EXECUTION COPY

ASSET PURCHASE AGREEMENT

BETWEEN

COMPUWARE CORPORATION

AND

MICRO FOCUS HOLDINGS LIMITED

DATED AS OF MAY 5, 2009

 

TABLE OF CONTENTS

			Page
ARTICLE I DEFINITIONS			1
	1.1	Definitions	1
	1.2	Other Definitions	5
ARTICLE II PURCHASE AND SALE OF ASSETS			6
	2.1	Purchase of Assets	6
	2.2	Assumed Liabilities; Excluded Liabilities	8
	2.3	Purchase Price	9
	2.4	Allocation of Purchase Price	10
	2.5	Closing Transactions	10
	2.6	Assignment of Contracts and Rights	10
	2.7	[Reserved]	11
	2.8	Risk of Loss	11
ARTICLE III CONDITIONS TO CLOSING			11
	3.1	Conditions to Buyer’s Obligation	11
	3.2	Conditions to Seller’s Obligations	13
ARTICLE IV COVENANTS PRIOR TO CLOSING			14
	4.1	Covenants of Seller	14
	4.2	Covenants of Buyer	16
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER			16
	5.1	Organization and Corporate Power	16
	5.2	Authorization of Transactions	16
	5.3	[Reserved.]	17
	5.4	Absence of Conflicts	17
	5.5	Statements	17
	5.6	Absence of Undisclosed Liabilities	17
	5.7	Absence of Certain Developments	17
	5.8	Taxes	18
	5.9	Contracts and Commitments	18
	5.10	Proprietary Rights	19
	5.11	Litigation; Proceedings	21
	5.12	Governmental Licenses and Permits	21
	5.13	Employees	21
	5.14	Employee Benefit Plans	22
	5.15	Product Warranties; Product Liability; Recalls	23
	5.16	Affiliate Transactions	23
	5.17	Compliance with Laws	23
	5.18	Title to Property	23
	5.19	Governmental Authorities and Consents	23
	5.20	Customers and Suppliers	24
	5.21	Trade Deals and Promotions	24
	5.22	Disclosure	24
	5.23	Limitation on Warranties	24

 

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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER			25
	6.1	Organization and Corporate Power	25
	6.2	Authorization of Transactions	25
	6.3	No Conflicts	25
	6.4	Governmental Authorities and Consents	25
	6.5	Litigation	25
	6.6	Financing	26
	6.7	Limitations on Warranties	26
ARTICLE VII TERMINATION			26
	7.1	Termination	26
	7.2	Effect of Termination	26
ARTICLE VIII INDEMNIFICATION AND RELATED MATTERS			27
	8.1	Survival; Risk Allocation	27
	8.2	Indemnification	28
ARTICLEI X ADDITIONAL AGREEMENTS			32
	9.1	Tax Matters	32
	9.2	Press Releases and Announcements	33
	9.3	Further Assurances	33
	9.4	Specific Performance	33
	9.5	Expenses	34
	9.6	Exclusivity	34
	9.7	Non-Competition; Non-Solicitation and Confidentiality	34
	9.8	Transitional Assistance	36
	9.9	Financial Information	36
	9.10	Employee and Related Matters	36
	9.11	Payments With Respect to Fees	41
	9.12	Recordation of Transfer of Proprietary Rights	41
	9.13	Trademarks; Tradenames; Domain Names	41
	9.14	Customer Litigation	41
ARTICLE X MISCELLANEOUS			42
	10.1	Amendment and Waiver	42
	10.2	Notices	42
	10.3	Binding Agreement; Assignment	42
	10.4	Severability	43
	10.5	Construction	43
	10.6	Captions	43
	10.7	Entire Agreement	43
	10.8	Counterparts	43
	10.9	Governing Law	43
	10.10	Bulk Transfer Laws	43
	10.11	Consent to Jurisdiction	43
	10.12	Delivery by Facsimile	44
	10.13	Waiver of Jury Trial	44
	10.14	No Third Party Beneficiaries	44
	10.15	Disclosure Schedules	44

 

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INDEX OF EXHIBITS

Exhibit A	Selling Affiliates and Buyer Affiliates
Exhibit B	Products
Exhibit C	Reserve
Exhibit D	Form of Proprietary Rights Bill of Sale and Assignment Agreement
Exhibit E	Form of Subcontract Arrangement
Exhibit F	Form of Technology Rights and Intellectual Property License Agreement
Exhibit G	Form of General Bill of Sale and Assignment Agreement
Exhibit H-1	Form of Trademark Assignment
Exhibit H-2	Form of Copyright Assignment
Exhibit H-3	Form of Patent Assignment
Exhibit I	Form of Transition Services Agreement

INDEX OF SCHEDULES

Schedule 1(a)	Permitted Liens
Schedule 2.1(a)(i)	Prepaid Assets
Schedule 2.1(a)(iii)(a)	Automobiles and Other Vehicles
Schedule 2.1(a)(iii)(b)	Computers, Servers, Related Equipment and Software
Schedule 2.1(a)(iv)(a)	Purchased Contracts
Schedule 2.1(a)(iv)(b)	Certain Partially Assigned Contracts
Schedule 2.1(a)(vii)(a)	Patents
Schedule 2.1(a)(vii)(b)	Trademarks
Schedule 2.1(a)(vii)(c)	Computer Software
Schedule 2.1(b)(x)	Other Excluded Assets
Schedule 2.3	Deferred Maintenance Adjustment
Schedule 2.4	Allocation Schedule
Schedule 3.1(d)	Required Consents
Schedule 3.1(i)	Non-transferable Licenses
Schedule 5.4	Absence of Conflicts
Schedule 5.5	Statements
Schedule 5.7	Absence of Certain Developments
Schedule 5.8	Taxes
Schedule 5.9	Material Contracts
Schedule 5.9(d)(i) and (ii)	Maintenance Revenue Amounts
Schedule 5.10(a)	Proprietary Rights
Schedule 5.10(b)	Proprietary Rights Exceptions
Schedule 5.10(e)	Third Party Software
Schedule 5.10(f)	Trojan Horses
Schedule 5.11	Litigation; Proceedings
Schedule 5.12	Governmental Licenses and Permits
Schedule 5.13(a)	Employees
Schedule 5.13(b)	Compensation Agreements
Schedule 5.14(a)	Employee Benefit Plans
Schedule 5.14(b)	Defined Benefit Plan
Schedule 5.15	Product Warranties, Product Liability; Recalls
Schedule 5.16	Affiliate Transactions

 

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Schedule 5.20	Customers and Suppliers
Schedule 9.10	Scheduled Employees

 

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “ Agreement ”) is made as of May 5, 2009, by and between Compuware Corporation, a Michigan corporation (“ Seller ”), and Micro Focus Holdings Limited, a private company limited by shares, incorporated under the laws of England & Wales (“ Buyer ”). Seller and Buyer are together referred to herein as the “ Parties ” and individually as a “ Party .” Capitalized terms used in this Agreement without definition shall have the meaning given to such terms in Article I hereof.

