1
Exhibit 2.3
ASSET PURCHASE AGREEMENT
dated as of February 15, 2000
by and among
CITRIX SYSTEMS, INC.,
INNOVEX GROUP, INC.
and
THE SHAREHOLDERS LISTED ON THE SIGNATURE PAGES HERETO
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TABLE OF CONTENTS
PAGE
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ARTICLE I - DEFINITIONS...........................................................................................1
1.01. Certain Definitions.....................................................................................1
ARTICLE II - PURCHASE AND SALE....................................................................................5
2.01. Purchase and Sale.......................................................................................5
2.02. Excluded Assets.........................................................................................6
2.03. Assumption of Liabilities...............................................................................7
2.04. Excluded Liabilities....................................................................................7
2.05. Instruments of Transfer and Conveyance..................................................................8
2.06. Closing.................................................................................................8
2.07. Deliveries at the Closing...............................................................................8
ARTICLE III - PURCHASE PRICE.....................................................................................10
3.01. Purchase Price; Payments at Closing....................................................................10
3.02. Earnout Payments.......................................................................................10
3.03. Payment to Equityholders...............................................................................11
3.04. Method of Payment......................................................................................12
3.05. Allocation of Purchase Price...........................................................................12
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDERS.......................................12
4.01. Corporate Existence and Power..........................................................................12
4.02. Authorization..........................................................................................12
4.03. Governmental Authorization.............................................................................13
4.04. Non-Contravention......................................................................................13
4.05. Required Consents......................................................................................13
4.06. Financial Statements...................................................................................13
4.07. Absence of Certain Changes.............................................................................14
4.08. Properties.............................................................................................15
4.09. Sufficiency of Purchased Assets........................................................................16
4.10. Title to Purchased Assets..............................................................................16
4.11. Subsidiaries...........................................................................................16
4.12. Litigation.............................................................................................16
4.13. Contracts..............................................................................................17
4.14. Permits................................................................................................18
4.15. Insurance..............................................................................................18
4.16. Compliance with Laws...................................................................................18
4.17. Intellectual Property..................................................................................18
4.18. Software...............................................................................................19
4.19. Employees..............................................................................................20
4.20. Warranty or Other Claims...............................................................................20
4.21. Brokers'Fees...........................................................................................20
4.22. Environmental Compliance...............................................................................20
4.23. Compliance with Certificate of incorporation and By-Laws...............................................21
(i)
3
4.24. Absence of Conflicts...................................................................................21
4.25. Buyer..................................................................................................21
4.25. Representations and Warranties.........................................................................21
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................21
5.01. Organization and Existence.............................................................................21
5.02. Corporate Authorization................................................................................22
5.03. Governmental Authorization.............................................................................22
5.04. Non-Contravention......................................................................................22
5.05. Finders'Fees...........................................................................................22
5.06. Litigation.............................................................................................22
5.07. Representations and Warranties.........................................................................22
ARTICLE VI - COVENANTS FOLLOWING THE CLOSING.....................................................................22
6.01. Covenants of the Seller and the Shareholders...........................................................22
6.03. Covenants of All Parties...............................................................................24
6.03. Covenants of Buyers....................................................................................24
ARTICLE VII - EMPLOYEE BENEFITS..................................................................................24
7.01. Employee Benefits Definitions..........................................................................24
7.02. ERISA Representations..................................................................................25
7.03. Employees and Offers of Employment.....................................................................26
7.04. Seller's Employee Benefit Plans........................................................................26
7.05. No Third Party Beneficiaries...........................................................................27
ARTICLE VIII -TAX MATTERS........................................................................................28
8.01. Tax Definitions........................................................................................28
8.02. Tax Matters............................................................................................28
8.03. Tax Cooperation; Allocation of Taxes...................................................................29
ARTICLE IX - SURVIVAL; INDEMNIFICATION...........................................................................30
9.01. Survival...............................................................................................30
9.02. Indemnification by the Seller and the Shareholders.....................................................30
9.03. Procedures.............................................................................................31
9.04. Consent to Jurisdiction................................................................................32
9.05. Buyer's Right of Offset................................................................................32
9.06. Threshold..............................................................................................33
9.07 Interest...............................................................................................33
ARTICLE X - MISCELLANEOUS........................................................................................33
10.01. Notices...............................................................................................33
10.02. Amendments; No Waivers................................................................................34
10.03. Expenses..............................................................................................34
10.04. Successors and Assigns................................................................................35
10.05. Governing Law.........................................................................................35
10.06. Counterparts; Effectiveness...........................................................................35
10.07. Entire Agreement......................................................................................35
10.08. Captions..............................................................................................35
10.09. Several Obligations...................................................................................35
(ii)
4
10.10. Including.............................................................................................35
10.11. Severability..........................................................................................35
10.12. Arbitration...........................................................................................35
10.13. Remedies..............................................................................................36
10.14 Press Releases and Announcements......................................................................36
10.15 Power of Attorney.....................................................................................36
(iii)
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of February 15, 2000 by and among
Citrix Systems, Inc., a Delaware corporation ("BUYER"); Innovex Group, Inc., a
Florida corporation ("SELLER"); and the shareholders of Seller listed on the
signature pages hereto (individually and collectively, the "SHAREHOLDERS").
W I T N E S S E T H :
WHEREAS, Seller conducts a business that consists of internet
consulting services, specializing in the design and development of e-commerce,
web-based and client/server solutions (the "BUSINESS"); and
WHEREAS, Buyer desires to purchase all of the assets of Seller and
assume certain specified liabilities of Seller, and Seller desires to sell all
of its assets to Buyer, upon the terms and subject to the conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01. CERTAIN DEFINITIONS. (a) The following terms, as used herein,
have the following meanings:
"AFFILIATE" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"ANCILLARY AGREEMENTS" means the ▇▇▇▇ of Sale, the Assignment
and Assumption Agreement, the Assignment of Trademarks and Service Marks and the
Option Exchange Agreement.
"APPLICABLE INTEREST RATE" means 6.2% per year compounded
annually.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the assignment and
assumption agreement in the form of EXHIBIT A hereto, whereby Seller assigns the
Purchased Assets to Buyer, and Buyer assumes the Assumed Liabilities.
"ASSIGNMENT OF TRADEMARKS AND SERVICE MARKS" means the
assignment document in the form of EXHIBIT B hereto, whereby Seller assigns
certain trademarks and service marks to Buyer.
"BALANCE SHEET DATE" means December 31, 1999.
"▇▇▇▇ OF SALE" means the document in the form of EXHIBIT C
hereto, whereby the Seller sells, conveys, transfers, assigns and delivers to
Buyer all of its rights, title and interest in and to the Purchased Assets, free
and clear of all Liens (subject to SCHEDULE 2.01).
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Asset Purchase Agreement -- 2
"CLOSING DATE" means the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPUTER PROGRAMS" means (i) any and all computer programs
(including, without limitation, sets of statements or instructions to be used
directly or indirectly in a computer in order to bring about a certain result),
and (ii) all associated data and compilations of data, regardless of their form
or embodiment. The term "COMPUTER PROGRAMS" shall include, without limitation,
all versions of any and all such computer programs, all screen displays and
designs thereof, all component modules of source code, object code and natural
language code therefor, all descriptions, flow-charts and other work product
used to design, plan, organize and develop any of the foregoing, and all
documentation, including without limitation user manuals and training materials,
relating to any of the foregoing.
"DISABILITY" means "permanent and total disability" as defined
in Section 22(e)(3) of the Code.
"HIRED EMPLOYEE" means the employees or independent
contractors listed on SCHEDULE 1.01(A)(I) who become an employee of Buyer on and
after the Closing Date.
"INTELLECTUAL PROPERTY RIGHTS" means all (A) patents, patent
applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, re-examination, utility, model,
certificate of invention and design patents, patent applications, registrations
and applications for registrations of any of the foregoing, (B) trademarks,
service marks, trade dress, logos, tradenames, service names and corporate names
and registrations and applications for registration of any of the foregoing, (C)
copyrights and registrations and applications for registration thereof, (D) mask
works and registrations and applications for registration of any of the
foregoing, (E) Computer Programs, (F) trade secrets and confidential business
information, whether patentable or nonpatentable and whether or not reduced to
practice, know-how, manufacturing and product processes and techniques, research
and development information, copyrightable works, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, including addresses, principal
contacts and related information, (G) all other proprietary rights of every
nature and description whether relating to any of the foregoing or otherwise
(including without limitation associated goodwill and remedies against
infringements thereof and rights of protection of an interest therein under the
laws of all jurisdictions) and (H) copies and tangible embodiments of any of the
foregoing.
"LIABILITY" or "LIABILITIES" means any liabilities or
obligations of any nature (whether fixed, contingent, potential or otherwise,
and whether due or to become due, known or unknown, accrued or unaccrued), and
whether presently existing, or arising or asserted after the Closing.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, reservation, restriction, restrictive covenant, limitation,
condition of record, right of first refusal, option to purchase, lease, security
interest, defect in title, deed in trust, easement, restriction or encumbrance
of any kind in respect of such asset.
"MATERIAL ADVERSE CHANGE" means a material adverse change in
the business, assets, condition (financial or otherwise), results of operations
or prospects of Seller.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
the business, assets,
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Asset Purchase Agreement -- 3
condition (financial or otherwise), results of operations or prospects of
Seller.
"OPTION EXCHANGE AGREEMENT" means the agreement in the form of
EXHIBIT D hereto, whereby the holders of options to acquire Seller Common Stock
are exchanged as provided therein.
"PERSON" means an individual, corporation, partnership,
association, limited liability company, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"SHAREHOLDERS AGENT" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇.
"SOFTWARE" means all elements of the Computer Programs on
SCHEDULE 2.01(I).
"SUBSIDIARY" means any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are owned
directly or indirectly by Seller.
"TERMINATION WITHOUT CAUSE" shall mean termination of a
Person's employment other than as a result of conduct involving one or more of
the following: (i) the substantial and continuing failure of such Person, after
written notice thereof, to render services to Buyer in accordance with the terms
or requirements of his or her employment; (ii) disloyalty, gross negligence,
willful misconduct, dishonesty, fraud or breach of fiduciary duty to the Buyer;
(iii) deliberate disregard of the rules or policies of the Buyer, or breach of
an employment or other agreement with the Buyer, which results in direct or
indirect loss, damage or injury to the Buyer; (iv) the unauthorized disclosure
of any trade secret or confidential information of the Buyer; (v) the commission
of an act which constitutes unfair competition with the Buyer or which induces
any customer or supplier to breach a contract with the Buyer; or (vi) the Person
failing to execute and deliver to Buyer by 5:00 p.m. Eastern Standard Time on
February 22, 2000, the Buyer's standard Non-Disclosure Agreement and the
standard Proprietary Information, Inventions, Non-Competition and
Non-Solicitation Agreement attached as EXHIBIT E and EXHIBIT F, respectively.
(b) Each of the following additional terms is defined in the
Section set forth opposite such term:
Term Section
---- -------
Accounts Receivable 2.01(vi)
Agreed Amount 9.03(c)
Allocation Statement 3.05
Apportioned Obligations 8.03(b)
Assigned Contracts 2.01(ii)
Assumed Liabilities 2.03
Balance Sheet 4.06
Benefit Arrangement 7.01
▇▇▇▇ of Sale 2.07(a)(i)
Business Preamble
Business Records 2.01(v)
Buyer Preamble
Claims 2.01(viii)
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Asset Purchase Agreement -- 4
Class A Holders 3.02(a)
Class B Earnout Payment Deduction 3.02(a)
Class B Holders 3.02(a)
Class C Earnout Payment Deduction 3.02(a)
Class C Holders 3.02(a)
Class C Replacements 3.02(a)
Closing 2.01
COBRA 7.04(d)
Contested Amount 9.03(d)
Contracts 4.13
Deductible 9.06
Disclosure Schedule Article IV preamble
Earnout Measurement Time 3.02(a)
Employee Plan 7.01
Environmental Laws 4.22(a)
Environmental Liabilities 4.22(b)
Equipment 2.01(iii)
EEOC 4.19
ERISA 7.01
ERISA Affiliate 7.01
Excluded Assets 2.02
Excluded Contracts 2.02(ii)
Excluded Liabilities 2.04
Financial Statements 4.06
First Earnout Payment 3.02(a)
First Earnout Payment Date 3.02(a)
Hazardous Materials 4.22(a)
Hired Parties 7.01
Income Statement 4.06
Indemnified Party 9.03(a)
Indemnifying Party 9.03(a)
Initial Payment 3.01(a)
IRS 8.03(e)
Losses 9.02
Maximum Earnout Payment 3.02(a)
Multi-Employer Plan 7.01
Notice of Claim 9.03(a)
Permits 2.01(x)
Post-Closing Tax Period 8.01
Pre-Closing Tax Period 8.01
Purchase Price 3.01
Purchased Assets 2.01
Real Property 2.01(iv)
Required Consent 4.05
Response Notice 9.03(c)
Second Earnout Payment 3.02(a)
Second Earnout Payment Date 3.02(a)
Seller preamble
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Asset Purchase Agreement -- 5
Seller Intellectual Property 4.17(a)
Shareholders preamble
Software Contracts 4.13(a)(i)
Tax 8.01
Tax Return 8.01
Technical Documentation 2.01(i)
ARTICLE II
PURCHASE AND SALE
2.01. PURCHASE AND SALE. Upon the terms and subject to the conditions
of this Agreement, Buyer agrees to purchase from Seller and Seller agrees to
sell, convey, transfer, assign and deliver, or cause to be sold, conveyed,
transferred, assigned and delivered, to Buyer, on the date hereof (the
"CLOSING"), good and marketable title (and also clear record title with respect
to any owned real property) to all of the assets, contract rights, properties
and business, other than the Excluded Assets, of every kind and description,
wherever located, real, personal or mixed, tangible or intangible, owned, held
or otherwise used by Seller, as the same shall exist on the Closing Date, free
and clear of all Liens, subject to Schedule 2.01 (all of the foregoing,
collectively, the "PURCHASED ASSETS"). Without limiting the generality of the
foregoing, the Purchased Assets shall include, among other things, the
following:
(i) All tangible and intangible property constituting the
Software listed on SCHEDULE 2.01(i), including without limitation (A) the media,
devices and documentation that constitute all full and partial copies of the
Software, (B) all technical and descriptive materials included in, or relating
to the acquisition, design, development, use, or maintenance of, the Software,
including object code, source code and any associated procedural code (the
"TECHNICAL DOCUMENTATION"), (C) all other documentation and items relating to
the Software and (D) all copyright interests owned or claimed by Seller
pertaining to the Software, together with all copyright interests accruing by
reason of international copyright conventions.
