Exhibit 10.3
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (this "Agreement") by and among The
Ultimate Software Group of the Carolinas, Inc., a North Carolina corporation
("Assignor"), The Ultimate Software Group, Inc., a Delaware corporation (the
"Company"), and the principals whose names appear on the signature page hereto
(the "Principals") dated as of February 2, 1998.
WHEREAS, Assignor entered into the Exclusive Reseller
Agreement (the "Reseller Agreement") dated February 27, 1992 with The Ultimate
Software Group, Ltd. (the "Partnership"), the assets and liabilities of which
were subsequently assigned to and assumed by the Company;
WHEREAS, Assignor desires to assign and transfer to the
Company, and the Company desires to assume from Assignor, certain business
assets and liabilities of Assignor pursuant to the terms hereof;
WHEREAS, the transactions contemplated hereby are intended to
be treated as a pooling of interests business combination by the Company for
financial accounting purposes and as a tax free reorganization for United
States federal income tax purposes; and
WHEREAS, this Agreement is intended by Assignor to constitute
a "plan of reorganization" as described in Section 361(a) of the Internal
Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Assignment. Subject to the terms hereof, Assignor, upon
the Closing Date (as defined below), shall sell, assign, convey, transfer and
deliver to the Company all right, title, benefits and interest in the assets
described on Schedule I hereto (the "Assets") and deliver bills of sale and
assignment documents in form and substance satisfactory to the Company with
respect to such Assets in exchange for (i) the assumption by the Company of
Assignor's obligations, duties and liabilities described on Schedule II hereto
(the "Assumed Liabilities") and (ii) 21,307 shares (the "Shares") of Class B
Common Stock of the Company, subject to adjustment for any stock splits or
stock combinations affecting the Class B Common Stock prior to the Closing
Date.
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2. Reseller Agreement. Each of the parties hereto
agrees that because the Reseller Agreement is among the Assets being sold to
the Company hereunder, any rights of Assignor and its affiliates arising
thereunder shall terminate on the Closing Date.
3. Representations and Warranties of the Company.
The Company hereby represents and warrants to and agrees with Assignor as
follows:
(a) Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
power and authority to carry on its business as now conducted and as
proposed to be conducted, and the Company has all requisite power and
authority to enter into and perform this Agreement and the
transactions contemplated hereby.
(b) Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the
performance of all obligations of the Company hereunder and the
authorization, issuance (or reservation for issuance) and delivery of
the Shares and any interest therein has been taken or will be taken
prior to the Closing Date.
(c) Valid Issuance of Shares. The Shares, when issued and
delivered in accordance with the terms hereof, (i) will be duly and
validly issued, fully paid and nonassessable, (ii) will be free of any
pledges, liens, security interests, claims or other encumbrances of
any kind, and (iii) will be issued in compliance with all applicable
federal and state securities laws.
(d) Prospectus. The Company shall provide Assignor with the
preliminary and final prospectuses with respect to its proposed
initial public offering of common stock and any amendments thereto,
promptly after the Company's Registration Statement and amendments
thereto containing such prospectuses are filed with the Securities and
Exchange Commission (the "SEC").
(e) Financial Statements. The Company has delivered to
Assignor and Assignor may rely upon copies of (i) the audited
financial statements of the Company for the fiscal years ended
December 31, 1995 and December 31, 1996, respectively, (ii) unaudited
financial statements of the Company for the fiscal year ended December
31, 1997 and (iii) Management's Discussion and Analysis of Financial
Condition and Results of Operation, in each case, certified by an
officer of the Company as being true and complete copies of such
financial statements.
(f) No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby do not contravene (i) the
Company's
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organizational documents, (ii) any law or (iii) any contractual
restriction binding on or affecting the Company.
(g) Litigation. There is no pending or threatened action or
proceeding affecting the Company before any court, governmental agency
or arbitrator, which may materially adversely affect the business,
financial condition or results of operations of the Company or which
could affect the legality, validity or enforceability of this
Agreement.
