean (i) any United States federal, state or local or any foreign taxes, levies, duties, fees, assessments, deductions, withholdings, or other similar charges of whatever nature, including, without limitation, income, gross receipts, net proceeds, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including, without limitation, taxes under Section 59A of the Code), customs, capital stock, franchise, profits, employee income, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other taxes, assessments, duties, fees, levies or other similar governmental charges, now or hereafter levied by the United States of America or any Governmental or Regulatory Authority, whether disputed or not, including, without limitation, any interest, penalty or addition thereto, and including, without limitation, all deposits required in connection therewith; (ii) any Liability for or in respect of the payment of any amount of a type described in clause (i) of this definition as a result of being a member of an affiliated, combined, consolidated, unitary or other group for tax purposes; and (iii) any Liability for or in respect of the payment of any amount described in clauses (i) or (ii) of this definition as a transferee or successor, by Contract or otherwise.

1.135.   “ Tax Returns ” means all returns, declarations, reports, estimates and information returns and statements required by applicable Law to be filed with respect to Taxes.

1.136.   “ Transfer Taxes ” means any and all sales, use, transfer, real property transfer, recording, documentary, stamp, registration, gains, stock transfer and other similar taxes and fees (including, without limitation, any penalty and interest) arising as a result of any transaction contemplated by this Agreement.

1.137.   “ Unassigned Maintenance Revenue ” has the meaning set forth in Section 4.5(b) .

1.138.   “ Unauthorized Code ” means any virus, Trojan horse, worm, or other software routines or hardware components designed to permit unauthorized access, to disable, erase or otherwise harm software, hardware, or data; or to perform any other such actions.

1.139.   “ WARN Act ” has the meaning set forth in Section 4.16(e) .

1.140.   “ Year-End Financial Statements ” has the meaning set forth in Section 4.9(a) .

Unless the context of this Agreement otherwise requires, (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms “hereof,” “herein,” “hereby”, “hereto” and derivative or similar words refer to this entire Agreement; and (d) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.

ARTICLE 2

SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES

2.1.   Assets to be Acquired . Subject to the terms and conditions contained herein, on the Closing Date, Seller shall sell, assign, transfer, convey and deliver to Acquisition Sub, and Acquisition Sub shall purchase from Seller, free and clear of all Liens, other than Assumed Liabilities, all right, title and interest in and to the following Assets of Seller, whether real, personal or mixed, and whether tangible or intangible, used, intended for use or required to be used (the “ Purchased Assets ”):

(a)   Tangible Personal Property . All furniture, fixtures, machinery and related equipment, supplies, computers, printers, spare parts, office equipment, business machines and other tangible personal property of Seller, including, without limitation, any items purchased subject to any conditional sales or title retention agreement in favor of any other Person, the Off-Site Purchased Assets and all tangible personal property set forth on Schedule 2.1(a) attached hereto (the “ Tangible Personal Property ”);

(b)   Personal Property Leases . All of Seller’s leases of Tangible Personal Property, together with any options to purchase the underlying property, including without limitation, those leases and options to purchase set forth on Schedule 2.1(b) attached hereto;

(c)   Contracts . All Contracts to which Seller is a party or otherwise applicable to Seller’s Business or Assets (excluding any Contract obligations set forth on Schedule 2.2 as an Excluded Asset), including, without limitation, the Contracts set forth on Schedule 2.1(c) attached hereto (collectively, the “ Assumed Contracts ”), which Assumed Contracts shall include all IP Licenses;

(d)   Intangible Property . All of Seller Intellectual Property and other intangible property used in connection with the operation of the Business, including, without limitation, the Seller Intellectual Property and other intangible property set forth on Schedule 2.1(d) attached hereto;

(e)   Current Assets . All Cash Assets and Accounts Receivable as of the Closing Date, not to exceed in the aggregate the sum of the Target Amount and the Current Asset Adjustment Amount, less $500,000 (the “ Purchased Current Assets ”). The relative amounts of Cash Assets and Accounts Receivable included in the Purchased Current Assets shall be determined by Seller in its sole discretion.

