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EXHIBIT 10.16
AGREEMENT
FOR
SALE AND PURCHASE OF ASSETS
DATED AS OF JUNE 18, 1999
BY AND AMONG
INFORMATION ON DEMAND, INC.,
HTE - IOD, INC.
AND
XXXXXX X. XXXXX
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AGREEMENT FOR SALE AND PURCHASE OF ASSETS
This AGREEMENT FOR SALE AND PURCHASE OF ASSETS (this "Agreement"),
made by and among INFORMATION ON DEMAND, INC., a Florida corporation
(hereinafter referred to as "Seller"); HTE-IOD, INC., a Florida corporation
(hereinafter referred to as "Buyer"); and XXXXXX X. XXXXX, as the sole
shareholder of Seller (hereinafter referred to as "Shareholder"):
The undersigned parties hereby undertake and agree as follows:
1. Agreement to Sell and Purchase. Except for the Excluded Property
(as hereinafter defined), Seller agrees to sell and Buyer agrees to purchase
all of the tangible and intangible property included in the description of
property hereinafter, including, but not limited to, the following described
items of property (collectively the "Property") as of the date of Closing, upon
the terms and conditions hereinafter set forth:
a. All licensed and unlicensed computer program materials and
software, including, but not limited to, the source and object codes,
documentation, development environment, development tools (the assignments or
consents for the transfer of such development tools and of any other Property
to Buyer, together with the amounts required by such third parties to effect
such transfers, as listed on the "Schedule of Third Party Assignments" attached
hereto as Schedule "A-1", which Seller shall obtain within fifteen (15) days
after Closing at Buyer's direction and reasonable cost and expense up to a
maximum of $5,000), enhancements, and all works in progress on such computer
program materials and software comprising, applicable or relating in any manner
to the software applications described below (hereinafter, collectively
referred to as the "Computer Products"), and also including, but not limited
to, such Computer Products listed or described on the "Schedule of Computer
Products" attached as Schedule "A" hereto. For purposes of this Agreement,
"Applications" shall mean the following computer programs in both source code
and object code form.
b. All copyrights and patents, at common law or granted,
filed, or in process with any governmental agency which relate in any manner to
the Computer Products or any services, products or items in which Seller has an
ownership interest, including, but not limited to, such copyrights and
unlicensed computer programs which are listed or described on the "Schedule of
Copyrights and Patents" attached as Schedule "B" hereto.
c. The customer list and the sales/service prospect list of
Seller, including all names, addresses, phone numbers, names of principal
contact persons, past correspondence, files and current status reports related
to any product or service or sales prospects of Seller which are listed or
described on the "Schedule of Customers and Sales/Service Prospects" attached
as Schedule "C" hereto.
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d. All customer contracts and agreements and purchase orders
for licensing any of the Computer Products and for any software modifications,
software designs, software development, training, conversions, software
maintenance support and all other services and products provided by Seller,
including, but not limited to, the customer contracts and agreements and
purchase orders which are listed on the "Schedule of Contracts and Agreements
for Sales and Services" attached as Schedule "D" hereto.
e. The name "Information On Demand" and all trademarks,
service marks, internet domain names and logos or other corporate
identification of the Seller and for all of its products or services,
including, but not limited to, the names, marks, logos and other corporate
identifications which are shown on the "Schedule of Trade Names and Trade
Marks" attached as Schedule "E" hereto.
f. The interests or rights of Seller in any leases or rental
agreements giving Seller possession or use of any real or personal property
which are shown on the "Schedule of Leases and Rental Agreements" attached as
Schedule "F" hereto.
g. The interests and rights, including without limitation the
right to enforce, but, except as specifically provided below, not the
obligations, of Seller in any employment contracts, confidentially,
intellectual property rights assignments agreements or noncompete or
nondisclosure agreements, or any other contracts or agreements not otherwise
described or included herein relating or pertaining in any manner whatsoever to
the Property or to the Seller's business, including, but not limited to the
contracts or agreements which are shown on the "Schedule of Other Contracts and
Agreements" attached as Schedule "G" hereto; provided, however, that Buyer
reserves the right to reject, in its sole discretion, and not include in this
purchase transaction, certain of such other contracts or agreements listed on
"Schedule of Specifically Excluded Other Contracts and Agreements" attached as
Schedule "G-1" hereto.
h. All inventories of any product or item held for sale to
customers, manuals, brochures, other advertising materials, office supplies, or
any other items of purchased, produced, or developed materials used in relation
to or in the conduct of Seller's business, including, but not limited to, such
inventories or items which are shown on the "Schedule of Inventories" attached
as Schedule "H" hereto; and all purchase orders and commitments made by Seller
to suppliers of Seller's business and relating to the Property outstanding as
of the Closing date and which have heretofore been made available to Buyer and
listed on Schedule "H".
i. All computer and related equipment, furniture and
fixtures, office equipment and other tangible personal property of Seller,
including, but not limited to, such items of tangible personal property which
are shown on the "Schedule of Tangible Personal Property" attached as Schedule
"I" hereto.
j. All good will, business opportunities and all other assets
of the Seller, except the excluded assets described below.
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2. Excluded Assets. The following items of property shall not be
sold by the Seller or acquired by the Buyer hereunder and are excluded from the
definition of Property (the "Excluded Assets"): (i) cash and cash equivalents
on hand or on deposit; (ii) amounts due from Seller's employees; (iii) accounts
receivables of Seller listed on a printout of Seller's accounts receivable and
existing as of the Closing date for which all of Seller's deliverables,
commitments, services or products whatsoever have been fully completed,
performed or provided to the customer by Seller as of the Closing date and such
accounts receivable are then legally payable to Seller, as set forth on the
"Schedule of Seller's Accounts Receivable" attached hereto as Schedule "X" and
made a part hereof; (iv) the corporate record book and financial books and
records of Seller excluding the books and records to be transferred hereunder,
and (v) the Seller's tax refunds and credits, utility deposits, investments,
prepaid insurance premiums and insurance claims and insurance proceeds, if any.
3. Purchase Price. The total purchase price, as hereinafter
provided, shall be $3,000,000. In consideration of Seller's and Shareholder's
performance under this Agreement and the transfer and delivery of the Property
to the Buyer, the Buyer shall pay, complete or otherwise undertake the
following:
a. Buyer shall pay the initial or fixed component of the
purchase price ("Initial Purchase Price") in the amount of One Million Dollars
($1,000,000) in cash at the Closing (as hereinafter defined). Buyer has
advanced to Seller Fifty Thousand Dollars ($50,000) of the Initial Purchase
Price, for which credit toward the payment of the Initial Purchase Price shall
be given to Buyer at Closing, and if the Closing does not occur, Seller and
Shareholder shall be jointly and severally obligated to Buyer to repay such
advance within ten (10) days of Buyer's demand. Notwithstanding the foregoing
to the contrary, at the Closing, One Hundred Thousand Dollars ($100,000) of the
Initial Purchase Price shall be retained by the Buyer in escrow for ninety (90)
days after Closing as security for any breach or violation by Seller or
Shareholder of any of Seller's or Shareholder's representations, warranties or
other provisions of this Agreement. To the extent not required as security for
any breach or violation by Seller or Shareholder of any of Seller's or
Shareholder's representations, warranties or other provisions of this
Agreement, such retained escrow funds shall be delivered by the Buyer to the
Seller at the end of the 90 days escrow period, plus all interest earned
thereon.
b. Buyer shall pay, in the aggregate, up to Two Million
Dollars ($2,000,000) in three payments over the three (3) year period following
the Closing ("Contingent Purchase Price"). The amount and payment of the
Contingent Purchase Price shall determined by and conditioned upon certain
operating profit and software development objectives being achieved after
Closing through Buyer's continued business operations of the the Property and
Seller's business purchased hereunder, as more fully described and provided in
Paragraph 4 of this Agreement.
c. As the transferee, assignee, sublessee or otherwise,
assume or undertake
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certain of Seller's obligations or responsibilities as specifically provided
hereunder pertaining to the contracts, leases, rental agreements and other
agreements listed or described in Schedules "D", "F" and "G" attached hereto.
