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Title: |
Asset Purchase Agreement |
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Entities: |
Sonic Foundry, Inc.; Carnegie Mellon University; Brown Rudnick Freed & Gesmer |
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Date: |
2001 |
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Size: |
Preview shows 26KB of 143KB total |
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Price: |
$72 |
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ID: |
#1169327 |
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ASSET PURCHASE AGREEMENT
AND
PLAN OF ASSET TRANSFER AND REORGANIZATION
ASSET PURCHASE AGREEMENT AND PLAN OF ASSET TRANSFER AND REORGANIZATION
(this "Agreement") dated September 6, 2001, by and among Sonic Foundry, Inc., a
Maryland corporation ("Buyer"), MediaSite Acquisition, Inc., a Maryland
corporation and a wholly-owned subsidiary of Buyer ("Acquisition") and
MediaSite, Inc., a Pennsylvania corporation ("Company").
RECITALS
WHEREAS, the Boards of Directors of Buyer and the Company deem it
advisable and in the best interests of each corporation and its respective
stockholders that Buyer purchase the assets of the Company (the "Purchase") in
order to advance the long-term business interests of the Buyer and the Company;
WHEREAS, as a condition and inducement to Buyer's willingness to enter
into this Agreement, as promptly as practicable following the execution and
delivery of this Agreement, certain shareholders of the Company, consisting of
Zero Stage Capital VI Limited Partnership and Saturn Partners Limited
Partnership, and Saturn Capital, Inc. (collectively, the "Key Shareholders") are
entering into a Stock Restriction and Registration Agreement dated as of the
date of this Agreement in substantially the form attached hereto as Exhibit A
---------
(the "Stock Restriction and Registration Agreement"), pursuant to which (a) such
shareholders have agreed, among other things, to restrict from resale their
shares of Buyer common stock, $0.01 par value per share, ("Buyer Common Stock")
received as a result of the Purchase, for a specified period of time, and (b)
the Buyer has agreed to register such shares of Buyer Common Stock, all as set
forth therein; and
WHEREAS, it is intended that the Purchase shall qualify as a
"reorganization," within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended (the "Code"), and that each of the Buyer,
Acquisition and the Company will be a "party to a reorganization," within the
meaning of Section 368(b) of the Code, with respect to the Purchase.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. PURCHASE AND SALE OF ASSETS
1.1 Assets to be Transferred.
------------------------
Subject to the terms and conditions of this Agreement, on the Closing
Date (as hereinafter defined) Company shall sell, transfer, convey, assign, and
deliver to Acquisition, and Acquisition shall purchase and accept, all of the
business, rights, claims and assets (of every kind, nature, character and
description, whether real, personal or mixed, whether tangible or intangible,
whether accrued, contingent or otherwise, and wherever situated) of Company,
together with all rights and privileges associated with such assets and with the
business owned or held for use by the Company, other
<PAGE>
than the Excluded Assets (as hereinafter defined) (collectively the "Purchased
Assets"). The Purchased Assets shall include, but not be limited to, the
following:
1.1.(a) Personal Property. All equipment, tools, supplies, furniture
-----------------
and all other personal property (other than personal property leased
pursuant to Real and Personal Property Leases as hereinafter defined) owned
or held for use by Company on the Closing Date.
1.1.(b) Real and Personal Property Leases. All leases of real
---------------------------------
property, equipment, furniture and other personal property leased by
Company (the "Real and Personal Property Leases"), solely as described in
Schedule 1.1. (b).
1.1.(c) Trade Rights. All the Company's interest in any Trade Rights,
------------
to the extent that such Trade Rights are transferable. As used herein, the
term "Trade Rights" shall mean and include: (i) all trademark rights,
business identifiers, trade dress, service marks, trade names, and brand
names, domain names, email addresses; (ii) all copyrights and all other
rights associated therewith and the underlying works of authorship,
including all computer software programs or applications developed by the
Company, whether under license or otherwise; (iii) all patents and all
proprietary rights associated therewith; (iv) all contracts or agreements
granting any right, title, license or privilege under the intellectual
property rights of any third party; (v) all inventions, mask works and mask
work registrations, know-how, discoveries, improvements, designs, trade
secrets, shop and royalty rights, employee covenants and agreements
respecting intellectual property and non-competition and all other types of
intellectual property; and (vi) all registrations of any of the foregoing,
all applications therefor, all goodwill associated with any of the
foregoing, and all claims for infringement or breach thereof.
Notwithstanding the foregoing, the term "Trade Rights" shall not include
any commercially available third party license or other agreement for the
use of software or other intellectual property rights.