Buyer desires to acquire from Seller and the Selling Affiliates, and Seller and the Selling Affiliates desire to sell to Buyer and the Buyer Affiliates, the Purchased Assets and the Assumed Liabilities.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I

 

DEFINITIONS

1.1         Definitions . For purposes of this Agreement, the following terms shall have the meanings set forth below:

“ Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities or otherwise.

“ Affiliate Assumed Liabilities ” means all of the Assumed Liabilities that are Liabilities of a Selling Affiliate as of the Closing Date.

“ Affiliate Purchased Assets ” means all the Purchased Assets that are owned by a Selling Affiliate as of the Closing Date.

“ ARD ” means the European Acquired Rights Directive 77/187, any national regulations implementing the Acquired Rights Directive 77/187 and any equivalent legislation in any country which is not covered by the Acquired Rights Directive 77/187.

“ Buyer Affiliate ” means each Affiliate of Buyer identified in Exhibit A .

“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

“ COBRA ” means Sections 601 et. seq. of ERISA.

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.

“ Contract ” means any contract, license, sublicense, mortgage, purchase order, indenture, loan agreement, lease, sublease, agreement, instrument, statement of work or arrangements for consulting services or any binding commitment to enter into any of the foregoing (in each case, whether written or oral) to which Seller or a Selling Affiliate is a party or by which any of their assets are bound (including all covenants not to compete and assignments of inventions).

 

 

“ Employee Movement Date ” means the Closing Date, or any other date that any court or other tribunal of competent jurisdiction shall deem to be the “time of transfer” under the ARD.

“ Employment Losses ” means all costs, claims, losses, liabilities, expenses, charges, penalties and fines arising from or connected with employment or an employment relationship.

“ Environmental and Safety Requirements ” shall mean all federal, state, local and foreign statues, regulations, ordinances and other provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law, in each case concerning public health and safety, worker health and safety and pollution or protection of the environment, including all those relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, Release, threatened Release, control or cleanup of any hazardous or otherwise regulated materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation, as the foregoing are enacted and in effect prior to or on the Closing Date.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ ERISA Affiliate ” means any Person who, together with Seller or any Selling Affiliate, is or was, at a relevant time, treated as a single employer under Section 414 of the Code.

“ GAAP ” means United States generally accepted accounting principles, consistently applied.

“ Indebtedness ” means (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or other debt security, (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise, (iv) any commitment by which a Person assures a creditor against loss (including any contingent reimbursement Liability with respect to letters of credit), (v) any indebtedness guaranteed in any manner by a Person (including any guarantees in the form of an agreement to repurchase or reimburse), (vi) any Liabilities under capitalized leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, (vii) any indebtedness secured by a Lien on a Person’s assets, (viii) any unsatisfied obligation for “withdrawal liability” to a “multiemployer plan” as such terms are defined under ERISA, (ix) any amounts owed to any Person under any noncompetition, nonsolicitation, severance or similar arrangements, (x) any change-of-control, retention or similar payment or increased cost which is triggered in whole or in part by the transactions contemplated by this Agreement, (xi) any Liability under deferred compensation plans, phantom stock plans, severance or bonus plans, or similar arrangements made payable in whole or in part as a result of the transactions contemplated herein, (xii) any Liability with respect to retirement plans (to the extent to which the Liabilities of such plans (determined on a plan termination/solvency basis) exceed the market value of assets held in such plans’ trust, if any), (xiii) any off-balance sheet financing of a Person (but excluding all operating leases), (xiv) any accrued and unpaid interest on, and any prepayment premiums, penalties or similar contractual charges in respect of, any of the foregoing obligations computed as though payment is being made in respect thereof on the Closing Date and (xv) any Liabilities incurred by such Person (including any fees, costs and expenses incurred on behalf of Seller) in connection with the negotiation of the Letter of Intent, this Agreement, the other Transaction Documents, the performance of such Person’s and its Affiliates’ obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby.

 

 

 

“ Knowledge ” as used in the phrases “to the Knowledge of Seller”, “to Seller’s Knowledge” or phrases of similar import means the actual knowledge of Scott Johnson, John Williams, John Ermanni, Dan Follis, Jerri Baker, Paul Czarnik, Mark Eschelby, Mark Kulak and Matthew Sarafian.

“ Letter of Intent ” means that certain letter agreement, dated on or about March 5, 2009, as the same may have been amended, between Buyer and Seller.

“ Liability ” means any liability, debt, obligation, deficiency, penalty, assessment, fine, claim, cause of action or other loss, fee, cost or expense of any kind or nature whatsoever, whether asserted or unasserted, absolute or contingent, known or unknown, accrued or unaccrued, liquidated or unliquidated, and whether due or to become due and regardless of when asserted.

“ Lien ” means any mortgage, pledge, security interest, encumbrance, claim, lien (including Tax lien) or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof) or any agreement to file any of the foregoing, any sale of receivables with recourse against Seller, or any of its Affiliates (including the Selling Affiliates), and any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute, in each case that affects a Purchased Asset.

“ Material Adverse Effect ” means an event, condition or change which has had or would reasonably be expected to have a material adverse effect on the business derived through exploitation or sale of the Products, the Purchased Assets or the Assumed Liabilities, except for any such event, condition or change resulting, directly or indirectly, from (i) the public announcement of this Agreement, (ii) any change in GAAP, (iii) any change in applicable law, but only to the extent it does not disproportionately affect the Purchased Assets or the business related thereto, (iv) any natural disaster or any acts of terrorism, sabotage, military action or war (whether or not declared) or any escalation or worsening thereof, but only to the extent it does not disproportionately affect the Purchased Assets or the business related thereto, or (v) any change in general economic conditions or the financial or securities markets generally, but only to the extent it does not disproportionately affect the Purchased Assets or the business related thereto.

“ Options ” means all options, warrants or other rights, whether or not then exercisable, to acquire shares of Seller’s capital stock.

“ Option Plans ” means the Seller’s Fiscal 1999 Stock Option Plan, amended December 14, 2000, Seller’s 2001 Broad Based Stock Option Plan, Seller’s 2007 Long Term Incentive Plan and any other plan, agreement or arrangement under which Seller grants Options.

“ Ordinary Course of Business ” means ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

“ Permitted Liens ” means (i) Liens for property or ad valorem Taxes which are not due and payable as of the Closing, (ii) those Liens for property or ad valorem Taxes set forth on the attached Schedule 1(a) , the validity of which are being contested in good faith, (iii) Liens constituting contractual license terms under Purchased Contracts, and (iv) materialmen’s, mechanics’, carriers, warehousemen’s, workmen’s and repairmen’s liens for amounts not yet delinquent, that constitute Assumed Liabilities.

“ Person ” means an individual, a partnership, a limited liability company, a corporation, a cooperative, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental authority, body or entity or any department, agency or political subdivision thereof.