Notwithstanding anything in this Agreement to the contrary, no obligation,
liability or responsibility of Seller will be imposed upon Buyer on or after
the Closing unless the contract or agreement describing such obligation,
liability or responsibility is listed or described on Schedules "D", "F" or
"G."
d. For purposes of complying with the requirements of Section
1060 of the Internal Revenue Code of 1986, as amended, a schedule allocating
the Purchase Price to be paid by Buyer to the Seller and among each class of
the Property (the "Purchase Price Allocation Schedule") shall be attached
hereto as Schedule W. Each of Seller and Buyer shall prepare its federal, state
and local income tax (if any) returns for all current and future tax reporting
periods and file Form 8594 (and corresponding state, local and foreign forms)
with respect to the transfer of the Property to Buyer in a manner consistent
with the Purchase Price Allocation Schedule. If any governmental entity
challenges such allocation, the party first receiving notice of such challenge
shall give the other party prompt notice of such challenge, and the Seller and
Buyer shall cooperate in good faith in responding to such challenge, in order
to preserve the effectiveness of the Purchase Price Allocation Schedule.
Neither the Seller nor the Buyer shall report the allocation of the Purchase
Price in a manner inconsistent with the Purchase Price Allocation Schedule.
4. Contingent Purchase Price. Buyer shall pay to Seller, with no
minimum commitment by Buyer, the Contingent Purchase Price, as follows:
a. The Contingent Purchase Price shall be divided into three
equal parts of Six Hundred Sixty-Six Thousand Six Hundred Sixty-Seven Dollars
($666,667), which each such part shall be referred to as an "Annual Contingent
Purchase Price Payment". The payment by Buyer to Seller of each Annual
Contingent Purchase Price Payment shall be conditioned upon Buyer achieving an
Operating Profit (as hereinafter defined) in the fiscal year applicable for
such payment of Four Hundred Seventy-Six Thousand Seven Hundred Seventy-One
Dollars ($476,771), Five Million Seven Hundred Nineteen Thousand Four Hundred
Twelve Dollars ($5,719,412) and Ten Million One Hundred Forty-Four Thousand One
Hundred Eleven Dollars ($10,144,111), for the years ended June 30, 2000, June
30, 2001 and June 30, 2002, respectively (each referred to as the "Annual
Operating Profit Objective"). "Operating Profit" shall be defined as pre-tax
net income of Buyer determined in accordance with generally accepted accounting
principles applied on a consistent basis. In the event Buyer engages after the
Closing in business activities which are not substantially similar to the
business activities conducted by Seller prior to the Closing (the
"Non-Operating Profit Activities"), then Operating Profit shall not include any
revenues or expenses directly associated with such Non-Operating Profit
Activities. The Operating Profit for each of the above stated three years
ending after the Closing shall be determined by the independent public
accounting firm, Xxxxxx Xxxxxxxx & Co., or such other independent accounting
firm then engaged by Buyer's parent, HTE, Inc., to provide public
accounting/auditing services, within sixty (60) days after the close of each
such annual period.
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The determination of the Operating Profit by such accounting firm shall be
final and binding upon the parties hereto. The payment of an Annual Contingent
Purchase Price Payment shall be made by Buyer to Seller within seven (7) days
after the determination that the Operating Profit for such fiscal year equals
or exceeds the Annual Operating Profit Objective for such year. In the event an
Annual Operating Profit Objective for any fiscal year is not achieved, then the
applicable Annual Contingent Purchase Price Payment for such year shall not be
due or payable by the Buyer; provided, however, that such unearned and unpaid
Annual Contingent Purchase Price Payment shall become payable upon the
cumulative and aggregate Operating Profit from July 1, 1999 through the end of
either of the fiscal years ended June 30, 2001 or June 30, 2002 equaling or
exceeding the cumulative and aggregate Annual Operating Profit Objectives from
July 1, 1999, through such year end date. The payment of the Contingent
Purchase Price shall not be conditioned upon the Buyer's continued employment
of Shareholder after the Closing.
5. Unearned Maintenance and Support Revenue. As of the Closing
date, a comprehensive description and amount of Seller's unearned maintenance
and support fees or revenue under its customer maintenance and support
contracts, if any ("Unearned Maintenance Fees") shall be mutually determined in
good faith by the parties using a straight-line or monthly prorated method,
which shall be shown on Schedule "J" attached hereto and made a part hereof.
Buyer shall receive a credit for the Unearned Maintenance Fees (the "Unearned
Maintenance Fees Revenue Credit"), which shall be applied: (i) one-third toward
the payment of the first Annual Contingent Purchase Price Payment; (ii)
one-third toward the payment of the second Annual Contingent Purchase Price
Payment and (iii) one-third toward the payment of the third Annual Contingent
Purchase Price Payment. Seller agrees that between the date hereof and the
Closing date, Seller shall not enter into any maintenance contracts with
customers without the Buyer's express prior written consent. In addition, with
respect to such customer maintenance contracts, Seller and Shareholder hereby
represent and warrant to Buyer that within the 90 days immediately preceding
the date of this Agreement, Seller has not executed or otherwise entered into
with a customer any renewed maintenance contract for a renewal term greater
than one year.
6. Other Deferred or Unearned Revenue. As of the date of Closing, a
comprehensive description of all prepaid customer development work or service
orders, including, without limitation, an estimated amount of person hours
required to fully perform such remaining services or work ("Person Hours"), and
amount of Seller's Other Deferred Revenue (defined herein), if any, shall be
mutually determined in good faith by the parties based on objective and
reasonable standards and factors, and shall be shown on Schedule "K" attached
hereto. Any dispute between the parties over such amount shall be resolved in
accordance with the Revenue Dispute Procedure set forth in Paragraph 37 of this
Agreement. Buyer shall receive a credit (the "Other Deferred Revenue Credit")
which shall be applied: (i) one-third toward the payment of the first Annual
Contingent Purchase Price Payment; (ii) one-third toward the payment of the
second Annual Contingent Purchase Price Payment and (iii) one-third toward the
payment of the third Annual Contingent Purchase Price Payment. For purposes
hereof, "Other Deferred Revenue" shall mean any customer fees or revenue amount
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billed and/or collected by Seller under any license, development, service or
other nonmaintenance nonsupport contracts for which the product or service
applicable to such billing or collection has not been fully provided or
completed (including, without limitation, the expiration of a license from the
Seller) by Seller as of the date of Closing. In the event (i) Buyer reasonably
expends more Person Hours after the Closing than agreed to and represented by
Seller on Schedule "K" or described in the Other Deferred Revenue or (ii) Buyer
otherwise reasonably incurs reasonable direct costs in fulfilling the requisite
performance owed to the customer in excess of 80% of the amount of the Other
Deferred Revenue Credit, then Buyer shall be entitled to deduct such excess
costs from any payment otherwise due to Seller, including any funds then held
in escrow or the Contingent Purchase Price.
7. Works-in-Progress and Customer Commitments. As of the date of
Closing, a comprehensive description and analysis, including an estimated
amount of Person Hours remaining to complete, and amount of Seller's customer
works-in-progress and commitments, together with the amount of fees or other
payments Seller is legally entitled to receive from its customers for
completion of such works-in-progress or commitments after the Closing date
("Seller Customer Commitments"), which shall be mutually determined in good
faith by the parties based on objective and reasonable standards and factors,
and which shall be shown on Schedule "L" attached hereto. As provided in this
Agreement, accounts or other receivables due from Seller's customers for which
all of Seller's deliverables, services or products have been fully provided or
completed prior to the date of Closing by Seller shall be retained by Seller.
Such definition of Seller's accounts receivables shall include any unbilled
amounts due from Seller's customers for the fully completed portion of any
works-in-progress or commitments as of the date of Closing. In the event (i)
Buyer reasonably expends more Person Hours after the Closing than represented
by Seller on Schedule "L" or described in the Seller Customer Commitments or
(ii) Buyer otherwise reasonably incurs direct costs in excess of 80% of the
amount of the Seller Customer Commitments ("Work-In-Progress Credit"), then
Buyer shall be entitled to deduct such excess costs from any payment otherwise
due to Seller hereunder, including any funds then held in escrow or the
Contingent Purchase Price. Any payments received by Buyer after the Closing
from customers which are entirely applicable to the portion of the above
described completed part of the works-in-progress retained by Seller shall be
remitted to Seller within thirty (30) days of Buyer's receipt thereof.