1.1.(d) Contracts. All the Company's rights in, to, and under all
---------
contracts, purchase orders and sales orders (hereinafter "Contracts") of
Company. To the extent that any Contract for which assignment to
Acquisition is provided herein is not assignable without the consent of
another party, this Agreement shall not constitute an assignment or an
attempted assignment thereof if such assignment or attempted assignment
would constitute a breach thereof. Company and Buyer agree to use their
commercially reasonable efforts (without any requirement on the part of
Buyer to pay any money or agree to any change in the terms of any such
Contract) to obtain the consent of such other party to the assignment of
any such Contract to Acquisition in all cases in which such consent is or
may be required for such assignment. If any such consent shall not be
obtained, Company agrees to cooperate with Buyer in any reasonable
arrangement designed to provide for Acquisition the benefits intended to be
assigned to Acquisition under the relevant Contract, including enforcement
at the cost and for the account of Buyer of any and all rights of Company
against the other party thereto arising out of the breach or cancellation
thereof by such other party or otherwise. If and to the extent that such
arrangement cannot be made, Acquisition, upon notice to Company, shall have
no obligation pursuant to Section 2.1 or otherwise with respect to any such
Contract and any such Contract shall not be deemed to be a Purchased Asset
hereunder.
1.1.(e) Computer Software. All computer source codes, programs and
-----------------
other software of Company, including all machine readable code, object
code, printed listings of code, documentation and related property and
information owned by the Company.
2
<PAGE>
1.1.(f) Literature. All sales literature, promotional literature,
----------
catalogs and similar materials of Company.
1.1.(g) Records and Files. All records and files of Company of every
-----------------
kind including, without limitation, invoices, customer and vendor lists,
specifications, designs, drawings, and operating and marketing plans, and
all other documents, tapes, discs, programs or other embodiments of
information owned or held for use by the Company.
1.1.(h) Notes and Accounts Receivable. All notes, drafts and
-----------------------------
accounts receivable owned or held by Company, except for those described in
Section 2.2. (a) hereof.
1.1.(i) Licenses; Permits. All licenses, permits, approvals,
-----------------
certifications and listings owned or held for use by Company.
1.1.(j) Corporate Name. The name "MediaSite," and all rights to use
--------------
or allow others to use such name, to the extent permitted by applicable Law
(as hereinafter defined).
1.1.(k) Joint Venture. All of the Company's interest in that certain
-------------
Japanese joint venture disclosed in Section 4.1(d) of the Company
Disclosure Schedule.
1.1.(l) General Intangibles. All prepaid items, all causes of action
-------------------
arising out of occurrences before or after the Closing, and other
intangible rights and assets.
1.2 Excluded Assets.
---------------
The provisions of Section 1.1 notwithstanding, Company shall not sell,
transfer, assign, convey or deliver to Acquisition, and Acquisition will not
purchase or accept the following assets of Company (collectively the "Excluded
Assets"):
1.2.(a) Cash and Cash Equivalents. All cash and cash equivalents,
-------------------------
other than petty cash balances at Company's various places of business.
1.2.(b) Consideration. The consideration delivered by Buyer to
-------------
Company pursuant to this Agreement.
1.2.(c) Tax Credits and Records. Federal, state and local income and
-----------------------
franchise tax credits and tax refund claims and associated returns and
records. Buyer shall have reasonable access to such returns and records and
may make excerpts therefrom and copies thereof.
1.2.(d) Corporate Franchise. Company's franchise to be a
-------------------
corporation, its certificate of incorporation, corporate seal, stock books,
minute books and other corporate records having exclusively to do with the
corporate organization and capitalization of Company. Buyer shall have
reasonable access to such books and records and may make excerpts therefrom
and copies thereof.
1.2.(e) Subsidiary. Company interest in that certain dormant United
----------
Kingdom subsidiary disclosed in Section 4.1(d) of the Company
Disclosure Schedule.
3
<PAGE>
2. ASSUMPTION OF LIABILITIES
2.1 Liabilities to be Assumed.
-------------------------
As used in this Agreement, the term "Liability" shall mean and
include any direct or indirect indebtedness, guaranty, endorsement, claim, loss,
damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, asserted, liquidated or unliquidated, secured or unsecured. Subject to
the terms and conditions of this Agreement, on the Closing Date, Acquisition
shall assume and agree to perform and discharge only the Liabilities of the
Company listed in the Company Disclosure Schedule or Recent Balance Sheet
(collectively the "Assumed Liabilities"). For greater certainty, the Assumed
Liabilities include only the following and only to the extent disclosed on the
Company Disclosure Schedule or the Recent Balance Sheet (except for Excluded
Liabilities):
2.1.(a) All Liabilities of the Company under the Contracts,
Trade Rights, Real and Personal Property Leases, or any of the other
Purchased Assets.