 

 

 

“ Proprietary Rights ” means all registered and unregistered intellectual property rights throughout the world, including all of the following items along with all income, royalties, damages, equitable relief and payments due or payable prior to or at the Closing or thereafter (including damages, equitable relief and payments for past, present or future infringements or misappropriations thereof, the right to sue and recover for past infringements or misappropriations thereof and any and all corresponding rights that, now or hereafter, may be secured throughout the world): (i) patents, patent applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice) and any reissue, continuation, continuation-in-part, division, revision, extension or reexamination thereof, (ii) trademarks, service marks, industrial designs, trade dress, internet domain names and web sites, logos, topographies, trade names and corporate names, and all registrations, applications and renewals for any of the foregoing, together with all goodwill associated therewith, (iii) copyrights, copyrightable works (including for all computer software) and mask works, together with all registrations, applications, extensions and renewals for any of the foregoing, (iv) trade secrets and confidential information (including ideas, formulae, compositions, know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, layouts, plans, proposals, technical data, financial, business and marketing plans, price and cost information, and customer and supplier lists and related information), (v) computer software and software systems (including data, source code and object code, databases and related documentation), (vi) all rights of publicity and privacy, including the right to use the names, likenesses, and voices of real persons, (vii) other intellectual property rights and (viii) all copies and tangible embodiments of the foregoing (in whatever form or medium), in each case including all claims and other rights with respect to each of the foregoing.

“ Products ” means the software or business solutions listed in Exhibit B .

“ Release ” shall have the meaning set forth in CERCLA.

“ Selling Affiliates ” means each Affiliate of Seller identified in Exhibit A .

“ Scheduled Employees ” means each of the employees who are wholly or mainly assigned to work in relation to the Purchased Assets listed on Schedule 9.10 who is actively employed by Seller as of the Closing Date or the Employee Movement Date. The contents of Schedule 9.10 shall include employee salary and bonus information as of March 31, 2009.

“ Subsidiary ” means, with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons shall be allocated a majority of partnership, limited liability company, association or other business entity gains or losses or shall be or control the managing director or general partner of such partnership, limited liability company, association or other business entity.

“ Tax ” or “ Taxes ” means any federal, state, local or foreign income, profits, gross receipts, capital gains, franchise, alternative or add-on minimum, estimated, sales, use, goods and services, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental (including taxes under Code §59A), customs, duties, real

 

 

 

property, personal property, capital stock, social security, unemployment, employment, disability, payroll, license, employee or other withholding, contributions or other tax or escheat obligation, of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of another Person.

“ Tax Returns ” means returns, declarations, reports, claims for refund, information returns or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes and including any amendment thereof.

“ Transaction Documents ” means this Agreement and the executed form of each agreement and instrument attached as an Exhibit hereto.

1.2         Other Definitions .  Each of the following defined terms has the meaning given such term in the Section set forth opposite such defined term:

Section Reference	Defined Term
9.10(a)(i)	Active Employees
2.5(c)	Affiliate Asset Purchase Agreement
Preamble	Agreement
2.4	Allocation Schedule
8.1(a)	Applicable Limitation Date
2.2(a)	Assumed Liabilities
8.2(c)(ii)	Basket
5.14(a)	Benefit Plans
Preamble	Buyer
8.2(a)	Buyer Parties
9.10(i)	Buyer’s FSA Plan
8.2(c)(ii)	Cap
2.3	Cash Consideration
2.5(a)	Closing
2.5(a)	Closing Date
2.5(b)	Closing Transactions
2.3	Deferred Maintenance Adjustment
9.7(c)	Confidential Information
Article V	Disclosure Schedules
2.1(b)	Excluded Assets
2.1(b)(ii)	Excluded Contracts
2.2(b)	Excluded Liabilities
3.1(e)	HSR Act
9.10(a)(i)	Inactive Employees
8.2(d)(i)	Indemnified Party
8.2(d)(i)	Indemnifying Party
5.16	Insiders
5.12	Licenses
8.2(a)	Loss
8.2(a)	Losses
5.9(a)	Material Contracts
9.7	Non-Compete Period
9.10(a)(i)	Non-Transferred Employees

 

 

 

 

Preamble	Parties
Preamble	Party
9.8	Post-Closing Period
2.3	Purchase Price
2.1(a)	Purchased Assets
2.1(a)(iv)	Purchased Contracts
2.1(a)(vii)	Purchased Proprietary Rights
2.7	Resulting Exclusive Contract
Preamble	Seller
9.10(j)	Seller 401(k) Plan
8.2(b)	Seller Party
8.2(b)	Seller Parties
9.10(i)	Seller’s FSA Plan
9.10(a)(i)	Transferred Employees
9.10(a)(ii)(D)	Undisclosed Employee
5.13(a)	WARN Act

ARTICLE II

 

PURCHASE AND SALE OF ASSETS

 

2.1

Purchase of Assets .

(a)        On the terms and subject to the conditions contained in this Agreement, on the Closing Date, Buyer shall (or shall cause one or more of its Buyer Affiliates to) purchase, and Seller shall, and shall cause the Selling Affiliates to, sell, convey, assign, transfer and deliver, free and clear of all Liens (except for any Permitted Liens), all of Seller’s and the Selling Affiliates’ right, title and interest as of the Closing Date in the following assets, properties and rights (except for Excluded Assets) that are primarily (except to the extent noted below) related to the Products or primarily used in connection with the business derived through exploitation or sale of the Products (the “ Purchased Assets ”):

(i)        all prepayments, prepaid expenses and other prepaid assets made by Seller or any Selling Affiliate under any Purchased Contract (or under any Excluded Contract to the extent attributable or related to any Product and not included in the calculation of the Deferred Maintenance Adjustment, including those items listed on Schedule 2.1(a)(i) );

(ii)       all packing materials, labels and supplies of or relating to the Products, and all inventories of hardcopies of Products, Product related materials and shrink wrap goods (whether in finished goods condition or otherwise) wherever located;

(iii)      (a) lease agreements for those automobiles and other vehicles set forth on Schedule 2.1(a)(iii)(a) (the “ Vehicle Leases ”), (b) all computers, servers and all related equipment (including all laptops, desktops and associated computer hardware, including any external storage devices and storage media) (collectively, “ Computer Devices ”) and software loaded thereon, as set forth on Schedule 2.1(a)(iii)(b) , (c) to the extent assignable, rights to all telephone numbers used exclusively in the business of Seller relating to the Products, and (d) cellular telephones (but only to the extent transferable) and laptop or desk Computer Devices that are used by or held for use by any of the Scheduled Employees (e.g., personal property associated with the Scheduled Employees);

 

 

 

(iv)      (a) all benefits and rights, other than license fees, (including rights in respect of non-performance or breach) under each Contract (w) exclusively relating to the Products or the business of exploitation or sale of the Products, (x) set forth on Schedule 2.1(a)(iv)(a) , (y) related to FileAID C/S when sold in conjunction with the Products, except as provided in Section 2.2(b)(ii) , or (z) constituting a Resulting Exclusive Contract (as defined below) (each, a “ Fully Assigned Contract ”), and (b) all benefits and rights, other than license fees, (including rights in respect of non-performance or breach) to the extent such benefits and rights relate to the Products or the business of exploitation or sale of the Products under each Contract that is not a Fully Assigned Contract and that produces any of the revenue included in Seller’s and its Affiliates’ revenue amounts set forth on Schedule 2.1(a)(iv)(b) (each, a “ Partially Assigned Contract ” and collectively, together with Fully Assigned Contracts, the “ Purchased Contracts ”);