8. Closing.
a. Date and Place of Closing. This transaction shall be
closed on or before June 24, 1999 (the "Closing"), or on such other date as
mutually agreed upon, at Buyer's offices, 0000 Xxxxxxxx Xxxxxx Xxxxx, Xxxx
Xxxx, Xxxxxxx 00000, or at such other place as mutually agreed upon; provided,
however, that Buyer shall have the right to request the consent of Seller and
the Shareholder to a ten-day extension, which consent shall not be unreasonably
withheld.
b. Conditions of Closing. The Closing shall be conditioned
upon the following:
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(i) the Buyer and Shareholder entering into an
Employment Agreement in substantially the form attached hereto as Exhibit "N",
as provided for in Paragraph 13 of this Agreement;
(ii) the representations and warranties of Seller and
the Shareholder as set forth in this Agreement being true and correct in all
material respects at and as of the date of this Agreement and as of the date of
Closing (as though made at and as of that time) and the respective obligations
of Seller and the Shareholder shall have been performed or complied with in all
material respects as required by this Agreement to be performed or complied
with at or prior to the Closing Date, and Seller and the Shareholder delivering
to Buyer an executed certificate to such effect, dated the date of Closing, in
form and substance reasonably acceptable to Buyer and its attorney; in
connection with Seller's delivery of the certificate referred to in the
foregoing sentence, Seller and the Shareholder may from time to time update and
deliver revised schedules (the "Updated Schedules") showing changes from the
schedules being delivered on the date hereof as may be necessary to reflect
developments occurring in the period between the date hereof and the Closing
date and other information required to be disclosed pursuant to this Agreement;
provided, however, that Buyer may accept the Updated Schedules and proceed with
Closing or reject the Updated Schedules and terminate this Agreement in its
sole but reasonable discretion; and provided further, that no claim may be made
by Buyer with respect to the Updated Schedules if Buyer elects to accept the
Updated Schedules and close the transactions contemplated hereby; provided
further, however, that as a condition to acceptance of any Updated Schedule(s)
and of its election to close the transactions contemplated hereby, Buyer may
require acceptable resolution in its sole but reasonable discretion of any
matter disclosed in an Updated Schedule prior to Closing;
(iii) [Intentionally Omitted];
(iv) Seller shall have delivered to Buyer (A)
state-certified copies of the Articles of Incorporation of Seller and copies of
the Bylaws of Seller as in effect immediately prior to the Closing, (ii) copies
of resolutions adopted by Seller's Board of Directors and by Seller's
Shareholder authorizing the transactions contemplated by this Agreement, and
(C) a certificate of legal existence of Seller issued by the Secretary of State
of the State of Florida and each other state in which it is qualified to do
business as of a date not more than ten days prior to the Closing date, and all
of such documents (except for the certificate of legal existence) shall be
certified as of the Closing date by a duly authorized officer of Seller as
being true, correct and complete;
(v) between the date of this Agreement and the
Closing date, there shall not have been any occurrence or event known to Seller
or Shareholder which, individually or in the aggregate, has resulted in or
which Seller or Shareholder reasonably expects will result in an effect or
change which is materially adverse to the results of
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operations, financial condition or prospects of the Seller's business or the
ability of Buyer to use the Property, and Seller and Shareholder delivering to
Buyer an executed certificate to such effect, dated the Closing date;
(vi) each of the parties receiving the opinions of
counsel from the other party's counsel, dated the Closing date, in form and
substance reasonably satisfactory to such other party;
(vii) each of the parties executing and delivering the
respective collateral documents to which it is a party, including, without
limitation, the xxxx of sale, the various assignments and assumption agreements
transferring the Property;
(viii) Buyer's receipt of all required approvals,
consents and authorizations of state and federal regulatory authorities, if
any,
(ix) receipt of all required consents of third
parties, if any; and
(x) all other conditions to the Closing of the
Seller, Shareholder and the Buyer provided under this Agreement have been fully
satisfied, including without limitation, the termination of all existing
security interests and financing statements affecting the Property.
c. Due Diligence. Buyer shall have the right to request, and
Seller shall have the obligation to supply, up to Closing continuing
information concerning the Seller, including, but not limited to: (i) resumes
of all personnel; (ii) employee compensation schedules; (iii) copies of all
employment, non-compete or non-disclosure agreements; (iv) employee benefit
plans; (v) annual financial statements and supporting schedules for the past
three years; (vi) customer lists; (vii) copies of all customer contracts
(licensing and support); (viii) copies of all lease, rental or similar
contracts; (ix) copies of all insurance policies or contracts; (x) copies of
all other contracts or agreements; (xi) copies of all loans or other debt
instruments; (xii) the Seller's Articles of Incorporation, Bylaws and corporate
minutes; (xiii) copies of aged accounts receivable and accounts payable; (xiv)
copies of current detail amortization schedules of intangible assets and
depreciation schedules for tangible assets, including a complete description of
each asset item shown thereon; (xv) copies of all sales brochures and
advertisements; (xvi) copies of standard licensing, support and other customer
agreements or contracts; (xvii) description of products and services sold;
(xviii) description of any product enhancements underway or planned; (xix)
description of any development programs underway or planned; (xx) copies of any
patents, copyrights, trademark, tradename or applications therefore; (xxi)
copies of Federal and state income tax returns as filed for the fiscal years
ended on or before December 31, 1998, together with all supporting schedules;
(xxii) copies of all payroll tax information and supporting payment
documentation for the past two (2) years; (xxiii) description of any
threatened, pending or ongoing arbitration, civil, legal, regulatory or
governmental proceedings, if any, whatsoever involving Seller, together
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with the case or file number, court or agency and the names and addresses of
all other parties involved therein; (xxiv) copies of any judgments, orders,
findings or decrees of any court, governmental entity, arbitrator or mediator,
if any, in which Seller is named or involved; (xxv) copies of bills of sale
and/or purchase documents for all of Seller's material assets; and (xxvi) such
other information, copies, or items as might be reasonably requested by Buyer
relating to the Property or the business of Seller.
d. Transfer of Possession. Possession of the Property shall
be transferred to Buyer as of the date of Closing or as of the opening of
business following the date of Closing, as the situation may require.
e. Transfer of Title. Title to the Property shall be
transferred by Seller and the Shareholder, as the case by, to Buyer at the time
of Closing as follows:
(i) Tangible personal property shall be transferred
by xxxx of sale absolute, free and clear of all liens, encumbrances and claims
whatsoever, except as to any obligation or encumbrance, if any, to be assumed,
or taken subject to, by Buyer as specifically provided for hereunder;
(ii) Intangible personal property shall be transferred
by an absolute assignment or other legally required or appropriate document of
conveyance, free and clear of all liens, encumbrances and claims whatsoever,
except as to any obligation or encumbrance, if any, to be assumed, or taken
subject to, by Buyer as specifically provided for hereunder; and
(iii) Leasehold interests shall be transferred by
assignment or sublease, free and clear of all obligations and encumbrances
whatsoever, except as to any obligation or encumbrance, if any, to be assumed,
or taken subject to, by Buyer as specifically provided for hereunder.
f. Prorations. Property taxes for 1999, rent, utilities,
prepaid items, etc., if any, shall be prorated between Seller and Buyer through
the last day preceding the date of Closing. In addition, the Seller shall
receive credit toward the payment of Work-In-Progress Credit and any other
amount due to Buyer hereunder. Buyer shall have the option of taking over any
existing policies of insurance, if assumable, in which event premiums shall be
prorated. Taxes shall be prorated based on the most recent tax xxxx issued by
the taxing authority with due allowance made for the maximum allowable
discount. Any tax proration based on an estimate may, at the request of either
Buyer or Seller, be subsequently adjusted when the tax xxxx is issued.
g. [Intentionally Omitted].
9. [Intentionally Omitted].
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10. Change of Corporate Name. Within fifteen (15) days after the
date of Closing, the Seller shall cease using the corporate name "Information
on Demand, Inc.", and shall adopt non-conflicting and non-confusing corporate
and trade names for its corporate existence and the conduct of its continued
business operations, if any, and shall deliver to Buyer a copy of its amended
articles of incorporation as filed with, and certified by, the Secretary of
State of the State of Florida so changing its corporate name from Information
on Demand, Inc., to such other name reasonably acceptable to Buyer.
11. [Intentionally Omitted].
12. Employment for Seller's Employees. Effective as of the date of
Closing, selected employees of Seller as listed on Schedule "R" will be offered
employment with Buyer (the "HTE Employment Opportunity"). Job descriptions,
compensation, etc. will be negotiated with each of Seller's employees. Those
employees of Seller who accept employment with Buyer will be entitled to
participate in Buyer's employee benefits programs.