(ii) All of Seller's rights, free of third party offsets,
under all of its contracts, agreements, licenses, commitments, arrangements and
understandings other than under the Excluded Contracts, including, without
limitation, those contracts, agreements, licenses, commitments, arrangements and
understandings listed on SCHEDULE 2.01(ii) (the "ASSIGNED CONTRACTS").
(iii) All equipment, machines, furniture, vehicles, tools,
supplies and devices (including data processing hardware and related
telecommunications equipment, media, and tools) used by Seller (the
"EQUIPMENT"), including Seller's rights under all related warranties. As of the
Closing Date, the Equipment consists of all items listed on SCHEDULE 2.01(iii).
(iv) All real property of Seller, including all leasehold
interests, the buildings, structures, and other improvements located thereon,
the fixtures contained therein, and the appurtenances thereto, and the
easements, privileges, hereditaments and other rights relating thereto (the
"REAL PROPERTY"). As of the Closing Date, the Real Property consists of the
property listed and described on SCHEDULE 2.01(iv).
(v) All business, marketing and technical records, including
accounting and operating records, asset ledgers, inventory records, budgets,
personnel records, payroll records, customer lists, employment and consulting
agreements, supplier lists, information and data respecting leased or owned
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Asset Purchase Agreement -- 6
equipment, files, correspondence and mailing lists, marketing and advertising
materials and brochures, and other business records (excluding those set forth
in Section 2.02(i) below) used in the Business as of the Closing Date (the
"BUSINESS RECORDS"), including with respect to supplier and customer lists,
addresses and names and telephone numbers of contact persons.
(vi) All accounts receivable, including without limitation all
license fees and maintenance and support fees and charges owing or to become
owing to Seller (the "ACCOUNTS RECEIVABLE").
(vii) All Intellectual Property Rights owned (and all of
Seller's rights to the Intellectual Property Rights used but not owned) by
Seller, including, without limitation, the Intellectual Property Rights owned by
Seller pertaining to the Software and all of Seller's right, title and interest
in the name Innovex Group, Inc., "InnTerprise" and in any related logos.
(viii) All claims Seller may have against any person relating
to or arising from the Purchased Assets or the Business or otherwise, including
rights to recoveries for any damages or defective goods, to refunds, claims,
breaches of warranty and chooses in action ("CLAIMS").
(ix) All deposits, prepaid income, other receivable items and
prepaid expense items (other than with respect to insurance policies) of Seller,
including those items listed on SCHEDULE 2.01(ix), plus all cash, cash
equivalents, deposits, notes receivable, other receivable items, and investments
of Seller, and all other products and proceeds of any Purchased Assets.
(x) To the extent assignable, all licenses, permits, approvals
or other governmental authorizations, approvals or filings affecting, or
relating in any way to, the Seller or its Business (the "PERMITS"). As of the
Closing Date, the Permits consist of the items listed on SCHEDULE 2.01(x).
(xi) All inventory of Seller, including raw materials, work in
process and finished goods.
(xii) All rights to receive mail and other communications
addressed to Seller with respect to mail and written communications from
customers, suppliers, distributors, agents and others in connection with the
Purchased Assets or the Business.
(xiii) All goodwill associated with the Business or the
Purchased Assets or otherwise with Seller, together with the right to represent
to third parties that Buyer is the successor to the Business.
2.02. EXCLUDED ASSETS. The only assets that Seller shall not sell,
convey, transfer, assign or deliver, and Buyer shall not purchase or accept
assignment from Seller of, are the following (the "EXCLUDED ASSETS"):
(i) Seller's corporate and company charters, Tax records,
qualifications to conduct business as a corporation, taxpayer and other
identification numbers, seals, minute books, stock transfer books, blank stock
certificates and other such documents relating to the organization, maintenance
and existence of Seller as a corporation.
(ii) All of Seller's rights under this Agreement, the
Ancillary Agreements and the contracts and agreements listed on SCHEDULE
2.02(ii) (the "EXCLUDED CONTRACTS").
(iii) The Purchase Price.
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Asset Purchase Agreement -- 7
(iv) The Permits listed on SCHEDULE 2.02(iv) that are not
assignable.
(v) All of Seller's insurance policies.
2.03. ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees, effective at the time of Closing, to
assume all of the following specific liabilities of Seller and no other
Liabilities (the "ASSUMED LIABILITIES"):
(i) All obligations of Seller under the Assigned Contracts
after the Closing Date arising by reason of events or circumstances occurring
after the Closing Date in accordance with the express terms of the Assigned
Contracts, except to the extent such obligations are attributable to or arise
from any breach or default by Seller or another Person under any Assigned
Contract on or before the Closing Date. In the case of the Leases listed on
SCHEDULE 2.01(iv), the only Leases to be assumed are those in which Seller
receives the appropriate consent from the respective landlords to the assignment
of such Leases.
(ii) The specific Liabilities of Seller listed on SCHEDULE
2.03(ii), but only to the extent of the specific dollar amounts listed on
SCHEDULE 2.03(ii), and other normal and usual costs and expenses incurred in the
ordinary course of Seller's business which do not exceed $10,000 in the
aggregate.
2.04. EXCLUDED LIABILITIES. Notwithstanding any provision in this
Agreement or any other writing to the contrary, Buyer is not assuming, and
Seller shall retain and pay and perform when due, all Liabilities that are not
Assumed Liabilities, including, without limitation, and by way of example only,
the following Liabilities of Seller, even if such Liabilities are disclosed by
Seller in any of the schedules to this Agreement (other than SCHEDULE 2.03(ii))
(the "EXCLUDED LIABILITIES"):
(i) Any Liability of Seller that is not specifically
enumerated as an Assumed Liability in Section 2.03.
(ii) Any Liability of Seller to the extent that the existence
of such Liability either gives rise to, or results from or reflects, facts and
circumstances that constitute a breach of any representation and warranty set
forth in Article IV of this Agreement.
(iii) Any Liability of Seller under this Agreement or any
Ancillary Agreement.
(iv) Any obligation or liability for any Taxes of Seller and
the Shareholders attributable to or arising from or in connection with the
income, business, assets, properties or operations of Seller for any Pre-Closing
Tax Period, or payable in connection with the transactions contemplated by this
Agreement (including the payment of the Earnout Payments), together with any
interest or any penalty, addition to or additional amount imposed by any
governmental authority as a result of the failure by Seller or Shareholders to
pay when due any such Tax.
(v) Any Liability resulting from violations of any applicable
laws or regulations by Seller on or prior to the Closing Date, any tort of
Seller committed on or prior to the Closing Date, or any infringement by Seller
of third-party rights or interests, including third-party Intellectual Property
Rights.
(vi) Any Liability arising by reason of any breach or alleged
breach by Seller or pre-Closing by any other Person (other than Buyer) of any
agreement, contract, lease, license, commitment, instrument, judgment or order
or decree.
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Asset Purchase Agreement -- 8
(vii) Except for those Assumed Liabilities in the amounts
specified on SCHEDULE 2.03(ii), any employee Liabilities relating to present and
past employees of Seller with respect to plans, programs, policies, commitments,
and other benefit entitlements established or existing on or prior to Closing
(whether or not such liabilities are accrued or payable at Closing, and whether
or not such liabilities are contingent in nature), including any Liability (A)
for severance or dismissal pay or otherwise in connection with any termination
of employment by Seller, (B) for accrued vacation or sick time or (C) relating
to any Employee Plan or Benefit Arrangement.
(viii) Any Liability for product liability or warranty claims
or damage claims arising out of defects (or alleged defects) in or failures (or
alleged failures) of any product or services, Computer Program, or material of
Seller or the Business provided, distributed, licensed, or delivered on or prior
to the Closing Date.
(ix) Any Liability associated with any of the Excluded Assets.
(x) Any pre-Closing Environmental Liability.
(xi) All Liabilities under or in connection with the Excluded
Contracts, except as specified on SCHEDULE 2.03(ii).
(xii) Any Liability of Seller and the Shareholders for legal
and accounting or other expenses related to the transactions contemplated by
this Agreement (including tax advice and consulting expenses).
(xiii) All Liabilities (including premiums) relating to all of
Seller's insurance policies.
2.05. INSTRUMENTS OF TRANSFER AND CONVEYANCE. The sale, conveyance,
transfer, assignment and delivery of the Purchased Assets shall be effected by
delivery on the Closing Date by Seller to Buyer of such deeds, transfers in
registrable form, bills of sale in registrable form, endorsements, assurances,
conveyances, releases, discharges, assignments, certificates, drafts, checks or
other instruments of transfer and conveyance, duly executed by Seller, as Buyer
or its title insurance company shall reasonably deem necessary to vest in Buyer
good and marketable title (and clear record title with respect to any owned Real
Property) to such Purchased Assets free and clear of all Liens (subject to
SCHEDULE 2.01), and such other documents as Buyer may reasonably request to
demonstrate satisfaction of the conditions of and compliance with this Agreement
by Seller, including, without limitation, the Assignment and Assumption
Agreement. The assumption by Buyer of the Assumed Liabilities shall be effected
by delivery on the Closing Date by Buyer to Seller of the Assignment and
Assumption Agreement, and such other documents as Seller may reasonably request
to demonstrate satisfaction of the conditions of and compliance with this
Agreement by Buyer.
2.06. CLOSING. The closing of the purchase and sale of the Purchased
Assets, the assignment of the Assigned Contracts and the assumption of the
Assumed Liabilities hereunder shall take place at the offices of ▇▇▇▇▇, ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, LLP in Boston, Massachusetts on the date hereof.
2.07. DELIVERIES AT THE CLOSING.
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Asset Purchase Agreement -- 9
(a) DELIVERIES OF SELLER. In addition to the taking of such
other actions as may be provided for in this Agreement, at the Closing:
(i) Seller shall deliver to Buyer the ▇▇▇▇ of Sale,
the Assignment and Assumption Agreement, the Assignment
of Trademarks and Service Marks and such other bills of sale, endorsements,
consents, assignments and other good and sufficient instruments of conveyance
and assignment as the parties and their respective counsel shall deem reasonably
necessary or appropriate to vest in Buyer all right, title and interest in, to
and under the Purchased Assets, as well as physical possession of all of the
Purchased Assets.
(ii) Seller shall deliver to Buyer Seller's entire
inventory of copies of the Software and all other
Computer Programs used by Seller in both object code and source code forms
including all Technical Documentation and other documentation related thereto.
(iii) Seller shall cause the opinion of Holland and
Knight LLP, dated the Closing Date, in the form
attached hereto as EXHIBIT G, to be delivered to Buyer.
(iv) Seller shall cause to be delivered to Buyer
evidence of the payment of all Liabilities listed on
SCHEDULE 2.07(iv) that are being paid by Seller at the Closing, including
without limitation (A) by returning all applicable notes, financing statements
or other evidences of indebtedness marked "paid in full," and (B) by presenting
evidence to the Buyer's reasonable satisfaction that the employee vacation and
overtime expense accrued to date shall have been paid.
(v) Seller shall deliver to Buyer a list of all its
present customers and suppliers and all its past
customers and suppliers since January 1, 1997, as well as, in each case, their
addresses, telephone numbers, and principal contact names.