(v)       all lists and records pertaining to customer accounts (whether past, present or under development), sale order history, customer support, development issue tracking, sales plan opportunities, sales pipeline, licensing data, suppliers, personnel and agents;

(vi)      all claims, deposits, warranties, guarantees, refunds (other than Tax refunds), causes of action, rights of recovery, rights of set-off and rights of recoupment of every kind and nature;

(vii)     all Proprietary Rights and interests therein, including (a) the patents, patent applications and patent disclosures set forth on Schedule 2.1(a)(vii)(a) ; (b) the trademark registrations and trademark applications set forth on Schedule 2.1(a)(vii)(b) , as well as any goodwill of Seller and the Selling Affiliates to the extent related to the foregoing; (c) all computer software set forth on Schedule 2.1(a)(vii)(c) (collectively, the “ Purchased Proprietary Rights ”);

(viii)    all insurance, warranty and condemnation net proceeds received before, on or after the Closing Date with respect to damage, non-conformance of or loss to any of the Purchased Assets that occurred before, on or after the Closing Date to the extent not already expended to remediate such damage or non-conformance;

(ix)      except as provided in Section 2.1(b) below, and to the extent related to the Products (with redaction of non-Product-related information), copies of all books, records, ledgers, files (including all financial, business and marketing plans and information), documents, mail, correspondence, lists, studies and reports and other printed or written materials (including all advertising, marketing and promotional materials), in each case, whether evidenced in writing or electronic data; and

(x)       all data extracts created by Seller from all relevant systems (including, but not limited to, personnel (to the extent permitted under applicable law), finance, sales, and payroll), in formats reasonably satisfactory to Buyer, and details of current business processes and systems in a format that Seller can reasonably provide.

(b)        Excluded Assets . All assets, properties and rights of Seller and the Selling Affiliates other than the Purchased Assets (the “ Excluded Assets ”) are expressly excluded from the purchase and sale contemplated hereby, including:

(i)        all assets that are not set forth or described in Section 2.1(a) , including all assets giving rise to Seller’s own corporate identity (including the corporate charter, taxpayer and other identification numbers, seals, minute books and stock transfer books);

 

 

 

(ii)       all rights (x) under any Contract that is not a Purchased Contract (other than a Resulting Exclusive Contract or as set forth in Section 2.6 below) and relating to File-AID C/S when sold in conjunction with a standalone or mainframe FileAID C/S component, (y) existing under any collective bargaining agreement or other Contract of any kind or nature with any labor organization or (z) under any reseller or similar distribution Contract (each, a “ Reseller Agreement ”) (collectively, the “ Excluded Contracts ”);

(iii)      all cash and cash equivalents as of the Closing Date and all rights in any bank accounts of Seller or the Selling Affiliates;

(iv)      any intercompany receivables or intercompany assets of any kind or nature;

(v)       any employee benefit plan of any kind sponsored, maintained or contributed to by Seller, the Selling Affiliates or any ERISA Affiliate;

(vi)      the accounting records, Tax Returns and other books and records of Seller and the Selling Affiliates that are not specifically identified in Section 2.1(a) , provided that Seller and the Selling Affiliates shall provide copies of any such books and records (other than Tax returns) to Buyer to the extent related to the Products, with redactions of information not related to the Products at Seller’s option;

(vii)     any Tax asset of any kind or nature whatsoever, including all rights to or claims for refunds of Taxes paid by Seller;

(viii)

All prepaid sales, use or value added Taxes;

(ix)      insurance policies and associated prepayments and rights of recovery (except to the extent constituting a Purchased Asset);

(x)

those other assets set forth on Schedule 2.1(b)(x) ; and

(xi)      all rights of Seller under this Agreement and the other Transaction Documents.

 

2.2

Assumed Liabilities; Excluded Liabilities .

(a)         Assumed Liabilities . From and after the Closing, Buyer shall (or shall cause one or more of the Buyer Affiliates to) assume and agree to pay, defend, discharge and perform as and when due following the Closing (pending resolution of any good faith dispute then existing with the other contracting party to any Purchased Contract) only the following specific Liabilities of Seller and the Selling Affiliates (the “ Assumed Liabilities ”): subject to Section 2.6 , all continuing obligations (including required maintenance and professional services obligations) that are first required to be performed by Seller or the Selling Affiliates on or after the Closing Date under each Purchased Contract (including each Vehicle Lease) but solely to the extent such obligations relate directly to the Products or the business derived through exploitation or sale of the Products and do not constitute Excluded Liabilities.

(b)        Excluded Liabilities . Notwithstanding anything to the contrary contained in this Agreement and regardless of whether such Liability is disclosed herein or on any schedule or exhibit hereto, other than the Assumed Liabilities explicitly set forth in Section 2.2(a) , Buyer and the Buyer Affiliates will not assume or be liable for any Liability of any kind or nature whatsoever of Seller or any Seller Affiliate, including, but not limited to, the following: (i) those Liabilities not specifically described

 

 

 

in Section 2.2(a) hereof, (ii) those Liabilities arising out of or related to facts, events, transactions, occurrences or actions or inactions arising prior to the Closing Date, (iii) those Liabilities resulting from, arising out of, relating to, in the nature of, or caused by (A) Taxes of any kind or nature whatsoever (including Taxes relating to all payments relating to wages, bonuses and all other forms of compensation made to the Scheduled Employees by Seller or a Selling Affiliate prior to or after the Closing Date), (B) Indebtedness, (C) any Excluded Asset or Excluded Contract (or any Reseller Agreement or other Contract imposing exclusivity or noncompetition obligations on the part of Seller or any Selling Affiliate) or any intercompany payable or intercompany Liability of any kind or nature or any obligation with respect to any outstanding checks, (D) any breach of contract or noncompliance thereunder (including with respect to the transfer or assignment of Purchased Contracts to Buyer or Buyer Affiliate under this Agreement), breach of warranty or product liability, tort, default, infringement, violation of law, warranty claim or other matter, including any third-party claim under a theory of fraudulent conveyance, inadequate consideration or preferential transfer arising out of facts, events, circumstances, actions or inactions occurring or existing on or prior to the Closing Date, (E) any litigation, claim, assessment, action, suit, proceeding, order, judgment, decree or investigation of any kind or nature arising out of facts, events, circumstances, actions or inactions occurring or existing on or prior to the Closing Date, (F) violation or non-compliance with Environmental and Safety Requirements or (G) any Scheduled Employee(s) prior to the Closing Date, non-Scheduled Employee(s), former employee(s) or retiree(s) (or any dependents or beneficiaries thereof), or any benefit plan of any kind or nature sponsored, maintained or contributed to by Seller or any ERISA Affiliate, (iv) Seller’s Liabilities under this Agreement, the Disclosure Schedules attached hereto, and the Transaction Documents, (v) any accounts payable or accrued expenses, (vi) any Liabilities for workers’ compensation benefits, severance pay, vacation pay, sick pay, salary, bonuses (including bonuses paid pursuant to long-term retention arrangements or agreements or executive bonus plans), commission payments, long-term retention bonuses, reimbursable expenses or other payments or obligations of any kind owed or promised to any Scheduled Employee or any non-Scheduled Employee or made or granted (whether pursuant to law or otherwise) in connection with any Scheduled Employee’s or any non-Scheduled Employee’s termination of employment or (vii) any Liabilities described in the second proviso of the fourth-to-last paragraph on Exhibit E attached hereto (in each case with respect to any of the matters described in the second proviso of the sixth-to-last paragraph on Exhibit E , whether known or unknown, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated and whether due or to become due, whether related to the Products or not, and regardless of when or by whom asserted) (collectively, the “ Excluded Liabilities ”).