13. Employment of Shareholder. Effective as of the date of Closing,
the Shareholder shall enter into with Buyer a five (5) year employment,
confidentiality and noncompete agreement (the "Employment Agreement"), in
substantially the form attached as Exhibit "N" hereto, pursuant to which the
Shareholder will agree to certain covenants and restrictions and will provide
services, in an executive employee capacity, to Buyer in regard to the
continued business operations of the Property and Seller's business purchased
hereunder. Buyer shall pay to the Shareholder pursuant to the Employment
Agreement the following: (i) an annual base salary of $150,000, and (ii) an
annual performance bonus up to a maximum of $75,000. In addition, the
Employment Agreement will include reasonable and customary provisions for such
agreements, including confidentiality, nondisclosure, non-compete, works for
hire and non-solicitation provisions.
14. Opinions of Counsel.
a. Seller. At the Closing, the Buyer shall receive a
favorable opinion, dated the date of the Closing, from Seller's outside legal
counsel, substantially stating and covering the following matters:
(i) The Seller is a corporation incorporated and
organized under the laws of the State of Florida, and its status is active;
(ii) The Seller has the corporate power to conduct
its business and to execute and deliver this Agreement and all other agreements
or instruments pertaining thereto;
(iii) The Seller, and the shareholder of Seller, have
authorized the execution, delivery and performance of this Agreement and all
other agreements or
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instruments pertaining hereto;
(iv) This Agreement and all other agreements or
instruments pertaining thereto are valid and binding upon and enforceable
against the Seller under the laws of Florida and the Federal law of the United
States;
(v) [Intentionally Omitted];
(vi) The execution, delivery and performance by the
Seller and the Shareholder of this Agreement and all other documents pertaining
thereto, will not (i) violate the articles of incorporation, as may be amended,
or bylaws of the Seller; or, (ii) to counsel's knowledge, (A) violate any
statute, law, rule or regulation of the State of Florida or the United States
applicable to the Seller and/or the Shareholder or any order, writ, judgement
or decree of any court or any public or governmental agency or authority
applicable to the Seller or the Shareholder; (B) violate, conflict with or
constitute a default (or an event which, with the giving of notice or lapse of
time or both, constitutes or would constitute a default) under any material
agreement or instrument to which the Seller or the Shareholder is a party or by
which they or their assets, including the Property, are bound and of which
agreement or instrument counsel is aware; or (B) result in the creation of a
mortgage, security interest or other encumbrance upon the Property; and
(vii) To counsel's knowledge, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body or governmental agency pending or overtly threatened in writing against
the Seller or the Shareholder or any of the properties of the Seller or
Shareholder, including the Property.
b. Buyer. At the Closing, the Seller shall receive a favorable
opinion, dated the date of the Closing, from Buyer's counsel, substantially
covering the following matters:
(i) The Buyer is a corporation incorporated and
organized under the laws of the State of Florida, and its status is active;
(ii) The Buyer has the corporate power to conduct
its business and to execute and deliver this Agreement and all other agreements
or instruments pertaining thereto;
(iii) The Buyer has authorized the execution, delivery
and performance of this Agreement and all other agreements or instruments
pertaining thereto;
(iv) This Agreement and all other agreements or
instruments pertaining hereto are valid and binding upon and enforceable
against the Buyer under the laws of Florida and the Federal law of the United
States; and
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(v) The execution, delivery and performance by the
Buyer of this Agreement and all other documents pertaining thereto, will not
(i) violate the articles of incorporation, as amended, or bylaws of the Buyer,
or (ii) to counsel's knowledge (A) violate any statute, law, rule or regulation
of the State of Florida or the United States applicable to the Buyer or any
order, writ, judgement or decree of any court or any public or governmental
agency or authority applicable to Buyer; (B) violate, conflict with or
constitute a default (or an event which, with the giving of notice or lapse of
time or both, constitutes or would constitute a default) under any material
agreement or instrument to which Buyer is a party or by which it or its assets
are bound and of which agreement or instrument counsel is aware. Seller
acknowledges and agrees that Buyer's counsel may rely on a certificate from a
responsible officer of the Buyer covering factual matters upon which counsel
may base its opinion as to the matters set forth in its opinion.
15. Debts of Seller. In lieu of compliance with the provisions of
any law or statute relating to bulk transfers or otherwise, it is agreed as
follows:
a. At Closing, Seller shall furnish to Buyer a list of the
Seller's then existing business creditors on the "Schedule of Existing
Creditors" attached as Schedule "U" hereto, which schedule shall be separately
signed and sworn to by Seller and shall contain the names and business
addresses of all such creditors and showing the amounts owed to each of them,
and also the names and addresses of all persons who are known by Seller to
assert claims against it, even though such claims are disputed or, if there are
no such creditors or claimants, an affidavit that none exist.
b. In the event Seller defaults or otherwise fails to repay or
otherwise satisfy any or all of such indebtedness in a timely manner, or as
otherwise legally or contractually required, then any amount of cash otherwise
due hereunder to Seller or the Shareholder may, at the Buyer's option and upon
the expiration of thirty (30) days from the date which Buyer delivers advance
written notice thereof to Seller and the Shareholder and during which 30 day
period Buyer has not received evidence satisfactory in its sole discretion to
demonstrate that Seller and/or the Shareholder has paid off or otherwise
satisfied such outstanding amount, be applied instead, insofar as necessary, to
the payment of such delinquent indebtedness of Seller as shown on the above
described Schedule "U" or as otherwise reasonably shown to be an indebtedness
of Seller, and the balance of such funds, if any, due hereunder shall be
disbursed to Seller or the Shareholder, as the situation may require. If any
such debts are in dispute, the necessary sums shall be withheld from
distribution until the dispute is settled or adjudicated. Buyer shall be
authorized, but not required, to make appropriate inquiries of any of such
listed creditors from time to time to ascertain whether such indebtedness is
being liquidated in a timely manner by the Seller. Neither Seller nor the
Shareholder shall have any cause of action, or claim, against Buyer for any
amount paid hereunder in good faith to any of such creditors. Notwithstanding
any provision hereof to the contrary, Buyer shall assume only such obligations
or other liabilities expressly recognized and agreed to in Paragraph 3(c).
16. Seller's and Shareholder's Representations and Warranties.
Seller and the
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Shareholder each represent and warrant to Buyer as follows (referenced
Schedules not attached hereto upon execution hereof shall be delivered on or
before Closing):
a. Corporate Existence. Seller is now and on the date of
Closing will be a corporation duly organized and validly existing and in good
standing under the laws of the State of Florida. Seller has all requisite
corporate power and authority to own, operate and/or lease the Property, as the
case may be, and to carry on its business in all states or jurisdictions as now
being conducted.
b. Authorization. The execution, delivery, and performance of
this Agreement have been duly authorized and approved by the board of directors
and Shareholder of Seller, and this Agreement constitutes a valid and binding
agreement of Seller and the Shareholder in accordance with its terms.
c. Financial Statements. Attached hereto as Schedule "O" are
Seller's balance sheet as of December 31, 1998 and income statement and other
financial information for the twelve months ended December 31, 1998 ("Financial
Statements"). The Financial Statements are prepared in accordance with the
books and records of Seller and are true, correct, and complete and fairly
present the financial condition of Seller at the date of such Financial
Statements and the results of its operations for the period then ended. Except
as described in this Agreement, since the date of the Financial Statements
there has been no material adverse change in the financial condition of Seller.
d. Title to Property. Except as described in Schedule "P"
attached hereto, or in Schedule A-1 wherein Seller shall list all requisite
assignments and consents necessary to transfer the development tools and other
Property as further described in Subparagraph 1(a) hereof, Seller holds good
and marketable title to the Property, free and clear of restrictions on or
conditions to transfer or assignment, and free and clear of liens, pledges,
charges, encumbrances or adverse rights of third parties. Except as described
in Schedule "P" of this Agreement, Seller holds valid and enforceable
intellectual property rights to the Property that may be asserted, and to
Seller's and the Shareholder's knowledge are sufficient, to prevent any third
party other than the Seller from reproducing, transmitting, distributing,
selling, licensing, leasing or otherwise conveying or exploiting for commercial
purposes, or preparing derivative works of, the source code or object code
contained in the Property. Except as described in Schedule "P", the Computer
Products do not contain any copyrighted material, including source code or
portions of source code, created by any third party other than past or current
employees of, or consultants to, the Seller ("Contributors"). Except as
described in Schedule "P", none of the Contributors has any valid claim to
ownership or joint ownership of any copyright in or to any portion of the
Property. Except as described in Schedule "P", the execution and delivery of
this Agreement and the other documents to be delivered by Seller and the
Shareholder to Buyer in this transaction, upon delivery of the Initial Purchase
Price, will vest at the Closing all of the Seller's right, title and interest
in and to the Property in Buyer and Buyer will be vested with good and
marketable right, title and interest in and to the Property, in each case free
and clear of any liens, security
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interests, mortgages, charges, encumbrances and adverse rights of every kind,
nature and description.