(vi) Each Shareholder shall have signed Buyer's
standard Non-Disclosure Agreement and standard Proprietary
Information, Inventions, Non-Competition and Non-Solicitation Agreement.
(vii) Seller shall provide evidence of the filing of
an amendment to Seller's certificate of incorporation changing Seller's name
from Innovex Group, Inc. to Kobayashi, Soze and ▇▇▇▇, Inc.
(viii) Seller shall provide a Certificate of the
Secretary of Seller certifying that attached thereto is a
true, correct and complete copy of (A) the Articles of Incorporation of the
Seller, (B) the By-laws of Seller, (C) all resolutions adopted by the
shareholders of Seller in connection with this Agreement and the transactions
contemplated hereby, and (D) all resolutions adopted by the Board of Directors
of Seller in connection with this Agreement and the transactions contemplated
hereby.
(ix) A Certificate of Good Standing of the Seller
issued by the Secretary of State of the State of Florida.
(x) Seller shall execute the Option Exchange
Agreement with respect to each optionee and each holder of
restricted stock.
(b) DELIVERIES OF BUYER. In addition to the taking of such
other actions as may be provided for in this Agreement, at the Closing:
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Asset Purchase Agreement -- 10
(i) Buyer shall make all payments due at Closing.
(ii) Buyer shall deliver to Seller the Assignment and
Assumption Agreement.
(iii) Seller shall cause the opinion of ▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, dated the Closing Date, in the
form attached hereto as EXHIBIT H, to be delivered to Seller.
ARTICLE III
PURCHASE PRICE
3.01. PURCHASE PRICE; PAYMENTS AT CLOSING. The aggregate consideration
to be paid by Buyer to Seller for the Purchased Assets (the "PURCHASE PRICE")
shall be (i) $28,680,000 in cash (the "INITIAL PAYMENT") to be paid at the
Closing, PLUS (ii) the Earnout Payments (if any) determined pursuant to Section
3.02, PLUS (iii) the assumption of the Assumed Liabilities.
3.02. EARNOUT PAYMENTS.
(a) DEFINITIONS:
"CLASS A HOLDERS" shall mean the Shareholders.
"CLASS B EARNOUT PAYMENT DEDUCTION" shall mean with respect to each
Earnout Payment, (i) if 80% or more of the Class B Holders are employed by Buyer
or any of its successors or Affiliates as of the applicable Earnout Measurement
Time, zero; (ii) if none of the Class B Holders are employed by Buyer or any of
its successors or Affiliates as of the applicable Earnout Measurement Time, the
product of (a) 65% TIMES (b) the Maximum Earnout Payment; or (iii) if less than
80% but more than zero of the Class B Holders are employed by Buyer or any of
its successors or Affiliates as of the applicable Earnout Measurement Time, the
product of (a) the Maximum Earnout Payment TIMES (b) 65%; TIMES (c) one minus a
fraction, the numerator of which is the percentage of Class B Holders still
employed by Buyer or any of its successors or Affiliates as of the applicable
Earnout Measurement Time and the denominator of which is 80%.
"CLASS B HOLDERS" shall mean the persons identified on SCHEDULE
3.02(a)(i).
"CLASS C EARNOUT PAYMENT DEDUCTION" shall mean with respect to each
Earnout Payment, (i) if 70% or more of the Class C Holders are employed by Buyer
or any of its successors or Affiliates as of the applicable Earnout Measurement
Time, zero; (ii) if none of the Class C Holders are employed by Buyer or any of
its successors or Affiliates as of the applicable Earnout Measurement Time, the
product of (a) 35% TIMES (b) the Maximum Earnout Payment; or (iii) if less than
70% but more than zero of the Class C Holders are employed by Buyer or any of
its successors or Affiliates as of the applicable Earnout Measurement Time, the
product of (a) the Maximum Earnout Payment TIMES (b) 35%; TIMES (c) one minus a
fraction, the numerator of which is the percentage of Class C Holders still
employed by Buyer or any of its successors or Affiliates as of the applicable
Earnout Measurement Time and the denominator of which is 70%.
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Asset Purchase Agreement -- 11
"CLASS C HOLDERS" shall mean the persons identified on SCHEDULE
3.02(a)(ii) and, to the extent that Shareholders Agent elects to replace up to
four (4) of such Persons as a result of the termination of their employment with
Buyer or any of its successors or Affiliates (for any reason), the Class C
Replacements, substituted on a one-for-one basis with respect to each such
former employee.
"CLASS C REPLACEMENTS" shall mean the Persons identified on SCHEDULE
3.02(a)(iii), for so long as such Persons are employed with Buyer or any of its
successors or Affiliates.
"EARNOUT MEASUREMENT TIME" shall mean with respect to each Earnout
Payment, 5:00 p.m. Eastern time on the day prior to the First Earnout Payment
Date, or Second Earnout Payment Date, as the case may be.
"FIRST EARNOUT PAYMENT" shall mean (i) the Maximum Earnout Payment
MINUS (ii) the sum of (a) the applicable Class B Earnout Payment Deduction PLUS
(b) the applicable Class C Earnout Payment Deduction.
"FIRST EARNOUT PAYMENT DATE" shall mean August 15, 2001.
"MAXIMUM EARNOUT PAYMENT" shall mean, with respect to each of the
First Earnout Payment and the Second Earnout Payment, $9,560,000.
"SECOND EARNOUT PAYMENT" shall mean (i) the Maximum Earnout Payment
MINUS (ii) the sum of (a) the applicable Class B Earnout Payment Deduction PLUS
(b) the applicable Class C Earnout Payment Deduction.
"SECOND EARNOUT PAYMENT DATE" shall mean February 15, 2002.
(b) Subject to the terms and conditions set forth herein, Buyer agrees
to make the following payments (the "EARNOUT PAYMENTS"):
(i) Not later than August 15, 2001, Buyer shall pay,
subject to provisions of Section 9.05, to Seller, the
First Earnout Payment. Any such payments shall include interest accrued on such
amount from the Closing Date at the Applicable Interest Rate.
(ii) Not later than February 15, 2002, Buyer shall
pay, subject to provisions of Section 9.05, to Seller, the Second Earnout
Payment. Any such payments shall include interest accrued on such amount from
the Closing Date at the Applicable Interest Rate.
(c) For purposes of determining the Class B Earnout Payment
Deduction or the Class C Earnout Payment Deduction at any given time, the Class
B Holders or Class C Holders no longer employed by Buyer or any of its
successors or Affiliates by reason of such Person's death, Disability or
Termination Without Cause shall be counted as if they are still employed by
Buyer. No Hired Employee shall be transferred outside the consulting services
group of Buyer without the consent of Shareholders Agent, such consent not to be
unreasonably withheld.
3.03. PAYMENT TO EQUITYHOLDERS. Seller and Shareholders Agent (on
behalf of the Class A Holders, Class B Holders and the Class C Holders)
acknowledge and agree that any payments due
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Asset Purchase Agreement -- 12
pursuant to Section 3.01 and Section 3.02 by Seller to the Persons listed in
SCHEDULE 3.03 shall be made in accordance with the relative percentages set
forth in such schedule, which shall not be amended without Buyer's express
written consent.
3.04. METHOD OF PAYMENT. All payments from Buyer to Seller pursuant to
this Article III shall be made by wire transfer of immediately available funds
to an account or accounts designated in writing by Shareholders Agent.
3.05. ALLOCATION OF PURCHASE PRICE. As soon as practicable after the
Closing, but in no event later than 30 days post-Closing, Buyer shall deliver to
Seller a statement (the "Allocation Statement"), which shall be used for the
allocation of the Purchase Price (together with the Assumed Liabilities) among
the Purchased Assets and the covenant not to compete described in Section
6.01(d) hereof. The Seller and Buyer agree to report an allocation of such
Purchase Price among the Purchased Assets in a manner entirely consistent with
the Allocation Statement and agree to act in accordance with such Allocation
Statement in the preparation of financial statements and filing of all tax
returns (including, without limitation, filing Form 8594 with its Federal income
tax return for the taxable year that includes the date of the Closing) and in
the course of any tax audit, tax review or tax litigation relating thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
AND THE SHAREHOLDERS
Each of Seller and the Shareholders hereby, severally and not jointly,
represent and warrant to Buyer that the statements contained in this Article IV
are true and correct, except as expressly set forth on the Disclosure Schedule
attached hereto (the "DISCLOSURE SCHEDULE"). The Disclosure Schedule shall be
arranged in numbered sections corresponding to the sections contained in this
Article IV. Any item disclosed on the Disclosure Schedule which makes explicit
reference to a specific representation or warranty as to which exception is
taken shall be only effective as to such representation or warranty and to no
other representations and warranties.
4.01. CORPORATE EXISTENCE AND POWER. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida, and has all corporate power and authority required to carry on its
business as now conducted. Seller is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is required, except where the failure to qualify would not have a
Material Adverse Effect. Set forth on SECTION 4.01 OF THE DISCLOSURE SCHEDULE is
a complete list of all of the addresses at which Seller maintains offices,
property or assets. Seller has heretofore delivered to Buyer true and complete
copies of the corporate charter and bylaws of Seller as currently in effect. All
of the outstanding shares of capital stock of Seller are owned, beneficially and
of record, by the Persons and in the amounts set forth on SECTION 4.01 OF THE
DISCLOSURE SCHEDULE. All currently outstanding options, warrants and any other
securities convertible or exercisable for any equity securities of Seller are
held by the Persons, in the amounts and have the vesting schedule set forth in
SECTION 4.01 OF THE DISCLOSURE SCHEDULE.
4.02. AUTHORIZATION. The Seller has the requisite corporate power and
authority to enter into this Agreement and the Ancillary Agreements to which it
is a party and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by Seller of this Agreement
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Asset Purchase Agreement -- 13
and each of the Ancillary Agreements to which it is a party and the consummation
by Seller of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action (including without limitation the
approval of Seller's directors and shareholders) on the part of Seller. Each of
this Agreement and the Ancillary Agreements to which the Seller is a party has
been duly executed and delivered by the Seller and constitutes the valid and
binding obligation of the Seller, enforceable against Seller in accordance with
its terms. This Agreement has been duly executed and delivered by each of the
Shareholders and constitutes the valid and binding obligation of each such
Shareholder, enforceable against each such Shareholder in accordance with its
terms.
4.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Seller and the Shareholders of this Agreement and each of the
Ancillary Agreements do not require any action by or in respect of, filing with,
approval, authorization of or consent from any governmental body, agency,
official or authority, except in connection with the Assignment of Trademarks
and Service Marks.
4.04. NON-CONTRAVENTION. The execution, delivery and performance by
Seller and the Shareholders of this Agreement and each of the Ancillary
Agreements do not and will not (i) contravene or conflict with the corporate
charter or bylaws, as amended to date, of Seller; (ii) contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to Seller, the
Purchased Assets or the Business, or any of the Shareholders; (iii) constitute a
default under or violation of any contract or agreement, or give rise to any
right of termination, cancellation or acceleration of, any right or obligation
of Seller, or to a loss of any benefit relating to the Purchased Assets or the
Business, under any provision of any agreement, contract or other instrument
binding upon Seller or by which it or any of the Purchased Assets or the
Business is or may be bound, or any Permit; (iv) result in the creation or
imposition of any Lien on any Purchased Asset; or (v) require the consent of,
the waiver of any right of first refusal from, the giving of notice to, the
filing of notice with, or the approval or authorization of, any Person (except
as expressly set forth in Section 4.05 below and except in connection with the
Assignment of Trademarks and Service Marks).
4.05. REQUIRED CONSENTS. Each of SCHEDULE 2.01(ii) and SCHEDULE 2.01(x)
denotes those Assigned Contracts and those Permits, respectively, requiring
consents of any Person as a result of the execution, delivery and performance of
this Agreement and the Ancillary Agreements or the consummation of the
transactions contemplated hereby and thereby, including the assignment of the
Purchased Assets and Assigned Contracts to Buyer hereunder (each such consent, a
"REQUIRED CONSENT"). Except as set forth in SECTION 4.05 OF THE DISCLOSURE
SCHEDULE, all of the Required Consents have been duly and validly obtained, are
in full force and effect, have not been withdrawn, and are enforceable in
accordance with their respective terms. Other than the Required Consents, no
consent, approval or authorization of any governmental agency, any stockholder
or director of Seller or any Person with whom Seller has entered into a contract
or agreement, or, to the knowledge of Seller, otherwise is necessary for Buyer
to conduct the Business substantially in the manner conducted by Seller prior to
the Closing.
4.06. FINANCIAL STATEMENTS. (a) Seller has heretofore furnished Buyer
with (i) the unaudited balance sheet of the Seller as of December 31, 1999 (the
"BALANCE SHEET") and (ii) the unaudited income statement of the Seller for the
year ended December 31, 1999 (the "INCOME STATEMENT") (the items under clauses
(i) and (ii) above being referred to herein collectively, as the "FINANCIAL
STATEMENTS"). The Financial Statements present fairly the financial position of
Seller as of their respective dates, and the results of operations for the
respective periods then ended and are consistent with the business records of
Seller.