For purposes of this Section 2.2 , “ Seller ” shall be deemed to include all of Seller’s Subsidiaries, Affiliates (including the Selling Affiliates), any predecessors to Seller and any person or entity with respect to which Seller is a successor-in-interest (including by operation of law, merger, liquidation, consolidation, assignment, assumption or otherwise). Seller hereby acknowledges that it or a Selling Affiliate is retaining the Excluding Liabilities, and Seller or a Selling Affiliate shall pay, discharge and perform all such Liabilities promptly when due.

2.3         Purchase Price . The purchase price for the Purchased Assets shall be equal to U.S. $80,000,000 (Eighty Million Dollars) (the “ Cash Consideration ”) minus the aggregate amount of all cash or cash equivalents received or collected (other than Taxes collected for the purpose of being remitted to a governmental authority), billed, or invoiced related to deferred maintenance, deferred consulting, deferred services or deferred training fees as of the Closing relating in any manner to maintenance or professional services obligations (or other Assumed Liabilities) that are to be performed by Buyer related to the Products at any time on or following the Closing Date (the “ Deferred Maintenance Adjustment ”) minus the aggregate amount paid to the Seller Affiliate pursuant to the Affiliate Asset Purchase Agreements (such difference being referred to herein as the “ Purchase Price ”). An estimate, and the methodology for final calculation at Closing (and a post-Closing true-up), of the “ Deferred Maintenance Adjustment ” is set forth on Schedule 2.3 attached hereto. The Parties agree that the Purchase Price shall not be subject to withholding Taxes.

 

 

 

2.4        Allocation of Purchase Price . The Purchase Price (including the Assumed Liabilities) shall be allocated in accordance with the allocations and methodologies specified in Schedule 2.4 (the “ Allocation Schedule ”). Seller and Buyer shall file, and shall cause their respective Affiliates to file, all Tax Returns in a manner consistent with the allocation of the Purchase Price pursuant to the Allocation Schedule.

 

2.5

Closing Transactions .

(a)         Closing . Subject to satisfaction or waiver of the conditions contained in this Agreement, the closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Kirkland & Ellis LLP, 555 California Street, San Francisco, California 94104, commencing at 10:00 a.m. on the second business day following the satisfaction or waiver of each of the conditions set forth in Article III hereof or at such other place or on such other date as may be mutually agreeable to Buyer and Seller. The date of the Closing is herein referred to as the “ Closing Date .” The Closing shall be effective as of 12:01 a.m. on the Closing Date.

(b)        Closing Transactions . Subject to the conditions set forth in this Agreement, the Parties shall consummate the following “ Closing Transactions ” on the Closing Date:

(i)        Buyer (or its designee(s)) shall deliver an aggregate amount equal to the Purchase Price in exchange for the transfer to Buyer (or a Buyer Affiliate) of the Purchased Assets and Buyer (or its designee(s)) shall assume the Assumed Liabilities; and

(ii)       The Parties shall deliver the certificates and other documents and instruments required to be delivered by or on behalf of such Person under Article III .

(c)         Affiliate Assets . The sale, transfer, assignment and delivery of the Affiliate Purchased Assets and the assumption of the Affiliate Assumed Liabilities of each Selling Affiliate by Buyer or a Buyer Affiliate will be effected pursuant to a short-form asset purchase agreement, to be mutually agreed to by the Parties and consistent with the general terms and conditions set forth in this Agreement (each, an “ Affiliate Asset Purchase Agreement ”) on a country-by-country basis (or otherwise for certain transfers of Proprietary Rights) as designated by Buyer. Each Affiliate Asset Purchase Agreement shall be in substantially the same form as the form of Affiliate Asset Purchase Agreement attached hereto as Exhibit C , except (as Buyer and Seller shall reasonably agree) for (i) the deletion of provisions which are inapplicable to such Selling Affiliate, the Affiliate Purchased Assets or the Affiliate Assumed Liabilities covered by such agreement, (ii) such changes as may be necessary to satisfy the requirements of applicable local law (including any applicable Tax laws), (iii) such changes as may be reasonably agreed upon by Buyer and Seller regarding employees and employee benefits and compensation matters in order to adapt such agreement to the particular circumstances of the relevant Selling Affiliate and country, provided that such changes shall be consistent with the principles underlying the corresponding provisions of this Agreement and (iv) such other changes as may be reasonably agreed to by Seller and Buyer; provided that the sale of all Proprietary Rights shall be effected pursuant to that certain Bill of Sale and Assignment Agreement attached hereto as Exhibit D . Notwithstanding the foregoing, Seller shall be fully responsible for all indemnification obligations with respect to its respective Affiliates that may arise under any of the Affiliate Asset Purchase Agreements.

2.6         Assignment of Contracts and Rights . Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Purchased Contract if an attempted assignment thereof, without consent of a third party thereto, would constitute a breach or other

 

 

contravention thereof or in any way adversely affect the rights of Buyer or Seller or a Selling Affiliate hereunder. Seller shall, and shall cause a Selling Affiliate if applicable to, use its commercially reasonable efforts (but without the requirement of any payment of money or the provision of any other consideration by Seller, Selling Affiliate or Buyer) to obtain the consent of the other parties to any such Purchased Contract for the assignment thereof to Buyer or a Buyer Affiliate as Buyer may request. Unless and until such consent is obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of the Parties thereunder so that Buyer would not in fact receive all rights under such Purchased Contract, Seller shall, and shall cause a Selling Affiliate if applicable to, cooperate with Buyer or a Buyer Affiliate in a subcontracting arrangement as set forth on Exhibit E under which Buyer or a Buyer Affiliate would obtain the benefits in the nature of Purchased Assets and be responsible for the obligations in the nature of Assumed Liabilities thereunder in accordance with this Agreement or under which Seller or a Selling Affiliate, as applicable, would enforce, at Buyer’s expense, for the benefit of Buyer or a Buyer Affiliate, with Buyer assuming at Buyer’s expense Seller’s or a Selling Affiliate’s, as applicable, obligations, any and all rights of Seller or a Selling Affiliate, as applicable, against a third party thereto. Seller shall, and shall cause a Selling Affiliate to if applicable, promptly pay to Buyer when received all monies received by Seller or a Selling Affiliate, as applicable, under any Purchased Contract, excluding any Taxes (which, unless contested in good faith, will be remitted promptly and timely to the applicable government authority by Seller, and if any such contest is successful thereafter paid to the customer) and any Excluded Assets, and Buyer shall pay, defend, discharge and perform all Liabilities in the nature of Assumed Liabilities under such Purchased Contracts as required under Section 2.2(a) and Exhibit E . In cases in which a Contract that would otherwise constitute or result in the transfer of a Partially Assigned Contract contains prohibitions on partial assignment, this Agreement shall not constitute an agreement to assign or transfer such Contracts to Buyer, but Seller shall, and shall cause a Selling Affiliate if applicable to, prior to the Closing, use commercially reasonable efforts to cause each such Contract to be separated into two Contracts in a manner consistent with the requirements set forth on Exhibit E (it being understood that if any such Contract does not specify the value of the Products sold pursuant to such Contract, the Parties acknowledge and agree that amounts attributable to such Products shall be deemed to have a value based on Seller’s maintenance recognition schedule in local currency and in applicable exchange rate for the month of March 2009), with each such newly split Contract that relates exclusively to the Products being referred to herein as a “ Resulting Exclusive Contract ”.  