e. Adverse Circumstances. Except as otherwise set forth on
the "Schedule of Other Adverse Circumstances" attached as Schedule "V" hereto,
to the Seller's and the Shareholder's knowledge, there are no developments or
circumstances, existing or threatened, of a special or unusual nature that may
be materially adverse to the Property or Seller's business.
f. Transfer Not Subject to Encumbrances or Third-Party
Approval. The execution, delivery and performance of this Agreement by Seller
and the Shareholder, and the consummation of the contemplated transactions,
will not (i) contravene any provision of the articles of incorporation or
bylaws of Seller, (ii) result in the creation or imposition of any valid lien,
charge, or encumbrance on any of the Property, or (iii) require the
authorization, consent, or approval of any third party, including any
governmental entity, subdivision or regulatory body, except that the prior
written consent of the other party to the agreements listed on Schedule "A-1"
attached hereto is required for the assignment thereof by Seller to Buyer.
g. Labor Agreements and Disputes. Seller is neither a party
to, nor otherwise subject to any collective bargaining or other agreement
governing the wages, hours, and terms of employment of Seller's employees.
Neither Seller nor the Shareholder is aware of any labor dispute or labor
trouble involving employees of Seller, nor has there been any such dispute or
trouble during the two years preceding the date of this Agreement.
h. ERISA and Related Matters. Schedule "Q" sets forth a
description of all "Employee Welfare Benefit Plans" and "Employee Pension
Benefit Plans" (as defined in xx.xx. 3(1) and 3(2), respectively, of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
existing on the date hereof that are or have been maintained or contributed to
by the Seller. Except as listed on Schedule "Q", the Seller does not maintain
any retirement or deferred compensation plan, savings, incentive, stock option
or stock purchase plan, unemployment compensation plan, vacation pay, severance
pay, bonus or benefit arrangement, insurance or hospitalization program or any
other fringe benefit arrangement for any employee, consultant or agent of the
Corporation, whether pursuant to contract, arrangement, custom or informal
understanding, which does not constitute an "Employee Benefit Plan" (as defined
in ss. 3(3) of ERISA), for which the Seller may have any ongoing material
liability after Closing. The Seller does not maintain nor has it ever
contributed to any Multiemployer Plan as defined by ss. 3(37) of ERISA. The
Seller does not currently maintain any Employee Pension Benefit Plan subject to
Title IV of ERISA. There have been no "prohibited transactions" (as described
in ss. 406 of ERISA or ss. 4975 of the Code) with respect to any Employee
Pension Benefit Plan or Employee Welfare Benefit Plan maintained by the Seller
as to which the Seller has been party. As to any employee pension benefit plan
listed on Schedule "Q" and subject to Title IV of ERISA, there have been no
reportable events (as such term is defined in ss. 4043 of ERISA).
i. Noncancelable Contracts. At the time of Closing, there
will be no material
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leases, employment contracts, contracts for services or maintenance, or other
similar contracts existing or relating to or connected with the operation of
Seller's business not cancelable within 90 days, except those Agreements listed
on Schedules "D", "F" and "G."
j. Compliance with Laws. To the Seller's and the Shareholder's
knowledge, Seller is in compliance in all material respects with all federal,
state and local laws, regulations and ordinances and all orders, judgments and
decrees of any court or governmental authority applicable to, binding upon or
affecting any of the Property or any aspect of the Seller's business. Seller
has not been charged with violating, or, to the knowledge of Seller, threatened
with a charge of violating, or under investigation with respect to a possible
violation of any provision of any federal, state or local law, regulation or
ordinance relating to the Property or any aspect of the Seller's business.
k. Noninfringement; Litigation. There is no claim, litigation,
proceeding, or investigation pending or, to the best knowledge of Seller and
the Shareholder, threatened against Seller or the Shareholder that might result
in any material adverse change in the business or condition of Property being
conveyed under this Agreement. The Computer Products do not: (i) infringe any
copyright, or to the best knowledge of Seller and the Shareholder after
reasonable inquiry, induce or contribute to the infringement of any copyright
of any third party; (ii) to the best knowledge of Seller and the Shareholder
after reasonable inquiry, infringe, induce or contribute to the infringement of
any patent, trademark, tradename or other intellectual property right (other
than copyright) of any third party; (iii) to the best knowledge of Seller and
the Shareholder after reasonable inquiry, misappropriate any trade secret,
know-how, process, proprietary information or other right of any third party.
Neither Seller nor the Shareholder has received notice of, or has any knowledge
of, any complaint, assertion, threat or allegation that would contradict the
foregoing.
l. Good Standing. Except as set forth on the "Schedule of
Other Adverse Circumstances" on Schedule "V" hereto, all contracts, leases and
other agreements to be assigned or transferred to Buyer hereunder are in good
standing and are not in default and neither Seller nor the Shareholder knows of
any facts or circumstances which, after any satisfaction or expiration of
applicable notice or opportunity to cure provided for therein may or could
constitute an event of default. Except as set forth on Schedule "V", the
consent of all persons whose consent to such transfer or assignment is required
has been or will be secured by Seller on or prior to the date of Closing.
m. Accurate and True Information. The originals or copies of
the contracts, leases, agreements and all other documents or papers, including
Seller's financial statements and other information (except as otherwise
described in Subparagraph 16(c) hereof), which have been or will be furnished
to Buyer for examination prior to Closing are genuine, complete and accurate in
all material respects.
n. Payment of Seller's Debts. All creditors of Seller have
been or will be
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paid in a timely manner, or as otherwise legally or contractually required.
o. Timely Filing of Tax Returns. Seller shall complete and
timely file all tax returns and other governmental filings and reports legally
required by virtue of the business operation up to the date of transfer of
possession hereunder, and shall pay all taxes and other items shown to be due
by such returns, filings or reports, including, but not limited to, income
taxes, sales taxes, unemployment compensation taxes, social security taxes and
withholding taxes.
p. No Conflict. Neither Seller nor the Shareholder has entered
into any other contract to sell, mortgage or otherwise transfer, assign or
encumber the Property or any portion thereof. In addition, Seller will, up to
the time of Closing, operate and maintain the businesses in which the Property
is used in the regular course and will not violate the terms of any mortgage,
lease, or any other contract connected with the business or pertaining to the
Property.
q. Working Order, Condition and Performance of Certain Items
of Property. Subject to the representations and warranties as to title
contained hereinabove, Buyer shall accept the conveyance of all of the Property
that is tangible personal property "AS IS" and "WITH ALL FAULTS," with no other
warranties whatsoever including, without limitation, warranties as to
condition, merchantability or fitness for a particular purpose. The Computer
Products will functionally perform or operate as of the date of Closing,
including without limitation the ability to operate accurately for "Year 2000"
purposes, and thereafter substantially in accordance with the documentation for
such Computer Products provided and other representations made by Seller or the
Shareholder to the Buyer; provided, however, that to the extent any of the
Computer Products do not so perform and operate, the Buyer may deduct or offset
from any amounts owed to Buyer hereunder or otherwise seek indemnification from
Seller and/or the Shareholder, as further provided herein, the amount(s) equal
to such damage or loss. The Computer Products do not contain any virus, timer,
clock, counter, or other design or routine intended to limit access to or usage
of the Computer Products except to the extent expressly reflected in design
documentation for such products provided to Buyer.
r. Access to Premises and Information. At reasonable times
prior to the Closing, Seller will provide Buyer and its representatives with
reasonable access to its premises during business hours to review, examine,
inspect, study, copy and audit the assets, titles, contracts, books, personnel
files, records and financial and operating data of Seller and timely furnish
such additional information concerning Seller's business as Buyer from time to
time may request so that Buyer can conduct its due diligence investigation;
provided, however, that no such review, examination, inspection, study, copy or
audit by Buyer or its representatives shall be deemed to be a waiver by Buyer
of, or a release of Seller or the Shareholder from, any representations,
warranties, covenants, conditions, liabilities or obligations as set forth in
this Agreement. Each of Buyer, Seller and the Shareholder acknowledge that
certain of the information and material provided by each to the other during
the course of this transaction is privileged and confidential. Each of Buyer,
Seller and the Shareholder agree to respect the
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confidential nature of this information and material and not to disclose such
information or give such material to any unrelated third party. As to
documents, confidential information shall include any document which is clearly
marked or identified by a party as "confidential." Promptly following the
Closing date, Seller shall deliver to Buyer all materials remaining in its
employees, agents or representatives possession containing any such
confidential information, including, without limitation, information relating
specifically to source code, system and user documentation and other
documentation relating to the Computer Products, and all copies, extracts and
transcriptions thereof.