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Asset Purchase Agreement -- 14
(b) Except for the Excluded Liabilities and the Liabilities
referred to in Section 2.03, Seller does not have any Liabilities.
4.07. ABSENCE OF CERTAIN CHANGES. Except for entering into this
Agreement and the Ancillary Agreements or as otherwise set forth on SECTION 4.07
OF THE DISCLOSURE SCHEDULE, since the Balance Sheet Date, Seller has conducted
the Business in the ordinary course consistent with past practice and has not:
(i) suffered any Material Adverse Change or any event,
occurrence, development or state of circumstances or facts which has had or
could reasonably be expected to result in or have a Material Adverse Effect on
Seller;
(ii) incurred, assumed or guaranteed any indebtedness for
money borrowed, or incurred any Liabilities other than in the ordinary course of
business consistent with past practice;
(iii) paid, discharged or satisfied any claim, Lien or
Liability, other than those (i) which were reflected or reserved against in the
Balance Sheet and which were paid, discharged or satisfied in the ordinary
course of business consistent with past practice, or (ii) which were incurred
and paid, discharged or satisfied (other than legal fees and related expenses in
connection with the transactions contemplated by this Agreement) since the
Balance Sheet Date in the ordinary course of business consistent with past
practice;
(iv) permitted or allowed any of the Purchased Assets to be
mortgaged, pledged or subjected to any Lien;
(v) written down the value of any inventory other than in the
ordinary course of business consistent with past practice, or written off as
uncollectible any notes, accounts or other receivables or any portion thereof;
(vi) made, leased or acquired any capital asset other than in
the ordinary course of business and in any event not in excess of $10,000 in the
aggregate;
(vii) declared, paid or made, or set aside for payment or
making of, any dividend or other distribution in respect of its capital stock or
other securities, or directly or indirectly sold, issued, redeemed, purchased or
otherwise acquired, or subdivided, combined or in any way reclassified, any of
its capital stock or other securities, other than issuances of options under the
Innovex Group, Inc. 1998 Stock Option Plan and issuances of restricted stock;
(viii) suffered any damage, destruction or other casualty loss
(whether or not covered by insurance) adversely affecting the Business or the
Purchased Assets;
(ix) entered into any transaction with any of its shareholders
or officers or directors, except in their capacities as employees in the
ordinary course of employment;
(x) made any change in any method of financial or tax
accounting or any financial or tax accounting practice or in its method of
maintaining books and records;
(xi) increased the rate of compensation of, or paid any bonus
to, any of its directors, officers or employees, other than periodic increases
in the ordinary course of business consistent with
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Asset Purchase Agreement -- 15
past practice, or entered into or amended any employment, management,
consulting, deferred compensation, severance or other similar contract or
agreement;
(xii) entered into or modified (except as may be required by
applicable law) any Employee Plan, or any trust agreement or insurance contract
related thereto, in respect of any of its present or former directors, officers
or employees;
(xiii) experienced any labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any of its employees, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to any
of its employees;
(xiv) entered into any transaction, contract or agreement
relating to the Purchased Assets or the Business (including the acquisition or
disposition of any of the Purchased Assets or any other asset of Seller) or to
the relinquishment by the Seller of any contract or other right, other than
transactions, contracts, agreements and relinquishments entered into in the
ordinary course of business consistent with past practices and those
contemplated by this Agreement; or
(xv) agreed to, or made any commitment to, do any of the
foregoing.
4.08. PROPERTIES. (a) SCHEDULE 2.01(iv) correctly describes all Real
Property pertaining to the Business, including all leasehold interests,
easements, rights of way, privileges, licenses and other rights benefiting or
appurtenant to such Real Property. Seller does not own a fee simple interest in
any Real Property and does not lease any Real Property to others as landlord or
sublandlord. Seller does not lease any Real Property as tenant other than those
leases set forth in SCHEDULE 2.01(iv).
(b) SECTION 4.08(b) OF THE DISCLOSURE SCHEDULE describes all
personal property used in the Business included in the Purchased Assets,
including but not limited to Equipment, other equipment, furniture, vehicles,
storage tanks, spare and replacement parts, fuel and other trade fixtures and
fixed assets, and any Liens thereon, specifying in the case of leases or
subleases, the name of the lessor or sublessor, the lease term and basic annual
rent.
(c)(i) The Seller has good and marketable indefeasible, fee
simple title to all Purchased Assets that are real, personal, mixed or tangible
property, free of all Liens, subject to SCHEDULE 2.01.
(ii) The Real Property includes all real property owned or
leased by Seller or otherwise used or held for use in connection with the
conduct of the Business as heretofore conducted.
(iii) All leases of real and personal property are in good
standing and are valid, binding and enforceable in accordance with their
respective terms, and, other than in connection with this Agreement and the
transactions contemplated hereby, there does not exist under any such lease any
default by Seller or, to the knowledge of Seller and the Shareholders, by any
other Person, or any event that, with notice or lapse of time or both, would
constitute a default by Seller or, to the knowledge of Seller and the
Shareholders, by any other Person.
(iv) The plants, buildings, structures and equipment included
in the Purchased Assets have no material defects, are in good operating
condition and repair and have been reasonably maintained consistent with
standards generally followed in the industry (giving due account to the age and
length of
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Asset Purchase Agreement -- 16
use of same, ordinary wear and tear excepted), are suitable for their
present uses and, in the case of Real Property (including without limitation,
the roofs thereof), are structurally sound.
(v) Except for the leases listed on SCHEDULE 2.01(iv), no
portions of the Real Property are subject to any leases or other occupancy
agreements or are occupied by anyone other than Seller.
(vi) Seller has delivered to Buyer complete and accurate
copies of all leases relating to the Purchased Assets, both real and personal,
including all amendments related thereto.
(vii) All rent and other charges currently due on the Real
Property leases are listed on SCHEDULE 2.01(iv) and Seller has not assigned such
Real Property leases or subleased all or any portion of the premises leased
thereunder.
(viii) Seller has not made any alterations, additions or
improvements to the premises leased under the Real Property leases listed on
SCHEDULE 2.01(IV) that are required to be removed (or of which lessor could
require removal) at the termination of the respective lease terms.
(d) No Purchased Asset is subject to any Lien, except for Liens
disclosed on the Balance Sheet or on SCHEDULE 2.01.
(e) No violation of any law, regulation or ordinance (including,
without limitation, laws, regulations or ordinances relating to zoning, health,
safety, handicapped persons, city planning or similar matters) relating to
Seller, the Business or any Purchased Asset which would have a Material Adverse
Effect currently exists or has existed at any time since Seller's incorporation.
There are no developments, other than those developments that are known
generally to the public, affecting any of the Purchased Assets pending or, to
the knowledge of Seller and the Shareholders threatened, which might detract
from the value of such Purchased Assets, interfere with any present use of any
such Purchased Assets or adversely affect the marketability of such Purchased
Assets. In addition, except as set forth on SECTION 4.08(e) OF THE DISCLOSURE
SCHEDULE, the Real Property and the present use of the Real Property are not in
violation of or out of conformity with (i) any zoning, subdivision, building,
building code, health, safety, traffic, environmental, flood control, wetlands,
or other land use laws, statutes, ordinances, rules, regulations, variances,
permits or orders of any local, state, or federal authorities or any other
governmental entity having jurisdiction over the Real Property, including,
without limitation, the Americans with Disabilities Act of 1990 or (ii) any
Liens affecting the Real Property, in either case which would have a Material
Adverse Effect.
4.09. SUFFICIENCY OF PURCHASED ASSETS. The Purchased Assets constitute,
and on the Closing Date will constitute, all of the assets or property used or
held for use in the Business necessary to operate the Business as currently
conducted.
4.10. TITLE TO PURCHASED ASSETS. Upon consummation of the transactions
contemplated hereby, Buyer will have acquired good and marketable title in and
to, or a valid leasehold interest in (as applicable), the Purchased Assets, free
and clear of all Liens, subject to SCHEDULE 2.01.
4.11. SUBSIDIARIES. Seller does not have any Subsidiaries.
4.12. LITIGATION. Except as set forth on SECTION 4.12 OF THE DISCLOSURE
SCHEDULE, there is no action, suit, charge, or proceeding pending against (or
any basis therefor), and to the knowledge of Seller
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Asset Purchase Agreement -- 17
and the Shareholders, there is no investigation pending, and no action, suit,
charge or proceeding threatened against or affecting, the Business, any
Purchased Asset or Seller, before any court or arbitrator or any governmental
body, agency or official, or that in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated hereby.
4.13. CONTRACTS. (a) SCHEDULE 2.01(ii) and SCHEDULE 2.02(ii), list all
contracts, agreements, arrangements and understandings to which Seller is a
party or by which it is bound, such contracts, agreements, arrangements and
understandings, whether constituting Assigned Contracts or Excluded Contracts,
being referred to herein collectively as the "CONTRACTS." SCHEDULE 2.01(ii) also
denotes with an asterisk (*) each Contract for which the consent of any Person
is necessary to transfer to Buyer all rights and any Assumed Liabilities
pursuant to Section 2.01 or to otherwise consummate the transactions
contemplated by this Agreement. In addition, each of the contracts listed on
SCHEDULE 2.01(ii) is expressly classified on such SCHEDULE 2.01(ii) under one of
the following categories:
(i) Contracts relating to the ownership, license,
acquisition, design, development, distribution, marketing, use, maintenance or
support of each Computer Program or any other software and related items (all of
such Contracts as so classified being referred to herein as the "SOFTWARE
CONTRACTS"). The Software Contracts are further classified on SCHEDULE 2.01(ii)
as (A) licenses to Seller from third parties (development and/or marketing
and/or relicensing to third parties); (B) licenses from third parties to Seller
(Seller's internal use); (C) development contracts, work-for-hire agreements and
consulting and employment agreements; (D) distributorships, dealerships, value
added reseller, franchises, sales or marketing representatives, and
manufacturer's representative contracts (from third parties to Seller, or from
Seller to third parties); (E) licenses and sublicenses to others; or (F)
maintenance, support or enhancement agreements.
(ii) Leases of (A) real property; (B) equipment; (C)
office furnishings and fixtures; and (D) other
personalty, in each case as used in the Business.
(iii) Agreements currently in effect concerning
employment, confidentiality, noncompetition,
non-solicitation of employees or any acquisition proposal.
(iv) Agreements under which Seller has created,
incurred or assumed or guaranteed any secured or unsecured
indebtedness for borrowed money or any capitalized lease obligation.
(v) Any other contracts, agreements, arrangements or
understandings to which Seller is a party and not
elsewhere classified pursuant to this Section 4.13(a).
(b) Seller has delivered to Buyer a correct and complete copy
of each written agreement listed in SCHEDULE 2.01(ii) and SCHEDULE 2.02(ii).
Except as set forth on SECTION 4.13 OF THE DISCLOSURE SCHEDULE, each Assigned
Contract is a valid and binding agreement of Seller and is in full force and
effect enforceable against the parties thereto in accordance with its terms not
subject to any valid claims, counterclaims or offsets, and neither Seller nor,
to the knowledge of Seller and the Shareholders, any other party thereto is in
default nor is there a basis for any such default by Seller (or, to the
knowledge of Seller and the Shareholders, by any other party thereto) under the
terms of any such Assigned contract, nor has any event or circumstance occurred
that, with notice or lapse of time or both, would constitute any default
thereunder with respect to Seller or, to the knowledge of Seller and the
Shareholders, any other party thereto, nor is there any claim under the terms of
any such Assigned Contract (or basis for any claim), including, without
limitation, any claims relating to products or
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Asset Purchase Agreement -- 18
services, against Seller and the Shareholders or with respect to the Business,
any of the Purchased Assets or any Assigned Contract. There is no contract,
agreement, commitment or obligation to which Seller is a party or is bound that
at the time it was entered into or made was, or is currently, known or could be
reasonably expected to result in, any loss to Seller upon completion or
performance thereof, or any bid, offer or proposal which if accepted would
result in such a loss, contract, agreement, commitment or obligation.
4.14. PERMITS. SCHEDULE 2.01(x) correctly lists all Permits. SCHEDULE
2.01(x) also denotes with an asterisk (*) each Permit for which the consent of
any Person is necessary to transfer to Buyer all rights under such Permit or to
otherwise consummate the transactions contemplated by this Agreement. Such
Permits are valid and in full force and effect, are not subject to any adverse
disputes or claims, to the extent transferable, have been validly and lawfully
transferred by Seller to Buyer as of the date hereof and will not be violated,
invalidated, terminated or impaired or become terminable as a result of the
transactions contemplated hereby. Upon consummation of the transactions
contemplated hereby, Buyer will have all of the right, title and interest in and
to all the Permits (to the extent transferable) and they constitute all of the
licenses, permits, approvals or other governmental authorizations, approvals or
filings necessary to own and operate the Real Property and to conduct the
Business as currently conducted.