(h) No Material Adverse Change. Since December 31, 1997,
there has not been any change in the business financial condition or
results of operations of the Company from that reflected in the
unaudited financial statements of the Company for the fiscal year
ended December 31, 1997, except changes in the ordinary course of
business which have not been materially adverse.
(i) Reseller Agreement. Assignor has not materially
breached any of its obligations under the Reseller Agreement as of
the date hereof.
(j) Registration Rights. None of the officers or directors,
individually, of the Company, other than ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇▇▇, has registration rights with respect to the capital stock
of the Company.
(k) Percentage Interest. As of the Closing Date, the Shares
will represent at least 1.49% of the outstanding capital stock of the
Company on a fully diluted basis determined as if all outstanding
shares of such capital stock had been converted into one class of
common stock of the Company. For purposes of this Section 3(k), the
Company has assumed that it will issue, to certain other resellers of
the Company's products, a number of shares of the Company's Class B
Common Stock in connection with the acquisition of such resellers'
businesses, at or about the time of the Closing Date. To the extent
that the Company does not issue such shares in connection with such
acquisitions, the Shares sold to the Assignor hereunder will
represent, pro rata, a greater percentage of the outstanding capital
stock of the Company.
4. Representations and Warranties of Assignor and the
Principals. Assignor and the Principals hereby jointly and severally represent
and warrant to and agree with the Company as follows:
(a) Assets. Assignor is the legal and beneficial
owner of the Assets, free and clear of any lien, charge, encumbrance
or adverse claim, except as set forth on Schedule II hereto, and has
the legal authority to transfer the Assets. There are no assets used
in, or necessary for the operation of, the business of Assignor as
presently operated (the "Business") other than the Assets. The Assets
are substantially all of the assets of Assignor.
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(b) Liabilities; Litigation. Assignor has no
liabilities known or unknown, fixed or contingent, including
contractual liabilities, other than the Assumed Liabilities. There is
no pending or threatened action or proceeding affecting the Assets or
the Business before any court, governmental agency or arbitrator,
which may materially adversely affect the Assets or the Business or
which could affect the legality, validity or enforceability of this
Agreement.
(c) Consents; No Conflicts. The execution, delivery
and performance of this Agreement by Assignor and the Principals and
the consummation by Assignor and the Principals of the transactions
contemplated hereby (x) do not contravene (i) Assignor's
organizational documents, (ii) any law or (iii) any contractual
restriction binding on or affecting Assignor or the Principals and (y)
do not require the consent, approval, permission or other
authorization of any court, arbitrator or governmental, administrative
or self-regulatory authority or consent under any material lease,
license, agreement or other material instrument of Assignor, the
Principals or the Business and (z) do not require any stockholder,
director, partnership or other authorization or action, other than
authorizations that have been duly obtained and actions that have been
duly taken.
(d) Financial Statements. Assignor has delivered to
the Company all of its quarterly financial statements for the years
ended December 31, 1996 and December 31, 1997 and, it will, on or
before February 6, 1998, deliver to the Company its financial
statements for the fiscal years ended December 31, 1995, December 31,
1996 and December 31, 1997, audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
("▇▇▇▇▇▇▇▇") (the "Audited Statements"), and such financial statements
do and will fairly present the financial position and results of
operations of Assignor as of the dates and for the periods indicated
therein. Such financial statements were and will be prepared in
accordance with generally accepted accounting principles, consistently
applied.
(e) No Brokers. No broker, finder or any other third
party is entitled to any fee or commission in connection with the
transactions contemplated hereby.
(f) Investor Certificates. Assignor has delivered on
the date hereof a certificate of each shareholder of Assignor in the
form attached hereto as Exhibit A.
(g) Investment Intent. Assignor (i) has such
knowledge, sophistication and experience in business and financial
matters that it is capable of evaluating the merits and risks of an
investment in the Shares and any interest therein, (ii) can bear the
economic risk of an investment in the Shares and any interest therein
for an indefinite period of time and can afford a complete loss of
such investment, and (iii) is acquiring the Shares and any interest
therein for its
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own account and not with a view to, or for a sale in connection
with, a distribution in violation of any applicable securities laws
of any jurisdiction.