(f)   Permits . All of Seller’s Permits, including, without limitation, Seller’s Permits set forth on Schedule 2.1(f) attached hereto, to the extent transferable to Acquisition Sub;

(g)   Licenses . All of Seller’s Licenses, including, without limitation, the Licenses set forth on Schedule 2.1(g) attached hereto; 

(h)   Choses in Action . All of Seller’s Claims or right to Claims of any nature, whether or not pending, threatened or presently contemplated, by Seller as of the Closing Date, including, without limitation, Seller’s Claims set forth on Schedule 2.1(h) ;

(i)   Inventory . All of Seller’s supplies, sales, marketing and promotional materials and supplies, catalogs, packaging materials, artwork for packaging and marketing and promotional materials, spare parts, raw materials, components, work in process, finished goods and inventories, including, without limitation, those items set forth on Schedule 2.1(i) attached hereto (the “ Inventory ”); 

(j)   Warranties . All guarantees, warranties, indemnities and similar rights in favor of Seller with respect to any Purchased Assets;

(k)   Books and Records . All of the files, documents, instruments, papers, books and records relating to Seller, including, without limitation, pricing guidelines, journals, deeds, title policies, customer lists, computer files and programs, retrieval programs, operating data and plans and environmental studies and plans (the “ Books and Records ”);

(l)   Prepaid Items . All of Seller’s prepaid expenses, advances and deposits, including, without limitation, those listed on Schedule 2.1(l) attached hereto; and

(m)   Goodwill . All of Seller’s rights in and to the goodwill of Seller, the Business and the Purchased Assets, including, without limitation, all goodwill associated with the Seller Intellectual Property.

2.2.   Excluded Assets . The following Assets of Seller are specifically excluded from the Purchased Assets (“ Excluded Assets ”):

(a)   the Cash Assets and/or Accounts Receivable that are not included in the Purchased Current Assets, if any;

(b)   the corporate books of Seller, including but not limited to minute books and stock ledgers, financial statements, Tax Returns and related work papers and letters from accountants, and such other books and records as Seller is required to maintain under all applicable Laws (“ Corporate Books ”); and

(c)   those Assets set forth on Schedule 2.2(c) .

Title to the Excluded Assets is not being transferred to Acquisition Sub pursuant to this Agreement or otherwise.

2.3.   Assumption of Certain Liabilities . Neither Parent nor Acquisition Sub will assume any Claims, Liabilities or obligations of Seller, whether Known, unknown, absolute, contingent, accrued or otherwise, and whether or not related to the Purchased Assets or the Business, except as expressly provided in this Section 2.3 . Acquisition Sub hereby assumes and agrees to pay, perform and discharge in accordance with their respective terms, only the following specified Liabilities and obligations of Seller (collectively, the “ Assumed Liabilities ”):

(a)   all obligations of Seller to the other parties under the Assumed Contracts;

(b)   the Partial Month Expenses;

(c)   all obligations arising under the continuation coverage requirements of Section 4980B of the Code and by COBRA or other applicable Law with respect to the Employees and their beneficiaries who experience a “Qualifying Event” (as defined in COBRA) on, prior to or after the Closing Date; and

(d)   those Claims and Liabilities of Seller set forth on Schedule 2.3(d))

2.4.   Excluded Liabilities . Notwithstanding anything to the contrary in this Agreement, except for the Assumed Liabilities, neither Parent nor Acquisition Sub does, nor shall Parent or Acquisition Sub be deemed to, acquire, discharge, assume or become responsible for, any Liability of Seller of any kind or nature (collectively, the “ Excluded Liabilities ”). In furtherance and not in limitation of the foregoing, neither Parent nor Acquisition Sub is or shall become (i) by reason of the purchase of the Purchased Assets, (ii) by reason of any other act or failure to act on either of their part, or (iii) for any other reason, liable in any manner for any Liabilities of Seller other than the Assumed Liabilities. Without limiting the generality of the foregoing, and without regard to whether any Law, Governmental or Regulatory Authority, or other third party may impose any Liability of Seller, in whole or in part, on Seller, neither Parent nor Acquisition Sub shall assume, and Seller shall continue to be liable for, all Liabilities of Seller not otherwise specifically assumed by Parent or Acquisition Sub under this Agreement, including, without limitation, any Liability of Seller for Taxes.