4.15. INSURANCE. Seller has furnished to Buyer a list of, and true and
complete copies of, all insurance policies and fidelity bonds covering the
Purchased Assets, the business and operations of the Business and Seller and its
employees.
4.16. COMPLIANCE WITH LAWS. Seller is not in violation of, and
immediately upon the consummation of the transactions contemplated hereby will
not be in violation of, and to Seller's knowledge is not under investigation
with respect to, and has not been threatened to be charged with or given notice
of, nor is there any basis for, any violation of, any law, rule, ordinance or
regulation, or judgment, order or decree entered by any court, arbitrator or
governmental authority, domestic or foreign, applicable to Seller, the Purchased
Assets or the conduct of the Business, the violation of which would have a
Material Adverse Effect.
4.17. INTELLECTUAL PROPERTY. (a) Seller owns free and clear of all
Liens (or, with respect to Intellectual Property Rights used by Seller in the
Business and owned by a third party, has the valid right to use) and Buyer shall
receive at Closing, good and marketable title to (or, with respect to
Intellectual Property Rights used by Seller in the Business and owned by third
parties, obtain the valid right to use) all Intellectual Property Rights owned
or used by Seller in the Business, which include all Intellectual Property
Rights necessary for the use of the Purchased Assets and the conduct of the
Business as currently conducted (collectively, "SELLER INTELLECTUAL PROPERTY").
SECTION 4.17 OF THE DISCLOSURE SCHEDULE contains a list of all of the following
that are included in the Seller Intellectual Property: (i) patents and patent
applications, (ii) trademarks, trade names and service marks and registrations
thereof and applications therefor, and (iii) registered copyrights and
applications for copyright registration. SECTION 4.17 OF THE DISCLOSURE SCHEDULE
identifies the owner of each item listed thereon and, in the case of
registrations and applications, the registration or application number and date.
Seller has made no foreign applications or registrations with respect to any
Intellectual Property Rights.
(b) (i) Except for the restrictions disclosed on SECTION 4.17
OF THE DISCLOSURE SCHEDULE, Seller holds free from contractual restrictions and
any other restrictions, all of the Seller Intellectual Property, (ii) the Seller
Intellectual Property does not infringe any Intellectual Property Rights of any
other Person, and no claims have been asserted with respect to the use by Seller
of the Seller
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Asset Purchase Agreement -- 19
Intellectual Property or otherwise for patent, copyright, trade secret or trade
▇▇▇▇ infringement, (iii) the Seller Intellectual Property owned by Seller and,
to the knowledge of Seller and the Shareholders, the Seller Intellectual
Property owned by third parties is valid and enforceable, and (iv) Seller is not
aware of any infringement by any other Person of any Seller Intellectual
Property. None of the Seller Intellectual Property is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting the use thereof by
Seller or restricting the licensing thereof by Seller to any Person. Seller has
not entered into any agreement to indemnify any other Person against any charge
of infringement of any patent, trademark, trade name, service ▇▇▇▇ or copyright.
(c) None of the processes, methodologies, trade secrets,
research and development results and other know-how included in the Seller
Intellectual Property, the value of which is contingent upon maintenance of the
confidentiality thereof, has been disclosed by Seller to any Person other than
employees, contractors, customers, representatives and agents of the Seller who
are parties to customary confidentiality and non-disclosure agreements with the
Seller or subject to other non-disclosure obligations.
4.18. SOFTWARE. (a) The Technical Documentation includes the source
code and system documentation for all of the Software, as well as any pertinent
commentary or explanation that may be necessary to render such materials
understandable and usable by a trained computer programmer. The Technical
Documentation also includes any Computer Program (including compilers), tools,
and higher level language used for the development, maintenance, and
implementation of the Software.
(b) Seller has validly obtained the right and license to use,
copy, modify, maintain, support, install, license and distribute the third-party
Computer Programs and materials contained in or relicensed with the Software,
the Technical Documentation and all other Computer Programs used by Seller
pursuant to the Contracts identified as "licenses from third parties
(development and/or marketing and/or relicensing to third parties)" or "Licenses
from third parties (internal use only)" in SCHEDULE 2.01(ii). Seller has good
and marketable title to the Software (including the Technical Documentation),
and the Software (including the Technical Documentation) contains no other
Computer Programs or materials in which any third party may claim superior,
joint, or common ownership, including any right or license.
(c) Except as set forth on SECTION 4.18 OF THE DISCLOSURE
SCHEDULE, (i) the Software conforms in all material respects to the Technical
Documentation and all other documentation published by Seller with respect to
the Software; (ii) no portion of the Software contains any software routines or
hardware components designed to permit unauthorized access; or to disable or
erase software, hardware or data; and (iii) the performance of the Software has
not been affected by the advent of the year 2000, and the Software is capable of
correctly processing, receiving and providing date data between the twentieth
and twenty-first centuries.
(d) All personnel, including employees, agents, consultants,
and contractors, who have contributed to or participated in the conception and
development of any of the Software either (i) have been party to a
"work-for-hire" arrangement or agreement with the Seller that has accorded the
Seller full, effective, exclusive and original ownership of all tangible and
intangible property thereby arising, or (ii) have executed appropriate
instruments of assignment in favor of the Seller as assignee that have conveyed
to the Seller full, effective and exclusive ownership of all tangible and
intangible property thereby arising. All employees currently employed, or
employed during the past two years, by Seller have signed the Employee
Confidentiality, Nonsolicitation and Noncompetition Agreement in the form
attached to SECTION 4.18(d) OF THE DISCLOSURE SCHEDULE.
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Asset Purchase Agreement -- 20
4.19. EMPLOYEES. SECTION 4.19 OF THE DISCLOSURE SCHEDULE sets forth a
true and complete list of (a) the names, addresses, social security numbers,
titles, annual salaries and other compensation of all Hired Employees of the
Business, date of last review and date of last compensation adjustment and (b)
the wage rates for non-salaried Hired Employees of the Business (by
classification). None of such employees and no other key employee of the
Business has indicated to Seller or Shareholder that he does not wish to become
an employee of Buyer upon consummation of the transactions contemplated by this
Agreement.
Seller is in compliance in all material respects with all applicable
U.S. Federal, state and local laws respecting employment and employment
practices, employee benefits, terms and conditions of employment, wage and
hours, and is not engaged in any unfair labor or unlawful employment practice
relating to the Business. Seller represents and warrants there is no unlawful
employment practice pending before the Equal Employment Opportunity Commission
("EEOC"), EEOC recognized state "referral agency" or any other Governmental
Authority. None of the employees of Seller are represented by any labor union.
No grievance or arbitration proceeding relating to the employees of Seller are
pending and no written claim therefore exists with respect to Seller.
4.20. WARRANTY OR OTHER CLAIMS. There are no existing or, to the
knowledge of Seller and the Shareholders, threatened claims, against Seller for
products (including the Software or other Computer Programs of third parties),
parts or services which are defective or fail to meet any applicable warranty,
representation or other term or provision, nor is there any basis therefor.
Except as described in the preceding sentence, no claim has been asserted and is
currently outstanding against Seller for renegotiation or price redetermination
of any business transaction with respect to the Business, nor is there any basis
for any such claim. SECTION 4.20 OF THE DISCLOSURE SCHEDULE attached hereto
accurately describes all express warranties and service policies of Seller
relating to the Software, the conduct of the Business or the other Purchased
Assets that are currently in effect or that were in effect at any time during
the past year and discloses Seller's terms and conditions with respect to the
sale, distribution or licensing of the Software (including, without limitation,
all express warranties) and service policies currently in effect or that were in
effect during the past year. Any express warranties, service policies or terms
and conditions with respect to the Assigned Contracts currently in effect are
expressly set forth in such Assigned Contracts.
4.21. BROKERS' FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Seller or Shareholders who might be entitled to any fee or commission upon
consummation of the transactions contemplated by this Agreement.
4.22. ENVIRONMENTAL COMPLIANCE. (a) Except as disclosed on SECTION 4.22
OF THE DISCLOSURE SCHEDULE, (i) the Seller has complied in all material respects
with all federal, state and local laws (including, without limitation, case law,
rules, regulations, orders, judgments, decrees, permits, licenses and
governmental approvals) which are intended to protect the environment and/or
human health or safety (collectively, "Environmental Laws"); (ii) the Seller has
not handled, generated, used, stored, transported or disposed of any material,
substance or waste which is regulated by Environmental Laws ("Hazardous
Materials"), except for reasonable amounts of ordinary office and/or
office-cleaning supplies which have been used in compliance with Environmental
Laws; (iii) there is not now, nor has there ever been, any underground storage
tank or asbestos-containing material on any real property owned, operated or
leased by the Seller; (iv) the Seller has not conducted, nor is it aware of, any
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Asset Purchase Agreement -- 21
environmental investigations, studies, audits, tests, reviews or analyses, the
purpose of which was to discover, identify, or otherwise characterize the
condition of the soil, groundwater, air or the presence of Hazardous Materials
at any real property owned, operated or leased by the Seller; and (v) there are
no "Environmental Liabilities".
(b) For purposes of this Agreement, "Environmental
Liabilities" are any claims, demands, or liabilities under Environmental Laws
which (i) arise out of or in any way relate to the Seller's operations or
activities, or any real property at any time owned, operated or leased by the
Seller, or any Shareholder's use or ownership thereof, whether vested or
unvested, contingent or fixed, actual or potential, and (ii) arise from or
relate to actions occurring (including any failure to act) or conditions
existing on or before the Closing Date.
4.23. COMPLIANCE WITH CERTIFICATE OF INCORPORATION AND BY-LAWS. Seller,
in the conduct of the Business, the ownership of the Purchased Assets and
otherwise, is in compliance in all respects with the terms and provisions of its
corporate charter and bylaws, both as amended to date.
4.24. ABSENCE OF CONFLICTS. Except as otherwise set forth on SECTION
4.24 OF THE DISCLOSURE SCHEDULE, neither the Shareholders nor any officer,
director or other Affiliate of Seller and the Shareholders (i) has (or in the
past three years had) any material direct or indirect interest in any Person
that does business with Seller; (ii) has (or in the past three years had) any
direct or indirect interest in the Business or the Purchased Assets; or (iii)
has (or in the past three years had) any other business relationships with
Seller, other than such relationships that arise in the ordinary course from
being an officer, director or shareholder of Seller.
4.25. BUYER. Notwithstanding anything contained herein to the contrary,
Seller and the Shareholders make no representation or warranty relating to any
Contract, agreement or understanding with Buyer, or any proceeds thereof, to the
extent such representation or warranty would be affected by any action or
inaction by Buyer.
4.26. REPRESENTATIONS AND WARRANTIES. No representation or warranty by
Seller or any Shareholder set forth in this Agreement, and no statement
contained in any exhibit or schedule hereto or any certificate or writing
delivered in connection with this Agreement and the transactions herein
contemplated in connection with this Agreement contains any untrue statement of
a material fact, or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and the Shareholders
that:
5.01. ORGANIZATION AND EXISTENCE. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all corporate power and authority required to carry on its
business as now conducted. Buyer is duly qualified to do business as a foreign
corporation and is in good standing in the State of Florida.
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Asset Purchase Agreement -- 22
5.02. CORPORATE AUTHORIZATION. Buyer has the requisite corporate power
and authority to enter into this Agreement and the Ancillary Agreements to which
it is a party and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the
Ancillary Agreements to which Buyer is a party, and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Buyer. Each of this Agreement and the
Ancillary Agreements to which Buyer is a party has been duly executed and
delivered by Buyer and constitutes the valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms.
5.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Buyer of this Agreement and each of the Ancillary Agreements do
not require any action by or in respect of, filing with, authorization or
consent from any governmental body, agency, official or authority.
5.04. NON-CONTRAVENTION. The execution, delivery and performance by
Buyer of this Agreement and each of the Ancillary Agreements do not and will not
(i) contravene or conflict with the corporate charter or bylaws of Buyer; (ii)
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to Buyer; (iii) constitute a default under or violation of any
contract or agreement, or give rise to any right of termination, cancellation or
acceleration of, any right or obligation of Buyer under any provision of any
agreement, contract or other instrument binding upon Buyer or by which Buyer is
or may be bound; or (iv) require the consent of, the waiver of any right of
first refusal from, the giving of notice to, filing of notice with, or the
approval or authorization of, any Person.
5.05. FINDERS' FEES. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Buyer who might be entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement.
5.06. LITIGATION. There is no action, suit, charge, investigation or
proceeding pending against, or to the knowledge of Buyer threatened against or
affecting Buyer before any court or arbitrator or any governmental body, agency
or official that in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby.
5.07. REPRESENTATIONS AND WARRANTIES. No representation or warranty by
Buyer set forth in this Agreement, and no statement contained in any exhibit or
schedule hereto or any certificate or writing delivered in connection with this
Agreement and the transactions herein contemplated in connection with this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading.