(h) No Registration. Assignor understands that the
offering and the issuance of the Shares have not been and will not be
registered or qualified under the laws of any jurisdiction regarding
the offering or sale of securities, and that the Shares and any
interest therein may not be resold or otherwise transferred by
Assignor unless any such subsequent sale or transfer is duly
registered and qualified under the applicable securities laws or is
exempt from such registration and qualification.
(i) Access to Information. Assignor (i) has been
furnished with, and hereby acknowledges the receipt and review of, (a)
the audited financial statements of the Company for the fiscal years
ended December 31, 1995 and December 31, 1996, respectively, and (b)
unaudited financial statements of the Company for the fiscal year
ended December 31, 1997, (ii) has been afforded the opportunity to
obtain such additional information from the Company and its
representatives as Assignor has deemed necessary in order to evaluate
the merits, risks and other considerations relating to an acquisition
of Shares and any interest therein, (iii) fully understands the risks
and other considerations relating to the investment contemplated
hereby, and (iv) with respect to tax and employee benefits, has relied
on the advice of Assignor's own professional advisors.
(j) Draft Prospectus. Assignor understands that (i)
the draft of the Preliminary Prospectus of the Company dated December
31, 1997 and any attachments thereto (the "Draft Prospectus") received
by Assignor is a preliminary draft and that future drafts may contain
material changes from the Draft Prospectus and (ii) there can be no
assurance that an initial public offering of the Company's stock will
be consummated in the near future or ever or that the Registration
Statement filed in connection therewith will be declared effective by
the SEC.
(k) Assignor Information. All information which
Assignor has heretofore furnished or furnishes herewith to the Company
in connection with the transactions contemplated hereby is correct and
complete in all respects as of the date of this Agreement, and if
there should be any change in such information prior to the
consummation of the transactions contemplated hereby, Assignor will
immediately furnish such revised or corrected information to the
Company.
(l) Schedule of Contracts. Attached hereto as
Schedule III is a true and complete list of all oral and written
contracts and agreements entered into by Assignor through the date
hereof. Complete copies of all such written contracts and complete
descriptions of all such oral contracts have been delivered to the
Company.
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(m) Certain Accounting Matters. Assignor has not
taken or agreed to take any action that would prevent the Company
from accounting for the transactions contemplated hereby as a
pooling of interest business combination.
(n) Shareholder Agreements. Assignor acknowledges
that it is the parties' intention that the transactions contemplated
by this Agreement be accounted for as a pooling of interests business
combination and that each of the shareholders of Assignor may be
deemed to be an "affiliate" of Assignor within the meaning of Rule 145
promulgated under the Securities Act. Accordingly, Assignor has
delivered on the date hereof an agreement of each shareholder of
Assignor wherein such shareholder covenants and agrees that he, she or
it will not (i) take any action after the date hereof to cause the
transactions contemplated hereby not to be accountable under the
pooling of interests method of accounting, or (ii) sell, transfer,
pledge, dispose of or otherwise part with any interest in or with
respect to, or in any other manner reduce his, her or its investment
risk with respect to, (A) any shares of capital stock of Assignor at
any time prior to the Closing Date, and (B) any shares of the
Company's stock received by such shareholder in connection with the
transactions contemplated hereby or otherwise until such time as the
Company publishes financial results covering at least 30 days of
combined operations of the Company and Assignor or (iii) from the
Closing Date until the time the Company publishes financial results
covering at least thirty days of combined operations of the Company
and Assignor, directly or indirectly sell or purchase or enter into
any agreement, contract or arrangement to sell or purchase any put or
call options or other derivative securities (including any short
sales) with respect to shares of the Company's stock or enter into any
other agreements, contracts or arrangements providing for the
alteration of such shareholder's investment risk with respect to any
shares of the Company's stock.