ARTICLE 3

PURCHASE PRICE AND ESCROW

3.1.   Purchase Price . The aggregate purchase price for the Purchased Assets (the “ Purchase Price ”) shall be comprised of (a) Five Hundred Sixty Thousand (560,000) shares of unregistered Parent Common Stock, as may be decreased or increased pursuant to Section 3.2 (the “ Astea Shares ” or the “ Initial Purchase Price ”), plus (b) the Earnout Purchase Price, plus (c) the assumption of the Assumed Liabilities. Each of the Parties will treat the transactions contemplated by this Agreement as a taxable purchase of the Purchased Assets for Tax purposes.

3.2.   Closing Date Purchase Price Adjustment .

 

(a)   If the fair market value (as defined below) of Parent Common Stock at the time of Closing is greater than Six Dollars and Eighty-Five Cents ($6.85) per share, the number of shares of Parent Common Stock to be issued to Seller shall be reduced to that number which results from dividing Three Million Three Hundred Thirty-Six Thousand Dollars ($3,336,000) by the fair market value.

(b)   If the fair market value of Parent Common Stock at the time of Closing is less than Five Dollars and Sixty Cents ($5.60) per share, the number of shares of Parent Common Stock to be issued to Seller shall be increased to that number which results from dividing Three Million One Hundred Thirty-Six Thousand Dollars ($3,136,000) by the fair market value, but in no event will Parent issue to Seller more than Five Hundred Ninety Thousand (590,000) shares of Parent Common Stock.

(c)   The “fair market value” of Parent Common Stock shall be equal to the average closing price per share of Parent Common Stock on the NASDAQ SmallCap Market for the five (5) trading days ending on (and including) the trading day immediately preceding the Closing Date.

(d)   On or before the Closing Date, Parent shall submit to Parent’s registrar and transfer agent an instruction letter including the name, address and taxpayer identification number of Seller and the number of shares of Parent Common Stock payable to Seller.

3.3.   Earnout Purchase Price .  The “ Earnout Purchase Price ” shall be equal to the sum of (i) the 2005 Earnout, (ii) the 2006 Earnout and (iii) the 2007 Earnout, and shall be payable within forty-five (45) days following the end of each calendar quarter following the Closing Date and continuing through the quarter ended June 30, 2007.

(a)   The “2005 Earnout” shall be equal to the sum of (i) Fifty Percent (50%) of the gross license revenue of Parent and its consolidated subsidiaries (“ Parent Companies ”) collected by Parent Companies during the period beginning on the Closing Date and ending on December 31, 2005, for sales (other than in connection with the use of Customer Deposits) of Seller’s products set forth on Schedule 3.3(a)(i) (the “ Earnout Products ”) (net of third party costs but without reducing such revenues for commissions, if any) by Parent Companies to any of the customers of Seller set forth on Schedule 3.3(a)(ii) , which shall consist of Seller’s existing customers as of the date hereof and Seller’s identified pipeline opportunities (the “ Earnout Customers ”), and (ii) Ten Percent (10%) of collected billings received by Parent Companies during the period beginning on the Closing Date and ending on December 31, 2005 for non-maintenance services directly related to the Earnout Products (not including billed travel costs, but without reducing such revenues for commissions, if any).