2.1.(b) All Liabilities of the Company with respect to accounts
payable that are in existence as of the Closing (the "Accounts
Payable").
2.1.(c) All Liabilities of the Company under the Employee
Plans/Agreements (as defined in Section 4.15(a)) described in Section
4.15(a) of the Company Disclosure Schedule (as hereinafter defined),
including, without limitation, (i) all compensation and benefits
accrued by or otherwise payable to any employee of the Company for
premiums or benefits under any Employee Plans/Agreements (excluding
payments to Company employees under the Company's Employee Retention
Plan, which shall be paid to the Company employees in Buyer stock in
accordance with Section 3.1 below), (ii) all severance or other
benefits due pursuant to written agreements which are included in the
Company Disclosure Schedule to Vinay Mehra and Krishna Pendyala to the
extent that such employment is terminated (or treated as terminated)
in connection with the consummation of the transactions contemplated
by this Agreement, ] and (iii) all costs and expenses incurred in
connection with the transfer of work visas from the Company to Buyer
for those Affected Employees (as defined in Section 6.1), who are not
U.S. citizens.
2.1.(d) All Liabilities for claims for workers' compensation by
person who at or prior to the Closing Date are or were employees of
the Company, whether insured or otherwise, arising out of events
occurring on, prior to or after the Closing Date (including, without
limitation, claims existing at the Closing Date), and otherwise in
accordance with the terms and conditions of all applicable workers'
compensation statutes, without interruption as a result of any
employment by Buyer on or after the Closing Date.
2.1.(e) All Liabilities arising out of any claim, suit, action,
arbitration, proceeding, investigation or other similar matter pending
or arising on, prior to, or after the Closing Date in any way relating
to the Company, the business or operations of the Company, or the
Purchased Assets, whether or not arising out occurrences,
transactions, events or incidents occurring prior to, on or after the
Closing Date.
4
<PAGE>
2.1.(f) All Liabilities of Company arising out of or in any way
relating to or resulting from any product manufactured, assembled or
sold on or prior to the Closing Date (including any Liability of
Company for claims made for (i) injury to person, (ii) damage to
property or other damage, or (iii) repair, replacement or return of
products sold and shipped by the Company, whether made in product
liability, tort, breach of warranty or otherwise).
2.1.(g) All Liabilities of the Company for federal, state,
foreign, county, local and other income, ad valorem, excise, profits,
franchise, occupation, property, payroll, sales, use, gross receipts
and other taxes (and any interest and penalties) and assessments
incurred by, or attributed to, the Company or the Purchased Assets on
or prior to the Closing Date.
2.1.(h) All Liabilities to third parties for infringement by
the Company of such third party's Trade Rights.
2.1.(i) All Liabilities of Company for any violation by the
Company of, or failure by the Company to comply with, any statute,
law, ordinance, rule or regulation (collectively, "Laws") or any
order, writ, injunction, judgment, plan or decree (collectively,
"Orders") of any court, arbitrator, department, commission, board,
bureau, agency, authority, instrumentality or other body, whether
federal, state, municipal, foreign or other (collectively, "Government
Entities").
2.2 Liabilities Not to be Assumed.
-----------------------------
Other than the Assumed Liabilities disclosed on the Company
Disclosure Schedule and/or Recent Balance Sheet, Acquisition is not
assuming any other Liabilities, including, but not limited to the
following Liabilities of Company:
2.2.(a) Series-A 2001 Notes. Any Liability of Company pursuant
-------------------
to those certain Loan Agreements and accompanying Promissory Notes in
the aggregate principal amount of $3,675,400.13, entered into on
February 27, 2001 and certain dates thereafter by and among the
Company and certain of its shareholders (the "Series-A 2001 Notes").
2.2.(b) Transaction Expenses. All Liabilities incurred by
--------------------
Company in connection with this Agreement and the transactions
contemplated herein, except as otherwise provided in Section 13.3.
2.2.(c) Liability for Breach of Agreement. Liabilities of
---------------------------------
Company for any breach or failure to perform any of Company's
covenants and agreements expressly set forth in this Agreement.