(o) Reseller Agreement. The Company has not
materially breached any of its obligations under the Reseller
Agreement as of the date hereof.
(p) No Material Adverse Change. Since December 31,
1997, there has not been any change in the business financial
condition or results of operations of Assignor from that reflected in
the financial statements of Assignor for the fiscal year ended
December 31, 1997, except changes in the ordinary course of business
which have not been materially adverse.
(q) Purchaser Representative. ▇▇▇▇▇ ▇▇▇▇▇ has agreed
to act as the purchaser representative of any Shareholders who are not
"accredited investors" as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, as amended.
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5. Securities Laws. Assignor hereby acknowledges and
agrees that:
(a) the Shares must be held indefinitely unless
subsequently registered under the Securities Act and under any
applicable state securities laws or unless an exemption from such
registration is available.
(b) the Shares will not be registered under the
Securities Act on the grounds that the offering and sale thereof
contemplated by this Agreement will be exempt from registration under
the Securities Act, and that the Company's reliance upon such
exemption is based in part upon the representations of Assignor set
forth herein.
(c) "stop transfer" instructions shall be placed
against the Shares on the transfer books of the Company and that the
certificate(s) evidencing the Shares shall bear a legend, in addition
to any legend required by applicable state securities laws, in
substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE DISPOSED OF FOR VALUE UNLESS A REGISTRATION
STATEMENT HAS BECOME EFFECTIVE WITH RESPECT TO SUCH
SECURITIES UNDER THE SECURITIES ACT AND SUCH STATE SECURITIES
LAWS OR IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE CORPORATION THERE IS AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND THE
APPLICABLE STATE SECURITIES LAWS OR SUCH REGISTRATION IS NOT
OTHERWISE REQUIRED."
6. Due Diligence; Termination. (a) Assignor shall afford any
and all authorized representatives of the Company access, during normal
business hours, to its employees, properties, books, contracts and records and
shall furnish promptly all information concerning its business, properties and
personnel and copies of any of its books, records or contracts as the Company
or its representatives shall request; provided, that no investigation pursuant
to this Section 6 shall effect or be deemed to modify any representation or
warranty made in this Agreement by Assignor.
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(b) Until the date which is ten days after Assignor
delivers to the Company the Audited Statements pursuant to Section 4(d) hereof,
the Company shall have the right to terminate this Agreement if the Company
shall determine in its sole discretion, based on its investigation of Assignor
pursuant to Section 6(a) or a review of such Audited Statements, that
consummating the transactions contemplated hereby would not be in the best
interests of the Company.
(c) The Company shall have the right to terminate
this Agreement if the Company does not receive requisite approval of the
transactions contemplated hereunder from its Board of Directors and/or
stockholders on or before February 15, 1998.
7. Closing. Subject to Section 6(b) hereof and the
satisfaction or waiver of the conditions set forth in Section 9 hereof,
consummation of the transactions contemplated by Section 1 hereof (the
"Closing") shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on a date (the "Closing Date") which
is the earlier of (a) March 31, 1998 and (b) the date specified in a written
notice given by the Company no less than five (5) days prior to such date.