ARTICLE VI
COVENANTS FOLLOWING THE CLOSING
6.01. COVENANTS OF THE SELLER AND THE SHAREHOLDERS. Seller and each
Shareholder, jointly and severally, agree that:
(a) CONFIDENTIALITY AND OTHER MATTERS. Seller and each
Shareholder will hold, and will use their best efforts to cause Seller's
Affiliates, officers, directors, employees, accountants, counsel,
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Asset Purchase Agreement -- 23
consultants, advisors and agents to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law,
all proprietary or confidential documents and information concerning Buyer,
Seller or the Business (including any such documents and information provided by
Buyer to Seller and the Shareholders after the Closing Date pursuant to Section
6.02 of this Agreement or otherwise) and will not use and will use their best
efforts to cause Seller's officers, directors, employees, consultants, advisors
and agents not to use, any such proprietary or confidential documents or
information for any purpose whatsoever, except to the extent that such
information can be shown to have been in the public domain through no fault of
Seller or any Shareholder. Seller and each Shareholder, jointly and severally,
covenant that they shall not, directly or indirectly, for a period of one year
after the Closing Date, solicit, cause to be solicited, hire or cause to be
hired any Hired Employee or other employee of Buyer or its Affiliates or
cooperate with any person in doing any of the foregoing. For the avoidance of
doubt, any information obtained by Seller or any of the Shareholders pursuant to
Section 6.02 of this Agreement shall be deemed to be confidential information of
Buyer and the Business for purposes of the obligations of Seller and the
Shareholders under this Section 6.01(a).
(b) TRADEMARKS; TRADENAMES. As soon as practicable after the
Closing Date but in no event later than one month thereafter, Seller shall cease
using, and eliminate the use of, all of the trademarks, tradenames, service
marks and service names used in the Business or by Seller, including the use of
the names "Innovex Group, Inc.," "InnTerprise", and the use of any names
confusingly similar to such trademarks, tradenames, service marks and service
names, and all logos used in the Business on all advertising, stationery,
business cards, checks, purchase orders and acknowledgments, customer agreements
and other contracts and business documents or otherwise. Seller shall change the
corporate name of Seller so as not to be confusingly similar to the current name
of Seller. On the Closing Date and at any time thereafter as requested by Buyer,
Seller shall provide to Buyer any additional consents in writing requested by
Buyer, to the use of the names in this subsection and in the absence of such
consents Buyer may use either such name for any and all purposes whatsoever
without the approval of Seller. In addition, no Shareholder shall use the names
"Innovex Group, Inc.," "InnTerprise," or any names confusingly similar to such
name.
(c) BOOKS AND RECORDS. Seller shall afford for a period of six
years following the Closing (or such longer period as the following records are
retained by Seller), the officers, attorneys, accountants and other authorized
representatives of Buyer or its Affiliates free and full access during normal
business hours to all items pertaining to the Purchased Assets, whether in hard
copy or computer format, and Buyer and its Affiliates shall be permitted to make
abstracts from, or copies of all such items.
(d) NON-COMPETITION. Until the first anniversary of the
Closing Date, Seller shall not engage, directly or indirectly (including,
without limitation, as a principal, member, owner, partner, shareholder or
investor (other than as a shareholder of one percent or less of the outstanding
voting stock of a company whose stock is traded on Nasdaq or any registered
stock exchange), independent contractor, consultant, advisor, or otherwise) in
any activity that competes with the Business as conducted by Seller prior to the
Closing.
(e) REASONABLE EFFORTS; FURTHER ASSURANCES. (i) Seller and
each Shareholder agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be necessary or desirable in order to consummate or implement expeditiously
the transactions contemplated by this Agreement and to vest in Buyer good and
marketable title to the Purchased Assets.
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Asset Purchase Agreement -- 24
(ii) Seller hereby constitutes and appoints,
effective as of the Closing Date, Buyer and its successors and assigns as the
true and lawful attorney of Seller with full power of substitution in the name
of Buyer or in the name of Seller, but for the benefit of Buyer (A) to collect
for the account of Buyer any items of Purchased Assets and (B) subject to
Article IX of this Agreement, to institute and prosecute all proceedings which
Buyer may in its sole discretion deem proper in order to assert or enforce any
right, title or interest in, to or under the Purchased Assets, and to defend or
compromise any and all actions, suits or proceedings in respect of the Purchased
Assets. Buyer shall be entitled to retain for its account any amounts collected
pursuant to the foregoing powers, including any amounts payable as interest in
respect thereof.
(f) REQUIRED CONSENTS; LIENS. Seller shall use commercially
reasonable efforts to obtain promptly (in no event more than 20 days) after the
Closing all Required Consents. Buyer agrees to use commercially reasonable
efforts to cooperate with Seller in obtaining such Required Consents. Seller
shall use commercially reasonable efforts to cause the release, discharge or
termination of all Liens on the Purchased Assets, including without limitation
evidence of the termination and removal of all UCC-1 financing statements and
the discharge of all mortgages and other monetary Liens.
6.02. COVENANTS OF ALL PARTIES. The parties hereto agree that Seller
and Buyer shall cooperate with one another (i) in determining whether any action
by or in respect of, or filing with, any governmental body, agency, official or
authority is required in connection with the consummation of the transactions
contemplated by this Agreement and (ii) in taking such actions or making any
such filings, furnishing information required in connection therewith and
seeking timely to obtain any such actions, all as set forth in Section 6.02(i).
Notwithstanding the foregoing, Seller and the Shareholders shall remain solely,
jointly and severally responsible for all filings and approvals relating to
Environmental Laws covering (i) conditions existing before the Closing Date and
(ii) actions to correct unpermitted or noncompliant conditions existing before
the Closing Date.
6.03. COVENANTS OF BUYER. After the Closing, Buyer shall use
commercially reasonable efforts to promptly arrange for the termination of all
personal guarantees by any of the Shareholders relating to the Assigned
Contracts, Assumed Liabilities or any other Purchased Asset. To the extent that
any Shareholder is held liable under any such guarantee (other than guarantees
relating to an Excluded Liability), with regard to any obligation arising after
the Closing as a result of actions taken by Buyer, Buyer shall indemnify and
hold such Shareholder harmless with regard thereto.
ARTICLE VII
EMPLOYEE BENEFITS
7.01. EMPLOYEE BENEFITS DEFINITIONS. The following terms, as used
herein, having the following meaning:
"BENEFIT ARRANGEMENT" means an employment, severance or similar
contract, arrangement or policy and each plan or arrangement providing for
severance, insurance coverage (including any self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights or other forms
of incentive compensation or post-retirement insurance, compensation or benefits
that (i) is not an Employee Plan and (ii) is maintained or contributed to by
Seller or any of its ERISA Affiliates, as the case may be.
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Asset Purchase Agreement -- 25
"EMPLOYEE PLAN" means each "employee benefit plan", as such term is
defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA
and (ii) is maintained or contributed to by Seller or any of its ERISA
Affiliates, as the case may be.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"HIRED PARTIES" means those employees or independent contractors of
Seller who are offered employment by Buyer and who commence employment with
Buyer as of the Closing Date.
"MULTI-EMPLOYER PLAN" means each Employee Plan that is a multi-employer
plan, as defined in Section 3(37) of ERISA.
7.02. ERISA REPRESENTATIONS. Seller and each Shareholder hereby,
severally represent and warrant to Buyer that:
(a) SCHEDULE 7.02(a) attached hereto lists each Employee Plan
and each Benefit Arrangement that covers any employee of the Seller, copies or
descriptions of all of which have previously been made available or furnished to
Buyer. With respect to each Employee Plan, Seller has provided the most recently
filed Form 5500 and an accurate summary description of such plan. Seller has
provided Buyer with complete age, salary, service and related data as of the
most recent practicable date for each employee of Seller.
(b) Neither the Seller nor any ERISA Affiliate maintains or
has ever maintained or contributed to any Multiemployer Plan or Employee Plan
subject to Title IV of ERISA.
(c) None of the Employee Plans or Benefit Arrangements listed
on SCHEDULE 7.02(a) covers any non-United States employee or non-United States
former employee of the Seller.
(d) No "prohibited transaction", as defined in Section 406 of
ERISA or Section 4975 of the Code, has occurred with respect to any Employee
Plan.
(e) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. Seller has furnished to
Buyer copies of the most recent Internal Revenue Service determination letters
with respect to each such Plan. Each Employee Plan has been maintained in
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including but not limited to ERISA and
the Code, which are applicable to such Employee Plan.
(f) Each Benefit Arrangement has been maintained in compliance
with its terms and in all material respects with the requirements prescribed by
any and all statutes, orders, rules and regulations, including but not limited
to ERISA and the Code, which are applicable to such Benefit Arrangement.
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Asset Purchase Agreement -- 26
(g) There has been no amendment to, written interpretation of
or announcement (whether or not written) by Seller or any of its ERISA
Affiliates relating to, or change in employee participation or coverage under,
any Employee Plan or Benefit Arrangement that would increase materially the
expense of maintaining such Employee Plan or Benefit Arrangement above the level
of the expense incurred in respect thereof for the fiscal year ended prior to
the date hereof.
(h) No Tax under Section 4980B or 4980D of the Code has been
incurred in respect of any Employee Plan that is a group health plan, as defined
in Section 5000(b)(1) of the Code.
(i) With respect to the employees and former employees of the
Seller, there are no employee post-retirement medical or health plans in effect,
except as required by Section 4980B of the Code.
(j) No employee of the Seller will become entitled to any
bonus, retirement, severance or similar benefit or enhanced benefit solely as a
result of the transactions contemplated hereby.
(k) There is no contract or agreement of any kind covering any
employee or former employee of Seller that would prevent such employee or former
employee from becoming employed by Buyer on or after the Closing Date.
7.03. EMPLOYEES AND OFFERS OF EMPLOYMENT. On or prior to the Closing
Date, Buyer shall offer employment to all of the persons listed in Section 4.19
of the Disclosure Schedule; PROVIDED, that Buyer may terminate at any time after
the Closing Date the employment of any employee who accepts such offer. Buyer
shall grant to each such person who accepts its offer of employment an
employment and benefits package which provides for: (i) employment at a rate of
base pay substantially comparable to that in effect for such person immediately
prior to Closing; (ii) a benefits package which is substantially comparable in
the aggregate to the benefits package provided to Buyer's employees as of
Closing; and (iii) a carryover from Seller of all applicable calculations of
years of service, waiting periods and other limitations or prerequisites so that
eligibility for, or current level of employee benefits provided to (but not
prior accruals or contributions of benefits for), such person shall be
substantially comparable as if such person had been employed by Buyer for a
period equal to his employment by Seller. Neither Seller nor any Shareholder
will take any action that would impede, hinder, interfere or otherwise compete
with Buyer's effort to hire any Hired Parties. Buyer shall not assume
responsibility for any such employee until such employee commences employment
with Buyer, but in no event whatsoever shall Buyer assume any responsibility for
any commitment or liability of Seller to any such employee. Buyer shall not
assume responsibility for any employee of Seller who is not a Hired Party and
Seller agrees to continue to assume all responsibilities, commitments and/or
liabilities for any employee of Seller who is not a Hired Party.
7.04. SELLER'S EMPLOYEE BENEFIT PLANS. (a) Seller shall retain, perform
and pay all obligations and liabilities under the Employee Plans and Benefit
Arrangements in respect of each employee or former employee (including any
beneficiary thereof of Seller). Seller shall retain, perform and pay all
liabilities and obligations in respect of benefits accrued as of the Closing
Date by or for Hired Parties under the Employee Plans and Benefit Arrangements
or otherwise, and Buyer shall not have any liability with respect thereto. No
assets of any Employee Plan or Benefit Arrangement shall be transferred to Buyer
or to any plan of Buyer, without the written consent of Buyer. However, with
respect to Seller's 401(k)
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Asset Purchase Agreement -- 27
retirement plan, Seller shall cooperate and assist any Hired Party who so
requests, in making a direct rollover of the Hired Party's vested account
balance to Buyer's 401(k) plan as soon as practicable after the Closing Date.
Buyer shall cooperate with Seller and any Hired Party with respect to such
direct rollover, provided that Buyer determines that the direct rollover is
permitted under the Code and regulations thereunder. Each of the parties hereto
shall pay its own expenses in connection with such direct rollover.
(b) With respect to the Hired Parties (including any
beneficiary or dependent thereof), Seller shall retain (i) all liabilities and
obligations arising under any group life, accident, medical, dental or
disability plan or similar arrangement (whether or not insured) to the extent
that such liability or obligation relates to contributions or premiums accrued
(whether or not payable), or to claims incurred (whether or not reported), on or
prior to the Closing Date, (ii) all liabilities and obligations arising under
any worker's compensation arrangement to the extent such liability or obligation
relates to the period on or prior to the Closing Date, including liability for
any retroactive ▇▇▇▇▇▇▇'▇ compensation premiums attributable to such period and
(iii) all other liabilities and obligations arising under the Employee Plans and
the Benefit Arrangements.