2.7

[ Reserved ].

2.8         RISK OF LOSS . Until the Closing, any loss of or damage to the Purchased Assets from fire, casualty or any other occurrence shall be the sole responsibility of seller or the Selling Affiliates, as applicable. At the Closing, title to the Purchased Assets shall be transferred to Buyer (or a Buyer Affiliate), and Buyer (or a Buyer Affiliate) shall thereafter bear all risk of loss (subject to Article VIII ) associated with the Purchased Assets.

ARTICLE III

 

CONDITIONS TO CLOSING

3.1         Conditions to Buyer’s Obligation . The obligation of Buyer to consummate the transactions contemplated by this Agreement is subject to the fulfillment of the following conditions as of the Closing Date:

(a)        Except for representations and warranties made as of a particular date (which representations and warranties shall be true and correct in all respects as of such particular date), the representations and warranties set forth in Article V hereof shall be true and correct in all respects as of the date hereof and as of the Closing Date as though then made, except for inaccuracies of representations  

 

 

or warranties the circumstances giving rise to which, individually or in the aggregate, do not constitute and could not be reasonably expected to have a Material Adverse Effect; provided that, the representations and warranties set forth in Sections 5.1 (Organization and Corporate Power), 5.2   (Authorization of Transactions), and 5.4 with respect to clauses (i), (iii) and (iv) (Absence of Conflicts) shall be true and correct in all respects as of the date hereof and as of the Closing Date as though then made; provided further that, the representations and warranties set forth in Section 5.10(b) (Proprietary Rights) and Section 5.18 (Title to Property) shall be true and correct in all material respects as of the date hereof and as of the Closing Date as though then made;

(b)       Seller shall have performed and complied in all material respects with all of the covenants and agreements required to be performed by it under this Agreement on or prior to the Closing;

(c)        Since December 31, 2008, there shall have been no event, transaction, condition or change which has had or could reasonably be expected to have a Material Adverse Effect;

(d)       All consents and approvals of third parties that are required for the transfer to Buyer of each Contract as set forth on Schedule 3.1(d) shall have been obtained or the replacement of third party software where Seller has not obtained such a consent, (x) all on continuing terms and conditions no less favorable to Buyer than those in existence as of the date hereof and (y) without cost to Buyer; provided that the foregoing condition in this clause (y) shall be deemed to be waived with respect to Contracts set forth on Schedule 3.1(d) the consent for which can be obtained by Buyer at a cost of less than $10,000 individually and less than $100,000 in the aggregate;

(e)        All governmental and regulatory filings, authorizations and approvals that are required for the transfer of the Purchased Assets to Buyer and the consummation of the transactions contemplated hereby shall have been duly made and obtained, and all applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), and applicable non-U.S. regulatory filings regimes shall have expired or been terminated;

(f)        No action, suit or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state, provincial, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable judgment, decree, injunction, order or ruling would prevent the performance of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement, cause such transactions to be rescinded or materially and adversely affect the right of Buyer to own or operate the Purchased Assets, and no judgment, decree, injunction, order or ruling shall have been entered which has any of the foregoing effects;

(g)       Seller shall have delivered to Buyer releases of any and all Liens (other than Permitted Liens) held by third parties with respect to any of the Purchased Assets; and

(h)       On or prior to the Closing Date, Seller shall have delivered to Buyer each of the following:

(i)        a certificate from Seller, in form and substance reasonably satisfactory to Buyer, dated as of the Closing Date, stating that the preconditions specified in Sections 3.1(a) and 3.1(b) have been satisfied;

(ii)       other than this Agreement, each of the other Transaction Documents to which Seller or a Selling Affiliate is a party, duly executed by Seller and/or a Selling Affiliate, as applicable;

 

 

 

(iii)      copies of all third party, governmental and regulatory consents, approvals, filings, releases, etc. required in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents;

(iv)      certified copies of the resolutions of Seller’s board of directors authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and approving the consummation of the transactions contemplated hereby and thereby;

(v)       certificate of the Michigan secretary of state stating that Seller is in good standing;

(vi)      a non-foreign affidavit dated as of the Closing Date, sworn under penalty of perjury and in form and substance required under the Treasury Regulations issued pursuant to Code §1445 stating that such Seller is not a “Foreign Person” as defined in Code §1445; and

(vii)     such other documents or instruments as Buyer may reasonably request to effect the transactions contemplated hereby; and

(i)        Except for the software licenses set forth on Schedule 3.1(i) Seller shall have delivered to Buyer development software and a server that is fully functioning in Seller’s Detroit, Michigan facility, which shall enable Buyer to further build and develop the Products.

Any condition specified in this Section 3.1 may be waived by Buyer; provided that no such waiver shall be effective unless it is set forth in a writing executed by Buyer or unless Buyer agrees in writing to consummate the transactions contemplated by this Agreement without fulfillment of such condition.

3.2         Conditions to Seller’s Obligations . The obligation of Seller to consummate the transactions contemplated by this Agreement is subject to the fulfillment of the following conditions as of the Closing Date:

(a)        Except for representations and warranties made as of a particular date (which representations and warranties shall be true and correct in all respects as of such particular date), the representations and warranties set forth in Article VI hereof shall be true and correct in all respects as of the date hereof and as of the Closing Date as though then made, except for inaccuracies of representations or warranties the circumstances giving rise to which, individually or in the aggregate, do not constitute and could not be reasonably expected to have a material adverse effect on Buyer;

(b)       Buyer shall have performed and complied in all material respects with all of the covenants and agreements required to be performed by it under this Agreement on or prior to the Closing;

(c)        All governmental and regulatory filings, authorizations and approvals that are required for the transfer of the Purchased Assets to Buyer and the consummation of the transactions contemplated hereby shall have been duly made and obtained, and all applicable waiting periods (and any extensions thereof) under the HSR Act, and applicable non-U.S. regulatory filings regimes shall have expired or been terminated;

(d)       No action, suit or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state, provincial, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable judgment, decree, injunction, order or ruling would prevent the performance of this Agreement or any of the transactions contemplated hereby, declare unlawful the

 

transactions contemplated by this Agreement, cause such transactions to be rescinded or materially and adversely affect the right of Buyer to own or operate the Purchased Assets, and no judgment, decree, injunction, order or ruling shall have been entered which has any of the foregoing effects; and

 

(e)        On or prior to the Closing Date, Buyer shall have delivered to Seller all of the following:

(i)        a certificate from Buyer, in form and substance reasonably satisfactory to Seller, dated as of the Closing Date, stating that the preconditions specified in Sections 3.2(a) and 3.2(b) have been satisfied;

(ii)       copies of all third party, governmental and regulatory consents, approvals, filings, releases, etc. required in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents;

(iii)      certified copies of the resolutions of Buyer’s board of directors authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and approving the consummation of the transactions contemplated hereby and thereby;

(iv)      certificate of the relevant authority stating that Buyer is in good standing;

(v)       other than this Agreement, each of the other Transaction Documents to which Buyer is a party, duly executed by Buyer; and

(vi)      such other documents or instruments as Seller may reasonably request to effect the transactions contemplated hereby.