8. Covenants.
(a) Interim Operations. Prior to the Closing Date,
unless the Company has consented in writing thereto, Assignor:
(i) shall conduct its operations according to its usual,
regular and ordinary course in substantially the same
manner as heretofore conducted;
(ii) shall use its reasonable efforts to preserve intact
its business organization and goodwill and maintain
satisfactory relationships with those persons having
business relationships with it;
(iii) shall promptly notify the Company of (x) any
material change in its condition (financial or
otherwise), business, properties, assets,
liabilities or the normal course of its business or
of its properties, (y) any material litigation or
material governmental complaints, investigations or
hearings (or communications indicating that the same
may be contemplated), or (z) the breach of any
representation or warranty contained herein;
(iv) shall not issue any shares of its capital stock
or securities;
(v) shall not (w) incur, create, assume or otherwise
become liable for borrowed money or assume,
guarantee, endorse or otherwise become responsible or
liable for the obligations of any other
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individual, corporation or other entity, (x) make
any loans or advances to any other person, except in
each case in the ordinary course of business, (y)
acquire (including, without limitation, for cash or
shares of stock, by merger, consolidation, or
acquisition of stock or assets) any interest in any
corporation, partnership or other business
organization or division thereof or any assets, or
make any investment either by purchase of stock or
securities, contributions of capital or property
transfer or, except in the ordinary course of
business, consistent with past practice, purchase any
property or assets of any other person or (z) effect
a sale or other disposition of any of the Assets or
allow the creation of any lien or encumbrance
thereon;
(vi) shall not (x) declare, set aside or pay any dividend
or make any other distribution or payment with
respect to any shares of its capital stock or other
ownership interests or (y) directly or indirectly
redeem, purchase or otherwise acquire any shares of
its capital stock or make any commitment for any
such action;
(vii) shall not amend or otherwise change its articles of
incorporation or bylaws or equivalent organizational
documents
(viii) shall not increase the compensation payable or to
become payable to its officers or employees, pay any
employment related or other bonus to its
shareholder, or, except as presently bound to do,
grant any severance or termination pay to, or enter
into any employment or severance agreement with, any
of its directors, officers or other employees;
(ix) shall not take any action other than in the ordinary
course of business and in a manner consistent with
past practice with respect to accounting policies or
procedures; and
(x) shall not agree, in writing or otherwise, to take
any of the foregoing actions or take any action
which would make any representation or warranty in
this Agreement untrue or incorrect as of the Closing
Date.
(b) Trading in Company Stock. Except as otherwise
expressly consented to by the Company, from the date of this Agreement
until the Closing Date, Assignor will not directly or indirectly
purchase or sell (including short sales) any shares of the Company's
stock, or sell, transfer, pledge, dispose of or otherwise part with
any interest in or with respect to or in any other manner reduce its
investment risk with respect to any shares of the Company's stock to
be received pursuant to this Agreement.
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(c) Confidentiality of Prospectus. Assignor
acknowledges and agrees that the Draft Prospectus is highly
confidential, that it may not be photocopied, distributed or otherwise
communicated to persons other than Assignor or its representatives
retained for purposes of this transaction and that upon receipt by
Assignor of a preliminary or final prospectus of the Company, the
Draft Prospectus will be returned to the Company.
(d) Custom Applications. Assignor shall provide on
the date hereof a Schedule IV which lists, by customer, all custom
applications, including, without limitation, custom programs, modules
and interfaces (other than software purchased by Assignor from the
Company) ("Custom Applications"), which have been provided to any
customer of the Assignor. Assignor shall provide source code with
respect to all Custom Applications on or before the Closing Date.
(e) Assignor's Name. From and after the Closing,
Assignor shall not use the name "The Ultimate Software Group" or any
expression containing the word "Ultimate" or "US Group" or expression
similar thereto or derivative in whole or in part therefrom. As
promptly as practicable (and in any event within thirty days)
following the Closing, Assignor will change its name to a name
complying with the immediately preceding sentence, and shall deliver
to the Company written evidence of such name change.
(f) Cooperation; Tax Schedule. Following the Closing
Date, Assignor shall promptly furnish the Company with such financial
and reporting data and other information with respect to the Assets
and Assumed Liabilities as the Company may from time to time
reasonably request, for any reasonable business purpose, including,
without limitation, the preparation of tax returns and financial
statements. Within sixty (60) days following the Closing Date,
Assignor shall prepare and deliver to the Company a schedule
indicating the federal income tax basis and state income tax basis, if
different, of each of the Assets and Assumed Liabilities.
(g) Options. The Company hereby agrees that from the
date hereof until April 30, 1998, the Company will not issue any
options to purchase shares of capital stock of the Company to any
persons who are officers of the Company as of the date hereof.
(h) Combined Operations. The Company shall publish
financial results covering at least thirty days of combined
operations of the Company and Assignor within one year from the
Closing Date.