(b)   The “2006 Earnout” shall be equal to the sum of (i) Fifty Percent (50%) of the gross license revenue of Parent Companies collected by Parent Companies during the period beginning on January 1, 2006 and ending on December 31, 2006, for sales (other than in connection with the use of Customer Deposits) of the Earnout Products (net of third party costs but without reducing such revenues for commissions, if any) by Parent Companies to any of the Earnout Customers, and (ii) Ten Percent (10%) of collected billings received by Parent Companies during the period beginning on January 1, 2006 and ending on December 31, 2006 for non-maintenance services directly related to the Earnout Products (not including billed travel costs, but without reducing such revenues for commissions, if any).

(c)   The “2007 Earnout” shall be equal to (i) Fifty Percent (50%) of the gross license revenue of Parent Companies collected by Parent Companies during the period beginning on January 1, 2007 and ending on June 30, 2007, for sales (other than in connection with the use of Customer Deposits) of the Earnout Products (net of third party costs but without reducing such revenues for commissions, if any) by Parent Companies to any of the Earnout Customers prior to January 1, 2007, (ii) Twenty-Five Percent (25%) of the gross license revenue of Parent Companies invoiced by Parent Companies for sales (other than in connection with the use of Customer Deposits) of the Earnout Products (net of third party costs but without reducing such revenues for commissions, if any) by Parent Companies to any of the Earnout Customers for the period beginning on January 1, 2007 and ending on June 30, 2007 and subsequently collected by Parent Companies prior to December 31, 2007, and (iii) Ten Percent (10%) of collected billings received by Parent Companies during the period beginning on January 1, 2007 and ending on June 30, 2007 for non-maintenance services directly related to the Earnout Products (not including billed travel costs, but without reducing such revenues for commissions, if any) invoiced by Parent Companies prior to January 1, 2007.

(d)   To the extent Parent Companies decide to bundle any licenses of, or services directly related to, the Earnout Products with any product or services of Parent Companies or any other person, the “gross license revenue” or “collected billings” figure used in the calculations specified in paragraphs (a)-(c) above shall be equal to the list price of the license of, or services directly related to, the Earnout Products included in the bundled products, in each case discounted at the same rate that the bundled licenses or services are discounted from the total of the list prices for each of the bundled licenses or services, if any such total discount is given.

3.4.   Earnout Calculations . The calculations of the Earnout Purchase Price set forth above shall be agreed upon by the Parties as follows:

(a)   In the case of the 2005 Earnout, within ten (10) Business Days of Parent’s completion of its unaudited financial statements for the fiscal quarters ending September 30, 2005 and December 31, 2005, but in no event later than November 30, 2005 and February 28, 2006, respectively, Parent’s Auditors shall compute the respective quarterly amount of the 2005 Earnout and Parent shall deliver such computations to Seller together with a detailed accounting of the basis of the computations. Each quarterly calculation of the 2005 Earnout shall become final and binding upon the Parties unless within twenty (20) Business Days following submission to Seller, Seller notifies Parent of its objection thereto in writing, providing reasonable specificity as to the basis for its objection. If Seller so notifies Parent of its objection to any quarterly calculation of the 2005 Earnout, Seller and Parent shall negotiate in good faith to resolve any differences. If, within ten (10) Business Days following the receipt of such notice by Parent, any of such differences have not been resolved, they shall be resolved by the Independent Accountants and the Independent Accountants’ special purpose audit report thereon within twenty (20) Business Days or as promptly as reasonably practicable thereafter and the resulting respective quarterly calculation of the 2005 Earnout, reflecting any modifications recommended by the Independent Accountants in order for the 2005 Earnout to conform to the requirements of this Agreement, shall be final, binding and not subject to any appeal. The fees and expenses of the Independent Accountants in connection with any such resolution shall be paid by Seller, if the amount payable by Parent to Seller in accordance with the disputed quarterly calculation of the 2005 Earnout is not modified or is decreased as a result of the Independent Accountants’ special purpose audit, or by Parent, if the amount payable by Parent to Seller in accordance with the disputed quarterly calculation of the 2005 Earnout is increased as a result of the Independent Accountants’ special purpose audit. The payments in respect of the respective quarterly amount of the 2005 Earnout, if any are due, shall be made to Seller on the earlier of (A) the date that Seller and Parent agree on the respective quarterly amount of the 2005 Earnout and (B) the date that the respective quarterly amount of the 2005 Earnout becomes final and binding upon the Parties in accordance with this Section.