s. No Future Liens. At no time after Closing shall Buyer or
the Property be subject to a lien, encumbrance or charge arising out of or
relating to Seller's use or ownership of such Property prior to the Closing.
t. Accuracy of Representations and Warranties. None of the
representations or warranties of Seller or the Shareholder herein contains or
will contain any untrue statement of a material fact or omit or will omit or
misstate a material fact necessary in order to make statements in this
Agreement not misleading. Neither Seller nor the Shareholder knows of any fact
that has resulted, or that in the reasonable judgment of Seller and the
Shareholder may result, in a material change in the business (the basis of
which occurred prior to Closing), operations or Property of Seller that has not
been set forth in this Agreement or otherwise disclosed in writing to Buyer. In
addition, neither Seller nor the Shareholder have made any written or oral
customer commitments or promises which have not been disclosed in writing by
Seller to Buyer prior to Closing.
u. No Rights to Third Parties. Neither Seller nor the
Shareholder has: (a) sold, licensed, transferred, pledged or assigned the
Computer Products to, or otherwise provided for the escrow of source code of
the Computer Products for the benefit of, any third party, except as
specifically listed on the "Schedule of Third Party Holders of Source Code"
attached hereto as Schedule "T", or (b) granted any third party the right to
sublicense any Computer Products to any other third party, or (c) granted any
third party ownership rights in or to the Computer Products or any enhancements
of or revisions to the Computer Products, except pursuant to written
agreements, each of which is listed on Schedule "D". Except as set forth on
Schedule "T" attached hereto, after the Closing, other than the Buyer there
will be no person or entity who has the source code, or copies thereof, to the
Computer Products.
v. No Undisclosed Agreements. Neither Seller nor the
Shareholder has contracted or committed to provide development work or
customization work (or special features or functionality) with respect to any
Computer Products (including releases, versions, updates or enhancements to
Computer Products or additional products), except as provided in the agreements
listed on Schedule "D", which lists all such agreements for (i) Computer
Products that have not been fully and completely developed, customized,
shipped, delivered, and/or installed, for new Computer Product features or
enhancements that have not been developed, customized, shipped, delivered, or
installed, or (ii) development or customization services or any
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other commitments of Seller to a customer which have not been fully and
completely performed by Seller. Seller has provided Buyer with originals or
copies of all such agreements. Seller has not made any written or oral
performance, licensing, or programming commitments to customer(s) which are not
disclosed in writing by Seller to Buyer on Schedule "D" or otherwise on or
prior to the Closing date.
w. Warranties and Warranty Claims. Other than as set forth in
the agreements listed on Schedule "D", Seller has not made any written or other
binding warranty or representation with respect to any of the Computer
Products, or any product that embodies or utilizes any of it or them. All
pending warranty claims by Seller's customers with respect to the Computer
Products are described on the "Schedule of Pending Warranty Claims" attached
hereto as Schedule "S". Seller has heretofore provided Buyer with access to
complete copies of all unresolved written customer complaints and all written
summaries of those oral customer complaints in Seller's possession relating to
the Products and any products not currently sold by Seller's business but as to
which ongoing service, support or other responsibilities is provided or owed by
the Seller's business.
17. Buyer's Representations and Warranties. Buyer represents and
warrants that Buyer is a corporation organized and existing under the laws of
the State of Florida, is active, and in good standing in all material respects,
and has the power and legal authority to enter into and carry out the
provisions of this Agreement. The execution and delivery by Buyer to Seller and
the Shareholder of this Agreement has been duly authorized by Buyer's board of
directors and is made in compliance with all requirements which may be imposed
by Buyer's articles of incorporation and bylaws, and this Agreement is a
legally binding contract of Buyer. The execution, delivery and performance of
this Agreement by Buyer, and the consummation of the contemplated transactions,
will not contravene any provision of the articles of incorporation or bylaws of
Buyer or require the authorization, consent, or approval of any third party,
including any governmental subdivision or regulatory agency.
18. Employee Wages and Benefits; Other Liabilities. Seller shall be
solely responsible for the salaries and other benefits due and payable to
Seller's employees. In the event Buyer decides to employ a person who was
previously employed by Seller, Buyer shall negotiate with and enter into a new
employment arrangement with such person under which Buyer's entire
responsibility for salaries, vacation time, and other employee benefits, if
any, for such person shall be provided for therein. As between Seller, the
Shareholder and Buyer, Seller and the Shareholder shall have sole
responsibility and joint and several liability for the defense of, and will
hold Buyer harmless from, any damages or loss resulting from, any claims that
may arise at any time against Seller, the Shareholder or Buyer in connection
with the Property or the operation of the business as a result of an act,
transaction, event or anything occurring prior to the date of Closing.
19. Indemnification and Hold Harmless and Right of Set-off of Buyer.
Notwithstanding anything herein to the contrary, the Seller and the
Shareholder, jointly and
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severally, agree to defend, hold harmless and indemnify the Buyer and its
affiliates, and their respective employees, directors, officers, agents,
representatives, successors and assigns (the "Buyer Indemnified Parties"), on
an after tax basis, from and for all claims, demands, actions, damages,
liabilities and losses (including court costs, reasonable attorneys' fees and
other expenses, whether or not suit is filed, and including such costs, fees
and expenses in any trial court and on any appeal) ("Adverse Consequences")
that may accrue, arise, be made against or sustained by any of the Buyer
Indemnified Parties following the date of Closing for the following
circumstances: (i) the failure of the Computer Products to functionally perform
substantially in accordance with the representations and documentation provided
by Seller and/or the Shareholder to Buyer on or prior to the Closing; (ii) as a
result of any commitment or promise made on behalf of Seller to any customer or
potential customer of Seller which is not disclosed in writing to Buyer on or
prior to Closing; or (iii) as a result of any breach of any of Seller's or the
Shareholder's representations, covenants or warranties set forth herein or any
other provision of this Agreement; provided, however, that: (A) the Shareholder
shall not have any obligation to indemnify Buyer Indemnified Parties hereunder
until Buyer Indemnified Parties have suffered by reason of all such breaches in
excess of a $15,000 aggregate threshold (at which point the Shareholder will be
obligated to indemnify the Buyer Indemnified Party or Buyer Indemnified Parties
from and against all such Adverse Consequences relating back to the first
dollar), provided, however, that the representations and warranties set forth
herein shall be interpreted for the purpose of determining a breach thereof
within the indemnification provisions set forth herein, including without
limitation the threshold described in this clause (a), as if the word
"material" or other like materiality or qualifying provision was not included
in such representation or warranty; and (b) the aggregate amount of
indemnification payments that may be required from the Shareholder shall not
exceed the aggregate amount of all amounts received by Seller and the
Shareholder hereunder, including without limitation the Initial Purchase Price
and Contingent Purchase Price. Buyer and its affiliates shall have the right to
set-off any obligations and/or indemnification owing from Seller and/or the
Shareholder under this Agreement against any payments or other obligations
which may otherwise be owing to Seller and/or the Shareholder from Buyer and
its affiliates hereunder; provided, however, that such right of set-off shall
not apply to any Base Salary due from Buyer and/or its affiliates to
Shareholder under the Employment Agreement entered into between Buyer and
Shareholder
20. Indemnification and Hold Harmless of Seller and Shareholder.
Notwithstanding anything herein to the contrary, the Buyer hereby agrees to
defend, hold harmless and indemnify the Seller and the Shareholder, and each of
them, and their respective employees, directors, officers, agents,
representatives, successors and assigns (the "Seller Indemnified Parties"), on
an after tax basis, from and for all Adverse Consequences that may accrue,
arise, be made against or sustained by any of the Seller Indemnified Parties
following the date of Closing as a result of any breach of any of Buyer's
representations, covenants or warranties set forth herein or any other
provision of this Agreement.