(i) Registration Rights Agreement. (i) The Company
agrees that if at any time between the Closing Date and the
first anniversary of the Closing Date, the Company proposes
to register any shares of capital
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stock of the Company owned by ▇▇▇▇▇ ▇▇▇▇▇▇ and/or ▇▇▇▇
▇▇▇▇▇▇▇▇▇, other than on a Registration Statement on Form
S-8, shareholders of Assignor shall have the right to
register in such registration, on the same terms as have
been given to Messrs. ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇, under the
Amended and Restated Shareholders Rights Agreement, dated
as of June 6, 1997, by and among the Company, ▇.▇. ▇▇▇▇▇▇
Investment Corporation, Sixty Wall Street SBIC Fund, L.P.,
▇▇▇▇▇▇▇ Venture Partners V-Direct Fund L.P., The Ultimate
Software Group, Ltd., ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, a
number of Shares equal to the total number of Shares held
by each such shareholder of Assignor multiplied by a
fraction, the numerator of which is the total number of
shares of Messrs. ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇, as applicable,
proposed to be registered and the denominator of which is
the total number of shares of the Company's capital stock
owned by Messrs. ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇, as applicable, at
the time of registration.
(ii) The Company shall bear and pay all
expenses incurred in connection with any registration, filing
or qualification of Shares with respect to a registration
pursuant to Section 8(i)(i), including without limitation all
registration, filing, and qualification fees, printers' and
accounting fees relating or apportionable thereto and the
fees and disbursements of one counsel for all holders of the
Company's securities being registered in such registration
(selected by the holders of a majority of such securities
being registered), but excluding underwriting discounts and
commissions relating to the Shares being registered.
9. Conditions to Closing. (a) The obligations of the
Company under this Agreement are subject to the fulfillment or waiver
on or before the Closing Date of the following conditions:
(i) Representations and Warranties. The representations
and warranties of Assignor contained in Section 4
shall be true on and as of the Closing Date with the
same effect as though such representations and
warranties had been made on and as of the Closing
Date.
(ii) Performance. Assignor shall have performed and
complied with all agreements, obligations and
conditions contained in this Agreement.
(iii) No Material Adverse Change. There shall have been no
material adverse change in the condition of Assignor
or the Assets since the date hereof.
(iv) Pooling Letter. The Company shall have received from
▇▇▇▇▇▇▇▇, a letter dated the Closing Date,
confirming that the transactions
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contemplated hereby, if consummated, can properly be
accounted for as a pooling of interests combination
in accordance with GAAP and the criteria of
Accounting Principles Board Opinion No. 16 and the
regulations of the SEC.
(v) Approvals. The Company shall have obtained all
requisite approvals of its Board of Directors and
stockholders for the transactions contemplated by
this Agreement.
(vi) Balance Sheet. Assignor shall have delivered to the
Company a balance sheet of the Assignor, dated as of
the Closing Date, prepared in accordance with
generally accepted accounting principles,
consistently applied, and which shall be subject to
review or audit by ▇▇▇▇▇▇▇▇ at the sole discretion of
the Company. Such balance sheet shall demonstrate
that the assets of Assignor, other than the Reseller
Agreement and other intangible assets, have an
aggregate value greater than the aggregate value of
the liabilities of Assignor.
(vii) Updated Schedules. Assignor shall have prepared and
delivered to the Company updated Schedules I, II,
III and IV which reflect, as of the Closing Date,
the information required to be stated therein.
(viii) Assignor shall have delivered to the Company a
Certificate of the President of Assignor that the
representations and warranties of Assignor contained
in this Agreement are true on and as of the Closing
Date and that Assignor has satisfied and performed
all of its respective obligations hereunder.
(ix) Other Documents. The Company shall have received such
other documents as it shall reasonably request prior
to the Closing.