(b)   In the case of the 2006 Earnout, within ten (10) Business Days of Parent’s completion of its unaudited financial statements for the fiscal quarters ending March 31, 2006, June 30, 2006, September 30, 2006 and December 31, 2006, but in no event later than May 30, 2006, August 31, 2006, November 30, 2006 and February 28, 2007, respectively, Parent’s Auditors shall compute the respective quarterly amount of the 2006 Earnout and Parent shall deliver such computations to Seller together with a detailed accounting of the basis of the computations. Each quarterly calculation of the 2006 Earnout shall become final and binding upon the Parties unless within twenty (20) Business Days following submission to Seller, Seller notifies Parent of its objection thereto in writing, providing reasonable specificity as to the basis for its objection. If Seller so notifies Parent of its objection to any quarterly calculation of the 2006 Earnout, Seller and Parent shall negotiate in good faith to resolve any differences. If, within ten (10) Business Days following the receipt of such notice by Parent, any of such differences have not been resolved, they shall be resolved by the Independent Accountants and the Independent Accountants’ special purpose audit report thereon within twenty (20) Business Days or as promptly as reasonably practicable thereafter and the resulting respective quarterly calculation of the 2006 Earnout, reflecting any modifications recommended by the Independent Accountants in order for the 2006 Earnout to conform to the requirements of this Agreement, shall be final, binding and not subject to any appeal. The fees and expenses of the Independent Accountants in connection with any such resolution shall be paid by Seller, if the amount payable by Parent to Seller in accordance with the disputed quarterly calculation of the 2006 Earnout is not modified or is decreased as a result of the Independent Accountants’ special purpose audit, or by Parent, if the amount payable by Parent to Seller in accordance with the disputed quarterly calculation of the 2006 Earnout is increased as a result of the Independent Accountants’ special purpose audit. The payments in respect of the respective quarterly amount of the 2006 Earnout, if any are due, shall be made to Seller on the   earlier of (A) the date that Seller and Parent agree on the respective quarterly amount of the 2006 Earnout and (B) the date that the respective quarterly amount of the 2006 Earnout becomes final and binding upon the Parties in accordance with this Section.

(c)   In the case of the 2007 Earnout, within ten (10) Business Days of Parent’s completion of its unaudited financial statements for the fiscal quarters ending March 31, 2007, June 30, 2007, September 30, 2007 and December 31, 2007, but in no event later than May 30, 2007, August 31, 2007, November 30, 2007 and February 29, 2008, respectively, Parent’s Auditors shall compute the respective quarterly amount of the 2007 Earnout and Parent shall deliver such computations to Seller together with a detailed accounting of the basis of the computations. Each quarterly calculation of the 2007 Earnout shall become final and binding upon the Parties unless within twenty (20) Business Days following submission to Seller, Seller notifies Parent of its objection thereto in writing, providing reasonable specificity as to the basis for its objection. If Seller so notifies Parent of its objection to any quarterly calculation of the 2007 Earnout, Seller and Parent shall negotiate in good faith to resolve any differences. If, within ten (10) Business Days following the receipt of such notice by Parent, any of such differences have not been resolved, they shall be resolved by the Independent Accountants and the Independent Accountants’ special purpose audit report thereon within twenty (20) Business Days or as promptly as reasonably practicable thereafter and the resulting respective quarterly calculation of the 2007 Earnout, reflecting any modifications recommended by the Independent Accountants in order for the 2007 Earnout to conform to the requirements of this Agreement, shall be final, binding and not subject to any appeal. The fees and expenses of the Independent Accountants in connection with any such resolution shall be paid by Seller, if the amount payable by Parent to Seller in accordance with the disputed quarterly calculation of the 2007 Earnout is not modified or is decreased as a result of the Independent Accountants’ special purpose audit, or by Parent, if the amount payable by Parent to Seller in accordance with the disputed quarterly calculation of the 2007 Earnout is increased as a result of the Independent Accountants’ special purpose audit. The payments in respect of the respective quarterly amount of the 2007 Earnout, if any are due, shall be made to Seller on the earlier of (A) the date that Seller and Parent agree on the respective quarterly amount of the 2007 Earnout and (B) the date that the respective quarterly amount of the 2007 Earnout becomes final and binding upon the Parties in accordance with this Section.