(c) With respect to any Hired Party (including any beneficiary
or dependent thereof) who enters a hospital or is on short-term disability under
any Benefit Arrangement on or prior to the Closing Date, Seller shall be
responsible for claims and expenses incurred before the Closing Date in
connection with such Person. With respect to any of Seller's Benefit
Arrangements covering medical expenses and other costs relating to pregnancies
and maternity leave, Seller shall be responsible for all claims (whether or not
reported) and expenses incurred by any Hired Party during the period prior to
and ending on the Closing Date.
(d) Seller shall provide or shall cause Paychex Business
Solutions to provide all notices and any continuation of health benefit coverage
required to be provided to any of Seller's employees, former employees, or the
beneficiaries or dependents of such employees or former employees, under Section
4980B of the Code (herein collectively referred to as "COBRA"), to the extent
such notices and continuation of health benefit coverage are required to be
provided by reason of events occurring prior to or on the Closing Date or by
reason of the transactions contemplated by this Agreement. Seller shall continue
the health coverage required by COBRA and the provisions of this Agreement
irrespective of the elimination of any health benefit plan of Seller. Seller
shall promptly notify Buyer of the elimination of any health benefit plan of
Seller prior to the end of the maximum coverage period described in Section
4980B(f)(2)(1)(B) and shall provide Buyer with evidence, to the satisfaction of
Buyer, of continuing compliance with this Section 7.04(d).
7.05. NO THIRD PARTY BENEFICIARIES. No provision of this Article VII
shall create any third party beneficiary or other rights in any employee or
former employee (including any beneficiary or dependent thereof) of Seller in
respect of continued employment (or resumed employment) with Buyer, and no
provision of this Article VII shall create any such rights in any such Persons
in respect of any benefits that may be provided, directly or indirectly, under
any Employee Plan or Benefit Arrangement or any plan or arrangement that may be
established by Buyer. No provision of this Agreement shall constitute a
limitation on rights to amend, modify or terminate after the Closing Date any
such plans or arrangements of Buyer. No provision of this Agreement shall cause
any employee to be a third party beneficiary of any rights herein.
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Asset Purchase Agreement -- 28
ARTICLE VIII
TAX MATTERS
8.01. TAX DEFINITIONS. The following terms, as used herein, have the
following meanings:
"POST-CLOSING TAX PERIOD" means any Tax period (or portion thereof)
ending after the Closing Date.
"PRE-CLOSING TAX PERIOD" means any Tax period (or portion thereof)
ending on or before the close of business on the Closing Date.
"TAX" means any federal, state, local or foreign net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, franchise, capital, paid-up capital, profits, greenmail, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any governmental authority (domestic or foreign) responsible for the
imposition of any such tax.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
8.02. TAX MATTERS. Seller and each Shareholder hereby, jointly and
severally, represent and warrant to Buyer that:
(a) Seller has timely filed all Tax Returns required to be filed and
all Taxes owed (whether or not shown as due on such Tax Returns) have been paid
or remitted, in each case, to the extent such Taxes and Tax Returns related to
the Purchased Assets or the operation of the Business. All such Tax Returns were
complete and correct in all material respects. No portion of any Tax Return that
relates to the Purchased Assets or the operation of the Business has been the
subject of any audit, action, suit, proceeding, claim or examination by any
governmental authority, and no such audit, action, suit, proceeding, claim,
deficiency or assessment is pending or, to the knowledge of the Seller,
threatened. Seller is not currently the beneficiary of any extension of time
within which to file any Tax Return, and Seller has not waived any statute of
limitation with respect to any Tax or agreed to any extension of time with
respect to a Tax assessment or deficiency. No claim has ever been made by a Tax
authority in a jurisdiction where Seller does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no Liens for Taxes
upon the Purchased Assets other than for real property Taxes not yet due. Seller
does not have, and has not had, a permanent establishment in any foreign
country, as defined in any applicable Tax treaty or convention between the
United States and such foreign country. Seller does not have any liability for
the Taxes of any Person (other than the Seller) under Treasury Regulation
Section 1.1502-6 (or any corresponding provision of state, local or foreign Tax
law), as a transferee or successor, by contract, or otherwise. No portion of the
Purchase Price is subject to any Tax withholding provision of federal, state,
local or foreign law.
(b) Seller has withheld and paid all Taxes required to have been
withheld and paid in
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Asset Purchase Agreement -- 29
connection with amounts paid or owing to any employee, independent contractor,
creditor, or other third party. None of the Assumed Liabilities is an obligation
to make a payment that will not be deductible under Section 280G of the Code.
(c) No state of facts exists or has existed with regard to Seller or
any of its shareholders that would constitute grounds for the assessment against
Buyer, whether by reason of transferee liability or otherwise, of any liability
for any Tax of anyone other than Buyer.
(d) Seller has timely paid all Taxes due and payable by it for the
Pre-Closing Tax Period which will have been required to be paid on or prior to
the Closing Date, the non-payment of which would result in a Lien on any
Purchased Asset, would otherwise adversely affect the Business or would result
in Buyer becoming liable or responsible therefor.
(e) Seller has established, on a basis consistent with that of
preceding periods, adequate reserves for the payment of, and will timely pay all
Taxes which arise from or with respect to the Purchased Assets or the operation
of the Business, the non-payment of which would result in a Lien on any
Purchased Asset, would otherwise adversely affect the Business or would result
in Buyer becoming liable therefor.
8.03. TAX COOPERATION; ALLOCATION OF TAXES. (a) Buyer and Seller agree
to furnish or cause to be furnished to each other, upon request, as promptly as
practicable, such information and assistance relating to the Purchased Assets
and the Business as is reasonably necessary for the filing of all Tax Returns,
and making of any election related to Taxes, the preparation for any audit by
any governmental authority, and the prosecution or defense of any claim, suit or
proceeding relating to any Tax Return. Seller and Buyer shall cooperate with
each other in the conduct of any audit or other proceeding related to Taxes
involving the Business or the Purchased Assets and each shall execute and
deliver such powers of attorney and other documents as are necessary to carry
out the intent of this paragraph (a) of Section 8.03.
(b) All real property taxes, personal property taxes and similar AD
VALOREM obligations levied with respect to the Purchased Assets for a taxable
period which includes (but does not end on) the Closing Date (collectively, the
"APPORTIONED OBLIGATIONS") shall be apportioned between Seller and Buyer as of
the Closing Date based on the number of days of such taxable period included in
the Pre-Closing Tax Period and the number of days of such taxable period
included in the Post-Closing Tax Period. Seller shall be liable for the
proportionate amount of such taxes that is attributable to the Pre-Closing Tax
Period. Within 90 days after the Closing, Seller and Buyer shall present a
statement to the other setting forth the amount of reimbursement to which each
is entitled under this Section 8.03(b) together with such supporting evidence as
is reasonably necessary to calculate the proration amount. The proration amount
shall be paid by the party owing it to the other within 10 days after delivery
of such statement. Thereafter, Seller shall notify Buyer upon receipt of any
▇▇▇▇ for real or personal property taxes relating to the Purchased Assets, part
or all of which are attributable to the Post-Closing Tax Period, and shall
promptly deliver such ▇▇▇▇ to Buyer who shall pay the same to the appropriate
governmental authority, provided that if such ▇▇▇▇ covers the Pre-Closing Tax
Period, Seller shall also remit prior to the due date of assessment to Buyer
payment for the proportionate amount of such ▇▇▇▇ that is attributable to the
Pre-Closing Tax Period. If either Seller or Buyer shall thereafter make a
payment for which it is entitled to reimbursement under this Section 8.03(b),
the other party shall make such reimbursement promptly but in no event later
than 30 days after the presentation of a statement setting forth the amount of
reimbursement to which the presenting party is entitled along with such
supporting evidence as is reasonably necessary to calculate the amount of
reimbursement. Any payment required under this
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Asset Purchase Agreement -- 30
Section and not made within 10 days of delivery of the statement shall bear
interest at the rate per annum determined, from time to time, under the
provisions of Section 6621(a)(2) of the Code for each day until paid.
(c) Any transfer, documentary, sales, use or other Taxes assessed upon
or with respect to the transfer of the Purchased Assets to Buyer and any
recording or filing fees with respect thereto shall be paid by Seller, and
Seller shall promptly reimburse Buyer for any such Taxes paid by Buyer.
(d) Prior to the Closing Date, Seller shall provide Buyer with a
clearance certificate or similar document(s) which may be required by any
governmental authority in order to relieve Buyer of any obligation to withhold
any portion of the Purchase Price. No new elections with respect to Taxes, or
any changes in current elections with respect to Taxes, affecting the Purchased
Assets shall be made after the date of this Agreement without the prior written
consent of Buyer, which consent shall not be unreasonably withheld.
(e) Buyer, Seller and each Shareholder shall file all Tax Returns
consistent with the Allocation Statement and shall not make any inconsistent
written statements or take any inconsistent position on any Tax Return, in any
refund claim, during the course of any U.S. Internal Revenue Service ("IRS")
audit or other tax audit, for any financial or regulatory purpose, in any
litigation or investigation or otherwise. Each party shall notify the other
parties if it receives notice that the IRS or other governmental agency proposes
any allocation different than that set forth in the Allocation Statement.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
9.01. SURVIVAL. The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement or in any
certificate, schedule or other writing delivered pursuant hereto or in
connection herewith shall survive the Closing until the second anniversary of
the Closing Date, except (i) as to matters as to which an Indemnified Party has
made a claim for indemnity or given a Notice of Claim on or prior to the second
anniversary of the Closing Date, which matters shall survive the expiration of
such period until such claim is finally resolved and any obligations with
respect thereto are fully satisfied, (ii) with respect to any misrepresentation
or breach of warranty under Section 8.02 and 8.03 which shall survive so long as
the applicable statute of limitations shall provide (giving effect to any waiver
or extension thereof) and (iii) with respect to any misrepresentation or breach
of warranty under Sections 4.17 and 4.18, which shall survive indefinitely. Any
investigation or other examination that may have been made or may be made at any
time by or on behalf of the party to whom representations and warranties are
made shall not limit, diminish or in any way affect the representations and
warranties in this Agreement, and the parties may rely on the representations
and warranties in this Agreement irrespective of any information obtained by
them by any investigation, examination or otherwise.
9.02. INDEMNIFICATION. (a) Seller and each Shareholder, hereby agree
severally to indemnify Buyer against and agree to hold it harmless from any and
all damage, loss, liability or cost or any diminution in value of a Purchased
Asset and any expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding) (collectively, "LOSSES") incurred or suffered by
Buyer or any of its Affiliates arising out of (i) any misrepresentation or
breach of warranty, covenant or agreement made or to be performed by
35
Asset Purchase Agreement -- 31
Seller or such Shareholder pursuant to this Agreement, whether or not discovered
by Buyer prior to Closing; (ii) any failure to comply with any "bulk sales" or
similar laws relating to notice to creditors; (iii) any failure to obtain any
Required Consents prior to the Closing; or (iv) any failure to release,
discharge or terminate all Liens on the Purchased Assets, including without
limitation evidence of the termination and removal of all UCC-1 financing
statements and the discharge of all mortgages and other monetary Liens, prior to
the Closing.
(b) Seller and each Shareholder, hereby agree severally to indemnify
Buyer against and agree to hold it harmless from any and all Losses incurred or
suffered by Buyer or any of its Affiliates arising out of any costs incurred by
the Buyer or penalties levied against the Buyer in connection with the Seller's
accrual of employee overtime and vacation time prior to the Closing.
(c) Buyer hereby agrees to indemnify Seller and the Shareholders
against and agrees to hold each of them harmless from any and all losses
incurred by Seller and any Shareholder arising out of any misrepresentation or
breach of warranty, covenant or agreement made or to be performed by Buyer
pursuant to this Agreement, whether or not discovered by Seller or any
Shareholder prior to Closing. Notwithstanding anything else to the contrary in
this Agreement, Buyer shall not indemnify or hold harmless any Person, or
otherwise be liable for, any Losses arising from or attributable to the
termination of Seller's status as an "S corporation" within the meaning of
1362(a) of the Code.
9.03. PROCEDURES. (a) The party seeking indemnification under this
Article IX (the "INDEMNIFIED PARTY") agrees to give prompt notice (the "NOTICE
OF CLAIM") to the party or parties from whom indemnification is sought (the
"INDEMNIFYING PARTY") of the assertion of any claim, or the commencement of any
suit, action or proceeding by a third party in respect of which indemnity may be
sought under this Article IX; PROVIDED, HOWEVER, that no delay on the part of
the Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party of any liability or obligation hereunder, except to the
extent that the Indemnifying Party demonstrates that the defense of any third
party suit, action or proceeding has been materially prejudiced by the
Indemnified Party's failure to give such notice. If such Notice of Claim relates
to a suit, action or proceeding by a third party, the Indemnifying Party may
upon written notice given to the Indemnified Party within 20 days of the receipt
by the Indemnifying Party of such Notice of Claim, assume control of the defense
of such action, suit or proceeding with counsel reasonably satisfactory to the
Indemnified Party. If the Indemnifying Party does not so assume control of such
defense or if the Indemnifying Party fails to give reasonable written assurance
to the Indemnified Party of Indemnifying Party's financial capacity to defend
and/or provide indemnification as required hereby, the Indemnified Party shall
have the right to control such defense. The party not controlling such defense
may participate therein at its own expense; PROVIDED THAT, if the Indemnifying
Party assumes control of such defense and there exists a conflict of interest
between the interests of the Indemnified Party and those of the Indemnifying
Party with respect to such claim, or if the Indemnifying Party shall fail to
assume responsibility for such defense, the Indemnified Party may retain counsel
satisfactory to it and the reasonable fees and expenses of counsel to the
Indemnified Party shall be considered Losses for purposes of this Agreement.