(b) The obligations of Assignor under this Agreement
are subject to the fulfillment or waiver on or before the Closing Date
of each of the following conditions:
(i) Representations and Warranties. The representations
and warranties of the Company contained in Section 3
shall be true on and as of the Closing Date with the
same effect as though such representations and
warranties had been made on and as of the date
thereof.
(ii) Delivery of Shares. The Company shall have delivered
the Shares specified in Section 1.
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(iii) The Company shall have delivered to Assignor a
certificate of the President or any Vice President
of the Company that the representations and
warranties of the Company contained in this
Agreement are true on and as of the Closing Date and
that the Company has satisfied and performed all of
its respective obligations hereunder.
10. Certain Tax Matters. The parties to this Agreement intend
that the transactions contemplated hereby (and the distribution of the Shares
of the Company to Assignor's shareholders) (collectively, the "Transaction")
will constitute a reorganization described in Section 368(a)(1)(C) of the Code
and each party agrees that it will not take any action which would result in
the Transaction not so qualifying. However, each of the parties to this
Agreement acknowledges that it is relying solely upon its respective advisors
in determining the tax consequences of the Transaction and will not rely on any
representation or assurance of the other party other than the representations
and covenants set forth in this Agreement or any other agreement or certificate
delivered in connection herewith. None of the Company, the Assignor or the
shareholders of the Assignor will take any tax reporting position or make any
tax election inconsistent with the characterization of the Transaction
qualifying as a reorganization described in Section 368(a)(1)(C) of the Code,
except as may be required upon examination by the Internal Revenue Service or
any other tax authority.
11. Waiver. Subject to the consummation of the transactions
contemplated hereby, each of the parties hereto hereby releases and discharges
the other party, its partners, employees, parents, subsidiaries, affiliates,
successors and assigns from all actions, causes of action, suits, debts,
agreements, judgments, claims, and demands whatsoever, in law or equity which
such party ever had, now have or hereafter can, shall or may have, for, upon or
by reason of any claim relating to the Reseller Agreement and the relationship
of the parties thereunder.
12. Indemnification. (a) Assignor and the Principals hereby
jointly and severally agree to indemnify and hold harmless the Company
and any fiduciary, officer, director, employee, agent or controlling
person of the Company (each, an "Indemnified Person") against any and
all losses, claims, damages, expenses and liabilities (or actions in
respect thereof) whatsoever by reason of or arising from (i) any
breach of the representations and warranties of this Agreement, (ii)
any failure by the Assignor to comply with any covenant in this
Agreement, (iii) any liabilities whether known or unknown, fixed or
contingent (including contractual liabilities) of Assignor or any of
its affiliates, other than the Assumed Liabilities and (iv) any
failure of Assignor to comply with the Bulk Sales Act (as defined
below); provided, however that (A) the aggregate liability of ▇▇.
▇▇▇▇▇ ▇▇▇▇▇, as Principal, under this Agreement shall not exceed $
1,552,500 and (B) the aggregate liability of ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, as
Principal, under this Agreement shall not exceed $1,012,500. Assignor
and the Principals will reimburse any
13
Indemnified Person for all expenses (including reasonable attorneys'
fees) as they are incurred by any such Indemnified Person in connection
with investigating, preparing or defending any such action or claim,
whether or not in connection with pending or threatened litigation in
which any Indemnified Person is a party.
(b) The Company hereby agrees to indemnify and hold harmless
Assignor and the Principals and any fiduciary, officer, director,
employee, agent or controlling person of Assignor (each, an
"Indemnified Person") against any and all losses, claims, damages,
expenses and liabilities (or actions in respect thereof) whatsoever by
reason of or arising from (i) any breach of the Company's
representations and warranties in this Agreement, (ii) any failure by
the Company to comply with any of its covenants in this Agreement and
(iii) for any action or omission of the Company occurring after the
Closing Date with respect to contracts with customers of the Assignor.
The Company will reimburse any Indemnified Person for all expenses
(including reasonable attorneys' fees) as they are incurred by any
such Indemnified Person in connection with investigating, preparing or
defending any such action or claim, whether or not in connection with
pending or threatened litigation in which any Indemnified Person is a
party.