3.5.   Allocation of Purchase Price .  Parent, Acquisition Sub and Seller shall use their reasonable best efforts to agree prior to the Closing Date to an initial allocation of the Initial Purchase Price and the Assumed Liabilities among the Purchased Assets (the “ Allocation ”). Such Allocation will be based on arm’s length negotiations and will be prepared in accordance with Section 1060 of the Code. In the event that Parent, Acquisition Sub and Seller are unable to agree on the Allocation prior to the Closing Date, the Allocation shall be determined in the following manner. Within sixty (60) days following the Closing Date, Parent and Acquisition Sub shall deliver to Seller a proposed Allocation. Seller shall deliver written notice to Parent and Acquisition Sub within thirty (30) days after Seller’s receipt of Parent’s and Acquisition Sub’s proposed Allocation either accepting or objecting to Parent’s and Acquisition Sub’s proposed Allocation (in the absence of such written notice, Seller shall be deemed to have accepted Parent’s and Acquisition Sub’s proposed Allocation). If Seller so objects to Parent’s and Acquisition Sub’s proposed Allocation, Seller, Parent and Acquisition Sub shall attempt to resolve their differences by good faith negotiation. If with thirty (30) days, Seller, Parent and Acquisition Sub are unable to agree to an Allocation, such Allocation shall be determined by the Independent Accountants. The Independent Accountants shall use their best efforts to reach a determination as promptly as possible and in no event later than twenty (20) days after submission of the matter to the Independent Accountants. All determinations of the Independent Accountants relating to the Allocation, absent fraud, shall be final and binding on the Parties, and all fees and expenses of the Independent Accountants shall be borne equally by Parent and Seller. In the event of an adjustment to the Purchase Price and Assumed Liabilities as a result of the payment of the Earnout Purchase Price or otherwise, the Allocation shall be adjusted in a manner consistent with the provisions of Section 1060 of the Code. Any disputes regarding the manner of adjustment shall be resolved by the Independent Accountants. Each party shall, to the extent permitted by applicable Law, report the Tax consequences of the purchase and sale contemplated hereby (including, without limitation, the filing of Internal Revenue Service Form 8594 in respect of the Purchased Assets) in a manner consistent with the Allocation, and shall not voluntarily take any position inconsistent therewith upon examination of any Tax Returns, in any claim for any Tax refund, in any Litigation or otherwise.

3.6.   Escrow . Pursuant to an escrow agreement in substantially the form attached hereto as Exhibit A (the “ Escrow Agreement ”) to be entered into on or before the Closing Date among Parent, Acquisition Sub, Seller and the escrow agent named therein, Seller shall deposit in the escrow an amount in cash equal to one-half of the Accounts Receivable, from the Cash Assets not included in the Purchased Current Assets (the “ Cash Escrowed Amount ”), and Acquisition Sub will withhold from the Initial Consideration and deposit in the escrow Ten Percent (10%) of the number of shares of Parent Common Stock to be delivered at the Closing (the “ Stock Escrowed Amount ”). The Cash Escrowed Amount will be held in escrow until one hundred twenty (120) days following the Closing Date, at which time there shall be distributed to Acquisition Sub from the Cash Escrowed Amount the sum of (i) the amount of any Accounts Receivable included in the Purchased Current Assets which have not then been collected by Parent or Acquisition Sub in full, and (ii) the Unassigned Maintenance Revenues of the Non-consenting Customers whom have not assigned their maintenance agreement with Seller to Acquisition Sub by the date one hundred twenty (120) days following the Closing Date. To the extent that the Cash Escrowed Amount is insufficient to make required distributions to Acquisition Sub, any such Cash Escrowed Amount shortfall shall be funded first by the Stock Escrowed Amount and then second by a reduction in any payments due to be made by Acquisition Sub to Seller for the Earnout Purchase Price. Any remaining amount of such Cash Escrowed Amount shall be promptly returned to Seller. The Stock Escrowed Amount will be held in escrow as Acquisition Sub’s security for Parent’s Off-Set Claims. Subject to the terms of the Escrow Agreement, the Stock Escrowed Amount will be held in escrow until one (1) year from the Closing Date, at which time the Stock Escrowed Amount will be disbursed in accordance with the Escrow Agreement. For purposes of valuing the Parent Common Stock in the Stock Escrowed Amount, each share of Parent Common Stock shall equal the average closing price per share of Parent Common Stock on the NASDAQ SmallCap Market for the five (5) trading days ending on (and including) the trading day immediately preceding the Closing Date.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER

As a material inducement to Parent and Acquisition Sub to enter into this Agreement and to consummate the transactions contemplated hereby, Seller represents and warrants to Parent and Acquisition Sub as follows:

4.1.   Organization and Capitalization . 

(a)   Seller is a corporation duly organized, validly existing, and in good standing under the Laws of the State of California, has full corporate power and authority to carry on the Business as it is now being conducted and to own and operate the properties and Assets now owned and operated by it. Attached hereto as Schedule 4.1(a) is a list of each and every jurisdiction in which Seller is qualified as a foreign corporation. Seller is and has been at all times required to be, duly qualified to transact business as a foreign corporation, and is and has been at all times in good standing, in each and every jurisdiction where the ownership or leasing of its properties and Assets or the operation of the Business requires such qualification, except where failure to do so does not have a Business Material Adverse Effect.

(b)   The authorized capital stock of Seller consists of 45,000,000 shares of common stock, of which 3,713,671 shares have been validly issued and are outstanding 5,991,985 shares of Series A-1 preferred stock, of which 3,378,276 shares have been validly issued and are outstanding, and 15,600,000 shares of Series B preferred stock, of which 13,811,712 shares have been validly issued and are outstanding (collectively, the “ Shares ”). All of the Shares are free and clear of any Liens other than restrictions on transfer under applicable securities Laws, are fully paid and nonassessable, were not issued in violation of the terms of any Contract binding upon Seller, and were issued in compliance with Seller’s certificate of incorporation and bylaws and in all material respects with all applicable federal and state securities or “blue sky” Laws. Except as set forth on Schedule 4.1(b) , there are, and have been, no preemptive rights with respect to the issuance of capital stock by Seller, including, without limitation, the Shares. Except as set forth on Schedule 4.1(b) , there are no existing Contracts, subscriptions, options, warrants, calls, commitments or rights of any character to purchase or otherwise acquire from Seller at any time, or upon the happening of any stated event, any capital stock or other securities of Seller, whether or not presently issued or outstanding.

4.2.   Corporate Power and Authority; Legal Capacity; Enforceability .  Seller has the requisite power and authority to execute, deliver and perform this Agreement and each of the documents, agreements and instruments to be executed, delivered and performed by it in connection with this Agreement, including, without limitation, pursuant to Section 6.2 hereof (collectively the “ Collateral Documents ”), and Seller has all requisite power and authority to transfer the Purchased Assets to Acquisition Sub. The execution, delivery and performance of this Agreement and each of the Collateral Documents to which Seller is a party, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action on the part of Seller, including, without limitation, the approval thereof by Seller’s shareholders, and requires no further authorization or consent by Seller, Seller’s shareholders or any other Person. This Agreement and the Collateral Documents to be executed and delivered by Seller have been duly and validly executed and delivered by Seller and constitute the legal, valid and binding obligation of Seller enforceable against it in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, moratorium or similar Laws affecting the enforcement of creditors’ rights generally and general principles of equity relating to the availability of equitable remedies (whether such agreements are sought to be enforced in a proceeding at law or a proceeding in equity).