21. Third Party Claims.
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a. If any third party makes a claim for which any party
claiming indemnification under Paragraphs 19 or 20 hereof (an "Indemnified
Party") from the indemnifying party (an "Indemnitor"), the Indemnified Party
shall as soon as practicable notify Indemnitor of the details of the claim
("Claim Notice"); provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnitor shall relieve the Indemnitor from
any obligation hereunder unless (and then solely to the extent) the Indemnitor
thereby is prejudiced.
b. After receiving a Claim Notice, Indemnitor may elect, by
written notice to the Indemnified Party, to assume the defense of such claim by
using counsel selected by Indemnitor, acting reasonably, so long as (i)
Indemnitor notifies Indemnified Party in writing within fifteen (15) days after
Indemnified Party has given notice of such third party claim that Indemnitor
will indemnify (without reservation) Indemnified Party from and against the
entirety of any Adverse Consequences Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by such claim,
(ii) Indemnitor provides Indemnified Party with evidence reasonably acceptable
to Indemnified Party that Indemnitor will have the financial resources to
defend against such claim and fulfill its indemnification obligations
hereunder, (iii) such claim involves only money damages and does not seek an
injunction or other equitable relief, (iv) settlement of, or an adverse
judgment with respect to, the claim is not, in the good faith judgment of
Indemnified Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of Indemnified Party,
and (v) Indemnitor conducts the defense of such claim actively and diligently.
c. So long as Indemnitor is conducting the defense of such
claim in accordance with the subparagraph (b) above, (i) Indemnified Party may
retain separate co-counsel at its sole cost and expense and participate in the
defense of such claim, (ii) Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to such claim without
the prior written consent of Indemnitor (not to be withheld unreasonably), and
(iii) Indemnitor will not consent to the entry of any judgment or enter into
any settlement with respect to such claim without the prior written consent of
Indemnified Party (not to be withheld unreasonably).
d. In the event any of the conditions in the subparagraph (b)
above is or becomes unsatisfied, however, (i) Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, such claim in any manner it reasonably may deem appropriate
(and Indemnified Party need not consult with, or obtain any consent from, any
Indemnitor in connection therewith), and (ii) Indemnitor will remain
responsible for any Adverse Consequences Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by such claim to
the fullest extent provided in this Paragraph 21.
22. News Release. Except for any press release by Buyer made in
conjunction with the execution of the letter of intent in respect of this
transaction, on or before the Closing date, neither Seller, the Shareholder nor
Buyer shall (nor shall any party permit any of its respective
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affiliates to), without prior consultation with the other party and the other
party's review and consent to any public announcement concerning the
transactions contemplated hereby (which consent shall not be unreasonably
withheld), issue any press release or make any public announcement with respect
to the transactions contemplated hereby except such disclosures as may be
required by law. During such period each party shall, to the extent
practicable, allow the other party reasonable time to review and comment on
such release or announcement in advance of its issuance and use reasonable
efforts in good faith to reflect the reasonable and good faith comments of such
other party; provided, however, that neither party shall be prevented from
making any disclosure required by law at the time so required; provided
further, that Seller and the Shareholder hereby consent in advance to Buyer's
press release concerning the transactions contemplated hereby upon execution of
this Agreement by the parties. In addition, Seller and the Shareholder will
assist Buyer in communicating the benefits of the transactions contemplated
hereby to customers and assist Buyer in maintaining its relationships with
existing and prospective customers of the business purchased by Buyer hereby.
23. Restrictive Covenants.
a. Restricted Activities of Seller and the Shareholder. At no
time after the Closing will Seller or the Shareholder represent to any third
party that Seller or the Shareholder still owns or operates the Seller's
business operated by Seller immediately prior to Closing (the "Business") or
the Property as conveyed to Buyer hereunder or is the successor in interest of
the Business or the Property. In addition, for the period beginning on the
Closing date and continuing for the three (3) years thereafter during which the
Contingent Purchase Price shall be determine (the "Seller Restricted Period"),
Seller shall not, and for the period beginning on the Closing date and
continuing until the later of (i) the Seller Restricted Period, or (ii) two (2)
years after the termination of the respective Employment Agreement, as further
described therein, neither Shareholder shall (the "Shareholder Restricted
Period"), directly or indirectly, alone or as a partner, joint venturer,
officer, director, member, employee, consultant, agent, independent contractor
or shareholder of or lender to, or otherwise:
(i) engage in or own any interest (except as a
passive investor of less than five percent (5%) of total debt and equity of a
publicly traded company) in, any business or other activity whose products or
services compete with the Business, or the Computer Products (or any upgrades,
enhancements, or other releases, modifications or customizations thereof) or
otherwise which enterprise is the same as or similar to the line of business of
the Buyer (its predecessors or affiliates) (a "Competitive Business");
provided, however, that it is expressly agreed by the parties hereto that the
Shareholder may engage in, be employed by or own an interest in any business or
other activity whose products or services are not similar to or otherwise
compete with the Computer Products (or any upgrades, enhancements, or other
releases, modifications or customizations thereof); provided further, however,
that a Shareholder may request in writing from Buyer its prior consent with
respect to such Shareholder's activity and Buyer shall promptly provide to such
Shareholder a written response thereto stating whether or not it considers such
activity to violate any of the restrictive covenants set forth herein and, if
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still in force, in the Employment Agreement. In giving its consent to such
Shareholder's activity as contemplated in the immediately preceding sentence,
Buyer may request that such Shareholder provide a written undertaken to Buyer
(A) reaffirming his intention and obligation to abide by all the restrictive
covenant provisions of this Section 23 (and any other similar existing
restrictive covenants in an Employment Agreement), and (B) representing and
warranting that he has disclosed to any entity which is employing him the
existence and binding nature of restrictive covenant provisions of this Section
23 on or before the date of such written notice; and
(ii) divert, induce, or attempt to divert or induce
any existing or prospective business or customer(s) of Buyer (including Parent
or any other affiliates of Buyer) as it relates to the operation of the
Business or the Computer Products (or any upgrades, enhancements, or other
releases, modifications or customizations thereof) to any other person or
entity, by direct or indirect inducement or otherwise, in any Competitive
Business or the Property.
b. Restriction on Employee Solicitation. During the later of
the Seller Restricted Period and Shareholder Restricted Period, neither Seller
nor the Shareholder(s) shall solicit, or attempt to solicit, any person for
employment who was an employee of Seller with respect to the Business or the
Property as of the Closing date or who is at that time already employed by
Buyer or any of its affiliates, or otherwise directly or indirectly induce or
seek to induce such person to leave his or her employment with Buyer.
c. During the Shareholder Restricted Period, no Shareholder
shall, directly or indirectly, in any way utilize, disclose, copy, reproduce or
retain, or attempt to utilize, disclose, copy, reproduce or retain, in its
possession the proprietary rights, records or other information transferred or
otherwise relating to the Business or the Property transferred hereby,
including, but not limited to any customer lists, all of which shall be deemed
confidential information, except information which has been publicly disclosed
by Buyer or by a third party not in violation of any applicable law or
agreement, or is lawfully required to be disclosed by any governmental agency
or applicable law; provided, however, that the Shareholder(s) shall be allowed
reasonable access to review and copy such records for purposes of litigation
and tax audits and tax preparation, but with respect to any litigation brought
by a Shareholder against or adverse to Buyer or any of its affiliates, such
access shall be only to the extent required under laws and rules of procedure
and discovery applicable to such proceeding.
d. Scope of Restriction.
(i) The provisions of this Paragraph 23 constitute a
series of separate covenants for each county, state (including the District of
Columbia) and country in which Buyer or an affiliate of Buyer transacts
business.
(ii) In the event that any other provision of this
Paragraph 23 or the application of any such provision shall be held to be
prohibited or unenforceable in any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such
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prohibition or unenforceability. The remaining provisions of this covenant to
refrain from competition shall remain in full force and effect, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. The parties
shall use their best efforts to replace the provision that is contrary to law
with a legal one approximating to the extent possible the original intent of
the parties.
(iii) For purposes of this Paragraph 23, "Buyer" also
shall include any existing or future affiliates or subsidiaries or
successors-in-interest of Buyer, including without limitation, successors by
merger or consolidation as Buyer.
e. Ancillary Agreement. The parties acknowledge that their
agreements in this Paragraph 23 are ancillary to an otherwise enforceable
agreement.
f. Reasonably Necessary. Seller, the Shareholder and Buyer
agree that there exist legitimate business interests which justify the need for
the restrictive covenants set forth in this Paragraph 23, including, without
limitation, (i) the Property is valuable, confidential business information and
is the basis of the bargain between the parties hereto, (ii) substantial
relationships with the specific prospective and existing customers of Buyer and
of Seller are associated with, and are a significant part of, the Property
being acquired hereby, and (iii) there exists significant customer goodwill
associated with (A) the ongoing Business by way of the Computer Products, the
trademarks and other intellectual property being conveyed by Seller and/or the
Shareholder hereby and (B) the areas where the Buyer, and the Business of the
Seller, transacts business. Seller, Shareholder and Buyer agree that the
restrictive covenants set forth in this Paragraph 23 have been drafted so as to
reflect the parties intent that such covenants be upheld by a court
interpreting such provisions, including, without limitation, under Florida
Statute 542.335(1)(d)(3).