13. Miscellaneous. (a) Notices Any notices or other
communications required or permitted to be given or delivered under
this Agreement shall be in writing and shall be sufficiently given to
a party if delivered personally or mailed by registered or certified
mail, postage prepaid, return receipt requested, or by overnight
delivery by a nationally-recognized courier or by telecopier, as
follows (or to such other address or person as either party may from
time to time designate to the other in writing):
To Assignor or the Principals:
c/o ▇▇▇▇▇ ▇▇▇▇▇
The Ultimate Software Group of the
Carolinas, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
To the Company:
The Ultimate Software Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
14
Any such notice or other communication shall be deemed to be given as
of the date it is personally delivered, five (5) days after being
deposited in the United States mail, one (1) day after being deposited
with a nationally recognized courier for overnight delivery or the
date it is transmitted via telecopier, answerback received (followed
promptly by delivery of such notice in accordance with one of the
other methods above).
(b) Binding Effect; Assignability. This Agreement
shall be binding upon and inure to the benefit of all of the parties
and their successors, legal representatives and assigns. Neither party
hereto may transfer its rights hereunder without the prior written
consent of the other party, which consent may be given or withheld for
any reason or no reason.
(c) Severability. If any provision hereof is held to
be illegal or unenforceable, such provision shall be fully severable,
and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by such provision's
severance. Furthermore, in lieu of any such provision, there shall be
added automatically as part of this Agreement a legal and enforceable
provision as similar in terms to the severed provision as may be
possible.
(d) Counterparts. This Agreement may be executed in
any number of counterparts with the same effect as if all parties
hereto had signed the same document. All counterparts shall be
construed together and shall constitute one instrument.
(e) Integration. This Agreement constitutes the
entire agreement among the parties hereto pertaining to the subject
matter hereof and supersedes all prior agreements and understandings
pertaining thereto.
(f) Governing Law. This Agreement and the rights of
the parties hereunder shall be interpreted in accordance with the laws
of the State of Delaware, and all rights and remedies shall be
governed by such laws without regard to principles of conflict of
laws.
(g) State Securities Laws. The offer and sale of the
Shares is intended to be exempt from registration under the securities
laws of certain states. Assignor must note that there are restrictions
on transfer of the Shares, as agreed upon in Section 5 of this
Agreement.
(h) Bulk Sales Waiver. Subject to Section 12(a)
hereof, the parties hereto waive compliance with the Bulk Sales Act or
similar acts or provisions of any jurisdiction which may apply to the
transaction contemplated by this Agreement (collectively, the "Bulk
Sales Act").
15
(g) Survival. The representations, warranties and
indemnities of the parties set forth in this Agreement shall survive
for a period of one year from the Closing Date.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING
THE MERITS AND RISKS INVOLVED. THE SECURITIES OFFERED HEREBY HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR
REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS AGREEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR
THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.
16
IN WITNESS WHEREOF, the undersigned has caused this Agreement
to be executed as of the day and year first above written.
THE ULTIMATE SOFTWARE GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
THE ULTIMATE SOFTWARE GROUP
OF THE CAROLINAS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
PRINCIPALS:
/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT A
INVESTOR CERTIFICATION
_______________________________________ hereby certifies that he or she EITHER:
(Check Box that Applies)
[ ] 1. meets one or more of the following criteria:
(A) He or she is a person having individual net
worth, or joint net worth with his or her
spouse, exceeding $1,000,000; or
(B) He or she is a person having an income in
excess of $200,000 in each of the two (2)
most recent years or a joint income with
his or her spouse in excess of $300,000 in
each of those years and having a reasonable
expectation of reaching the same income
level in the current year.
[ ] 2. does not meet either of the criterion described in
1(A) or (B) above and acknowledges that it has
appointed ▇▇▇▇▇ ▇▇▇▇▇ as its purchaser
representative.
---------------------------------
[Exhibit B intentionally omitted]
[Schedules intentionally omitted.]