4.3.   Non-contravention .  The execution, delivery and performance of this Agreement and each of the Collateral Documents to which Seller is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) violate, breach or contravene any of the terms, conditions or provisions of the certificate of incorporation, bylaws or other organizational documents of Seller; or (b) except as set forth on Schedule 4.3 attached hereto (the consents referred to on Schedule 4.3 being referred to herein as the “ Required Consents ”), (i) conflict with, constitute a Default under or otherwise impair the good standing, validity or effectiveness of any Assumed Contract; (ii) violate any provision of Law, Permit or License applicable to Seller or any of the Purchased Assets; (iii) result in the creation or imposition of any Lien upon any of the Purchased Assets or the Business; or (iv) otherwise adversely affect the good standing, validity or effectiveness of any Assumed Contract. Except as set forth on Schedule 4.3 , there are no restrictions of any kind that could affect Seller’s ability to enter into this Agreement or any of the Collateral Documents, to perform any of its obligations thereunder, or to consummate the transactions contemplated hereby or thereby.

4.4.   Government and Third Party Approvals .  No consent by, approval or authorization of, or filing, registration or qualification with any federal, state or local authority, or any corporation, person or other entity (including, without limitation, any party to any Contract with Seller) is required (i) for the execution, delivery or performance of this Agreement and the Collateral Agreements by Seller; (ii) in connection with the consummation by Seller of the transactions contemplated hereby; or (iii) in order to vest in Purchaser good and marketable title in and to all of the Purchased Assets upon the Closing subject to the terms and conditions hereof.

4.5.   Maintenance Customers .  

 

(a)   Schedule 4.5(a) contains a correct and current list of all of Seller’s customers whom Seller has accrued revenue for maintenance services during the preceding twelve (12) months (collectively the “ Maintenance Customers ”). Except as set forth in Schedule 4.5(a) , Seller has no written information and no Knowledge that any of the Maintenance Customers intends to cease doing business with Seller or materially alter the amount of the business that any such Maintenance Customer is presently doing with Seller, or will require as a condition to the continuation of its business relationship with Parent or Acquisition Sub following the Closing Date a change in material terms under which any such Maintenance Customer has been doing business with Seller. Seller has obtained unconditional consents to the assignment to Acquisition Sub of all of Seller’s Contracts with the Maintenance Customers that account for at least 75% of Seller’s revenues for maintenance services during the preceding twelve (12) months (the “ Customer Consents ”).

(b)   Schedule 4.5(b) contains a correct and current list of Seller’s Maintenance Customers who have not consented to the assignment to Acquisition Sub of Seller’s Contracts with such customers (the “ Non-consenting Customers ”). Schedule 4.5(b) also contains the annual value of the maintenance contracts of the Non-consenting Customers (the “ Unassigned Maintenance Revenue ”).

(c)   Seller’s prepaid maintenance services fees as of the Closing Date, which constitute maintenance fees collected by Seller prior to the Closing Date but which relate to the provision of maintenance services for any period following the Closing Date, are set forth on Schedule 4.5(c) (the “ Prepaid Maintenance Fees ”).

4.6.   Title; Properties .

(a)   Except as set forth on Schedule 4.6(a) (the “ Purchased Asset Liens ”), Seller has good and marketable title to the Purchased Assets, including, without limitation, all Seller Intellectual Property and Seller Software free and clear of all Liens and no other Person has or will have on the Closing Date any interest whatsoever in any of the Purchased Assets. The Purchased Assets are in good working order and fit for their intended use, ordinary wear and tear excepted. There are no loans, leases or other financing to which such Purchased Assets are or will be subject on the Closing Date other than the Assumed Contracts.

(b)   Schedule 4.6(b)(i) hereto is a true, complete, correct and current list, by address, owner and usage, of all real property Contracts (including, without limitation, all amendments and supplements thereto) pursuant to which Seller leases, subleases or otherwi