Any condition specified in this Section 3.2 may be waived by Seller; provided that no such waiver shall be effective against Seller unless it is set forth in a writing executed by Seller or unless Seller agree in writing to consummate the transactions contemplated by this Agreement without the fulfillment of such condition.

ARTICLE IV

 

COVENANTS PRIOR TO CLOSING

4.1         Covenants of Seller . Prior to the Closing, unless expressly required of Seller by other provisions of this Agreement or unless Buyer otherwise agrees in writing, Seller shall, and cause the Selling Affiliates to:

(a)        keep in full force and effect its corporate existence and all material rights and franchises relating or pertaining to the Purchased Assets and the Products and maintain in full force and effect the existence of all of the material Proprietary Rights included in the Purchased Assets;

(b)       use its commercially reasonable efforts to carry on the business of exploiting or selling the Products in substantially the same manner as presently conducted and to keep the Purchased Assets intact, including its present employees and its present relationships with lessors, licensors, suppliers and customers and others having business relations with the Purchased Assets, and promote the smooth transition of the Purchased Assets to Buyer;

 

 

(c)        up to five (5) business days prior to Closing, supplement or amend the Disclosure Schedules with respect to any matter first arising after the date of this Agreement which, if existing, occurring, or known as of the date of this Agreement, would have caused any representation or warranty made by Seller in this Agreement to not be true and accurate or which is necessary to correct, any information in such materials which has been rendered materially inaccurate thereby. No such supplement or amendment shall be deemed to have modified the representations, warranties and covenants of Seller for the purpose of determining whether the conditions in Article III of this Agreement have been satisfied (including the condition in Section 3.1(a) ); provided, however, that such supplement shall be deemed to have modified the representations, warranties and covenants of Seller for purposes of determining whether any representation or warranty is inaccurate or has been breached or whether there has been any failure to perform or breach of any covenant contained herein for which an Indemnified Party would be entitled to indemnification hereunder;

(d)       substantially comply with all material legal requirements and material contractual Liabilities applicable to the operations of the Purchased Assets and pay all applicable Taxes with respect thereto when due and payable (unless being contested in good faith);

(e)        cooperate with Buyer, use commercially reasonable efforts and take such actions to cause the conditions to Buyer’s obligation to close to be satisfied (including the execution and delivery of all agreements contemplated hereunder to be so executed and delivered and the making and obtaining of all third party and governmental notices, filings, authorizations, approvals, consents, releases and terminations); provided that notwithstanding the foregoing, Seller will provide copies of all documentation necessary to comply with this Section 4.1(e) to Buyer for its review and approval prior to submitting such documentation to the appropriate Persons;

(f)        as reasonably requested by Buyer, meet and confer with representatives of Buyer to discuss transition matters relating to the Purchased Assets and the general status of the business of exploiting or selling the Products;

(g)       provide, and cause its Affiliates and its respective officers, directors, employees, attorneys, accountants and other agents to provide, Buyer and its accounting, legal, funding sources and other representatives reasonable access at all reasonable times to the Purchased Assets and persons associated therewith;

(h)       file any forms or related material that Seller may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the HSR Act and applicable non-U.S. regulatory filings regimes, use reasonable efforts to obtain termination of the applicable waiting period, and make any further filings pursuant thereto that may be necessary, proper, or advisable in connection therewith;

(i)        prepare, issue and deliver, and thereafter collect, on a timely basis without delay in the Ordinary Course of Business invoices and bills for all revenue amounts set forth on Schedule 5.9(d)(ii) ;

(j)        not make, grant or promise any bonus or any wage, salary or compensation increase to any Scheduled Employee or not make, grant or promise any material increase in any employee benefit plan or arrangement applicable to Scheduled Employees (other than annual salary increases of no more than 3% for any individual); and

(k)       not take any action (or agree or commit to take any action) that, if taken prior to the date of this Agreement, would require disclosure under Section 5.7 or otherwise constitute a breach thereof as of the Closing Date.

 

 

4.2

Covenants of Buyer . Prior to the Closing, Buyer shall:

(a)        file any forms or related material that Buyer may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the HSR Act, use its reasonable efforts to obtain termination of the applicable waiting period, provided, however, that Buyer shall not be obligated to commence or defend any legal proceeding or to dispose of or hold separate any assets, category of assets, or business of Buyer or Seller in order to secure termination of the HSR waiting period, and make any further filings pursuant thereto that may be necessary, proper, or advisable in connection therewith;

(b)       as reasonably requested by Seller, meet and confer on a regular and reasonable basis with representatives of Seller to discuss transition matters relating to the Purchased Assets; and

(c)        cooperate with Seller and use its commercially reasonable efforts to cause the conditions to Seller’s obligation to close to be satisfied (including the execution and delivery of all agreements contemplated hereunder to be so executed and delivered and the making and obtaining of all third party and governmental filings, authorizations, approvals, consents, releases and terminations required to be obtained by Buyer hereunder).

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

OF SELLER

Except as set forth in the disclosure schedules dated as of the date hereof and delivered herewith to Buyer (the “ Disclosure Schedules ”), and as a material inducement to Buyer to enter into this Agreement, Seller (it being agreed that, except for Sections 5.1 and 5.2 , unless otherwise specified, all references in this Article V to “Seller” shall be deemed to be references to Seller and Selling Affiliates to the extent the applicable) hereby represents and warrants as of the date of this Agreement and as of the Closing Date (provided that the representations and warranties made as of a specified date will be true and correct as of such date) to Buyer that:

5.1         Organization and Corporate Power . Seller is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. Seller has full corporate power and authority and all licenses, permits and authorizations necessary to own and operate its business relating to the Purchased Assets as presently conducted, except where the failure to have such license, permit or authorization would not have a Material Adverse Effect. Seller is not in default under or in violation of any provision of its articles of incorporation or bylaws.