3. PURCHASE PRICE - PAYMENT
3.1 Purchase Price.
--------------
The purchase price (the "Purchase Price") for the Purchased
Assets shall be (a) the assumption of the Assumed Liabilities, (b) the issuance
by Buyer to the Company of Three Million Four Hundred Twenty Thousand
(3,420,000) shares of the Buyer Common Stock (together with all shares of Buyer
Common Stock issued as a result of stock dividends, stock splits, or other
customary anti-dilution provisions); and (c) the Buyer Common Stock to be
distributed (if at all) in accordance with the provisions of Section 3.3. The
Company has advised the Buyer that (i) Five Hundred Thirteen Thousand
5
<PAGE>
(513,000) shares of the Three Million Four Hundred Twenty Thousand (3,420,000)
shares of Buyer Common Stock are to be distributed to the employees of the
Company (the "Employee Stock") as compensation pursuant to the Company's
Employee Retention Plan upon compliance with all applicable securities laws,
including the filing of an S-8 registration statement and (ii) fifteen percent
(15%) of the shares of Buyer Common Stock to be distributed (if at all) pursuant
to the provisions of 3.3 shall be Employee Stock as compensation pursuant to the
Employee Retention Plan.
3.2 Payment of Purchase Price.
-------------------------
The Purchase Price shall be paid by Buyer as follows:
3.2.(a) Assumption of Liabilities. At the Closing,
-------------------------
Acquisition shall deliver to Company such documents and instruments as
are reasonably requested by the Company to evidence the assumption of
the Assumed Liabilities.
3.2.(b) Delivery of Certificates; Delivery of Employee Stock.
----------------------------------------------------
The procedures for delivering the Buyer Common Stock and delivering
the Employee Stock are as follows: As of the Closing Date, the Buyer
shall deposit with a bank or trust company designated by the Company,
and reasonably acceptable to the Buyer (the "Transfer Agent"), for the
benefit of the Company, certificates representing the shares of Buyer
Common Stock issuable pursuant to Section 3.1, including separate
certificates of the Buyer Common Stock designated for the employees of
Company pursuant to Section 3.1. The Company has been informed that,
unless there is an exemption from applicable securities laws, prior to
the Transfer Agent issuing any shares of Buyer Common Stock to any
Company shareholders (excluding employees), such shareholders may be
required to execute and deliver to the Buyer a shareholder
sophistication certification to the extent such certification is
reasonably necessary to comply with applicable securities laws. A form
of such certification is attached hereto as Exhibit B.
3.3 Other Payments; Accounts Payable.
--------------------------------
3.3.(a) On the Closing Date, the Company shall deliver to
Buyer an accounting of the Accounts Payable that have been finally
settled as of that date (the "Proposed AP Settlement Statement"). For
purposes hereof, an Account Payable shall be deemed to have been
finally settled when: (i) such account has been paid and the payee has
executed a written acknowledgement, in form and content reasonably
satisfactory to the Buyer, that such payment shall constitute payment
in full on such account; or (ii) the payee has delivered a written,
fully executed, agreement, in form and content reasonably satisfactory
to the Buyer, specifying the amount that will be accepted by such
payee as payment in full on such account, and the date or dates on
which such payment(s) will be due.
3.3.(b) The Buyer shall have 3 days after receipt of the
Proposed AP Settlement Statement to present to the Company any
objections Buyer may have to any of the matters set forth therein,
which objections shall be set forth in writing in reasonable detail.
If no objections are raised within such period, the Proposed AP
Settlement Statement shall be deemed to be accepted and approved by
Buyer (and shall be the "Final AP Settlement Statement" hereunder) and
on the following business day, the Buyer shall instruct the Transfer
Agent to issue that number of shares of Buyer Common Stock (if any) to
the Company in accordance with the provisions of Section 3.3(d) below.
6
<PAGE>
3.3.(c) If Buyer shall raise any objections within the
foregoing 3 day period, Buyer and the Company shall use commercially
reasonable efforts to resolve the matter or matters in dispute and, if
resolved, the Proposed AP Settlement Statement shall be final and
binding on the parties hereto (and shall be the "Final AP Settlement
Statement" hereunder). On the business day following the determination
of the Final AP Settlement Statement, the Buyer shall instruct the
Transfer Agent to issue that number of shares of Buyer Common Stock
(if any) to the Company in accordance with the provisions of Section
3.3(d) below.
3.3.(d) To the extent (if any) that the Final AP Statement
indicates that the Company has reduced the dollar amounts owed under
any of the Accounts Payable from their respective amounts stated on
the Accounts Payable Schedule of the Company Disclosure Schedule, the
Buyer shall issue the Company that number of shares of Buyer Common
Stock, not to exceed Three Hundred Sixty Thousand (360,000) shares
(together with all shares of Buyer Common Stock issued as a result of
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