24. Ordinary Course of Business. From the date hereof until the
Closing, Seller and the Shareholder covenants and agrees (i) to conduct the
Business only in, and Seller shall not take any action except in, the ordinary
course, consistent with past practices, and (ii) to use, and the Shareholder
shall cause Seller to use, Seller's best commercially reasonable efforts to
preserve intact Seller's business organizations, to keep available the services
of its current management/officers, employees and consultants, and to preserve
its present relationships with customers, suppliers and other persons with
which it has significant business relations.
25. Brokerage. Each party hereto warrants to the other that it has
not dealt with any brokers or incurred any brokerage fees or other commissions
in connection with this transaction, and agrees to hold the other harmless
from, and indemnify the other for, any claims for any such fees or commissions.
26. Specific Performance. Upon default hereunder the non-defaulting
party shall be entitled to make claim for specific performance of the terms of
this Agreement, in which event the defaulting party shall waive the defense
that there is an adequate remedy at law or in money damages.
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27. Attorneys' Fees; Costs. In any action to enforce the provisions
of this Agreement, the prevailing party shall be entitled to recover all
reasonable attorneys' fees, court costs and other expenses incurred in
connection therewith, including such fees and costs in the trial court and on
any appeal.
28. Assignment. Except for an assignment or transfer between Buyer
and its affiliates, including without limitation, Parent, and except for an
assignment of Seller's royalty rights hereunder to the Shareholder, neither
this Agreement nor any right, privilege, obligation or duty hereunder is
assignable or may be delegated without the written consent of the other party.
29. Notices. All notices provided for herein shall be deemed to have
been properly made if deposited in the U.S. mail, postage prepaid, and
certified, to the following addresses:
a. If to Seller or the Shareholder:
Xxxxxx X. Xxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxx Xxxx, Xxxxxxx 00000-0000
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Winderweedle, Haines, Xxxx & Xxxxxxx, P.A.
Xxxx Xxxxxx Xxx 000
Xxxxxx Xxxx, Xxxxxxx 00000-0000
b. If to Buyer:
HTE-IOD, Inc.
Attention: Chief Financial Officer
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxx 00000
with copy to:
X. X. Xxxxxx, Jr., Esq.
000-X Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Any such notice shall be deemed given as of the date delivered, if served
personally, or as of the date deposited in any post office box regularly
maintained by the United States Postal Service, if mailed.
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30. Additional Items. Each party agrees to execute and deliver in
proper form any additional items or documents that may appear after Closing to
be necessary to fully accomplish the purposes and objectives of the parties to
this Agreement.
31. Paragraph Headings. The paragraph headings given throughout this
Agreement have been inserted only as a matter of convenience and for ease of
reference, and in no way define, limit or describe the scope of this Agreement
or the intent of any provision thereof.
32. Governing Law. This Agreement and the rights of the parties
shall be governed by and construed or enforced in accordance with the laws of
the State of Florida, without giving effect to principles of conflicts of laws.
33. Gender. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine and neuter, singular or plural, as the
identity of the person or persons may require.
34. Survival of Representations and Warranties; Disclosure and
Accommodation.
a. Each of the representations and warranties made by the
Shareholder contained in subparagraphs 16(h), (j), (o), (s) and (w) shall
survive the Closing date and continue in full force and effect until the
expiration of any applicable statute of limitations, at which time the
respective representation or warranty shall expire. Each of the representations
and warranties made by the Shareholder contained in subparagraphs 16(q) and (k)
shall survive the Closing and continue for so long as royalties are paid by
Buyer hereunder. All other of the representations and warranties made by the
Shareholder shall survive the Closing Date and continue in full force and
effect for a period of three (3) years thereafter. Each representation,
warranty, covenant and agreement of the parties contained in this Agreement is
independent of each other representation, warranty, covenant and agreement.
Each of the representations and warranties of Buyer shall expire at the
Closing. The covenants and agreements of the parties contained in this
Agreement shall survive until fully performed. Notwithstanding any knowledge of
facts determined or determinable by any party by investigation, each party
shall have the right to fully rely on the representations, warranties,
covenants and agreements of the other parties contained in this Agreement or in
any other documents or papers delivered in connection herewith.
b. Matters disclosed on a Schedule herein shall be deemed to
be adequate disclosure for purposes of disclosing information only with respect
to the particular section of this Agreement to which such Schedule relates,
except to the extent that such matters are also disclosed on, or
cross-referenced to, another Schedule. To the extent that a matter is
disclosed, but a material circumstance related thereto is not ascertainable
from the information disclosed on the Schedule concerning such matter by review
of the specific agreements, documents or other information identified on the
Schedule and made available for review, it shall not be deemed to
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be adequate disclosure of such material circumstance.
35. Counterparts. This Agreement may be executed in counterparts,
all of which together shall comprise one and the same instrument.
36. Effect of Agreement. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the successors and assigns of the parties.
37. Dispute Resolution. If any dispute, claim, question or
disagreement (a "Disputed Matter") arises between any of the parties hereto
which relates to this Agreement or a breach of this Agreement, the parties
shall use their best efforts to settle such Disputed Matter. If the parties
cannot reach a mutually agreeable solution to such Disputed Matter within
twenty (20) days of one party sending the other party written notice of such
Disputed Matter (the "Resolution Period"), the Disputed Matter shall be
submitted to arbitration as hereinafter provided.
38. Arbitration. After the Resolution Period has expired, upon the
demand of any party to this Agreement, any controversy or claim arising out of
or relating to this Agreement, or any breach thereof, including, without
limitation, any claim that this Agreement or any portion thereof is invalid,
illegal or otherwise voidable, shall be submitted to arbitration before and in
accordance with the rules of the American Arbitration Association and judgment
upon the award may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing to the contrary, either party shall have the
right to seek and obtain any provisional remedy, including, without limitation,
a temporary restraining order, injunctive relief, or other equitable relief,
from any court of competent jurisdiction, as may be necessary in such party's
sole subjective judgment, to protect its interests during the pendency of such
arbitration. The prevailing party to said arbitration shall be entitled to an
award of reasonable attorneys' fees. The situs of the arbitration proceedings
shall be the regional office of the American Arbitration Association which is
located nearest to Lake Mary, Florida, or such other office of the American
Arbitration Association as the parties hereto shall mutually agree.
39. Events of Termination. This Agreement may be terminated by
written notice of termination at any time before the Closing Date only as
follows:
a. Mutual Consent. By mutual written consent of Seller, the
Shareholder and Buyer; or
b. Breach. By Seller/the Shareholder or Buyer if the other
party(ies) or its affiliates shall have (a) breached or otherwise materially
misstated any representation or warranty contained herein which would result in
the failure of such party to satisfy the conditions to Closing set forth in
Paragraph 8(b), or (b) breached any covenant, undertaking or restriction
contained herein which would result in the failure of such party to satisfy the
conditions to Closing set forth in Paragraph 8(b).
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40. Entire Agreement. This Agreement contains the entire agreement
and understanding between the parties. There are no oral understandings, terms,
or conditions, and neither party has relied upon any representations, express
or implied, not contained in this Agreement. All prior understandings, terms,
conditions, or negotiations are deemed merged in this Agreement. This Agreement
shall not be changed or supplemented orally.
Executed as of the 18th day of June, 1999, effective as of the date
and year first above written.
Signed, sealed and delivered
in the presence of:
HTE -IOD, INC.
/s/ By: /s/ X.X. Xxxxxx, Jr.
----------------------------- ------------------------------------------
Witness as to Buyer X. X. Xxxxxx, Jr., Executive Vice President
(Corporate Seal)
INFORMATION ON DEMAND, INC.
/s/ By: /s/ Xxxxxx X. Xxxxx
----------------------------- -----------------------------------------
Witness as to Seller Xxxxxx X. Xxxxx, President
(Corporate Seal)
SHAREHOLDER:
/s/ /s/ Xxxxxx X. Xxxxx
----------------------------- ---------------------------------------------
Witness as to Shareholder Xxxxxx X. Xxxxx, in his individual capacity