5.2         Authorization of Transactions . Seller has full corporate power and authority to execute and deliver this Agreement and each of the Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby. Seller’s board of directors has duly approved this Agreement and all other Transaction Documents to which it is a party and has duly authorized the execution and delivery of this Agreement and all other Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby. No vote of the stockholders of Seller or any other corporate proceedings on the part of Seller (or any of its Affiliates) is necessary to approve and authorize the execution and delivery of this Agreement or the other Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby. This Agreement and all other Transaction Documents to which Seller is a party have been duly executed and delivered by Seller and constitute the valid and binding agreements of Seller, enforceable against Seller in accordance with their terms, except as such enforceability may be limited by principles of laws of general application relating to bankruptcy, insolvency and the relief of debtors.

 

 

5.3

[Reserved.] .

 

5.4         Absence of Conflicts . Except as set forth on Schedule 5.4 attached hereto, the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby by Seller do not and shall not (a) conflict with or result in any breach of any of the terms, conditions or provisions of, (b) constitute a default under, (c) result in a violation of, (d) give any third party the right to modify, terminate or accelerate or cause the modification, termination or acceleration of, any obligation under, (e) result in the creation of any Lien upon any of the Purchased Assets or (f) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any court or administrative or other governmental body or agency, under (i) the provisions of the articles of incorporation or by-laws of Seller, (ii) any Contract, (iii) any law, statute, rule or regulation to which Seller or any of the Purchased Assets is subject or (iv) any judgment, order or decree to which Seller or any of the Purchased Assets is subject, except such filings and notices as may be required under the HSR Act.

 

5.5

Statements .

(a)        Seller has delivered to Buyer and attached hereto as Schedule 5.5 : a spreadsheet provided by Seller to Buyer reflecting all (i) GAAP revenues attributable to the Products and (ii) third party royalty or similar payments required with respect to under any Purchased Contract the Products, in each case for the fiscal years ended March 31, 2008 and March 31, 2009, and such spreadsheet has been prepared in accordance with GAAP consistently applied is accurate and complete in all material respects and is consistent in all material respects with the books and records of Seller.

(b)       As of March 31, 2009, the Deferred Maintenance and Services Revenue (as defined on Schedule 2.3 and calculated as set forth thereon as of March 31, 2009) is set forth on Schedule 5.5 attached hereto.

5.6         Absence of Undisclosed Liabilities .There are no Liabilities with respect to the Purchased Assets other than such Liabilities (i) under Purchased Contracts (but not Liabilities for material breaches thereof or material defaults thereunder or for tort, infringement or violation of law) or (ii) which have arisen after December 31, 2008 in the Ordinary Course of Business (none of which is a Liability for material breach of contract, material breach of warranty, tort or infringement or a claim or lawsuit or an environmental Liability).

5.7         Absence of Certain Developments . Except as set forth in Schedule 5.7 and except as expressly contemplated by this Agreement, since December 31, 2008, Seller and its Affiliates have conducted its business with respect to the Purchased Assets only in the Ordinary Course of Business and Seller and its Affiliates, to the extent relating to the Purchased Assets, have not:

(a)        suffered a Material Adverse Effect or suffered any theft, damage, destruction or casualty loss in excess of $100,000 in the aggregate to the Purchased Assets, whether or not covered by insurance;

(b)       borrowed any amount or incurred or become subject to any Liabilities, except Liabilities incurred in the Ordinary Course of Business;

(c)        subjected any portion of its properties or assets to any Lien (other than Permitted Liens);

(d)       sold, leased, licensed, assigned or transferred (including transfers to any Insider) any of its tangible or intangible assets (including Proprietary Rights) (except for sales of inventory or non-

 

 

exclusive licenses of software in the Ordinary Course of Business to unaffiliated third Persons on an arm’s length basis), or disclosed any confidential information (other than pursuant to agreements requiring the person to whom the disclosure was made to maintain the confidentiality of and preserving all of its rights in such confidential information);

(e)        waived, canceled, compromised or released any rights or claims of material value whether or not in the Ordinary Course of Business;

(f)        entered into, amended, modified or terminated any Material Contract or entered into any other material transaction or materially changed any business practice;

(g)       made any other change in employment terms for any of its directors, officers or employees outside the Ordinary Course of Business or entered into any transaction with any Insider;

(h)       failed to sell Products on terms and conditions, or to collect or invoice on a timely basis accounts receivables related to deferred revenue cash collections on historical terms, in each case in the Ordinary Course of Business;

(i)        made any loans or advances to, or guarantees for the benefit of, any Persons (other than advances to employees for travel and business expenses incurred in the Ordinary Course of Business which do not exceed $10,000 in the aggregate);

(j)        instituted or settled any claim or lawsuit for an amount involving in excess of $10,000 in the aggregate or involving equitable or injunctive relief;

(k)       granted any performance guarantee to its customers or suppliers other than in the Ordinary Course of Business and consistent with the policies and practices disclosed to Buyer;

(l)         acquired any other business or Person (or any significant portion or division thereof), whether by merger, consolidation or reorganization or by purchase of its assets or stock or acquired any other material assets; or

(m)

committed or agreed to any of the foregoing.

5.8         Taxes . During the past five (5) years, no claim has ever been made by a taxing authority in a jurisdiction where Seller does not file Tax Returns that Seller is or may be subject to Taxes relating to the sale of the Products assessed by such jurisdiction relating to the sale of the Products. Schedule 5.8 contains a list of states, territories and jurisdictions (whether foreign or domestic) in which Seller or Selling Affiliate is required to file Tax Returns. Seller expressly disclaims any representation or warranty that Seller’s customer transaction tax procedures are proper; provided that Seller has no Knowledge that any such tax procedures are improper. Seller is not responsible for loss of customers by Buyer following the Closing Date to the extent resulting from Seller’s tax billing policies.

5.9

Contracts and Commitments .

(a)        Seller is not a party to, bound by or subject to any Contract relating to the Purchased Assets or the Products, except for (i) this Agreement and the other agreements contemplated hereby, (ii) any Contract under which Seller and its Affiliates do not expect to receive or expend cash of (x) $300,000 or more with respect to any Contracts with a customer of Seller or the Selling Affiliates or (y) $100,000 or more with respect to any other type of Contract, and (iii) those Contracts described on Schedule 5.9 attached hereto (the Contracts required to be disclosed on Schedule 5.9 attached hereto are referred to herein as the “ Material Contracts ”). Seller has delivered to Buyer true and correct copies of

 

 

each Material Contract, together with all amendments, waivers and other changes thereto (all of which are disclosed on Schedule 5.9 ). Schedule 5.9 contains an accurate and complete description of all material  terms of all oral Contracts referred to therein. With respect to the Purchase Assets or the Products, neither Seller nor its Affiliates is a party to, bound by or subject to (i) in-bound license agreements except as set forth on Schedule 5.10(e) , (ii) settlement agreements, (iii) non-compete obligations imposed upon them, and (iv) exclusivity arrangements imposed upon them.

(b)       Except as disclosed in Schedule 5.9 , (i) no Purchased Contract has been canceled or, to Seller’s Knowledge, breached by the other party, and Seller has no Knowledge of any anticipated breach by any other party to any Contract, (ii) since December 31, 2008, to the Knowledge of Seller, no material supplier or other material provider of goods or services has indicated in writing to Seller that it shall stop or materially decrease the rate of business done with respect to the P