Notwithstanding anything to the contrary contained herein, in the event that
Buyer determines in its reasonable judgment that there is a probability that a
claim may materially adversely affect it or the Purchased Assets or its rights
under this Agreement other than as a result of monetary damages for which it
would be entitled to indemnification under this Agreement, then Buyer may, by
written notice to the Indemnifying Party, assume the exclusive right to defend
such claim and the reasonable fees and expenses of counsel shall be considered
Losses for purposes of this Agreement. Seller and the Shareholders hereby
acknowledge that any claim involving taxes or Seller's Intellectual Property
shall be deemed to satisfy the requirements for Buyer to assume the
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Asset Purchase Agreement -- 32
defense of any related claims. In all such cases, Seller and the Shareholders
will have the right to participate, at Seller's expense, in the defense or
settlement of such claim. The party controlling such defense shall keep the
other party advised of the status of such action, suit or proceeding and the
defense thereof and shall consider in good faith recommendations made by the
other party with respect thereto.
(b) The Indemnifying Party shall not agree to any settlement of any
action, suit or proceeding without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed. For purposes
hereof, the Indemnified Party's withholding of its consent to any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to the Indemnified Party of a complete irrevocable release
from all liability in respect to such claim or litigation or which requires
action (or limits action) other than the payment of money by the Indemnifying
Party shall be deemed to be reasonable.
(c) In the event that an Indemnified Party seeks indemnification for
Losses pursuant to this Article IX, the procedures in this subsection (c) shall
also apply. Within 30 days after delivery of a Notice of Claim, the Indemnifying
Party shall provide to the Indemnified Party a written response (the "RESPONSE
NOTICE") in which the Indemnifying Party must either: (i) agree that some or all
of the Losses claimed should be indemnified and, in the case of any Losses
claimed and not so agreed to, contest such claimed amount, or (ii) contest all
of the Losses claimed. The Indemnifying Party may contest such claimed amount of
Losses only based upon a good faith belief that all or such portion of such
claimed amount does not constitute Losses for which the Indemnified Party is
entitled to indemnification hereunder. If no such Response Notice is delivered
by the Indemnifying Party within such 30-day period, the Indemnifying Party
shall be deemed to have agreed that all of the claimed amount should be
indemnified. Any such amount agreed to, or so deemed to be agreed to, by the
Indemnifying Party pursuant to clause (i) or (ii) of this subsection (c) or
otherwise pursuant to this Agreement being referred to herein as an "AGREED
AMOUNT."
(d) If the Indemnifying Party in the Response Notice contests all or
part of the claimed amount (thereupon, the "CONTESTED AMOUNT"), the Indemnifying
Party and the Indemnified Party shall attempt promptly and in good faith to
agree upon the rights of the parties with respect to the Contested Amount. If
the Indemnifying Party and the Indemnified Party should so agree, a memorandum
setting forth such agreement shall be prepared and signed by both parties and,
if such agreement provides that all or a portion of the contested Amount is to
be paid to the Indemnified Party (all or such portion of such Contested Amount
to be so paid to the Indemnified Party being also referred to herein as an
"AGREED AMOUNT"), the Indemnifying Party shall make such payments in accordance
with the terms of this Agreement. If no such agreement can be reached after good
faith negotiation within 30 days of the delivery of the Indemnifying Party's
Response Notice (or such longer period as the Indemnified Party and Indemnifying
Party may mutually agree), the matter shall be settled by binding arbitration in
accordance with Section 10.12 of this Agreement.
9.04. CONSENT TO JURISDICTION. The indemnifying party hereby consents
to the non-exclusive jurisdiction of any court in which a third-party claim is
brought against any Indemnified Party for purpose of any claim that an
indemnified party may have under this Agreement with respect to such claim or
the matters alleged therein, and agrees that process may be served on it with
respect to such a claim anywhere in the world.
9.05. BUYER'S RIGHT OF OFFSET. Buyer shall have the right to offset, in
whole or in part, against the payments to be made by Buyer to Seller or the
Shareholders under Sections 3.02(b)(i) and 3.02(b)(ii)
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Asset Purchase Agreement -- 33
of this Agreement (i) the Agreed Amount of any Losses incurred by Buyer; and
(ii) any Contested Amount, PROVIDED that such Contested Amount shall in all
events be paid by Buyer into a segregated interest bearing escrow account
pursuant to the terms of a mutually acceptable escrow agreement with a mutually
acceptable third party escrow agent pending a resolution with respect to such
Contested Amount pursuant to Section 10.12 of this Agreement. Such escrow
agreement shall provide that the escrow agent shall pay the Contested Amount,
together with interest thereon, in accordance with the arbitrator's award.
Pending selection of a third party escrow agent and the entering into of a
mutually acceptable escrow agreement, Buyer shall satisfy its obligations to
make payment in respect of such offset under this Section 9.05 by paying such
Contested Amount into a segregated interest bearing account.
9.06. THRESHOLD. No party hereto shall be liable for indemnity to the
other party pursuant to this Article IX unless and until the total aggregate
cumulative Losses for which it would be liable on account of all claims under
this Article IX exceed $100,000 (the "DEDUCTIBLE"), in which case the
Indemnifying Party shall be liable for indemnification to the Indemnified Party
pursuant to this Article IX for the full amount of all such Losses (including
the Deductible). In order to determine Losses as a result of a breach of a
representation and warranty or covenant, such representation and warranty or
covenant shall be deemed to exclude all exceptions as to materiality and
limitations as to materiality contained therein.
9.07 INTEREST. (a) Each Indemnifying Party shall be severally liable to
the Indemnified Party for interest at the simple annual rate of ten percent
(10%) on any Losses for which the Indemnifying Party is entitled to
indemnification under this Article IX that the Indemnifying Party has failed to
pay when due, upon written demand. All such interest shall be calculated from
the date of such written demand.
ARTICLE X
MISCELLANEOUS
10.01. NOTICES. All notices, requests, demands and other communications
provided for hereunder shall be in writing and mailed (by first class registered
or certified mail, postage prepaid), sent by express overnight courier service
or electronic facsimile transmission with a copy by mail, or delivered to the
applicable party at the addresses indicated below:
if to Buyer, to:
Citrix Systems, Inc.
▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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Asset Purchase Agreement -- 34
if to Seller, to:
Innovex Group, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
Holland & Knight LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
if to a Shareholder, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Shareholders Agent
▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the other party complying as to delivery with
the terms of this Section. All such notices, requests, demands and other
communications shall, when mailed or sent, respectively, be effective (i) five
days after being deposited in the mails or (ii) one day after being deposited
with an the express overnight courier service or sent by electronic facsimile
transmission (with receipt confirmed), respectively, addressed as aforesaid.
10.02. AMENDMENTS; NO WAIVERS. (a) Any provisions of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed by Buyer, Seller and Shareholders Agent.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
(c) In no event will any party be deemed to waive any breach
by any other party of any representation, warranty, covenant or agreement by
reason of such party's completing the Closing with knowledge thereof.
10.03. EXPENSES. All costs and expenses incurred in connection with the
preparation or negotiation of this Agreement and the Ancillary Agreements shall
be paid by the party incurring such cost or expense; provided that all expenses
of Seller shall be paid by the Shareholders or shall be deducted from the
Initial Payment.
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Asset Purchase Agreement -- 35
10.04. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; PROVIDED, HOWEVER, that Seller and the
Shareholders shall not be entitled to assign or in any way transfer any of their
rights or obligations hereunder, by operation of law or otherwise, without the
prior written consent of Buyer. Any attempted assignment of such rights by
Seller or Shareholders without such prior written consent shall be void and
prohibited.
10.05. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Florida, without regard to the
conflicts of laws principles thereof.
10.06. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof (which may be a facsimile signature) signed by the other
parties hereto.
10.07. ENTIRE AGREEMENT. This Agreement and the Ancillary Agreements
constitute the sole and entire agreement between the parties with respect to the
subject matter hereof and thereof and supersede and terminate all prior
agreements, understandings and negotiations, both written and oral, among the
parties with respect to the subject matter of this Agreement and the Ancillary
Agreements. None of this Agreement and the Ancillary Agreements, nor any
provision hereof or thereof, is intended to confer upon any Person (other than
the parties hereto) as a third party beneficiary any rights or remedies
hereunder. Notwithstanding the foregoing, the Mutual Non-Disclosure Agreement
dated January 26, 2000 by and between Buyer and Seller shall not be superseded
and shall survive the Closing.
10.08. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
10.09. SEVERAL OBLIGATIONS. Each Shareholder hereby severally
irrevocably and unconditionally guarantees the performance of all covenants,
liabilities and obligations of Seller under this Agreement in addition to but
not in limitation of the foregoing.
10.10. INCLUDING. Words of inclusion shall not be construed as terms of
limitation herein, so that reference to "included" matters shall be regarded as
nonexclusive, noncharacterizing illustrations.
10.11. SEVERABILITY. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
effected thereby.
10.12. ARBITRATION. Any dispute, controversy or claim arising out of,
in connection with, or in relation to this Agreement or any breach thereof shall
be finally settled by arbitration in Ft. Lauderdale, Florida, pursuant to the
rules of the American Arbitration Association then in effect. Any award shall be
final, binding and conclusive upon the parties and a judgment upon the award
rendered thereon may be entered in any court having jurisdiction thereof. The
cost of such arbitration shall be borne equally by Buyer and Seller, and each
party shall pay for and bear the cost of its own experts, evidence and counsel.
The arbitrator shall choose the form of final decision that, in its judgment, is
most consistent with the terms of this Agreement and the intent of the parties,
including by awarding specific performance of either party's obligations
hereunder.
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Asset Purchase Agreement -- 36
10.13. REMEDIES. In addition to the rights and remedies set forth in
this Agreement and subject to the provisions of Section 10.12 of this Agreement,
the parties shall each have and retain all other rights and remedies existing in
their favor at law or equity, including without limitation, any actions for
specific performance and/or injunctive or other equitable relief (including the
remedy of recission) to enforce or prevent any violation of this Agreement.
Without limiting the generality of the foregoing, Seller hereby agrees that in
the event Seller fails to convey the Purchased Assets to Buyer in accordance
with the provisions of this Agreement, Buyer's remedy at law will be inadequate.
In such event, Buyer shall have the right, in addition to all other rights and
remedies it may have, to specific performance of the obligations of Seller to
convey the Purchased Assets.
10.14 PRESS RELEASES AND ANNOUNCEMENTS. No party hereto shall issue any
press release or announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of Buyer and the
Shareholders; PROVIDED, HOWEVER, that any party hereto may make any public
disclosure it believes in good faith is required by law or regulation (in which
case the disclosing party will advise the other parties hereto prior to making
the disclosure).
10.15 POWER OF ATTORNEY. Each Shareholder hereby constitutes and
appoints the Shareholders Agent as his true and lawful attorney-in-fact, agent
and representative, with full power of substitution and resubstitution, for him
and in his name, place and ▇▇▇▇▇, in any and all capacities, to negotiate and
sign all amendments to this Agreement, and all other documents in connection
with the transactions contemplated by this Agreement, including without
limitation those instruments called for by this Agreement and all waivers,
consents, instructions, authorizations and other actions called for,
contemplated or that may otherwise be necessary or appropriate in connection
with this Agreement or any of the foregoing agreements or instruments, granting
unto the Shareholders Agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that the Shareholders Agent, or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof, including without limitation the power
and authority to receive and give receipt for all consideration due him pursuant
to this Agreement and to receive all notices, requests and demands that may be
made under and pursuant to this Agreement. Should the Shareholders Agent be
unable or unwilling to serve or to appoint his successor to serve in his stead,
and unless the Shareholders Agent appoint a successor to serve in his stead,
such Shareholders shall be deemed to be represented by such Shareholders (other
than the Shareholders Agent) who immediately prior to the Closing Date held a
majority in interest in Seller.
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41
Asset Purchase Agreement -- 37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as an instrument under seal as of the day and year first above
written.
CITRIX SYSTEMS, INC.
By:
-----------------------------------
Name:
Title:
INNOVEX GROUP, INC.
By:
-----------------------------------
Name:
Title:
SHAREHOLDERS:
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